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NGUS MAY 29 2019 362.05

Nigeria’s ‘rice revolution’ leaves other crops struggling

CALEB OJEWALE

Continues on page 38

Inside FG to increase VAT by 50% to fund Senate-approved P. 2 N30,000 new minimum wage

NGUS AUG 21 2019 362.50

NGUS FEB 26 2020 363.40

g L-R: Dalu Ajene, head, investment banking/executive director, Rand Merchant Bank Nigeria; HE Shri Abhay Thakur, high commissioner of India to Nigeria; Taiwo Shote, head, corporate banking, Rand Merchant Bank Nigeria, and Doyin Salami, renowned economist, at the Indian Professionals Forum Nigeria sponsored by Rand Merchant Bank Nigeria in Lagos. The keynote address was given by Doyin Salami on the Economic Outlook for Nigeria in 2019.

...Benefits most from ABP among 20 target sub-sectors ...Wheat, maize farmers target larger hectares in 2019/2020 ice production has dominated discourse in Nigeria’s agricultural sector, particularly in the last four years, raising concerns that other crops may be suffering as a result. Dubbed Nigeria’s political crop, rice has benefitted the most from the Central Bank’s Anchor Borrowers’ Programme (ABP), which is intended to create a linkage between anchor companies involved in the processing and small holder farmers of the required key agricultural commodities, according to heads of farmers’ associations who spoke with BusinessDay. This is despite

FGN BONDS

TREASURY BILLS

Access, Diamond merger crosses final hurdle as court sanctions deal To unveil new logo Access shares gain 1.71%

OLUWASEGUN OLAKOYENIKAN & OLUFIKAYO OWOEYE

ier-one lender, Access Bank plc, and midtier Diamond Bank plc have successfully completed the process leading to final completion

of the merger deal between the two lenders to form Africa’s largest retail bank by customer base. Access Bank, in a statement on the Nigerian Stock Exchange (NSE) website, Tuesday, said it obtained a court sanction of the deal which was sequel to the final approval by the Central Bank

of Nigeria (CBN) and the Securities and Exchange Commission (SEC) on the agreement. The new entity, which is expected to fully integrate organisation and processes by April 1, 2019, would retain Access Bank as its name with Diamond Bank’s logo. It will span three

continents, 12 countries with 29 million clients. The two banks announced their merger plans in December 2018 following the signing of the Memorandum of Agreement and announcement of headline Continues on page 38

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Lessons for Nigeria as Brazil leverages ethanol opportunity in sugar TEMITAYO AYETOTO

he impact of Nigeria’s lack of capacity to produce a selfsufficient amount of sugar is not totally captured by ample foreign exchange expended on importation. The capacity dearth also manifests in the opportunities Nigeria loses in areas like ethanol production, a bio-fuel alternative to petroleum, which demand is also on the uptick. Just as Nigeria’s sugar supply

in sugar production despite healthdriven decline in consumption shows Nigeria has bright prospects of achieving economic diversification in the non-oil sector if it adopts Brazil’s style of capitalising on sugar in leading the world ethanol market. Brazil, a leading producer of sugar, has relied on its export earnings from the product for over five decades. Its output has more than doubled from 122.08 million metric tonnes in 1965 to 671.4 million metric tonnes

ANALYSIS

deficit positions it as one with the largest annual import bill of approximately $100 million in sub-Saharan Africa, ethanol appears worse on the record, gulping about $480 million annually on importation. Ethanol in Nigeria has recently received more attention from a number of private investors focusing on the establishment of plants, and has boosted efforts in the production of cassava, which serves as the predominant source. Yet, local ethanol production barely hovers at 4 percent of total demand. Nigeria’s sugar output on the other hand accounts for 7 percent of its demand, estimated at 900,000 tonnes. The meagre local production of ethanol does not equally have it smooth as private players also complain their capacity is limited by poor supply of cassava. With these issues, the need for Nigeria to achieve its sugar policy goals becomes expedient not only to whet the appetite for the sweetener, but also necessarytodiversifytheresource-base for ethanol production through sugar. The policy highlights the need to establish about 28 sugar factories of varying capacities and bring about 250,000 hectares of land into sugarcane cultivation by next year. The bulk of the investment capital will come from private investors. Government has yet to deliver on this mandate among several others outlined to achieve import substitution. However, Financial Derivatives Company, an integrated research firm’s analysis of the opportunities

in 2009, fetching the country revenue of approximately $10 billion annually. Sugar production for ethanol has helped Brazil to remain relevant, producing more than 30 billion litres between 2015 and 2016. Projections further show that Brazil’s annual ethanol capacity could be on track for over 50 billion litres by 2030. Brazil somewhat compares with Nigeria in terms of how it has used agriculture to absorb oil price shock. After the oil price shock of 1973, sugarcane became the South American country’s main agricultural crop, serving as the feedstock for ethanol refineries. In the last two decades, the renewable liquid fuel became a replacement for gasoline in powering internal combustion engines. Nigeria’s current challenges with sugar and ethanol output were once Brazil’s major bone of contention. But Brazil successfully confronted its problems, protecting its sugar industry. In 2017, the Brazilian government introduced the RenovaBio programme to encourage ethanol producers. The programme is expected to double the use of ethanol by 2030 from its current level of 26 billion litres by fuel distributors. The programme is structured to reward producers who invest in manufacturing clean bio-fuels, encouraging fuel distributors to buy the clean bio-fuel produced through a credit-trading programme.

•Continues online at www.businessday.ng

Atiku, PDP want presidential election annulled on 5 grounds …assemble 400 witnesses against APC, Buhari’s victory FELIX OMOHOMHION, Abuja

residential candidate of the People’s Democratic Party (PDP) in the February 23 presidential election, Atiku Abubakar, on Monday submitted a 141-page petition to the election tribunal sitting in Abuja. The petition, which is premised on five grounds, is seeking to upturn the declaration of President Muhammadu Buhari of the All Progressives Congress (APC) as winner of the election. In the petition, Atiku and his party, the PDP are alleging that Buhari was not qualified to run for the office of the president on the grounds that he did not possess the constitutional minimum qualification of a school certificate. The issue of certificate has dogged Buhari’s candidacy since 2015 when he won the presidential election. Meanwhile, the petition has

the Independent National Electoral Commission, Buhari and the APC as the first, second and third respondents, respectively. Among the arguments for the appeal are: “The 2nd respondent (Buhari) was not duly elected by majority of lawful votes cast at the election. “The election of the 2nd respondent is invalid by reason of corrupt practices. “The election of the 2nd Respondent is invalid by reason of non-compliance with the provisions of the Electoral Act, 2010 (as amended). “The 2nd respondent was at the time of the election not qualified to contest the said election. “The 2nd respondent submitted to the 1st Respondent an affidavit containing false information of a fundamental nature in aid of his qualification for the said election.” Continues on page 38

L-R: Olumide Orojimi, head, corporate communications, Nigerian Stock Exchange (NSE); Bekeme MasadeOlowola, GRI board member/CEO, CSR-in-action; Bola Adeeko, head, shared services division, NSE, and Douglas Kativu, director, GRI Africa, at the sustainability reporting workshop and the unveiling of the NSE sustainability disclosure guidelines at the NSE in Lagos, yesterday. Pic by Pius Okeosisi

FG to increase VAT by 50% to fund Senateapproved N30,000 new minimum wage ...as 2019 budget passes second reading OWEDE AGBAJILEKE, Abuja

he Federal Government has concluded plans to increase Value Added Tax (VAT) by between 35 percent and 50 percent to fund the new National Minimum Wage. The increase will also affect Company Income Tax (CIT) and Petroleum Profit Tax (PPT). Minister of budget and national planning, Udoma Udo Udoma, and chairman, Federal Inland Revenue Service (FIRS), Tunde Fowler, disclosed this on Tuesday at an interactive session with the Senate Committee on Finance on the 2019-2021 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP). “By the end of this year, we should be ready for increase in VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher. And they pay when they go for those trips. We should be ready for an increase in VAT,” said Fowler. “I can certainly see an increase in VAT of at least 35 percent to 50 percent this year based on our enforcement activities. There certainly will be an increase in Company Income Tax (CIT) and also on Petroleum Profit Tax (PPT),” he said. Udoma announced that the Federal Government had revised the 2019-2021 MTEF/FSP earlier submitted by President Buhari to the National

Assembly on November 7, 2018. He explained that while the key assumptions of MTEF/FSP such as daily oil production at 2.3 million barrels, oil benchmark at $60 per barrel and exchange rate of N305/$ remain the same, the expenditure level was reviewed from N8.727 trillion to N8.826 trillion. He attributed the review to the increase in police salaries. Speaking on the minimum wage, Udoma said beyond revision, it was important to make sure that it can be funded. “And that is why we set up the Bismark Rewane Technical Committee. So, we will be coming to you. There may be some changes maybe in VAT and other things. But we will be coming to you in order to make sure that we can fund the minimum wage. Not just fund the minimum wage but also as you announce it, you now enter into negotiations with those above the minimum wage and we have to be prepared for that,” he said. BusinessDay learnt the Bismarck Rewane-led Technical Advisory Committee on the implementation of an increase in the minimum wage, inaugurated by President Muhammadu Buhari in December 2018, is expected to submit its report this week. This came on a day the Senate approved N30,000 monthly as the new National Minimum Wage, calling for review of the revenue sharing formula to enhance states’ capability to pay.

The House of Representatives had earlier on January 29 approved N30,000 as minimum wage for workers in the public and private sectors. The amount is N3,000 higher than the N27,000 which President Buhari presented to the National Assembly in the executive bill in January this year. The Minimum Wage Bill as presented by President Buhari sought to prescribe the National Minimum Wage for the country and provide a legal framework for ideal review of the minimum wage in line with the period specified under the Bill. The Senate called on the Ministries of Finance and Budget and National Planning to immediately forward to the National Assembly for inclusion in the 2019 budget the actual amount required for the new National Minimum Wage. It also said the Federal Government should put in place procedure that will lead to a review of the revenue sharing formula to enhance states’ capabilities to implement the new wage. BusinessDay findings show the revenue sharing formula stands at 56 percent for the Federal Government, 24 percent for states, and 20 percent for local governments. The Senate also concluded second reading of the N8.83 trillion 2019 budget proposal and referred same to its Committee on Appropriation.

•Continues online at www.businessday.ng

Can Buhari salvage Nigeria’s oil and gas sector? DIPO OLADEHINDE

ith Nigerian President Muhammadu Buhari winning a re-election in the February 23 presidential election, analysts are weighing the implications of another four years of Buhari for the country’s oil and gas sector. The most important question the analysts are asking is whether Buhari can salvage the country’s oil and gas sector. Oil remains the heartbeat and chief source of income for Africa’s biggest economy, accounting for a whopping 85 percent of export revenue. While many industry experts believe that the nation’s oil and gas industry can do with some liberalisation, Buhari had historically opposed

ANALYSIS market liberalisation publicly, citing corruption risk as the rationale behind this position. He also argues that through state control, oil profits can be more easily distributed to nascent sectors of the economy and also help the masses. But with Nigeria’s economy at a breaking point, Buhari may be forced to adopt unprecedented liberal reforms to solve old perennial problems, with Africa’s most populous nation boasting the greatest number of people in what World Bank calls “extreme poverty”: 87 million Nigerians reportedly live on less than $1.90 per day. “We have an upstream that’s not

operating optimally, midstream that’s not functioning and a downstream that is dying, so we have to think of a way to ensure private sector can make investment in the sector,” Ademola Henry, team leader at Facility for Oil Sector Transformation (FOSTER II), said. Henrysaidthemajortaskbeforethe newadministrationistoreformthesector for more efficiency, more effectiveness, find a way of reducing leakages in the sector, and maximise opportunities in the sector’s value chain. As it has been for more than a decade, the Petroleum Industry Bill (PIB) remains the biggest regulatory issue in Nigeria’s petroleum sector, although there was a significant

Continues on page 38

Wednesday 20 March 2019

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NAFDAC, NAQS’ fight over methyl bromide questions regulators’ credibility JOSEPHINE OKOJIE

… as farmers call for synergy

he recent disagreement between the National Agency for Food and Drug Administration and Control (NAFDAC) and the Nigerian Agricultural Quarantine Service (NAQS) over the use of methyl bromide by farmers and exporters on agricultural commodities question the credibility of Nigeria’s regulatory agencies. Farmers and exporters use methyl bromide for storage, packaging and preservation of food products that are consumed locally or exported, experts say. Experts say exposure during fumigation activities and consumption in food stored or packaged using the chemical cause toxic health effects as well as hasten ozone layer depletion. “The disagreement between the two regulators over the use of methyl bromide tells a lot about food regulation in the country,” Victor Iyama, president, Federation of Agricultural Commodities Association of Nigeria (FACAN), told BusinessDay. “We importers are adhering to the warnings of NAFDAC over NAQS because we

cannot afford rejection of our exported commodities. It has been banned globally because of its effect on health and the environment,” Iyama said. Methyl bromide is a broad spectrum pesticide used in the control of pests, insects, weeds, pathogens, and rodents. It is considered to be a significant ozone-depleting substance. The Montreal Protocol, which was finalised in 1987, had 183 countries sign the treaty to protect the stratospheric ozone layer by phasing out the production and consumption of ozone-depleting substances (ODS), information on the UN Environment website says. In line with this agreement of which Nigeria is a signatory, and considering the health effect of methyl bromide, NAFDAC – the agency that regulates and controls quality standards for foods, drugs, cosmetics, medical devices and chemicals among others, banned the use of the pesticides in the country. Moji Christiana Adeyeye, director-general of NAFDAC, while explaining to journalists the ban on the use of the

chemical in the country recently, said methyl bromide causes toxic health effects and hastens ozone layer depletion. Adeyeye stated that methyl bromide is a Class I Ozone Depleting Substance (ODS) that releases bromine atom which depletes the ozone layer. According to experts, ozone layer depletion is one of the major causes of global warming and has attendant negative effects on health, food production and environment. Ibrahim Kabiru, president, All Farmers Association of Nigeria (AFAN), said both regulatory agencies should work in synergy to educate farmers and the general public on food safety. “We want to reduce the residual of pesticides on the food produce and ensure that they meet international standards,” Kabiru said. NAQS, the regulatory agency in charge of promoting and regulating sanitary and phytosanitary measures in connection with imports and export of agricultural commodities, thinks otherwise.

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Foreign airlines realise 12% increase from ticket sales in 2018 IFEOMA OKEKE

oreign airlines operating in Nigeria sold tickets worth about N565 billion from January to December 2018, showing a 12.1 percent increase from sales of tickets in 2017. In 2017, total ticket sold by foreign airlines was about $1.4 billion amounting to N504 billion at an exchange rate of N360 to a dollar. This shows an increase of N61 billion in tickets sales in year 2018.

This was disclosed by Bernard Bankole, president, National Association of Nigeria Travel Agencies (NANTA), at a press conference to announce its 43rd annual general meeting, Lagos. Bankole said this collation of tickets sold within the period could even be higher, considering the fact that the new Gen ISS introduced by the International Air Transport Association (IATA) allowed anyone in and out of Nigeria to issue tickets, thereby depriving the government its 5 percent remittance and

revenues meant for local travel agencies. Bankole said while IATA promised that the system would be faster, safer and more cost effective, the reality was that the system was only killing local travel agencies and increasing the level of fraudulent activities by impostors across various countries. He explained that the cost of ticket for international travel in Nigeria was higher than what obtained in other West African countries because of government policy.

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Distressed buildings: Lagos asks citizens to report ‘corrupt’ officials JOSHUA BASSEY

gainst the backdrop of allegations that officials of relevant agencies of Lagos State government were engaged in undercurrent deals with developers and property owners to overlook distressed and defective buildings, the government has called for the cooperation of citizens by reporting such officials wherever found. The request comes as the state government on Tuesday, inaugurated a five-man investigative committee to unravel the remote and immediate causes of last week’s collapse

of a three-storey building on Massey Street, Ita-faji, Lagos Island, in which 20 persons, including school children died, and 45 injured. “We have read such reports in the media, but we do not have any of our officials caught to have asked for bribes from landlords to bypass any distressed buildings. However, we want our citizens who have come across any of our officials asking for bribes or engaging in any such practice in the course of doing duty, to report to the ministry,” Rotimi Ogunleye, commissioner for physical planning and urban development said on Tuesday. Ogunleye, who briefed

newsmen on the efforts being made by the government to stem the tide of building collapse in the state, also urged the citizens to be whistle blowers by alerting the government about defective and distressed buildings within their localities. According to him, this is important because officials cannot be in every nook and crannies of the state and so public involvement is required to provide prompt information. He said the move was to prevent a reoccurrence of building collapse, even as he confirmed that a total 149 buildings across the state were identified in distressed form out of which 48 were in Lagos Island alone.

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CBN, states, banks in talks to resuscitate Nigeria’s moribund palm oil sector ONYINYE NWACHUKWU, Abuja

igeria’s Central Bank on Monday began talks with key players across the palm oil value chain - including state governments, banks, as well as other stakeholders to map out a sustainable strategy that will help resuscitate the country’s moribund palm oil industry under its Anchor Borrowers

Programme. The strategy involves, among other things, a loan programme for industry participants at not more than 9 percent interest rate, Godwin Emefiele, CBN governor, said at a meeting that had governors of Abia State, Okezie Ikpeazu; Akwa Ibom, Emmanuel Udom, as well as Edo, Godwin Obadeki, present. Emefiele said the meeting was enlarged to include state

governors and other top government officials from the oil palm producing states to elicit their buy-in and set a partnership model that would, with immediate effect, stimulate investments in the palm oil plantations, such that within the next three to five years, the global share of Nigeria’s oil palm production would more than double. “Our ultimate vision is to overtake Thailand and Co-

lumbia to become the third largest producer over the next few years. “This conversation is indeed important as it forms part of our overall strategy to reduce our reliance on crude oil imports, diversify the productive base of our economy, create jobs and conserve our foreign exchange,” Emefiele explained. At the meeting, the governor regretted that despite

placing oil palm in the forex exclusion list, official figures indicate that importation of palm oil had declined by about 40 percent from the peak of 506,000 MTs in 2014 to 302,000 MT in 2017. This indicates that Nigeria still expends close to $500 million on oil palm importation annually and we are determined to change this narrative. “If we had kept pace with our peers in supporting im-

proved cultivation of palm oil, at the current global market price of $600 per ton, and an assumed production level of 16m tons, Nigeria could have generated close to $10 billion worth of foreign exchange for the country. “This excludes huge jobs that could have been created in our rural communities from large scale small holder developments,” the CBN governor said.

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SMEs should continue still brace up as uncertainty reboots Small Business handbook

Emeka Osuji

he election-induced uncertainties are not over yet. For Nigerian entrepreneurs, especially those in the SME sector, the fall-outs of the existential threat that was the 2019 elections in Nigeria may have abated but is not yet over. If anything, it is time to brace up even the more but not necessarily for security reasons. It is more for economic reasons. And I hope the SMEs have not exhausted their survival strategies or lost staying powers as the elections come to a close. The real need for staying power and creativity is actually about to become more urgent as businesses try to get back on track. The elections may have come and gone (though not quite. The reruns are still out there) but the crisis has just rebooted. The days of uncertainty; the kind that is truly typical of the Nigerian business environment, are about to really and truly break. Adherents of positivism and those passionate about faith and the art of calling into being those things, which be not, may not feel this way but passion and reality have their places. The reality is that meaningful business patronage is still far down the pipeline. Clearly, the uncertainty ahead of SMEs and indeed, the small business community in the country, is of a different kind from the one that preceded

the elections. Prior to the elections, the main concern of everyone was the survival of the nation – a shameful situation arising from the lust for power and the unremitted opportunity for corrupt enrichment offered by Nigerian politics. People feared that there could be crisis whatever the result of the elections. And there was a lot of crisis. With power hungry politicians ready to kill in order to win elections, and a largely ignorant and illiterate followers; victims of poverty weaponization, deliberately pauperised by the operators of the system, equally ready to die for their principals, the concern was for the survival of the country. The coalescence of these forces left investors with a heightened sense of cautious optimism and a wait-and-see attitude. SMEs were the primary victims as they suffered all manner of negative consequences from delayed payments, botched orders and inventory pile up. Now the elections have come and practically gone but the uncertainty remains. It is important for SMEs to realize that things are not going to be normalized in a jiffy. There is still some more waiting and adjustment time before it all comes back to normal. This implies that SMEs must still guard their loins, nourish and protect their few surviving revenue streams and create new markets. The idea of cost containment, as a strategy of revenue management, must be emphasized, even much more. There is med for efficiency. The reason for continued focus on efficiency and cost control is simple – even those who have won their elections will need time to take office. And when they do, they will discover and learn things they never knew ever existed. Even those they knew existed will take new forms and shapes, as reality replaces speculation and bravado. This makes a case for caution. Business opportunities will to return but they will do so very slowly.

There is probably going to be an even longer waiting period of time than the one preceding the elections, depending on the preparedness and capacity of the new men in power, especially in places where power has changed hands. SMEs need to learn to be patient. Small business operators need to continue to practice the management strategies we had recommended elsewhere in this column, as part of the key success factors for surviving hard times like these. Without doubt, cost containment, beginning with realistic costcutting devices, must remain in vogue. Indeed, the cut must be targeted and with more precision. By all accounts, and since the worst is no longer likely to happen, operators must be careful what cost to cut and how deep to cut it. They must be careful also not to kill the business through cuts that are unnecessarily too deep. Some deep cuts take too much flesh off the business. Scarecrow enterprises have no place in the impending race to recovery. Cost-containment must leave needed flesh in the business. The business must have enough flesh, especially in the key driving units (the legs of the business) to carry it forward. On the other hand, too much flesh at a time of speed and precision has its own punishment. Shallow cuts in places where deep cuts are inevitable paper over problems. Therefore, cost containment must be properly thought through and implemented. If not so, they do not make the impact they ought to make. This is why precision is very important in cost control at a time like this. SMEs should use this low time to increase their capacity through training. This does not have to take them away from work or cost so much. Some important ways to reduce the cost of training and operations is the use of technology. Online business training can save travel time and costs while availing us the benefits of quality train-

‘

Scarecrow enterprises have no place in the impending race to recovery. Costcontainment must leave needed flesh in the business

ing, which others attend physically. It is now possible for us to attend some of the best training programmes in the world while sitting comfortably in our offices. SMEs should explore the opportunity. Even software can be obtained and used without having to pay so much. There are Open Source Softwares that allow users to modify the source codes and manipulate the software to suit their needs. We also have free software that can transform small businesses, at little or no cost. SME operators should stop longing for yesterday’s analogue life and embrace technology. According to Hernando de Soto, the Chilean economist who has written so much about the success of capitalism in the West and its failure elsewhere in the rest of the world, “The present has finally prevailed and the past shall not return”. We must let go of the past and move ahead with the times. It is a mark of failure and inability to learn, that we hold on to long disused ways of life either on grounds of culture or religion. Even culture itself is dynamic. Dynamism is a quality every small business must have. It is affordable because of their small size and inherent flexibility. In the early 90s when I was a senior bank executive, we introduced the concept of Paperless Environment. It helped us save much money especially when we attached rewards to those who emerge as the most paperless teams. A business must continually expand its coast. Business development epitomised in extensive marketing must be emphasized. Online marketing of business will save costs and achieve the desired reach. Keep the business slim. Keep it smart, and wait for the return to the green fields. Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

A few words to Mr President

Bola Adediran

ow that the presidential election has come and gone, and hopes have been dashed and optimism eroded, it might be worth reminding the president why his first term in office was a monumental failure. The president’s recent commitment to work harder in the next four years comes from the right place but misses the point --the failures of the last four years were not a result of the lack of hard work, but the paucity of ideas and talent in his cabinet. A cabinet of Rotimi Amaechi, Lai Mohammed, Chris Ngige, Audu Ogbeh and Kemi Adeosun could hardly be described as stellar. Kemi Adeosun’s case was particularly disappointing. With oil prices tumbling, and the economy contracting, the president’s lack of foresight became immediately apparent when he elected to appoint a woman whose best claim to the job was her stint as the commissioner of finance for Ogun State--a 2nd tier state in Nigeria. Anyone discerning enough could see that she had been promoted beyond her capacity. It was hardly surprising when the economy further spiralled out of control and into a recession under her leadership. Indeed, for all the shortcomings—and there

were many-- one of the few good things of president Obasanjo’s administration was the plethora of talented Nigerians in his cabinet. Just like Buhari, Obasanjo inherited an economy that had been looted into coma by the successive military regimes, but Obasanjo was perceptive enough to hire Ngozi Okonji Nweala, Oby Ezekwesili, Charles Soludo, Dora Akunyili, Nuhu Ribadu, among others. Under Obasanjo’s administration, the economy grew at an average rate of 6% and the foreign reserve rose significantly from $2billion to $43billion. With his team, he was able to negotiate a debt forgiveness that amounted to $18billion. In his second term, Buhari must recognise the truth in this Latin saying: Nemo quod non habet—you cannot give what you do not have. Harsh as it may sound; political jobbers like Ngige and Lai Mohammed are simply bereft of the kind of ideas that the Nigerian state desperately needs. He must radically shake up his cabinet and look outside of his party structure to appoint qualified Nigerians regardless of their party affiliation or political loyalty. President Buhari must curb the tendency to insulate himself. He must also shed his nepotism. A week after president Obama won his landmark election in 2008; he approached Hilary Clinton, his rival during the primaries, to be his Secretary of State. Obama would disregard party affiliation and political loyalty several more times during his presidency. Between 2009 and 2015, Obama appointed two Republicans as Secretary of Defence. Robert Gates, an accomplished intelligence analyst and a George Bush appointee was retained in Obama’s first term, and Chuck Hagel, a veteran of the Vietnam War, and a staunch Republican was appointed as Secretary of Defense in Obama’s second term in office. The APC does not have a monopoly of good people, and to

carry on thinking otherwise is self-defeating and unhelpful to the Nigerian project. The rise of right wing extremists For too long there has been a conspiracy of silence regarding the threat posed by white terrorists. Terrorism has been spoken of, and engaged with almost exclusively as a brown people’s problem. In most western societies, the so called war on terror has inadvertently become a war waged against a specific religion and region. It has fanned the embers of hate among neo-Nazis, but it has also done something more insidious. It has legitimised a different sort of racism--one that exceptionalises, humanises and sometimes rationalises acts of terrorism committed by whites. We can see this in the ‘politics of naming’, and in the institutional response to acts of terrorism committed by whites. First, white terrorism is ‘empowered’ by the tag of supremacy. It is also legitimised and rationalised as white nationalism. What this allows is the inclusion of people with abhorrent views in political discourse as long as their views are well disguised as some form of nationalist rhetoric. Discourses around immigrants and immigration, fertility rates of immigrant communities provides plausible basis for the unfounded myth of the white genocide that white terrorists believe is underway. We also see the attempt by the media to exceptionalise acts of terrorism by whites. When a brown person commits acts of terrorism, there is a ‘naturalness’ to it--brown people are programmed to act in such ways. After all, they are freedom hating Muslims whose religion is fundamentally illiberal and irrational. The white terrorist on the other hand is a deeply disturbed individual who ‘only’ went nuts with guns. The white terrorist is humanised in the media.

His family roots and the ‘ordinariness’ of his upbringing is often investigated and splashed across the news page to reinforce in our subconscious that this was an exceptional case by an exceptionally disturbed individual. In Charleston, Dylan Roof’s manifesto was derided for its infantile rants. In Charlottesville, Trump drew moral equivalence between the acts of protest by anti-fascist groups and the actions of white terrorists that resulted in the death of a woman and the injury of several others. In Christchurch, the headline of a major newspaper in the UK read—the little blonde boy who became a murderer: how an ordinary white man from Scottish, Irish and English descent turned into a far-right killer. But this narrative that these are exceptional acts is patently false. White terrorism is not exceptional. Indeed, data collated through FOI by The Investigative Fund at The Nation Institute in the US, shows that over a nine year period in the US, terrorist plots and successful attacks by the far right outnumbered Islamist incidents by 2:1. The argument here is that white nationalists, neo-nazis, and white supremacy groups are terrorists and to call them anything but this is to make an unjustified differentiation between the abhorrent acts committed by these groups and the Islamists. Naming them as terrorists has political and legal consequences. It ensures that as with Islamic terrorists or other terrorists groups, those who promote their ideology may be classified and treated as terrorists rather than as hate groups. Dr Adediran is a Senior Lecturer in Politics and International Relations at the University of the West of England, Bristol. He writes via bolarinwa.adediran@gmail.com and tweets at @bholarinwa.

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Dapo Akande

hough they’ve been around for so long, it still gets to me whenever I come across our police check points; when we’re not a police state. The same check points every newly sworn in IG promises to dismantle. They come in threatening fire and brimstone to all officers of the law who flagrantly disobey this directive. Yeah yeah yeah... we’ve heard it all before. Please pull the other one. What annoys me more is that those in government, our supposed representatives do nothing to abate this menace. Please tell me. For as long as the Police have employed this antiquated tactic, how many criminals has it helped them to catch, compared to the menace they cause to hapless motorists, most of whom are so obviously innocent? Instead, almost weekly, we’re regaled with stories of how human lives are pathetically wasted for reasons as mundane as a bus driver’s refusal to part with twenty naira. If you’re truly determined to catch criminals, don’t you think it might be more effective to just upgrade and revamp the police intelligence gathering unit? But before I condemn them too much, have you been so privileged to enter their living quarters? If you do, it will

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Nigerian lives matter too (part 1) Character Matters with Daps

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certainly assist you to understand where the oppressor mindset comes from. To put it simply, our policemen and policewomen are victims of chronic abuse. Our political representatives, both backed by law and duty bound to represent the interest of the people are perfectly positioned to call the law enforcement agencies to order, citing the negative effects these road blocks, the oppression and the brutality they afford the police officers to inflict, have on the people. But they do nothing. Instead, they resort to sharing out grinding machines and purchasing JAMB forms for members of their constituency, few weeks to elections. Once they’ve successfully “acquired” their re-election, nobody sees their brake lights for another four years. And so the perfidy continues. Sadly though, they’re not the only ones. Our other big men in society, ordinarily expected to give a voice to the voiceless do nothing too and I’ve had to ask myself why? It then dawned on me. It’s typical of us to permit pretty much anything which appears to separate the men from the boys to continue unabated. If the big men can’t enjoy the “untouchable” status which we mere minnows can only dream of, then how will people identify that they are big men? What’s the point of sitting quietly in traffic in your bullet proof four by four? The joy of being a big man is that everyone must know. The Gangan effect must be there. Hence, the senseless blaring of sirens to announce your presence to those who otherwise would never have known you were there. Now, maybe you’re starting to see our conundrum. If the big man is merely living out what the

rest of us (some secretly, others very openly) desire, because his wealth or position now affords him to, then it means we are our own biggest problem. The man on the street is no different to the big man in mindset. So where will the change come from? This pushed me to attempt to trace the source of this problem/mindset and to be honest I don’t think I got too far until one day Pastor Wole said something which lit up a huge light bulb in my head. He said, the simple and unavoidable truth is, many Nigerians have been psychologically abused almost from the cradle and sadly, they’re hardly even conscious of this fact. I couldn’t agree more. As a result, they have grown up believing their anomalous behaviour is normal. To compound matters, we have also come as a people to erroneously associate vulnerability and sensitivity to weakness. We Nigerians are so incredibly proud of how tough we are. Able to take crap that we really shouldn’t take, if only psychological abuse over the years hadn’t hardened our own sensitivity. The unfortunate spill-over is the lack of sensitivity to the feelings of others, often times. Carelessly we run roughshod over people’s sensibilities. The boy whose mother repeatedly yanks him up with one arm, much like when a crane hoists up a container and it sways quite helplessly from side to side mid air; not minding the predictable discomfort this will cause the child, will believe that is normal. Even the subsequent pain or discomfort he’s subjected each time becomes his normal. So sad but that’s the way it is. Not until he sees one aje butter baby being carefully lifted up by his ever so doting mother does he realise there’s

‘

But before I condemn them too much, have you been so privileged to enter their living quarters? If you do, it will certainly assist you to understand where the oppressor mindset comes from

a difference between baby and pikin. We find ourselves daily, in many cases, subjected to unpleasant sights of acutely deformed people on our streets. Some have been in that sorry state since birth, others as a result of disease or accidents. Don’t get me wrong, these people deserve help and love much like the next person. Maybe more. And to look at this from one angle, it may well help the rest of us to keep in perspective our own challenges vis-à-vis that of others. Perhaps even going as far as serving the purpose of enhancing our sense of humanity. To look at it another way though is to recognise the fact that they too deserve to be accorded dignity as human beings. The more so why governments have a responsibility to provide them with necessary help instead of abandoning them to their fate. By virtue of the binding social contract between the governed and those we voted to govern our affairs as a society, government owes a duty to do it’s best to make life meaningful and worth living for all. The critical point I want to draw from this is that while we are still lagging far behind in the index of those who value the lives of their citizens, oyibo has gone beyond that, to not only recognize the incalculable value of human life, but to also concern themselves with the quality of lives their citizens are entitled to, first as nationals, and second as unique members of the human race. Changing the nation...one mind at a time Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

The national peace committee and its agenda Emeka Okolo

n a time of national crisis, no reasonable person should stand aloof and wish that the crisis resolves itself. Anonymous The aforementioned committee came into prominence during the build up to the 2015 general elections when ominous signs hung on the nation like the sword of Damocles on what the outcome of the elections, especially the Presidential, portent for the nation. Made up of very prominent Nigerians including top clerics from my own faith, the committee was able to reduce tension just before the elections by committing the contending forces then to sign peace accord that parties should shun violence and self help if the elections did not go their way. It advocated constitutional and peaceful means of ventilating any grievances arising from the conduct of the elections. It followed through to its self assigned mandate by getting the then incumbent President to put a call across to its main rival, the current President, congratulating him on his success at the polls even when the result had not been officially declared by the electoral umpire – Independent National

Electoral Commission (INEC). With that singular move, tension was diffused and the nation heaved a huge sigh of relief. Consequently, the Committee had since etched itself on national marble and the psyche of Nigerians as the moral compass of the nation. Just before the 2019 general elections, the committee repeated what it did in 2015 elections; the contending political gladiators were again made to sign the peace accord. The elections have largely been concluded, save for few states were the gubernatorial and state houses of assembly elections have been declared inconclusive and repeat of the exercise slated for 23rd March, 2019 and Rivers State where the gubernatorial and state assembly elections have been suspended due to violence that marred the polls and extended to the collation centre in Port Harcourt – no thanks to hooligans in army uniform. Immediately the presidential election result was announced and to stem any untoward reaction from the main contender – Alhaji Atiku Abubakar – and his supporters, the National Peace Committee swung into action and met with him and thereafter with the incumbent President – Gen. Muhammadu Buhari (rtd.) - and now President elect. The former and his supporters laid their grievances before the committee about the conduct of the elections and made it clear that they would contest the outcome constitutionally. Their grievances, it was reported, were tabled before the President by the Committee. Nobody is privy to what these grievances are and the response of the president elect. The committee after meeting with the two main presidential contenders (post election) just

like it did after the 2015 elections appears to feel satisfied with its performance or so it seems. In essence, the committee feels that its job is concluded. That has opened a vista of interrogation by not a few Nigerians including this writer as to the real agenda of the committee. Few posers need urgent clarification from the committee: • Is the scope of its assignment just limited to getting contending parties sign a peace accord to eschew violence before, during and after elections and just accept the outcomes once the results are announced? • Does it have any mechanism in place to monitor the conduct of the elections with a view to ensuring that the elections are free, fair, transparent and credible and thus nip in the bud any potential violence if the elections are deficient in any or all of the principles? • In the event that it discovers that the preceding falls short of standard, how does it ensure that the identified anomalies are corrected on time to the satisfaction of all and avoid any untoward reaction from dissatisfied parties? To be candid, I have never envied the assignment that the peace committee has undertaken for itself. It is a thankless job that if not properly handled will attract a lot of backlash. But considering the calibre of men driving it, one cannot but expect a good, indeed excellent, performance from it. In a season where many if not all of the so called civil rights organizations and activists have suddenly gone both dumb and numb for whatever reason, the committee still stands out as a beacon of hope. That is why not a few Nigerians were stiffly worried about the silence of the committee to the

brazen display of brute force by security agents and even armed thugs obviously at the behest of the ruling party at the centre in most states of the federation during the just concluded elections. Serving ministers, top ranking members of the ruling party and members of parliament elected or who have defected to the ruling party were known to be moving about with security men during elections either intimating or unleashing mayhem on the hapless voters. The situation particularly in Rivers State where as at the time of writing this article, nothing regarding the result of the March 9 elections is known except that the election has been ‘suspended’, calls for serious concern and the apparent silence of the committee is giving many Nigerians goose pimples. Though the committee is not one given to playing to the gallery regarding expressing its concerns to the right quarters, nothing so far has suggested that it has done so. The foregoing strikes at the heart of the agenda which the committee has set for itself! Is it just to get parties before elections to sign peace accord that no violence would occur? What of ensuring that the things that would precipitate violence are checkmated? It needs to clarify its agenda along the lines already enunciated because to all intents and purposes, it appears to be the only body most Nigerians trust to stand on the path of truth and speak the truth to all and sundry, no matter whose ox is gored. It needs to act fast to rekindle the confidence of Nigerians who are beginning to doubt its ability to rise up to situations as occasions demand. Dr. Okolo is a Chartered Stockbroker and Management Consultant based in Lagos.

A Par

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Wednesday 20 March 2019

The Lagos-Badagry expressway

he Lagos-Badagry expressway, a route which connects Nigeria to other West African countries through the Seme Border, and a major gateway into the country has been in decrepit condition and remained a death trap to motorists and passengers who ply the road. It is not only a gateway to the country, it also leads to the Lagos International Trade Fair, Alaba International Market, the Lagos State University, the ancient city of Badagry, and countless residential communities. The incidences of trailers stumbling and petrol-laden tankers going up in flames have been routine activities. Robbery attacks thrive around FESTAC First-Gate and up to Agbara and Badagry, while commercial activities shrink. A journey of less than 30 minutes could take two hours and under limited choices, people grudgingly move on, wishing the government would respond accordingly. The Lagos state government began the construction of the road 10 years ago. On leaving office, former governor Baba-

tunde Fashola who began construction and expansion of the road to 10 lanes assured residents and road users that his successor, whom, he said, understood the project thoroughly, would complete the road. However, since coming to power, Governor Ambode has abandoned the road. The only section of the road repaired thus far has been the section between Eric Moore and Okokomaiko. Also, the Federal Executive Council last year approved a contract for the rehabilitation of the 46km section from Agbara to Badagry and to Seme Border. Months after, the signs of commitment have not translated to the passable roads that commuters dream of. The road is replete with different abandoned works even when both the state and federal governments have mapped out the aspects they would undertake. More like a useful material for campaign manifesto, the All Progressives Congress (APC) governorship candidate in Lagos, Babajide Sanwo-Olu, has pledged to deliver the road, citing its role in connecting the country to other ECOWAS states as critical.

“Specifically, the ongoing 60-kilometre Lagos-Badagry Expressway project being executed by the state government must be completed as early as possible. The project has two major intermodal transport schemes – the Lagos-Badagry Expressway and the Light Rail Mass Transit with their accompanying infrastructure – 10 lanes superhighway taking off from Eric Moore interchange and traversing westward through Orile Iganmu, Alaba Oro, Mile 2, Festac, Agboju, Iyana-Iba, Okokomaiko, Iyana-Era, Ijanikin, Agbara, Ibereko and terminating at Badagry,” Femi Hamzat, Sanwo-Olu’s running mate, said on radio. It remains to be seen whether the governor-elect and his team will fulfil their promise on coming to power. Although the federal government embarked on rehabilitation of some failed sections of the road, especially from Agbara to Seme border, it was just mere remedial work due to the elections. Now that the elections are over, we hope the government will follow through on its commitment of reconstruction of the road. It is unfortunate the govern-

ment allowed a major gateway into the country deteriorate to such a level. The state of the road continues to confirm our thesis that we are not a thinking society; and are only reactive rather than pro-active. While other societies have thought about their transport needs of the future and have designed effective transportation systems to accommodate the needs of their growing societies, we are stuck in the past and unable to maintain even the infrastructure of the past, built to support only a small fraction of our current population. Even our poor neighbours are doing far better than us. On crossing the Seme border, one is confronted with a society that works. The Benin republic end of the road is everything that the Nigerian end of the road is not : well-paved, excellent asphalted surfaces with absolutely no pot-hole on any section of the road. What is more, the Benin republic road has a dedicated lane for bikes, barricaded with iron, stretching kilometres into the town. If, indeed, we still feel shame, we should be thoroughly ashamed of ourselves and what we have turned our country into.

Bashir Ibrahim Hassan

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any have wondered why Zenith Bank plc has continued to lead other banks on the growth parth, which has often led to global and regional recognition. One of the secrets is seen in the bank’s continuous efforts towards placing a high premium on developing a robust risk management framework which has helped in promoting the soundness of the bank, protecting its assets and ensuring its growth. “We are committed to entrenching a robust enterprise risk management, global best practices in corporate governance and sustainability in the coming years”, said, Peter Amangbo, group managing director / CEO of Zenith Bank. Since its inception, Zenith brand has been synonymous with innovation and the deployment of cuttingedge technology to cater to the expectations of its customers. “Our array of products, services and alternative channels that ensure convenience, speed and security of transactions, and our

The secret of Zenith Bank’s sustained leadership in sector Stories by Hope Moses-Ashike readiness to deploy stateof-the-art technology has assured that we maintain our leadership in the digital space”, Amangbo said. In his review of the 2018 financial year result, the group managing director said, “ We shall continue to intensify efforts towards making further in-roads into the retail segment of the market with new and innovative products that supports small and medium sized enterprises. “As a customer-centric organization, our people are the most valuable assets that is vital to our long term sustainable success, competitive advantage, and brand differentiation strategy. The skills, experience and commitment of our employees are critical for stakeholder’s engagement and delivery of ex-

Peter Amangbo, group managing director / CEO of Zenith Bank

ceptional services to our is to continually create an customers. Consequently environment for our peoour focus in the years ahead ple to thrive, while creating

value for all stakeholders”. In its 2018 financial results, the bank grew its total deposits by 2.9 percent to N2.82 trillion for the year ended December 2018 compared to N2.74 trillion recorded over the previous year. Profit Before Tax (PBT) of the bank rose by 13.6 percent from N169 billion in 2017 to N192 billion in 2018, while Profit After Tax (PAT) also rose by 7.8 percent from N153 billion in 2017 to N165 billion in 2018. During the same period, total assets of the bank grew by 2.7 percent from N4.83 trillion to N4.96 trillion, while shareholders’ funds declined by 3.3 percent from N698 billion to N675 billion. The gross earning of the bank declined by 20.2 percent from N674 billion in 2017 to N538 billion in the financial year ended December 2018.

“In the year under review, we harnessed the enormous potential of our human capital, digital solutions, excellent service culture, and cost control strategies to grow our business and enhance efficiency, which culminated in a stellar performance”. “our drive towards entrenching sustainable principles in our business operations gained further momentum in the year under review. Our corporate social responsibility initiatives and investments are hinged on the firm belief that our performance is not all about profit. We believe that our social investments, contributions to inclusive economic growth and development, as well as improvements in the condition of the physical environment all constitute our balanced scorecard in line with the sustainable development goals.

Heritage Bank tasks start-ups on contribution for economic growth

eritage Bank Plc has charged applicants of HB Lab start-ups to support Nigeria’s aspiration and roadmap to become a leading Information Communication Technology (ICT) Hub in Africa. Jude Monye, executive director of the bank, disclosed this at the launch of the maiden edition of the new innovation-driven concept, HB LAB in Lagos. Monye commended the 10 teams of contestants who made it to the LAB, whilst charging them to replicate

the Rwanda’s ICT digital tech system feats. He, however, canvassed for indigenous production of advanced technological sys-

tems, as against leaving the core job in the hands of foreigners. Addressing the applicants, Monye said that as

usual, the financial powerhouse is known for supporting and sponsoring investment ideas that have the potency of challenging the status quo with the motive of impacting positively on the critical sectors of the nation’s economy. According to him, the management of Heritage Bank is always seeking viable business ideas that could compliment the fiscal policies of the government with the ultimate aim of growing and developing the aggregate economy.

“At Heritage Bank, we help aspiring entrepreneurs to create, preserve and transfer wealth. What we are gathered here for today, is another moment of innovation-driven concept that is expected to provide startup enterprises with enabling environment, resources and support required to innovate and accelerate impactful solutions for the economic development drives,” he said. For this maiden edition, Monye explained that Heritage Bank has ceded the professional handling of the

12-week competition to a consultancy firm. According to him, this was done to allow for professionalism, fair-play and objectivity. He further stated that his management was not really particular about any sector of the economy, as the winner could emerge from any industry as long as his proposal is strong enough to impact positively on the various sectors. His words: “We are not zeroing in on any particular idea or industry; we are more interested in the result achievable in different sectors.”

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Wednesday 20 March 2019

Need to maintain tight monetary policy by CBN Hope Moses-Ashike

he Central Bank of Nigeria (CBN) needs to maintain its tight monetary policy stance to ensure price stability according to FSDH Research, an arm of the FSDH Merchant Bank Limited. The CBN may also consider the removal of the multiple exchange rate system. “We expect that the Monetary Policy Committee (MPC) of the CBN to maintain the current tight monetary policy stance when it meets on 25-26 March 2019”, said Ayodele Akinwunmi, head of research FSDH Merchant Bank. Fragile Balance of Payment Position: Policy Options The net inflow of money into the Nigerian economy from other countries in Q4 2018 remained fragile and was dominated by oil and gas transactions. Clearly, the Nigerian economy is vulnerable to movements in the oil and gas market. FSDH Research makes this conclusion based on the latest report of the Central Bank of Nigeria (CBN) on the estimate of Balance of Payment (BOP) position of Nigeria as at Q4 2018. The weak BOP position buttresses the urgent need to create multiple sources of revenue and foreign exchange earnings for Nigeria. Most countries around the world do business and financial transactions with other countries that require exchanges of money. These transactions are usually carried out by individuals or busi-

nesses, or by governments on behalf of their countries. The record of these transactions with other countries is known as BOP and is made up of three major components: Current Account, Financial Account and the Capital Account. The Current Account is usually the largest component of the BOP and it measures a country’s trade balance plus the effects of net income and direct payments. The Financial Account measures the changes in domestic ownership of foreign assets and foreign ownership of domestic assets. The Capital Account is usually the smallest component of the BOP and it measures the financial transactions that do not affect a country’s income, production, or savings. In some cases, Capital Account may be added to the Financial Account transitions. Just like the financial accounts of individuals and businesses, a country’s BOP could be in a surplus or in deficit. Surplus means the country receives more money from other countries than it pays out. In Q4 2018, Nigeria recorded a surplus of US$2.8million lower than the surplus of US$6.18billion it recorded in the corresponding period of 2017 but higher than the deficit of US$4.52billion recorded in Q3 2018. Between Q3 2018 and Q4 2018, Nigeria was able to reduce its imports and increased its export of goods. The effect of these actions led to a significant reversal of Nigeria’s Current Account balance with its positive impact on the BOP. As in previous years, the main drivers of exports were crude oil and gas, representing 93.79% of total exports. The Financial Account balance was in deficit during the period as more investments moved from Nigeria to other countries than they moved to Nigeria. Investments from other countries to Nigeria were dominated by portfolio investments attracted by good return in the financial sector, particularly in fixed income securities. FSDH Research stresses the need to improve the business environment in Nigeria to attract direct investment. This will create jobs, and ensure foreign currency stability and prosperity of the Nigerian economy. In the March 2019 edition of our Monthly Economic and Financial Market report entitled ‘Economic Realities: Policy Options’, we discussed strategies to improve the Nigerian business

environment. Some of the policies we suggested include: reduction in administrative delays in obtaining licences and approvals, investment in infrastructure through partnership with the private sector, and removal of multiple exchange rate systems. The CBN report shows that the position of external reserves as at Q4 2018 at US$42.59 billion was enough to cover 13 months of imports. This is higher than the 3 months global benchmark and 6 months West African Monetary Zone (WAMZ) benchmark. This also provides temporary stability for the value of the Naira. However, the long-term stability of the value of the currency will depend on the ability of the country to generate foreign exchange from multiple sources and to build domestic capacity to save, invest and consume goods and services that are produced locally.

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COMPANIES & MARKETS

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Zenith Bank raises shareholders appetite with 3.7 percent

Pg. 17

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

BANKING

These two banks have shed N101bn in six days OLUWASEGUN OLAKOYENIKAN

hares of Nigeria’s biggest bank by assets, Zenith Bank Plc, and tier-two lender, Fidelity Bank, have experienced downward spree lately on the floor of the Nigerian Stock Exchange (NSE), an occurrence that has cost the two banks over N101 billion in values within the last six trading sessions. The tier-one bank witnessed its longest bear run in six months on Monday after it depreciated by 0.45 percent to close at N21.90. The drop in share price, which is an extension of the previous week’s losses, has caused the stock to lose a total of 12.22 percent since March 8. The top-tier lender proposed to pay a final dividend payment of N2.50 for every unit of share held as at the close of business on March 8 after sharehold-

ers’ approval at the company’s Annual General Meeting on March 18. Similarly, the mid-tier fell 1.40 percent to N2.11 to book its sixth consecutive day of decline, the stock’s most elongated streak of losses since February 2018. As a result, more than N95.76 billion has so far been wiped off Zenith Bank’s market value as at the close of business on Monday, while Fidelity Bank has lost as much as N5.79 billion to the rout. Paul Uzum, a stockbroker at the Lagos bourse explained that the tier-one bank’s share price was declining after it was marked down for the dividend. “It is not just that the stock declined significantly, but they marked it down for dividend.” Despite Zenith Bank growing profit by 15 percent to N551.65 billion in 2018, investors who have

accumulated large units of the bank’s stock were selling off ahead of the dividend payment date, said Lucky Djebah, an equity research analyst at Lagos-based financial advisory firm, Qualinvest Capital Ltd. Zenith Bank emerged the toast of investors last week as it was the most active stock by value and second-most traded by volume after FBN Holdings, transacting over 163 million units worth N3.7 billion. While Fidelity Bank was yet to release its 2018 audited financial results, Uzum noted that some investors may have been trading ahead of the news. Results for the nine months to end-September 2018 reveal that the midtier lender grew profit by 23.6 percent to N17.86 billion from N14.45 billion recorded in the corresponding period in 2017.

BANKING

Ecobank clears the air on alleged forfeiture order against O&O Networks OLUFIKAYO OWOEYE

&O Networks Limited, a special purpose vehicle previously owned by the defunct Oceanic Bank International Limited which formed part of Ecobank Transnational Incorporated’s (ETI) acquisition of Oceanic, has debunked media reports over the forfeiture order of the Federal High Court of Nigeria against Ecobank Nigeria Limited. Ecobank in a release noted that neither ETI nor Ecobank Nigeria Limited had made or was required by law to make any payment to the Federal High Court of Nigeria in relation to the long-standing litigation against Airtel. The statement ex-

plained that since the matter was filed in 2006, it had not proceeded to trial on the substantive merits of the claim to date through a trial date on the substantive merits was recently fixed for May 28, 2019. The bank recalled that, O & O Networks sold its shares in Airtel Networks Limited for N22.5 billion (US$62.5 million) in August 2018 with the permission of the Federal High Court on 7 June 2018 and subsequently in September 2018, while the plaintiff filed an interlocutory application requesting the Federal High Court to grant an order directing O&O Networks to place the N22.5 billion (approximately US$62 million) which is the en-

tire proceeds of the sale in the Airtel shares and an amount which is significantly in excess of the plaintiff’s total monetary claim into an escrow account in the name of the Chief Registrar of the court, pending the final determination of the substantive claim, a prayer the Federal High Court granted the plaintiff ’s interlocutory application on 7 March 2019. However, the bank said O&O Networks has filed a notice of appeal and an application for stay of execution to this ruling. O&O Network’s appeal to the interlocutory order is currently pending, and it intends to prosecute the appeal vigorously “There is no forfeiture order of the Federal

High Court of Nigeria in these proceedings that is directed against ETI or Ecobank Nigeria Limited, and neither ETI nor Ecobank Nigeria Limited has made or is required by law to make any pay-

ment to the Federal High Court of Nigeria in relation to this long-standing litigation” the statement noted. Ecobank Transnational Inc. (ETI) is a panAfrican banking con-

glomerate with banking operations in 36 African countries. It is the leading independent regional banking group in West Africa and Central Africa, serving wholesale and retail customers

L-R: Kola Ogunwunmi, marketing manager, Redington-Apple Business; Sujeendra Prasad, sales head, Nigeria, Redington-Apple Business; Fayaz Ahammed, sales head, retail Nigeria, Redington-Apple Business, and Ebenezer Okeowo, sales manager, SLOT Systems Limited, at the first raffle draw event SLOT-iPhoneA-Car campaign in Lagos. Picture by Olawale Amoo

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: David Ogar

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Wednesday 20 March 2019

COMPANIES & MARKETS MANUFACTURING

Toyota aims to broaden US presence with new $749mn investment in plants ISRAEL ODUBOLA

apanese automaker, Toyota Motor Corporation, says it will invest an extra $749 million investment in its five plants in the United States to expand its manufacturing footprint in the world’s biggest economy. The corporate, which is world’s market leader in sales of hybrid electric vehicles, announced that it will grow investment in the automotive space in the United States to about $13

TECHNOLOGY

Mass Exodus at Facebook worries Wall Street as Needham lowers stock rating SEGUN ADAMS

he recent exodus of top talents from Facebook seems to raise concern for investors as shares of the technology firm was down some 3.33 per cent, at about 01:07 pm Eastern Daylight Time on the Nasdaq stock market, Monday, following the downgrade of the company’s stock to hold by a Wall Street brokerage. The departure of about a dozen senior executives amid a shift in the company’s privacy policy, increasing regulatory risk and criticism over disturbing contents shared on the platform is biting Facebook, as shares fell to $160.45, 29 per cent above its 52-low of $124.06 established last Christmas Eve. “We are concerned that regulatory, headline and strategic pivot risks will negatively impact Facebook’s valuation more than investors currently believe due to the negative flywheel created by Network Effects,” Laura Martin, Needham analyst, commented. Needham which downgraded Facebook from Buy to Hold warned that rival firms might jump on the opportunity to lure the former employees considering Silicon Valley’s airtight race for the best talents while Martin also expressed concern that the recent trend might snowball causing more harm to the technology giant. “A Negative Network Effect suggests that departures will continue, and since we believe that people are a key competitive advantage of FAANG companies, this implies accelerating value destruction until senior executive turnover ends,” she said. Last week, Chris Cox, Facebook’s chief product officer, announced his departure from Facebook after a fallout with company’s CEO Mark Zuckerberg over what is believed to be a change in the vision of the company, as Facebook announced a new privacy policy. In similar fashion, Vice President of the company’s Whatsapp messaging platform, Chris Daniel is also said to be leaving the company owing to moves of the social media giant to integrate its various messaging apps.

billion by 2021. However, the fresh $749 million investment is expected to elevate the company’s manufacturing strength and create employment opportunities at its plant in the United States. The funds will be shared among its five plants in West Virginia, Alabama, Missouri, Kentucky, and Tennessee, with 70 percent going to Alabama and Kentucky hubs. The Georgetown, Kentucky-based hub will receive 32 percent of the sum, equiv-

alent to $238 million to enhance production line. This hub will produce Toyota’s best-selling sport utility vehicles (SUVs), Toyota RAV4 hybrid and Lexus ES 300. Toyota plans to invest $288 million, which indicates 38 percent of the funds in its AL-based plant in Alabama basically to elevate engine production by 2021. To achieve the objective of doubling hybrid transaxle capacity and expand castings at the Jackson hub in Tennessee, the automotive giant will

invest $50 million. The company’s facility at Missouri will be funded by $62 million for additional casting while the West Virginia investment share of $111 million will be used to expand its capacity of hybrid transaxles to 240, 000 units per share. The Japanese automaker projects a net revenue figure of JPY 29.5 trillion and net income of JPY 1.87 trillion in the current financial year. Also, Toyota expects its new product offerings to

elevate growth amid fears on weakening demand in North America and rising input cost. The automotive giant has been keen to widen presence in the United States. In 2017, the automaker vowed to invest $10 billion over a period of five years. Few months back, Toyota partnered with fellow automaker, Mazda Motor Corporation to for a joint venture worth $1.6 billion in a bid to build additional plants in the United States.

Toyota gained 0.53 percent or JPY 35 after Monday’s trading on the Tokyo Exchange, outperforming the automotive industry, which advanced 0.16 percent. The automaker has returned 3.8 percent since the start of 2019. Toyota Motor Corporation produces vehicles under five brands including Toyota brand, Hino, Lexus, Ranz and Daihatsu. The company is part of the Toyota Group, one of the largest conglomerates in Japan.

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COMPANIES & MARKETS

BANKING

Zenith Bank raises shareholders appetite with 3.7 percent dividend HOPE MOSES-ASHIKE

hareholders of Zenith Bank Plc on Monday approved the payment of dividend which increased by 3.7 percent to N2.80k in the financial year ended December 31, 2018 from N2.70k in the corresponding year of 2017. A breakdown of the dividend pay-out show that the bank paid an interim dividend of 30kobo per share in the course of the 2018 financial, and dividend warrants

EVENTS

Huawei to host entrepreneurs on how to improve business SEYI JOHN SALAU

n a bid to improve business growth in Nigeria, Huawei will host a business-connect for entrepreneurs on Tuesday, March 19, 2019 in Lagos. According to a statement signed by the Managing Director, Huawei Nigeria Enterprise Group, Mr. Tank Li, the Huawei Nigeria Eco-Connect 2019 will enable business owners to learn how to grow their businesses using the Information and Communications Technology. The statement read, “Accelerating digitalisation is deepening the convergence of physical and digital worlds. New ICT represents not only new technologies and platforms, but also a new ecosystem, making it a cornerstone of industrial digitalisation. “Huawei is a leading global ICT infrastructure provider. In line with our open, cooperative, and win-win principles, Huawei has teamed up with its partners and developers to explore the road to digital transformation and create business success for customers by maximising Huawei’s robust ICT capabilities.” Li said that the summit would also enable business owners to express their concerns. “We will be showing you how Huawei solutions will improve your business results. Together with our partners, Huawei will demonstrate IP, IT, Cloud Communication Solutions and more. “We welcome the opportunity to exchange ideas and work together to further develop a new, healthy and sustainable ICT ecosystem,” he said. The Huawei managing director said, “We would be delighted to have you present at the summit to listen to your concerns and challenges as well as to share with you our visions and trends. “We appreciate your continued support for Huawei’s enterprise products and solutions and look forward to hosting you at our flagship event.” He added, “Leading Industry experts will present a variety of key note addresses on the trends of new ICT and business innovations driven by digital transformation.”

of N2.50k for every share of 50kobo year. “Zenith Bank remains committed to delivering superior returns to our much-valued shareholders by ensuring that a good chunk of our profit is set aside for you”, said Jim Ovia, Chairman of the Bank, at the company’s Annual General Meeting. Rising in excitement, Timothy Adesiyan, president of Nigerian Shareholders Solidarity Association (NSSA), said, “Thank you for the dividend of

N2.5k. we appreciate the bank for good corporate governance which is helping in inflow of capital to the bank”. Also speaking at the AGM, Funke Augustine, one of the shareholders said, “you have been giving us dividend but this one is fantastic. We need to more than this”. Ovia said 2018 was a very challenging year for operators in the Nigerian banking industry due to a number of global and domestic factors. “True to our track record,

however, we were able to fully exploit the opportunities within the environment to record a performance that attests to our durability and resilience as a brand”, he said. The bank grew its total deposits by 2.9 percent to N2.82 trillion for the year ended December 2018 compared to N2.74 trillion recorded over the previous year. Profit before Tax (PBT) of the bank rose by 13.6 percent from N169 billion in 2017 to N192 billion in 2018, while Profit after

Tax (PAT) also rose by 7.8 percent from N153 billion in 2017 to N165 billion in 2018. During the same period, total assets of the bank grew by 2.7 percent from N4.83 trillion to N4.96 trillion, while shareholders’ funds declined by 3.3 percent from N698 billion to N675 billion. The gross earning of the bank declined by 20.2 percent from N674 billion in 2017 to N538 billion in the financial year ended December 2018. Peter Amangbo, Group

Managing Director / CEO of the bank said the bank shall continue to intensify efforts towards making further inroads into the retail segment of the market with new and innovative products that supports small and medium sized enterprises. “As a customer-centric organization, our people are the most valuable assets that is vital to our long term sustainable success, competitive advantage, and brand differentiation strategy

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Farmers yearn for mechanisation, irrigation, cheap credit in Buhari’s second term …ask FG to focus on livestock and fishing subsector Stories by Josephine Okojie

ith the re-election of President Muhammadu Buhari for another four years, farmers are yearning for mechanisation, irrigation and single digit interest loans in driving growth in the sector and attaining food security. “We are expecting much benefit from the next level agenda of the Federal Government. We want irrigation and mechanisation facilities to boost production,” Ibrahim Kabiru, national president, All Farmers Association of Nigeria (AFAN) said. “We cannot grow our agriculture using hoes and cutlasses anymore. Mechanisation and irrigation are vital if we will attain food sufficiency. “We also need cheap credit. Though the government is trying with the ABP, we want it extended to all crops and livestock as well,” Kabiru said. Nigeria’s agricultural sector is important in changing the fortunes of the country’s economy with attendant exponential gains by way of earnings, employment, food provision and other spin-offs. In the last four years, the Buhari administration says it has devoted a lot of energy at deepening agriculture.

Such initiative as the Anchor Borrowers’ Programme (ABP) has been designed to do just that, without addressing fundamental issues of mechanisation, irrigation and credit among others. As a result, yields have continued to remain low and progress made initially is now on a downward trajectory. This is evident in the country’s Gross Domestic Product (GDP) report. Data from the National Bureau of Statistics (NBS) GDP report shows

that growth in the sector has been on the decline since first quarter 2017, with marginal growth recorded only in the fourth quarter of the same year. The GDP report shows that growth in the sector contracted from 3.06 percent in q3 2017 to 1.91 percent in q3 2018 year on year. “We still do not have sufficient tractors that farmers need. We do not have enough irrigation facilities to get water directly from our dams so that farmers can farm all year round,” AfricanFarmer Mogaji,

chief executive officer, X-Ray Farms Consulting Limited said. “The Buhari led government needs to focus on this area to attain food sufficiency and create jobs,” Mogaji said. Farmers in the fishing and livestock sector have complained on neglect in the last four years by the Buhari’s administration and this has reduced their productivity and impacted their capacity to expand. “In the last four years the entire focus of the government was for

crop farmers. We expect Buhari to focus on the fishing and livestock subsector,” Oloye Rotimi Olibale, president, Catfish and Allied Fish Farmers Association (CAFFAN) said from his Ibadan farm. “We were not entirely included in the ABP programme. We want the government to totally include all fish farmers in the anchor borrowers programme so that we can have access to cheap credit,” Olibale said. He urg e d the g overnment to address the lingering ban of Nigeria’s smoked catfish by the US and European governments and the problem that warranted the ban is totally resolved. Also, Victor Iyama, president, Federation of Agricultural C o m m o d i t i e s A s s o c i at i o n o f Nigeria (FACAN) commended the Buhari government for the Anchor Borrowers Programme but demanded that the government provide key infrastructure to drive growth in the sector. “The government has done well in the sector but much more still needs to be done,” Iyama said. “ The government needs to provide motorable roads, irrigation facilities and agro credit for farmers to drive growth in the sector.” Buhari had stated that his administration will initiate new agricultural programs to drive growth in sector.

FMARD, FUNAAB collaborate to train youths, women in agriculture

Why farmers need to keep farm records

n a bid to engage more youths and women in agriculture, the Federal Ministry of Agriculture and Rural Development (FMARD) in collaboration with the Federal University of Agriculture, Abeokuta (FUNAAB) and the House Committee on Agricultural Production and Services, has trained thousands of them in various value chain opportunities. Speaking at the flag-off of the training programme organised recently, Kolawole Salako, a professor and vice-chancellor of FUNAAB,

arm records are very critical in running a successful farm business because they give a farmer precision for future analysis of production methods, cropping history and decision making. The more records a farmer keeps, the easier it is to manage, run the affairs of the farm and obtain loans from financial institutions, as well as obtain insurance cover. According to industry experts, record keeping provides valuable information concerning what works and what does not and possibly, the reasons why something did not turn out as planned. Similarly, due to climate change, best production methods and hybrids can fail, but farm records give the farmer knowledge on changing weather patterns. Abiodun Olorundenro, manager, Aqua Shoot Limited, said that farm records provide history that helps shape farmers future decisions on crop production. Olorundenro stated that good farm records must contain the location, size of farm, soil types, form of labour employed and the

represented by Lateef Sanni, also a professor and deputy vice-chancellor (Development), implored youths to engage more in agriculture and explore the opportunities in the sector. Salako said the essence of the training conducted by BOAYOL International Company Limited is for youths and women to create wealth through agriculture, while also positively impacting their livelihood. According him, youths and women can do this by being service providers to farmers such as spraying the farm with herbicides and

providing other essential labour needed on the farm. He stressed that the training is essential because of the need to remind farmers of the importance of effective farming, marketing and distribution, as well as consumer satisfaction and to strengthen the value chain, in order to make more profit on their produce. Omoleye Olabode, managing director, BOAYOL International Company Limited, represented by Ayodele Olaniyi, charged the farmers to make good use of the knowledge acquired during the training. Certificates and incentives were given to participants at the end of the training program to motivate them. Speaking on behalf of other participants and trainees, Samson Adegoke, head of farmers from Imala, Abeokuta North Local Government Area , appreciated the organisers of the training program for bringing together farmers, women and youths to share and learn farming knowledge. He stated that the training has widened their horizon in various fields of agriculture they were hitherto not familiar with.

cost, number and cost of input supplies and number and cost of each farm produce sold. Also, experts say that farmers should keep farm inventory, including records of all assets owned, tools and equipment inventory and crop and livestock expense records. Experts also said that farm records helps far mers treat agriculture as a business and that they remain a critical document needed to obtain loans from any financial institutions in the country. According to them, good farm records help a farmer make good managerial decisions for the smooth operation of his farm. Without a clear record of farming activities over a period of time, showing the true position of the farm, financial institutions will not be able to ascertain the viability of the business and the farmer would not be able to secure any loan. Keeping farm records allow farmers to quantify profit made from the total input into running the farm and output achieved at end of each production cycle.

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How seasonal farming, R&D constrain Nigeria’s fruit industry Josephine Okojie

i g e r i a’s inability to farm fruits all year round and carry out extensive research and development are major constraints to the nation’s estimated $10 billion fruit industry. Nigeria could save as much as N165 billion which is the yearly estimated spend on the importation of fresh fruits and juices, create jobs for its teeming youths and reduce pressure on the naira if the country starts farming fruits all year round. “We need to start farming fruits and every agricultural product all year round. Farmers need irrigation facilities and access to finance to achieve this as it is done in other nations of the world,” Sanusi Daud, former manager at Dangote Farms told BusinessDay in a telephone response to questions. “Nigeria’s fruit industry is worth about $10 billion

yet you do not find a lot of orchard farms in the country and this is because we lack adequate Research and Development (R&D) in the subsector which is very critical for the growth of the industry. “There are hybrid seeds fo r f r u i t s w i t h sh o r te r gestation periods now but you do not get them easily in Nigeria. Farmers still

farm with seeds of longer gestation periods,” said Daud. The Nigerian market for fruit juice is estimated to grow by more than 20 percent this year due to rising preference among consumers for natural fruit juices and high population growth rate. “The cocktail industry is growing very fast and we use

a lot of fruits in our industry. One of the most sought after cocktails is the mango cocktail but we can only have it for our customers when mangoes are in season,” said Jumoke Ojo, creative director, MandiesCocktails Limited. “We need to start farming fruits all year round like South Africa and other countries where you get any

fruit you want, irrespective of the season. Nigerians are now consuming more of natural fruit juices and this is more business for us to benefit from if we can source them locally,” Ojo said. Due to the huge demand for fresh fruits in the country, juice makers in Nigeria go to the extent of importing fruits to satisfy demand for their products. The Manufacturers A ss o c iat i o n o f Nig e r ia (MAN) estimates that Nigeria imports N165 billion worth of fruit juices every year. With the present situation, farmers of oranges and other fruits like pineapples and watermelon will have to compete for market share, already saturated with fruits from other neighbouring countries. In 2002, the Federal Government banned the importation of fruit juices into the country, which gave f a r m ers h o p e f o r a prosperous time in the farming and marketing of fruits in the country. “We import lots of fruits

from Benin Republic, Burkina Faso, Ghana and a few other West African countries when fruits are out of season in Nigeria,” said AfricaFarmer Mogaji, chief executive officer, X-ray Farms Consulting Limited. Ni g e r i a h a s v a r i o u s ranges of fruits such as oranges, guava, pineapples, avocado, pears, and pawpaw among others. Each year, millions of tonnes of these fruits are harvested in Nigeria but much of the harvest goes down the drain as wastages, due to poor market access and poor storage facilities, among others. Most of the fruits in the country are farmed in the middle belt region, with traders buying and conveying them across the country, especially to areas with of high demand. Nigeria is currently the ninth producer of citrus fruits and mangoes in the world with 3.4 million MT and 850,000MTrespectively, according to data from Fo o d a n d A g r i c u l t u ra l Organisation (FAO).

‘AgNet initiative will drive FDI in Nigeria’s agricultural sector’ Roland Oroh is the founder and director of the Nigeria Agribusiness Register. In this interview with JOSEPHINE OKOJIE, he spoke about the AgNet initiative and plans to drive foreign direct investments in the agricultural sector through the initiative. What informed your decision to launch the AgNet initiative? gNet stands for agribusiness networking, and this networking is an outreach program of the Nigeria Agribusiness Register. The register came into being to facilitate $3.4 billion in new agribusiness investments by 2023 from domestic and foreign sources, through provision of free and chargeable business development ser vices to capital providers and project promoters. The register is designed to be operated as a private public partnership initiative that will serve five functions. Firstly, to identify and track agribusiness investments that are above $1 million in investment value in some selected value chains. Secondly, to attract and operationalise foreign direct investment projects. Thirdly, provide data and information for measuring employment and inclusive growth in agribusiness demography. Fourthly, to provide business development services to listed businesses to strengthen and support

expansion of their operations in sales, distribution, hiring, and management. Lastly, to promote new agriculture technology ventures through incubation support services in partnership with relevant government agencies. What do you hope to achieve with AgNet? AgNet is just our contribution to help project promoters within the value chains we are covering to network with alternative c a p i t a l p rov i d e r s w h i c h include, social impact funds, venture capital funds, private equity funds, development finance, innovative banking products, diaspora funds, angel funds, blended finance and donor funded grants. AgNet was created to generate pre-qualified, pre-screened agribusiness projects seriously seeking funding and provide a deal room opportunity for prescreened project promoters to network and engage with fund managers, lenders and investors. AgNet will contribute to realising the $3.4 billion investment facilitation target of the Nigeria Agribusiness Register.

What specific areas of agriculture will the initiative focus on? AgNet will cover innovations and dynamic business models in agribusiness from primary production, aggregation, and processing including logistics, ware housing and cold storage investment projects. In addition, agricultural technology (agtech), climate smar t, gender inclusive, renewable energy (cleantech) projects are encouraged and will be weighted heavily. We are constantly researching the funding side to know what the different funding interests are and what sorts of projects specific fund providers are looking for and then match them with projects in those areas. We also prepare project promoters on basic pitching techniques and support in business plan development and offer other relevant kinds of support. How will the AgNet initiative benefit farmers, processors, and other actors in the sector? Ultimately, the beneficiaries will be farmers, aggregators and processors. Finance that

is patient and affordable is required to put all the factors of production together to drive growth in the sector. Banks generally are finding it difficult to fund agriculture, though they are trying their best, but more needs to be done so that the potentials of the sector can be realised. Nigeria has 84 million hectares of arable land, out of which only 40 percent is cultivated and only about 10 percent is optimally cultivated. Recognising farmland and agribusiness investments generally as an alternative asset class and allowing long term funding from pension fund assets will

Roland Oroh

greatly benefit farmers and others within the value chain. Farmers will have more options to sell their produce if there are more processing facilities and aggregation centers. Processors need to develop market channels and distribution networks and promote their brands in domestic and regional markets, considering the possibilities of trading within the ECOWAS regional market and further within the new African Continental Free Trade Agreement with over 1.3 billion African-wide consumers. So ultimately, identifying alternative funding for agribusiness will be beneficial to all. I am aware this is going to be a monthly event. Are there conditions for participation? Yes, every month we will take a value chain and scout for promising projects and profile them and produce a Deal Book for the month’s edition of AgNet. The conditions for participation are that you are a project promoter and are seeking for start-up or expansion capital, and you are able to complete our project

profile sheet which will be reviewed, pre-qualified and if shortlisted, you will be invited to participate. This month’s edition is focused on the five industries within the agroinputs sector namely, seeds, fertilizer, livestock feeds, agrochemicals, and mechanization. Next month we shall be looking at the rice value chain and paddy aggregation centre business in particular. How do you intend to mobilise all the relevant stakeholders to take advantage of this programme? We are constantly seeking for partnership from different organisations to enable us mobilise SME project promoters and extend our reach. One key partner for us is the relevant commodity associations whom we partner with to get the list of their registered members. We also use the Agribusiness Register’s listed companies to reach potential participants. We also have partnership with donor funded projects and international development organisations, tapping into their network of companies and individuals to reach out.

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Wednesday 20 March 2019

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Compulsory insurance enforcement: Who will bell the cat? Stories by Modestus Anaesoronye

ho will bell the cat? That is the question everyone is asking about the enforcement of the different compulsory insurances. If the insurance regulator, the National Insurance Commission (NAICOM) is handicapped because the current Insurance law, which has been described many times as outdated, did not empower it to sanction without recourse to the Attorney-General of the Federation, then government needs to urgently do something. A consolidated Insurance Law which ought to address a lot of the challenges facing the insurance industry, as well as capacity of the regulator to enforce certain things is yet to see the light of the day. This indicates that government needs to do something. In Nigeria today, five types of insurance are made compulsory under different laws which government identifies as necessarily good to enable people have peace of mind in pursuing their daily economic activities. The five compulsory insurances under the law are: Group Life Insurance, in line with the Pension Reform Act 2004 as amended in 2014; Buildings Under Construction-section 64 of the Insurance Act 2003;

Occupiers Liability Insurance –section 65 of the Insurance Act 2003; Motor Third Party Insurance –section 68 of the Insurance Act 2003 and Health Care Professional Indemnity Insurance - section 45 of the NHIS Act 1999. To unlock the nation’s billion naira premium potential from compulsory insurances, government at both the federal and state levels must take it upon themselves to enforce compliance. Besides that, they also must see the social welfare benefits accruable from enforcement of compulsory insurances, which take away the burden from government of paying compensation to victims of accidents. Analysts believe that

to drive compulsory insurances NAICOM must create alternative distribution channels so that participating stakeholders can find various means of engagement. Analysts who spoke on enforcement of compulsory insurance said the role of NAICOM is to increase awareness and educate the key stakeholders to make enforcement work. Peter Irene, interim managing director/CEO, International Energy Insurance Plc, had said. “We cannot do much as operators without the government coming in to enforce it. “NAICOM is making efforts to educate the public and buy the support of stakeholders, particularly the law enforcement agen-

cies so that all can join hands and make it work”. Ben Ujoatuonu, managing director/CEO, Universal Insurance Plc, had stated that to make compulsory insurance work, enforcement is the way to go, with the collaboration of major stakeholders. “There must be a well thought out collaboration arrangement whereby participating agencies will see benefits derivable from participation”. Ujoatuonu also noted that NAICOM must create alternative distribution channels that will enhance product distribution and accommodate as many agencies as possible under various platforms. Experts say the implementation of the project under the Market Develop-

ment and Restructuring Initiative (MDRI) of NAICOM is expected to create over 250,000 jobs, because it is designed to engage insurance agents and marketers that will take the insurance products to the grassroots, as part of the vision is to increase market penetration (lowering the insurance gap from 94 percent to 70 percent). The fact that some of these insurances are necessary for a healthy social and economic environment, underscores why government in its wisdom insists that they are made compulsory so that people concerned are compelled under given laws, to take the covers against expected damage or loss, for selves or third parties, the expert further observed.

STACO Insurance strengthens retail space with new products Modestus Anaesoronye

n a bid to fulfil the strategic objectives of the company, which is to retain and enhance its client base, adding real and genuine value to customers, STACO Insurance Plc has once again strengthened its retail business portfolio with three retail products. The products are STACO Personal Protection Plan (PPP) which protects its holders against accidental death, permanent or temporary disability and medical expenses arising from all forms of accidents.

The next is STACO Home Owners Insurance which seeks to protects its holders from loss or damage to their precious assets or properties at home arising from theft, fire, lightning and explosion, damage caused by bursting or overflowing of water tanks apparatus or pipes amongst others; and then STACO Travel Policy which is designed to provide compensation for accidental death, permanent disability or partial disability, loss of luggage up to a specified amount and medical expenses following accidents. The Travel Insurance policy covers all the travels embarked upon by

the subscriber through any means of transportation on both local and international travels. The customised insur-

ance policies have been designed to bring comfort to their holders and improve their well-being at a very affordable price. STACO Insur-

ance is known for its passion for high standards and its customer centered service delivery. The company is committed to putting smiles on the faces of its teaming clientele by developing and offering flexible, topnotch quality and customer friendly insurance products at all times. STACO Insurance Plc is one of the leading Insurance companies in Nigeria, a product of a well thought out acquisition carried out on Alpha Insurance Plc. The Company which commenced operations in 1994 specialises in General Insurance and Special Risks businesses.

Insurers need to deliver microinsurance through a wide range of distribution channels

o get microinsurance into the hands of the masses, insurers must use a wide range of distribution channels, according to micro insurance facility network. Through partnerships with mobile network operators, supermarkets, corner shops, and churches, insurers are getting closer to the everyday lives of their clients. Insurers are able to leverage the channel’s trusted brand, and its close proximity to and knowledge of clients. The Facility has supported projects that have tested a range of distribution channels in various countries, including financial institutions in Jordan and Bangladesh, banking correspondents in Brazil and Mexico, retailers in India and South Africa, and mobile operators in Kenya. Insurers must actively manage the partnerships. Challenges remain around how to train and incentivise the sales force and ensure that clients understand what they are buying. Distribution channels also need to take a more active role in claims processing Retailers, ranging from supermarkets, clothing stores, pawnshops, and corner shops, are proving to be successful distribution channels for microinsurance because of their close proximity to clients and their existing relationships with them. Partnerships have been successful where the insurance product contributes to the core business of the retailer and is simple enough for the customer to understand. It has been challenging, however, to make sales and servicing of microinsurance a priority in busy retail environments. Mobile network operators are rapidly covering entire populations. This widespread network provides a unique distribution opportunity to insurers to reach a large number of potential customers. Partnerships between insurers and mobile network operators are starting to pay dividends, especially in Africa. In eight out of the nine biggest African microinsurance markets (outside of South Africa) the majority of clients have been reached through mobile-based insurance. Insurers are also using a host of channels in addition to financial institutions, mobile phones, and retailers. These include trusted channels such as faith-based organisations and communitybased organisations.

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Where your future lies is dependent on how you plan today Modestus Anaesoronye

ot having a pension plan that is sustainable and guaranteed is like someone living in a house without a roof or where the roof is leaking. When rain comes the person is confused and worried because there is no place to run to, whereas those that have roofs over their heads are relaxed and could care less about the rains. Therefore, without a sustainable pension scheme, like what the Contributory Pension Scheme (CPS) offers, you are likely to face a future of hardship when you retire from active working life. Before the coming of CPS in 2004, Nigeria operated a defined benefit scheme that was non funded and unsustainable, with its attendant huge debt running into trillions. So, states and employees that have continued to align with the old pension arrangement after a reprieve has come, following the enactment of the Pension Reform law are still doing a disservice to their employees and citizens. Let alone at a time when states are finding it difficult to pay workers salaries on grounds of low revenue allocation and little or no internally generated revenue. This therefore means that the situation might even be worse for such employees in the long term, particularly with payment of pensions, if nothing was done to start off a sustainable and guaranteed pension system, like what has been adopted at the Federal level. For the population in the informal sector, the coming on board of the micro pension scheme, for which the launch is being expected, would brighten their future if they key in. The scheme being developed by the National Pension Commission (PenCom) as an offshoot of the Pension Reform Act 2014 that targets to extend the CPS to the informal sector that will be flexible and captures the peculiarities of the target population. Contributions are to be split into two with a smaller percentage

going for savings and accessible to the contributor while the greater percentage shall be strictly set aside for pensions. This scheme will have like the CPS, an individual portable retirement savings account that will be managed by Pension Fund Administrators (PFAs) while the funds will be kept in custody of the Pension Fund Custodians (PFCs). The need for provision of pensions and most especially to the self employed informal sector workers, experts say is as result of the clearly breakdown of the family support system which hitherto helped parents at old age. Besides that, there is the need to avert old age poverty, even as it has become a global trend and has been implemented successfully in many parts of the world. National Pension Commission described micro pension initiative as a scheme that exists for the provision of pension coverage to self-employed persons. The Commissionâ&#x20AC;&#x2122;s target is the self-employed in various trades and professions in Nigeria including artisans, accountants, lawyers, mechanics, tailors, market men/ women, hair dressers, architects, engineers among others. Section 2(3) of the Pension Reform Act, 2014 extended coverage of the Contributory Pension

RC634453

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

Scheme to self-employed persons with the objective to avail the contributor access to regular stream of retirement income at old age and improve living standards of the elderly. Besides, it will enable contributors benefit from the various incentives to be offered by the PFAs; deepen financial literacy and inclusion, secures financial autonomy & independence of retirees; passage of wealth to survivors in the event of death; increases national savings & long term funds; promotes growth & development of the capital, mortgage and insurance markets and overall positive effect on the national economy as pension asset increases. Like an â&#x20AC;&#x2DC;SOSâ&#x20AC;&#x2122;, states and local governments that were yet to see the need to align with the contributory pension scheme should do so quick to protect the future of their workers and citizens, as well as create an economic backbone for such states to be able to provide infrastructure for the betterment of their citizens, experts advice. The objective of the pension reform is to establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the public service of the Federa-

tion, the Public Service of the Federal Capital Territory, the Public Service of the State Government, the Public Service of the Local Government Councils and the private Sector; It is also to ensure that every person who worked in either the public Service of the Federation, Federal Capital Territory, States and Local government or the Private Sector receives his retirement benefits as and when due ; and to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age. The provisions of this Act shall apply to any employment in the public service of the Federation, the public Service of the Federal Capital Territory, the Public Service of the state, the public service of the local governments and the private sector. In the case of the Private Sector, the Scheme shall apply to employees who are in the employment of an organisation in which there are 3 or more employees. Notwithstanding the provision of subsection (2) of this section, employee of organisation with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with guidelines issued by the commission.

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

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Insurers face huge claims as businesses are confronted with emerging risks Modestus Anaesoronye

usinesses have to navigate an increasingly complex risk landscape. As well as combating the threat posed by a host of natural and man-made hazards, companies also have to deal with the demands of a less forgiving regulatory and legal environment and emerging risks posed by growing reliance on technology. All of these factors can combine to impair successful running of operations and insurers have a vital role to play in ensuring any disruption following a loss event is minimized. This report examines global developments in corporate insurance claims, highlighting the top causes of loss, and other trends. It also examines a number of industry-specific trends that will impact the claims landscape in future, according to the report by Allianz Global Corporate & Specialty. The report highlights the increasingly high values at risk in corporate insurance claims. AGCS has identified the top causes of loss and emerging trends from

more than 470,000 insurance industry claims in over 200 countries and territories with which it has been involved between 2013 and 20181. These claims have an approximate value of €58.1bn (US$66.5bn). The analysis shows that over 75 percent of financial losses arise from 10 causes of loss, with the largest single identified cause being fire/ explosion, which account for almost a quarter (24%) of the value of all claims. In the past five years, fire and explosion incidents have caused in excess of €14bn worth of insurance losses from over 9,500 claims and are responsible for more than half (11) of the 20 largest non- natural catastrophe loss events analyzed. Even the average claim from such an incident totals almost €1.5mn at €1.47mn. Aviation collision/ crash incidents (14%) rank as the second top cause of losses globally according to value of claims. Faulty workmanship/maintenance (8%) is third. Aviation The high values at risk in the aviation industry are highlighted by the fact it is the main driver of corporate insurance claims overall,

Sovereign Trust deepens stake in sports development Modestus Anaesoronye

he stage is set for the 7th edition of the Sovereign Trust Insurance Plc Open Golf Tournament in the ancient city of Ibadan, Oyo State. The three-day tournament is expected to bring together some of the country’s top golfers from different Golf Clubs in the country at both amateur and professional levels in the male and female categories to be competed for. The event is scheduled to hold from March 22 – 24, 2019, at the Ibadan Golf Club, Onireke Reservation Area, Ibadan, Oyo State. Olaotan Soyinka, managing director/CEO, stated that “the gesture is a further indication of the company’s affirmed commitment to the development of sports in the country. “We are resolute in our commitment to the ideals of promoting development in all areas of human endeavour, as much as we can ac-

commodate, which explains why our CSR philosophy is hinged on Health, Sports and the Community, and these to us, are all-encompassing”. Segun Bankole, the company’s spokesperson and head of Corporate Communications and Brand Management, said the underwriting firm will not relent in any way in giving back to the society through different sporting and recreational platforms of this nature in reinforcing its corporate social responsibility stance in line with its corporate philosophy. He further mentioned that adequate arrangements have been put in place to ensure a successful and entertaining tournament. Just recently, Sovereign Trust Insurance Plc was voted the CSR Company of the year for 2018 while the MD/CEO was also voted the Insurance Man of the Year in the same year by an online Pension and Insurance media organization based on electronic voting by members of the public.

L-R: Jude Modilim, executive director, Technical Operations, Sovereign Trust Insurance Plc; Peter Aghedo and Kayode Adigun, general manager/divisional head, Finance & Corporate Services, Sovereign Trust Insurance plc during the presentation of the prize to the winner of the radio trivia question tagged “Stay Safe With STI at the Corporate Head Office in Lagos.

accounting for 22% of all losses. Unsurprisingly, collision/ crash is the top cause of loss, accounting for over half the value of all aviation claims (59%), followed by faulty workmanship/maintenance incidents (10%)

and machinery breakdown (including engine failure) [6%]. Increasing repair costs from composite materials and more sophisticated higher value engines; a rise in attritional claims stemming from more congested

airports; risks related to the sector’s increasing reliance on automation; a shortage of pilots; cyber security; and more widespread use of drones are just some of the drivers which will shape the future claims landscape.

Energy Energy insurance claims are infrequent compared with other analyzed sectors. However, losses are costly. The sector accounts for less than 1% of claims by number but 17% of all losses by value. The average significant loss3 in the sector is around €13.8mn. Fire incidents are the top cause of loss accounting for almost half of the value of all claims (46%). Although natural catastrophes represent some of the sector’s largest exposures, human-made incidents account for four of the top five causes of loss. In addition, the growing potential for cyber-related losses and the impact of a changing oil price – including the prospect of larger BI claims for producers – occupy the thoughts of companies and insurers alike. Marine The frequency of major hull claims remains low yet natural catastrophe and fires have resulted in some large hull and cargo losses in recent years. Attritional claims, such as machinery breakdown, while stable in frequency are becoming more material for insurers.

At Exchange AIICO, CRe, Custodian control 40% industry premium income Ifeanyi John

he insurance industry is projected to generate a quarter of a trillion naira in gross premium income at the end of the 2018 financial calendar and three out of 23 underwriters of risk on the Nigerian Stock Exchange have a combined market share of 40 percent. Continental Reinsurance grossed over N26 billion in premium income at the end of the third quarter of 2018, with net assets of N24 billion, the company is on track to outperform every other insurance company by the end of the financial calendar. This represents a market share of 13.72 percent of the industry premium income earned among publicly traded insurance companies. The reinsurance giant overshadows all but three other companies in the industry in terms of premiums earned which trickle down into the profits. Unfortu-

nately, the company is set to go private at N2.10 per share, as the proposal of the parent company to acquire all outstanding shares of CRe Nigeria for cash has already been sent to the Securities & Exchange Commission for final approval. AIICO Insurance was N77 million behind the leading premium earner in September 2018 with N25.92 billion earned from its customers. The company’s performance at the end of September 2018 was impressive as it was the only underwriter to have surpassed its full year revenues of the previous accounting calendar. This pushed AIICO from the fourth best earner at the end of 2017 to the second best in September and is projected to

maintain its 13.68 percent market share at the end of the year. Custodian Investment Plc, the leading premium income earner at the end of 2017 with 15.03 market share had fallen to third in the third quarter of 2018. N6 billion shy of the N31.9 billion earned in 2017, the allied insurance company that thrives on delivering innovative insurance products, had lost 1.38 percent of market share to its competitors. With net assets totaling N39.4 billion, Custodian Investments is ahead of other insurance companies but this did not translate to higher revenues at the end of the third quarter of 2018. AXA Mansard completes the list of insurance companies

on the bourse that earn in excess of N20 billion. Investors have chosen to price all but one of these four companies above their peers in the industry because of the above mentioned revenue generating qualities. According to Blomberg data, AIICO is the cheapest high premium generating insurer, priced at 0.37x net assets which is below the industry average of 0.39x. AXA Mansard (1.09x), Continental Reinsurance (0.94x) and Custodian Investment (0.92x) are priced in line with the banking industry priceto-book average of 0.9x. The country’s underwriters of risk, listed on the stock market, made a combined N17.96 billion in profits from a premium income of N189.54 billion as at September 2018, N3 billion less than the full year earnings of the 23 insurance companies in 2017. At this pace, the companies are set to earn close to N24 billion from an estimated premium income of N252.08 billion for the year ended 2018.

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IPO proceeds in Africa fall 27% in 2018 MICHEAL ANI

he sporadic increase that was recorded both in volume and value in Initial Public Offering in 2017 could not be sustained in 2018, despite strong market indications that were witnessed at the beginning of the year. The total value of IPOs recorded in the African continent fell 27 per cent from as high as $3.1 billion in 2017 to $2.2 billion in 2018, according to data compiled by global consulting and auditing firm, Pricewatercorpers. Similarly, the volume of IPO transactions also declined to 17 in 2018 from a height of 30 IPOs that were recorded in the previous year. The year 2018 started on a positive note with major stock market indicia such as the Allshare indices of both the Nigerian stock exchange and the Johannesburg stock exchange, reaching ten-year highs in January 2018. These results however deteriorated throughout the year due to several factors including the US interest rate hike, the trade wars between two of the world’s biggest economy(the US and China) and political uncertainties in different countries in the continent. The NSE ASI and JSE ASI closed the year with a decline of 18 per cent and 11 per cent respectively. In spight of the decline, the year saw some landmark transactions for African market other than Nigeria. Such transactions include the $819 million May 2018 dual listing of Vivo energy PLC on both the JSE and the London Stock Exchange—the

largest Africa-focused on the LSE since 2005, and the second largest IPO in Africa in the past five years in terms of proceeds raised. That same year, Uganda also ended its seven-year IPO drought with the listing of PEbacked Cipla Quality Chemical industrial Limited on the Uganda stock exchange raising about $44.8 million. Ghana saw its largest IPO listing till date with the $239.6 million IPO of Scancom Plc (MTN Ghana). However, while other African markets made a giant stride in getting a new listing, this could not be said of the Nigerian market as it extended IPO drought since 2015, so far into 2019. The financial sector constituted the largest IPO proceeds accounting for about 53 per cent of the total IPO recorded in 2018, this is followed by the consumer services sector with 17 per cent. In terms of IPO proceeds, the consumer services sector contributed the largest proportion, accounting for 37 per cent of the proceeds raised. This was closely followed by the financial sector with 36 per cent. As was the case in 2017, the South Africa market emerged the preferred destination for the largest African IPOs by value, representing the top three IPOs of 2018, and accounting for 79 per cent of top five IPO value. The top five IPOs in 2018 were spread across the consumer services, consumer goods and telecommunications sectors, with the financial sector constituting a larger proposition with two out of the top five deals. Share price performance of African top five IPOs in 2018 was largely negative, reflecting business and economic risks,

IPOs by African exchange, 2014-2018

Source: PWC but also risks associated with the listing process and the increased attention that goes along with being a public company. The year’s top IPO by value, Vivo Energy, declared a maiden interim dividend after listing but was hit by commodities price volatility and supply disruptions during the year, with the share price closing 29 per cent lower than listing price (in US dollar terms) As with Vivo Energy, Qulter plc also lived up to investors’ expectations with a special in-

terim dividend; however, the asset manager’s share price was impacted by poor performance in global markets, as major stock markets recorded negative returns amid global economic turmoil. Libstar Holdings finished the year with a decline in its share price of 51 per cent from its listing price after its first set of results failed to meet investor expectations. Libstar’s performance and similar performance from other recent issuers has drawn criticism in the market

about pricing and the scrutiny applied to new listings, suggesting the need for increased planning and transparency in the pre-listing process. Sarwa Capital Holdings, the EGXs top IPO of 2018 faced price deterioration and ultimate suspension from trading in light of alleged IPO irregularities, also casting doubt about the pace of listings in North Africa. The lone member of the top five with a positive return was MTN Ghana, with an increase of 5 per cent

Nigeria records $7.88 billion in private equity deals in 5 years DAVID IBIDAPO

igeria has in the last 6 years maintained its lead on private equity destination to Africa, accounting for the highest in total deals closed during the period. According to a report by African Private Equity and Venture Capital Association (AVCA), amongst West African countries, the share of private equity deals by value in West Africa in Nigeria between 2013 and 2018 accounted for 73 per cent of a total value of $10.8 billion. This amounts to $7.88 billion

in value in the last 5 years. Of a total of 282 number of reported private equity deals, Nigeria’s share of PE deals by volume in West Africa accounted for 54 per cent, representing a total 152.28 deals. According to the report, efforts made by the Government to enhance the country’s credibility contributed to the significant growth in foreign direct investment, which accounted for 18.58 per cent (US$530.63mn) of total capital imported in Q3 2018 according to data from National Bureau of Statistics (NBS). Year on year, total foreign di-

rect investment increased by 22 per cent to $1.19 billion in 2018, after FDI declined slightly by 6 per cent in 2017 against $1.04 billion in 2016. To mention but a few, the passing of bill to repeal and re-enact the Companies and Allied Matters Act (CAMA), which introduces the individual ownership of company, establishment of limited liability partnerships, enhancing cross-border trading and regulation on Investment of Pension Fund Assets; increased pension funds’ allocation limit for PE to 10 percent, according to report.

Meanwhile, analysts are however optimistic on 2019 outlook. “The outlook for 2019 remains positive, as further growth is projected for the region,” stated in the report. Given that the elections have been concluded and a cabinet should soon be instituted, analysts anticipate stability in Nigeria which will encourage and motivate more private equity investments. Recall, So far into the year 2019, the Nigeria private equity space has recorded investments worth N277.65 billion ($767 million) in deals sealed between

January and February. This is an improvement by 345 per cent compared to N62.37 billion ($172 million) worth of deals closed during corresponding periods in 2018. Meanwhile, since the value of private equity in Africa declined by 67.9 per cent to $2.5 billion in 2015, the value of PE has averaged $3.74 billion in 4 years, reaching the highest level of $4 billion in 2016. The total value of reported African PE deals between 2013 and 2018 amounted to $25.7 billion with the number of reported deals of 1022 deals.

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

Email the PE & F team loladeakinmurele@gmail.com

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The innovation equation SAFI BAHCALL

anagement theories that focus on culture have always felt squishy to me. As a physicist, I look for harder science. How do companies shift from nurturing the “crazy” projects that transform industries to rejecting innovations? Why would good teams kill great ideas? I’ve built a model that helps us understand how organizations change. The model shows that there is a certain size at which human groups shift from embracing radical ideas to quashing them. Let’s call this the magic number M. This transition point is not fixed. It is a function of two competing forces: When employees feel they have more to gain from the group’s collective output, that’s where they invest their energy. When they feel their greatest rewards come from moving up the corporate ladder, they stop taking chances on risky ideas whose failure could harm their careers. Leaders can raise the value of M by tweaking four key control parameters. They are equity fraction, fitness ratio, management span and salary growth. These are elements of structure: organization design. A higher M results from increasing every parameter except for salary growth. THE FOUR CONTROL PARAMETERS Imagine that your job is to develop a better pacemaker, and you need to decide how you’ll spend the final hour of the workday. Should you experiment a little more with your design, or should you use the time to network? In other words, should you focus on project work or on politics? Such daily choices are what determine the level of innovation at a company, not cultural changes instituted from the top. In order for “crazy” ideas to turn into successful products, people across the organization need to be incentivized to invest their time in moving projects — not themselves — forward. Here’s how each control parameter affects behavior: — EQUITY FRACTION: This

variable represents the extent to which incentives reflect the outcome of projects as opposed to rank within the organization. Equity fraction ties your pay directly to the quality of your work. If you create a revolutionary pacemaker, the company will probably sell a lot of them, and the value of your equity will grow. Equity comes in two forms, hard and soft. Hard equity includes stock options, commissions, bonuses. Soft equity — nonfinancial stakes, such as peer recognition — counts, too. If your pacemaker design could be submitted for an industry award, you have a soft equity stake in the success of your project. Whether your equity stake is hard or soft, the higher the fraction, the more likely you are to spend that extra hour on project work. — FITNESS RATIO: This parameter involves the relationship between project-skill fit and return on politics. The project-skill fit is a measure of the rewards from investing time in your project. The return on politics is a measure of the rewards from investing in politics. Suppose you are a highly skilled medical-device designer. An extra hour per day invested in working on your pacemaker might double its value. The excellent fit between your skills and your project (high project-skill fit) would tip you in favor of spending more time working on it. There would be no need for schmoozing; your triumph would speak for itself. Suppose, on the other hand, that you’re not well-suited to the projects to which you’ve been assigned (a low project-skill fit). Your design skills are lousy, and one more hour wouldn’t help much. Investing that hour in politics might be the best way for you to win a promotion. — MANAGEMENT SPAN: This refers to the average number of direct reports that executives of the company have. To see how this parameter affects innovation, imagine that you work at a 1,000-person company with an average management span of two. That means there are 10 levels in the hierarchy (the CEO has two direct reports; those two managers have two reports and so on). When

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organizations have many layers — that is, a narrow span — promotions are on everyone’s mind. Now think of the same company with an average management span of 32. In this case, there’s only one management layer between the CEO and the people doing the real work. Promotions occur so rarely that no one thinks about them; instead they focus on their work. — SALARY GROWTH: The average step-up in base salary that employees receive as they ascend the hierarchy is another important factor. If every promotion at your company comes with a 200% increase in salary, you’d want to make sure that every influential person knows why you should be promoted. If, however, promotions yield only a 2% pay raise, you might as well pour your energy into your project, where extra effort could earn you a bigger bonus or increase the value of your stake in the company’s success. PUTTING IT ALL TOGETHER There are many ways companies can adjust the control parameters to increase M and enhance inno-

vation. — CELEBRATE RESULTS, NOT RANK: To increase the equity fraction and lower the salary growth rate, management must structure rewards to be based more on results than on level in the hierarchy. Celebrating results rather than rank means changing compensation practices — and eliminating (or toning down) perks of rank. — USE SOFT EQUITY: Different people are motivated by different things. To some, tangible financial rewards are most important. Others are driven by peer recognition or by personal growth. Companies should identify and use all the means at their disposal to increase employees’ stakes in the success of their projects. — TAKE POLITICS OUT OF THE EQUATION: Employees need to see that lobbying for pay and promotions will not help them. One way to do this is to have those decisions depend less on an employee’s manager and more on assessments by neutral parties. — INVEST IN TRAINING: A designer who has learned new techniques will want to practice them.

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Training encourages employees to spend more time on projects, which reduces time spent on lobbying and networking. — PERFECT EMPLOYEE PLACEMENT: Designate a person or a small team to regularly scan the organization for project-skill fit, ensuring that everyone is in the right job at the right time. The person or team making assignments should be separate from any particular function to ensure a broad view of the organization. — FINE-TUNE THE SPANS: Companies should widen management spans and design looser controls for groups in which radical innovation is the goal. — APPOINT A CHIEF INCENTIVES OFFICER: Organizations need top-level executives who can identify wasteful bonuses, reduce the risks of perverse incentives and tap into the power of nonfinancial rewards.

Safi Bahcall is a physicist and an entrepreneur. He is the author of “Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases and Transform Industries.”

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INSIGHT

Boeing 737 crashes raise tough questions Benedikt Kammel

om Enders just couldn’t resist the swipe at the competition. It was June 2011, and the chief executive officer of Airbus SE was on a stage at the Paris air show after the plane maker won in a matter of days an unprecedented 600 orders for its upgraded A320neo airliner, while Boeing Co. stood on the sidelines. “If our colleagues in Seattle still maintain we’re only catching up with their 737, I must ask myself what these guys are smoking,” Enders blurted out, to the general amusement of the audience, while Boeing representatives at the back of the room looked on. Boeing had wavered on its decision whether to follow Airbus’s lead and re-engine the 737 or go with an all-new aircraft. Customers were willing to wait for “something more revolutionary,” as Jim Albaugh, at the time Boeing’s head of commercial aircraft, said then. But the European manufacturer’s blow-out success with the A320neo, essentially a re-engined version of its popular narrow-body family, would soon force Boeing’s hand. As the A320neo became the fastest-selling plane in civil aviation history as Airbus picked off loyal Boeing customers like American Airlines Group Inc., the U.S. company ditched the pursuit of an all-new jet and responded in July 2011 with its own redesign, the 737 Max. “The program was launched in a panic,” said Sash Tusa, an analyst at Agency Partners, an equity research firm in London. “What frightened Boeing most of all was losing their biggest and most important customer. American Airlines was the catalyst.” It turned out that Chicagobased Boeing wasn’t too late to the party in the end: While the Max didn’t quite replicate the neo’s order book, it did become the company’s fastest seller as airlines scrambled to cut their fuel bills with new engines that promised savings of 20 percent or more. All told, the Max raked in about

“

Boeing 737 Max at the manufacturer’s plant

5,000 orders, keeping the playing field fairly level in the global duopoly between Airbus and Boeing. Now the 737 Max is grounded globally, after two almost factoryfresh jets crashed in rapid succession. As a result, the repercussions of Boeing’s response to Airbus’s incursion are under the microscope. Getting particular scrutiny are the use of more powerful, fuel-saving engines and automated tools to help pilots control the aircraft. After the grounding, Boeing said that it “continues to have full confidence in the safety of the 737 Max, and that it was supporting the decision to idle the jets “out of an abundance of caution.” The company declined to comment beyond its public statements. In late October, a plane operated by Lion Air went down minutes after taking off in Jakarta,

Now the 737 Max is grounded globally, after two almost factory-fresh jets crashed in rapid succession. As a result, the repercussions of Boeing’s response to Airbus’s incursion are under the microscope

killing all 189 people on board. Then on March 10, another 737 Max crashed, this time in Ethiopia en route to Kenya. Again, none of the 157 people on board survived the impact. There are other similarities that alarmed airlines and regulators and stirred public opinion, leading to the grounding of the 737 Max fleet of more than 350 planes. According to the Federal Aviation Administration, “the track of the Ethiopian Airlines flight was very close and behaved very similar to the Lion Air flight.” After decades of steadily declining aircraft accidents, the question of how two identical new planes could simply fall out of the sky minutes after takeoff has led to intense scrutiny of the 737 Max’s systems. Adding to the chorus in the wake of the crash was President Donald Trump, who lamented the complexities of modern aviation, suggesting that people in the cockpit needed to be more like nuclear physicists than pilots to command a jet packed with automated systems. “Airplanes are becoming far too complex to fly. Pilots are no longer needed, but rather computer scientists from MIT,” the president said in the first of a pair of tweets on March 12, darkly warning that “complexity creates danger.” Automation plays a limited role in the 737 Max. That’s because the aircraft still has essential analog design and layout features dating

back to the 1960s, when it was conceived. It’s a far older concept than the A320, which came to market at the end of the 1980s and boasted innovations like fly-by-wire controls, which manipulate surfaces such as flaps and horizontal tail stabilizers with electrical impulses and transducers rather than heavier hydraulic links. Upgrading the 737 to create the Max came with its own set of issues. For example, the 737 sits considerably lower to the ground, so fitting the bigger new engines under the wings was a structural challenge (even with the squished underbelly of the engine casing). In response, Boeing raised the front landing gear by a few inches, but this and the size of the engines can change the plane’s center of gravity and its lift in certain maneuvers Boeing’s technical wizardry for the 138- to 230-seat Max was a piece of software known as the Maneuvering Characteristics Augmentation System, or MCAS. It intervenes automatically when a single sensor indicates the aircraft may be approaching a stall. Some pilots complained, though, that training on the new system wasn’t sufficient and properly documented. “The benefits of automation are great, but it requires a different level of discipline and training,’’ said Thomas Anthony, director of the Aviation Safety and Secu-

rity Program at the University of Southern California. Pilots must make a conscious effort to monitor the plane’s behavior. And reliance on automation means they will take back control only in the worst situations, he said. With the Lion Air crash, data from the recovered flight recorders points to a battle in the cockpit between the software and the pilots who struggled in vain to keep control. The data showed that an errant sensor signaled the plane was in danger of stalling and prompted the MCAS to compensate by repeatedly initiating a dive. The pilots counteracted by flipping a switch several times to raise the nose manually, which temporarily disabled MCAS. The cycle repeated itself more than two dozen times before the plane entered its final deadly dive, according to the flight data. With the flight and cockpit voice recorders of the Ethiopian plane now in France for analysis, the interaction between the MCAS system and the pilots will again be under close scrutiny, probably rekindling the broader debate about who or what is in control of the cockpit. That man-versus-machine conundrum has been central to civil aviation for years. Automation has without doubt made commercial flying much safer, as planemakers added systems to help pilots set engine thrust, navigate with

Wednesday 20 March 2019

greater precision and even override human error in the cockpit. For example, automation on modern aircraft keeps pilots within a so-called flight envelope to avoid erratic maneuvers that might destabilize the aircraft. Analyses of flight data show that planes have more stable landings in stormy, low-visibility conditions when automation is in charge than on clear days when they land by sight. The most daring descent in recent memory, Chesley “Sully” Sullenberger’s landing of US Airways Flight 1549 in the Hudson River in early 2009, is Exhibit A of how an interconnected cockpit worked hand-in-hand with an experienced pilot. Automatic pitch trim and rudder coordination assisted manual inputs and kept the Airbus A320 steady on its smooth glide into the icy water. The drama showed that automation can play a crucial support function, provided a pilot is fully trained and the aircraft properly maintained. “Some people are saying modern aircraft such as the 737 Max are too complex,” said Dave Wallsworth, a British Airways captain on the Airbus A380 double-decker. “I disagree. The A380 is a far more complex aircraft and we fly it very safely every day. Pilots are capable of understanding aircraft systems so long as the manuals contain the information we need.” Airbus traditionally has pushed the envelope on automation and a more modern cockpit layout, with larger screens and steering by joystick rather than a central yoke, turning pilots into something akin to systems operators. Boeing’s philosophy, on the other hand, has been to leave more authority in the hands of pilots, though newer designs also include some computerized limits. Like Airbus planes, the latest aircraft from Seattle -- where Boeing makes most of its jetliners -- are equipped with sophisticated autopilots, fly-by-wire controls or systems to set speed during landings. “The big automation steps came in the 1980s with the entry into service of the A320 and the whole fly-by-wire ethos,” said John Strickland, an independent aviation analyst. “I don’t think automation per se is a problem, we see it in widescale use in the industry, and as long as it is designed to work hand-in-hand with pilots and pilots understand how to use it, it shouldn’t be an issue.” But the counter-argument is that increasingly complex systems have led computers to take over, and that many pilots may have forgotten how to manually command a jet -- particularly in a moment of crisis. That criticism was leveled at Airbus, for example, after the mid-Atlantic crash of Air France Flight 447 in 2009 that killed all 228 people on board. Analysis of the flight recorders showed the crew was confused by stall warnings

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and unreliable speed readings, leading to erratic maneuvers that ended in catastrophe. “I grew up on steam gauges and analog, and the modern generation on digital and automation,” said Jon Weaks, president of the Southwest Airlines Pilots Association and a Boeing 737 captain for the Dallas-based airline. “No matter what you grew up on, you have to fly the plane. If the automation is doing something you don’t want it to do or that you don’t understand, you have to disconnect it and fly the plane.” A 2013 report by the FAA found more than 60 percent of 26 accidents over a decade involved pilots making errors after automated systems abruptly shut down or behaved in unexpected ways. And the 2016 inspector general’s report at the FAA noted that as the use of automation increases, “pilots have fewer opportunities to use manual flying skills.” “As a result, the opportunities air carrier pilots have during live operations to maintain proficiency in manual flight are limited and are likely to diminish,” the report found. The grounding of the 737 Max fleet has left Boeing in crisis. The company couldn’t get through with its message that the plane was safe to fly, as the group of regulators and airlines idling the jet kept expanding. The 737 program is Boeing’s cash cow, accounting for a third of its profit, and Boeing’s stock dropped sharply in the days after the disaster. The Max gave Boeing a relatively cheap path back into the narrow-body game that it was at risk of losing to the Airbus neo. At the time, Boeing had to make a quick decision, as it was still burdened financially by the 787 Dreamliner wide-body that was over budget and behind schedule. Both manufacturers have said they won’t come out with an allnew single-aisle model until well into the next decade, preferring to wait for further technological advancements before committing to massive spending. The success of both the neo and the Max bought the companies that extra time, with orders books stretching years into the future. Half a century after it was launched almost as an afterthought, the 737 program has become the lifeblood of Boeing that helps finance the rest of the corporation -- the biggest U.S. exporter. It’s the one aircraft that Boeing cannot afford to give up. “The Max was the right decision for the time,” said Richard Aboulafia, an aviation analyst with the consultancy Teal Group. “Yes, there may be an issue with MCAS needing a software patch. Yes, there may need to be some additional training. But these are not issues that cause people to change to the other guys’ jet. The other guys have a waiting line, and when you get to the back of that line, you burn more fuel.”

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BUSINESS DAY

Oil bulls stick to their guns ahead of Make-or-Break OPEC Summit

PEC can make or break oil’s bull run, and hedge funds are betting the cartel will keep fueling the rally. Money managers increased wagers on rising West Texas Intermediate and Brent crude prices to the highest since October ahead of a key meeting of top exporters in Azerbaijan over the weekend. “As long as we come out of the weekend with stasis, the hedge funds will consider that a positive sign and will continue to support the bull run,” said Ashley Petersen, an oil analyst at Stratas Advisors LLC in New York. As the producer group prepares for the gathering with allies including Russia, OPEC has signaled commitment to its deal to cut output. That’s helped spur a rally of more than 30 percent for both benchmarks since late December. Plus, sanctions on Iran and Venezuela have helped to tighten global oil supply. WTI ended the week more than 4 percent higher, at $58.52 a barrel, just pennies below a fourmonth high. Brent had a weekly gain of 2 percent, to $67.16. The weekend’s agenda in Baku, Azerbaijan’s capital, includes a meeting of Russia’s Energy Minister Alexander Novak with his Saudi Arabian counterpart, Khalid Al-Falih. Their two countries, which together produce more than a fifth of the world’s crude, are key to the accord’s success.

Saudi Arabia is said to have pledged a bigger-than-required cut in crude shipments to its customers in April, and the kingdom is leaning toward extending the output curbs agreement into the second half of this year. Russia, in turn, has said it will speed up its progressive reduction of production. “The speculative community is starting to get bullish,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, Missouri. “The Saudis appear pretty committed to trying to keep supplies constrained and generally, if the Saudis are willing to put that out there, the rest of the cartel usually goes along.”

“

As long as we come out of the weekend with stasis, the hedge funds will consider that a positive sign and will continue to support the bull run

Hedge funds’ WTI net-long position -- the difference between bets on higher prices and wagers on a drop -- climbed 4 percent to 157,648 futures and options in the week ended March 12, according to the U.S. Commodity Futures Trading Commission. Longs rose for a third straight week, while shorts dropped 7 percent during the period. At the beginning of the year, there were fears that U.S. production growth “was going to explode, demand is going to crumble, and what are we going to do with an excess of oil?,” Petersen said. “Now, we’re actually getting data that shows the sky isn’t falling and positions are reacting accordingly.” Another reason for hedge funds to become more optimistic on crude: technicals. WTI’s 50-day moving average is poised to cross above its 100-day moving average-- a bullish signal that often invites buyers into the market. Brent’s 50-day average crossed above its 100-day line on Friday. But not everyone was optimistic. Investors have rushed to short one of the top oil exchangetraded funds as crude prices hover near four-month highs. Short interest in the $1.86 billion SPDR S&P Oil & Gas Exploration & Production ETF made up close to 35 percent of the fund’s outstanding shares, the most since 2014, according to Markit data.

28 BUSINESS DAY Financial Inclusion www.businessday.ng

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& INNOVATION

How credit loans are driving financial inclusion Stories by Endurance Okafor

he large informal segments at the bottom pyramid of the Nigeria economy are being attracted into the financial cycle through credit loans. Unlike the conventional credit loans given by Fintech to the employed market who by virtue of having a salary account are included into the financial space, checks by BusinessDay revealed that most Fintech companies are beginning to attract petty traders with credit loans. This is because the excluded small and mediumsized businesses which are mostly in the informal sector are more than those in the formal sector and market experts say there are lots of opportunities to be tapped from that segment. This was affirmed byWale Okunrinboye, a Lagos-based Investment Researcher, as he said “when loans and credits are given to individuals who have basic bank accounts especially those in the informal sector, (as they contribute to the larger population of the country), they will be encouraged to operate formally in the financial circle other than their normal traditional way of carrying out financial transactions.” These excluded informal individuals and businesses do not have bank

accounts and as such lack financial history which can qualify them for a credit loan. They mostly use the small contributory savings schemes in which they contribute a daily portion of their trading profit to a collective. In Yoruba, the schemes are commonly called Ajo; it is referred to as Adashe in the north, while the Ibo word for it is Esusu. Financial technology companies, the new technology and innovation that aim to compete with traditional financial methods in the delivery of financial services, are helping to in-

clude them in the financial cycle. The recently launched micro loans for MSMEs, the new solution for selfemploye d individuals, business men and business women by Renmoney, a Fintech company operating under a microfinance banking license in Lagos is an example of such products by several Fintechs that are designed for that segment of the market. O luwatobi B oshoro, Renmoney’s CEO, told BusinessDay during the product launch that “we’ve always been aware of the need to solve credit challenges for another equally

important segment- the self-employed, the businessman, the business woman.” Sh e a d d e d t hat “ w e have tested and iterated this product extensively for almost six months, reviewed over 30,000 applications and issued over 6,000 loans in the process.” Nigeria currently has 36.8 percent of its adult population excluded from the financial inclusion cycle, according to figures from the central bank. This is 16.8 percent away from its 20 percent financial exclusion target by the year 2020.

Yetunde Akindele, a petty trader in Oyingbo market explained to BusinessDay how the Fintech product which she was introduced to by her fellow trader is helping to finance her business. “I only had to open an account and operate it for six months and then I had enough financial history to access a loan.” Akindele added that through the credit she got from the Fintech Company which didn’t ask her for collateral or a guarantor has “helped in growing my business and now I have moved from a canopy space to zinc roofed shop.”

To increase the country’s financial inclusion rate, the Central Bank of Nigeria has announced its plans to introduce Payment Service Bank (PSBs). Currently, 36.6 million of Nigeria’s population is not part of the financial market. The initiative can enable Banking agents, Mob i l e Mo n e y O p e rat o r s (MMOs), Retail chains (Supermarkets), and telecommunications companies (Telcos) to operate as financial service providers in ensuring access to financial services for the unbanked rural segments of the society. At least 30 business names are currently undergoing registration as payment ser vice banks w ith the functions to; maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-boarder personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards, and operate electronic purse. “Apart from encouraging the collaboration between the telecoms and banks, through mobile money to spur financial inclusion, there is need to reduce the cost of financial transactions, as mobile money is more expensive than core banking,” Okunrinboye said.

UBA reports N400million donations for financial inclusion in 2018 …total donations surge by 25.8% year on year David Ibidapo

he United bank for Africa (UBA) showed its commitment to deepening financial inclusion in Nigeria with a N400 million donation. This was stated in its 2018 full year financial report released on Friday, which showed, of a total of N1.03 billion donations in Nigeria, commitment to financial inclusion and public enlightenment project, accounted for 38.7 percent of total donation value. As stated in the directors’ report, donations by the group is targeted to,

‘‘commitment to the development of host communities, the environment and broader economy.’ According to figures by the Enhancing Financial Innovation and Access (EFInA), financial sector development organisation as compiled from its results of the 2018 Access to Financial Services (A2F) Survey, Nigeria’s financial exclusion rate reduced from 41.6 percent in 2016 to 36.8 percent. To this end, with less than two years to meet its 80 percent financial inclusion target, the Central Bank of Nigeria (CBN) approved the setting up of a financial

inclusion Trust Fund to help drive its course. Meanwhile, total donations across the group

Source: CBN

amounted to N1.048 billion, with N1.03 billion in Nigeria and N15.14 million in the rest of Africa.

Amongst other expenses entries, UBA’s donations year on year increased the most. Total donations increased by 25.8 percent against N833 million donations in 2017 recorded by the tier one lender. However, this accounted for about 1 percent of total expenses for the period. ‘‘if N400 million was truly donated to boosting financial inclusion in Nigeria, then this is a good example other banks can emulate,’’ an analyst who pleaded anonymity told BusinessDay. Meanwhile, UBA recorded a profit after tax (PAT) of N78.6 billion, a marginal in-

crease by 1.36 percent from previous income recorded in 2017. G row t h i n PAT w a s slowed down by a 9 percent increase in total expenses for the period to N225.89 billion against N206.6 billion in 2017. UBA declared a final dividend of N0.65 for every ordinary share of 50 kobo each, bringing the total dividend to N0.85 per share for the 2018 financial year ended December 2018. As at the close of market on Monday, UBA’s stock was up 1.34 percent to N7.55 with a market capitalization of N258.20 billion.

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BUSINESS DAY

B/Airways in £6.5bn first class upgrade investment Pg 31 Santa Fe’s mid-size SUV makes J.D. Power rating

Flashback: Display of Toyota model range during the Lagos Motorfai exhibition in 2010. That was when the auto market was upbeat. Today is a story od despair and lamentations by both the middle class and the auto dealers.

Autoparts makers, franchisees set for Lagos autofair …200 foreign firms expected despite industry setbacks MIKE OCHONMA mikeochonma@gmail.com

ndaunted by the sliding fortunes confronting the Nigeria’s automobile market, BKG Exhibitions Limited, organisers of the Motor Fair & Autoparts Expo has announced May 6 to 11 this year as date for Lagos Motorfair. Ifeanyi Agwu, managing director, BKG Exhibitions Limited, organisers of the event stated that this year’s edition is holding despite all odds. He said that, the auto sector remains at the front burner of economic discuss in Nigeria having in mind the developments in the political arena. Now in the 14th Edition of the Lagos Motorfair and 8th edition of the Autoparts Expo, the weeklong event will hold at the Federal Palace Hotel, Ahmadu Bello Way Victoria Island, Lagos from May 6-11 for the automobile exhibition, and May 8-11, May, for the autoparts showcase. The BKG managing director stated that the insistence on keeping the event going was informed by the determination of the organizers with him as the chairman to champion the

development and thriving of autoparts sub-sector as leeway to fast-tracking the development of Nigeria’s auto industry. According to him, “In this edition, as we have been doing before, we will champion the need to institute and drive a well thought out policy and programme to rejig the sector so as to make Nigeria the hub of automotive business in West Africa in particular and by extension, the entire continent in general’’. He called on the federal government to focus on how to seeing that local auto spare parts manufacture is used to drive the policy of auto manufacturing in the country. In his words, “Spareparts are the place where the real technology transfer takes place. It involves precision and proper planning more than the coupling that takes place in assembling. This will give rise to establishing of more Original Equipment Manufacturers and increase employment”. While calling for a review of the ongoing auto policy to make it achieve the desired ends, he pointed out that, the sector is very important as it shows physically the state of the economy and it generates much revenue

and creates enormous employment, adding that no serious government toys with it. Auto sector was one of the key sectors that received bailout from the American government during the last global economic meltdown and it helped to revamp the economy. It is a sector that drives the economy; if it is badly affected, other sectors suffers. It is the artery of the economy. Government should parley seriously with the sector stakeholders to seeing how it could be made better. He also lamented that organizing the event has been very challenging which the organisers are trying to find a way to push it as a key event the sector. We want to use the event to draw the necessary attention on the sector. Government should increase its support in all ramifications to the automobile companies operating in the country. It is a sector that affects virtually everything. It occupies prime position in the economy. If it is not done now it will in the very near future affect a whole lot in the life of the people and economy. The challenges of hosting this event are becoming higher but our drive in continuing is that the sector must not be

allowed to die. For the Autoparts Expo segment of the event, he said that, it is doing well and BKG Exhibitions is considering involving West and Central Africa countries in the edition. ‘’This we have kick-started by extending invites to players in the autoparts business in those countries to visit the fair’’. He disclosed ‘’We are aiming at using the local autoparts markets as the hub of the sectors business in Africa. The intention is to make them to be buying from the Nigerian markets. In no distant future it will become a big event spreading to other countries in the continent’’. Nigeria he noted has the resources and capacity to play such a role and it will be a very big disservice to the country and if another African country does this ahead of the country. “We are expecting over 20 automotive and 200 autoparts/accessories firms including those from allied sectors to participate in this combined edition. Each of the days of the event is loaded with activities and events that will make this edition remarkably rewarding to the exhibitors, visitors and other stakeholders”. He stated.

New-vehicle exports to Africa up 10% in 2018

ew-vehicle exports from South Africa to the rest of Africa have improved by 9.8% in 2018 compared with 2017, “following a number of years of sharp decline”, says the National Association of Automobile Manufacturers of South Africa (NAAMSA) in its newest quarterly business review. Export sales to the rest of Africa reached 61,015 units in 2014, dropping to 41,431 units in 2015 and 21,848 units in 2017 while vehicle export sales to the continent recorded 23,988 units in 2018. NAAMSA says the improvement suggests that demand from the rest of Africa has stabilised and “is starting to recover, albeit from a low base”. The association adds that exports from South Africa to North

America declined substantially in 2018 owing to the phasing out of BMW 3-Series exports to the United States. Exports of the 3-Series sedan have been replaced by the BMW X3, with the focus now on European markets, even as new-vehicle exports from South Africa to North America dropped by 70 percent in 2018, to 13,037 units. In contrast, exports to Central America picked up 86.1 percent, to 1 511 units while exports to Europe increased by 22.7 percent, to 233, 772 units, with South America up 61.3 percent, to 5,787 units. In total, new vehicle exports from South Africa improved by 3.9 percent in 2018, to 351,139 units. Domestic market sales, however, were down by 1 percent in 2018,

to 552,190 units NAAMSA’s quarterly report also indicates that fourth quarter 2018 employment in the South African

new-vehicle manufacturing industry declined by 781 jobs, to 29, 484 positions, following six years of stability.

yundai’s Santa Fe has received one of the world’s most highly respected awards for long-term owner satisfaction, being named as the most dependable mid-size SUV in the J.D. Power 2019 Vehicle Dependability Study. The United States-based study, now in its 30th year, examines problems experienced during the past 12 months by 80,000 original owners of 2016 model-year vehicles. Overall dependability is determined by the number of problems experienced per 100 vehicles (PP100), with a lower score reflecting higher quality. The study covers 177 specific problems, with cars grouped into eight major vehicle categories. The Santa Fe ranked highest in its class, demonstrating real-world dependability based on the experience of real owners. Reacting on the latest JD Power Award, Mike Song, Hyundai’s Middle East and Africa Head of Operations, said; “Dependability is the foundation of Hyundai’s success as a brand, so this is an important award for us as a company. We offer customers bold design, powerful performance, versatility, and a host

of advanced technologies to keep drivers and passengers comfortable, happy and safe. Most of all, we promise all of this in a car that people can depend on year after year.” As a long-term test, the 2019 Vehicle Dependability Study assessed a model-year of the previous third-generation Santa Fe. Hyundai launched an all-new fourth generation during 2018. Mike Song said he believes the current Santa Fe goes even further to create satisfied customers. For 2019 models, the Santa Fe features new safety, comfort and convenience technologies, better visibility, increased cabin and storage space, and bolder design language. J.D. Power is a global market information consultancy, known for its research into customer satisfaction and product quality. Its automotive surveys include the Vehicle Dependability Study each year, and also the Initial Quality Study which looks at problems people have with new cars during the first 90 days of ownership. The automaker has achieved strong results in previous J.D. Power surveys, including the Tucson being named as most dependable small SUV in the 2018 Vehicle Dependability Study. Also in 2018, the Hyundai Kona was the top-rated small car in the J.D. Power Tech Experience Study, which measured owners’ experience, usage and interaction with driver-centric vehicle technology. Kona topped the small segment in technology categories such as entertainment and connectivity amongst others.

30 BUSINESS DAY

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Toyota commercial segment set for upmarket push …With global reveal of 17-seater Hiace

Cars45 expands retail footprints with Enyo R&S MIKE OCHONMA mikeochonma@gmail.com

n continuation of its drive to facilitate ease of access and deliver more convenient services, Nigeria’s largest online vehicle trading platform, Cars45, has partnered with ENYO Retail and Supply, an innovative fuel retail brand, to increase its retail footprints and provide consumers with opportunities to buy, sell or swap their cars at all Enyo service stations nationwide. It is expected that the launch of this exciting partnership, will enable consumers experience peerless automotive services at Enyo retail outlets whilst increasing visibility for Cars45 value offerings across foot and vehicular traffic channels. Commenting on the partnership, Etop Ikpe, chief executive officer, Cars45, , noted that the relationship is a strategic one aimed at helping the company to achieve its mission to build an ecosystem that enhances, enables and drives trade within the nation’s automotive sector. The CEO noted that the partnership with ENYO affords Car45 the opportunity to deepen the pervasiveness of its products and

services across the country, adding that the company is always seeking innovative approaches to expand and transform the currently fragmented automotive ecosystem and offer support across all the automobile trade, repair and verification services. Highlighting the similarities between both organizations, Ikpe noted that, “Cars45 and ENYO are both technologydriven and innovative firms that have become synonymous with engaging customers through excellent retail experiences. Whilst Cars45 fueling and giving life to the car ownership dreams of consumers, ENYO is powering a fuel retailing revolution in Nigeria.” Also speaking on the partnership, Abayomi Awobokun chief executive officer, ENYO Retail and Supply, described the partnership with Cars45 as an extension of Enyo’s unrelenting desire to become the most desired fuel retailing company renowned for its best-in-class retail experience, strong customer-focus, and technology driven operations. According to Awobokun, “this partnership is a step in the right direction and is positioned

to achieve great feats as well as validate our market position and ability to create new value streams for our customers’’. ‘’It is also in alignment with our brand persona as the most exciting and trusted fuel retail brand in the country. I have no doubts that this partnership will become the role model in delivering world class automotive services in Nigeria.” He said. Head, Commercial Operations and Marketing, Cars45, Mayokun Fadeyibi, said, “We are always striving to ensure that we make the automotive transaction experience a whole lot easier and exciting. She disclosed that its partnership with ENYO signposts this commitment even as it continues to seek for new ways of creating value. On the back of the partnership, our services will be accessible in the over 55 ENYO service stations across 13 states and serving over 50,000 customers daily.” Furthermore, “this is just the beginning of the partnership and I am excited at the possibilities ahead for both brands to co-create amazing value offerings. We would be looking to build on it and expand the scope of our partnership through the year.” She concluded.

oyota Motor Corporation (TMC) is in the news once again, but for a good reason that would excite its corporate customers and commercial fleet operators and challenge it competitors following the global launch of the all-new sixth generation Toyota Hiace. By comparison, it is significantly longer and wider than its predecessor.Originally introduced back in 1967, the Toyota Hiace is now entering its sixth generation with a significant jump in size for both the standard and long roof versions. Power will be provided by either a naturally aspirated 3.5-liter V6 gasoline engine or a 2.8-liter four-cylinder turbodiesel, with a choice between a six-speed manual and an automatic transmission.

since mechanics will have far better access to the engine compartment. According to Toyota, the 2019 Hiace offers lower noise, vibration, and harshness levels thanks to a completely new body derived from the design behind the company’s new TNGA platform. The upgrades made to hardware will translate into lower driver fatigue over extended distances while ensuring a high level of safety having achieved the performance equivalent of five stars in the Euro NCAP crash test. Like before, the Toyota Hiace will largely be sold in Asia, the Middle East, Africa, Oceania, Latin America, and Mexico. Interestingly, the JDM-spec model won’t make the transition to the new generation, with Toyota deciding to keep the old model as-is, citing “different

Switching to a new “semi-hood” design means the engine is no longer positioned on top of the front axle, which in turn provides better ergonomics for the driver and the front passenger. The people sitting in front won’t be bothered anymore by any heat and vibration coming from underneath the seat. In addition, servicing the engine will be easier

local market environment.”. The table attached below reflects the vehicle’s growth, allowing the multi-purpose vehicle to accommodate as many as 17 people in the Commuter version destined for private bus use. There is a plethora of seating layouts available, including a two-seat van model for carrying voluminous cargo such as pallets.

Jaguar I-PACE wins first European COTY

he all-electric Jaguar I-PACE has been voted ‘Car of the Year’ at the European Car of the Year (COTY) Awards 2019. This is the first time a Jaguar has won the coveted prize. The European Car of the Year jury comprises 60 motoring journalists from 23 countries, and the award recognises technical innovation, design, performance, efficiency and value for money. Ralf Speth, chief executive officer of Jaguar Land Rover (JLR), said: “For our first electric vehicle to also be the first Jaguar to win European Car of

the Year gives us a huge sense of pride. “I-PACE was designed and engineered in the United Kingdom (UK) from a clean sheet of paper. It is the most technologically advanced battery electric vehicle. It’s a true game-changer. Winning European Car of the Year is an honour and real recognition of what our worldclass team has delivered.” Designed and developed in the UK, the Jaguar I-PACE has had profound sales success Nothing else on the road globally, with more than 8,000 customer deliveries to date, out looks or drives like the I-PACE. of which 75 percent of them are It is engineered to take full advantage of its electric powerin Europe*.

Charging is made easy for customers using the Jaguar public charging service, accessed via a dedicated app or using an RFID key. With tailor-made charging packages and tariffs compiled into a simple monthly bill, it gives the customers access to more than 85,000 charging points throughout Europe. Since it was revealed a year ago, the I-PACE has received 55 awards worldwide, including German, Norwegian and UK train and bespoke aluminium Car of the Year, BBC TopGear architecture, offering sports magazine EV of the Year, China car performance and SUV Green Car of the Year, and Autobest’s ECOBEST Award. practicality.

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BUSINESS DAY

MTRAVEL odern IHG acquires SixSenses in $300million deal

B/Airways in £6.5bn first class upgrade investment MIKE OCHONMA

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his year is British Airways’ Centenary year and to celebrate this milestone, the airline is investing £6.5 billion for customers over five years, including new aircraft, new cabins, new catering, new lounges, WiFi, and new routes. The airline company is set to deliver significant changes to the on-board product and service in its first cabin as part of its £6.5 billion investment for customers. The new look and feel, set to take to the skies from March 31st, will include new bedding, amenities and menus. Following this latest offerings, the airline’s customers will be offered super-soft, sophisticated new male and female loungewear designed exclusively by luxury British fashion brand, Temperley London. The airline’s chefs have also designed new delicious a la carte menus that focus on fresh seasonal

ingredients of British provenance. The new menus will be served on elegant bone china crockery, designed exclusively for the airline by high-end British tableware designer, William Edwards. The new tableware will be accompanied by contemporary cutlery from Studio William. The airline will also be introducing a new signature afternoon tea service, showcasing the great British tradition of high tea. It will include a selection of sandwiches, delicate pastries and scones, as well as a wide range of tea infusions. As part of the changes, British Airways is also investing in new Dartington glassware. Passengers will now be able to enjoy the airline’s fine wines and champagnes from sophisticated stemware, while soft drinks and spirits will be served from elegant cut-glass tumblers. Carolina Martinoli, British Airways director of brand and customer experience, said: “As part of our £6.5 billion investment for customers, we’re changing parts

of the travel experience in our first cabin. “Our teams of designers, chefs and customer service experts have carefully thought through the details we know matter most to our customers. “In this, our centenary year, we’ve sought out some of the best British designers and manufacturers to work with to ensure travelling in first with British Airways is an unforgettable experience.” She concluded. February 1 this year saw the British Airways marking its Centenary- a complete 100 amazing years of taking the world to Britain and Britain to the world. It featured customers, cabin crew, pilots and engineers from across the airline as they carry out the final touches for an incredible British Airways flight; that is the BA100. Providing a snapshot of modern-day Britain, the iconic British superstars take their seats alongside people from all walks of life. As they make their journey on

board, they each recount the values that they feel make Britain such a special place. Launching the celebrations was marked with a heart-warming brand campaign featuring a love letter to Britain brought to life by some of Britain’s biggest names. The campaign includes stars of the screen Gary Oldman, Olivia Colman and Riz Ahmed, sporting stars Anthony Joshua, Ellie Simmonds, Nicola Adams, Chris Robshaw, Harriet Millar-Mills and Anthony Watson. Others included musical icons such as Paloma Faith and The Kingdom Choir (with a cameo from David Bowie), alongside contemporary artist Grayson Perry, anthropologist Jane Goodall, chef and TV presenter Matilda Ramsay and Helen Sharman, the first Briton in space. All the famous faces were brought together as leaders in their respective fields and who are playing an integral role in shaping the modern Britain of both today and the future.

HG has acquired Six Senses in a deal worth US$300 million. Formally known as Six Senses Hotels Resorts Spa, InterContinental Hotels Group acquired the hospitality and wellness company from private equity fund Pegasus Capital Advisors. The sale includes the management of 16 hotels and resorts, 37 spas and sister companies Evason and Raison d’Etre. Following the acquisition Six Senses is now expected to grow to 60 hotels within the next ten years. “This is an exciting new era for Six Senses,” said Six Senses chief executive, Neil Jacobs. Neil says IHG believes in our purpose to merge the two platforms of wellness and sustainability to promote personal health, and the health of the planet. The Six Senses chief executive said joining forces with IHG means his company can use a wealth of systems and operational excellence to grow its brand and reach new markets without losing quirky personality and playful touch. “It’s been a great pleasure to work with Pegasus over the last six years and we would never have reached this milestone without their vision and deep involvement.” He noted. Over the next 12 months, Six Senses will open properties in surprising locations. From the private island of Krabey in Cambodia, a circuit of five lodges in Bhutan, to a 14th century restored fort in Rajasthan. IHG chief executive, Keith Barr, said: “IHG’s growing portfolio of luxury brands is a collection of the very best in the travel industry. According to Barr, each one offers something unique to the guests, and together they offer an unparalleled choice of locations and experiences. “We’re incredibly proud to welcome Six Senses into our family of brands and look forward to opening more stunning hotels, resorts and spas - each one staying true to Six Senses’ world-renowned reputation for wellness and an unwavering commitment to purposeful travel”.

Singapore’s Airport to open £1bn Jewel facility

ewel Changi Airport, a multidimensional tourist destination, will open its doors to the world on April 17 where it will house aviation, travel-related and lifestyle facilities for international visitors to Singapore, as well as an extensive retail offering and unique play attractions. Comprising ten storeys and a total area of 137,000 square metres, all under a stunning glass and steel facade, Jewel will be directly connected to Changi Airport’s terminals. It will feature a lush, fourstorey Forest Valley containing thousands of trees and plants, making it one of the largest indoor collections of plants in

Singapore. The majestic 40-metre high Rain Vortex, the world’s tallest indoor waterfall, will also take centre stage in the complex. Surrounding this will be over

280 retail stores and eateries, as well as Jewel’s own 130-room hotel, Yotelair Singapore Changi Airport. Passengers will also enjoy the convenience of early check-in for

their flights with baggage storage facilities even for their handcarry at Jewel. Designed by a team of consultants comprising Safdie Architects led by worldrenowned architect Moshe Safdie, as well as architects RSP and Benoy, the concept for Jewel’s design represents the juxtaposition of a park and marketplace. Iv a n Ta n , g ro u p s e n i o r vice president, corporate and marketing communications, Changi Airport Group, said: “Jewel is set to be a unique destination, like no other. “ It offers a mix of lush greenery, a scenic waterfall,

incredible retail offerings and family play attractions that together make for an unrivalled experience. We are excited to bring a new dimension to the travel and leisure experience of our visitors’’. He said. The topmost level of Jewel will feature a Canopy Park, with play attractions, gardens, walking trails, and dining outlets, that is designed to be a wonderland for both the young and young at heart. Three iconic attractions comprising Sky Nets, Canopy Mazes and Discovery Slides will take pride of place at the park, which is planned for a second phase opening in mid-2019.

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Maritime e-Commerce

NBS ranks India, Spain, France, South Africa, Netherlands as top destinations for Nigerian export amaka Anagor-Ewuzie

ive countries, India, Spain, France, South Africa and the Netherlands have been listed among countries that received about 50 percent of Nigerian export cargo in the fourth quarter of 2018, the National Bureau of Statistics (NBS) Foreign Trade Statistics, has revealed. A record of export trade by country of destination showed that 15.5 percent of Nigeria’s export goods worth N780.1 billion went to India; 11.33 percent of goods worth N569.4 billion was moved to Spain; 9.9 percent goods worth N496.1 billion was taken to France; 6.8 percent of Nigeria’s export valued at N340.1 billion went South Africa while 6.5 percent of the export trade valued at N328.7 billion was sent to the Netherlands within the period under review. The NBS report further revealed that Nigeria’s export in the fourth quarter valued at N5.023 trillion was dominated by crude oil exports which contributed N4.228 trillion revenue and accounted for 84.2 percent of the total export in the period under review. “Nigeria exported mainly mineral products which ac-

Source: NBS

counted for N4.809 trillion or 95.7 percent of the total value of exports. This was followed by prepared food stuff, beverages, spirits and vinegar, which accounted for N59.9 billion or 1.2 percent of total exports. In terms of the continent, the NBS report stated that Nigeria exported about N2.167.9 trillion or 43.2 percent of goods to European countries; N1.428.1 trillion or 28.4 percent of the entire export cargo to Asian countries and N702.5 billion or

13.98 percent of total export cargo went to American countries. “Nigeria exported goods worth N708.7 billion or 14.1 percent to other African countries, out of which goods valued at N338.5 billion, or 48 percent was exported to the ECOWAS region. Agricultural goods valued at N316.5 billion, representing 3.7 percent of the total export trade, was moved out of the country within the period under review,” according to the NBS

report. Further analysis by economic regions showed that Nigeria’s agricultural exports worth N51.4 billion were moved to Asia while goods valued at N41.1 billion were exported to Europe. The NBS report added that during the period under review, agricultural products were dominated by Sesame seeds valued at N33.9 billion; fermented Nigerian cocoa beans worth N24.5 billion; superior quality raw cocoa beans valued at N9.6 billion

NSC gets ICRC approval to seek transaction adviser for Lokoja, Obollo-Afor Parks amaka Anagor-Ewuzie

he Nigerian Shippers Council (NSC) has received the approval of the Infrastructure Concession Regulator y Commission (ICRC), to seek the transaction adviser to handle the proposed Lokoja and Obollo-Afor truck transit park projects. Truck Transit Park (TTP) projects, are promoted by the NS C and would be developed on a Public Private Partnership, in line with the Federal Government’s policy of addressing infrastructure deficits in the country. The parks were aimed at providing short-term resting places for truck drivers on long distance travels and to reduce loss to life and cargo in transit, caused by accidents aris-

ing from fatigue. Research has it that the NS C plans to build the truck parks in locations such as Lokoja, Kogi State; Obollo-Afor, Enugu State; Jebba, Kwara State; Ore, Ondo State; Ogere, Ogun State; Porto Novo Creek, Lagos state; Onitsha, Anambra State; Mararaban Jos and Kaduna State. TTP is also a public rest area located off the road, designed to provide temporar y rest location for truck drivers. It is primarily intended for short-term breaks and also long-term parking ser vices where truck drivers can get fuel, food, restrooms, shower and basic supplies like oil and spare parts, as well as servicing and repairs of haulage vehicles. In an inter view with BusinessDay , Hassan Bello, executive secretary of the NSC, assured that the

council is still moving on with the TTP project in order to promote safety of cargoes and haulage vehicles while in transit, adding that this would help reduce pilferage and theft of cargoes. “There was a focus lab on which we had extreme interest on the Truck Transit Park. Our problem was that we had to handover the parks to investors free from any encumbrances. Land issue has been our problem but fortunately in Enugu, Obollo-Afor land has been resolved,” Bello said. According to him, the state government is yet to pay the compensation for the land for the transit park project in Lokoja. “We have just received a letter of approval from the ICRC that we can go ahead and advertise for the request for qualification (RFQ) because we have

appointed a transaction adviser. Very soon, we will do so,” Bello said. He further said: “The existence of parks will afford cargo owners the means to monitor the movement of cargoes through a cargo tracking system to be located in respective TTPs, and to help in improving trade with landlocked neighbouring countries. The parks are expected to have facilities such as gas stations, hotels and motels, restaurants, mechanic workshops, fire stations, police posts and automated cargo tracking systems. ICRC is an agency of the Federal Government, responsible for the development and implementation of PPP framework for the provision of infrastructure services, thus the importance of the approval given to the council.

and cashew nuts (in shell) worth N5.8 billion were exported. It further revealed that Sesame seeds worth N13.7 billion were exported to China and about N5.9 billion worth of export cargo was taken to Japan. “Good fermented Nigerian cocoa beans were exported to the Netherlands and Germany in values worth N15.3 billion and N3.8 billion. “Superior quality raw cocoa beans valued at N7.1 billion were exported to

the Netherlands and goods worth N2.1 billion was taken to Indonesia, while cashew nuts (in shell) valued at N3.7billion went to Vietnam and N3.7billion worth of the same cargo went to India. “Trade in manufactured goods stood at N2.279.7 trillion, or 26.5 percent of total trade in quarter four 2018. The export component was valued at N75.6 billion, while imported manufactured goods stood at N2,204.1 trillion. “In the quarter under review, export of manufactured products stood at 14.97 percent higher, while vessels and other floating structures for breaking up were exported to Namibia and Cameroun at values worth N9.98 billion and N6.0 billion respectively. Aluminum alloys (unwrought) were exported to Japan and India at values of N4.1 billion and N1.0 billion respectively, while dredgers worth N6.5 billion were exported to the Netherlands,” the NBS explained. Then NBS report added that cigarettes containing tobacco worth N1.6 billion were exported to Niger Republic while other machines and mechanical appliances having individual functions were exported to the United Arab Emirates at a value of N4.98 billion.

Pirates kidnap five seafarers from OSV off Nigeria – IMB report

rmed pirates have k i d nap p e d f i ve crew members from an offshore support vessel in the latest pirate attack off Brass in Nigeria, the IMB Piracy Reporting Centre has said. According to the IMB Piracy Reporting Centre, pirates armed with machine guns in two speed boats approached the unnamed vessel while it was underway some 32 nautical miles off the coast of Brass, midday on March 9. It further revealed that the ship’s captain immediately notified the naval escort security boat which maneuvered to engage the attackers. One speed boat closed in from port side of the vessel and crossed the bow, while the other speed boat exchanged fire with the security boat.

“An alarm was raised and the crew went to the engine room, while all power was shut down. The pirates boarded the vessel with the aid of an elongated ladder and broke into the accommodation, vandalised the cabins and took crew belongings and vessel’s properties. It was reported that the pirates also went to the engine room, kidnapped five men and escaped. The remaining crew members sailed the vessel under escort to a safe anchorage. IMB Piracy Reporting Centre added that one Nigerian Navy armed guard was reported killed in the exchange of fire between the naval security boat and the pirates. Relevant authorities have launched an investigation into the incident.

Wednesday 20 March 2019

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Shipping

Logistics

Maritime e-Commerce

Only revival of refineries and pipeline evacuation of oil products can solve Apapa problem - Anakebe The persistent gridlock around Apapa port city has created loads of problems for businesses and port users. This results in daily man-hour loss to traffic gridlock and high cost of doing business at the ports. Tony Anakebe is the managing director of Gold Link Investment Ltd, a Lagos-based clearing and forwarding company. In this interview with AMAKA ANAGOR-EWUZIE, he shares his thoughts on the best way to address the Apapa problem. He also speaks on other issues. Excerpts.

Buhariâ&#x20AC;&#x2122;s re-election ith the return of Buhari as the President of Nigeria for the next four years, we pray that the economy will be his priority and that the President will follow up economic issues with all seriousness. We also want Mr. President to give good attention to the port because the port environment has dwindled in the last four years, due to negligence. A lot of things went bad in the port due to lack of infrastructural development and multiple check points mounted on port roads. These create bureaucratic bottlenecks and breed corruption. The multiple check points that came up in the last three years have helped in increasing corruption in the port system. The Federal Government has to look into the condition of the access roads to the ports. We understand that the contract for the reconstruction of Apapa-Oshodi Expressway has been awarded, but that is not the solution to the problem of Apapa, which is persistent traffic gridlock. There is need for all the tank farms in Apapa area to vacate. We need to either revive our refineries or make use of pipelines in the evacuation of petroleum products, in order to stop tankers from coming to Apapa. Even if the Federal Government reconstructs the road from Apapa to LagosIbadan Expressway with these tank farms still in Apapa, the

tankers will convert the road into parks and the problem will continue. We need to make Nigerian ports the hub of West Africa. Now, cargo traffic has dropped and the volume has even increased in countries like Togo and Cotonou. Togo has even taken over as West African hub instead of Nigeria, and an economy minded President should not feel comfortable with this. There is a lot to be done in order reorganise ports in Lagos. We need to extend port services to places like Port Harcourt, Onne and Calabar. All these ports should be opened, and dredged for bigger ships to come in. Shipping companies are imposing unnecessary charges and high demurrage charges on Nigerian shippers. This is unfortunate because the income of these shipping companies is not retained in our economy because the funds generated from charges are repatriated back to their home countries and this creates capital flight. We should institute serious regulatory body to regulate the activities of the shipping companies and concessionaires. The President needs to put in more efforts at sanitising the port system. Currently, high level of corruption is going on in the port. Customs officers demand millions in bribe to clear containers from the port. We call on Mr. President to give hope to businesses in the country in this coming four years.

interest of the economy. There is need to ensure that the ports in the East will not experience what Lagos ports are experiencing today. Importers are diverting cargo from Lagos to other ports in Nigeria and in the next five years, those ports will be able to compete with Lagos ports.

Tony Anakebe

Port business in Q1 Port business has been slow since the first quarter of 2019 due to elections. I wonder if any Customs command has been able to meet its monthly target. The election has actually affected port business because importers are being skeptical about doing business in a politically tensed economy. In addition, the 2019 budget is yet to be passed and is contributing to the delay. But, we see the business environment changing and performing better in the second quarter after the swearing in of the elected government and passing of 2019 budget. Impact of budget delay on businesses There is no nation that operates without a budget and if this is delayed, it affects the

business environment. For close to a decade, Nigeriaâ&#x20AC;&#x2122;s budget always comes late and the delay is increasing by the year. This also delays the economy from picking up. Presently, people find it difficult to plan their businesses because they are waiting for the government to roll out its fiscal and monetary policies for this year. Revival of Eastern Ports Apart from concessioning the Old Warri Port to competent operator, Ocean and Cargo Terminal Ltd, a consortium led by the SIFAX Group to manage, there is need to monitor the activities of the concessionaire and to also ensure that access roads to these ports are motorable. If there is free movement of cargo in and out of these ports, it will decongest Lagos in the

Cargo clearance at Apapa port The coming together of all government agencies to examine cargo and write reports was a well thought out initiative that was introduced in 2018, and it helped to fast track cargo clearance at that time. Presently, the agencies are doing individual examination of cargo and the initiative is no longer there. Management of empty containers Each ship that comes into the country brings about 1,000 containers in a year and when you multiply this by N200, 000 equals to N200 million. This is roughly what the shipping companies collect from Container Deposit Charge annually. This is why they will frustrate return of empty containers and they also collect demurrage charges. Before port concession, trucks used to have parking spaces inside the port and containers were being dropped inside the port as well. The port was also devoid of the present day gridlock. The concessionaires evicted trucks from the ports after concession without the gov-

ernment creating an alternative parking space for the truckers. I strongly believe that the delay in returning empty containers is a deliberate act to drain Nigerian importers of their hard earn resources. If you bring an empty container today, discharge it tomorrow and return the next day, the shipping companies will not make money from demurrage. The government needs to stamp its authority that every shipping company must provide holding-bay for dropping empty containers. This will help to save money for Nigerians. Elongation demurrage and rent free days We have not seen the elongation working. Some shipping companies like Hapag-LIoyd have even introduced new charges called Port Advanced Charges of N74,750 per container, which is equivalent to over $208 dollar per container. The company said that the new charges came from their headquarters. This is why we need serious regulation on shipping companies. Ban on textile importers from accessing dollars African fabrics are being accepted all over the world. I support that move by the Central Bank of Nigeria (CBN) because it will help the local industry to measure up. Apart from the ban, government needs to help the local industry to produce the much that can meet market demand.

34 BUSINESS DAY

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Tax Issues

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Increased tax compliance obligations for employers in Lagos State Ann Olalere and Mayowa Adeloye

Introduction he Presidential Enabling Business Environment Council (PEBEC) was set up in July 2016 under the leadership of Professor Yemi Osinbanjo with the objective of removing delays and restrictions associated with doing business in Nigeria. This is to enable the ease of starting and growing a business which would improve the economy and make Nigeria attractive to investors. One of PEBEC’s core areas of focus is “payment of taxes” and two of the issues with paying taxes, according to World Bank’s Report on the Ease of Doing Business were number of tax payments per year and time required to comply with three (3) major taxes. From the last report, Nigeria has moved up 11 places in paying taxes and taxpayers can see some improvements from the tax authorities. However, the number of tax payments per year has also increased, creating additional tax compliance obligation especially for employers. While much attention has been focused on corporate taxes, the requirement for employers to comply and fulfill their tax obligations with respect to their employees have also grown over the years. This is also as a result of the public notices released recently by the Lagos State Internal Revenue Service (LIRS). This has translated to increased compliance obligations for employers, both financially and in terms of administration. In our view, this can create more hurdles for doing business in Nigeria. In this article, we have evaluated the increase in tax compliance obligations for Nigerian employers and the need for employers to evaluate and mitigate any tax risk with respect to their employees. Compliance obligation for new and existing employees In 2017, the Lagos State Internal Revenue Service (LIRS) issued public notices clarifying the taxability of several payroll items such as voluntary contributions, employee loan, employee share/stock options, compensation for loss of office and relocation allowance. It is important to note that while some of the public notices may be contrary to the provisions of the Personal Income Tax Act (PITA), it is also a call to action for employers to review their treatment of certain remuneration items. • Employee Loan Some employers provide loans to their employees at zero interest rate or at a rate lower than that of the market. In this instance, the LIRS public notice provides that where employers provide interest-free loan to employees or loan below an adjusted monetary policy rate (MPR), they are required to compute PAYE tax on the deemed interest income. This is consistent with the provisions of the law in Section 3(1)(b) of the Personal

Income Tax Act (PITA). Although, this provision has always been there, and many employers recognize a notional interest in their books, hardly do companies compute and pay tax on the notional interest income. The LIRS, therefore, seeks to collect additional PAYE tax from such employers. This invariably increases the financial obligation of the affected employers towards their employees. Furthermore, the LIRS requires that employers should submit an annual returns showing information on employee loans and the payment terms applicable to each loan. Also, employers are to continue to account for appropriate taxes on qualifying loan arrangements with employees and directors even after the termination of their relationship with the company. This creates additional administrative requirements. Therefore, employers should ensure that loans given to employees are structured to ensure tax efficiency and to reduce their financial, as well as administrative obligations. Although, we do not understand how the responsibility to account for PAYE tax on exited employees would apply in practice, as the employer would no longer have sufficient information to correctly compute PAYE tax on the loan-related benefit-in-kind (BIK). • Reasonable removal expenses Reasonable removal expenses constitute expenses incurred to move an employee to a new employment location or relocation allowances paid when taking up a new employment. Section 4(3) of PITA exempts reasonable removal expenses, including a temporary subsistence, from PAYE tax. The LIRS in its publication, however, sought to separate removal expense and subsistence allowance, in order to subject the latter to tax. As a result, employers would have to go extra mile to demonstrate the makeup and reasonableness of removal expense paid to employees. In addition, LIRS requires employ-

ers to submit their staff employment policy and guidelines as well as their per diem rates for pre-approval by the LIRS to obtain certainty for such expenses. Also, employers are to provide information relating to the expense such as date of relocation, reason for relocation, distance (km) involved and relevant receipts to validate them. This creates, in our view, an unnecessary layer of administrative work for employers. Also, this additional requirement plus the attempt by the LIRS to disallow subsistence allowance may discourage mobility of labour across the country which can stifle economic growth. It also creates compliance issues since it is contrary to the law as PITA exempts removal expense including subsistence allowance from tax. In the meantime, employers are advised to keep all relevant documents relating to removal expenses in the event that there is a tax audit. • Employee levies There has also been increased compliance for employees’ levies. For instance, contributions to the Industrial Training Fund (ITF), which previously mandated employers with a minimum of 25 employees to make annual contribution of 1percent of staff cost to the Fund, now requires employers with a minimum of 5 employees or a turnover of N50 million, to comply. This is based on the amendment to the ITF Act. This means that employers with a staff strength as low as 5 employees are now required to comply with this Regulation. Similarly, Pension Reform Act (PRA 2014), now requires employers to contribute 10percent of a minimum sum of the Basic, Housing and Transport allowance to the employee’s Retirement Savings Account (RSA) as opposed to 7.5percent, increasing the financial burden on employers. While this is good for the employees, an employer will have to consider the impact of the increased contribution on its returns.

Compliance obligation for exiting employees Every organization needs to pay particular attention to tax compliance obligation when an employee is exiting. Besides the administrative exit process of the organization, employers need to evaluate that all tax obligations have been settled. For example, the following items may be important to note: • Compensation for loss of office Compensation for loss of office is a common remuneration item for exiting employees. Based on the provisions of PITA, compensation for loss of office is exempt from tax. However, the LIRS released a public notice which attempts to tax compensation for loss of office under PITA. In addition, the LIRS released another public notice which provides that if an employee is made redundant and paid a settlement lump sum as compensation for loss of office, the employer will be held accountable for the deduction and remittance of capital gains tax on such amount. This position is probably based on section 6(1)(a) of the Capital Gains Tax Act (CGTA) which provides that any capital sum derived by way of compensation for any loss of office or employment is liable to capital gains tax. Based on the above, employers have to make conscious effort to evaluate remuneration item to be paid to exiting employees. This is because if one tax law exempts such amount, another may seek to tax such item. Thus, employers must ensure that all taxes are accounted for and paid on amounts paid to exiting employees, as it is usually difficult to deduct any tax from an employee who has left an organization. Appropriate documentation should also be kept as the LIRS now requires employers to notify the LIRS of payments for compensation for loss of employment and the beneficiaries of such amounts – although , we are not

sure if this should be done during the statutory annual filing or as a separate notification. • Share/stock allotment Employers are now required to account for PAYE tax on stock option schemes by computing tax on the difference between actual share price and exercise price. In cases where benefits such as share allotments become vested at the point of termination of the employee’s contract or the cash equivalent is being paid to the exiting employee, the value of the benefit will be deemed as a benefit in kind (BIK) to the employee and PAYE tax would be computed accordingly. Failure to do so may result in the employer bearing the PAYE tax burden on such amount. In addition, employers are now expected to file a schedule showing the information on its employee share options. Compliance obligation for expatriate employees Expatriate employees include individuals who come into Nigeria on a temporary work permit (TWP) or subject to regularization (STR) visa. These individuals are required to apply for a Combined Expatriate Resident Permit and Aliens Card (CERPAC) within 90 days of arrival, and the organization bringing them into Nigeria is required to have obtained an Expatriate Quota from the Federal Ministry of Interior. Employers who bring in expatriate into Nigeria need to be aware of the taxation of such individuals and the tax implication of some remuneration paid to the employee. • Taxation of non-nationals The income of an expatriate employee with TWP becomes taxable in Nigeria subject to the conditions provided in section 10(1)(a) of the PITA. The conditions in Section 10(1)(a) of PITA considers if the remuneration of the employee constitutes a fixed base for the foreign employer, the duration of stay of the employee in Nigeria and the taxability of the income in the foreign country. However, in practice, where an expatriate comes into Nigeria on a TWP or STR visa, they become taxable in Nigeria from the first day they arrive in Nigeria. Based on the above, employers’ tax compliance obligation with respect to expatriate employees starts with recognizing the visa that the employees carry. If the employees have TWP or STR visas, the employer is required to deduct and remit PAYE tax on the income earned by the employee. However, please note that an expatriate from a country with which Nigeria has a double tax treaty (DTT) will be liable to tax after 183 days, or any period specified in the DTT. Also, where Nigerian employers contract with an expatriate contractor, they are required to deduct WHT from payments to such vendors. By Ann Olalere, Manager in Tax, Regulatory and People Services, KPMG in Nigeria; and Mayowa Adeloye, Senior Adviser, Tax, Regulatory and People Services, KPMG in Nigeria

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Africa aviation market has created $72.5bn GDP - Sirika

... as air traffic to grow by 4.3% in 2035 - ICAO STELLA ENENCHE, Abuja

frican air transport market has created an estimated $72. 5 billion gross domestic product (GDP), even as it has generated a total of 7 million jobs. Minister of state for aviation, Hadi Sirika, who made the disclosure Tuesday, at the Aviation Infrastructure for Africa Gap Analysis Workshop in Abuja, said Africa remained the fastest growing air transport markets in the world. Sirika, however, lamented what he referred to as inadequate airport capacity, among other infrastructure deficit. “Africa is one of the fastest growing air transport markets in the world; this is due to an emerging industrial sector and increasing population. These among

many other reasons created almost 7 million jobs and $72.5 billion GDP. “However, in terms of infrastructure requirements to support future capacity, aviation in Africa and other regions faces some serious constraints due to inadequate airport capacity, and air traffic management technologies and a dearth of aviation personnel. “Africa aviation requires significant upgrade and expansion to meet the requirements of the projected growth but has to overcome the problem of insufficient access to financial resources for aviation development and modernisation,” he said. The minister expressed the hope that workshop would serve as a platform for an enduring aviation master plan for state and region at large. “Consequently, as part of the 2019 AFI Plan Work Programme, this work-

shop is to provide basis for the formulation of aviation infrastructure programmes and Master Plans for Africa at State and regional levels. “It follows the conduct of a preliminary survey on aviation infrastructure in Africa covering Airports, Air Navigation. Services and Aircraft fleet capacity and equipage,” he said. Meanwhile, the International Civil Aviation Organisation (ICAO), has passenger traffic in the region, may witness an annual growth rate of 4.3 percent and 2. 8 percent, respectively, through 2035. President of ICAO, Bernard Aliu, who spoke at the workshop, informed that Africa accounted for 4 percent of the global air transport services. “According to ICAO current global figure for 2018, stands at 4.1 billion passengers transported on 38 million route and may double in the next 15 years.

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BUSINESS DAY

Apapa Customs duplicates functions, creates clearance delay - agents AMAKA ANAGOR-EWUZIE

icensed Customs Agents have raised fresh concern over the recent deployment of CG Customs’ taskforce, a unit of the Nigerian Customs Service (NCS), to Apapa Port with the mandate of partaking in cargo clearance at ports. According to the agents, the deployment of the taskforce duplicates functions of Customs, creates double examination of container and slows cargo clearance process at ports. Tony Anakebe, a port user, who confirmed this to BusinessDay, said the deployment of the CG Taskforce was gradually slowing the process of cargo clearance and making doing business difficult in Apapa Port. According to Anakebe, the management of Customs needs to put an end to duplication of Customs units in the ports due to the complications created in Apapa Port by them. “It has become worri-

some that Customs management cannot trust its officers, especially at the command level. We have Apapa Customs Command yet CG taskforce, which was used to be at Warehouse, have been moved to the port. The taskforce must clear the consignment before the clearing agent would go and release the goods from the resident officer,” Anakebe said. Such are the same functions of resident Customs officer, and that the taskforce must also go for physical examination with the resident officers after which, they will write report on the examination, he said. “In most case, the taskforce will ask the agent to go and reposition the container for a secondary examination, especially if the taskforce is not satisfied with the result. This involves payment of an additional N60,000 to the terminal operator to reposition the container for examination,” he said. Citing example, Anakebe said his company was sup-

posed to take delivery of consignment since Thursday last week but had not be able to do so till date, and the importer would be forced to be paying demurrage to shipping company and storage rent to terminal operator for no just reason. “Formerly, if Customs conducts examination and write the report we can get our cargoes after payment of appropriate duty. But today, when the resident officer finishes, the taskforce will keep your consignment over one week and this is happening in Apapa now. This creates serious problems for the importers and their agents. It also increase cost for us,” Emma Nwabunwanne, a Lagosbased importer, said. He said after these encumbrances another Customs unit would hold the cargo on the road, claiming to be Abuja taskforce, saying this duplication of units encouraged corruption in the system and make doing business difficult for importers.

Edo makes case for NIFOR’s revival to boost oil palm production

L-R: Shehu Dikko, chairman, League Management Company/vice president, Nigerian Football Federation (NFF); Tunde Fagbohunlu, chairman, Lagos Chamber of Commerce International Arbitrations Centre (LACIAC); Funmilayo Iyayi, MD/CEO; Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), and Tunde Busari, managing partner, Akinwunmi and Busari Legal Practitioner, during the stakeholders roundtable on sport business and dispute resolution organised by LACIAC in Lagos, yesterday. Pic by Olawale Amoo

Digital health takes centre stage in Nigeria as stakeholders chart way forward ANTHONIA OBOKOH

he healthcare ecosystem in Nigeria, Africa’s most populous country, is changing fast, as digital start-ups introduce innovations that bring quick access to care, opportunity for data collection, buoyed by a large market size. In support of these developments in the sector, the World Bank has invested $3 million to back Nigerian tech hubs, making the country a vital hotspot for digital health tech innovation in Africa. As part of its contribution to this move, Sterling Bank, a Nigerian lender, is partnering Premier Medical System (PMS) and PharmA-

ceess, to host a digital health summit March 21, in Lagos. The summit aims at moving Nigeria’s healthcare forward by encouraging collaboration, creating connections between investors, development partners, government agencies, other stakeholders, and start-ups to transform its service delivery. “Our approach is to use our influence and resources to bring all collaborators in the sector together to brainstorm on the way forward through sustainable collaboration that is digital based,” Abubakar Suleiman, managing director/CEO, Sterling Bank, said while speaking at a press conference. There are thousands of individuals across Nigeria who

are making individual efforts to lift Nigeria’s health care sector, Suleiman noted, but such efforts are not enough to take the industry to the next level. “We want agile minds; we want digital platform and specialist skills. We are bringing the digital platform, the concept of it to the specialist skill which is in the health care sector in a bid to find the parties that can make it digital,” he said. He also noted that Nigeria was obviously lagging behind in data collection, quality healthcare, poor coverage of health insurance and that the country cannot use traditional methods to catch up in these area. “So, we want to use the technology that is now available to leapfrog the sec-

tor, and opportunities for this project,” he said. “The Digital Health Summit would bring together stakeholders in the Nigerian digital health space to explore the theme – Leveraging mobile technology for Health: Progress and Challenges,” Niyi Osamiluyi of Premier Medical Systems, said. He said the summit would have in attendance stakeholders such as the Federal Ministry of Health, Federal Ministry of Communication, National Information Technology Development Agency (NITDA), National Health Insurance Scheme (NHIS), World Health Organisation (WHO), World Bank, and Mobile Network Operators (MNOs), among others.

do State governor, Godwin Obaseki, has made a case for the revival of the Nigerian Institute of Oil Palm Research (NIFOR) to strengthen the country’s capacity to produce quality, high-yielding seedlings and boost oil palm production. Governor Obaseki made the case during a meeting in Abuja between Central Bank of Nigeria (CBN) governor, Godwin Emefiele, and governors of states in oil palm production belt of the country. He said the revival of NIFOR would improve investment in research and production of quality oil palm seeds. Noting that the state government has extended support to oil palm production companies in the state to boost production, the governor said Edo was currently cultivating oil palm on about 70,000 hectares of land. Nigeria intends to become the third largest producer of oil palm in the world ahead of Thailand and Columbia, and will extend support to states to realise the plan, the CBN governor said. According to Emefiele, “As some of you may know, the

usual life cycle for optimum palm production is 25 years. If we had kept pace with our peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne and an assumed production level of 16 million tonnes, Nigeria could have generated close to $10 billion worth of foreign exchange from palm oil. “This analysis does not take into consideration the amount of jobs that could have been created in our rural communities from large scale and small holder developments.” The CBN’s package to ensure Nigeria records accelerated jump in oil palm production include using part of the bank’s Anchor Borrower Programme (ABP) to grant loans at 9 percent interest rate and work with off-takers, he said. “On our part, the ABP and our Commercial Agriculture Credit Scheme (CACS), the CBN will work with large corporate stakeholders and smallholder farmers to ensure availability of quality seeds for this year’s planting season and agro-chemicals in order to enable improved cultivation of oil palm,” he said.

Naira closes at N360.13/$ at investors’ window

he naira on Tuesday exchanged at N360.13 to the dollar at the investors’ window as market turnover stood at $277.11 million. At the parallel market in Lagos, the naira remained stable, closing at N358 to the dollar, while the Pound Sterling traded at N475 and the Euro at N405.

Trading at the Bureau De Change (BDC) segment saw the naira closing at N360 to the dollar, while the Pound Sterling and the Euro traded at N475 and N405, the News Agency of Nigeria reports. Currency traders commended the efforts of the Central Bank of Nigeria in maintaining stability at the foreign exchange market.

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Wednesday 20 March 2019

Live @ The Exchanges Market Statistics as at Tuesday 19 March 2019

Top Gainers/Losers as at Tuesday 19 March 2019 LOSERS

GAINERS Company

Company

Opening

Closing

Change

Opening

Closing

Change

MOBIL

N166

N170

NESTLE

N1545

GUARANTY

N35.4

N36.85

1.45

PRESCO

N75

N68

-7

ETI

N13.5

N13.8

0.3

N75

N70

-5

N1.8

N1.92

0.12

GLAXOSMITH

N11.55

N10.5

-1.05

N2.11

N2.21

0.1

DANGCEM

N189.9

N189.4

-0.5

FCMB

FIDELITYBK

-18.4

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn

31,082.32 3,924.00 286,899,334.00 3.094 11.591

SEC seals G-Circle for operating pyramid scheme Stories by Iheanyi Nwachukwu

he S e cur ities and Exchange Commission has sealed the premises of Growing Circle International (“G-Circle) whose head office is No. 6 Mojidi Street, off Toyin Street, Ikeja Lagos. In line with the Commission’s mandate to regulate investments and securities business in Nigeria and to protect investors, the premises of G-Circle in Lagos was sealed up on Tuesday February 19, 2019. SEC said the action follows information received by the Commission from

a member of the public, adding that surveillance was conducted on the activities of Growing Circle

International (G-Circle). The SEC in a public notice said its investigation revealed that G-Circle was

operating a pyramid scheme and soliciting funds from unsuspecting members of the public through various means including its website www.growingscircle.com. The Commission wishes to inform the general public that Growing Circle International and any individual representing the company are not registered by the Commission and therefore not permitted to engage in any capital market-related activity in Nigeria. Members of the public are advised to confirm the registration status of any company, individual and the products they offer before entering into any transaction with such persons.

Meristem Securities

Insights on early retirement

his year, we set out with new goals, dreams and aspirations which we aim to achieve for the year. Some of these aspirations are exciting, valid and you deserve every benefit from it; however, we advise you pay keen attention to your retirement and plan accordingly especially now we are three months into the year. The aim of every employee in Nigeria is to work till the statutory age of retirement and retire to an exciting life of adventure. Unfortunately, more times than often, he retires to a life of collecting pensions and possibly depending on his children to provide the needs which his pension cannot afford. For most, the prospect of retiring at an early age seems impossibly out of reach. For others, it is a goal that drives them each day. Here are some useful insights to retiring early and living the life of your

dreams: Change your perspective about retirement Retirement should never be a rat race or a trend you just want to partake in. Rather, think of it as a quest for financial independence. Although not all retired persons are financially independent, your goal should be to maximize your retirement savings and personal investment such that your money starts working for you early while you stop working for money. Alternatively, instead of shooting for an early retirement, shoot for a role that keeps you interested in years to come. Go for a rewarding role as a mentor or challenge yourself by supervising a business. Start investing early

This follows a simple logic; if you want to retire early, invest early. Investing, as with anything in life, benefits from an early start. The earlier you begin planning for retirement, the greater your potential return on investment. Starting early to invest gives your wealth a longer time to reap the benefits of compound interest. Acquire income producing assets As applicable to conventional investments specifically, you should put more focus on acquiring income producing properties and assets only. Certain income producing assets include real estates, dividend stocks, fixed income instruments etc. Acquire quality investments that have con-

sistent income or dividends. This always pays off with time. Pay yourself first Paying yourself first is a great way to build wealth. This financial strategy implies that you would have to automate a portion of your salary to go towards saving and investing before making any expenses. Paying yourself first is a great way to automate your savings process and, in turn, your retirement. Set up automatic transfers to put a portion of your paycheck into savings during each payment cycle. Work hard and be disciplined There may be several ways to make early retirement happen, but they all require hard work and discipline. One is to take a high-paying job and save as much of your income as you can. Another is to start a business. However, putting in a daily dose of hard work and discipline have shown to be the most reliable way to retire early.

Global market indicators FTSE 100 Index 7,329.26GBP +30.07+0.41% S&P 500 Index 2,847.06USD +14.12+0.50% Generic 1st ‘DM’ Future 26,102.00USD +137.00+0.53%

Deutsche Boerse AG German Stock Index DAX 11,798.10EUR +141.04+1.21% Nikkei 225 21,566.85JPY -17.65-0.08% Shanghai Stock Exchange Composite Index 3,090.98CNY -5.44-0.18%

Shareholders laud Transcorp for delivering superior returns

he shareholders of Transnational Corporation of Nigeria Plc (Transcorp) have commended the Board and Management of the company for their remarkable achievements demonstrated in the company’s record-setting financial performance in 2018. Speaking at the company’s 13th Annual General Meeting (AGM), which was held at the Transcorp Hilton, Abuja on Friday, March 15, 2019, the shareholders lauded Transcorp for remarkably exceeding its financial performance in previous years while positively impacting the lives of its stakeholders across the country. Faruk Umar, national president, Association for the Advancement of Rights of Nigerian Shareholders reiterated praises from other shareholders and applauded the management of Transcorp for keeping their promise to deliver superior returns to shareholders. “We are over N22billion in profit before tax (PBT) and we are sure this trend will continue.” Umar also thanked Transcorp for consistently emerging as the first company quoted on the Nigerian Stock Exchange to host its AGM, which he described as a mark of strong corporate governance. Transcorp’s results for the financial year ended December 31, 2018, showed that the Group’s revenue hit an impressive N104.16billion translating into a 30percent revenue growth compared to the preceding year’s results. Profit Before Tax closed the year at N22.40billion; a significant leap compared to the Profit Before Tax of N12.31billion recorded in 2017. While addressing the shareholders at the meeting, Valentine Ozigbo, president/CEO of Transcorp stated that “the group’s performance for the year ended 2018 is the result of an unflinching commitment to deliver

superior value to our wide clientele base.” Elaborating further, he said, “Our hospitality business recorded a 26percent increase in revenue year-on-year as the Transcorp Hilton Abuja saw an increase in occupancy following the release of the newly upgraded rooms after the $100million upgrade of the hotel. “Our power business also achieved a 31percent increase in revenue yearon-year; a testament to an operating environment characterised for the most part, by stability in gas supply, foreign exchange rates and the payment

assurance programme of the federal government. These and our focused efficiency measures across the Group resulted in a 23percent reduction in operating costs, ensured that our Profit Before Tax soared by 82percent yearon-year,” Ozigbo said. Tony O. Elumelu, chairman, Transnational Corporation of Nigeria Plc used the occasion of the Annual General Meeting to congratulate the President, His Excellency Muhammadu Buhari for his re-election and urged him to prioritise the power sector. He also spoke on the importance of creating an enabling environment for domestic investors to succeed, emphasising that the steady supply of power will boost businesses and make the economy more competitive. “Transcorp Plc remains committed to the purpose for which it was founded, which is to improve lives and transform Nigeria,” Elumelu said.

Wednesday 20 March 2019

BUSINESS DAY

38 BUSINESS DAY NEWS

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Access, Diamond merger crosses final... Continued from page 1

terms which valued Diamond

Bank at approximately $200 million. Based on the agreement reached by the Boards of the two financial institutions, Diamond Bank’s shareholders will receive a consideration of N3.13 per share, comprising N1.00 per share in cash and the allotment of two new Access Bank ordinary shares for every seven Diamond Bank ordinary shares held as at the

implementation date. As at the close of trading at the Lagos bourse on Tuesday, Access Bank’s shares gained 1.71 percent to close at N5.95, while those of Diamond Bank shed 1.63 percent to N2.42. This indicates that over 20 percent has been wiped off Access Bank’s market value since the formal announcement of the deal on December 17, while Diamond Bank has jumped more than 154 percent. Although Diamond Bank is yet to

release its results for the 2018 financial year, Access Bank results show it grew profit for the year by 58 percent buoyed by gains on investment securities and lower income tax expense. Thebankrecordedanafter-taxprofit of N94.98 billion in 2018 compared withN60.09billionpostedayearearlier, while pre-tax profit was up 32 percent to N103.19 billion, from N78.17 billion achieved in the previous year. Retained earnings surged 37 percent to N115.6 billion in 2018 as against N113.4 billion retained as capital in the previous year.

Access Bank realised N96 billion as net gains from trading investment securities as against a loss of N33.4 billion recorded in 2017. Also, the tier-one bank recorded a decline in its income tax expense to N8.21 billion in 2018, from N18.08 billion paid in the previous year. Gross earnings surged to N528.75 billion in the review year, representing a 15 percent increase from N459.08 billion garnered in the corresponding period of 2017, while net interest income rose 6 percent to N173.58 billion. Access Bank’s impairment charges dropped 57 percent to N14.66 billion, from N34.47 billion; total assets rose 21 percent to N4.95 billion, while customer deposits increased by 14 percent to N2.57 billion.

Wednesday 20 March 2019

Herbert Wigwe, CEO of Access Bank,hadsaidthebankwouldleverage on its strong track record of acquisition and integration, noting that the two bankshavecomplementaryoperations and similar values, and a merger with Diamond Bank, with its leadership in digital and mobile-led retail banking, could accelerate Access Bank’s strategy asasignificantcorporateandretailbank in Nigeria and a pan-African financial services champion. Diamond Bank’s chief executive, Uzoma Dozie, said the proposed combination with Access Bank would create one of Africa’s leading financial institutions, noting that there is a clear strategic rationale for the proposed merger and strong complementary between the two institutions.

Can Buhari salvage Nigeria’s oil and gas... Continued from page 2

L-R: Soji Apampa, CEO, Integrity Organisation; Guy Harrison, head of prosperity, British Deputy High Commission; Oshuwa Gbadebo Smith, director, Integrity Organisation; Okechukwu Enelamah, minister of industry, trade, and investment; Jumoke Oduwole, senior special assistant to the president on industry, trade and investment; Ayokuunu Ojeniyi, project manager, technical lead, Enabling Business Environment Secretariat (EBES); Dotun Sulaiman, chairman, Corona Schools Trust Council; Lolade Sasore, communication specialist, EBES; Toki Mabogunje, director, Integrity Organisation; Muda Yusuf, DG, Lagos Chamber of Commerce and Industry, and Cynthia Akpomudiare, director, stakeholder relations, Integrity Organisation, at the launch of the REPORTGOV mobile app in Lagos.

Nigeria’s ‘rice revolution’ leaves other... Continued from page 1

that the programme was at incep-

tion meant to serve rice and six other crops, including wheat and maize. While there is dearth of reliable, untainted data on just how much progress Nigeria has made in its ‘rice revolution’, the Food and Agriculture Organisation (FAO) says the country’s rice production reached 7 million tonnes (4.2 million tonnes, milled basis) in 2017, up 12 percent from 6.3 million tonnes (3.8 million tonnes, milled basis) in 2015. The number of rice mills that have sprung up across the country and local rice brands that have become more visible may be evidence of improvement, though sceptics think it has been more rhetoric than reality, particularly considering the volume of ‘foreign rice’ that can be found in Nigerian markets. But the emphasis on rice has left other crops and sectors in agriculture struggling. Industry experts say the same attention given to rice has not been extended to other crops. “Wheat has not got a lot of attention in recent years,” Salim Muhammad, president, Wheat Farmers Association of Nigeria, told BusinessDay by phone. Nigeria’s wheat import hovered around N362 billion in 2017 and 2018, according to BusinessDay analysis of data from the National Bureau of Statistics. This implies that wheat production has not improved in the last two years. The Anchor Borrowers’ Programme is meant to cover cereals (rice, maize, wheat etc.); cotton; roots and tubers (cassava, potatoes, yam, ginger, etc.); sugarcane; tree crops (oil palm, cocoa, rubber etc.); legumes (soybean, sesame seed, cowpea etc.); tomato; and livestock (fish, poultry, ruminants, etc.), according to guidelines published by the CBN’s Development Finance Department in December 2016. But the programme has so far

covered only a few of these, with rice production taking the lion’s share. The process has been politicised, Muhammad said, creating preference for supporting rice, while certain interests have also continued to favour massive wheat importation. However, Kabiru Ibrahim, president, All Farmers Association of Nigeria (AFAN), told BusinessDay in a phone interview that the high foreign exchange implications rice had for Nigeria in the past necessitated the focus on it. The ABP, Ibrahim said, was at inception meant to serve rice and wheat production, but wheat millers and others who used it for production held the notion that the Nigerian wheat “does not rise”, hence the preference for imported one. This, he said, was why wheat failed to take off at the same time rice did. Ibrahim also explained that other sectors such as poultry and maize have also been gradually taking off under the programme, and are expected to grow rapidly in the next four years. “A lot of effort has been put into rice, which is commendable, but even that is insufficient to get best results,” said Emmanuel Ijewere, vice president, Nigeria Agribusiness Group (NABG). Regardless of the objectives in increasing rice production, Ijewere noted there are other crops that equally require concerted efforts to improve productivity across their value chains. In comparison, a hectare of tomato farm will create many times the job provided by a rice farm of similar size, he said. “There are three tomato factories in the country unable to operate optimally due to lack of raw materials,” said Ijewere, stressing it is yet another value chain that could do with government’s commitment and interventions. Annually, the tomato crop suffers a 40 percent loss, valued at N72 billion, between farm and market. Yet,

an estimated $170 million is spent importing tomato paste annually. According to Ijewere, if a fraction of what has been spent on rice is committed into tomato, more jobs will be created, and there will be more distribution of wealth across the value chain. Bello Abubakar, president, Maize Association of Nigeria, told BusinessDay that his members have begun to benefit from the ABP. In 2017 when maize farmers first benefitted from the scheme, 12,000 farmers in Katsina were supported in what he described as a pilot programme. This was expanded to 19 states in 2018, covering 38,000 farmers who cultivated 55 hectares, and produced 150,000 metric tonnes of maize. The funding provided for this by CBN was N9.2 billion at a 9-percent interest rate, according to Abubakar. Only about 40 percent of Nigeria’s estimated 82 million hectares of arable land is reported to be under cultivation, implying that about 50 million hectares of land are still available for cultivation. Again, high-yielding varieties of crops are required to deliver optimal yields. The Maize Association of Nigeria is already looking in this direction. For the 2019/2010 season, the maize body is planning to double its coverage in number of farmers and land cultivated, which will translate to 110,000 hectares. If the plan is achieved, it is expected to have a spiral effect on the struggling poultry sector, where availability of maize and soybean will improve the costs of farmers in getting feed for their birds. The wheat farmers have similar expansion plans, Muhammad of Wheat Farmers Association of Nigeria said. He disclosed an ambitious plan to increase coverage of land cultivated under the Anchor Borrowers Programme, from 9,000 hectares to 100,000 hectares during the 2019/2020 wheat production season. If achieved, particularly with better-yielding varieties, the country may be able to significantly lower wheat imports.

progress in the bill in the last three years, championed by Bukola Sarakiled Eighth National Assembly (20152019). The PIB was broken into parts for ease of passage. When presented with the Petroleum Industry Governance Bill (PIGB), President Buhari withheld assent on certain grounds, chief among which was the proposal in the bill to have the Petroleum Regulatory Commission (PRC), the successor agency to the Department of Petroleum Resources (DPR), as the principal regulator of the oil and gas industry, retain 10 percent of the revenue generated by the commission for its own operations. “If the government does not want PIGB, what does itwant?” asked Henry. Another major dilemma for the presentgovernmentistheissuearound oil bid rounds which last took place in 2011. According to BusinessDay’s February 12 report, the Department of Petroleum Resources, the oil sector regulator charged with the responsibility of conducting the bid rounds, was not ready to conduct the bid rounds slated for the first quarter of 2019. “The DPR is not anywhere close to concluding preparations for the next bid rounds. In fact, from all indications, it does not seem it will happen any time soon, because the guidance notes for the bid rounds are not even prepared yet. It does not even look like it could happen this year,” said a source that preferred anonymity. Luqman Agboola, head of energy infrastructure at Sofidam Capital, said Nigeria needs a petroleum minister who will not only ensure transparent bid rounds, but also be more capitalist-oriented which would help the country domesticate the value chain in the oil sector and also increase oil revenue.

“Oil bid rounds should be more competitive and transparent. Let Nigerians know who is bidding for each field,” Agboola told BusinessDay. Deregulation of the downstream petroleum sector is another key issue that will be facing President Buhari. Before the 2015 elections, Buhari strongly questioned the fuel subsidy arrangement, which was one of the issues that irredeemably dented the image of his predecessor, Goodluck Jonathan. Despite attempting to coat it as “under recovery”, the current administration has not moved away from subsidy payment. In fact, it budgeted over N300 billion to fund subsidy in 2019. Today, Nigeria is only capable of pumping some 1.7mbpd barrels of crude oil per day, according to OPEC figures, despite sitting on more than 37 billion barrels of proven reserves with its midstream and downstream infrastructure arguably in worse shape than upstream production. The country’s refineries – most concentrated in the oil-rich Niger Delta region – currently operate at under half of their intended 500,000 barrel per day consolidated capacity, which billionaire businessman Aliko Dangote sees as a business opportunity leading to a the building of a $15 billion refinery. Stakeholders in the sector said processing 650,000 barrels of crude daily would give the billionaire a near monopoly on Nigeria’s refining sector, although not necessarily a step in the right direction for market liberalisation. Also, President Buhari may have a easier ride in his second administration, with the All Progressives Congress (APC) winning more than 60 of the 109 Senate seats and is heading for a majority in the House of Representatives, according to partial results announced by Independent National Electoral Commission (INEC).

Atiku, PDP want presidential election... Continued from page 2

Atiku and PDP legal team is led by Livy Uzoukwu (SAN), as well as 21 Senior Advocates of Nigeria and 18 other lawyers. Atiku and the PDP had filed a petition on Monday challenging the declaration of President Buhari as the winner of the Feb. 23 presidential election. They filed the petition alleging massive riggings, malpractices and non-compliance substantially with the electoral laws. Atiku and the PDP prayed the tribunal to declare them as winner of the presidential election. In the alternative, the petitioners prayed the Presidential Election Petition Tribunal (PEPT) to nullify the poll and ordered for a fresh election that will be conducted in

lines with provisions of the electoral laws. The National Legal Adviser of the PDP, Emmanuel Enoidem, confirmed at the Court of Appeal, venue of the PEPT, that the petition had been filed. Enoidem said that the PDP and its presidential candidate have already assembled tested legal team to argue their case. He also disclosed that over 400 witnesses have been assembled to testify during the hearing of the petition. On the order earlier granted to Atiku to inspect materials used in the conduct of the presidential election, he said that the party is using the report of the party’s polling agents across the country to establish facts of the petition.

Wednesday 20 March 2019

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Security chiefs decline comment after meeting Buhari TONY AILEMEN, Abuja

L-R: Roosevelt Ogbonna, group deputy managing director, Access Bank plc; Herbert Wigwe, group managing director/CEO, and Ajoritsedere Awosika, acting chairman, during the signing ceremony for the N15 Billion Green Bond Issuance at the bank’s head office in Lagos. Pic by Olawale Amoo

FG reiterates commitment to total eradication of open defecation in Nigeria CYNTHIA EGBOBOH, Abuja

he Federal Government on Tuesday reiterated its commitment towards ensuring total eradication of open defecation in Nigeria by 2028. Suleiman Adamu, minister of water resources, speaking at the 2019 World Water Day celebration organised by Global Citizens, P&G in Abuja, said the current administration as part of its commitment to hygiene had introduced a set of activities to promote a “open-defecation-free” Nigeria by 2028. “Actions to end the open defecation in Nigeria require the commitment of everyone, and these actions are expected to promote an open-defecation-free Nigeria by 2025,” he said. The minister, speaking

further, said that of 774 local government area in Nigeria, only 10 had been so far certified as open defecation free, adding that that presented the need for everyone to be involved in ensuring complete eradication of open defecation in Nigeria. “We have developed several initiatives in our commitment to improving access to safe drinking water and ensuring a healthier living environment for everyone in Nigeria. However, we still have a long way to go as only 10 out of 774 local government has achieved the open defecation free certification”. Allison Tummon, Procter and Gamble (P&G) representative said that the world day commemoration is aimed at improving access to clean water and sanitation as it affects the health and economy of the nation at large.

“We believe water, sanitation and hygiene (WASH) is beyond drinking water, it has effect on the general health and economy of any nation, usage of unsafe water affects the productivity also.” “The problem is huge and we believe everyone can contribute in any little way as possible to make a difference,” she said. Betta Edu, director-general, Cross River State Primary Healthcare Development Agency in her remarks, stressed that access to safe water should be the right of every citizen and should not be seen as a privilege. “We have discovered that having safe water does not only improve our health but also improve our productivity, to this end the government of Cross River state in partnership with other sponsors have provided over 25 boreholes in

some local governments.” She also stressed that the state government in its bit to be declared the first open defecation-free state has committed a total of $15 million over the next 5 years to ensure proper sanitation in Cross River state. “As part of our commitment to ensuring an open defecation free state, the government of Cross River State over the next 5 years will set aside a total of $15 million to ensure clean water and proper sanitation in the state.” Yetunde Adeyanjo, representing the governor of Ondo state, said that the government in its bead to scale up access to clean water and ensure sanitation in the state has committed N1.8 million to rural water supply, and rehabilitation of over 1000 boreholes in the rural areas of the state.

Elumelu urges increased government attention to power sector ONYINYE NWACHUKWU, Abuja

ony Elumelu, chairman, Transnational Company of Nigeria plc (Transcorp), has urged the Federal Government to give more attention to the power sector and encourage more indigenous companies to invest. This comes as the company, which has its investments in the power, hospitality, oil and gas sectors of the economy, posted impressive financial result in 2018, declaring a 3k dividend for every 50k held by the shareholders. Speaking at the companies 13th annual general meeting in Abuja, Elumelu said though government had shown commitment to resolve systemic issues in the power sector

… as Transcorp posts impressive financial results like the Nigeria Bulk Electricity Trader’s N701 billion Payment Assurance Plan (PAP), the eligible customers regulation, meter asset providers’ initiative, among others, more still needed to be done. According to Elumelu, “The resolution of the issues bogging the power sector such as non-utilisation of load, inadequate transmission and distribution infrastructure, poor remittances by the distribution companies and full payment of outstanding debts owed GENCOs, is a critical success factor for the sector.” He said for instance that the PAP, an intervention fund, had significantly eased liquidity challenges in the power

sector, but “did not address the huge outstanding payments due to the power Generation Companies (Gencos) prior to their commencement as well as the accumulating shortfall of 20 percent of their invoices from 2017 till date.” He told the shareholders that as a result of this, one of the subsidiaries - Transcorp Power - still had significant amount of receivables with the electricity bulk trader. He said to enhance the company’s profitability, Transcorp Power continued to explore the opportunities created by Eligible customer regime of the Federal Government, which allows the Gencos to sell power directly to certain end users who meet

the set out criteria. Apart from the power sector, the company also leveraged gains in its hospitality and oil and gas businesses to post strong revenue and profit increase last year. Addressing the shareholders, he said Trancorp Group recorded a 30 percent increase in gross earnings to N104 billion from N80.3 billion in 2017, while that for the company rose by 75 percent to N8.9 billion from N5.1 billion. The Group’s operating income grew by 40 pecent to N34.6 billion as against N26 billion while operating income for the company rose by 85 percent to N7.6 billion compared to N4.1 billion in 2017.

resident Muhammadu Buhari on Tuesday met for several hours behind closed doors with Service Chiefs at the Presidential Villa. The security meeting is coming barely four days to the supplementary election scheduled for some states with inconclusive gubernatorial polls. The meeting always review security situation in the country, after which some far-reaching decisions are arrived at. Although none of the Service Chiefs agreed to speak with State House Correspondents after the meeting, BusinessDay however gathered that the meeting also reviewed the current security situation with much of the time dedicated to the situation in Kaduna State. Despite persistent efforts to get some information af-

ter the meeting, the Service Chiefs kept security strategies to tackle the Kaduna crises away from journalists BusinessDay sources said the meeting was also used to review the role all the security agencies played during the last gubernatorial and State Assembly elections. The meeting, which was attended by Mansur Dan-Ali, minister of defence, and Babagana Monguno, national security adviser, also had the Chief of Defence Staff, Gabriel Olonisakin, Chief of Army Staff, Tukur Buratai, Chief of Air Staff, Sadique Abubakar, and Chief of Naval Staff, IbokEte Ekwe Iba. The meeting came against the backdrop of various accusations levelled against the Nigerian Army by the Independent National Electoral Commission (INEC), which accused the Army of meddlesomeness in Rivers State elections.

Human trafficking: Edo, NAPTIP strategise to reduce menace by 50% by year end

overnor Godwin Obaseki of Edo State says his administration will collaborate with the National Agency for the Prohibition of Trafficking in Persons (NAPTIP) to reduce the menace of irregular migration and human trafficking by 50 percent by the end of 2019. The governor made the submission during a courtesy visit by the director-general of NAPTIP, Julie Okah-Donli, to the Government House, in Benin City, Edo State capital. Obaseki said as part of efforts to tackle the scourge of human trafficking and irregular migration, the state government established a

CHANGE OF NAME

I, formerly known and addressed as Oyemike Ijeoma Stella now wish to be known and addressed as Akpe Ijeoma Stella. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Maureen Elohor Fredrick now wish to be known and addressed as Fredrick Maureen. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Oruche Somtoochukwu Rita Augusta now wish to be known and addressed as Oruche Somtoochi Augusta Rita. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss. Oduwole Oluwaseyifumi Idayat now wish to be known and addressed as Mrs. Adeniran Oluwaseyifunmi Idayat. All former documents remain valid. General Public please take note.

taskforce, noting, “As a government, we have admitted to the huge challenges we face and we decided to set-up a taskforce to provide local solutions to the issue. “NAPTIP and Edo State Government are working closely to reduce irregular migration and human trafficking by 50 per cent by the end of this year and if I am governor for eight years, it will reduce to zero.” He urged donor agencies to support efforts of the state to address the problems faced by returnees, noting, “We are working to pressure foreign government to create legitimate travel windows that will enable them travel legally.”

CHANGE OF NAME

I, formerly known and addressed as Mrs Comfort Tonte Douglas now wish to be known and addressed as Miss Comfort Bioduemoye Meindinyo. All former documents remain valid. General Public please take note.

CORRECTION OF NAME

This is to inform the general public that my name was wrongly written as Raji Ajao Raifu instead of my correct name which is Adesina Raifu Ajao. Diamond Bank and genral public please take note.

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I, formerly known and addressed as Miss Nkiruka Udoye now wish to be known and addressed as Mrs. Nkiruka Okani. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Onyeiwu Chioma Stella now wish to be known and addressed as Mrs. Obi Chioma Stella. All former documents remain valid. General Public please take note.

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Wednesday 20 March 2019

Militarisation of elections diminishes Nigeria’s democracy - ULC JOSHUA BASSEY

ontinued militarisation of elections Nigeria, diminishes democratic values and calls for serious concern about sustenance of democracy in the country, United Labour Congress (ULC) has said. The union in a statement issued on Tuesday, and signed by Joe Ajaero, its president, also described the 2019 general election as the worst in Nigeria’s democratic history, listing vote buying, suppression of votes, intimidation of electorate, heavy militarisation, as some of the downside of the elections. According to the labour union, democracy allows the people freedom and unabridged rights to choose their leadership at all levels of governance. It is in the exercise of these freedoms that electoral processes are validated and outcomes are legitimised, empowering and morally enabling those that are put into offices as a result. “These are part of the fundamental principles upon which democracy; its traditions, frameworks,

institutions and practices are built. The success of any democratic experiment is therefore dependent on the protection of these fine principles. Anything that undermines any of these precepts undermines democracy and ultimately impairs

ourth time Senator and former Senate Leader, Victor Ndoma-Egba has filed a case in the Cross River State Election Tribunal challenging the declaration of his opponent, Sandy Onor of the People’s Democratic Party (PDP), as the elected senator for the central senatorial district of Cross River State. Senator Ndoma-Egba, along with eleven other candidates who lost the elections, filed their petitions challenging the outcome of recently concluded elections, claiming that the Independent National Electoral Commission (INEC), colluded with the People’s Democratic Party (PDP), to deny them victory in the elections in Cross River. Josephine Ekpereobe, secretary of the Tribunal told journalists on Tuesday that twelve petitions have been received from candi-

ised in sane societies. “It was a harvest of blood given the loss of lives, a defilement of the ballot and desecration of democracy with the capacity to destroy the very basis of our existence as a democratic nation. It was a com-

President Muhammadu Buahri (r) welcoming Bola Tinubu, APC Chieftain, Asiwaju, at the Presidential Villa in Abuja, with them is Bisi Akande. NAN

Ex-Senate leader, Ndoma-Egba, heads to Election Tribunal over loss of contest MIKE ABANG, Calabar

it from delivering its full potentials to the nation and her citizens,” Ajaero said. Juxtaposing these against the 2019 elections, the ULC said the elections negated the principles upon which elections are organ-

dates contesting the outcome of the National Assembly elections in the state. The petitions received so far include those of Senator Victor Ndoma-Egba of APC, contesting the emergence of Sandy Onor of PDP; Solomon Idor Esor of Social Democratic Party also against Sandy Onor’s victory. Others are Egbe Abeng of APC against Michael Etaba of PDP, and Victor Abang of APC against Chris Agibe of PDP. Others are Senator Bassey Otu of APC against Senator Gershom Bassey of PDP; Jude Ngaji of APC against Jarigbe Agom of PDP; Akiba Bassey of APC verses Eta Mbora of PDP and Wabily Nyiam of APC against Rose Oko of PDP. The only petition from PDP is that of Speaker of the Cross River State House of Assembly, John Gaul Lebo against Alex Egbona of APC for the Yakkur/Abi Federal Constituency where the PDP candidate lost to the APC flag bearer.

plete rape of democracy thus an embarrassing sham that in most cases aborted the will of the majority as expressed by the ballot,” the statement further said. It said one of the most harrowing experiences witnessed in this election was the “abusive use of the military, the police and other security agencies in the conduct of the elections. “We saw cases of rampant collusion between the military and politicians to manipulate the vote in favour of their chosen candidates, use of military to intimidate opponents and their voters and eventually to force the collation and announcement of results that heavily compromised electoral integrity,” it further said. It said the heavy militarisation of elections in Nigeria as seen in the last elections was not healthy for a nation that seeks to raise the bar of democratic aspirations but rather diminishes the institutions of the army and the others, undermining their capacities to effectively fulfill their major task of protecting the nation’s borders against external aggressions,” the union said.

Security Chiefs decline comments after meeting Buhari Tony Ailemen, Abuja

resident Muhammadu Buhari on Tuesday met for several hours behind closed doors with Service Chiefs at the Presidential Villa. The security meeting is coming barely four days to the supplementary election scheduled for some states with inconclusive gubernatorial polls. The meeting always review security situation in the country, after which some far-reaching decisions are arrived at. Although none of the Service Chiefs agreed to speak with State House Correspondents after the meeting, BusinessDay gathered that the meeting also reviewed the current security situation with much of the time dedicated to the situation in Kaduna State. Despite persistent efforts to extract some information after the

meeting, the Service Chiefs kept security strategies to tackle the Kaduna crises away from journalists BusinessDay sources said the meeting was also used to review the role all the security agencies played during the last gubernatorial and State Assembly elections. The meeting which was attended by Defence Minister Mansur DanAli, minister of defence, and Babagana Monguno, national security adviser, also had the Chief of Defence Staff, Gabriel Olonisakin, chief of Army staff, Tukur Buratai, chief of Air Staff, Sadique Abubakar, chief of Naval Staff, Ibok-Ete Ekwe Iba The meeting came against the backdrop of various accusations leveled against the Nigerian Army by the Independent National Electoral Commission (INEC), which accused the Army of meddlesomeness in Rivers State elections. Emerging from the meeting which took place inside the President’s office in the presidential villa, Abuja,

Buratai, asked by reporters to react to the allegation, declined but pushed the responsibility to answer questions to the Inspector General of Police (IGP), Mohammed Adamu. He simply stated that “The IG will speak.” However, when the IGP was approached, he too declined to speak saying that “there would be no briefing officially” Recall that INEC had condemned what it described as the role played by some soldiers and armed gangs in Rivers State which it said led to the disruption of the electoral process. The National Commissioner and Chairman, Information and Voter Education Committee, Festus Okoye, said the action which took place during the March 19 election was an attempt to subvert the will of the people. The commission based its allegation on part of the submissions made by its fact-finding committee which assessed the situation in Rivers State.

South-West PDP elders’ caucus insists 2019 elections result manipulated …Alleged conspiracy of silent Iniobong Iwok

he South-west elder ’s caucus of Nigeria’s main opposition, the People’s Democratic Party (PDP) has insisted that the 2019 general election result was manipulated, while the election was characterised by flaws, sabotage, treachery and outright banditry, even as it request all elders, patriots and people of

goodwill across the land to speak out with courage about the perceived wrong and imbalances in the nation’s polity. In a communiqué presented to journalists on behalf of the members of the forum by its spokesman, Uthman Shodipe Dosunmu, on Tuesday, stated that the country deserved peace, harmony, equity and a strengthened bond of brotherhood that would galvanise the nation’s toward greater develop-

ment and prosperity. The forum noted that it had resolved that the present electoral process wherein result sheets would be physically carried across the nation were absolutely primitive and apparently susceptible to all kinds of distortions. The meeting, which had in attendance, Bode George, former PDP deputy National Chairman, Ebenezer Babatope, a member of the Board of Trustees (BoT) Okanlawon Soboyede,

Senator Kofo Bucknor-Akerele, Elder Wole Oyelese, Remi Akintoye, Joju Fadairo, Tunji Shelle, Adegbola Dominic, and several other elders and leaders of the party in the region. The elders’ caucus agreed that the leadership of the party should return to the first principle of fairness, equity and justice. “The apparent distortion of elections in Yobe, Borno, Rivers, Lagos, Adamawa, Kano and many other

states had really diminished the purity of a fledgling democratic nation,” the elders said. The PDP elders further maintained that the Nigerian union had crossed a crucial threshold in the continuous struggle for a common identity and national wholeness, pointing out that the party would never tolerate interference of outsiders in the affairs of South West region of the country.

Wednesday 20 March 2019

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Joe Biden’s candidacy could pit experience against excitement

Former vice-president seen as a potential steady hand at the helm despite doubts over age DEMETRI SEVASTOPULO

oe Biden inadvertently answered the big question looming over the Democratic presidential race when he told fans on Saturday that he had the most progressive record “of anybody running”. “Anybody who would run,” the former vice-president quickly corrected, amid applause at a dinner in his home state of Delaware, smiling and making the sign of the cross. The six-term senator is expected to launch his third presidential bid in early April. His entry into the race would not only expand the nearrecord field of Democrats — from 15 — it would also give the contest a heavyweight who has the longest political résumé of any contender aiming for the White House in 2020. And it would expose the stark divide in the Democratic party between those arguing for a fresh face more representative of society, and those who say that the US, more than ever, needs an experienced commander-in-chief to succeed Donald Trump in the White House. “After four years of tumult, uncertainty and political upheaval, the majority of American voters are looking for stability, experience and some respite from all the dysfunction in Washington,” said Tom Daschle, the former Democratic Senate majority leader. “While in politics there is always a market for young, new and different, 2020 may be a unique year in that voters may be looking for mature, seasoned and trusted.” Mr Biden leads in the polls. But he will face the most diverse presi-

dential field in history, including five women, two African-Americans, a Hispanic and a gay man. While the 76-year-old is one year younger than Bernie Sanders, 39 years separate him and the youngest contender, Pete Buttigieg. One close friend said Mr Biden knew that his party had shifted left since he and Barack Obama left the White House and that he risked being hammered by progressives. As he was making his gaffe on Saturday, Beto O’Rourke, 46, was drawing big crowds of young and old voters in Iowa, including many who proclaimed fondness for Mr Biden but said his time to run was long gone. “I want somebody younger than me,” Jake Blitsch, 71, said after standing up during an O’Rourke event and declaring that Mr Biden should not run. “I love Joe Biden . . . He’s been wonderful. I just think that he is too old.” The most closely watched survey in Iowa, which kicks off national voting with its caucuses in January, found that 27 per cent of voters would back Mr Biden. Only Mr Sanders came close with 25 per cent. Nine per cent favoured Senator Elizabeth Warren, while 7 per cent said they wanted Senator Kamala Harris. J Ann Selzer, who conducted the poll for The Des Moines Register, said 64 per cent of likely caucusgoers thought Mr Biden had the most experience and should run. But she cautioned that the same poll four years ago showed Mr Sanders, who came extremely close to beating Hillary Clinton in Iowa, at 3 per cent — underscoring how Iowa

US companies agree to lift veil on political donations Mondelez, Chubb and MSCI among those promising more disclosure after activist pressure ANDREW EDGECLIFFE-JOHNSON

ive large US companies have agreed to reveal more details about their political spending in response to rising investor pressure on directors to explain how they use shareholders’ funds to influence campaigns and candidates. The disclosure agreements from Ameriprise Financial, Chubb, Mondelez International, MSCI and Tractor Supply represent a significant step forward for corporate governance campaigners, who have used the threat of votes at annual shareholder meetings to wring extra disclosures from companies. “I’ve been involved in many of this season’s dialogues and I can attest that companies are concerned about the heightened reputational and business risks from political spending in today’s hyper-polarised political environment,” said Bruce Freed, president of the Center for Political Accountability. Corporate spending on elections and lobby groups has become more controversial as attention has been drawn to companies’ support for candidates and causes that most divide an increasingly fractured US electorate. Publix, the supermarket chain, last year suspended its political

contributions after protests over its donations to Adam Putnam, a gubernatorial candidate in Florida who had described himself as a “proud NRA sellout” before a deadly shooting at a high school in Parkland. Companies including Intel and Purina similarly cut off their financial support for Steve King, an Iowa congressman, after he expressed support for white nationalism, while Walmart and AT&T were among those who asked for their money back after Mississippi senator Cindy Hyde-Smith appeared to make light of lynching. Boeing’s $1m contribution to Donald Trump’s inauguration attracted fresh headlines last week as the president steered the response to two crashes of the aircraft manufacturer’s 737 Max passenger jets, and some large oil and gas groups have found themselves at odds with the trade associations they fund over carbon taxes. The growing pressure was coming from large institutional investors as well as customers and social media campaigners, Mr Freed said. The disclosure resolutions submitted in the 2018 proxy season received support from 34 per cent of investors on average, up from just 9 per cent in 2005. “You get a strong vote and companies take that as a strong message,” Mr Freed said.

voters try to see all the contenders up close before making a decision. Danielle Glover, executive vicepresident of Young Democrats of America, said its members had mixed views. “There is validity to that argument that he has a lot of experience, but at the same time there is a desire for someone new who can come in with new ideas and bring a different perspective,” she said. While Mr Biden’s appeal to working-class voters could help beat Mr Trump, his bigger challenge will be winning the Democratic primary. Gene Ficken, an Iowa state representative, said that while Mr Biden would be an “excellent” president, his own son had sowed doubts about whether

he was progressive enough for the times. Some voters said Mr Biden was not the right candidate for the #MeToo era, due to criticism over his handling of the congressional appearance in 1991 of Anita Hill, who had accused now Supreme Court justice Clarence Thomas of sexual harassment, when he chaired the judiciary committee. “That would probably be a deal breaker,” said Cassandra Irwin, a young woman from Iowa who said she leaned heavily towards supporting New Jersey senator Cory Booker. “He’s [also] got an interesting history where he seems like he’s got a weird uncle personality and as much as that’s like fun, it might not have a broad

appeal.” During the 2008 presidential race, Mr Biden described Mr Obama as “the first mainstream African-American who is articulate and bright and clean”. Months later, he was mocked for saying “Stand up, Chuck” at a rally before realising then Missouri state senator Chuck Graham was paralysed. Supporters see his gaffes as part of his wanting-to-be-loved “Uncle Joe” personality. After a reporter teased him for joking about Greek food at an Irish embassy event, he clasped his hand for two minutes as he recounted that no one had ever won more votes with the Delaware Greek community. “Do you know what they call me? Joe Bidenopoulos.”

ECB bank supervisor Enria criticises ‘national champion’ mergers Potential collision course with Berlin over plans for Deutsche-Commerzbank tie-up CLAIRE JONES

he eurozone’s top financial supervisor has criticised the idea of creating national or European champions to compete with global rivals, potentially putting the European Central Bank on a collision course with Berlin’s efforts to protect its banking industry via a merger of Germany’s two biggest lenders. In his first interview since becoming chair of the ECB’s Single Supervisory Mechanism (SSM), Andrea Enria said: “I do not particularly like the idea of national champions, of European champions; especially when you are a supervisor, you should not promote any particular structural outcome.” Deutsche Bank and Commerzbank have begun talks on a possible merger after the government in Berlin said it would support the restructuring needed to make the tie-up a success. Mr Enria declined to comment specifically on Deutsche and Commerzbank’s plans in line with SSM policy not to comment on individual lenders. Mr Enria, who was speaking before the banks confirmed merger talks, did not say how the supervisor would treat

the deal. He made clear that in all instances, the SSM would ignore any political motivations behind proposed tie-ups. “What is relevant for us is the deal which is put forward to us, and the only things we care about are the sustainability of the project,” he told the Financial Times last Wednesday. “The ability to deliver a bank which has a strong business, a good capital position, is able to generate profits, and to respect in the medium term the standard requirements, prudential requirements, that is what we look at.” Berlin has become more aggressive in protecting its largest businesses from foreign pressure. Olaf Scholz, the German finance minister, has been an important driver in encouraging Commerzbank, which is 15 per cent state-owned, to hold talks with Deutsche. Peter Altmaier, Germany’s economy minister, has also proposed an industrial strategy to challenge China’s dominance. However, European officials have signalled that they are reluctant to drop their pro-competition stance. The opposition of the SSM to create “champions” mirrors that of Margrethe Vestager, the

EU competition commissioner, who this year blocked a proposed Franco-German merger between train manufacturers Siemens and Alstom. Mr Enria took over the supervisor’s role, set up in 2014 in the aftermath of the region’s sovereign debt crisis, in January. Eurozone banks are in a less critical state than during the financial crisis but are struggling to keep up with their US and Asian investment banking rivals in terms of market capitalisation. While Mr Enria said it was “a problem” that European banks were not seen as “attractive investment propositions”, he insisted the region’s financial services industry should remain open to competition. “You want to have a market which is open, so that if there are foreign banks, foreign investors, bringing their expertise, their capital, into your jurisdiction, that should be welcome,” Mr Enria said. The regulator said he expected another seven big lenders and 17 smaller institutions would fall under SSM supervision as banks relocate from London after Brexit. They are expected to add around 6 per cent to the €21.2tn of assets under SSM supervision.

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FT US farmers being cut out of Japan after TPP withdrawal

Chaos across South Africa as blackouts roll into third day

Producers urge Trump to start trade talks as they lose Asian market share to rivals

President apologises to nation as outages hit industry, traffic and communications

JAMES POLITI

S farm groups are ramping up pressure on Donald Trump to quickly launch trade talks with Tokyo, as they face mounting evidence of lost sales and market share in Japan following America’s withdrawal from the Trans-Pacific Partnership. In recent weeks, wheat, pork and beef producers in the US have complained that they are being rapidly outflanked and replaced in the lucrative Japanese market by rivals including Canada, Australia, and EU member states, whose trade deals with Japan entered into force in recent months. Farm belt politicians, including from Mr Trump’s own Republican party, are increasingly restless about the latest trends in trade with Japan, which has added to the angst among farmers and ranchers about the president’s protectionist trade policies. Farmers and ranchers have already suffered heavily because of retaliatory tariffs imposed by China on their products. “We’re now behind in Japan because our other allies here have signed agreements and are moving forward and going to receive the benefits of the tariff reductions and it’s going to put US producers at a significant disadvantage,” Steve Daines, a Republican senator from Montana, told Robert Lighthizer, US trade representative, at a congressional hearing last week. He pointed to the struggles of his state’s grain producers. “They’ve lost barley contracts with Japanese clients and they’re very concerned,” he said. Jim Monroe, a spokesman for the US Pork Producers Council, said that US pork exports to Japan, a $1.6bn business last year, had dropped 35 per cent in volume so far this year. “We’re already losing sales and seeing the negative impact . . . we’re under significant duress right now,” he said. He added that on April 1, at the beginning of the Japanese fiscal year, additional tariff cuts would take effect, further putting the US at a disadvantage. Expeditious negotiation of a trade agreement with Japan is one of US pork’s top priorities, he added. Tobias Harris, vice-president at Teneo Intelligence, noted that Japanese imports of beef from TPP countries had surged 150 per cent year on year in January — another sign that a big shift in trading patterns was under way. “Every week our agriculture folks are losing their competitiveness in Japan,” said Wendy Cutler, a former US trade negotiator and vice-president of the Asia Society Policy Institute. “They are seeing it now”. The pain felt by farmers is a vivid reminder of the economic consequences of Mr Trump’s decision early in his presidency to withdraw the US from TPP — a trade pact among 11 Pacific nations including Japan — that was negotiated by Barack Obama. While many of the fears about US withdrawal focused on the geopolitical impact — signalling American disengagement from Asia to the benefit of China — the raw financial costs have not materialised until now. The US administration has responded by vowing to accelerate plans for trade talks with Japan. Mr Trump and Shinzo Abe, the Japanese prime minister, agreed to hold negotiations last September, but these have not yet been formally launched. Mr Trump is expected to hold another meeting with Mr Abe in May, which could offer a chance to do so.

Wednesday 20 March 2019

JOSEPH COTTERILL

Jay Powell, the Federal Reserve chair, says the Fed is taking a ‘patient, wait-and-see approach’ to monetary policy © Getty

Four things to watch at the Fed’s March meeting Balance sheet and outlook in focus as Powell preaches monetary policy patience JAMES POLITI

peaking in northern California earlier this month, Jay Powell, the chairman of the Federal Reserve, appeared content with the US central bank’s cautious new equilibrium in monetary policy. Late last year, Mr Powell had led the Fed’s pivot away from a bias towards steadily rising interest rates, and towards a more neutral posture that appears to have been vindicated by soft economic data in the US and abroad. “With nothing in the outlook demanding an immediate policy response and particularly given muted inflation pressures, the committee has adopted a patient, wait-and-see approach to considering any alteration in the stance of policy,” he said at Stanford University. This week, that view is expected to be endorsed by other Fed monetary policymakers as they meet in Washington for their second formal gathering of 2019. Against a backdrop of weakening growth in the US and abroad, and huge uncertainty over key sources of risk such as Brexit and US-China trade negotiations, the US central bank is expected to refrain from new interest rate increases and tone down its expectations of monetary policy tightening later in the year. There is also a good chance the Fed will announce that the reduction of its balance sheet following the big expansion during the financial crisis will be halted later in the year, leaving the US central bank with enough of a buffer to take aggressive action in the event of a future financial and economic meltdown. “This will be a reality check, acknowledging that economic mo-

mentum has started to slow, which we’re seeing in the data, and the cross-currents are still present,” said Lydia Boussour, senior US economist at Oxford Economics. “We think that Powell will reinforce that message of patience,” she added. Here are four key things to watch when the Fed announces its decision on Wednesday. The dot plot The main source of disagreement among economists is the degree to which Fed officials have grown more dovish and wary of further monetary policy tightening in recent weeks. It is almost certain that the fed funds rate will remain at 2.25-2.5 per cent, but the question is for how long. In December, the median forecast of Fed officials — as indicated by dots on a chart released by the US central bank every two months — called for two increases in interest rates this year. That pace now seems too aggressive. While some economists believe the median expectation this week will be for one rate rise this year, others say Fed officials might signal there could be none at all. “Beyond the median dot, we expect a major capitulation by the more hawkish-leaning Fed officials,” said economists at Deutsche Bank in a note on Friday, noting that interest rate projections for 2020 and 2021 would also be lower. Mr Powell has sought to play down the importance of the “dot plots”, saying they are merely an “input” to policy, but they will offer some key insight into the extent of the shift in Fed thinking. The outlook Since its latest statement in January, US economic data have been generally weaker than expected, with a few bright spots. Job growth ground to a near-halt in February, but that is probably too little evidence for the Fed to be worried that labour market

growth is stalling. Industrial production figures were also soft, but consumer sentiment rose unexpectedly. Some economists are expecting annualised growth in the first quarter to fall below 1 per cent, after hitting 3 per cent in 2018, but are predicting a rebound later in the year. While this slowdown is expected to be reflected in more cautious interest rate projections, it is not certain that the Fed statement — and economic forecasts — will be substantially different than they were in January. Global growth has also weakened, and there are still too many questions about the fate of negotiations over Britain’s exit from the EU, and the US-China talks, for the Fed to take a firm view. In January, the base case of Fed officials remained “sustained expansion of economic activity, strong labour market conditions, and inflation near the committee’s symmetric 2 per cent objective”. If there is a meaningful downgrade in that language, it would suggest that deep concern is lurking behind Mr Powell’s patient approach. The balance sheet In 2017, Janet Yellen, then Fed chair, began the process of shrinking the Fed’s balance sheet from $4.5tn, a peak reached following multiple rounds of quantitative easing introduced to combat the financial crisis and support the ensuing tepid recovery. Fed officials have given strong indications that this process will be concluded by the end of 2019, leaving the US central bank with more than $3.5tn in assets and at least $1tn in bank reserves to manage future crises, according to economists. “It appears that the new normal size of the balance sheet is likely to remain greater relative to the size of the economy than it was before the financial crisis. How much larger is still an open question,” Lael Brainard, a Fed governor, said this month.

May warns UK faces ‘crisis’ following Bercow ruling Commons Speaker has said PM’s Brexit deal must be substantially changed before a further vote GEORGE PARKER

heresa May has told her cabinet that Britain is facing a “crisis” after Commons Speaker John Bercow made it even harder for her to pass her Brexit deal through parliament. Mrs May will acknowledge the Brexit impasse when she writes to Donald Tusk, European Council president, seeking a lengthy delay to Brexit beyond the scheduled exit day of March 29. The prime minister’s request for an extension to the Article 50

exit process will be sent to Brussels in the next 48 hours; EU27 leaders will discuss the request at a summit in Brussels on Thursday. Mrs May’s spokesman said the prime minister had previously warned that Britain would face a “crisis” if MPs voted down her deal for a second time earlier this month. Referring to Mr Bercow’s ruling that Mrs May could not submit an unchanged Brexit deal to the Commons for a third vote, he added: “The events of yesterday tell you that situation has come to pass.”

At a lengthy meeting on Tuesday Mrs May and her cabinet discussed ways in which the government’s Brexit deal might be revived, in spite of its defeat by 149 votes earlier this month. Ministers debated how a third vote might be framed to avoid Mr Bercow’s apparent blockade. Some argued that if Britain’s exit date is changed at the European Council this week, then MPs would be asked to vote on a substantially different motion when Mrs May presents her deal for a third vote, possibly next week.

actories, traffic lights and mobile phone connections sputtered across South Africa on Monday as the indebted stateowned electricity monopoly imposed a third day of severe outages. Eskom said it was “working round the clock” to restore multiple units that broke down and choked Africa’s most industrialised economy. The unusually fierce, so-called stage four blackouts have been met with dread by South Africans and — two months before national elections — have embarrassed the governing African National Congress of President Cyril Ramaphosa. In Johannesburg, the country’s economic hub, blackouts triggered rush-hour gridlock because traffic lights at busy junctions no longer worked. Workers had to cut short their day so that they could get home before power cuts shut down electric gates and locked them out of their properties. South Africans have joked that stage five blackouts would involve Eskom coming to their homes to blow out the candles. Up to stage eight — meaning 12-hour blackouts — is technically possible if shortages worsen. With urban areas in darkness for four hours at a time, salons have had to finish off clients’ nails using the light of mobile phones. Radio talk show hosts debated the benefits of going off the grid in studios left sweltering without air-conditioning. Without enough electricity to pump reservoirs, water shortages are also looming in parts of Johannesburg, a municipal utility said. The country’s national energy regulator estimated that the cost of lost power to the economy is about R87 ($6) a kilowatt hour, or $140m a day at the current level. The latest round of blackouts prompted an apology to the nation from Mr Ramaphosa, who has pledged to break up Eskom. “We are very sorry to South Africans for this type of crisis . . . I am certain that we are going to be able to turn it around in the next two to three days,” the president said on Sunday. Mr Ramaphosa has asked for patience on a long-term plan to divide Eskom into three separate state businesses and defuse unsustainable debts of $30bn. But South Africans are not taking any chances and are stocking up on home diesel generators. Business has grown increasingly desperate. “We have never been in this dire position before,” said Shaun Nel, spokesperson for South Africa’s Energy-Intensive Users Group, a body of miners, smelters and industry, which accounts for 40 per cent of the country’s power demand. South Africa’s power supply has been growing ever more precarious for months due to Eskom’s reliance on ageing coal plants and the legacy of misrule under Jacob Zuma, the former president. The power stations are 37 years old on average but maintenance was slashed as Eskom’s finances went into a tailspin. In February Eskom received a $5bn state bailout but analysts warned more may be needed.

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Democratic lawmaker calls for Facebook antitrust investigation David Cicilline says FTC should launch a competition probe into social media giant KADHIM SHUBBER

top Democratic lawmaker has called for an antitrust investigation into Facebook, in the latest sign of the political pressure on the social media giant and the government agencies who regulate the company. David Cicilline, who chairs the House antitrust subcommittee, urged the Federal Trade Commission on Tuesday to launch a competition probe into whether Facebook had violated antitrust laws. Mr Cicilline said in a letter to the FTC’s five commissioners that it should investigate Facebook’s acquisition of rivals like Instagram and WhatsApp, the company’s “exclusionary conduct” in relation to former competitors like Vine, and alleged abuses of its monopoly power connected to Facebook’s “widespread commercial surveillance” of its users. “The FTC is facing a massive

credibility crisis,” said Mr Cicilline in an accompanying New York Times op-ed, arguing that the agency had “enabled Facebook to extend its dominance” by failing to take action in the past. The call by Mr Cicilline is a sign of the mounting pressure in Washington on large technology companies but also on the authorities with responsibility for regulating them. While Republicans currently control the federal government, the comments by Mr Cicilline point to the potential ramifications of a Democratic takeover of the White House. Earlier this month, Elizabeth Warren, the Democratic senator and presidential candidate, vowed to break up Facebook, along with Amazon and Google, if she prevailed in the 2020 presidential campaign. Facebook did not immediately return a request for comment. A FTC spokesperson confirmed receiving Mr Cicilline’s letter but had no additional comment.

Coal producers battle to keep UK mining industry alive Approval secured for Britain’s first deep coal mine in 30 years despite environmental opposition CHRIS TIGHE

hey are the last survivors of an industry that shaped the Industrial Revolution, employed 1.2m people at its peak and made Britain a dominant global power. Now the country has only a handful of coal mining companies. And they face increasingly tough environmental opposition as they try to win permission for new projects. Cumbria county councillors on Tuesday unanimously approved plans for the £180m Woodhouse Colliery, an underground, offshore coal mine accessed from near Whitehaven. West Cumbria Mining, the proposer, which is backed by Australian private equity firm EMR Capital, has spent £28m so far over five years on what will be the UK’s first deep coal mine to open in more than 30 years. Meanwhile, County Durhambased Banks Mining, which has spent almost six years trying to secure planning permission for its proposed Highthorn mine near Druridge Bay, a Northumberland beauty spot, expects to learn before Easter whether the government will give the go-ahead. Banks Group, a family business, has so far spent £2m on Highthorn, including legal fees on a successful High Court challenge to a ministerial ruling that overturned earlier approval. Deep coal mining ended in the UK in 2015, so Woodhouse will be unique in current UK coal mining. Other schemes use opencasting, extracting coal from the surface using excavators. Banks, Britain’s biggest producer, has also filed a planning application to opencast coal and fireclay on greenbelt land a few miles west of Newcastle. With opencasting on two of its three sites nearing an end, it is also seeking permission to increase output from its Bradley site in County Durham. This site has been the focus of sustained protest action by environmental campaigners. “Because it’s coal, it has a blanket

image problem; it’s just seen as a headline — coal is bad,” said Gavin Styles, managing director of Banks Mining. Like others in the sector, he argued that, while the UK still needed coal, it should be mined in the UK. This, he said, supported jobs and reduced reliance on imports, sometimes from countries with poorer environmental controls. The applications are not guaranteed success. Merthyr South Wales, which operates the Ffos-y-Fran opencast site at Dowlais, 20 miles north of Cardiff, is laying off its 180 employees when mining ends in two years’ time because planning permission to opencast an adjacent site, Nant Llesg, was refused. To the producers’ intense frustration, British industry and power stations are using coal imported from Russia, the US and Colombia. Government figures show that in 2018 UK coal production, which has declined by 95 per cent since the 1950s, fell to just 2.6m tonnes, the lowest in well over a century. Imports, despite dropping sharply since 2015, rose 15.5 per cent from 2017 to 9.82m tonnes in 2018. Transportation of imports adds to emissions, Mr Styles argued. “Greenhouse gases created by transportation of coal are significantly higher than from the UK.” In the case of Russia, he says, it is five to seven times higher. Environmentalists argue that coal contributes more to climate change than any other energy source. Friends of the Earth said coal was the world’s biggest single source of carbon dioxide emissions. Preventing global warming from spiralling out of control required a switch to clean energy, it said. “Opening up new opencast coal mines would jeopardise the government’s claim to international leadership in tackling climate change and phasing out coal use,” said Tony Bosworth, a Friends of the Earth energy campaigner.

Is the equity bull market too big to fail?

Private sector’s growing reliance on stocks means a crash could substantially damage the economy JOSEPH CARSON

he US equity market is on another streak, posting a doubledigit gain since the start of the year and extending a bull run that has lasted 10 years. In terms of pure numbers, equities occupy a position far above any other asset, and in everyday life stocks have jumped ahead of real estate as a store of wealth for Americans. From a risk management perspective, policymakers should consider broadening the definition of “too big to fail” to include market segments and not just financial groups since, at various times, the main risks to the economy and financial system have been the high value of assets on the private sector’s balance sheets. The power and influence of equities should not only be assessed by the numbers, but also by how the market has become part of daily public and political conversation as well as a driver and verification of policy. At today’s prices, the market value of publicly traded equities is estimated to be about $33tn, not far off the record high of $36tn recorded in the third quarter of 2018. Measured in relation to nominal GDP, the market value of equities stands at about 1.6 times. The record high of 1.7 times was reached twice before, in Q3 2018 and Q1 2000. Household holdings of equities, both directly and indirectly held, stand at almost $30tn, and represent the highest valued as-

set on household balance sheets. Equities account for 33 per cent of total household financial assets, topped only by the 37 per cent share recorded in 2000. Equities have exceeded the market value of real estate on household’s balance sheets for six consecutive years. The only other time equities exceeded real estate was in 1998-1999, which came on the heels of five consecutive years of 20 per cent to 30 per cent gains in the equity market. News on the equity market dominates the airwaves. Today there are several financial markets shows dedicated to stocks, and even news TV broadcasts post an equity ticker showing how the market is faring. Updates on the equity markets are as frequent and as common as weather reports. The equity market has become an important driver of consumer and business confidence and is often viewed as the single most important “real time” barometer of current and future economic conditions. Monetary policymakers often look at the equity market for a validation of their views on the economy and policy stance. Many analysts think the recent pivot by the US Federal Reserve to pause from further rates hikes was directly linked to the near 20 per cent selloff in equities in the fourth quarter of 2018. And political leaders such as President Donald Trump have been pointing to the stock market as a barometer of the success or

failure of their policies and even their leadership. None of this suggests a correction in the equity market any time soon, but it does illustrate how it has risen to a level of financial, economic, public and political importance never seen before. That raises the natural question: “Is the equity market too big to fail?” That clearly was a valid issue back in the late 2000s when the housing market — a key driver of growth and liquidity — crashed, triggering widespread damage to the economy and financial market. When it comes to the equity market, that question can only be answered in hindsight, but after 10 years of gains risks are rising, especially since recent gains appear to be linked to the promise of easy money and not stronger corporate earnings. Policymakers have consistently argued that it is impossible to identify asset bubbles and the best defence against them is robust supervisory and regulatory oversight. That policy does not work in practice when the risks sit on the balance sheets of the private sector and easy money is part of the problem. At today’s levels, the equity market is too big to fail without causing substantial damage to the economy that would be far greater than what happened after the tech bubble burst in 2000, since policymakers have far less capacity to reduce interest rates and real estate is unlikely to provide the same buffer for investors or the economy.

Wall Street’s fear gauge drops to over five-month low PAN KWAN YUK

anic over? It is according to the derivative markets. Wall Street’s so-called fear gauge fell to its lowest level in five and a half months on Tuesday, as diminishing expectations for further US interest rate rises this year continue to boost investors’ appetite for equities. The Cboe’s Vix index, which gauges investor expectations of short-term volatility in US stocks, dropped as much as 5.6 per cent to trade at 12.37. That’s the lowest level since October 5 and marks a dramatic climbdown from the 36.2 reached at the height of the market sell-off in late December.

The move comes amid a continued rally on Wall Street. The S&P 500 has fully recovered from the December downturn to trade at a five-month high and is up 13 per cent so far this year. The Vix index is the most closely watched gauge of implied volatility in the world’s biggest stock market. It reflects the cost of buying shortterm options on the S&P 500, which pay off if stocks move significantly over the next 30 days. Implied volatility for equities jumped late last year as concerns about the Fed’s aggressive rate hikes, slowing global economic growth and Washington’s trade war with Beijing sparked a sharp market downturn.

But Wall Street has regained its footing since the start of the year, with frayed nerves since soothed by the Fed’s unexpectedly dovish tilt. Having raised interest rates four times in 2018, the US central bank surprised the market in January with a pledge to be patient on further tightening this year. While the Fed currently has pencilled in two rate rises in 2019, economists are widely expecting the bank to lower this forecast and possibly announce an end to its balance sheet reduction programme when its two day policy setting meeting ends on Wednesday. Investors meanwhile are pricing in zero rate rises this year, according to Fed fund futures.

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ANALYSIS Apple ready to unveil big bet on television The question is whether media companies will sign up to its TV platform TIM BRADSHAW AND ANNA NICOLAOU

Turkey: Erdogan’s struggle to lift flagging business

With the country in recession, Turkish companies want bold measures to tackle bad debts and restore growth LAURA PITEL

“W

hen it comes to money, we have serious problems,” businessman Mehmet Naci Topsakal confided to Turkey’s President Recep Tayyip Erdogan at a ceremony to mark the construction of a new Istanbul arts centre in February. Visibly uncomfortable, he blamed the state housing agency that oversees hundreds of projects nationwide for “ruining us” and asked the Turkish leader for a fuller discussion at a later date. Unfortunately for the chairman of building contractor Yeni Yapi — and embarrassingly for Mr Erdogan — his microphone was on and the confidential conversation quickly became very public. It revealed what the rest of the business sector already knew: countless companies across the country are struggling in a multitude of ways after last year’s dramatic currency meltdown. Turkey has enjoyed a period of relative calm in the financial markets since the crisis, which erupted in August after a bitter spat between Mr Erdogan and his US counterpart, Donald Trump. At its peak it threatened to spark contagion across emerging markets. Yet while the lira has strengthened after hitting a succession of all-time lows, last year’s almost 30 per cent depreciation continues to reverberate through the economy. Businesses that gorged on an influx of overseas money in the past 10 years are now straining under a $285bn pile of foreign currencydenominated debt that has become much harder to service, given the weaker lira. Private banks have battened down the hatches, limiting their lending as they brace themselves for further rises in non-performing loans. The credit crunch — combined with sky-high 24 per cent interest rates — has taken its toll. Last week, fourth-quarter growth figures proved what economists had long predicted: at the end of 2018 the country entered its first recession in a decade. Mr Erdogan is keenly aware of the damage that this gloomy backdrop could inflict on his ruling Justice and Development party, or AKP, in local elections on March 31. Insiders admit that the party is anxious about losing control of Ankara, the nation’s capital. The president and his son-inlaw, the finance minister Berat Albayrak, have taken unconventional approaches to limit the pain for voters, from leaning on state banks to pressurising retailers to hold down prices. Both insist that Turkey has now left its troubles behind, but some analysts remain unconvinced. Investor sentiment is still shaky, there are tensions with the US and deep problems in the corporate world that are likely to limit Turkey’s ability to return to its once fast-paced growth.

“My worry is that this contraction could be in effect for more than a year,” says Fatih Ozatay, a former deputy central bank governor. After the elections, the government has a four-year window with no scheduled polls — unheard of during Mr Erdogan’s 16 years in power. That offers what one Turkish chief executive calls a “long runway” for reforms that have been demanded by investors and the international business community. He wants the government to outline a plan to reassure the markets, deal with the problem of bad debts — and put the economy on a path to sustainable long-term growth. “There are many things going for this country,” he says. “We need some adjustment to get growth coming from exports rather than domestic consumption and real estate development. That needs to stop.” Limited options In the past, Turkey has often experienced V-shaped recessions, with sharp contractions swiftly followed by a strong return to growth. This time, however, economists talk about a U-shaped or even an L-shaped scenario due to the debt burden on the banks. “Traditionally . . . lending has picked up quickly,” says Roger Kelly, lead economist for Turkey at the Istanbul office of the European Bank of Reconstruction and Development, or EBRD. “But when banks are deleveraging, you can’t expect them to lend their way out of a slump.” Turkey Lira Yet the tools available to the government to stimulate the economy are limited. One conventional response would be to cut interest rates. But the central bank — long browbeaten by Mr Erdogan, who has described high interest rates as “the mother and father of evil” — is still rebuilding its credibility with investors after being slow to react as the currency slid last year. And even though Turkey now has the world’s fourth-highest interest rates — after Argentina, Yemen and Suriname — annual inflation, stuck at 20 per cent, means most investors believe that cutting rates is risky. “They should not be tempted to cut too much or too quickly,” warns Esther Law, a senior investment manager for emerging market debt at the asset manager Amundi. At the same time, Mr Albayrak cannot spend his way out of the problem. He has promised to make fiscal discipline an “anchor” of his economic leadership, with a target budget deficit of 1.8 per cent of gross domestic product this year. Ms Law says she and other investors will be following events closely to see if the government is “tempted” to use fiscal stimulus to boost growth. Any mis-steps risk triggering a fresh run on the lira that the country can ill-afford. “It’s still fragile,” says Nora Neuteboom, an economist at

the Dutch bank ABN Amro. Unable to cut rates and unlikely to unveil a large fiscal stimulus, analysts say the government has little choice but to help the banking sector start lending again. That, they argue, means addressing the issue of corporate debt. Yet ahead of the elections the government has leaned on banks to lend more, and at lower costs. A mid-level manager at one of the country’s three state-owned banks says he has been ordered to lend even to companies with no prospects of repaying. “If you come to me and say: ‘I’m bankrupt’, I will say: ‘No you’re not’,” he says. “We will just keep rolling over your debt.” Such tactics are fuelling concerns about the creation of “zombie companies” that survive only by borrowing. Experts say it risks disguising the true extent of the problem. “I’m very worried,” says the bank manager. “But what can we do?” Unburden the banks The downturn in the second half of 2018 was characterised by a sharp rise in the number of companies seeking bankruptcy protection. Applicants ranged from an 81-year-old coach company to a construction business which fulfilled Mr Erdogan’s wish for a vast new mosque on an Istanbul hilltop. Banks are reporting a slow but steady rise in both non-performing loans and those under close watch. The official NPL rate now stands at 4 per cent of the banks’ total loan book — almost TL100bn ($18.3bn). A limited “stress test” of the banking system by the regulator in December forecast that the NPL rate could reach 6 per cent. Most analysts expect the true figure to be higher. “We forecast 7-9 per cent NPL ratios at private banks by the end of 2019,” says Gabor Kemeny of research firm Autonomous. A Standard & Poor’s analyst said last month that, by a broad definition, the figure could reach 15-20 per cent by the end of the year. The government’s strategy for dealing with bad loans has so far centred on encouraging banks to top up their capital and asking lenders to help companies to restructure their debts. Zumrut Imamoglu, chief economist at Tusiad, Turkey’s largest business association, thinks it needs to go further. “I’m not sure we can address all the problems with restructuring only,” she says, pointing to the deeper, more intractable problems in sectors such as energy and construction. Coal-fired and gas-fired power plants have faced rising costs for energy imports while the price that users can be charged is capped by the government. Many are struggling to pay back foreign currency debt. Real estate companies used foreign loans to build shopping malls, but now face a currency mismatch after being ordered to strike rent deals with retailers in lira.

teve Jobs told his biographer in 2011 that Apple had “finally cracked” a winning formula for television. But eight years later, his successor Tim Cook is still trying to win a place in his customers’ living rooms. For more than a decade, Apple has toyed with the idea of making its own television sets and pitched cable companies on various kinds of software integrations and bundled services. Now, after several false starts, Apple is ready to unveil its latest vision for TV, with an event at its Cupertino headquarters next week titled “It’s show time”. Mr Cook’s latest bet is that an acceleration in cord-cutting and the proliferation of streaming services has created a new role for Apple as aggregator. Apple wants to reinvent the TV guide with a personalised slate of programming drawn from a wide range of sources, including a few shows of its own. Even getting as far as launching a new service is something of an

when Netflix is chasing the mass market with a huge volume of original shows. “Apple are taking a lot of pride in being very curated, with a smaller but higher-quality offering,” said one producer who has worked with both companies. However, some in Hollywood have struggled to adjust to the secrecy and exacting standards with which Apple typically approaches all its products. While Apple could show an “abundance of caution at taking each little step”, the producer said, the company is also anxious not to develop a reputation that it is difficult to work with. “They want the best creative talent to work there, not find [Apple] so maddening that they give up.” Analysts estimate Apple could charge $10 to $15 a month for a subscription video service that includes its original shows. The company needs new sources of income to counteract the iPhone’s recent declines and meet its $50bn services revenue target by 2020. Some on Wall Street are sceptical that a video service can make

achievement for Apple. Unlike the music and telecoms industries, which have been forced to cede control to Apple through the iPod and iPhone eras, pay-TV operators have proven able to cling on to their direct relationship with customers. Instead of trying to reorient the TV experience around an iPhone-like grid of apps from the likes of Netflix, Disney or HBO, Apple’s new TV platform is likely to put the focus on individual shows. Its existing “TV” app, which is already available on iPhones and iPads as well as the Apple TV box itself, is designed around each individual viewer’s favourite series, with personalised recommendations for other TV and movies drawn from a wide range of providers. Until now, however, shows from key providers such as Netflix have been absent from Apple’s TV guide. With Hollywood still on the fence about teaming with the iPhone maker, Apple embarked on a radical change in its television strategy two years ago. It hired two well-regarded executives, Jamie Erlicht and Zack Van Amburg, from Sony Pictures TV. Armed with a billion-dollar budget, they began to commission its own original TV shows and now has more than 30 series in the works from big-name talents including Oprah Winfrey and Steven Spielberg. Apple just needs one those original shows to become a hit — perhaps its new drama starring Reese Witherspoon and Jennifer Aniston, a sci-fi epic based on Isaac Asimov’s Foundation novels, or a mystery thriller from Sixth Sense director M Night Shyamalan — to pull in viewers to its TV app. As it scouted for shows, Hollywood executives say that Apple has sought out high-quality content at a time

a meaningful impact. Analysts at Goldman Sachs said in a note this week that even if 20m people sign up to a $15 monthly fee, by 2020 it would generate only $3.6bn in annual revenues — barely 1 per cent of Apple’s $265.6bn total sales last year — and add less than half of 1 per cent to Wall Street’s consensus earnings estimates. To bolster the income from its own shows, Apple has also spent many months negotiating deals with television networks and film studios to offer their content too. Viacom and CBS are in advanced talks to license programmes to Apple, while AT&T-owned HBO has also held talks, said people familiar with the matter. WarnerMedia’s other content is not being discussed but could be in the future, these people said. The pricing would mirror the structure of Amazon’s Channels, in which Prime customers can pay an additional monthly fee for individual subscriptions to other streaming services, such as Nickelodeon’s Noggin, aimed at pre-school kids. “You basically have an easy flow of the content back and forth between different brands,” said one person with knowledge of the plans. Hollywood executives are tempted to team up with Apple because of its massive reach, but are also wary of the potential costs of further ceding control of their content to tech giants. Within Apple’s ecosystem, they may not be privy to information about who their customers are or what they are watching. TV groups fear losing their longstanding control over pricing or user interface design, with their channel brands submerged behind a list of programmes and Apple acting as gatekeeper.

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OIL

Ghana: Cabinet approves Downstream Petroleum Policy Page 52 GAS

Egypt: Eni finds gas offshore Egypt

Debrief

Page 53 Market Insight

Should Nigeria panic as Egypt is back to LNG exporters’ club? Maybe not FRANK UZUEGBUNAM

Oil slips on economic slowdown, but OPEC-led cuts still support Page 57 OPEC weekly basket price DAY

PRICE

15/3/19

66.91

14/3/19

67.29

13/3/19

66.60

12/3/19

66.30

11/3/19

66.01 Source: OPEC

gypt is back again into the club of major exporters of liquefied natural gas (LNG) after halting exports in 2014. The North African country had set the end of 2018 target for natural gas selfsufficiency, and now moving ahead in their quest to become a regional hub for energy trading by liquefying gas and exporting it. Having successfully weaned itself of natural gas import, Cairo exported 300 million cubic feet per day of LNG in 2018 and by January 2019, its LNG export grew to about 520 million cubic feet per day. At present, the country is exporting 800 million cubic feet per day from Idku by Malaysia’s Petronas, Royal Dutch Shell, and Egypt’s two main state oil and gas compa-

nies, Tarek El-Molla, the petroleum minister said. For April 2019, the state gas company, Egyptian Natural Gas Holding Company (EGAS), tendered to sell four cargoes of LNG for loading. The bids are valid until March 25. The company is also marketing four cargoes for loading in May and three for June. “The speed and scale of which Egypt has turned from importer to notable exporter is likely to further loosen the already wide supply/demand balance,” Nick Campbell, a director at industry consultant Inspired Energy Plc, said. Egypt’s extra supplies came at the time LNG market is battling with the lowest spot prices since July 2017 following a mild winter that curbed demand across Europe and Asia. But should Nigeria panic about its market share? “Essentially, we are sold out. I have committed contracts; short, medium, long terms. At

this moment, spot trading does not mean much to us at NLNG”, Tony Attah Managing Director/ Chief Executive Officer of Nigeria LNG Limited, told Businessday on the sidelines of Gastech Conference in Barcelona, Spain late 2018. It is also noteworthy that the US, Russia and Australia are all contributing to the glut, starting new plants to export the fuel and build market share. “The advantage we have is that we are not green, we already have off-takers who have tasted us and know what we can do. We are not as exposed to the new fundamentals in the market around short or long term but we are quite flexible to leverage the situation. In the end, it is about value and it is how you can create a better value today”, Attah said. Egypt’s revival was built on a run of discoveries and bringing them online on schedule. Eni’s Nooros is churning out 900 million cubic feet of gas

daily, becoming Egypt’s biggest producing field since it came on stream late in 2015. Production from two BP fields in the West Nile Delta development, Taurus and Libra, started eight months ahead of schedule. Its North Alexandria gas fields are set to boost output as well. The giant Zohr gas field was discovered in 2015 by the Italian energy company Eni and is the largest ever natural gas find in the Mediterranean Sea with around 30 trillion cubic feet of gas reserves. Zohr gas field is currently producing two billion cubic feet per day (bcfd) of natural gas, equivalent to about 365,000 barrels of oil equivalent per day (boed). Eni also announced recently that it made another gas discovery under evaluation in the Nour exploration prospect located in the Nour North Sinai Concession, in the Eastern Egyptian Mediterranean, about 50 km North of the Sinai peninsula.

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and Ghanaian-owned petroleum downstream industry capable of attracting increased local value-added investments. Nkrumah said it is also to enhance job opportunities as well as indigenous knowledge, expertise and technology in the industry for the overall benefit of Ghanaians. The new policy frame-

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Ghana: Cabinet approves Downstream Petroleum Policy he Cabinet of the Republic of Ghana has approved a Policy on Ghanaian content and Participation in the Downstream Petroleum Industry in Ghana. Kojo Oppong Nkrumah, Information Minister, said the policy is intended to ensure a Ghanaian-driven

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work covers areas such as; trading, shipping and bulk distribution of petroleum products; Infrastructure development in the petroleum sector such as the construction of port discharge facilities, processing and petrochemical plants; Supply of petroleum to strategic sectors of the economy and general procurement

Brief Guinea Bissau: Exceed wins contract to drill first-ever deepwater well offshore Guinea Bissau

of goods and services for the downstream industry. He added that though there has been significant progress in the role and participation of Ghanaians in some of the downstream activities, the government believes there is still lots more space for Ghanaian participation. “The policy provides for a grace period for building local capacity as well as onboarding best practices from other jurisdictions where this is being practised. “Energy Minister, Peter Amewu, will provide more details on the policy nuances per activity. A petroleum downstream Ghanaian content committee is to consequently be established under the NPA to supervise, coordinate, administer and monitor and manage the development of local content in the downstream industry,” Nkrumah said. Government, he said, believes efforts such as these will assist in strengthening the Ghanaian economy as well as ensure that Ghanaian capital is bolstered.

xceed, a well management and performance improvement specialist, continues to consolidate its West African presence, by announcing the company’s first contract to be undertaken offshore Guinea Bissau. Awarded by Swedish E&P company, Svenska Petroleum Exploration AB, the project will comprise full well project management services to deliver a deep water exploration well, the first deep water well to be drilled offshore Guinea Bissau. Exceed’s work scope will include all front end engineering planning, service procurement support, logistical set-up, HSE management (including systems permitting) and operational execution of the well. Valued in the region of $4 million, the 12-month contract follows on from existing operations in the region, begun during fourth-quarter 2018, which have seen Exceed steer an operator through its maiden well project offshore The Gambia. “As the first deepwater well to be drilled offshore in this area, this contract win succinctly illustrates Exceed’s unparalleled reputation for deepwater project management services in the West African region.

“Our track record and continuous investment in capability inspires confidence on a global level. We are at the forefront of operations in some of the world’s most complex and remote environments, consistently chosen to manage those challenging projects,” Al Brockie, Head of Well Management said. Exceed revealed that it is at final negotiation stage on additional exploration well projects for other clients in the region, which will present opportunities for synergies and value optimization for all participants across a multi well campaign. 2019 sees Exceed’s long-term investment strategy continue to bear fruit, as it deploys its expertise in well management and performance improvement projects across the UK, Middle East, West Africa, South East Asia, Norway and North and Central America.

Morocco: Qatar Petroleum farms into Eni exploration blocks offshore Morocco

atar Petroleum (QP) has agreed to farm into 12 exploration blocks offshore Morocco where Italy’s Eni is targetting an oil find with earlystage exploratory work. Under a farm-out agreement signed with Eni, state-run Qatar Petroleum will acquire a 30 percent participating interest in the Tarfaya Offshore Shallow Petroleum Agreement, which covers 12 exploration blocks offshore Morocco, Eni said. The Tarfaya Area is located in the southern part of the Moroccan offshore shallow waters in water depths of up to 1,000 meters and covers a total area of 23,900 sq km. “This agreement repre-

sents another important milestone in our partnership roadmap with Eni, and further strengthens our distinguished long term relationship with the Kingdom of Morocco,” Saad Sherida Al-Kaabi, Minister of State for Energy Affairs, and President/ CEO of Qatar Petroleum, said. “This opportunity is in line with Qatar Petroleum’s strategy to enter into exploration activities in frontier basins with high hydrocarbon resource potential as we intensify our efforts to expand our portfolio at home and abroad,” he added. Eni currently operates the area with a 75 percent interest alongside Morocco’s Office National

des Hydrocarbures et des Mines (ONHYM) which holds the remaining 25 percent stake. The companies are currently performing geological and geophysical studies as part of an initial exploration work program. When Eni picked up the exploration area in late 2017, it said the blocks had “liquid hydrocarbons potential in place.” QP has already undertaken several moves in recent years to expand its overseas footprint. Earlier, QP agreed to acquire a 25.5 percent interest in Block A5-A, offshore Mozambique from Eni. QP has also recently undertaken positions in Argentina, Brazil, Congo, Cyprus, Oman, and South Africa.

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Brief GLOBAL LNG: Asian LNG prices dip to 3-year seasonal low

sian spot prices for liquefied natural gas (LNG) fell to their lowest for this time of the year since 2016 as more supply entered the market from Egypt and Australia, with the lower prices attracting Indian demand, trade sources said. Spot prices for April delivery to Northeast Asia LNG-AS dropped to $5.45 per million British

and Torrent Power had also purchased spot cargoes earlier this month. Supply was ample with Egyptian state-owned company EGAS offering at least four LNG cargoes for loading in April, one of the traders said. Demand from China remained muted as hopes dimmed that Washington and Beijing could reach a deal soon to resolve their long-standing trade dis-

Egypt: Eni finds gas offshore Egypt

talian oil company Eni announced it has made a gas discovery under evaluation in the Nour exploration prospect located in the Nour North Sinai Concession, in the Eastern Egyptian Mediterranean, about 50 km North of the Sinai peninsula. The Nour-1 New Field Wildcat (NFW), which has led to the discovery, was drilled by Saipem’s Scarabeo-9 ultra deepwater

thermal units (mmBtu), down 25 cents. That was the lowest for mid-March since 2016. Prices for cargoes delivered in May are estimated to be around $5.50 per mmBtu, indicating some price recovery could be coming, trade sources said. The continued drop in prices has been attracting buying interest from India, they added. For instance, India’s Reliance Industries issued a tender earlier this month seeking 12 cargoes for April 2019 to March 2020, while Emirates National Oil Company had sought four cargoes for delivery into India over April to July, they said. ENOC likely bought the cargoes at $5.50 to $5.60 per mmBtu, they said, though details of sellers were not immediately known. India’s GSPC

pute. A summit to seal a trade deal between US President Donald Trump and Chinese President Xi Jinping will not happen at the end of March as previously discussed because more work is needed in US-China negotiations, Treasury Secretary Steven Mnuchin said. Buying interest was also low in Europe, industry sources said. The tradable price level in Europe is at a discount of around 20 cents per mmBtu to the Dutch price. The April price on the Dutch and British gas hubs fell by around $0.30 per mmBtu between March 8-14 to slightly below $5.20 per mmBtu, the lowest level since August 2017, Refinitiv Eikon data showed. The May price is almost at the same level.

6th generation semi-submersible drilling rig in a water depth of 295 meters and reached a total depth of 5,914 meters, the company said. Nour-1 well found 33 meters of gross sandstone pay with good petrophysical properties and an estimated gas column of 90 meters in the Tineh formation of Oligocene age. Eni said the well has not been tested, but an intense and accurate data acquisition has been car-

ried out. In the concession, which is in participation with Egyptian Natural Gas Holding Company (EGAS), Eni is the operator with a 40 percent stake, BP holds a 25 percent stake, Mubadala Petroleum a 20 percent stake while Tharwa Petroleum Company a 15 percent stake of the contractor’s share. The JV Operator will start the feasibility studies to accelerate the exploita-

tion of these new resources leveraging the synergies with existing facilities and infrastructures, after finalizing the discovery evaluation. Eni, which operates in Egypt through its subsidiary IEOC, is the country’s leading producer with equity above 340,000 barrels of oil equivalent per day. This number stands to grow in 2019 with the ramp up of the offshore Zohr Project to production plateau.

Algeria: Petrofac awarded $1-billion EPC project in Algeria

etrofac has been awarded a contract worth around $1 billion with Groupment Isarene, the joint operating group set up by Sonatrach, Petroceltic and Enel, for the Ain Tsila Development

Project in Algeria. Located around 1,100 km southeast of Algiers, the Ain Tsila field will produce gas, LPG and Condensate, for the local Algerian market and for export. Under the terms of the 42-month contract,

the lump-sum engineering, procurement and construction (EPC) project scope of work includes commissioning, start-up and performance testing. “I am delighted we have the opportunity to be working with the Groupe-

ment Isarene partners to deliver this strategically important project. This award builds on Petrofac’s significant track record in Algeria where we have been operating successfully for more than 20 years, with a strong record for project execution and the development of local capability. We are focused on delivering an effective, safe solution that meets our high standards and continues our commitment to the local energy sector,” E S Sathyanarayanan, Group Managing Director, Engineering & Construction, said. Petrofac’s EPC activities in Algeria include Sonatrach’s Tinrhert Field Development Project, along with the Alrar and Reggane projects that commenced production last year.

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South Africa: Special economic zone set to deliver wind turbine towers

ind turbine tower sections for the 140MW Kangnas Wind Farm, one of the Renewable Energy Industry Power Producer Procurement Programmes (REI4Ps) giant Bid Window 4 projects, are being manufactured locally, on Cape Town’s West Coast, in Atlantis. This signals the recovery of the Special Economic Zone (SEZ) for Green Technologies, which according to GreenCape, has already attracted R680 million in green technology investments and has created over 300 jobs. It is expected that the zone will attract a further R3.7 billion of investment by renewable energy and other manufacturers, and nearly 3,000 jobs are expected to be created by 2030 if these investments are realised. Manufacturing industries, in particular, stand to benefit from wind farms that are currently being constructed around the country. Two of these large

one of the most experienced providers of competitive long-term project finance to the African renewables energy industry,” Emilio Cattaneo, the company’s executive director said. KPCL’s plant will consist of an 8.5mhigh dam of 300m in length, three turbines

of 5.5MW each and associated earthworks, control and plant rooms and allied infrastructure connecting the plant to switchyards in Uganda and Tanzania. Around 250 people are involved in construction work. Once operational, around 10 percent staff will run the plant.

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power

Uganda: $27m approved for Kikagati hydropower plant he Emerging Africa Infrastructure Fund (EAIF), a PIDG company, has agreed to a $27 million loan to Kikagati Power Company Limited to aid in the building of a 14MW run-of-the-river hydro electricity generating station at Kikagati on the Kagera River. The power generated from the plant will be bought by the Uganda Electricity Transmission Company Limited, which will then sell half the energy to Tanzania. The Kagera River on which Kikagati is located forms the natural border between Uganda and Tanzania. The project has been made possible through the close collaboration of the developer with the two governments. The Kikagati plant is the 10th renewable energy development EAIF has backed in Uganda, demonstrating the benefits of replicating experience, financial structures and legal documentation. “The Kikagati hydropower station will strengthen the economic development foundations of Uganda and Tanzania and provide good jobs in construction and operation. EAIF is now

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power generating plants, will be receiving their turbine tower sections from GRI, a Spanish wind tower manufacturer. The towers are manufactured at the Atlantis-based facility and assembled on site. The tower sections are transported individually to the wind farms (via road transportation), on abnormal load trailers - the longest component/trailer (combined length) is almost 58m. Prior to designation of the SEZ, GRI had made the most of the City of Cape Town’s available infrastructure and rapid land release and approvals process to land them on their chosen ground. “GRI’s South African wind tower company is 25 percent owned by local Black shareholders, whilst their 250 or so employees have benefited from skills transfer, some seeing training and experience in Spain and the US, and bringing their skills back to the community,” explained Francis Jackson, SEZ Project Executive, GreenCape.

The project will require only limited interconnection infrastructure as it will interconnect to the existing 33kV networks near to the site in both Uganda and Tanzania. FMO, the Dutch development bank, was mandated lead arranger of the project financing, and is lending $27 million.

Goldman Sachs: Global solar PV capacity set to soar

S bank Goldman Sachs has reported that global utilityscale solar power capacity is expected to grow by double digits in 2019 and 2020, driven by growth in the US, Middle East, and China markets. According to Goldman Sachs, it expected global utility-scale solar installations to reach 108GW in

2019, up 12 percent on the previous year, and grow by a further 10 percent in 2020 to 119GW. For 2021 and 2022, the bank expected capacity to reach 129GW and 135GW. “We expect the combination of lower costs for solar and favourable policy support providing a multiyear runway for utilityscale to drive meaningful upside to the market,” the

US investment bank said in a research note. “We anticipate some of the strongest growth to materialise in key regions such as the US, Europe, and the Middle East while we see some potential upside emerging in China where demand appears to have stabilised in recent months following a collapse through the latter part of 2018,” it added.

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How Sasol seeks to expands operation in West Africa DIPO OLADEHINDE

outh Africa based integrated energy and chemical company Sasol Limited is looking to expand its operation in West Africa. The company’s only operated upstream acreages outside South Africa are in Mozambique. It has equity in upstream acreage in Gabon and is involved in a midstream project in Nigeria. Sasol said it has strong basin knowledge in West Africa and it is building on existing relationships, assets and capabilities on the continent. In the last few years, it has strengthened its skilled team for the purpose for acquisitions. “In Central and West Africa, we are pursuing both development-ready and producing assets, partnering with independent, small to medium-sized players to extract value,” Sasol Limited said in its recent financial statement. The company which is also one of the 16 companies looking to get an acreage through Ghana’s ongoing bidding round said it is looking to “progressively grow upstream positions in Mozambique and West Africa.”

The company says it has a structured West Africa basin screening process. It has identified acquisition targets and has assessed both sub-surface and above ground risks. Sasol is investigating low-cost entry into targeted infrastructure-led exploration opportunities. By the financial results ended 31 December 2018, Sasol recorded a satisfactory operational and financial performance against the backdrop of a volatile macroeconomic environment and an uncertain geo-political climate, which impacted global demand growth. “Our production and sales performance was mixed with largely lower than expected production in the first half of the financial year, mainly as a result of the longer than planned total shutdown at our Secunda Synfuels Operations (SSO). However, our operational performance was enhanced by management interventions in previous periods resulting in improved performances at Natref and Sasol Mining. Post the shutdowns, we are pleased to see steady progress across our value chains,” said Joint President and Chief Executive Officer, Bongani Nqwababa. The CEO of Sasol Limited noted that the company remain

focused on key controllable factors, with safety, reliability of operations and cost control being paramount. “Our Continuous Improvement (CI) programme will be a key feature to deliver future value to shareholders and improve our cost competitive advantage. This initiative is driven with the same discipline and rigor that allowed us to deliver, and exceed expectations, on our Business Performance Enhancement Programme and Response Plan target,” CEO of Sasol Limited said. Sasol Limited underlying cash generation remains sound, with Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) increasing by 10 percent to R27 billion when compared to the prior period and normalized cash fixed cost contained to below our inflation target. Sasol Limited earnings growth was, however, slower than expected due to volatility in the oil price and lower than expected production and sales volumes. “As we are in the commissioning phase of the LCCP production units, the delay in income from these units will result in lower earnings due to costs being recognized without corre-

sponding revenues.” While the LCCP fundamentals remain firmly intact, Sasol acknowledged the disappointing cost and schedule overrun as the project was impacted by several challenges, within and beyond our control, in the fourth quarter of the previous calendar year. “Despite incremental cash flows from the project being deferred due to a schedule delay, Sasol remained confident that the project will deliver the steady EBITDA run-rate of $1.3 billion in financial year 2022,” said Joint President and Chief Executive Officer, Stephen Cornell. He added that while this update will have an impact on our cash flow inflection point and gearing, Sasol continues to proactively protect its balance sheet, while managing the capital structure and gearing during these turbulent times. Sasol said its short-term focus remained on productivity in the field, process safety and progressing units to mechanical completion followed by beneficial operation. The Linear LowDensity Polyethylene (LLDPE) unit achieved beneficial operations on 13 February 2019, and is the first of seven LCCP production units to come online.

“Our commitment to sustainable value creation for all our stakeholders is underpinned by driving our roadmap to deliver on our financial and sustainability goals, as well as contributing meaningfully to inclusive growth and development of our fenceline communities. We are mindful of the challenges we face, however, our management team is fully committed to ensuring Sasol is a credible stakeholder partner with a compelling investment proposition that will deliver value to all stakeholders.” Sasol experienced some challenges with regards to our operational performance in the first quarter of the year, largely due to the extended planned shutdown at SSO which impacted production and sales volumes across the value chain. We did, however, deliver a stronger operational performance in the second quarter of the year and are maintaining stable operations. “Our current production run-rates at SSO support an annualised run-rate of 7.8 million tons. In Europe, our operations maintained their good performance, but were affected by external ethylene supply constraints which impacted sales volumes,” Sasol said.

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ENERGY intelligence Brief Shell CEO’s pay more than doubles to $22.8m in 2018

oyal Dutch Shell Chief Executive Ben van Beurden saw his pay package more than double to $22.8 million in 2018, mainly thanks to a bonus and an incentive plan for delivering on targets, the oil company said. It was the second highest pay on record for van Beurden since he became CEO in 2014 and received 24.2 million euros that year, mainly because of

changes in pension payments and tax calculations as a result of his promotion. As the oil prices plunged, his pay fell to 5.6 million euros in 2015, before recovering to 8.6 million in 2016 and 8.9 million in 2017.

Shell said van Beurden’s role was critical in successfully integrating rival BG, delivering on a $30 billion divestment plan and “leading the sector in framing a methodology for aligning with the Paris (climate change) agreement”. “We reviewed Shell’s CEO pay ratio externally against the ratios that we see in other FTSE 30 companies, which we calculated based on their disclosed employee numbers and employee costs,” Shell’s remuneration committee said. “We believe our ratio is consistent with those seen in other FTSE 30 companies, although it is challenging to draw a meaningful comparison given the different markets and industries in which they operate,” it added. Shell said its remuneration committee would include a new performance condition linked to the transition to lower-carbon energy for the long-term incentive plan grant starting in 2019, one year earlier than planned.

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Egypt returns to LNG exports club seeking to sell cargoes

gypt indicated it is ready to rejoin the club of major exporters of liquefied natural gas, making its biggest offer to supply the market in at least five years. The state gas company EGAS tendered to sell four cargoes of LNG for loading in April. The bids are valid until March 25. The company is also marketing four cargoes for loading in May and three for June. For Egypt, the tender marks a revitalizing of its gas industry, where sagging domestic production forced it to halt most exports of LNG in 2014. The North African nation has regained self-sufficiency with the help of major discoveries including the giant Zohr gas field. LNG is exported from the Damietta and Idku plants, which were largely left idle five years ago. Extra supplies from Egypt would hit a market already battling with the lowest spot prices for the super-chilled fuel since July 2017 following a mild winter that curbed de-

mand across Europe and Asia. The US, Russia and Australia all are contributing to a glut, starting new plants to export the fuel and build market share. “The speed and scale of which Egypt has turned from importer to notable exporter is likely to further loosen the already wide supply/ demand balance,” Nick Campbell, a director at industry consultant Inspired Energy Plc, said. That will exacerbate “the lower demand en-

vironment with warmer winters in Europe and Far East leaving storage levels relatively full.” When plants restart and come back into the market, sellers have a lack of commercial visibility and doing a tender will allow Egypt to test the market, said JeanChristian Heintz, founder and director of industry consultant Wideangle LNG in Lugano, Switzerland. “It is a good way for Egypt to figure out the real

appetite and the price level,” he said. “Fragmenting the initial supply in several tenders is a good way to proceed, rather than creating price precedents on mid-term indexed deals.” Egypt became a major consumer of the fuel in 2015, using its regasification and import units to take in cargoes. Purchases that once were as large as 120 cargoes a year stopped in 2018 as flows increased from the Zohr field, setting the stage for a resumption of exports.

Petrobras CEO eyes $10 bln of divestments in first four months of 2019

oberto Castello Branco, the chief executive of Brazil’s Petroleo Brasileiro SA , said he believes the company will divest some $10 billion in assets in the first four months of 2019, aided by the sale of a major pipeline unit. Petrobras is aggressively divesting non-core assets in a bid to reduce its hefty debt load, which has steadily fallen in recent years but is still above that of its peers. The firm is accepting the final round of bids for its TAG gas pipeline unit on April 2, which is expected to bring in several billion dollars and will likely be the com-

pany’s largest-ever asset sale. Branco said he believes the TAG deal will be among the divestments completed by the end of April, bringing Petrobras’ total divestments in the first four months of 2019 to some $10 billion. Paulo Guedes, Brazilian Economy Minister said Petrobras and the government had started off 60 billion apart in their negotiating positions regarding the transfer-ofrights area, but were now only 2 billion apart. The figures likely refer to dollars, as the two sides at one point each believed they were owed $30 billion. The transfer-of-rights

area is the result of a 2010 deal between the Brazilian government and Petrobras related to a huge share offering that would have diluted the government’s stake. To maintain control of the company, the government sold Petrobras the rights to explore 5 billion barrels of oil in an area off Brazil’s coast for 74.8 billion reais at the time. With that money, it bought additional Petrobras shares. But Brazil’s oil regulator now estimates there are around 17 billion barrels of recoverable oil in the area, and the government is seeking to auction rights for the exploration of the excess oil.

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led by producer group OPEC and US sanctions against Iran and Venezuela. Brent crude oil futures were at $67.03 per barrel, down 13 cents, or 0.2 percent, from their last close, but not far off the $68.14 per barrel 2019-high. US

The agency said it was particularly concerned about a possible further decline in production in Ven-

ENERGY intelligence

West Texas Intermediate (WTI) futures were at $58.32 per barrel, down 20 cents, or 0.3 percent, from their last settlement, and also not far off their 2019high of $58.95. “The greatest downside risk to our oil price view

is demand weakness on slower economic growth. Our base case is that global oil demand will increase by 1.3 million barrels per day (bpd) in 2019. A synchronized global slowdown in growth could push global demand growth to below 1 million bpd,” Bernstein Energy said. Oil prices have gained around a quarter since the start of the year amid US sanctions against Iran and Venezuela, and as the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, known as OPEC+, have pledged to withhold 1.2 million bpd in supply to prop up prices. OPEC’s de-facto leader Saudi Arabia said that balancing oil markets was far from done as inventories were still high. Russia also said production cuts would stay in place at least until June.

IEA sees oil market flipping into deficit in second quarter he oil market will flip into a modest deficit from the second quarter of this year, with OPEC possessing a hefty supply cushion to prevent any price rally in case of possible supply disruptions, the International Energy Agency said. The IEA, which coordinates the energy policies of industrialised nations, kept its 2019 oil demand growth forecast unchanged at 1.4 percent, or 1.4 million barrels per day. Solid non-OPEC oil output growth led by the United States should ensure demand is met, the IEA said. The IEA said the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 million bpd. “At the same time, (OPEC) production cuts have increased the spare capacity cushion. This is especially important now as economic sentiment is becoming more pessimistic and the global economy could be entering a vulnerable period,” the IEA added.

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Oil slips on economic slowdown, but OPEC-led cuts still support

il prices d i p p e d amid concerns that an economic downturn may dent fuel consumption, but crude markets remain broadly supported by supply cuts

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ezuela, where output has stabilised at 1.2 million bpd in recent months. It said the degradation of

OPEC Flakes OPEC urges oil producers to prevent return of surplus this year

PEC’s secretariat urged oil producers to keep going with efforts to prevent a surplus this year, as supplies from their rivals increase faster than world demand. “While oil demand is expected to grow at a moderate pace in 2019, it is still well below the strong growth expected in the non-OPEC supply forecast for this year,” it said. “This highlights the continued shared responsibility of all participating producing countries to avoid a relapse of the imbalance and continue to support oil-market stability in 2019.” A rally in oil prices during the first six weeks of the year has slowed on concerns that record US shale production, a slowing global economy and the prolonged US-China trade dispute could lead to a pile-up of unwanted crude. In its monthly report, the Organization of Petroleum Exporting Countries trimmed forecasts for world oil demand and boosted projections for

non-OPEC supply, particularly in the second half of the year. As a consequence, it indicated the risk of a renewed surplus emerging in the fourth quarter, even as the group’s output declines as a result of planned and involuntary cutbacks. Production from OPEC’s 14 members dropped by 221,000 bpd to 30.55 MMbpd in February, according to the report. Although that reflected deliberate reductions by Saudi Arabia, Iraq and Kuwait as they implement the deal to balance markets, the single biggest decline was in Venezuela, which is being roiled by economic turmoil and American sanctions. Output from the Latin American nation slumped by 142,000 bpd in February to just over 1 MMbpd, the report showed.

Barkindo says rebound in oil investments “very minimal” Venezuelan power system, vital for oil output, was such that it could not be sure if the fixes were durable.

he investments needed to ensure stability in the global oil industry are returning after a downturn, but the pace is still slow, Mohammed Barkindo, OPEC Secretary General said on the sidelines of an OPEC and non-OPEC monitoring committee in the Azeri capital of Baku. He also said leading oil producing nations have made significant achievements in terms of cooperation and efforts to avoid imbalance between the supply and demand on the global oil market. Barkindo added he would welcome greater engagement with the United States to tackle industry issues. According to estimates from Amin Nasser, Saudi Aramco Chief Executive Officer last year, the global oil and gas industry needs to invest more than $20 trillion over the next 25 years to meet expected growth in demand and compensate for the natural decline in developed fields.

“A number of challenges are arising from the down cycle that we have seen, and at the top of that list is an issue of investments. We have seen investments contract for couple of years and even at the moment the rebound is very, very minimal,” Barkindo said. “For the long cycle projects, which are the base for the global economy, the picture is still not encouraging. Therefore we welcome the United States to join us in this global energy dialogue to address this and other issues affecting this industry.”

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Nigeria’s green energy set to lift on first $100m fund STEPHEN ONYEKWELU

igeria’s green energy space has received a significant boost thanks to a new memorandum of understanding signed by three institutions establishing the country’s first green en-

ergy fund. Africa’s most populous nation’s first Green Energy Fund (GEF) programme backed by Vetiva Capital Management Limited (“Vetiva”), Climate Finance Advisory Limited (CFAL) and the African Guarantee Fund West Africa (AGF) seeks to leverage available public and private sector credit funds to facilitate access, and flow of flexible finance to eco-friendly energy projects.

Snapshot

Our aim is to grow the fund to $100 million in the next two to three years. Some local sources of our finance will be the intervention funds sitting at the Central Bank of Nigeria, the Bank of Industry and the Development Bank of Nigeria at interest rates of between 9 percent and 12 percent

“The signing of this MoU is another important step in facilitating flow of funding towards bankable, commercially viable and environmentally friendly energy projects in Nigeria” Damilola Ajayi, group executive director at Vetiva said. The Fund’s primary focus will be on bankable, commercially viable and socially responsible renewable or clean energy generation and distribution. Funding options that currently exist include grants, debt financing and equity. Most of the debts financing clean energy developers in Nigeria are from international banks and there is the challenge of fluctuations in foreign exchange rate. This makes naira-denominated debt financing more attractive. But, high interest rates and short-terms are two factors that discourage players in this space from seeking loans from commercial banks. “Our aim is to grow the fund to $100 million in the next two to three years. Some local sources of our finance will be the intervention funds sitting at the Central Bank of Nigeria, the Bank of Industry and the Development Bank of Nigeria at interest rates of between 9 percent and 12 percent” Jubril Adeojo, director and chief investment adviser at Climate Finance Advisory Limited told BusinessDay. “Commercial banks have been slow to fund such projects because of the kind risks involved.” To de-risk financing for green energy projects in Nigeria, the AGF has agreed to

provide 50 percent partial risk guarantee to enable green energy project developers access up to 10 years long-term local currency concessional loans to implement their green projects. The green energy projects that qualify are captive power and mini-grid power projects where renewables and gas are preferred sources of energy. In 2016, AGF introduced a Green Guarantee Facility geared towards increasing financing for climate change mitigation and adaptation projects. “In line with this, AGF West Africa is pleased, to be part of this tripartite partnership as a partial guarantor to enhance access to finance for climate and green growth-oriented SMEs in Nigeria and West Africa at large” Adidja Zanouvi, managing director of AGF West Africa, said in a press statement. Experts say Nigeria needs two key reforms to incentivise the private sector to invest in renewable energy: cheaper financing and lower taxes. Lending rates in Nigeria (currently at an average of 17.50 percent) are too high for investors who require capital to start-up businesses such as in renewable energy. Countries such as China, the United States of America and India, which are leading the renewable energy revolution, offer substantially lower rates. The average commercial bank lending rate in India, for example, is about 9.45 percent per annum. In the US and China the rates are at an average of 4.30 percent per annum.

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Live @ the Stock exchange Prices for Securities Traded as of Tuesday 19 March 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. 172,121.43 5.95 1.71 712 84,673,147 UNITED BANK FOR AFRICA PLC 258,205.63 7.55 -0.66 380 40,905,453 689,153.04 21.95 0.23 361 22,153,865 ZENITH BANK PLC 1,453 147,732,465 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 296,136.17 8.25 0.61 305 8,248,452 305 8,248,452 1,758 155,980,917 BUILDING MATERIALS DANGOTE CEMENT PLC 3,227,472.10 189.40 -0.26 59 1,405,499 112,754.57 13.00 0.39 45 509,181 LAFARGE AFRICA PLC. 104 1,914,680 104 1,914,680 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 351,242.56 596.90 - 7 152 7 152 7 152 1,869 157,895,749 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 11,300.89 45.20 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 500 1 500 1 500 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 1 500 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 2,000 76,312.80 80.00 - 8 6,402 OKOMU OIL PALM PLC. PRESCO PLC 68,000.00 68.00 -9.33 9 80,386 18 88,788 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 - 9 60,910 9 60,910 27 149,698 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 820.66 0.31 - 7 39,950 JOHN HOLT PLC. 202.36 0.52 - 6 6,072 1,903.99 2.93 - 0 0 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 49,590.55 1.22 -0.82 95 8,692,627 22,185.98 7.70 -0.65 31 379,869 U A C N PLC. 139 9,118,518 139 9,118,518 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,300.00 27.50 - 23 58,622 165.00 6.60 - 0 0 ROADS NIG PLC. 23 58,622 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,833.02 1.86 - 3 6,226 3 6,226 26 64,848 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,135.72 1.55 - 11 84,139 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 4 53,616 GUINNESS NIG PLC 140,184.50 64.00 - 29 23,518 INTERNATIONAL BREWERIES PLC. 206,730.48 24.05 - 8 12,252 NIGERIAN BREW. PLC. 559,783.14 70.00 -6.67 80 1,405,213 132 1,578,738 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 54,500.00 10.90 -0.46 159 6,886,307 DANGOTE SUGAR REFINERY PLC 165,600.00 13.80 -0.72 53 682,299 FLOUR MILLS NIG. PLC. 77,907.21 19.00 - 45 2,444,491 HONEYWELL FLOUR MILL PLC 9,516.24 1.20 - 18 309,800 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 54,843.37 20.70 -3.38 13 178,876 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 288 10,501,773 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 22,538.42 12.00 - 19 150,616 NESTLE NIGERIA PLC. 1,210,069.03 1,526.60 -1.19 59 70,408 78 221,024 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,978.36 3.98 - 12 47,000 12 47,000 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 43,079.68 10.85 -1.36 16 116,378 UNILEVER NIGERIA PLC. 222,331.71 38.70 - 23 27,103 39 143,481 549 12,492,016 BANKING DIAMOND BANK PLC 56,048.14 2.42 -1.63 92 15,109,066 ECOBANK TRANSNATIONAL INCORPORATED 253,223.81 13.80 2.22 47 2,311,983 FIDELITY BANK PLC 64,034.30 2.21 4.74 122 6,489,221 GUARANTY TRUST BANK PLC. 1,084,538.95 36.85 4.10 210 22,064,978 JAIZ BANK PLC 15,321.41 0.52 -1.89 7 302,465 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 67,657.48 2.35 2.17 37 3,132,311 UNION BANK NIG.PLC. 199,477.16 6.85 - 33 372,772 UNITY BANK PLC 9,468.36 0.81 - 6 86,435 WEMA BANK PLC. 28,545.10 0.74 4.23 31 1,684,552 585 51,553,783 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,920.45 0.71 - 14 401,441 AXAMANSARD INSURANCE PLC 23,100.00 2.20 - 1 50 CONSOLIDATED HALLMARK INSURANCE PLC 2,357.70 0.29 - 0 0 19,811.94 1.91 - 0 0 CONTINENTAL REINSURANCE PLC CORNERSTONE INSURANCE PLC 3,093.20 0.21 - 5 149,430 GOLDLINK INSURANCE PLC 2,001.98 0.44 - 1 3,000 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 487.95 0.38 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC LASACO ASSURANCE PLC. 2,270.26 0.31 3.33 8 352,000 LAW UNION AND ROCK INS. PLC. 2,191.13 0.51 - 1 1,000 LINKAGE ASSURANCE PLC 4,400.00 0.55 - 2 42,000 MUTUAL BENEFITS ASSURANCE PLC. 1,840.00 0.23 -4.17 5 240,684 NEM INSURANCE PLC 12,145.16 2.30 -2.13 14 457,492 NIGER INSURANCE PLC 1,625.29 0.21 -4.55 14 2,370,778 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 4 32,413 REGENCY ASSURANCE PLC 1,733.88 0.26 4.00 4 204,000 SOVEREIGN TRUST INSURANCE PLC 1,751.57 0.21 -8.70 25 6,552,984 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 200 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 - 1 6,700 WAPIC INSURANCE PLC 5,353.10 0.40 - 20 39,685 120 10,853,857 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,635.75 1.59 5.30 10 157,109

10 157,109 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 2,265.95 0.20 - 1 35,000 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 35,000 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,600.00 3.80 0.53 71 1,517,955 35,291.19 6.00 - 12 134,899 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 38,021.20 1.92 6.67 64 4,508,161 1,697.97 0.33 -5.71 7 352,001 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 489,498.43 47.80 -0.62 18 3,029,281 17,100.00 2.85 - 56 878,118 UNITED CAPITAL PLC 228 10,420,415 944 73,020,164 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 2,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1,065.94 0.30 - 5 401,400 6 403,400 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 3 2,186 3 2,186 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 7,425.00 4.95 - 6 25,820 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 12,556.70 10.50 -9.09 15 79,458 4,019.80 2.33 - 7 88,810 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,272.44 0.67 - 17 96,367 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 1 3,000 PHARMA-DEKO PLC. 46 293,455 55 699,041 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 1 300 381.11 0.77 - 0 0 TRIPPLE GEE AND COMPANY PLC. 1 300 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 5 20,050,600 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 1 1,000 6 20,051,600 7 20,051,900 BUILDING MATERIALS BERGER PAINTS PLC 2,391.04 8.25 - 5 6,960 CAP PLC 26,180.00 37.40 - 1 5 249,726.52 19.00 - 35 736,204 CEMENT CO. OF NORTH.NIG. PLC FIRST ALUMINIUM NIGERIA PLC 633.11 0.30 7.14 10 1,357,141 MEYER PLC. 286.87 0.54 - 3 4,344 1,999.41 2.52 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,279.20 10.40 - 1 100 55 2,104,754 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 1 100 3,610.71 2.05 - 8 52,032 CUTIX PLC. 9 52,132 PACKAGING/CONTAINERS BETA GLASS PLC. 39,497.79 79.00 - 1 290 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 290 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 65 2,157,176 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 3 10,670 3 10,670 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 50,000 1 50,000 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 4 60,670 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 30 8,029,596 30 8,029,596 INTEGRATED OIL AND GAS SERVICES OANDO PLC 72,723.76 5.85 -4.27 49 1,071,167 49 1,071,167 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 61,301.19 170.00 2.41 16 18,372 CONOIL PLC 15,960.90 23.00 - 5 19,236 ETERNA PLC. 5,738.24 4.40 - 11 56,213 FORTE OIL PLC. 36,469.47 28.00 - 22 29,128 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 9 21,182 TOTAL NIGERIA PLC. 67,904.37 200.00 - 17 15,451 80 159,582 159 9,260,345 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 16,576.10 1.70 - 1 500 1 500 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,947.48 5.00 - 3 13,100 TRANS-NATIONWIDE EXPRESS PLC. 323.50 0.69 6.15 9 892,255 12 905,355 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 2 3,500 2 3,500 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 1 110 IKEJA HOTEL PLC 3,533.95 1.70 -9.09 6 349,200 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 1 8 349,311 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 217.73 0.36 - 2 8,140 LEARN AFRICA PLC 1,010.60 1.31 - 6 13,084 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 862.82 2.00 - 7 10,515 15 31,739 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 895.16 0.54 - 2 1,000 2 1,000

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Opinion

PMB, northern youths and warning from West Indies

Franklin Ngwu

rom Kano to Lagos, Maiduguri to Port Harcourt and in every other city, town and village in Nigeria, the story is the same! The army of very young and uneducated youths from northern Nigeria roaming and doing all kinds of menial and odd jobs is alarming. These very disturbing scenes were also very evident during the elections. Millions of unemployed youths thronged campaign rallies especially that of PMB who has a kind of cult followership particularly in the North West and North East regions. While the shouts of ‘Sai baba’ can be very soothing and reassuring, it is time to show genuine interest and concern for the welfare and future of these youths. Northern leaders might be perceiving them as assets for election, they are fast becoming serious threats and risk to the survival of the north and Nigeria in general. The situation is dire and sad. It is a story of failure: failure of governance and leadership of the north amidst abundant human and natural resources of our dear nation. From my interactions with them, the lamentations and cries for help are similar. They crave for direction, opportunities and freedoms through the provision of effective and functioning educational system! As such direction, opportunities

and freedoms are presently not provided or inadequate, a sub-culture of frustration and violence is rapidly emerging which will do no one any good. Of all the causative factors, a key one is our present approach to human capital/skills development which can be described as a process of “accomplishment of natural growth” with little or no strategic plan, vision and guidance. It is similar to Jamaica’s then education system to which William M. MacMillian described as ‘narrow and insecure’ in his 1938 work ‘Warning from the West Indies’. He warned that the education system in Jamaica was a major contributory factor to worsening inequality, poverty, unemployment, crime and social divisions. He beckoned on the government to act urgently to avoid social crisis and violence. Remarkably as he warned, wide spread violence and social unrest ravaged the Caribbean with many killed and injured a year after his book was published. While MacMillian has not published the Nigerian version of his book, it is clear that his warnings are all over Nigeria especially in the north where almost all the states particularly ones in North West and North East are perceived as too unsafe to visit. Whereas we thought that Boko Haram is being contained to Borno state, recent and ongoing killings and destruction of farms and properties in Sokoto, Zamfara, Kastina, Kadunna, Adamawa, Taraba, Benue all suggest that Boko Haram might have expanded and mutated into varied criminal groups and activities. To avoid escalation of the crsis, I beckon and implore PMB and the northen governors to act now! What is needed especially in the north is an education system that can be described and developed from the concept of concerted cultivation and development. This approach will give

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With the millions of northen youths roaming all major cities in Nigeria, it is clear that a critical factor absent in the governance agenda of Northern States is Effective Human Capital/Skills Development

direction and focus, imbue confidence and trust, create a sense of ownership and belonging to our children and youths. Failure to do this is an inevitable invitation and preparation for the exponential escalation of social crisis higher than Boko Haram. Your Excellency, directly or indirectly allowing menial and odd jobs to be the most prominent brand of northern youths is poignant and a disservice to anything good and noble. With your victory as declared by INEC, I deeply pray and implore you to quickly galvanise the northen governors to adopt pro-poor policies particularly ones that will address the lamentable human capital state of northern Nigeria. As the youths overwhelmingly voted for you, this is the time to reciprocate with policies and intervention for their human capital development. Nigeria, particularly the northern states, are very backward in every aspect of human capital development and this requires very urgent attention through effective and committed good governance. Of the 71, 294 candidates that participated in the 2018 National Common Entrance Examinations for admission into the 104 Federal Government Colleges, Zamfara had 28, Kebbi 50, Taraba 90 and Lagos 24,000 candidates respectively. It is the same very poor result for the north in all the variables used in measuring Human Development Index (HDI). With the millions of northen youths roaming all major cities in Nigeria, it is clear that a critical factor absent in the governance agenda of Northern States is Effective Human Capital/Skills Development (education). While I appreciate that it might be included in the social services, priority attention is demanded given the lamentable level of human capital development of northern states. It is the fulcrum upon which any kind of develop-

ment can be meaningful and sustainable but which is sadly approached with levity by northern leaders. For people to be employed, they have to be properly educated and skilled which will enhance the appreciation and better utilisation of the social services to be provided by government. It will also support the development of the rural areas. Security will be improved with good governance and justice better understood and protected. In the absence of a properly educated and skilled northern youths, all the development agendas and projects might be a waste, ineffective and unsustainable. Creating a high level of human capital and skill development in northen Nigeria does not start and end with building new class rooms in different states or promotion of teachers. Either is part of it but a very little or insignificant part of what is needed. It will require a detailed and comprehensive understanding of the kind of north we want in 5, 10, 20, 50 and 100 years. This will help in understanding the kind of skills required in the short, medium and long term. To achieve the above will require excellent thinking and foresight that expectedly should come from a strategic think-tank and cabinet. Given the enormity of problems and consequences of no action, I implore you to declare a state of emergency in education sector of northern Nigeria and persuade the governors to allocate at least 30% of their state budgets to education even though UNESCO recommends 26% for Nigeria. This will be a better way of utilizing the youths than using them mainly as assets to win elections!

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@lbs.edu.ng

The witch-killing syndrome: The politics of tribe Bongonomics

Bongo Adi

n 2005, Ted Miguel, a professor of economics at University of California, Berkeley, published a now famous paper in The Review of Economic Studies entitled Poverty and Witch Killing. Using evidence from Tanzania, Miguel investigated violence against the elderly, young children and the helpless and vulnerable members of the society who were labeled “witches”. As in many parts of Africa, including Nigeria, of course, witchcraft accusations are rife. There are similar cases in Nigeria where parents carry out dastardly acts of violence against their children whom they allege to be witches. In the case of Tanzania, Miguel proved that incidents of such violence are driven by poverty and economic hardship which induce more able members of the community to unleash violence or even death on the less able members just so to reduce competition for reduced food rations. Miguel showed that any year that experienced drought or over-drainage was also marked by a huge spike in incidents of witchkilling. In other words, witch-killing follows drought or yield-depleting, economic shocks. But this was not obvious, however. What seemed obvious is the heightened accusations of witchcraft which was reified as a supernatural phenomenon with the power to cause evil. Our objective for now is not to interrogate the potency or otherwise

of witchcraft – that is matter for another day. However, Miguel was able to prove, using rigorous econometrics techniques, that drought or over-drainage caused crop failures such that affected households faced threats of poverty and food shortage. It is this impending doom that forced stronger members of the society to invoke witchcraft imaginations and deploy it as a rationalizing frame to unleash violence on the socially disadvantaged — elderly women in particular and other vulnerable and less productive members of the society. This is done chiefly to reduce the number of claims to already drastically depleted food rations. Much earlier before the Tanzanian and African witch-killing syndrome, Medieval Europe’s witch-hunting (from whence the word originated) enacted a process of violence and scapegoating that have directly been linked by recent researchers to similar mechanisms. Researchers have shown that deteriorating economic conditions brought about by severity in temperatures was the main reason for the European witch-hunt of the medieval Christendom in Europe. Although spuriously garbed as an ecclesiastical inquisition, medieval witch-hunting and witch-killing was instigated by challenging economic circumstances that forced the powerful to unleash death on the weak just to increase their chances of survival. We therefore understand the witch-killing syndrome as a symbolical metaphor employed to rationalize a scape-goating design in the pursuit of a political economic strategy of exclusion, marginalization or punishment of less opportune others. It is the cloaking of what is essentially a materialist struggle for resource control under the garment of other unrelated issues like the convenient invocation of tribe, social cleavages and sectarianism deployed to justify political contests in

Nigeria. We have seen this in exasperated orchestration in recent elections. Nigeria’s 2019 election did not disappoint in its notoriously rancorous and acrimonious lead-up. As in 2015, the election stirred the putrid, murky waters that have deceitfully and tentatively covered the debris of Nigeria’s cracks, allowing them to freely burst to the surface with unapologetic vehemence. All the pretenders to this spurious oneNigeria ephemerality got the opportunity to yank off the mask of self-denial to bare their fangs and talons. From threats of eviction to historical revisions to outright physical attacks, the spurious identity of the Nigerian nonentity received resounding booing. Nowhere was this more pronounced than in the media axis of Lagos where some influential journalists, to the total dismay and disgrace of all the post-civil war integration efforts to which most of them are beholden threw all restraints and civility to the wind and presented their ugly dance of nudity and shame to the village market square. But It is interesting to note that the so-called “Igbo Question” or the “Nigerian Question” does not longer appear once at the eve of the fouryear election cycle. It seems to have acquired a life of its own and continues to frame ethnic narratives and ultimately appear to shape behaviours. The “Lagoon threat” and other vicious threats of extermination no longer recede into hushed discusses, but seem to have galvanized ethnic fundamentalisms that place calls for pogroms against fellow citizens of other ethnic groups on the social media. Some would also argue that these rantings are beginning to materialize into policy exclusivism and reconstructions that especially manifest in evictions and demolitions of both markets and property. Ethnic chauvinism and sectarianism are known to be potent political weapons that

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… as our population and hence, the number of mouths to feed continue to boom and outstrip the increasingly scarce oil revenue, politics will continue to be hijacked by politicians who would always play the ethnic card

unscrupulous politicians deploy in service of selfish political ends. Okwudiba Nnoli in his 1978 seminal work — Ethnic Politics in Nigeria — in which he interrogated the ethnic question, concluded that “ethnicity is not a critical variable” in the analysis of contemporary Nigeria. “It lacks explanatory potency. Its role in African politics, although sometimes considerable, is more apparent than real. Its potential as a force for changing the objective realities of African life is very minimal.” It therefore amounts to a futile exercise to associate the problems of social dynamics or economic problems in Nigeria, or any other African state for that matter, to the ethnic question. Politics merely invoke or weaponize ethnicity in the contest for the spoils of office which has, over time in Nigeria, been cast as largely a regional conflict. Nigeria’s failure to diversify its economy and develop other sources of revenue has perpetuated the dependence on single source of revenue, whose control now remains the singular objective of politics. Just as the Nigerian economy revolves around the oil in the Niger Delta, Nigeria’s politics revolves around the control of this same resource. Our politics is simply about who gains control and who gains access to the oil proceeds. Regional coalitions are therefore, nothing but different teams competing for control of oil. It is not surprising therefore, that as our population and hence, the number of mouths to feed continue to boom and outstrip the increasingly scarce oil revenue, politics will continue to be hijacked by politicians who would always play the ethnic card. We are therefore caught in this web of instrumentalization of ethnicity for crass material purposes. This is the witch-killing syndrome.

Dr Adi, PhD is a faculty member of Lagos Business School

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