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news you can trust I ** wednesDAY 20 may 2020 I vol. 19, no 567
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FG asks businesses, schools, others to adopt new strategies ahead of reopening … as Lagos releases additional guidelines JOSHUA BASSEY (Lagos) & TONY AILEMEN (Abuja)
T President Muhammadu Buhari (r), receiving Theophilus Yakubu Danjuma, former chief of army staff and minister of defence, during the latter’s visit to the president at the Presidential Villa in Abuja.
Nigerian employers in gruelling battle to keep staff LOLADE AKINMURELE
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igerian employers are fighting to keep staff on their payrolls amid the financial pain inflicted by the COVID-19 pandemic, according to the Nigeria Employers’ Consultative
As COVID-19 pressure mounts
Association (NECA), the umbrella organisation of employers in the Organised Private Sector. Economic activity in Nigeria, like in other countries, has been hammered by the pandemic, but businesses in the West Af-
rican country may be faring worse than in countries where government palliatives from tax holidays to other forms of support have helped soften the blow of the pandemic. Staff layoffs in the private
sector, which employs some 90 percent of the country’s total workforce, will worsen what is already a precarious economic situation for Africa’s most popuContinues on page 7
he Federal Government on Tuesday asked businesses, offices, professional bodies, places of worship and educational institutions awaiting reopening to use the additional two weeks of phased ease of lockdown to plan and adopt new strategies under a COVID-19 era in line with the guidelines for the new life ahead. The government also urged Nigerians to prepare for “behavioural change” which “is a must for every citizen because COVID-19 has changed the world completely”. The government had on Monday said it would maintain the current guidelines on “ease of Continues on page 7
Inside
Terms Nigeria must meet to access $1.5bn World Bank credit P. 6 NLNG Train 7 project attracts $3bn financing from 31 lenders P. 6
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Businesses lose billions in 5-week lockdown as SMEs rethink models ODINAKA ANUDU
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usinesses in Nigeria are counting their losses from a five-week lockdown imposed to curb the spread of coronavirus in Africa’s most populous country, according to separate reports by the Lagos Chamber of Commerce and Industry (LCCI) and the Enterprise Development Centre of the Pan-Atlantic University. The lockdown has also forced small businesses to rethink their business models in order to stay afloat as the business environment toughens. The Federal Government imposed a five-week lockdown in Lagos, Abuja and Ogun State, from March 30 to May 4, to curtail the spread of coronavirus in the country. Gradual ease of the lockdown has begun, but busi-
nesses have not fully reopened as several restrictions remain in place. Though the lockdown was targeted at ensuring the safety of Nigerians, it has done a lot of harm on businesses. In a survey carried out by the LCCI, 64 percent of respondents (mainly business leaders and owners) said they lost below N500,000 each day during the lockdown, while 16 percent lost between N500,000 and N1 million. Similarly, 12 percent lost above N5 million each day, while 7 percent incurred between N2 million and N4 million loss daily during the period. Nigeria has 41.5 million MSMEs and thousands of large enterprises, meaning that these losses run into billions of naira. Lagos has 8.395 million MSMEs, according
to data from the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), with thousands of large enterprises. The LCCI found that 63 percent of respondents planned to downsize operations to minimise losses, while 18 percent were willing to cut capital spending. “This is unsurprising as businesses have not generated income over a five-week period and have lost trillions of naira in profit due to lockdown,” LCCI said in a report breakdown signed by Muda Yusuf, its director-general. “This suggests that unemployment rate is expected to increase drastically postlockdown except government takes urgent steps to support business owners towards sur-
viving and ensuring business continuity,” it said. The chamber said such cost-cutting measures might see unemployment rate surge to 40-45 percent by end of 2020, from 23.1 percent as of the third quarter of 2018. “This has ripple effect on the Gross Domestic Product given that private consumption by households accounts for about 60 percent of national output,” LCCI said. Nigeria is world’s poverty capital with over 80 million people living in extreme poverty. Nigerians are the second most miserable people in Africa after South Africans, according to the 2019 Hanke’s Index. With coronavirusinduced lockdown, many will be out of job, which will further balloon the already congested labour market and fuel higher crime rate.
NLNG Train 7 project attracts $3bn financing from 31 lenders ISAAC ANYAOGU
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he Nigeria Liquefied Natural Gas Train 7 project has reached final investment decision and is scheduled for commissioning in 2025, but a record number of lenders in different continents are providing financing, which says a lot about the dire times the global economy is facing. Lagos-based Templars law firm advised an assortment of 31 lenders on the $3 billion multi-tranche corporate financing provided to NLNG Limited for the development of its Train 7 Expansion Project. According to details provided by the law firm, the lenders include three export credit agencies – Export-Import Bank of Korea (KEXIM), Korea Trade Insurance Corporation (K-SURE) and Servizi Assicurativi del Commercio Estero (SACE). Others are two regional development finance institutions: African Export-Import Bank andAfricaFinanceCorporation; 16 international commercial banks under an international
commercialfacilitytranche;and 10 Nigerian commercial banks, under a Nigerian commercial facility tranche. The financing, which is supported by substantial cashflows from NLNG’s existing six-train LNG plant, is record-setting for being the first time ever that a multisourced corporate finance lending would be utilised to fund an LNG project anywhere in the world. Financing for the project has been a major challenge, especially with the world in throes of a deadly pandemic that has sickened over 4 million people and killed over 300,000 people. Before proceeding, one of the major shareholders of the NLNG, Shell, extracted a formal commitment that all the partners in the project would raise financing to fulfil their obligations. Shell, in a note to its shareholders, said the new LNG processing unit would be funded by NLNG without shareholder loans or shareholder equity requirements.
Continues on page 7
Senate moves to ensure food security, seeks establishment of Reserve Agency … Reps ask Buhari to declare state of emergency on agriculture SOLOMON AYADO & JAMES KWEN, Abuja
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L-R: Johnson Lebile, company secretary, Wema Bank; Ademola Adebise, MD/CEO, and Samuel Durojaye, non- executive director, during the 2019 AGM held by proxy at the Wema Bank Towers in Lagos.
Terms Nigeria must meet to access $1.5bn World Bank credit LOLADE AKINMURELE
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aking definitive action on some longstanding reforms is all that stands between Nigeria and a part of the much-needed concessionary loans it needs to fill a gaping revenue shortfall that threatens to unravel the economy. Nigeria is unlikely to draw down on a World Bank $1.5bn credit unless it ends a controversial multiple foreign exchange rate practice, formally halts the cash guzzling fuel subsidy regime and significantly improves transparency at its state oil firm, the Nigerian National Petroleum Corporation (NNPC). These are part of a list of 10 conditions which the bank
has been negotiating with Nigeria’s government, but BusinessDay learnt that the requirements have now been narrowed to three irreducible conditions that Nigeria must satisfy before a drawdown. The World Bank loan is part of the $6.9 billion Nigeria seeks from multilateral lenders in order to fight the COVID-19 pandemic and the oil price crash which has blown holes in government revenue and exposed the flailing economy. The West African nation already secured $3.4 billion from the International Monetary Fund (IMF) last month. Patience Oniha, directorgeneral of the Debt Management Office, said last week that another set of loans including $1.5 billion from the www.businessday.ng
World Bank and $500 million from the African Development Bank (AfDB) would be validated by the banks anytime between June and July this year. But sources say the World Bank component is largely dependent on Nigeria’s exchange rate policy, fuel subsidy regime and a makeover of the NNPC. While the Central Bank insists that it does not operate multiple exchange rates, Nigeria has been unable to persuade the World Bank officials that this is the case. The bank officials point to the official rate that has moved to N360 per US dollar and there is also the I & E rate which is at N380. The NNPC has said that it does not engage in under-
recovery any longer given that oil prices have fallen below the pump price which made it necessary to cut petrol price to N123 per litre, but the World Bank is insisting that what has happened to petrol pricing in Nigeria does not amount to a policy change and if it did, there would need to be a clear and concise policy statement to this effect. That policy statement would then need to be backed up by legislation that officially puts an end to the wasteful subsidies. Thirdly, the World Bank says the country will do better with improved transparency at the NNPC, especially given its central role in economic
Continues on page 7
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he Senate on Tuesday commenced legislative work on a critical bill to ensure food security for Nigeria, saying establishment of Food Reserve Agency would prevent food inadequacy in the future. The move for the establishment of Food Reserve Agency comes as the Senate feared that the adverse effect of the coronavirus pandemic would lead to food insufficiency in the country. The Senate said if an agency is put in place, Nigeria would be taking the right step in the right direction as replicated in other African countries, such as Zambia and Tanzania. The agency would ensure adequate food production and storage. The bill, sponsored by Abdullahi Adamu (APC, Nasarawa West), was passed for second reading on Tuesday. Adamu is chairman, Senate Committee on Agriculture and Rural Development. Leading the debate, Adamu, while underscoring the importance for the diversification of the Nigerian economy, explained that there is the need for enabling laws to address the problem of food insecurity. @Businessdayng
According to the lawmaker, the Food Reserve Agency, when established, would be responsible for storing food grains and other food commodities for strategic purposes. “Agriculture plays a pivotal role in the development and growth of every nation. Any country seeking to diversify its economy, alleviate poverty, create jobs and ensure food security should prioritise agriculture,” Adamu said. He said Nigeria, recognising the important role agriculture plays, has made efforts to place the sector at the fore by introducing different intervention programmes and policies backed by enabling laws. “A further step to be taken to ensure food security in our country at all times is to formulate enabling laws that will address food insecurity,” Adamu said. “The recent mandate of the president during the COVID-19 pandemic to distribute 70,000 metric tons of grains from the grains reserves shows clearly how important it is for a country to have a Food Reserve Agency,” he said. He said with the existence of the agency, emergency food crisis would be taken care of, especially in the period of a pandemic.
Wednesday 20 May 2020
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news Nigerian employers in gruelling... Continued from page 1
lous country already grappling with high unemploy-
ment and poverty rates. It’s been difficult for employers to cope amid these trying times, according to Timothy Olawale, directorgeneral of NECA. “Some companies have outstanding loan facilities with banks, imported goods with increasing demurrage at the ports, ongoing salary obligations to their employees and other financial obligations to other stakeholders despite their dwindled revenue,” Olawale said in an interview with BusinessDay. “Thus, it has been quite difficult for employers to cope with the economic impact of COVID-19, without any form of palliative or stimulus package to address these challenges,” he said. Despite the harsh consequences of the pandemic, many employers have kept their employees on their payroll while those that couldn’t completely meet their obligations to employees have been engaging them in order to adopt a more humane option in a bid to save jobs. “Some that cannot meet up and in a bid to remain afloat, are now engaging cost-cutting measures which include, sadly, reduction in the number of staff, negotiation and agreement on the terms of salary or other benefits for adjustments with their employees and renegotiation of different contracts,” Olawale said. Some employers have also redesigned their standard operating procedures (SOPs) to meet the demands of the new normal and have been trying to operate, albeit, not up to capacity. Those that are not in manufacturing have taken to new strategies, from working-from-home (WFH) to teleworking, to continue to remain afloat and meet their obligations. “We advise that employers should continue to evaluate
the impact of COVID-19 on their businesses, taking lawful measures necessary to protect their business and employees, and seek advice where in doubt,” Olawale said. The economic impact of the COVID-19 will see the Nigerian economy contract 3.4 percent this year, according to estimates by the International Monetary Fund (IMF). That’ll be the worst contraction since 1987. Olawale said the impact of the pandemic has been particularly gruesome for some sectors of the economy among which are aviation, hospitality, tourism, real estate and manufacturing. A survey done by the Lagos Chamber of Commerce and Industry (LCCI), which captured business operators across various sectors of the economy, also revealed that airlines, manufacturers, agro-processors, Small and Medium Enterprises and the hospitality sector were the worst hit by the pandemic. According to the survey, 81 percent of sampled businesses said they were ‘severely’ affected by the lockdown while 17 percent indicated moderate impact on their business. The survey also revealed that the lockdown had severe impact on over 50 percent of businesses in the services sector after necessitating lower demand for services by individual and corporate clients. It further indicated that during the lockdown, clients prioritised food and essential items ahead of ‘relatively less important’ services, and corporate clients ran skeletal operations, which depressed demand for non-essential services. As a result of the economic impact of the pandemic, business owners in the country have demanded a one-year tax break from the government to enable them to recover. Apart from one-year tax relief, businesses are also asking for the suspension of the implementation of the new Value Added Tax regime rate till year-end, particularly for the worst-hit sectors.
NLNG Train 7 project attracts $3bn... Continued from page 6
The project cost is therefore not reported as part of Shell’s overall capital expenditure. This made it important to include a consortium of lenders across different continents. The project is projected to cost $5.7 billion and will include a new liquefaction unit, an 84,200m³ storage tank, a 36,000m³ condensate tank and three gas turbine generators. “It is expected to increase NLNG’s production capacity from 22 to 30 million tonnes per annum, thereby placing the company among the top five producers and exporters of LNG in the world,” said Templars law firm in a release. The consortium also com-
prises leading engineering contractors, Saipem, Chiyoda and Daewoo, who have been appointed EPC contractors with responsibility for detailed design, engineering and construction works on the project. “We are pleased to have played a role in creating this first-of-its-kind financing technique, which happens to be the largest financing on the continent so far in 2020. It continues a trend of Templars advising on a majority of the largest and most complex infrastructure projects in the Nigerian market, be it in the area of gas, pipelines, power, roads, ports, telecom infrastructure or petrochemicals,” said Oghogho Akpata, managing partner at Templars. www.businessday.ng
Nasir el-Rufai (l), governor, Kaduna State, presents appointment letter to Edward Andow, new high court judge, at the swearing-in ceremony in Kaduna, yesterday.
FG asks businesses, schools, others... Continued from page 1
lockdown” for another two
weeks, insisting on strict enforcement of laid-down rules going forward. Speaking at the daily briefing of PTF on Tuesday, Boss Mustapha, chairman, Presidential Task Force (PTF) on COVID-19 and secretary to the government of the federation, assured that the task force was committed and determined to continue to provide the required leadership for this national response. Mustapha said that in the coming days, intense consultations would be deepened with different segments of the society including the state governments, security agencies, religious and community leaders to ensure a coordinated implementation of the measures. He reiterated that specific directives have been issued to security agencies to strictly enforce the measures and admonished Nigerians to observe the restrictions in full. Also, ahead of planned full resumption of business activities across sectors of the Lagos economy, the government has reeled out guidelines expected to be strictly observed by corporate bodies and business
outfits, which would subsist in the state until COVID-19 completely blows over. A white paper developed by the Lagos State Safety Commission said ahead of the planed full reopening, corporate offices and business organisations should ensure all staff with underlying medical conditions, such as heart or lung diseases or diabetes, do not resume at work. “These categories of staff seem to be at a higher risk of developing serious complications from COVID-19 illness,” said the white paper seen by BusinessDay on Tuesday. Lagos State Governor Babajide Sanwo-Olu had on Sunday, while giving updates as they relate to the COVID-19 pandemic, said government was considering full reopening of the economy, but with a caveat that the state safety commission and Environmental Protection Agency (LASEPA) would be visiting offices and business premises to assess the level of their readiness to resume operations. “We are at a level where we are reviewing the other arms of the economy. In the coming days, we will be starting what we call Register-to-Open, which means all players in
Terms Nigeria must meet to access... Continued from page 6
matters as well as revenue generation in Nigeria. The World Bank’s demands are no different from what government officials promised the IMF in a letter of intent in the process of securing the $3.4 billion loan from the Fund. “The World Bank is having to ration funds among countries in need of urgent financial assistance, and there are quite a number of them, which is why they are making demands on Nigeria before granting a loan request,” a senior investment banker
familiar with the negotiations between the government and the World Bank said. “Nigeria will be wise to expedite action in meeting those demands, which are very positive for the economy anyway, so as not to pass up the opportunity of accessing such cheap concessionary loan,” the person said. A senior business leader said Nigeria is likely to dillydally on the reforms for as long as possible unless there is political will within the government, something he says may be lacking. “These are unprecedented times when you expect the
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the restaurant business, event centres, entertainment, malls and cinemas will go through a form of re-registration and space management,” SanwoOlu said on Sunday. “There is a regulation that will be introduced to supervise this move. We will be coming to their facilities to assess their level of readiness for a future opening. I don’t know when that opening will happen in the weeks ahead, but we want these businesses to begin to tune themselves to the reality of COVID-19 with respect to how their work spaces need to look like,” he said. The state government began phased and gradual reopening of the Lagos economy on May 4 according to the directives of the Federal Government. However, some critical sectors including tourism and hospitality, sporting, event centres, cinemas, entertainment, and religious gatherings are still on lockdown. According to the new guidelines released by the state government, business organisations are also expected to set up hotlines for employees to report concerns or violation of any of the COVID-19 protocols. In addition, organisations must encourage staggered breaks as well as limit the capacities of their
elevators to two persons (for small elevator) and four persons (for large elevator). The safety commission further insisted that staff must be made to work side-by-side rather than face-to-face. And for the manufacturing sector particularly, management must assign staff to same shift teams to reduce social interaction, it said. “No gathering during lunch or break times which must be staggered,” the government said. It further noted that companies should increase the use of conveyor belts for material distribution and deliveries on factory floors. The government also encouraged retail outlets and shopping malls to install plexiglass panels at regular points of contact to further reduce the risk infection for all parties. “Regular cleaning of panels and frequently touched surfaces like door handles, teals must be carried out,” it said. The government said as much as possible, business premises should encourage contactless payment system and keep doors open where possible to minimise contact while markings inside the banking halls should be carried out to facilitate social distancing.
government to speed up the process of reforming the economy. It’ll be a shame if we let such a good crisis go to waste,” the business leader said. A bleak future without petrodollars is something Nigeria has been warned about for years, yet the day of reckoning has caught the government unprepared and scampering for a way out against the odds. The times have rapidly changed for Africa’s largest oil producer facing a “double whammy”, as the minister of finance, Zainab Ahmed, puts it, of tumbling oil prices and the coronavirus pandemic. The true depiction of how Nigeria has fallen on hard
times stems from the government’s own estimates that oil revenues will fall by 80 percent this year. The government expects GDP to contract by 3.5 percent this year. That’s significant for two reasons. Not only is it going to mark the country’s biggest economic contraction since 1987, it’s the first time the Nigerian government is less optimistic about its economy than independent economists and the likes of the International Monetary Fund (IMF). Though still in the same ball park as the IMF’s forecast, the government’s growth outlook is actually worse than the Fund’s 3.4 percent estimate.
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Wednesday 20 May 2020
BUSINESS DAY
news
Axa Mansard Insurance grows 2019 profit by 17% to N2.91bn SEGUN ADAMS
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isted insurer Axa Mansard Insurance has announced a double-digit profit growth for the 2019 business year helped by nearly 30 percent surge in revenue and the company’s cost efficiency in the year. Axa Mansard Insurance said profit grew by 17 percent to N2.91 billion while its Group’s shareholders’ funds hit N25.26 billion, a 21 percent growth in the year on a boost in the insurer’s shareholders’ funds. “Our focus on identifying new growth areas in our markets, strengthening our partnerships and refining our distribution strategy continues to pay off as we grew revenues by 29% despite the challenging operating environment,” said Kunle Ahmed, Axa Mansard Insurance CEO. Gross Premium Written grew to N43.62 billion from N33.92 billion in the prior year while Net Premium Income rose by 33 percent to 26.29 billion. The insurer saw Investment and other Income remain flat for the year and net claims reach N17.46 billion. Ahmed noted that the 44 percent jump in net claims was testament of Axa Mansard Insurance’s capability to pay all valid claims promptly even it transits from just a payer to the partner of
its numerous customers, he said. Axa Mansard reported a Loss/Claims ratio of 45 percent, down from 53 percent in 2018. Both underwriting expenses and underwriting profit rose by 4 percent to N3.49bn and N6.15bn respectively and the company’s focus on cost optimization and efficiency ensured a 4 percent drop in operating expenses at N8.05bn in 2019. Underwriting expense ratio dropped to 8 in 2019 percent from 12 percent in 2018, and Operating expense ratio fell to 14 percent from 18 percent year-on-year. The performance supported a 16 percent rise in profit before tax to N3.93bn for the year. Earnings per share jumped to 26.24 kobo from 21.35 kobo in the prior year. Axa Mansard Insurance’s balance sheet remained strong, with assets growing by 25 percent to N92.28bn year-on-year compared to a 12 percent increase in total liabilities which printed at N25.16bn for the year. As a result, shareholders’ fund for the insurer surged 38 percent to N23.08bn pushing Group’s shareholders’ fund 21 percent higher to N25.26bn. Returns on Average Equity rose to 17 percent from 12 percent in the reporting period and Returns on Average Asset rose to 5 percent from 4 percent.
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Wema Bank holds AGM by proxy, assures stakeholders of growth
W
ema Bank plc held its annual general meeting (AGM) on Monday, May 18, 2020 to announce the growth of the bank in the past year and enable stakeholders receive their dividend. Coming several days after the bank’s 75th anniversary celebration, the meeting availed the investment community an opportunity to gain insight into the performance of the bank in the 2019 financial year. The AGM, which held in proxy, in compliance with the guidelines of the Corporate Affairs Commission (CAC), was moderated by the chairman of the bank, Babatunde Kasali with a few shareholders and members of the bank’s board and executives in attendance. Others joined remotely via live streaming. Shareholder group leaders commended the bank for attaining 75 years in service, 3 years of digital banking with ALAT and also applauded the Board and Management of the bank for the 2019 performance. For the year under review, Wema Bank announced gross earnings of N94.89 billion, which was a 32.65 per cent increase from the previous year. The bank’s Profit After Tax (PAT) grew by 56.16 percent to N5.2 billion while Profit
Before Tax (PBT) stood at 40.83 percent year-on-year to N6.76 billion in 2019, up from N4.8 billion in 2018. The bank also reported an increase in Customer Deposits by 56.35 per cent in the year under review, to N577.28 billion. MD/CEO, Ademola Adebise accredited the performance to the bank’s Double in two strategy which is targeted at increasing bottom-line while reducing cost. He added that the increase in customer deposits was as a result of the aggressive marketing campaigns around the bank’s digital platform, ALAT. The shareholders in attendance unanimously endorsed the payment of four kobo per share translating as a dividend, which translates to an of eight per cent from 2018. In his remarks, Adebise assured the shareholders of continuous growth for the bank. He noted that “despite the current challenges brought on by the global pandemic, the underlining strength of Bank, the quality of our assets and our position as the parent to ALAT, the first-ever digital bank in Nigeria has given us the competitive advantage to continue to deliver excellent banking services to our customers and gain the confidence of our shareholders.
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Carveton off the hook as Rivers withdraws charges against two pilots, 10 passengers Ignatius Chukwu
C
arevton Helicopters Limited is finally off the hook in its imbroglio with the Rivers State government led by Governor Nyesom Wike. This is because the court in Port Harcourt on Tuesday, May 19, 2020, struck out the case against the two pilots and 10 passengers. This is contained in a statement signed by the Rivers State Commissioner of Information and Communications, Paulinus Msirim. The statement read: “The Rivers State Government through the Honourable Attorney-General has withdrawn and discontinued the two separate charges (PMC/532C/2020 and PMC/533C/2020) preferred against the two pilots of Caverton Helicopters Ltd and the 10 passengers on board before the Port Harcourt Chief Magistrates’ Court. “Consequently, the presiding Chief Magistrate, D. D Ihua-Maduenyi has struck out the two charges and discharged all the defendants.” This ends the saga that began on April 7, 2020, when the governor led the task force to arrest the two pilots
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and 10 passengers at the Nigerian Air Force Base where the chopper landed. The arrest, detention, an d pro s e cut io n , all in one day, shook the business community around the country especially the oil industry. The detainees were not eventually taken to the prison but to a statement government-owned hotel in the state capital probably to show that the state government was not totally harsh. The reactions and condemnations rather seemed to infuriate the governor who shut down Carveton offices in the state. The company said they had permit from the federal government and this was backed by the minister of aviation, Hadi Sirika. Wike however said if they had permit to fly, he did not give them permit to step into Rivers soil. The governor was to later tell newsmen in Government House that the CEO of Carveton had pleaded for leniency and promised such would not happen again. He waved a letter of apology he said he extracted from Carveton. Thereafter, the detainees were freed. Now, the case has been withdrawn.
BUSINESS DAY
Wednesday 20 May 2020
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Almajiris and northern governors: Absence of leadership and vision!
Franklin Ngwu
W
ith COVID 19 and the deliberate scattering of Almajiris, the situation is becoming more petrifying! From 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. Even though that 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. Whereas 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 an effective and functional education system! As such direction, opportunities and freedoms are pres-
ently 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 Professor 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, widespread violence and social unrest ravaged the Caribbean with many killed and injured a year after his book was published. While William M. 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 in crisis and 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, Kaduna, Adamawa, Taraba, Benue all suggest that Boko Haram might have expanded and mutated into varied criminal groups and activities. To avoid escalation of the crisis, I deeply beckon and implore PMB and the Northern 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 direction and focus, imbue confidence and trust, create a sense of ownership and belonging to our children and youths. Failure to do this is
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To avoid escalation of the crisis, I deeply beckon and implore PMB and the Northern 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
an inevitable invitation and preparation for the exponential escalation of social crisis higher than Boko Haram. Your Excellencies, 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 position and cult following Mr President, 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. Your excellencies, 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. In the recently released report on the level of poverty and inequality in Nigeria by Nigeria Bureau of Statistics (NBS), the North is leading as the epicentre of poverty with about 14 states in the North recording over 50 percent poverty rates. In Sokoto, Taraba and Jigawa, it is most disappointingly about 90 percent. It is the same very poor result for the North in all the variables used in measuring Human Development Index (HDI). With millions of Northern youths roaming all major cities in Nigeria, it is clear that a critical and fulcrum 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, more and priority attention is demanded given the lamentable level of human capital
Sustaining the wins
F
mechanger in the battle. Following the March 23rd Boko Haram attack in Bohoma that left 98 Chadian soldiers dead, President Déby took personal charge of the battle. He led the planning and attack that killed over 1,000 insurgents and routed the remnants into Nigeria and Niger. According to a Nextier SPD Associate who is conducting field research in Diffa, President Déby involvement transcends the battlefield into the communities where the people are now emboldened to provide reconnaissance and intelligence to the MNJTF. The personal involvement of President Déby in the counter-attack and his threat to withdraw Chadian troops from the MNJTF triggered greater commitment from the partners. Lt. General Tukur Buratai, Nigeria’s Chief of Army, relocated to the country’s North-East region from where he is coordinating and directing the counterterrorism operations. Media reports indicate that “Operation Kantana Jimlan”, which Buratai launched on May 01, has led to the killing of 78 members of Islamic State West Africa Province (ISWAP), 56 members of Boko Haram and the arrest of 16 informants. According to Albert Schweitzer, Nobel laureate, example is not the main thing in influencing others; it is the only thing. Nimble strategy While Nigeria’s military is taciturn, keen observation indicates that it has abandoned its “Super Camp” strategy for a “degrade” strategy. The former strategy, which consolidates military capabilities within a “fortress”, minimises the
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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
Patrick O. Okigbo III & Ndubuisi N. Nwokolo
Boko Haram is on its back foot. Can Nigeria end the war now? rom April 2020, the Multinational Joint Task Force (MNJTF) has scored consistent victories against the terrorist groups in the Sahel. Using both aerial and ground assaults, MNJTF, which comprises of military troops from Chad, Niger, Nigeria, Cameroon and Benin, have eliminated scores of terrorists and regained previously lost territories. The killing on May 11th of about 75 Boko Haram insurgents around Diffa, a town in the southeastern part of Niger Republic, was the latest in a string of successful operations. The terrorist insurgency in the Lake Chad region has been raging for the last decade. According to the Council on Foreign Relations, a think tank, over 37,500 lives have been lost, 2,5 million persons displaced and about 244,000 Nigerian refugees in other countries. The United Nations Refugee Agency reports that over 26 million people are affected by the conflict in Nigeria’s northeast region. The MNJTF had suffered some significant defeats in the last three years; however, it appears that its sun has risen. Is there enough evidence to indicate that it is on a sustainable trajectory to victory against the insurgents? This essay, which is based on insights from our affiliates in the conflict zone, interviews with military personnel, and our study of the ongoing conflict, proposes how the MNJTF can consolidate its wins. Déby’s derby Many informed observers of the conflict credit President Idriss Déby of Chad as the ga-
development of Northern states. It is the fulcrum upon which any kind of development 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 the 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 Northern Nigeria does not start and end with building new classrooms 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 profoundly implore Mr President to declare a state of emergency in the education sector of Northern Nigeria and persuade the governors to allocate at least 30 percent of their state budgets to the Education sector even though UNESCO recommends 26 percent for Nigeria. This will be a better way of utilizing the youths than using them mainly as assets to win elections!
risk of terrorists overrunning military bases but leaves the rural areas vulnerable to attacks. With the “degrade” strategy, Nigerian Forces engage in multiple offensive operations to “find, fix, and destroy” the enemies. The strategy aims to destroy the enemies’ information networks and to obliterate their ability to project power. But the enemy is not sitting on its hands. The attack on Chadian troops in Bohoma provided insights into the increasing sophistication of the insurgent groups especially in terms of their intelligence, surveillance, and reconnaissance capabilities. The military will need diligence in strategy execution to achieve their strategic goals. Africans have to fight and win this war. While the Nigerian military is moving to a “degrade” strategy, the United States Africa Command (AFRICOM) has shifted from its “degrade” strategy to a “containment” strategy. According to The Defence Post, AFRICOM will continue to provide security assistance to partner nations to increase their willingness and capabilities to counter extremists. However, AFRICOM is looking to African troops to win this war while it continues to provide limited operational support. Governments in the Sahel must focus on developing their economies. While the “degrade” strategy allows the military to be nimbler and increases their chances of success, the strength of violent extremist organisations is linked to their ease of recruitment which, in turn, is aided by the challenges of extreme poverty, political instability, and economic fragility.
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Locked and ready The new “degrade” strategy has been made possible today because of the recent purchase of military hardware. In April 2020, Nigerian Army took delivery of high-grade armoured tanks and artillery trucks from China. The tanks enable the military to engage in close-up operations against the enemy. This is a major development for an Army that, until recently, used outdated weapons such as the unreliable Shilka guns procured between 1979 and 1983. The equipment was so bad that Major General Olusegun Adeniyi, field commander of “Operation Lafiya Dole”, recorded a mobile phone video that went viral complaining about the insurgent’s weapons advantage. The arrival of the arms has strengthened the Nigerian Forces. Winning hand The ongoing COVID-19 pandemic has narrowed Nigeria’s window for experimentation. The economy is wobbly and there are no excess funds to paper over faulty strategies. As Nigeria continues to record victories against the insurgents, there is a need to consolidate the wins and end the war before the impact of the weakening economy exacerbates. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Okigbo III is the Founder and Principal Partner at Nextier while Dr. Nwokolo is the Senior Policy and Research Lead.
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BUSINESS DAY
Wednesday 20 May 2020
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Saving banks from the impending revulsion Small Business handbook
Emeka Osuji
A
banking revolution is a good thing but any thing that makes people wish they had nothing to do with banks is revulsion. It is bad. The banking industry in Nigeria has seen the good, the bad and the ugly times. It has had its fair share of difficulties, leading to considerable attrition of its members. Banks have also made significant contributions to the financial inclusion policy of Nigeria, and the digitisation and modernisation of the financial intermediation role of the industry. Time there was, in Nigeria, when going to a banking hall to get cash was both comical and nightmarish. Once a customer arrived at the bank, he or she was given a “tally number” – a plastic disk with a number on it, to identify his or her location in the permanently long queues that were a standard feature of the banking halls. On armed with the tally, the endless waiting game begins, and ends only when somebody from behind the counter, calls out the tally number and the custom answers. That part used to be very entertaining - to hear Nigerians answer in their various languages, as their tally numbers ring out in the banking halls. Technology was rudimentary and customers literally went to banks with their mats to lie down, and probably take a nap, while waiting to be called. The real show begins when a banking officer calls out to the waiting custom-
ers, some of whom had already begun to doze or even snore. Usman, whose tally number is 4 hears the cashier scream Number 4, and he springs up from his mat and goes in Hausa, “n’am!”. This may be followed after several minutes with another call of tally number 5, which belongs to Madam Bisi, a Yoruba petty trader, and she jumps up on her feet, clutching her loosening wrappers and screaming back at the cashier in Yoruba, “emi re o!”. And Mazi Okoro will jump, roll his mat and reply in Igbo, “obum!”, as soon as his tally number was called. Each of those responses signalled the presence of the customer who then proceeded to be served. That was the kind of time-destroying ritual that was the norm in our banks at the time, until the dawn of the new era. The 1980s marked a watershed in Nigerian banking history, and saw us go through some of the most remarkable transformations in the history of banking in Africa. It was a fundamental and relatively sudden change - a kind of revolution that changed the banking landscape for good and for the better. Unlike in the 70s when Rural Banking was compelled, commercial banks took their branches to every nook and corner of the country. In many ways, this positively impacted on the rural based micro, small and medium enterprises (MSMEs). Prior to the banking revolution of the 1980s, the industry was characterised by what became known as “armchair banking”, whereby bankers sat in their then cosy, but now relatively decrepit, offices waiting for customers to bring their needs to the banks to have them met through any of the limited service options available at the time. There were hardly any marketing units, to say nothing of marketing divisions in the banks. Customers were served as long as they were able to bring their banking needs to the banks. Banking
was essentially an operations activity cantered in the back office. The banking revolution saw the development of many “new generation bank” that were slim and fleet-footed. Many were merchant banks that specialised in wholesale banking, focusing of capital issues and financial advisory services. The commercial banks outclassed the old “legacy banks” in ambience, product variety and customer service; all facilitated by and delivered through novel technology platforms. I dare say that the so-called new generation banks have contributed immensely to the development of banking in Nigerian, and national economic growth. Now the times have changed and revulsion, rather than a revolution, seems to be hanging over the banking industry, not just in Nigeria but in the whole world. Banking is not going to be a sweet-smelling scent around in the next few years, unless something is done urgently. The allure of banking has come to a screeching halt, as COVID-19 puts a foot on the break of the global economy, starting in 2020. Another new era seems to be breaking in the annals of banking, in which governments and regulatory authorities have got to nurse the banks and their customers back to life. This will call not just for prudence and rationality but also patience and courage. At a time when global economy was already weakened by declining oil prices, occasioned by a chain of events, including the Saudi-Russia oil conflict and declining demand from China, a calamity of dizzying proportions, in the form of a pandemic, hit the global economy, destabilising economic equilibrium and devastating every economic sector. In Nigeria, the economy is confronting a contracting manufacturing sector with Purchasing Managers Index diving significantly south to about
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In the face of mounting provisions and dwindling inflows, how can the banks sustain lending to ensure the economic engine restarts in good time? This is a global challenge we must attack. How do we keep households and microenterprises breathing as economic decline bottoms out?
Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii
Emotional reasoning
I
remember my first few terms at boarding school in the UK at the tender age of eight. Some of the oyinbo kids in my dormitory, finding themselves away from home for the first time would literally cry themselves to sleep every night. They were homesick. If they had thought they would find a sympathetic ear in me, it didn’t take them long to discover just how wrong they were. This “hard” black boy from Africa would instead mock them for crying over something so little. At least, how could their situation possibly compare with mine? My parents lived six million miles away...or so I believed at the time and was ever so quick to tell them. I felt compelled to help them put things in perspective. Little did they know that whenever my mother took me back to school to resume the new term, as she and Macdonald, our Headmaster, exchanged pleasantries before saying her goodbyes to me, I would tip my head upwards as if painstakingly tracing something on the ceiling, all in a vain effort to prevent the tears that were swiftly welling up in my eyes from dropping or worse still, from very visibly rolling down my cheeks. Saying goodbye was excruciating. If only my new oyinbo friends knew. This African boy wasn’t so tough after all. There are several virtues that are necessary for every human being to discover and develop, in order for them to attain and maintain a state of mental and emotional equilibrium. These are no less vital than the many skills and qualities required to succeed in life. Many of these virtues need to be taught and deliberately nurtured as they don’t always come naturally. Compassion, empathy and humility are just a few of these
qualities that need to be ingrained and it’s crucial this is done when young, so they can quickly become integral components of one’s character. I watched a video recently where five children from low income homes in the US were asked by an interviewer what they would have loved to receive for Christmas, which happened to be just a few days away. Amongst the gifts wished for were a giant Barbie house, an Xbox 360, a computer and a trophy house. They were then asked to suggest a gift that would really make the yuletide a special and unforgettable one for their parents. The suggestions included a ring, as one of the boys said his mother had never had one; a new television, a watch for each parent and nice jewellery. The interviewer subsequently presented each child, separately, with two wrapped gifts; one, the child’s choice gift and the second being the parent’s choice gift. The look on the faces of these children and their spontaneous outburst of excitement was priceless to behold. However, there was one small catch which brought them all crashing back down to earth. Each child was given the free will to pick just one. Their dream gift or their parent’s heart desire. As one might expect, they were all visibly pained to make a decision. However, when they did, their responses really moved me. Not just because of the decision in itself but because of the spirit in which it was made. The unmistakable glee was impossible to hide. Here was a dream come true for them all. I refer not to the chance to finally own the item they had always pined for, which their parents however couldn’t afford to buy for them, but the opportunity to play a part in presenting their parents with
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something they had always wanted, but which on their list of priorities, had always taken a distant second place to providing for their family. Though it may be relative, this sort of sacrifice is one most of us parents can readily relate to. Here are a few of the children’s unforgettable responses. “It’s either Lego or family and I choose family...family matters”. “I get a gift every year from my family but my mum doesn’t get anything”. “If I get a laptop, my mum will lose something. She takes care of me when I’m sick. She helps me with my homework”. “They look out for me and do stuff for me, so I need to give back to them”. “Now, I have an opportunity to give him something “. I was simply blown away. And did I mention a “sense of gratitude” amongst the virtues which contribute to mental and emotional wellbeing? This is one that cannot be overemphasised as it determines how you see the world and the part you and others play in it. Those who are willing to make sacrifices for the sake of others seldom lose, no matter how it may initially look. For putting the interest of their family first, the children were rewarded with both gifts and this was a wonderful way of conveying this character-building message to them. There is a school of thought which argues that individuals are primarily driven by the promise or hope of reward and the need to preserve their wellbeing. Therefore, the notion of duty or self-motivation are not practicable in the real world. Kantian ethics bases its theories on the “golden rule” - “do unto others as you want them to do to you”. But because human beings are naturally selfish, this is thought to
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51 in March, the lowest in about one year. COVID-19 has hit the banking industry in such a way that only concerted action of the government and regulators would have any meaningful impact. Customers have watched their cash flows evaporate and with it, credit quality, even of the best risk assets, has deteriorated. Clearly, it will be wishful thinking to expect customers to effectively service their facilities. Not only has cash flows dried up, collateral values have declined as various asset values take a hit. In the face of mounting provisions and dwindling inflows, how can the banks sustain lending to ensure the economic engine restarts in good time? This is a global challenge we must attack. How do we keep households and microenterprises breathing as economic decline bottoms out? Will recovery take a “V” or “U” shape or will it be drawn out taking an “L” shape? Each recovery trajectory has short and longterm implications for the economy. For starters, regulators must wake up from any hangover of the good times and come to the reality that banks will have to chase bad money with good money, and still run the risk of losing both and this why the times call for regulatory courage. Trigger happy regulators are not needed now. Regulatory arrogance and supervisory rigidity will dig the hole deeper and make recovery harder. Monetary policy action as currently being implemented is good but will not be good enough. Fiscal action effectively implemented, is a necessity. The flow of funds to households and firms, which constitute the key players in the Circular Flow of income, and the production of the Gross Domestic Product, now practically halted by the lockdown.
Character Matters with Daps
Dapo Akande hardly work. Kant’s ethical theories have often been criticised as seeming to appeal to emotions rather than reasoning. It’s been denounced as being too idealistic; as people care less about morality in our competitive societies, where you must first look out for No.1, or else? But can the golden rule truly be described as pure emotional hogwash? I have a hard time in trying to think of anything smarter than conducting yourself in a way which almost guarantees that your “selfless” actions will somehow be reciprocated? Admittedly, the reward may not come immediately but in the long run, it will come. That, to me, is a clear case of sound reasoning but it then throws up the question; do emotions and rational thinking always have to be mutually exclusive? I’ll leave you to ponder on that one. Changing the nation...one child at a time. Akande is a Surrey University graduate with a Masters in Professional Ethics. An alumnus of the institute for National Transformation and author of two books; The Last Flight and Shifting Anchors. Contact: dapsakande25@ gmail.com
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Wednesday 20 May 2020
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The tough decisions needed to strengthen the Nigerian economy post COVID-19
Olanrewaju Rufai
A
s the world continues to battle the COVID-19 pandemic, it is becoming increasingly clearer that the economic repercussions of the pandemic could be even more drastic than anticipated. Already, the outbreak has caused severe economic and market dislocations across the globe, disrupting global supply chains and travel, and causing a crash in the price of crude oil. The Nigerian economy has not been spared. Since the outbreak of the pandemic, the market for Nigeria’s major export, crude oil has suffered enormous losses. Furthermore, the near-term outlook of the nation’s principal export looks grim as the forecast for the rest of the year remains considerably unfavourable. Given the overall vulnerability of the Nigerian economy to volatility in global crude oil prices, the impact of the coronavirus on the future of the Nigerian economy cannot be underestimated. Before the pandemic, the Nigerian economy was yet to fully recover from the recession it suffered in 2016, with its 2019 GDP growth tapering
around 2.3 percent. In fact, the IMF had in February revised the 2020 GDP growth rate from 2.5 percent to 2 percent, as a result of relatively low oil prices and other macroeconomic headwinds. Furthermore, the country’s debt profile had also been a source of concern, with debt servicing already consuming over 60 percent of the nation’s revenue. Now with the outbreak of the pandemic, it seems inevitable that the nation’s economic indicators could get even worse, thus prompting the question - what should the Nigerian economy look like after the pandemic? The recent shock to the Nigerian economy, caused by the disruptions in the global crude oil market, again highlights the vulnerability of the nation’s economy to external shocks, and the need to restructure and diversify the productive base of the economy, with a view to reducing dependence on the oil sector. It is a no brainer that the nation’s dependence on oil revenue as the primary source of foreign exchange needs to be addressed. Simply put, as long as the Nigerian economy remains a mono-economy totally dependent on oil revenues, the nation will continue to remain vulnerable to oil price shocks. Therefore, in the aftermath of COVID-19, the nation’s policymakers must ensure that sustainable fiscal management practices resilient to global oil price cycles are put in place, starting with the diversification of the nation’s productive base. Diversifying the nation’s economic productive base will require significant Foreign Direct Investments (FDI). However, attracting foreign direct investments in the post-
COVID-19 world will be particularly tough, considering the predicted state of the global economy and market uncertainty. Therefore, it behoves the nation’s policymakers to engender the conditions which will incentivise investors. One major issue to address is the country’s worsening investment climate, which has been characterised by a severe infrastructure deficit, overly stringent government policies, and a weak legal framework. Furthermore, the prolonged state of insecurity in the country does little to attract foreign investors. Therefore, to attract FDI in the post-COVID-19 economy, measures must be put in place to ensure that these uncertainties and bottlenecks in the local market are swiftly addressed. In addition to all of these, given that the nation’s revenues might remain depressed for an extended period, and with the nation’s debt spiralling, there is an urgent need to plug leakages in the Nigerian economy, starting with an assessment of the government’s finances. A cursory examination of the Nigerian government’s budgets and expenditure over the past years reveals the nation’s misplaced priorities: rather than fund the sectors critical for development such as education, healthcare and infrastructure; the biggest chunks of the Nigerian government’s expenditure are instead debt servicing, subsidy of petroleum products and the remuneration of public officials. Currently, a chunk of government expenditure consists of salaries for civil servants across Nigeria’s bloated federal bureaucracy and remuneration of public officials. Based on available data, the federal government’s recurrent expenditure is estimated
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There is a need to ensure that the Nigerian economy is well-aligned with unfolding global realities, and strategically positioned to benefit from the post pandemic economic opportunities which might unfold to our advantage. However, this will not be possible if policymakers fail to be courageous and implement the tough policies required
at over N4.5 trillion. In fact, Nigeria historically spends over most of its annual budgets on recurrent expenditure. That this situation is unideal is an understatement. Thus, in the aftermath of the COVID-19 pandemic, there must be a complete reassessment of the government’s finances, starting with the discontinuation of the subsidy of petroleum products as well as a drastic reduction of recurrent public expenditure and the high cost of governance. Putting all of these into action help unlock liquidity, rejuvenate the nation’s fiscal and economic streams and lay the foundations for a prosperous economic future. Overall, there is a need to ensure that the Nigerian economy is wellaligned with unfolding global realities, and strategically positioned to benefit from the post pandemic economic opportunities which might unfold to our advantage. However, this will not be possible if policymakers fail to be courageous and implement the tough policies required. The COVID-19 pandemic has shown that the world, despite economic and technological advances, remains as fragile as ever. However, it also presents a rare, incredible opportunity for individuals, companies and nations to take advantage of the unfolding opportunities. In every crisis lies an opportunity. Thus, we must take the current when it serves, otherwise we lose our ventures. Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.
Public finance in challenging times: A principled path to prosperity
T
he ongoing pandemic foists difficult decisions on everyone. It has brought to the fore the inefficiency of several business models and the inadequacy of many plans and financial assumptions. This is unsurprising: both the existence and scale of disruption wrought by the pandemic were unforeseen. The good news is that this period also brings opportunities: the opportunity to rethink the business models and assumptions that have been exposed, and to create a crisisproof path to prosperity. This is as true for personal and corporate finance as it is for public finance. Through its impact on crude oil demand and the lockdowns which forced most businesses to temporarily shut down operations, the pandemic has had a tremendous effect on the finance of the Nigerian government, the full impact of which may not yet have been fully ascertained. Nigeria has now had a few years of fiscal deficits which have led the country to take on increasing amounts of debt on revenue assumptions that have now bottomed-up. The result has been painful to see: the revised 2020 budget of the federal government now has over 50 percent of planned spending unsupported by expected revenues. The ensuing problem may be framed as follows: How can the Nigerian state fund its present and future budgets and service its ongoing debts in the face of severely reduced revenues? In very broad terms, three options are available. The first is for Nigeria to default on (or seek forgiveness of ) existing loans, and then continue on a path of fiscal prudence. The debt forgiveness path relies on circumstances outside government’s control and is therefore not unilaterally open to the government. Debt
forgiveness can also impose stringent future obligations on the government and affect discussions for subsequent loans the government intends to take as lenders start to question the state’s ability to repay its debt. The default path is similarly problematic. Depending on loan conditions, a default on one loan could lead to lenders recalling other existing loans, thus crystallising repayment obligations early. This is, of course, apart from the legal, economic, diplomatic and geopolitical pressure Nigeria will face in a default scenario, which sum up to make this option unattractive. The second option is to simply inflate away the problem. Given the state’s control over monetary policy and the power to print currency, government can devalue its existing currency so that the same amount of foreign reserves/ exchange can now pay for more domestic goods or simply print additional currency which it uses to fund the budget and service debts. The problem here, of course, is inflation. Students of monetary economics will know all too well that an uncontrolled attempt to fund public expenditure in this way has led to hyperinflation, social unrest and ultimately revolutions. Wage freezes and price controls similarly do not work in this environment as they force firms out of business, lead to the creation of black markets and only exacerbate the inflation problem. Examples of this abound in history. The third option is a principled path towards prosperity. It relies on a prudent management of revenue and expenditure and a disciplined approach to deficit spending. For clarity, I conceptualise the issues using a simple example from personal finance. I complicate the model gradually as we move from personal to public
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finance. Consider a certain Mr. X. Mr. X has an annual income of N8,500,000. He reserves the sum of N2,500,000 to purchase new items such as a television or furniture. He pays the sum of N4,500,000 as annual rent and service charges for his flat in Ikoyi. He services a car loan he took some years ago with N2,500,000. He also supports his family, meets religious commitments and supports charity with N1,200,000 annually. It won’t take long to see that Mr. X is living above his means. Against an income of N8,500,000, he is spending 10,700,000. To fund this shortfall, he takes a loan of N2,200,000. Assume further that Mr. X’s employer has informed him that because of reduced business activities arising from the pandemic, his remuneration will be reduced from N8,500,000 to N5,000,000. Mr. X creates a brilliant plan to react to this predicament. He will reduce spending on new items by N155,000. He will similarly agree a reduction in his rent by N25,000, and reduce his exposure to religion, charity and family by N153,000. In all, his expenses will reduce from N10,700,000 to about N10,300,000 against a revised income of N5,000,000. He will make up the shortfall by taking up N5,300,000 in loans. This example explains how the budget works. Interestingly, this example is actually Nigeria’s 2020 budget divided by one million and rounded up as required. Mr. X’s remuneration represents Nigeria’s revenue; the planned spending on new items reflects capital expenditure; the spending on rent reflects recurrent (non-debt) expenditure; the car loan represents Nigeria’s debt service obligations; and the contributions to religion, family and charity represent contributions to the special intervention
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Reginald Aziza
fund, sinking fund and other statutory transfers. When planned expenditure exceeds expected revenue, we have a fiscal deficit. Generally, the government funds these deficits primarily through loans and secondarily through its control of the monetary system. As seen above, budgets are essentially made up of two components: expected revenues and planned expenditures. The key problem with Nigeria (typified by Mr. X) has been a suboptimal consideration of the expenditure portion of the budget. Hitherto, the government’s response to fiscal deficits has not been on cutting expenditure, but on increasing revenue. There are at least two problems with this. First, a substantial part of our public revenue is linked to oil prices which are entirely outside government’s control. A slump in oil prices therefore necessitates a slump in revenues accruing to the government. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Reginald is a PhD Student of Law in the University of Oxford.
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Wednesday 20 May 2020
BUSINESS DAY
Editorial Publisher/Editor-in-chief
Frank Aigbogun
Prioritise Nigeria’s healthcare in COVID-19 fight The maxim health is wealth can’t be overemphasised
editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)
Bashir Ibrahim Hassan
R
ecent efforts in Nigeria show a slow but steady shift towards fixing or lessening the effects of the COVID-19 pandemic on economic activities. With COVID-19 cases not showing signs of slowing soon, we urge the federal government not to lose focus but rather prioritise the healthcare system. The IMF, in a recent report on “COVID-19: An unprecedented threat to development,” made it very clear that the immediate priority is for countries to do whatever it takes to ramp up public health expenditure to contain the virus outbreak, regardless of fiscal space and debt positions. As at Sunday, the number of confirmed COVID-19 patients had risen to 5,959 with 338 new patients recorded. Here is the risk, the rapid spread of the virus, if left unchecked, is threatening to overwhelm the weak healthcare system which has characterised Nigeria over the years. Some state governments are gradually easing lockdown mea-
sures. Lagos State with the highest number of COVID-19 patients is considering re-opening its economy on improved businesses’ readiness stating that, “with the size of the state’s economy and numbers of businesses that operate in its domain, the government could not afford to keep people and businesses on lockdown permanently.” We may see similar responses also from the federal government. The reality is that Nigeria is faced with an unprecedented health and economic crisis, which requires a commensurate and timely policy response. Amid the need to restart economic activities, the fiscal authorities must also seek to minimise the humanitarian cost of the health crisis by ramping up the preparedness of healthcare systems. Nigeria’s healthcare system is currently under-equipped to deal with the increased demand for critical services, posing challenges in tackling the outbreak. The Presidential Task Force on Covid19 recommended that states prepare isolation centres with capacity for 3000 beds each. As the states do so, BusinessDay recom-
mends that they consider ensuring that the facilities should be easily convertible to regular hospital bed spaces. In the short to medium term what must be prioritised, according to the World Health Organisation, are the procurement of essential medical supplies for effective treatment (including for intensive care), setting up test labs to allow rapid case identification, implementing effective contact tracing and quarantining, and supporting frontline health workers. For countries where limited fiscal space and financing constraints prevent adequate health spending, mobilising grants or zero-interest loans should be a priority. According to the IMF, the priority for oil exporters like Nigeria should be to accommodate essential health spending and combine wellpaced, growth-friendly spending adjustments that protect social spending and public investment. This is a tough time for Nigeria. The lack of budgetary space to absorb the global shock of the COVID-19 pandemic is complicating an appropriate policy response.
The fiscal situation is more complex because persistently low oil prices are expected beyond 2020 and will result in low revenues for an extended period. A major challenge Nigeria has faced so far in the pandemic is its testing capacity. Twenty weeks into the pandemic just 35,345 patients have been tested out of an estimated population of 200 million people. This is too low. The number of new infections reported daily is a reflection of how many tests can be being conducted daily. It is not the total number of Nigerians who have contracted the disease. The number of tests must increase. While we restructure the 2020 budget, get loans from the IMF, World Bank and etc. in a bid to spur growth in the economy, we cannot afford to treat the healthcare system as secondary. We have called for a rethink of the 2020 revised budget in our editorial. We expect expenditure on health infrastructures and facilities to take priority above others. The federal government must see in this crisis an opportunity to build a solid and vibrant healthcare sector.
GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan
EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong
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BUSINESS DAY
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BUSINESS DAY
COMPANIES & MARKETS
COMPANY NEWS ANALYSIS INSIGHT
INDUSTRIALS
Lafarge declares N8.06bn Q1 20 profit as strong balance sheet reduced COVID-19 impact OLUFIKAYO OWOEYE
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ollowing the disposal of its lossmaking Lafarge South Africa Holdco and the deleveraging of its balance sheet, Lafarge Africa Plc’s first quarter result for the period ended 31 March, showed a 9.7percent increase in revenue to N63.69 billion from N58.01billion in same period in 2019. Revenue from the sales of cement surged 6.9percent to N62.25billion from N58.18billion, while revenue from aggregate and concrete decline 21.4percent yearon-year to N1.43billion from N1.82billion. Gross Profit ended at N17.62billion from N17.59billion in same period in 2019. H o w e v e r, c o s t o f sales surged 13.9percent to N46.06billion from N40.42billion in same period in 2019. This is coming on the back of increase in Fuel and Power which ballooned 51.93percent to N10.59billion from N6.97billion in Q1 2019. Selling and distribution expenses reduced 8.52per-
cent to N838.39million from N916.52million as a result of reduction in Marketing staff salaries and other related costs to N713.69million from N916.52million. Administrative expenses also reduced
slightly to N5.07billion from N5.24billion. Finance Income stood a t N 1 1 4 . 7 m i l l i o n f ro m N1.37billion, Finance cost reduced significantly to N2.57billion from N8.31 bil-
lion. Profit After Tax for the period surged to N8.06billion from N6.30billion Khaled El Dokani, CCEO of Lafarge Africa, said the first quarter results confirmed that the turnaround
initiatives are effective and its strong balance sheet is mitigating the risks borne by the pandemic that has started hitting our country in March. “COVID-19 impact on the 2020 results cannot be
Eric Omondi, Kenyan comedian and CEO of Big Tyme Entertainment, after endorsing Ogelle, Africa’s first user generated content platform.
reasonably estimated at this stage, but long-term prospects remain positive. The company expects that the public safety measures issued by the federal and state authorities in Nigeria and around the world will adversely affect the company’s results in Q2, 2020, despite short-term disruptions, Lafarge Africa Plc is however confident in the underlying resilience of its businesses and operating model as the company has developed robust cost and cash optimization initiatives. The Lafarge Africa’s strong balance sheet and reduced cost base will also help minimize the negative effects of the COVID-19 pandemic,” he said. Lafarge Africa has a wide footprint in Nigeria with cement operations in the South West (Ewekoro and Sagamu in Ogun State), North East (Ashaka, in Gombe State), South East (Mfamosing, Cross Rivers State) with Ready-Mix operations in Lagos, Abuja and Port Harcourt. It has a current installed cement production capacity of 10.5Mtpa.
OIL & GAS
Mutual celebrates 175 years of COVID 19: FBN Quest says peak demand for Old impacting lives in Africa crude oil may extend beyond 2035 MODESTUS ANAESORONYE
DIPO OLADEHINDE
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he effect of coronavirus and perhaps the subsequent lasting change in people’s lifestyle could mean peak demand for crude oil may extend beyond 2035, Gregory Kronsten, Head, Macroeconomics & Fixed Income Research, FBNQuest has said. The Oil Age has powered the world for well over a century and there is a school of thought who believed it might end in 2035, however, the effect of coronavirus might change those perceptions. “We are not writing an obituary for oil. Rather, we suspect that the pandemic has extended its life and that peak demand may extend beyond 2035,” Kronsten said in a statement. Concerning the threat of electric cars to crude oil, Kronsten said outside the United States they remain a luxury product, and in most
developing countries they have rarity value. “Electric aircraft seem some way off,” Kronsten said. Also, Kronsten believed the threat of oil majors shifting investments to renewable energy has been overstated and is simply a “putative investment strike by institutional shareholders.” “True, the majors have plans to reduce or end emissions, and programmes for renewables but these are small relative to their commitments to fossil fuels,” Kronsten said. “They like to pay generous dividends alongside the miners and banks, thereby cement shareholder loyalty.” In Q1 2020 for example, British Petroleum maintained its payment to shareholders while Shell reluctantly made its first cut in 80 years. “Reports of the death of the oil industry have been greatly exaggerated,” Kronsten said.
The issue of “peak oil” has been talked about ever since the 1950s, when the late Royal Dutch Shell geologist King Hubbert predicted US oil production would top out in the 1970s, with the rest of the world running out of crude soon thereafter. Today this hasn’t happened because of new discoveries and efficiency gains. In its IPO document, Saudi Arabia’s oil company Saudi Aramco argues “social pressure to reduce pollution and carbon emissions” has led to climate change policies which may “reduce global demand for hydrocarbons and propel a shift to lower carbon-intensity fossil fuels such as gas or alternative energy sources.” Surprisingly though, Aramco Chief Executive Officer Amin Nasser still in February had dismissed such talk as “not based on logic and facts” and said it arose “mostly in response to pressure and hype.”
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ld Mutual Limited has celebrated its 175 years of impacting lives across the continent. The key to Old Mutual Limited’s success, according to Vuyo Lee, Old Mutual group chief marketing officer, is that the company has always taken the long-term view and understood that change, challenge and opportunity are the only constants. She maintains that the company’s resilience and longevity buoyed by superior financial stability positions the Group - operating in 13 economies across Africa - to back its commitment to expansion in African markets like Nigeria, despite expected global economic headwinds arising from the COVID-19 pandemic. “Today, as our world faces unprecedented health and economic challenges, Old Mutual is very conscious of the anxiety and pressure all our customers, investors, business partners, financial advisers and employees are experi-
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encing. We are proud that we have the financial strength of many decades behind us, the strength that enables us to once again reassure all our stakeholders that our business remains resilient and ready to support them. Having a strong liquidity position means we can honour all our obligations to our customers while still holding the capital levels required by regulators. Alero Ladipo, executive head, Marketing and Customer Experience, Old Mutual Nigeria said the company, structured for inherent synergy would draw strength from the professionalism, resilience and longevity of its parent company with almost two centuries of experience in an African and global business space that has been impacted by uncertainties, strife and warfare. Alero maintains that Old Mutual Nigeria, being an affiliate of a pan-African corporate is in the country to battle for market leadership in Nigeria’s growing insurance market. “For us in Nigeria, we join our other affiliates across the @Businessdayng
world to celebrate an iconic brand born in 1845. For 175 years, Old Mutual has stayed true to its vision and business ethos by supporting individuals, businesses and communities through generations of civil wars and world wars as well as the Spanish Flu pandemic, the Great Depression, and many political crises and economic turbulence across the continent and the world. We also celebrate with anticipation, the next decade of growth and innovation in Nigeria, because we believe in the inherent resilience of the insurance sector and its capacity to help our nation survive and recover through difficult times such as the unprecedented challenge that we and the rest of the world presently face”, Alero said. Still hinting on the strengthening of its pan-Africa footprint, Lee disclosed that the Group would be leveraging technology to solidify internal structures, operations and external benevolence to its millions of customers around the world.
Wednesday 20 May 2020
BUSINESS DAY
COMPANIES&MARKETS FCMB founder donates relief materials to Ogun community leaders, religious organisations MICHEAL ANI
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oremost banker and renowned philanthropist, Otunba Subomi Balogun, has again donated relief materials to the people of Ijebu-Ode in Ogun State as part of his palliative measures to cushion the effect of the lockdown occasioned by the spreading COVID-19 disease. This gesture was among the series of such interventions by the highly revered traditional title holder and the Asiwaju of Ijebu Christians, having earlier donated 750 bags of rice to community leaders in IjebuOde as well as150 bags of rice to residents of Erinlu community in Ijebu Ode and the Anglican Church, Italowajoda also in Ijebu Ode. The latest in the series of the palliatives, which consists 300 bags of rice, were handed over by Professor Bankole Okuwa, the curator of Otunba Tunwase
Museum for onward distribution among respective recipients in Ijebu Ode. Speaking with some of the beneficiaries, Adebisi Alausa, the Oloritun of Mobegelu in Ijebu-Ode described the donor, Subomi Balogun as a cheerful giver and an extraordinary philanthropist. According to him; “Otunba Subomi Balogun is well known for his humanitarian gestures and unique kindness. I can recollect his support both in kind and cash when I was the Chairman of Ijebu-Ode Club about 30years ago. I find in him, a man who shows love to the people everytime and is always ready to give. We really appreciate his love and concern for the people, especially the less privileged and pray to Almighty God to grant him a long life in sound health”. Alausa then used the occasion to admonish Nigerians to obey government orders and observe the regulations as handed down by authorities
involved in checking the spread of the novel Coronavirus which has defied any meaningful solution since its outbreak. People, he said, should realise that the virus is highly contagious and can hang and remain active in the air for a long time, hence people should keep the stipulated distance from one another when necessary. “We shouldn’t see the lockdown as a punishment but as part of safety measures to combat the dreaded disease”, he concluded. In the same vein, the Central Chairman, Ijebu-Ode Christian Association of Nigeria, CAN, Wale Omotayo described Balogun as a philanthropist with a difference. Omotayo, in his words said; “he is a philanthropist with a difference who will even go out of his way to help the people. He does his things with fear of God and huge respect for humanity. He is a philanthropist with a difference”.
Red Star implements safety measures as offices open nationwide IFEOMA OKEKE
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ed Star Express Plc, one of Nigeria’s foremost logistics solutions providers, has announced new safety measures to be implemented at its offices nationwide. This was made known by Sola Obabori, the group managing director, in a statement issued by the company after the Federal Government announced a gradual ease of the lockdown in various parts of the country. “Following the decision of the Federal Government to ease the lockdown in various
parts of the country, we have opened our offices nationwide; with the exception of those situated in cities where the lockdown is still in place. “Our offices will be open from Mondays to Saturdays, and between 9:00 am and 3:00 pm. In line with this new development, we have also gone on to implement safety measures to ensure that our customers are safe whenever they enter our offices,” he stated. “We encourage all our customers to wear nose masks and use the hand sanitizers provided at the offices. We also encourage our customers to maintain a distance of at least
2 meters between themselves and the Sales Representative when they visit any of our offices,” he added. Sola Obabori also stated that customers are advised to minimize the use of cash by using the POS machines at the offices (with their ATM cards) when making payments. He added that the offices are regularly sanitized while Sales Representatives and Dispatch Riders are well-kitted with Personal Protective Equipment. Red Star Express Plc is a Licensee of Federal Express (FedEx) Corporation, one of the world’s largest delivery solutions providers.
Armese gets new CEO to drive business expansion
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ndigenous meter asset provider, Armese Power Solutions, has appointed Fred Harry as Chief Executive Officer to help drive its business strategy as it looks to extend service lines and scale national boundaries. A consummate business guru and strategist, Harry’s over 16 years in the banking sector cuts across banking operations, performance management/financial control, credit, retail and commercial banking. He holds a Bachelor’s degree in Geology from the University of Port Harcourt and an MBA in Strategy and Project Management from the prestigious Paris Graduate School of Management, France. “We are extremely proud to have Harry on the Armese team. His wealth of experience in finance and business strategy will help deepen our existing business operations and provide the impetus to continually differentiate our products and
services from competitors in the market,” said Dallas Peavey, Group Chief Operating Officer, Income Electrix Limited, parent company of Armese. Reacting to his appointment, Harry said: “I consider it a privilege and a challenge to make the switch from banking to the power sector, leveraging the enviable track record Armese has achieved over the years. I join an established team known for breaking barriers and believe we will collectively continue www.businessday.ng
to set the pace in the metering subsector and the much larger power industry.” Prior to his current appointment, Harry worked with Unity Bank Plc. He also spent 15 years in UBA Plc, where he was tasked with identifying and maximizing business opportunities; monitoring and ensuring the financial budgets of the then over 150 bank branches in the South are achieved and ensuring optimal utilization of resources, among others. He emerged one of the ‘Most Valuable Staff of UBA’ during the maiden edition of the award in 2008. Harry is a Professional Manager and a Chartered Accountant of the Institute of Chartered Accountants of Nigeria (ICAN); Member, Nigerian Institute of Management (NIM), National Institute of Marketing of Nigeria (NIMN) and also a Fellow of the Chartered Institute of Public Diplomacy and Management. https://www.facebook.com/businessdayng
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BUSINESS DAY
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BUSINESS DAY
INSIGHT
Oscar Onyema: Rethinking The Nigerian Stock Exchange SAMSON DAVIES
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rom creating wealth in 2011, to reconstructing possibilities in 2018, Oscar N. Onyema, OON has transformed the very essence of The Nigerian Stock Exchange (“The Exchange” or “NSE”) – globally acclaimed as a top performing securities exchange. At the end of the financial year in 2011 – the year he was appointed as the Chief Executive Officer of NSE, alongside the then newly appointed President of the National Council of The Exchange, Alhaji Aliko Dangote GCON – it became evident that his strategic mindset and mastery of Exchange business was what NSE dearly needed to rise to its next level of growth. Aliko Dangote summed up The Exchange’s performance in 2011 as follows, “The new Nigerian Stock Exchange provides a vehicle for long-term ‘saving’ and ‘borrowing’ and hence, efficient use of financial resources. As the reforms continue, we remain confident that by year’s end, the market will be well on its way to recovering its vibrancy and regaining investors’ confidence.” As anticipated, The Exchange went on to experience significant growth as the years went by. Under Oscar’s leadership, The Exchange’s Income and Expenditure Account went from a N358 Million deficit/loss position in 2011 to N2.7 Billion Surplus/Profit After Tax in the 2018 financial year. The asset base of The Exchange equally witnessed tremendous growth, from N14.9 Billion in 2011 to N29.07 Billion in 2018 – nearly a 100% increase. To cap his financial performance, Oscar took the Market Capitalization of The Exchange from N10.28 Trillion in 2011 to N26 Trillion by close of business in 2019. Spurred by a vision to build for the future – and years ahead of the declaration of Coronavirus (COVID-19) as a Pandemic by the World Health Organization – the Executive Management of NSE, led by Oscar conceptualized and executed the transformation agenda, rethinking both the business model and scope of The Exchange. Which was later revised
Oscar Onyema, Chief Executive Officer of NSE
to the 2018-2021 Corporate Strategic Road Map. This strategic road map was designed to position The Exchange in line with the global transition from an Equities-focused Exchange
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The new Nigerian Stock Exchange provides a vehicle for long-term ‘saving’ and ‘borrowing’ and hence, efficient use of financial resources. As the reforms continue, we remain confident that by year’s end, the market will be well on its way to recovering its vibrancy and regaining investors’ confidence www.businessday.ng
to a Multi-Asset Exchange. Oscar also made a bold move under the umbrella of this strategy by restarting the Demutualization of The Nigerian Stock Exchange, a project that had been long in the waiting. This move would see The Exchange evolve with the trend of global exchanges who were demutualizing and operating a group structure such as the New York Stock Exchange that transitioned into the NYSE Group Incorporated and further merged with Euronext to create the Largest Stock Market in the World 14 years ago. His resilience in overcoming legal and regulatory obstacles saw to the passage of the NSE Demutualization Bill by the National Assembly, which was subsequently assented to by The President and Commander-in-Chief of the Federal Republic of Nigeria, President Muhammadu Buhari GCFR. This major hurdle has fueled many more milestones in the demutualisation process. Another major milestone in building a globally competitive Exchange was the launch of the NSE Growth Board for fast growing companies, Small and
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Medium Sized Enterprises and Nigerian startups. The benefits of a platform such as the NSE Growth Board can be clearly seen in developed economies where startups like Alibaba in 2014 listed on the New York Stock Exchange and achieved a $25 Billion USD Initial Public offer – the largest IPO in history before Saudi Aramco’s $26 Billion USD IPO on Tadawul Stock Exchange in 2019. Oscar, in his opening remarks at the launch of the NSE Growth Board said, “This Platform is pivotal to our efforts in catering to a segment of the economy that hitherto has been neglected and perceived as a high risk and low reward venture by most service providers especially in relation to access to capital from financial institutions.” Just a year earlier the Executive Management of the NSE, led by Oscar, had approved True Nigerian Experience – a Pan-Nigerian Company – to document the first-ever globally acceptable ranking of Nigeria’s 50 biggest corporations by market capitalization. The initiative trademarked as The Signature50 at the Federal Ministry of @Businessdayng
Industry Trade and Investment was deisgned to rank Nigerian companies alongside their global counterparts by Market Capitalization. This ranking further amplified the position that NSE is home to globally competitive brands. For instance, with a $9.6 Billion market capitalization, Dangote Cement Plc equals the market capitalization of Emaar Properties Group – owners of the Burj Khakifa; and is bigger than the market capitalization of the largest cement company in Mexico and Japan – Cemex $5.6 Billion, and Taiheyo Cement $3.3 Billion respectively. In the telecommunications sector, MTN Nigeria’s $7.7 Billion market capitalization is bigger than the largest TelCos in Turkey – Turkcell $5.1 Billion; Greece & Romania – Hellenic Telecom $6.9 Billion; and the Phillipines – Globe Telecom $4.9 Billion. Looking closer into the quality of listings on the NSE, there have been several landmark achievements under Oscar’s leadership including: Stanbic IBTC Holdings in 2012, FBN Holdings in 2012, Seplat Petroleum in 2014, Transcorp Hotels in 2015, MTN Nigeria in 2019, Airtel Nigeria in 2019, SAHCOL in 2019, and Consolidation of BUA Cement in 2020. Through these and other initiatives, He has successfully steered the ship of The Exchange to safety from the aftermath of the global economic crisis of 2008 and restored investors’ confidence in The Nigerian Stock Exchange. Ultimately, Oscar has made some impressive contributions to Nigeria’s economic development and the growth of the capital market which are not lost on stakeholders. He was duly recognised in 2014 by Former President Goodluck Ebele Jonathan GCFR who conferred on him, Officer of the Order of Niger (OON). It is unsurprising that the National Council of the Nigerian Stock Exchange, under the leadership of Abimbola Ogunbanjo, has designated Oscar as the Group CEO of Nigerian Exchange Group (postdemutualization) with effect from March 2021.
Samson Davies, Chief Executive True Nigerian Experience.
Wednesday 20 May 2020
BUSINESS DAY
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Why Nigeria needs new strategy to promote agro exports amid COVID-19 Josephine Okojie
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iversifying the Nigerian e c o n o m y away from oil and earning the much needed foreign exchange, especially amid the COVID-19 pandemic, would require paying more attention to agro-processing. The agricultural sector which was neglected had since 2016 became an option for diversification owing to its vast potentials to drive a more sustainable economic growth in Africa’s most populous nation in terms of job creation and revenue diversification. To accelerate this growth, the government in the last five years had devoted a lot of energy at deepening agriculture with initiatives such as the Anchor Borrowers Programme (ABP), the ban on the importation of some agro commodities, and the shutting down of its land borders without paying adequate attention to value addition. As a re su lt, re ve nu e generated from agro exports has continued to remain low.
Data from the country’s Trade Report shows that despite the steady growth in the country’s agricultural exports in recent times, the country’s agro exports to total exports still stands less than two percent. In 2016, total agricultural exports stood at N60.7billion, accounting for 0.7percent of total exports for the period.
In 2017, total agro exports grew by 180.7percent but accounted for 1.3percent of total exports. By 2018, agro exports increased by 77percent, accounting for 1.6percent of total export for the period. In 2019, agro-export declined by 10.8percent, accounting for 1.4percent. This is because the country
still exports about 90 percent of its agro commodities raw and is yet to develop a new strategy to promote the export of processed produces. Nigeria is among the top growers of agro commodities such as cashew, cocoa, sesame, sorghum, and ginger among others. But the inability of Nigeria to process a large percentage
Fish farmers donate palliatives to states amid coronavirus Josephine Okojie
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he Catfish and Allied Fish Farmers Association of Nigeria (CAFFAN) has distributed smoked catfish as palliatives to three states in the country as part of efforts to support Nigerians cushion the effect of the novel coronavirus pandemic. The beneficiary states are; Lagos, Oyo, Rivers States, and Federal Capital Territory, Abuja. Rotimi Oloye, national president, CAFFAN, flaggedoff the distribution of the smoked fish in Oyo state recently. Rotimi said the gesture was to support the various states’ government in the provision of palliatives to Nigerians to cushion the effect of the coronavirus (COVID-19) pandemic in the states. “We are here today to answer the clarion call of the President Buhari, calling for support from organisations and individuals to support in the provision of palliatives that can be used to alleviate the sufferings of the less privileged amid the COVID-19 pandemic,” he said. He further emphasized that the distribution of the smoked catfish was very important at this crucial time, stressing that it is one of the
veritable sources of animal protein with a complete profile of essential amino acids necessary for bodybuilding, rapid cell replication, and development of the body’s immune system. While calling on governments at all levels to include home-grown fish as part of items for distribution to all vulnerable and lessprivileged Nigerians, Oloye noted that fish helps in building immune systems that fight against the ravaging effects of diseases. “Home-grow n fish is a mandatory food item in every home, especially now that various diseases and
infections appear to challenge our health and well-being,” he said. He, however, said that the beneficiaries of the CAFFAN palliatives in their respective states would appreciate the quality of the home-grown and processed fish, provided by its members across the country. Similarly, Hassan Mundu, chairman, CAFFAN Abuja chapter donated the smoked catfish to the Internally Displaced Persons (IDPs) at the Kuchingoro Kaura camp in Abuja. He p o i nt e d o u t t hat the humanitarian gesture was designed to promote
(L-R) Ola Oladimeji, member, Lagos State Catfish and Allied Farmers Association; Nurat Atoba, president, LASCAFAN; Olalekan Sheteolu programme manager/CEO, Lagos State Agricultural Development Authority; Bamisaye Ayodeji, aquaculture technical executive, Olam Grains; Samuel Akinyemi, treasurer; and Blessing Olugbemi, public relations officer, both of LASCAFAN, during the donation of cartons of smoked fish and other relief items to the Lagos State Government at Oko-Oba, Lagos recently. www.businessday.ng
fish as a source of protein to complement carbohydrates and other classes of food. In a similar vein, the CAFFAN Rivers State chapter distributed processed catfish to the Rivers State Government as a palliative to the less-privileged and vulnerable people in the state. According to Clapton Ogolo, chairman, Rivers State chapter of the association, the donation was aimed at ameliorating the sufferings of the less-privileged people due to the pandemic. The association chapter in the state also presented its post-COVID-19 plan; while entering into a partnership with the government to provide a minimum of 500,000 juveniles to its members at highly subsidized rates, to enable them to continue their farming business during and after the pandemic. The presentation of the Lagos leg of the CAFFAN donation was held at the Lagos State Agricultural Development Authority. The Lagos State chapter of the donation was led by Nurat Atoba, chairperson of the state chapter. The association called on government at all levels to harness the economic value inherent in aquaculture for better yields and a means of diversification of the economy away from oil.
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of these agro commodities before exporting is responsible for the loss of billions of dollars which the country could have earned if they were processed. About 90 percent of the total exports for 2016 were exported raw according to Emmanuel Ijewere, vice president, Nigeria Agribusiness Group, and chief executive officer, Best Foods Limited. According to Ijewere, for every amount earned in the exports of raw agro commodities in 2016, Nigeria would have made about ten times the value of what was made if it has processed all the commodities that were exported during the period. Similarly, experts say more revenue is earned in value chains that are closer to the consumers. “Processing to retailing accounts for 80 percent of the entire profits in the agricultural sector, so, any country not focusing on processing is losing that much,” said Babatunde Shodipe, senior manager –export development financing, Africa ExportImport Bank (Afreimbank) during the 2019 First Bank
Agribusiness conference in Lagos. According to him, adopting the strategy of driving value addition helps a country edge its farmers against price violability in the international market, while citing the Brazilian model for its coffee industry as an example. “Nigeria must create value addition that is about quality and standards which must be met and maintained by key actors,” he said. “Without quality, our produce cannot compete and get a fair price,” he added. Also, experts in the sector, say some challenges needed to be addressed to expand the country’s export for it to contribute to structural change and help promote agric sector growth, which is vital for sustaining economic growth and development. They stated that good market penetration and ensuring standards on the part of the exporters, as well as adequate financing from banks and government, among others would be key to achieving export competitiveness.
CBN approves N10bn agribusiness retirement loan for Kogi workers VICTORIA NNAKAIKE, Lokoja
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bout 10,000 workers of Kogi State Government a re e x p e c t e d t o benefit from an agribusiness retirement loan worth about N10 billion approved for the state by the Central Bank of Nigeria (CBN). Joseph Idoko, consultant in charge of the scheme who disclosed this while addressing journalists pointed out the significance of the scheme in the state, adding CBN has already approved the fund and it is expected to take off soon. Idoko hinted that the programme, an offshoot of the CBN Anchor Borrowers Scheme (ABS), was specifically an indirect cluster farming investment for the workers, with palm oil as the mandate crop for the initiative. He emphasised that the broad objectives of the agribusiness programme, designed under the CBN real sector support facilities, include the diversification from oil to non-oil sector and to provide retirement investment farms for workers. He added that the scheme is designed as a retirement investment scheme for both @Businessdayng
civil servants and workers in the organised private sector. He said that the scheme also planned, among other objectives, to enroll the participating workers in the National Health Insurance Scheme (NHIS) under the Organised Private Sector. He explained further that beneficiaries would cut across the Ministries, Departments and Agencies (MDAs) as well as the staffs of the state judiciary and institutions of higher learning in the state. The consultant equally hinted that land for the 10,000 hectares palm oil estate had been provided at Amaka in Igalamela-Odolu Local Government Area with partners from Florida, USA. “The idea is for government workers to retire into a particular business that even when they are no more in service,” he said. “The scheme launched in Kogi is a demonstration o f G o v e r n o r B e l l o’s commitment in providing civil servants with a new lease of life and also guarantee their well-being after retirement,” he further said. “The scheme comes in form of a loan of N1million to each participant at nine percent interest and payable in nine years after a two-year moratorium,” he added.
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Wednesday 20 May 2020
BUSINESS DAY
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Globalisation and the IEconomics of Covid 19 Globalisation and the HOW COVID-19 IS DISRUPTING WORK AND EDUCATION
n the past few weeks, as the novel virus raged through in terms of quality of primary education (World Economic countries, innovation has become key for survival to the Forum, 2017). education sector and many businesses. Although the full Efforts to stem the spread of COVID-19 through noneconomic or even psychological impact of the Coronavirus pharmaceutical interventions and preventive measures (“COVID-19”) is still unknown as so many countries are still such as social-distancing and self-isolation prompted the looking for ways to ease the lockdowns and resume business widespread closure of schools across some states. On March he times world activities, activities - these showturned that there economic are big changes 19th,only 2020 atime circular from Federal Ministry of Education had coming to the“as future work and approval for the closure of all school for a period it ofwere” on education. its willOrganizations tell. But forgranted now, an China have been experiencing a disruption workforce to at be an COVID-19 of one month commencing from Monday 23rd March 2020 head within the in appears free, unprecedentedspate scale of andjust speed while at the other end to prevent the spread of the COVID19. Although it has been ONE and economic activities have the COVID-19 pandemic has affected educational systems over a month, most schools are yet to resume in their MONTH and we are still resumed across physical the country. worldwide, leading to the near-total closures of schools. As spaces. The closure of the schools has affected up watching and gasping at unClearly, the Chinese at mid-April 2020, about 1.725 billion learners are currently to 46 economy million students throughout Nigeria. The sadly, the foldingdue events. Asclosures the global a pandemic foretaste ofmost what othergroups of children have been impacted the affected to school in response(in to the vulnerable economy reels like drunken globally. Statistics from athe UNICEF monitoring shows economies across globe mostthe - about 400,000 IDP children attending some form of that 158there countries are currently implementing nationwide learning in camps sailor, huge economare now witnessing, suffered heareworld turned economic activities, only time and host communities have been affected closures and 33 are implementing impacting the stoppage ic implications significant devastation in the of learning activities as plans have been “as it across were” induson local its closures, will tell. But forbynow, China about 98.5%sectors of the world’s population. stretched till further notice. tries and and ofstudent course
Internationally. 4. The need for Trust funds. These trying times have shown the great importance of parents securing an Education trust fund for their wards. The trust would help parents achieve their goal of making available sound education for their children through a and flexible. The trust should be B r o u g h t tplan o ythat o u isbconvenient y professionally managed and administered by a trustee. IMPACT ON WORKFORCE: Businesses have also been largely impacted by the pandemic. • One of the the immediate consequences of the COVID-19 restrictions was the quick shutdown of many businesses, this necessitated the need for many businesses to for the first time, explore options that require little or no physical interaction. A direct result a reduction overall shopping. As we all change downof this of was supplies of indrugs, workforce execute tasks and while there was our mode of work, schoolneeded and to manufacturing tools, pro-a huge increase in the cost of doing businesses for a lot of play, the Technology, Online duction equipment etc. from businesses, so many others had a huge reduction, including Education, Online Games and China is a huge lesson on the overhead cost. imperative of backward Digital Technology and Netf•These new ways of doing business have thus opened aintenew • The impact of the COVID-19 outbreak is also expected gration andbusinesses having with control of lix could winners. wave of innovations and provided a better, to impact admissions in the coming academic year.be The supply With government easier way of executing prior lines. herculean tasks. Thus going new academic section are been starts on the month of the forward, the impact backing, of these willlocal be seen in the number manufacturers August/September. but its may start later Investment if schools do not Lessons ofinvesting people would unemployed as aopportunities result of newer adapt fast. should explore It is essential to become shopping. As in we all change down of supplies ofowners drugs, ways of to do business. This would their also include of redesign models. recognize impact boom our mode the of work, and Asto manufacturing tools, prolargeschool office spaces. more people move online to conduct LESSONS THAT CAN BE LEARNT As governments finally under(when luxuries like cars, perplay, the Technology, Online duction equipment etc. from businesses, many more office spaces are left untaken. The disruption in the education systems has offered valuable stand importance fumes, fashion items, holidays, Education, Online Games and has China isimpacted a critical huge on lesson the • The disruption alsothe the on manner lessons and provides a unique opportunity to reimagine of the entire healthare sector resorts and cruises thrive) and imperative of backward inteDigital Technology and Netfconferences and large group meetings held, education, the curriculum, and teaching in Nigeria. gration and particularly having control of lix could be winners. value chain pharburst markets when only essenorganisations and businesses attend and conduct virtually 1. The digital divide. supply lines. With government online. the months to come, as business owners begin maceuticals, medical investigaarewas required. ThisInmeans Prior to the outbreak of the virus, virtual tials learning not backing, local inmanufacturers Investment Lessons to evaluate how much has been saved travel costs and tions, equipment production fully an option in the educational sector.your The pandemic diversification decisions should explore opportunities It is essential investing tothe need required, for large conference spaces might has made the society realize that technology has beyond the inspaces and primary healthcare. The must go geographislowly of fadeboom into secondary or tertiary needs. jected revenue in jeopardy, to redesign their models.which recognize the potentialoil to achieve universal quality education and improve Nigerian government cal, asset classimpact (equity versus •Due cars, to theperpandemic, there have been supplyunderchain As governments finally (when luxuries like and foreign exchange reserves learning outcomes. Most schools that have followed the has traditionally invested very debt) and sectoral issues to the disruptions and new innovative ways of managing stand the critical importance fumes, fashion items, holidays, path of intense innovationpressure have madeif progress in their syllabus under the little in health and education nature of the products of the businesses. found health ways to localize of thehave entire sector while othersGovernment that haven’t duecontinto certain factors have been resorts and cruises thrive) Some and companies Federal isvalue clearly facing implicacompanies securities production and sourcing whilst others have the remodeled and stagnant. In order to unleash the potential of the sector,whose chain particularly pharburst markets when only essenues to defend the Naira. tions of such choices now. The you in. Thisrepurposed way en- production their facilities medical to make products in the digital divide must be addressed. Digital capabilities, maceuticals, investigatialsinvest are required. Thisyou means Everyone seems to be counthigh demand during the pandemic. Central Bank of Nigeria has sure your entire portfolio the essential infrastructures, as well as connectivity must tions, equipment production your that diversification decisions ing losses as economic activi•The lockdown movement restrictions has The led a changing approach reach the remotest and poorest communities. to is not Access losing at the same time. andsignaled and primary healthcare. must go beyond geographijected oiland revenue inbusinesses jeopardy, businesses to take drastic measures reducing cost, (as bywhich laying ties grind to the a halt, technology internet is clearly an urgent with its recent decision, part Nigerian government The globalclass erosion of versus value cal, requirement asset (equity off staff, slash salaries give employeesinvested leaves. and exchange reserves in theforeign information age. It should beaccount a and luxurysectoral as face reduced activities and no in-longer hasorits traditionally very NGN3Trn unpaid COVID19 debt) issues disasto the of on of aThe major layoff rate is still expected to increase as companies under intense pressure if the connectivity the country is quite expensive. comes yetinhigher operational little in health and and education nature products of the the economic package) workter like of thisthe does not erase are struggling to survive and increase revenue. However, Federalto Government continis clearly the implicacosts meet new governcompanies intrinsic whose value securities ing with thefacing Bankers’ underlying of Increased unemployment will likely lead to an Commitincrease in 2. Curriculum ues to defendreorientation. the Naira. (e.g tionstoof support such choices now. The you stocks invest in. This way you enment-imposed standards tee, the country’s the of well-run compapoverty and a decrease in median incomes. This pandemic has shown core curriculum must be Everyone seems to bethat countCentral pharmaceutical Bank of Nigeria has sure that your entire portfolio for Public Transporters, banks, leading comsectorsand suffering the most have been; transportation, with viable •The products grounded in students’ realities,activicultivating nies critical, creative, ing losses as economic signaled a difficulty changing approach is not losing at the same shopkeepers) where they’re food (duetime. to restrictions and to theimport in transporting panies and produce and resilience, and empathy in students.demand established over time. ties flexible grindthinking, to a halt, businesses with its manufacturing, recent decision, (as part The global erosion value aviation, food of inter-state), hotels not completely shut and down. needed drugs, through FX and faSo depressedof prices offer an face reduced activities inof its NGN3Trn COVID19 on account arestaurants major disas- it’s beencilities. a burning house. Restaurants, Clubs, PlayAs initiatives like this opportunity to invest again in comes yet higher operational economic package) and workter like this does •Although not erasesome the businesses have re-opened, Rapid regrounds concontinue, it Bankers’ is expected that, costs to and meetbusinesses new governcompanies strong fundaingstill withneed the Commitunderlying with intrinsic value of employment strategies to be deployed and sidered non-essentials are shut this space is expected to open ment-imposed standards (e.g mental. tee, to support the country’s the stocks of well-run compamonitored. down. Others like banks banks, are to for Public Transporters, up immediately. leading pharmaceutical comThe current crisis is likely to nies with viable products and •Depending on government intervention, the recovery shopkeepers) where they’re maintain skeletal operations. tojob import produce bring in its demand wakecould anover accelerestablished time. linger for years,panies impacting seekersand and dislocated not completely shut down. needed drugs, FX faThe medical operators are workers struggling find companies thatthrough are actually hiring So depressed offer an to Conclusion ated shift in theprices way we work, Restaurants, Clubs,to battle Playcilities. As initiatives like for theiragain skill getting loans to build upthis on open but struggling opportunity invest in or businesses As the world continues to battle learn and dotobusiness. As sets we grounds and with businesses concontinue, ittools is expected that, and recover. Available and funding need companies with opportunities strongwe fundathe huge humanitarian impact the scourge inadequate learn how effectively can sidered non-essentials are shut to be put in place. COVID19 this space is expected the to open mental. pandemic, ecoresources and at great risk to work and learn In remotely, the conclusion, down. Others like banks are to up immediately. The current crisis is likely to
T Economics of Covid 19
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head
within
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of just ONE as always, spate there are losers and MONTH and we are still winners. Now officially dewatching gasping unclared as aand Pandemic of at global folding As the global impact, events. projections of poteneconomy reels like a drunken tial global infections range sailor, there are huge econombetween 500m at its most ic implications across indusconservative and over half of tries and sectors and of course thealways, world’s population as there are losers(close and to four billion beings) winners. Nowhuman officially deat its highest. Thereofseem to clared as a Pandemic global be no doubt in anyone’s mind impact, projections of potenthat this is theinfections most drastic fate tial global range between 500m at most that has befallen the its world in conservative andtoover the last century date.half of
first twotomonths of 2020 free, and appears be COVID-19 and economic activities the general feeling is thathave the resumed the country. nightmareacross is far from over. In Clearly, the Chinese economy this period, retail sales fell by (in a foretaste what other 20.5% year on of year, industrial economies the globe output was across down 13.5% and are now witnessing, suffered fixed asset investment by 25%. significant devastation in the Leading sectors like its aviation first two months of 2020 and and general motor feeling vehicle isindustries the that the which are collapsed during nightmare is far from over.this In period. this period, retail sales fell by 20.5% year on year, industrial Other was major economies like output down 13.5% and fixed asset investment 25%. the United States of byAmeriLeading sectors like its aviation ca, the United Kingdom and and motor industries Europe havevehicle not fared much which collapsed during this better, are with these markets still period. counting their losses as the
people travel across the globe for economic and leisure activities. As the coronavirus crisis rages on, medical facilities in the most advanced nations are overwhelmed. Leaders and citizens travel alike have compeople acrossbeen the globe for economic and leisure acpletely blindsided. Nigeria’s the world’s population (close tivities. stock market shed NGN2.2Trn to four billion human beings) As at the last count, global casAs the months coronavirus rages in two and crisis the bloodat highest. There to es its were 402,054 withseem 17,507 on, medical facilities letting is far from over. in the be no doubt in anyone’s mind deaths, with all 195 countries most nations are Coronavirus pandemic conNigeriaadvanced has now recorded that this is the most drastic fate Other major economies like overwhelmed. Leaders and of the world affected. The tinues to cause massive human over 40 cases of COVID19 that has befallen the world in the United States of Americitizens alike have been comtop last 3 hit countries are China, ca, andthe economic in these including very senior public the century to date. United losses Kingdom and pletely blindsided. Nigeria’s Italy and the United States of nations. On the back of these Europe have not fared much officers and personalities. Our stock market shed NGN2.2Trn America with 81,171, 63,927 developments, the InternaAs at the last count, global casbetter, with theseThe markets Impactstill on Education: economy has and also the witnessed in two months bloodandwere 46,168 infections and counting tional Monetary Fund es 402,054 with 17,507 their losses as(IMF) the The impact on education hasdrastic multiple effect on impact schools, other adverse letting isa far from over. 3,277, 6077 582 deaths haseconomy in a statement issued on In Nigeria, priorand to the novel virus rehitting the the pandemic families andconstudents. deaths, with all 195 countries Coronavirus in the shortest crude Nigeria has time now with recorded educational performance has appallingly low to in terms • On the path of schools, certain trends will accelerate, of the world affected. The tinues cause massive human spectively. In Africa, thebeen worst Monday 23 March forecasting oil prices crashing from over over 40 cases of COVID19 of quality and quantity while the unemployment rate based including continuing concern about the cost of education, top 3 hit countries are China, and economic losses in these hit are South Africa, Egypt that COVID -19 will trigger including very senior public USD60to below USD30 and on National of Statistics report showed thatthe back views on education would be more noticeable Italy and Bureau the United States of in 2018, nations. On of finances these andofficers and Algeria. a global recession that could andtopersonalities. Our predicted fallconsider to USD20 23.1% are unemployed and 16.6% are underemployed. A in the coming months a willingness to reduced America with 81,171, 63,927 developments, the Internaeconomy has on also witnessed be worse than the global fiwhilst the yield FGN 6.75% recent prediction by the Federal and Government through the fees for virtual classes. and 46,168 infections tional Monetary (IMF) other drastic adverse impact China, where theEmployment pandemic nancial crisis of• Fund 2008-2009, Eurobond issued at a yield minister of labor and shows that the rate is Educators will be overwhelmed and unsupported to of do 3,277, 6077 and 582 deaths rehas in a statement issued on in the shortest time with crude first broke out 33.5% has today been but with a hope of recovery expected to reach in 2020. their jobs well. in 7%, has spiked to 12.8%. In spectively. In Africa, the worst Monday 23 March forecasting pricesin crashing over • The move to onlineoil learning the Central past fewfrom weeks declared wholly free of CO2021. response, the Bank has of hit are South Africa, Egypt that COVID -19 will trigger below unprepared USD30 and shown the technologyUSD60to gaps in households and VID19 bringing both a ray a global recession Nigeria, CBN has now marked and Algeria. that could predicted to fall to USD20 unfamiliar with online learning. Once again, the world’s econoof hope that the virus can be be down the exchange rate 6.75% of the worse than global fi- issues whilst yield onlearning FGN •the Several additional willthe make online a more mies are crisis witnessing the underfought to a haltthe(not without nancial USD for NGN from China, where pandemic ofsignificant 2008-2009, issued atthis aNGN360 yield of challenge Eurobond for students, at least year, and belly of globalization. Hand significant loss of lives) and a to ofNGN376 NGN380 to first broke out has today been but with a hope of recovery in start 7%, has spiked 12.8%. One In possibly into the School year to into September. in hand with challenge opportunities specter ofwholly the huge costs the 2021. declared free of ofCOUSD1. With the fallwith inaccess deresponse, thestruggling Central Bank of being, low-income students VID19 a ray such as access toto both attack ofbringing the virus both to a Nation. mand from China and marked Saudi/ devicesglobal and the internet. Nigeria, CBN has now again, world’s econoof hope will thatbe the virus can be • COVID-19 has caused academic institutions to close, the funding andtheglobal markets down the exchange of the If there long lasting ef- Once Russia price war, rate Nigeria is are witnessing the underfought a nature halt (not Education sector is ready for certain change. Popular USD foraNGN from NGN360 for domestic companies, come fects oftothe andwithout quan- mies reportedly facing challenges applications — ClassDojo, Dreambox Learning, and Google belly of globalization. Hand significant loss of lives)sprayed and a to NGN376 to at NGN380 to vulnerability to borderless critum of antiseptics moving its crude an acceptClassroom, have been leveraging opportunity and in hand aswith opportunities specter huge costs of the USD1. Withthethe fall in desis such “imported” finanliberally,of the drugs administered able price. customers by from offeringChina free access to their such as access tobagging both new global attack of the virus to a Nation. mand andback Saudi/ cial and now borderless We mobile appear headed to to the thesame victims and the near In the of poor performance with crisis regards to global content platforms. These apps guarantee massive funding and markets If there willvein, be long lasting efRussia price war, Nigeria is recession half of the proas total shut down in of Nigeria domestic quantity of education is based diseases on the facteasily that transported engagement between student andwith teacher via live-streaming for domestic companies, come fects of the nature and quanreportedly facing challenges there were than 10.5 million out-of-school children into borderless classes and online Allits thiscrude helps at to reinforce the vulnerability cri- tutorials. tum of more antiseptics sprayed moving an accept2018, which is the highest globally according to UNICEF. education system as a bankable option for learning at scale. sis such as “imported” finanliberally, drugs administered able price. The state of the educational sector is even more worrying in At a point, Harvard University and some other learning cial crisis and now borderless We appear headed back to to the victims and of the near terms of quality as Nigeria ranks 124th out of 137 countries resource sites like EDx were also giving free online courses. recession with half of the prodiseases easily transported as total shut down of domestic
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nomic implications cannot also life. Demand for luxury goods potentials of certain technolmaintain skeletal operations. bring in its wake an acceler- be overlooked. In managing and fashion items and groomogy products become evident. the periodConclusion for when the virus would be fully The medicalof operators are consciousness A development social and political ated shift inbythe Although, way we work, the adverse fallouts, ing naturally dropped as This be business. a contained good time to unknown, is still flattening of the markets curve will students should be a major of education, and that openhas but struggling to goal battle As thethe world continues to battle learncould and do As we and must people tackle existential issues eventually itinvestors does, it will leavecritically behind a invest more in VPN, online ed- When lessons of equality core democratic values should the huge humanitarian impact the scourge withandinadequate learn how effectively wehappen. can examine thepandemic, opportunities for world. It will without doubt change thethe wayecowe be given as and much,atif not more, in the official ucation, artificial intelligence COVID19 resources great riskimportance to work and learn changed remotely, the work and learn. Institutions that are tocannot developprian of yet investment curricula than math, science, language lessons. Are there any at and digitalNow technology. nomic implications also life. Demand for Winners luxury and goods potentials of certain technol- realignment online strategy will beorities, forced to create oneIn andmanaging companies is the fashion time for governments integrate such curriculum asset allocations and of be overlooked. all? and items and to groomForward looking companies ogya products become evident. will have to think about developing ecosystems and into national curricular framework isn’t yet present budget spending. the adverseremote fallouts, markets ing the has naturally dropped as if itmay The pharmaceutical industry, This could be a managing good and time to government look at harnessing repeople. COVID 19 has given the world a fast in most schools. and Emerging investors Africa must critically The Capital people tackle existential issues invest more in VPN, online edlaboratories, medical equiptaining the efficiency gains of push into the future of innovation. The best strategy would examineis the opportunities for ucation,and artificial intelligence ment, delivery food, remote flexible working byorderGroup be to act fast in to adapt well.a leading African 3.A widerhome cadre of teachers empowerment. realignment investment priAre there any Winnersand at and digital technology. provider of of Capital Raising, food marts, supermarkets This crisis has forced teachers to rediscoverreducing their roles office from space, physical orities, asset allocations and of all? and toilet-ware stores Forward looking Management, The companies Emerging Capital Group is a leading Trusts African drugs consumables, power and utili-AfricaWealth that of transferring information to empowering learning. The government budget spending. The pharmaceutical industry, may look at to harnessing re- Raising, and Asset Serprovider and of Capital WealthManagement Management, Trusts, shift toexperiencing virtual learning has afforded opportunities are huge de-manyties. The Africa Services. Capital laboratories, medical equiptaining the efficiency gainsAdvisory of and Emerging Asset Management vices. teach differently, giving chances The huge impactInvestment of the shutmand. Due to encouraging panic and self-learning, binge Group is acontinue leading African ment, home delivery remotemodified and flexible working byCapital Emerging Africa Group will to access the to gain from different assets,food, and permitting of impact Capital Raising, food marts, supermarkets reducing office space, physical outbreak of the virus provider and its potential on both Local learning for various needs throughand tech sources. Wealth Management, Trusts drugs and toilet-ware stores consumables, and utiliand Foreign Direct Investment. COVID-19 school closures and its related challenges power and Asset Management Serare challenged experiencing huge dehave the educationally sector ties. both locally and mand. Due to panic and binge
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The huge impact of the shut-
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vices.
Wednesday 20 May 2020
BUSINESS DAY
21
Corporate governance
Covid-19 and its uncertainties: Strategies for surviving and staying effective Olayimika Phillips
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f there is anything as frustrating as the loss of irreplaceable lives occasioned by the outbreak of the Covid-19 pandemic, it is the uncertainties foisted on businesses globally. Whilst early expectations were that the pandemic would abate within a few months, recent disclosures by medical experts at the highest echelon suggest that it is impossible to determine, with exactitude, when the pandemic would be defeated. Accordingly, businesses must come to terms with this reality and brace up on how to survive and be effective in the face of the uncertainties foisted by the pandemic. At this time, boards of directors, saddled with decision-making duty and the responsibility of setting the strategic goals of companies, are under pressure to ensure the survival and effectiveness of their organisations. Whilst companies have varying business objectives, there are however general strategies that a determined board of directors can develop to advance the effectiveness of its company in these critical times. As a start, a determined board, in a bid to put in place strategy for the company’s survival and effectiveness, needs to undertake a review of its expense budget. The purpose of undertaking this review is to determine areas in the business that are not strategic to the company’s performance and attract extraneous or excess spending. The focus of the board should be directed at ensuring that spending is for core projects of the company, which would improve customers experience and satisfaction and yield revenue for the company during and after these uncertain times. Accordingly, the board should cut out inconsequential areas of the business and get rid of or limit extraneous spending. To stay effective and navigate through these uncer-
tainties, a determined board should undertake an assessment of the company’s supply chain. As is usual in businesses especially in the manufacturing industry, many companies depend on products or services from third party vendors and contractors to produce or offer services to their customers. A disruption to a company’s supply chain could have devastating impact on the company’s business. It could, especially, result in inability to produce, loss of customers and revenue. Given the impact of the pandemic on majority of businesses, the board needs to assess whether the company’s supply chain would be impacted and make a contingent plan after such assessment. Such plan would involve staying in touch with and maintaining constant communication with the company’s suppliers. An effective communication system is also important to the survival of a company. It would therefore be beneficial for companies to foster seamless communication with their stakeholders in this period. At the moment, some of the most important stakeholders for a company are the employees and customers. It is important for the board to maintain frequent communication with its employees. In a time where www.businessday.ng
job losses are at a record level, there is no doubt that there are bound to be panic and tension amongst employees in the workplace. The board should ensure that the panic and tension are effectively diffused to avoid a negative impact on employees’ performances, and this can be achieved through constant and honest communication of developments with the employees. Honest and constant communication, as
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Given the impact of the pandemic on majority of businesses, the board needs to assess whether the company’s supply chain would be impacted and make a contingent plan after such assessment. Such plan would involve staying in touch with and maintaining constant communication with the company’s suppliers
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well as putting in place protective measures for employees at workplace would facilitate and propel teamwork in the company, which is instrumental in improving service delivery. The board should also ensure that the company communicates constantly with its customers. Constant communications on the company’s efforts at improving its service delivery and customer experience would ensure the company’s effectiveness during this period. The customers should have a feeling that the company cares about them and is not just after their money. This would facilitate customer loyalty and prevent loss of customers to competitors. In addition, companies need to be flexible and adaptive during this period. Reports have shown that businesses in e-commerce, communication technology, healthcare & pharmaceuticals and telecommunications have continued to make profits despite the pandemic’s adverse effect on the economy. In order to survive, companies should explore the option of expanding their objects to these unimpacted but profitable businesses. Alternatively, companies may also leverage on the financial boom of these businesses, by exploring the @Businessdayng
option of servicing their critical needs. The board needs to also understand the usefulness of technology and leverage same in facilitating business operations. Businesses have become more sophisticated with exchange and critical use of data. Business decisions are sometimes required to be made speedily which require immediate access to critical information and data. With the aid of technology, processes have become automated and it has become easier for companies to track the popularity of their brands, market their products to distant target and track internal performance of employees. In the period of uncertainties, the board must appreciate that technology would play a decisive role in furthering business performance and must be prepared to deploy same. Whilst the devasting impacts of the pandemic continues to unfold, there is no doubt that the pandemic has created uncertainties for many businesses. A determined board should however be proactive, vigilant, and effective in this critical time. Deploying some of the strategies above would assist a business in surviving and staying effective in the market.
Olayimika is a Partner in the law firm of Olaniwun Ajayi LP and has over 34 years of professional experience. She specializes in corporate governance, providing pragmatic solutions to the diverse challenges which confront corporates at different growth stages and serves on the board of several companies (listed and privately held).”
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Wednesday 20 May, 2020
BUSINESS DAY
BANKING CIBN points banking industry to emotional intelligence for ethical leadership ... swears in Bayo Olugbemi as 21st president/ chairman of council Stories by HOPE MOSES-ASHIKE
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he Chartered Institute of Bankers of Nigeria (CIBN) has advised the banking industry to leverage on emotional intelligence to build ethical leadership in the Industry. Emotions in interpersonal relationships, service delivery and intrapersonal relationship influence the major parameters in service-oriented firms like banking profession, which are amplified by the digital landscape in which banks operate as pressure are exerted on these parameters. Uche Messiah Olowu, immediate past president/ chairman of council, CIBN gave the advice while delivering his presidential valedictory address, themed: ‘Ethical Leadership in Banks and Emotional Intelligence’, via Webinar at the weekend. Olowu listed the four domains of emotional intelligence that predicts success, which includes self-awareness, self-management, social awareness, and relationship management. These domains are strengthened by emotional
Bayo Olugbemi 21st president/ chairman of council, CIBN
competencies which comprised individual thoughts, feelings, and behaviours, and it is divided into personal and social competencies. He maintained that Leadership will succeed if people are emotionally engaged by priming good feelings in those they lead. Olowu told over one t h o u s a n d p a r t i c i p a nt s who connected to the programme through Zoom and
YouTube that ‘Ethical leadership influences people to exhibit right behaviour that could maximize values such as integrity, honesty, consistency and so on, adding that ‘Emotional intelligence aligns with ethics to achieve organizational success. According to him, emotions in interpersonal relationships, service delivery and intrapersonal relationship influence the major pa-
rameters in service-oriented firms like banking profession, which are amplified by the digital landscape in which banks operate as pressure are exerted on these parameters. He was concerned that little attention has been paid to emotional intelligence in the banking industry as cognitive processes are adopted for performance assessment, recruitments, and selections, and this has encouraged wrong performance, wrong interpretations of human actions and erroneous reflection of organizations’ values in the characteristics of top management as stated in underlying theories of emotional intelligence. It is generally perceived that numerous scandals in the banking industry creates the impression that corporate culture in banks tolerates unethical behaviour, apart from the fact that banking is a business premised on the capitalist ideal of profit at all cost. This, he said has damaged customers trust. Speaking as an outgoing president, he recommended that ethical leadership behaviour should be encouraged in banks to facilitate success through leadership commitment to ethical values, prudence, and exercise of fair judgement.
Emotional capabilities should be developed to create an atmosphere of trust, cooperation, and ethical leadership. The Banking industry should shun pressure of the moment which leads to unethical behaviour. Training for emotional intelligence across the broad spectrum should be executed to arrest discomfort and provide reassurances in time of turbulence and threatening change. Olowu highlighted his achievements as the 20th President/Chairman of Council of the Institute which were predicated on these five points agenda of: Rules and Standards, Skills and Competence, Research and Advocacy, Technology and Resources, and Brand and Visibility. The online valedictory address which was chaired by Mazi Victor Okoronkwo, group managing director of Aiteo Eastern Exploration and Production Company Limited/1st national vice president of the Nigerian Gas Association and Osaretin Demuren, chairman, GTBank Plc and chairman, Bank Directors Association of Nigeria as special guest of honour was also an opportunity to celebrate the leadership of Uche Messiah
Olowu for a two-year tenure (2018-2020) as the President of the most and enviable banking institute. Bayo O lugbemi was sworn in on Saturday as the 21st president/ chairman of council of the CIBN. Olugbemi took over the CIBN leadership from Uche Olowu his predecessor and has also crafted the strategic focus of his administration in the next two years into the acronym “A-TEAM”. The new CIBN leader will oversee affairs of the Institute for the next two years. He was sworn in by Honourable Justice Adesuyi Olateru-Olagbegi (Rtd) at the Bankers House, Council Chamber, Victoria Island, Lagos. Olugbemi is expected to bring his knowledge of over 38 years’ experience as investment banker to bear on the Institute. Olugbemi, who is also the managing director/ CEO, First Registrars and Investor Services Limited had served as the first vice president and chairman, board of fellows and practice licenses at CIBN as well as the president/chairman of council, The Institute of Capital Market Registrars and Treasurer, Lagos Chamber of Commerce and Industry (LCCI).
COVID 19 Rebound: Ecobank commits to supporting financial inclusion drive
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cobank Nigeria has reiterated that its agency banking scheme, also known as Xpress Points, is building entrepreneurs and pushing financial inclusion to the large unbanked and under-banked population in Nigeria. The Ecobank Xpress Point enables eligible Agents to carry out financial transactions on behalf of Ecobank and earn commission on every transaction processed. The consumer experience is very good as customers can do simple deposit, payment and transfers in their own neighbourhood rather than travel for hours to a bank branch. Ecobank Xpress Points is also a channel that can be used
for the deployment of national social intervention programmes of the Government. The aim of the Xpress
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Point is to let every Nigerian and household have access to Ecobank services within their neoghbourhood to provide easy bank-
ing services. Speaking in Lagos, Nike Kolawole, head, agency banking, Ecobank Nigeria, said unemployed and retired persons should avail themselves the opportunity to earn extra income by keying into services offered by the bank as Xpress point agents. According to her, the Ecobank Xpress point which are in various neighbourhoods across the country, are well positioned to facilitate basic financial transactions, with the process and services simplified to attend to a broad spectrum of the society. She further disclosed that agency banking in general, brings about economic and youth em-
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powerment by way of job creation and earning extra income, adding that small savers can easily do their savings at home or near their home. This leads to financial inclusion of the underbanked in the country. For now, Ecobank has over 43,000 agents across Africa. The agents carry out financial transactions on behalf of Ecobank and earn commission per transaction processed. Xpress Points can also be used as a channel for the deployment of national social intervention programmes, especially at this time that we are fighting the impact of lockdowns due to the COVID-19.” Kolawole listed the ser@Businessdayng
vices offered by the Xpress point agents as; cash in, cash out, fund transfer, bills payment, airtime recharge, remittance and account opening, among others. She added that the services are available for “sole proprietors, partnerships, co-operative societies, microfinance banks, companies with large distribution network - like petrol stations, FMCGs, telecommunication companies, super agents, aggregators and unregistered businesses such as petty traders, hair saloon and others.” Ecobank boasts of a bouquet of digital channels comprising solutions aimed at delivering convenient, accessible and reliable financial services.
Wednesday 20 May, 2020
BUSINESS DAY
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insurance today
E-mail: insurancetoday@businessdayonline.com
Rotimi Edu led NIPSS Alumni donates Covid-19 relief materials Modestus Anaesoronye
R L-R: Rotimi Edu, chairman of the Alumni Association of the National Institute, (AANI), Lagos Chapter; Gbolahan Lawal, Lagos State Commissioner for Agriculture and Cooperative; Omolara Balogun, vice chairman, AANI and Olayinka Patuola-Ajayi, treasurer, during the presentation of Covid-19 palliatives to Lagos State Government in Lagos, recently.
Insurance will become a need for Nigerians post Covid -19, says Anchor boss Modestus Anaesoronye
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ith several losses inc u r re d by individuals and businesses in Nigeria as a result of Covid-19 pandemic, underscoring complete absence of risk management practice, the need for insurance will therefore begin to get more attention after the impact, expert said. Individuals will lose their jobs this Covid-19, and that is what unemployment insurance could have taken care of; companies and institutions will witness business interruptions, which business interruption liability could have taken care of, the expert noted. Ebose Augustine Osegha, managing director/CEO, Anchor Insurance Company Limited said insurance all over the world remains risk mitigating mechanism, calling on Nigerians to see what COVID -19 pandemic has done to businesses, human lives and economies all over the world. Ebose explained that the impact of COVID -19 has
created deeper awareness for insurance, noting that it has made most people who had before now regarded insurance as a “yahoo yahoo business” to come to terms with the importance of risk coverage. He e x p re s s e d o p t i mism that with everyone now knowing the damage which situations like this could cause to businesses, economy and human lives, more people were likely to embrace insurance when the ongoing Coronavirus pandemic was over in Nigeria. Osegha said this in a live telephone interview with Plus TV Africa during the station’s ‘News in Pidgin’ pro-
Ebose Augustine Osegha
gramme on the theme “COVID -19: Impact on Insurance Industry,” held recently. He noted that before now, most business concerns looked away from taking business interruption covers for their operations. Also, most employees would not see the need to pick the loss of employment insurance covers because there will be job losses after the pandemics. Whatever effects they must be feeling now would have been mitigated if they had picked policies of the types I have mentioned here.” The Anchor Insurance boss who expressed displeasure over government’s nonchalant attitude toward insurance and welfare packages for its workers stated that some state governments have no health insurance, public liability, group personal accident or even group life policy for their staff just as he called on them to learn from the experience so far from COVID -19 to provide the necessary insurance covers for their workforce. According to him, “early this year when an award was given to Anchor Insurance, I called on government at all levels to brace up for chal-
lenges in future by providing insurance for their workforce. It was as if I was talking as a prophet then but now, it has happened.” On claims, Ebose said the insurance sector was experiencing high ratio but added that with the adequate and necessary reinsurance plans already put in place as well as the insurance reserve, the sector has been up to its task. On measure put in place to cushion the effect of the pandemic on the industry’s operations, he said they have to cut down on some expenditure and channel their resources to those things that are necessary now. “Now Information Technology (IT) is taking more money because when you are cutting from one side, you use it to support the other side. Before now, face mask and hand sanitizers were not in our budget but now we have to add them. The need for social distancing has, for instance, made us in Anchor Insurance Company Limited to buy more cars for staff use to avoid getting caught up with the issues that attend to using public transport and to ensure they remain healthy and productive.
COVID – 19: NCRIB donates relief materials to neighbours
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he Nigerian Council of Registered Insurance Brokers (NCRIB) has given out palliatives worth over N2 million to some communities and neighbours around its Lagos office to cushion the pains of COVID 19 pandemic on the people. The palliatives was part of the Council’s Corporate Social Responsibility to the
vulnerable and poor citizens who were adversely affected by the government imposed lockdown to fight the spread of coronavirus in Nigeria. It was a moment of joy for the recipients as bags of rice and other relief materials were handed to them. The NCRIB President, Bola Onigbogi, while appreciating the Federal Govwww.businessday.ng
ernment’s efforts to fight the spread of COVID -19, enjoined Nigerians to adhere to the directives and all health advisory issued by the National Centre for Disease Control (NCDC) and government with regards to social distancing, hand washing and use of face masks. She said, “we must all be aware that any infringement
of these advice would be tantamount to prolonging the pandemic which would not augur well for us as individuals and as a nation” Onigbogi stressed that the Council has continued to be a responsible and responsive institution as it often rise to the challenge of assisting the society through its various Corporate Social Responsibility projects.
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otimi Edu led Alumni Association of the National Institute of Policy and Strategic Studies (AANI) has joined public spirited institutions in supporting the efforts of the Lagos State Governing to curb the raging Covid 19 pandemic and alleviate the suffering of the less privileged in the State. Rotimi Edu, professional insurer and executive vice chairman at Quicklink Insurance Brokers is chairman of AANI, Lagos Chapter. The Association donated relief items which included 500 bags of 10kg and 10 bags of 50kg bags of rice; 500 cartoons of noodles and 1,000 face masks worth a total of N6 million to the State government. Making the presentation Edu, chairman of AANI, Lagos Chapter, Barr said the gesture was an indication of the resolve of the Association to always identify with the federal and various State governments in their strides at combating the global pandemic. Edu disclosed that AANI as a responsive Association had been playing credible roles in supporting government in communities in times of challenges and applauded the giant strides of the Lagos State government for putting in place strategic and pragmatic initiatives in slowing down the effect of the pandemic in the State. “As an association, we have a strong record of supporting our communities, through
challenging times and today we are here to encourage the efforts of the State government as a keen partner” Edu stressed that similar gestures were going on simultaneously at Kano and Kaduna States, while other state chapters of the Association were already on hand to give succor to the governments on the pandemic as time goes on. He applauded the healthcare providers and other frontline professionals in the ongoing war against the scourge across the country, appealing that it was time for the private sector, corporate institutions and well-meaning Nigerians to accelerate their collaboration and support government to fight the pandemic which he said had upstaged all projections in the socio economic development of all nations of the world. Receiving the relief on behalf of the Governor of Lagos State, Mr Babjide Sanwo-Olu, the Commissioner for Agriculture and Cooperatives, Hon. Gbolahan Lawal applauded AANI for living up to its brand as one of the most progressive Associations in Nigeria and particularly for its great support for the State government in curbing the pandemic. Lawal stated that Lagos State had continued to confronted the pandemic headlong, a situation which he said was responsible for the disease relatively slow spread, urging the people to always adhere to the health advisory, social distancing and wearing of face masks to flatten the curve of the pandemic in good time.
Universal Insurance sees greater future for insurance industry
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nderwriting firm, Universal Insurance Company Plc believes that an effective leadership of the industry under the watch of Sunday Thomas, as substantive commissioner for Insurance will raise position of the sector to an enviable height. According to the company, under Thomas great leadership, wisdom and guidance, NAICOM will strive to much greater heights and the Nigerian Insurance Industry will come to be at par with its peers in the world in terms of performance and functionality and assured of their full co-operation in his drive to achieve his dreams for the industry. The Universal Insurance Plc joined the array of wellwishers, professional colleagues, friends, the entire insurance business commu@Businessdayng
nity as well as associates of Sunday Thomas in felicitating with him on his confirmation as the substantive Commissioner for Insurance (CFI) and Chief Executive Officer of the National Insurance Commission (NAICOM) by President Muhammadu Buhari. The Company in a letter sent to the Commissioner and signed by the Board Chairman, Joshua Dogonyaro, and the MD/CEO, Ben Ujoatuonu described Thomas as the man perfectly fit for the job and wished the new CFI a happy and successful tenure in office. The letter noted that the Federal Government could not have made a better choice as Thomas remains the perfect fit and the right man to drive the industry on the path to excellence and professionalism given his wealth of experience in the Industry.
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TRANSPORTATION Motoring
RailBusiness
ModernTravel
Roads
SSA estimates two million new vehicles sales despite COVID-19 ...From 100,000 to 2 million units a year
MIKE OCHONMA
MIKE OCHONMA Transport Editor
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espite the Covid-19 pandemic, new-vehicle sales in sub-Saharan Africa can grow from around 100,000 a year, outside South Africa, to around twomillion a year in the next 15 years and this is a “very, very conservative” estimate, says Dave Coffey, chief executive officer of African Association of Automotive Manufacturers (AAAM). He believes, there is an opportunity coming out of this in that around the world, organisations may want to diversify their sourcing and that globally, companies will consider localising and regionalising supply chains and new forms of technology. On the impact of used vehicles, the AAAM CEO said that what is important is that used cars occupy more than 80 percent of vehicle sales in Africa. “I see this high percentage of used cars as an opportunity, because we come off such a low base of newvehicle sales, which even in the post Covid-19 environment new-car sales will grow in the right automotive ecosystem,” notes Coffey. While admitting that a big part of the AAAM’s current focus is to create this “right automotive ecosystem”. He noted that to do this, there are a number of key policy drivers that must be addressed in Africa’s automotive markets, says Coffey. “There are many facts out there that show there is great opportunity in Africa, from a growing population to a growing middle-class to growing gross domestic product. “In Africa we have a median age of under twenty, whereas in Europe this is in the forties. And I do want to mention the motorisation rate. There is low vehicle density in Africa which stands at 42 vehicles per 1,000 inhabitants. This is substantially lower than the global average of 180. America is on 830 and Europe is about 580. “So, there is huge opportunity for growth and job creation, as long as there are effective automotive
NRC : Face mask use, social distancing not negotiable
ecosystems.” Looking at the key drivers, Coffey stated, ‘’It is absolutely critical that an African country wishing to start up an auto assembly and sizeable new-car sales industry has the political will to introduce an effective automotive policy. “That is the starting point. And this is where I applaud the Ghanaian government for approving their Customs Amendment Bill in Parliament in March this year.” As used cars occupy more than 80 percent of vehicle sales in Africa, there is an ageing fleet in the heart of Africa, notes Coffey. This results in safety challenges where Africa has the highest per capita road fatalities in the world. According to the World Health Organisation this is expected to increase by 112 percent by 2030. “Reducing second-hand and grey-vehicle imports are key to driving new-vehicle demand. Africa is used as a dumping ground for used vehicles. So, limiting or managing second-hand vehicles is important to ensure safety and to support the manufacturing and assembly of vehicles”. Coffey says the AAAM understands that African governments cannot “just switch off” the flow of imported second-hand vehicles.
“However, it is important that we, over time, move towards creating a second-hand car market from the sale of new vehicles.” Equally important to creating an automotive industry is legal certainty and political predictability, adds Coffey. “Investors need confidence. A stable regulatory framework is, therefore, required, and where applicable, certain aspects need to be passed into law”. Anther vital aspect is market demand, notes Coffey. “It’s important that asset-based vehicle finance is introduced, as new vehicles must be affordable. “It is pointless going in there and having all the policies and developing the ecosystems and people can’t afford the vehicles. We need to work with financing institutions to bring affordable financing to the market.” Other drivers for developing an auto policy and effective industrialisation involve more conventional investment drives and incentives, with “clear criteria” for auto makers to register and enjoy the benefits of an auto policy. “Obviously standards, vehicle homologation, identification are also important. We need to avoid those that are not serious about the real industrialisation in Africa. To that
point the assembler should be an original equipment manufacturer (OEM, or vehicle manufacturer), or supported by an OEM, thus enabling technology transfer and competitiveness.” Says Coffey. Coffey says a number of tier one and tier two companies have expressed interest in investing in Africa, with AAAM viewing the aftermarket as a “very good place to start”. He says it is possible to create matches between tier one and tier two manufacturers and African firms with existing manufacturing capabilities, even if these firms may not be active in the automotive sector but rather, for example, in agriculture. “Let’s create the match, let’s create a joint venture where skills can be transferred and they can be brought into the auto sector.” Other challenges that need engagement with African governments as new automotive industries are developed include infrastructure, the quality and standard of fuel, as well as foreign exchange to fund imports. Coffey says the AAAM is working with Ghana, Nigeria, Kenya and Ethiopia to look at the establishment of auto sectors in these countries. “Egypt is busy with the approval of an auto policy which will be in Parliament soon,” says Coffey.
uthorities at the Nigerian Railway Corporation (NRC) say, the use of face mask and observance of social distancing for all staff of the corporation has come to stay until till further notice as a result of the devastating deadly effect of the coronavirus pandemic. Fidet Okhiria, managing director of Nigerian Railway Corporation had during the recent flagging off of the sensitization and awareness campaign of the corporation stressed on the imperative of using face mask and strict compliance to the social or physical distancing protocol as outlined by the Federal Ministry of Health and the Nigeria Center for Diseases Control (NCDC). He said, this is the surest way of containing the spread of COVID-19 in the community. According to the NRC managing director, a healthy workforce is an asset for any organization, because it is a healthy staff that
can perform optimally towards the production output with profound efficiency and effectiveness. Okhiria said the board and management have immense concern for the health and well-being of NRC staff and their families, hence, this sensitization becomes mandatory in NRC headquarters and Ebute-Metta Junction, adding that this campaign will also be carried out in all the Districts of the corporation. He appealed to the residence to always wear face mask which is now compulsory and maintain social distancing, personal and environmental hygiene.
Big players lower sales target by huge margin …Toyota projects 22 percent drop MIKE OCHONMA
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hanks to the ongoing crisis that has gripped the whole world, even Toyota, the Japanese carmaker giant, has set very low sales projections due to the ongoing situation. The ongoing situation has really made life hell for every carmaker. Right from low volume players to giants like Toyota and Volkswagen, everyone has reported a huge drop in sales due to the circumstances that prevail in the market. The drop in the sales can be largely attributed to most prospective buyers preferring to saving funds to use for
basic needs and medical exigencies. Due to this, the companies around the world have already lowered their sales www.businessday.ng
targets by a huge margin. Even Toyota, which is one of the largest carmakers in the world, has
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set really low targets for this year. Toyota Motor Corporation (TMC) has reportedly said that, it is projecting a drop of 22 per cent in its sales this year. Toyota is not the only company that is projecting such low sales figures. Many other carmakers, who have been highly successful, don’t have much hopes from this year. For Toyota specifically, this is owing to the minimal demand. Speaking on this, Akio Toyoda, President, Toyota Motor Corporation, had said, ‘’We anticipate a massive decline in sales, but we continue to hope and remain optimistic. We hope to become leaders in the economic recovery of affected @Businessdayng
countries ‘’. As per the company, the annual profit for the ongoing financial year will be in tune of 500 billion yen, which is 80 per cent lower than 2.44 trillion yen earned last fiscal. In terms of sales, the company projects the retail of 8.9 million units, which will be lower to the 10.46 million units sold in the last fiscal. Among the most challenging markets for the company is North America, where it is among the market leaders. In March, sales of Toyota in North America fell by 8 per cent but the company still stays focused on bolstering its position by allocating funds for investment and research & development (R&D).
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TRANSPORTATION Motoring
RailBusiness
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Roads
Businesses bouncing back at local dealerships …Prioritizes customers, employees safety MIKE OCHONMA
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oscharis and Kia Motors dealership; two among the leading automobile outlets in Nigeria have re-opened their showrooms and service workshops to the public as global economies battles to live with the coronavirus disease in accordance with government directive. While Coscharis has announced Wednesday, May 20 and take-off date for opening its operations across its Quicklane services, major service centres and auto care business in Lagos and Abuja, Kia resumed on a modest level last week with strict adherence to existing Covid-19 guidelines. Josiah Samuel, group managing director of Coscharis Motors said, “Coscharis Motors is set to commence operations but with the health and safety of its staff and customers as priority. Hence, we have delayed our re-opening in order to open under strict conditions with a number of precautionary measures in place to sanitize and safeguard staff and customers”. Josiah Samuel said that health and safety measures are now in place across all the group’s business outlets with strict compliance to the directives of the Nigeria Centre for Disease Control and the federal government’s recommendations on working hours. He pointed that Coscha-
ris is prepared to mitigate the risk of spreading contagious illnesses during service and sales transactions by reducing physical contacts to the barest minimum while ensuring social distancing where it is inevitable. In his words, Samuel said “The steps we are taking represent the highest standards possible and are in line with Government regulations to keep our staff and customers safe during the approved business hours’’. Vehicles handover and collections for services will be managed with specifically allocated time slots and staggered booking times to ensure social distancing. For all direct customer interaction areas such as the
premise entrance, reception desks and parts and service counters, sanitizers have been provided with a social distancing notice of at least, 2 meters away. Cash will not be permitted for any transaction, and touchpads on card machines (POS) will be disinfected after every use. Strict protocols will see all staff and visitors undergo mandatory temperature checks upon entry to our premises. Furniture will be strategically arranged to maintain set distancing rules at the service and payments areas. Inside the dealership, customers are directed to the washing bay where all the vehicle touch points are disinfected and the key
handed over to the service advisor, after it has been disinfected. Vehicles leaving the dealership after services, repairs or purchases will be put through an intensive cleaning process using specially-approved products for various surfaces. All tools and service-based machinery will also be regularly disinfected. All Coscharis staff will wear face masks at all times, and uniforms will be washed daily. As per government guidelines our work facilities will be thoroughly cleaned and disinfected daily with heavy traffic areas such as bathrooms, refreshment areas and service desks getting increased attention. While Coscharis equal-
ly assures customers that showrooms are as safe as possible, it is also possible to receive e-brochures on available new Ford, BMW, Jaguar Land Rover or Renault via the www.coscharisgroup.net from the comfort of their homes. Anyone who needs to visit our dealership for any reason, whether for scheduled services, maintenance, vehicle parts sales and quick fix at our Quicklane centres is urged to please phone ahead for bookings. Similarly, Olu Tikolo, vice president at Kia Motors Nigeria said, “Over the past few weeks, we have worked hard to develop processes and procedures at every outlet both the showroom and service centres that safe-
guard both our staff and customers, and providing the necessary comfort to visit our facilities. Tikolo said, the team has been hard at work to ensure that all facilities are fully compliant with the regulations stipulated by government at all levels in maintaining a controlled environment for business operations geared towards combating and preventing the spread of community transmission of the Covid-19 virus. “With many of our customers returning to work, it’s vital that we are up and running and able to support all their vehicle requirements in a safe and structured environment”. He said. Visitors and staff will be subject to temperature screening when entering a Kia facility and no person with a body temperature over 37.5 degrees celsius will not be allowed to enter any of its premises. Hand washing soap and clean water to wash their hands, an alcohol-based hand sanitizer will be offered to clean their hands, even as only a limited number of people are allowed into the facility at a time under a full adherence to social distancing rules; Every staff will wear personal protective equipment (PPE), such as masks, at all times and all cleaning procedures will apply to demo vehicles as well, and these will be sanitized before and after use. All public spaces will be sanitized at intervals every day.
Eight million auto industry workers’ future gloomy …Covid-19 gradually changing global narratives MIKE OCHONMA
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ith the world economies on its knees battling the coronavirus pandemic, at the end of the day, the devastating scourge may leave some automakers emerging stronger, others too weak to survive on their own and while factories will shut down, the pressure on the industry to go electric could become more intense. The takeaway in all the unfolding episodes is that people are traveling less now that; they have discovered how much they can get done from home. Or they may commute more by car to avoid jostling with others on crowded buses and trains. Prior to the outbreak, the
auto industry was bracing for a brutal year even before the coronavirus idled factories, closed dealerships and sent sales into a free fall. This time around, things are about to get really very critical. The industry is expected to realign in ways that could have a profound effect on the eight million people worldwide who work
for vehicle manufacturers. Before the pandemic, region by region, it took almost a decade for car sales in the European Union to recover from the recession that began in 2008. In the United States, it took the market about five years to bounce back, but sales have been flat since 2015. Explosive growth in Chi-
na initially helped compensate, but the market has been in decline since 2018. As Volkswagen, Daimler, Fiat Chrysler and other companies slowly restart their assembly lines; people who work in the car business are beginning to ponder what the repercussions of this crisis will be. One of the leading auto makers eggheads that is pessimistic about possible quick dramatic return to full scale businesses is Ola Källenius, the chief executive of Daimler. According to him, ‘’We should not be too optimistic and expect that in 2021, everything is going to go back to normal as if nothing happened. The pandemic will
probably have a huge effect on the global economy and we have to prepare’’. Industry analysts said before the outbreak of coronavirus, automakers worldwide had at least 20 percent more factory capacity than they needed. That idle manufacturing space cost them money without producing any profit. As sales plummet further, shutting down underused plants may be a matter of survival. In an example of the kind of fights that may lie ahead, workers shut down a Nissan plant in Barcelona only two days after it opened in early May, demanding that the Japanese company commit to maintaining its
presence in Spain. Sales of electric cars have been surprisingly resilient even as lockdowns gutted sales of gasoline and diesel powered vehicles. In March, as much of Europe went into lockdown as car sales on the continent fell by more than half. But registrations of battery-powered cars surged 23 percent, according to Matthias Schmidt, an analyst in Berlin who tracks the industry. In April, lockdowns caught up with electric cars, too, and their sales fell 31 percent, according to Schmidt’s estimate. But that was nothing compared with the total European car market, which plummeted 80 percent.
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Experts highlight positive impacts of COVID-19 on environment CHUKA UROKO
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n spite of all the negatives associated with coronavirus as a disease and global health emergency, it still has some positives, especially its impact on environment, facilities management experts have said. They note that the virus has greatly improved the environment, as there has been a drastic drop in the level of pollution caused by human activities that negatively affect the environment. These activities they list as transportation, which has reduced by 80 percent; use of buildings and their facilities, which has also reduced by more than 60 percent; power utilisation, water use, waste generation and others have reduced significantly due to lockdown and restriction of movement. The experts spoke during this year’s World Facility Management Day that was hosted virtually in Lagos by the Nigeria chapter of International Facility Management Association (IFMA). They say facilities managers, engineers, janitors, security team and IT teams in residential buildings, hospitals, government offices, and public offices should be celebrated for the sacrificial roles they have been playing since the outbreak of the dreaded disease. “Environments that are not properly managed could lead to building related diseases such as humidification; chemicals and cleaning agents; fumigation and pest control concerns; moist surfaces and dampness in buildings, etc,” explains MKO Balogun, GCEO of Global Property & Facilities International (Global-PFI) Limited.
Balogun, who was the guest speaker at the virtual event with the theme ‘Celebrating Our Environment,’ advises facility managers to focus on building a sustainable environment, adding that they should see need in turning buildings into green, as such buildings have been found to be a better environment than normal ones. “It is also expected that facilities managers optimise energy and water; reduce all resources that have negative impact on the environment; educate occupants on culture that can positively impact the environment, and automate all touch points,” Balogun states. He notes that “facilities management was a $1.15 trillion global industry with over 65,000 professional and industry participants across the world; this industry has successfully integrated people, place and process within the built environment with the purpose of improving the quality of lives of people and the productivity of the core business.” Earlier, in her opening remarks, president of the Association, Abimbola OlusegunAdamolekun, states that facilities management practitioners play significant roles in operating and maintaining environments where people work and live. She noted that this is a huge responsibility that they proudly do every day. According to her, “This special day enables us to reflect on the achievements of the profession. It is expected that this edition of the celebration will enable professionals to coordinate the workplace, people and technology, especially in this time of COVID-19 pandemic so that facilities can remain open but free of viruses.”
OAGF refutes ASUU’s claim on salary reduction
...says Union’s request to formalise tax evasion through IPPIS untenable, unpatriotic
Cynthia Egboboh, Abuja
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ffice of the Accountant General of the Federation (OAGF) has refuted claims on salary deduction claims by tertiary institutions unions, led by the Academic Staff Union of Universities (ASUU), calling such cheap propaganda aimed to denigrate Integrated Payroll and Personnel Information System (IPPIS). The OAGF in a statement signed by Henshaw Ogubike, director, information, press and public relations, on Monday, explained that IPPIS applied the correct rate in compliance with Section 34 of the 6th schedule on personal income tax (Amendment) Act of 2011, adding that prior to migration to IPPIS, the rate of tax being applied by tertiary institutions was not correct, leading to underpayment of PAYE Tax. “It is important to note that all states governments of the federation made claims on the federal government to pay the differential arising from underpayment of tax by these institutions. “The Federal Government has paid several billions on be-
half of these institutions because of their underpayment of PAYE Tax. The request by the tertiary institution unions to formalize tax evasion through IPPIS is not only untenable, but unpatriotic request to violate extant laws on tax,”according to the statement. Addressing the National Housing Fund (NHF) deductions, he explained that the NHF, which is a statutory saving contribution by all federal employees to enable them have access to short life loans to own their personal houses represented 2.5 percent of basic salary. He said: “ASUU is bringing claims that those laws should not be applicable to them and thereby should be exempted or be made optional for them. The request for breach of Act of Parliament is not within the ambit of the IPPIS or the OAGF. “Another issue raised by the unions is the Employees’ Pension Contribution deductions of 7.5 percent, the ASUU claim that the Employee Contributory Pension should be based on basic salary and not on consolidated salary and it has increased their employee deductions thereby reducing their take home. www.businessday.ng
Bayo Olugbemi (m), president/chairman of council, Chartered Institute of Bankers of Nigeria, being decorated with the badge of office by Debola Osibogun (l), former president, CIBN, and Seye Awojobi (r), registrar/CEO, CIBN, during the Investiture of Bayo Olugbemi as the 21st president/chairman of Council, CIBN, in Lagos.
LNG demand may fall 2% as NLNG ramps up plans for train 7 Olusola Bello
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hile shareholders of Nigeria Liquefied Natural Gas Limited have almost concluded plans to put in place train 7 that will lift its total production capacity to about 30 million metric ton per annum (mpta), experts say global demand for natural gas may fall by 2 percent this year. This is because commercial and industrial demand for natural gas is declining as most countries around the world impose lockdowns to limit the spread of the Covid-19 pandemic. Rystad Energy estimates global natural gas demand to fall by almost 2 percent this year as a result of the lower activity. “In absolute terms, we expect global gas demand to total close to 3,878 billion cubic meters (Bcm) in 2020, down from 3,951 Bcm last year. In our pre-Covid-19 estimates,
this year’s natural gas demand was expected to grow to 4,038 Bcm,” according to Rystad Energy. Rystad Energy says like oil demand, gas demand is also expected to suffer as a result of the slowdown. However, low prices are shielding gas demand to some extent as the fuel remains more competitive than other sources of energy, especially in the power sector where gas use remains relatively stable in most countries. “2020 will be the first year since 2009 where there will be no growth in consumption. This will be a hard blow for an industry accustomed to yearly growth rates of more than 3 percent,” says Rystad Energy’s head of Gas and Power Markets, Carlos Torres-Diaz. The impact on gas demand has varied substantially from country to country depending on the severity of lockdown measures and factors such as the power mix
Expected lawsuits against Governor Wike’s COVID-19 battle style begin with Hausa community Ignatius Chukwu
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here have been hushed threats of lawsuits against several actions so far taken by Governor Nyesom Wike of Rivers State in his battles against the COVID-19, as his style has bruised some persons and groups. Wike has locked down some areas such as Ikokwu Spare Parts Market without any timeframe and relief. He has impounded cows and trucks and threatened to sell them off. He has demolished hotels. Each has quietly been consulting towards taking out lawsuits despite pleading at the surface. Now, the Hausa community in the state has made the first move. A Federal High Court sitting in Port Harcourt has fixed June 1 to hear a suit filed by the Northern Community in Rivers State against the governor over the seizure of cows and trucks from Adamawa State. The Northern Community is demanding N100 million as compensation for the arrest of their kinsmen who were in the
state on a business trip alongside their cows and trucks. The justice, E.O. Obile, fixed the date to allow the plaintiff to put Governor Wike on notice over the case. Counsel for the arrested Northerners, Eze Kpaniku, claimed that the Wike erred in arresting the Northerners, adding that they had waivers from the Federal Government. Kpaniku also lamented that both his clients and their cows had been arrested and dumped at the isolation centre without food and medication for days. M e a n w h i l e, l e a d e r o f Northern community in Rivers State, Musa Saidu, has demanded for the unconditional release of the arrested persons, saying the Hausa community is the worst hit in the lockdown in Port Harcourt as most of their members have been arrested and detained at the isolation centre. The governor has said he was not looking back because he was determined to protect Rivers people, and many important persons have supported his position.
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and industrial activity. Countries with the capacity to switch from coal to gas will see less effect from the demand drop. Italy is one of the countries that have been the most affected by Covid-19, and as a result, the government decided to impose a strict lockdown starting in the beginning of March. The average loss in gas demand from the power and industrial sectors has been a staggering 23% over the duration of the lockdown. Other European countries have seen similar effects, with the International Energy Agency estimating a total loss in weather-adjusted gas demand of 25 percent in France and 19 percent in the UK. Shell Gas B.V., a subsidiary of Royal Dutch Shell plc, has stated that all conditions for its Final Investment Decision (FID) on a new LNG processing unit at Nigeria LNG (NLNG) has now been met.
These conditions included formal commitment from the organisations providing financing for the project. Subsequent to the FID, NLNG has announced awards of engineering, procurement and construction (EPC) contracts. “While remaining mindful of prevailing macro-economic challenges, Shell continues to see NLNG as a great resource that can deliver value to the people of Nigeria and investors alike. This decision is consistent with our long-term strategy and our disciplined approach to capital investment,” said Maarten Wetselaar, Shell’s Integrated Gas and New Energies Director. “The new LNG processing unit will be funded by NLNG without shareholder loans or shareholder equity requirements. The project cost is therefore not reported as part of Shell’s overall capital expenditure.”
29-year-old Nigeria banking law mentioned for amendment in Senate Solomon Ayado, Abuja
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he Banks and Other Financial Institution Act that was enacted 29 years ago was on Tuesday mentioned for the first time in the Senate for amendment. The bill seeking to alter the legislation is being co-sponsored by Uba Sani (Kaduna Central) and Betty Appiafi (Rivers West). It was passed for first reading. The bill seeks among other things, to enhance efficiency in the process of obtaining and granting banking licences. Leading the debate, Uba Sani explained that the aim of the amendment was to update and strengthen the existing Act to effectively address challenges being faced in the finance services sector in Nigeria, in line with global best practices. According to Sani, while in other countries like South Africa and Egypt, the laws regulating banking and other financial institutions are regularly updated, in Nigeria, the @Businessdayng
law enacted almost 30 years ago has remained in force. Other objectives of the bill, Sani said include - to update the laws governing Banks, Financial Institutions and Financial Services Companies; enhance efficiency in the process of obtaining/ granting banking licenses; accurately delineate the regulatory functions of the Central Bank of Nigeria in the financial services industry; update and incorporate the laws for enacting, licensing and re gulation of microfinance banks. Others are to regulate the activities of financial technology companies (FINTECHs; and update commensurate penalties for regulator y breaches in the financial services sector. The bill, when eventually passed, it will strengthen the legal framework for the regulation of banks to prevent distress especially the turbulent period of COVID-19 so that the country can adequately prepare and deal with potential post COVID-19 challenges in the banking sector.
Wednesday 20 May 2020
BUSINESS DAY
27
MARITIMEBUSINESS Shipping
Logistics
Maritime e-Commerce
TCIP Customs rides on trade facilitation tool to generate N117.8bn in Q1 amaka Anagor-Ewuzie
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he Nigeria Customs Service (NCS), TinCan Island Port Command, said it has beefed up its trade facilitation process with the deployment of ‘Time Release Study Tool’, which determines the actual time of release and clearance of goods, right from the time of arrival to physical release from Customs. Time Releas e Study (TRS) is a strategic tool that is capable of identifying bottlenecks in the trade value chain and creating an enabling environment for effectiveness and efficiency in operations. With the deployment of this tool, the command said, it was able to collect a total of 117,839,418,332.16 from January to April 2020, despite the outbreak of coronavirus, a global pandemic that has posed serious challenges to both health system and the business community. The total revenue
is 11,194,774,414.91 more than the sum of 106,644,643,917.25 generated same period in 2019, said a statement signed by Uche Ejesieme, public relations officer of the Command. According to the statement, Musa Abdullahi,
Customs Area Controller of the Command said in a recent chat with some stakeholders in his office that at the onset of this pandemic when pressure, anxiety and general apprehension was the order of the day, the Command demonstrated resilience,
Shippers’ Council sensitises truckers on COVID-19, gives out PPEs amaka Anagor-Ewuzie
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he Nigerian Shippers’ Council (NSC) said it has completed the first phase of its Coronavirus (COVID-19) sensitisation programme for the maritime community. The 3-day programme which started on Wednesday 13th and ended on Friday 16th May, 2020, kicked off at the Council’s headquarters with Hassan Bello, executive secretary/ CEO joined by the Council’s Directors of Regulatory Services and Consumer Affairs, Ifeoma Ezedinma and Cajetan Agu respectively, presenting hand gloves, sanitizers and masks to the leaders of seven trucking associations that attended the programme. According to statement signed by Rakiya Zubairu, head, Public Relations, Bel-
lo said NSC considered it part of its responsibility to ensure the safety of truckers as they are silent facilitators of Nigeria’s economy. He commended them for their cooperation in acceding to NSC’s request to reduce their fees during the period of the lockdown in Lagos alongside Ogun State and Abuja to contain the spread of Coronavirus (COVID-19). Bello, who said that truckers are primarily responsible for their own well-being, urged them to do everything to stay safe as their families and the nation need them. Responding on behalf of the trucking associations, Stephen Okafor, coordinator of Committee of Maritime Truck Unions & Associations (COMTUA), commended the management of the Council and assured of the members cooperation www.businessday.ng
in resetting Nigeria’s post COVID-19 economy. The sensitisation programme then moved to the terminals and shipping companies where Moji Ayorinde, hygienist of the Nigerian Centre for Disease Control (NCDC), under the direction of Everistus Aniaku, head of emergency operations and National Response Team on COVID-19 in Lagos State, gave talks on how to protect oneself from contracting COVID-19. She demonstrated the correct method to wear a mask, hand washing, hand sanitizing and physical distancing among others. Over 100 stakeholders attended this first phase of the programme including freight forwarders and staff of shipping companies and terminals. Participants received masks and sanitizers courtesy of Nigerian Shippers’ Council.
sagacity and compassion in its approach to the novel pandemic, such that tension was reduced from the psyche of port users. “With this pandemic, the Command will upscale her sensitisation on the need for Nigerians to fully take advantage of the operations
in export trade, especially at this moment when it has become compelling for diversification of the economy for national development,” he stated. According to him, Nigerians need to cease the opportunities inherent in the numerous incentives by the Federal Government in the area of export, to draw and attract the consciousness of Nigerians to the advantages in export trade. “With the Time Release Study Tool, we have generated statistical data on the actual time declarations were made up till the time of release from Customs Control. It was on the basis of this, that the Command realised that the Nigeria Customs Service is only involved in two major functions in the trade value chain (examination and release of cargo),” Abdullahi stated. He further assured that the Command will work assiduously towards ensuring that all operational bottlenecks are removed from the value chain, for effectiveness and efficiency
in accordance with global standards. “ The Command will continue to support and encourage the culture of compliance with fiscal and monetary policies, while also rewarding compliant traders. We have developed a framework and different layers for channeling of official complaints, including the help desk for speedy resolution of trade disputes,” he added. While applauding heads of security and regulatory agencies in the port for their consistent support for the Command in realising its statutory mandate, he added that the Command would create a friendly business environment that would encourage trade and investments. On issues bothering on challenges of Covid-19, the CAC reiterated the readiness of the Command to ensure adherence with the protocols put in place by Nigeria Centre for Disease Control (NCDC) and World Health Organization (WHO) towards containing the spread of the virus.
NMLA constitutes 16-member committee to reform admiralty law amaka Anagor-Ewuzie
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he Nigerian Maritime Law Association (NMLA) has constituted a reforms committee to lead the efforts in improving key procedural rules and substantive law in line with its plans to boost efficient dispute resolution in admiralty law in Nigeria. The 16-member committee, named “The Nigeria Admiralty Law and Procedure Reform Committee,” would be co-chaired by Jean Chiazor-Anishere and Osuala Nwagbara, while members include Omolola Ikwuagwu, Nelson Otaji and Chisa Uba. Others incl ude Ba batunde Ogungbamila, Adolphus Nwachukwu, Adedoyin Afun, Echefu Ukatt a h, No n s o A z i h, O l u k ay o d e D a d a a n d
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Kashimana Tsumba, with Gbolahan Elias (SAN), Dolapo Akinrele (SAN), Wale Olawoyin (SAN) and Olumide Sofowora (SAN) as advisory members. The committee, which report is expected by May 25, was saddled with the responsibility of proposing initiatives and implementing strategies for repositioning admiralty law practice with a particular focus on achieving speed in filing, assignment, hearing and determination of admiralty matters, said a statement co-signed by Chidi Ilogu (SAN ), president, and Emeka Akabogu, honorary secretary. “Implementation of a modern fit-for-purpose Admiralty Registry; review of procedural rules, particularly Admiralty Jurisdiction Procedure Rules and Federal High Court Civil Procedure Rules ; @Businessdayng
and reform of substantive law, in 1999 Constitution, Admiralty Jurisdiction Act and Federal High Court Act,” were listed as part of the expectations from the committee. According to NMLA, there has been a steady decline of admiralty law and practice over the years, largely as a result of sub-optimal procedural rules and poor judicial interpretation of substantive law. “ Ju d i c i a l d e c i s i o n s have not been consistent with standard global expectations, while speed, which is at the heart of functional admiralty litigation, has taken a back-seat. In the result, a number of significant maritime interests are no longer keen on having Nigeria as a jurisdiction for adjudication of their disputes,” the statement further revealed.
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Wednesday 20 May 2020
BUSINESS DAY
Live @ The Exchanges Market Statistics as at Tuesday 19 May 2020
Top Gainers/Losers as at Tuesday 19 May 2020 LOSERS
GAINERS
ASI (Points)
Company
Opening
Closing
Change
Company
Opening
Closing
Change
OKOMUOIL
N58.55
N64.4
5.85
INTBREW
N5
N4.85
-0.15
DEALS (Numbers)
DANGCEM
N143.5
N147.5
4
NAHCO
N2.44
N2.33
-0.11
PRESCO
N40.05
N41.5
1.45
WAPCO
N11.35
N11.3
-0.05
VOLUME (Numbers)
UNILEVER
N13.7
N15.05
1.35
LASACO
N0.25
N0.23
-0.02
VALUE (N billion)
N22.75
N23.3
0.55
WAPIC
N0.3
N0.29
-0.01
GUARANTY
MARKET CAP (N Trn)
24,202.87 4,784.00 339,756,744.00 3.921 12.613
Global market indicators FTSE 100 Index 6,002.23GBP -46.36-0.77%
Nikkei 225 20,433.45JPY +299.72+1.49%
S&P 500 Index 2,957.80USD +3.89+0.13%
Deutsche Boerse AG German Stock Index DAX 11,075.29EUR +16.42+0.15%
Generic 1st ‘DM’ Future 24,496.00USD -11.00-0.04%
Shanghai Stock Exchange Composite Index 2,898.58CNY +23.16+0.81%
Stocks sustain rally as investors buy Dangote Cement, Okomu Oil, others
Vetiva equity research: Seplat Petroleum Development Company:
...record N136billion gain
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Stories by Iheanyi Nwachukwu
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igeria’s stock m a r k e t sustained its w e e k- o p e n gains on Tuesday May 19, as investors hunted for shares of Dangote Cement Plc and other value counters like Okomu Oil and GTBank. Following their gains and that of other large cap stocks the Nigerian Stock Exchange (NSE) All Share Index (ASI) rose by 1.09percent to close the day at 24,202.87 points, from preceding day low of 24,010.19 points. The value of listed stocks increased from N12.477trillion on Monday to N12.613trillion, up by N136billion. Okomu Oil led the gainers table after its share price moved from N58.55 to N64.4, up N5.85 or 9.99percent. Dangote Cement followed after its share price moved from N143.5 to N147.5, adding N4 or 2.79percent.
Also, Presco increased from N40.05 to N41.5 up N1.45 or 3.62percent. Unilever rallied from N13.7 to N15.05, up N1.35 or 9.85percent, while GTBank increased from N22.75 to N23.3, adding 55 kobo or 2.42percent. This week, the market has advanced by 1.39percent, while it has gained 5.13percent this month. Year-to-date (YtD) negative return has moderated to - 9.83percent. Access Bank, GTBank, Zenith Bank, FBN Holdings
and Lasaco were actively traded stocks on Tuesday. In 4,784 deals, investors exchanged 339,756,744 units valued at N3.921billion. Analysts say with the steady improvement in the global oil market as well as gradual recoveries in domestic and global economic activities, they expect the domestic stock market to witness more of such bullish trend in the short term, though adding that the possibility of profit taking cannot be completely overruled.
United Capital Daily Insights
Bond market to remain tepid as investors await the May-2020 primary auction
D
uring Monday’s trading session at the bond market, sentiments in the local secondary bond market were mildly bullish, as investors took advantage of the low pricing environment. Notably, average FGN bond yield decreased by 2bps, to end the day at 10.53percent. At the secondary Eurobond market, the d e m a n d f o r N i g e r i a’s sovereign Eurobonds st re ng t h e n e d . Th i s wa s driven by a whopping 9.2percent increase in Brent price to $35.3/bp, following output cut by producers in the US amid expected increase in oil demand as
countries around the world ease economic lockdown. As such, average yield on sovereign Eurobonds fell by 52bps d/d, to 9.45percent. Similarly, the corporate Eurobond segment witnessed bullish sentiment with average yield declining by 19bps d/d, to settle at
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I formerly known and addressed as Bamgbade Sunday Abiodun now wishes to be address as Bamgbade Sunny Abiodun. All former documents remain valid. General public take note. www.businessday.ng
12.85percent. Going forward, we expect the Eurobond market to continue to track the performance of the crude oil market. Also, we expect the bond market to remain tepid as investors await the May2020 primary auction that will take place later in the week.
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I, formerly known and addressed as Faith Ituary Emokpae now wish to be known and addressed as Faith Ituary Njoku. All Former documents remain valid. General public please take note.
Q1 asset impairment to yield losses for full year
n its recently released Q1’20 results, Seplat reported a 36percent quarter on quarter (q/q) drop in turnover to $130 million, underperforming our estimate of $145 million. This was largely a result of smaller lifted crude and weaker oil prices (average realised oil priceQ1’20: $50/bbl, Q4’19: $65/ bbl). Although actual oil production came in higher at 3.1 mbbls in Q1’20 – thanks to Eland consolidation, Seplat only lifted 2.2 mbbls (down 19percent q/q) for its crude sales. As a result, oil revenue fell 38% q/q to $107 million, underperforming our estimate of $118 million. However, the 0.9 mbbl shortfall in lifted oil, which was in effect a sale to the NPDC, was reported under Other Income ($48 million). Like its oil business, Seplat’s gas operations posted an underwhelming performance in Q1, revealing a contraction in turnover for the third consecutive quarter. Dragged by a two-week maintenance downtime, gas
output declined 22percent q/q and 38percent y/y to 8.0 Bscf in Q1’20, bringing gas revenue to a multi-quarter low of $23 million (down 25percent q/q). Asset impairment precipitates losses in Q1 Following the inclusion of Eland numbers in its Q1 results, Seplat reported upward movements in almost all constituents of cost of sales. Notably, royalties (stipulated at 20percent of oil revenue) jumped 50percent q/q to $32 million, while operational and maintenance costs advanced 63percent q/q to $14 million. That said, cost of sales came in higher at $97 million (up 36percent q/q), resulting in a sharp decline in gross margin to 25percent (Q4’19: 65percent, Q1’19: 51percent). Further down the income statement, the company’s gross profit was subdued by an asset impairment charge of $146 million—reflecting the revaluation of the Group’s oil and gas assets amidst the slump in oil prices. As such, Seplat recorded an operating
loss of $77 million, a U-turn from an operating profit of $101 million in Q4’19 (Q1’19: $33 million). Furthermore, with Eland acquisition shooting the company’s debt to $789 million in the preceding quarter, finance costs climbed to $21 million (Q1’19: $16 million), coming in line with our estimate. All in, Seplat reported a loss before tax and a loss after tax of $96 million and $107 million respectively for the quarter. Target price cut to N701.25 (previous: N834.80) Seplat’s Q1 performance lagged our expectations for the quarter, mainly due to oil underlift and asset impairment. Looking ahead, we reiterate that the coronavirusinduced slump in oil demand will leave oil prices in a low terrain over the course of the year. As per Seplat’s oil business, we expect daily output to remain largely stable at current levels for the rest of the year, translating to a total lifted volume of 11.3 mbbls (previous: 12.6 mbbls).
Buhari shocks investment community, sends Yuguda’s name to Senate for confirmation as SEC DG
I
n what seemingly shocks the investment community, President Muhammadu Buhari on Tuesday May 19 urged the Senate to consider and approve the nomination o f L a m i d o Yu g u d a, f o r appointment as the new Director-G eneral of the Securities and Exchange Commission (SEC). Also to be confirmed are three nominees as fulltime Commissioners for the Commission. Those for confirmation are: Lamido A . Yuguda,
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Lamido Yuguda
Director General; R e g i na l d C . Ka raw u s a, full-time Commissioner ; I b r a h i m D. B o y i , f u l l time Commissioner; and
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I formally know and addressed as Miss. Chukwudeme Eziamaka Symphroza Theresa and now wish to know and addressed as Mrs. Okoye Eziamaka Theresa Symphroza All other document remain vialed. General public please take note. @Businessdayng
Obisan T. Joseph, full-time Commissioner. The President’s request was contained in a letter read by the Senate President, S enator Ahmad Lawan, during plenary in Abuja. Buhari’s letter reads in part: “Pursuant to Section 3 and 5(1) of the Investment and Securities Act 2007, I write to request for confirmation by the Senate, the appointment of the following four nominees as Director General and Commissioners of the Securities and Exchange Commission (SEC).”
CHANGE OF NAME
I formally know and addressed Sanusi Oluwatobi Muinat and now wish to know and addressed as Kolawole Oluwatobi. All other document remain vialed. General public please take note.
Wednesday 20 May 2020
BUSINESS DAY
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Wednesday 20 May 2020
BUSINESS DAY
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Wednesday 20 May 2020
BUSINESS DAY
cityfile Police parade suspected kidnappers of twins in Ibadan REMI FEYISIPO, Ibadan
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he police in Oyo have paraded seven suspects linked to the kidnapping of the two-year-old twins of a popular Ibadan cleric, Taofeek Akewugbagold. The Commissioner of Police (CP) in the state, Shina Olukolu, while parading the suspects made up of six males and a female, said N2, 863,000 was also recovered from them. The twins of the cleric were kidnapped on April 25 at gunpoint at their parent’s residence at Alphonso area, Ojoo, Ibadan, at about 8pm. Olukolu attributed the arrest to the concerted efforts of men of the Special Anti-robbery Squad (SARS), Anti-Kidnapping Squad (AKS), other police tactical teams and the support received from the public through credible information. “As soon as the incident was reported at Ojoo Police Station and later transferred to AKS Eleyele/SARS office, Dugbe, Ibadan, a team of AKS/SARS operatives swung into action. “The kidnappers demanded for the sum of N50 million before the two abducted babies would be released. “The abducted babies were, however, released unhurt eight days later after their father had parted with an alleged sum of N4 million as ransom to the hoodlums. “I wish to inform you that all the kidnappers of the two-year old twins of Taofeek Akewugbagold on April 25 have been arrested with a substantial part of the ransom collected. “The gun used for the operation, the two operational vehicles and one motorcycle were also re-
covered from them,” Olukolu said. The CP said the investigation team had embarked on a painstaking and discreet investigation that traversed several states, including Adamawa and Sokoto before the arrest. According to him, the female member of the gang was detailed to take care of the babies while in captivity. NAN reports that one locally made cut to size single barrel gun, eight live cartridges and one Nissan MICRA car with Reg. No. JJJ 703 BJ which was used for the criminal activity were recovered from the suspects. Also recovered was a Nissan MICRA car with Reg. No. NRK 864 YR which was partly paid for from part of the ransom. “The sum of N2,863,000.00, being part of the ransom, and an unregistered TVS Motorcycle which was equally used to monitor and execute the operation and buy food for the abducted babies were all recovered from the hoodlums,” he said. The commissioner said all the suspects confessed to the crime upon interrogation and explained their individual roles in the kidnap. Olukolu solicited the continuous support of the public in providing credible, timely and useful information to enable the police combat crimes in the state more effectively. One of the suspects who claimed to be Akewugbagold’s media aide, said he and another staff of the cleric masterminded the kidnap, claiming the cleric was not treating them properly. The suspect said he planned the kidnap to get some money to take care of his needs. NAN
A cross-section of members of Enugu-based Coalition of Civil Society Organizations during a ‘Mask-Up Enugu’ campaign and free face mask distribution to residents of Enugu to curb the spread of COVID-19 pandemic on Monday. NAN
COVID-19: Expert raises concern over possible outbreak of epidemic in A’Ibom … as mortuaries congested ANIEFIOK UDONQUAK, Uyo
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n Akwa Ibom based-medical practitioner, Ita Udosen has urged the state taskforce on COVID-19 to relax the lockdown order on burials to avoid an epidemic. Ita Udosen who runs a private clinic in Uyo, the state capital, in a statement made available to the journalists, noted that before and during the COVID-19 pandemic, a lot of persons had died from natural causes with the corpses still not buried due to the lockdown order restraining burials among other ceremonies and gatherings in the state. Udosen observed that most mortuaries in the state lacked space to take in more human bodies for preservation.
Also with the interstate borders closure, the challenge of no supply of formaldehyde (formalin solution) used by local morticians for dry embalmment of human remains whereas they depend on supply of this chemical from outside the state. According to him, this poses another threat of an epidemic should the lockdown on burials continued. He pointed out that with the increase in numbers of dead bodies from natural causes; mortuaries in the state are congested while some might begin to decompose. He called for an immediate action to arrest situation. “A lot of individuals died from natural causes before and during this pandemic period. From available statistic, most of the mortuaries in the state are filled to capacities and some
Abia decries state of Nsulu tailoring cluster … as artisans count losses to fire outbreak GODFREY OFURUM, Aba
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oveth Adimoha, commissioner for Arts, Culture and Tourism, Abia State has decried the state of tailoring cluster at Nsulu area of Aba, describing it as unbefitting for tailors and fashion designers, who are major stakeholders in the small and medium enterprises (SME) sector of the state.
Adimoha made the observation when she visited the cluster to sympathise with some members of Association of Tailors and Fashion Designers (ATFAD), whose shops were gutted by fire, recently. “I heard what happened and I decided to come by myself, because these artisans are directly under my ministry. The scene is pathetic. “I sincerely sympathise www.businessday.ng
with the victims. I’ll report back to the governor. These artisans are the producers of the facemasks we’re all using to protect ourselves from contracting Coronavirus. The governor cherishes them a lot.” Caleb Onwuchekwa, one of the victims of the fire incident, said he felt like committing suicide as the fire disaster has left him totally empty after destroying his eight industrial buttonhole
machines, other sewing machines and power generating sets. “I lost eight industrial machines, suit buttonhole machine and shirt buttonhole machine, worth over N8 million to the fire. “I also lost some other smaller sewing machines and generators. I don’t know what to do right now. I don’t know how I can take care of my family with this situation, because it’s beyond me.
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do not have spaces any more to take in more human bodies for preservation and storage. “It is important to note here that about 95 percent of the mortuaries in the state use dry embalmment method to preserve human remains. “Health facilities in both public and private sectors do not have up to three refrigerated mortuaries as at today. The dry embalmment of human remains uses Formaldehyde (Formalin Solution) which is not produced anywhere within the state. “Every mortician in the state depends on supply from outside the state. With the interstate borders completely closed, this solution is not easily available in the state for use by our local morticians. Thus human remains preservation and safe storage is facing a very serious challenge.
“This challenge coupled with mounting numbers of dead bodies from natural causes, the mortuaries across the state are fast overwhelmed and some of the bodies may start decomposing, setting a stage for epidemic of some sort in this pandemic period, Udosen stated. To this end, he called on the state COVID-19 taskforce to immediately allow burial of human remains according to the guidelines by the Nigeria Centre for Disease Control (NCDC). He said: “Every weekend (Friday and Saturday) one local government per Senatorial District (i.e three local governments areas in the state per weekend) should be selected in turns and allowed to carry out burials under strict compliance with compulsory face mask use, social and physical distancing protocols.
“I beg the government to help and rescue me, because what rings in my head now is to hang myself, because I can’t bear this”, he said. Maduka Chuckwu, who owns a shop with his brother atcluster,lamentedthatheand his brother have already been reduced to nothing by the fire. “I don’t know what led to this fire, but from what witnesses said, it could be high voltage that suddenly occurred in the night. Nobody was inside the shops, because there was lockdown. “Before I could manage to get here, the whole place was burnt. We lost our four Industrial Machines, two big
power generating sets, two small power generators, four manual sewing machines and people’s clothes we were working on. If my calculations are correct, what we lost here is over N4 million”. For Godwin Iheme, president, ATFAD, the plight of his colleagues, who were affected by the inferno, has left members of the association in a bitter mode. “I’m not happy about what happened to our colleagues here at Nsulu. What happened is sad but for the first time, we’re seeing a government that has shown concern about our feelings,” the trader lamented.
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Wednesday 20 May 2020
BUSINESS DAY
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FINANCIAL INCLUSION
& INNOVATION
Here’s what Nigeria needs to expand access to digital financial services an exclusion gap of 16.8 percent if it’s going to achieve its 80 percent inclusion target of 2020. The world Bank has however identified four stages for the development of digital financial services and they include basic access to transaction accounts, more intensive usage of transactions account of digital payments, moving beyond payments to other DFS products (e.g., credit and insurance), and stage four being- widespread adoption and usage of DSF by individuals and MSMEs For a country like Nigeria to achieve the aforementioned, the 2020 digital financial service report released recently by the World Bank recommended the following:
Endurance Okafor
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he importance of digital financial services for a country like Nigeria which runs a cash-based economy cannot be overemphasized especially at a time when social distancing and contactless transactions is the order of the day. The urgency of utilizing fintech to keep financial systems functioning and keep people safe has been amplified by the outbreak of the deadly coronavirus. According to the World Bank, digital financial services, powered by fintech, have the potential to lower costs by maximizing economies of scale, to increase the speed, security and transparency of transactions and to allow for more tailored financial services that serve the poor. “Fintech is helping governments quickly and securely reach people with cash transfers and other forms of financial assistance and reach businesses with emergency liquidity,” Ceyla Pazarbasioglu, Vice President Equitable Growth, Finance and Institutions, The World Bank Group said.
For countries to reduce poverty and spur economic growth, Pazarbasioglu said access to affordable financial services is critical as countries with deeper, more developed financial systems enjoy higher economic growth and larger reductions in poverty and income inequality. The low penetration rate of digital financial service in Nigeria is evident in the long queues that have recently been reported in banks
across the country. This is despite the advice of health experts that maintaining social distancing and making contactless transaction can help curtail covid-19 transmission. ‘A cashless economy fueled by a high penetration rate of mobile money like in Kenya would have been a good measure to help curtail the spread of Coronavirus in Nigeria,” a Lagos-based analyst said. Also, the choice by the
StanChart launches solution for FGN bonds investment on its banking app Endurance Okafor
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tandard Chartered Bank (Nigeria) has increased automation of the treasuries market with the launch of an investment solution on its mobile banking platform that allows investors to buy and sell bonds issued by the Federal Government. Tagged the Online Fixed Income Securities (FIS), the new offering provides users with the option to Invest in Federal Government Bonds or Treasury Bills on the SC Mobile App, bringing convenience, ease and simplified monitoring of their investments. On the SC Mobile app, users are able to purchase Federal Government Bonds Naira denominated bonds issued and backed by the Federal Government of Nigeria, with fixed coupon rates which are paid semi-annually. According to the bank, income earned is exempt
from state and local taxes. “Clients can also purchase Naira denominated treasury bills issued by the Federal Government of Nigeria which are short term securities that offer more flexibility and provide competitive yields to investors.” “At Standard Chartered Bank, our Clients remain at the centre of everything that we do, this shows clearly on how we offer products for investments, the markets where we operate and the entire process of how we deliver value to our client, Simpa Adaba, Head of Wealth Management said adding that “we continue to successfully partner with our clients through their life stages and in this journey, we continue to take learnings and rethink our strategies in terms of how we offer products conveniently to our clients.“ The Bank also stated that it is clearly focused on Digital banking from a convenience perspective which makes delivering value to its customers
easier, faster, secured and a lot more efficient. Explaining how the new offering can be used by its clients Adaba said: “On SC Mobile app today, clients can perform self-risk profiling to identify their risk ratings and also invest in Mutual Funds, Federal Government Bonds and Treasury Bills.” According to the wealth manager, it means that its clients can start and end their journey of subscribing to any of the bank’s investment products strictly on their mobile devices and this has changed how the lender is delivering value and investment products to its clients. Meanwhile, Standard Chartered Bank announced the launch of its Digital Bank in Nigeria in December 2019 with the SC Mobile 2.0 app. The Digital Bank offers savings accounts, current accounts, fixed deposits (with the option of joint accounts) along with Lending and Wealth Management solutions.
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Federal and State Governments to use physical locations for distributing the conditional cash palliative to the most economically vulnerable population in Nigeria is considered by analysts as a wasted opportunity that could have helped the country to onboard its 40 million excluded adults. The 2018 data by EFInA put Nigeria’s financial exclusion rate at 36.8 percent. Meaning the central bank of Nigeria would have to close
Enable financial and digital infrastructures To achieve this, the Washington-based lender said it would have to- foster good penetration of mobile phones and connectivity, well-functioning payment systems and enabling interoperability, establish credit infrastructure and enhance coverage of credit relevance data support universal broadband connectivity and target high penetra-
tion of smartphones. Ancillary government support systems Enhancing financial management system to support the intensive shift of G2P payments to digital as well as establishing and expanding coverage of digital ID will help Nigeria to achieve a more inclusive digital financial industry. “Enable automated access to digitized Government data platforms,” the World Bank recommended. Conducive legal and regulatory frameworks A digital financial services policy that allows non-bank insurance of e-money, implementation of simplified CDD and enabling the development of widespread agent network will help expand access, the World Bank said. “Adopt payment systems law, enable non-banks access to payment systems, robust consumer protection framework in place, develop and implement competition policy, establish a comprehensive regulatory framework for DFS providers and adopt a comprehensive legal measure for data protection and privacy,” the World Bank recommended.
COVID-19 & Financial inclusion in Nigeria (1) …the good, the bad, and the not-so-ugly Onyeka Akpaida
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o one envisioned the world would be at a standstill for 6 weeks, much less experiencing a global pandemic; in an unprecedented manner, COVID-19 decided to show up regardless. The economic disruption of this pandemic will largely come from ‘’aversion posture” taken by people to avoid contracting the virus. These include governmentimposed lockdowns, business closures and reduction in activities by people which will inadvertently affect all sectors of the economy and translate into reduced income for suppliers, lower wages, unemployment and a lower standard of living. This article will be addressing the impact of the pandemic on Nigeria’s financial inclusion drive and recommendations to stakeholders- fintech, social en-
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Onyeka Akpaida
terprises and government on how best to mitigate and innovate in the short and medium-term. The Not-So-Ugly (Covid-19 Impact) Remote Work: This is inevitable as many bricks and mortar financial service providers have to swim against this tide that is in uncharted territory. The banks are sequestered and so are the customers; financial service providers are leveraging on every office and a communication tool to keep work going. You can find us in front @Businessdayng
of our computers with the webcam on having your ‘beloved’ Monday morning meeting with your line a manager trying to explain why you have been unable to land that customer. Loans & Lending: There will definitely be a surge in the requests for loan facilities to meet up to daily and expensive demand of staying at home; I can imagine most lending institutions and apps are inundated with loan requests given the ease of getting credit in less than 5 minutes. Loan default is guaranteed as some workers have been laid off, and those who earn daily wages in nonessential sectors will be unable to meet up with their repayments. Onyeka Akpaida is a financial service professional with 9+ years of experience in financial inclusion, consumercentric digital banking and public sector engagement.
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Wednesday 20 May 2020
BUSINESS DAY
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FINANCIAL TIMES
World Business Newspaper
Virus will push up to 60m into extreme poverty, World Bank warns President David Malpass calls for more help to alleviate impact on ‘millions of livelihoods’ JONATHAN WHEATLEY
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p to 60m people will be pushed into extreme poverty by the economic consequences of the coronavirus crisis, and current recovery efforts are not enough, David Malpass, president of the World Bank, has warned. The Bank expects world economic output to contract by as much as 5 per cent in 2020, erasing efforts over the past three years to alleviate poverty in the world’s poorest countries, Mr Malpass said on Tuesday. “Millions of livelihoods have been destroyed and healthcare systems are under strain worldwide,” he said. The World Bank defines “extreme poverty” as living on less than $1.90 per person per day. The World Bank Group is offering $160bn in grants and low interest loans to help poor countries tackle the crisis over a 15-month period. Mr Malpass said that 100 countries, home to 70 per cent of the world’s population, had already been granted emergency finance. However, he said: “While the World Bank is providing
David Malpass, president of the World Bank © AFP via Getty Images
sizeable resources, it won’t be enough.” Interaction with advanced economies will be the single biggest step to recovery for the developing world David Malpass Mr Malpass said he was frustrated by commercial lenders’ reluctance to participate in a debt service suspension initiative for 73 of the world’s
poorest countries which was announced last month by the G20 group of leading developed and developing nations. He said that 14 countries had so far submitted requests to official bilateral creditors for repayment standstills, a further 23 were preparing to do so and another 17 were “seriously considering” it. The initiative allows coun-
tries to request a standstill on repayments of country-tocountry loans owed to G20 members until the end of this year, while preserving the value of the loans for later repayment. The G20 has called on banks and bondholders to participate on comparable terms. Many bondholders, and some debtor countries, have resisted, saying that borrowers
risk being cut off from international capital markets in future. Mr Malpass said some countries had overestimated the market access risks. “These are the poorest countries in the world and while their hope may be that commercial credit markets will reopen suddenly in 2020, the likelihood is that the p a n d e m i c a n d the economic shutdown in advanced economies will have long-lasting effects,” he said. Instead, poor countr ies should concentrate on implementing economic programmes that would attract remittances and direct investment from abroad, while e n couraging investment by domestic businesses, he added. He also stressed the importance of reopening advanced economies as they begin to come out of lockdown, allowing a resumption of financial flows to poor countries in the form of remittances, trade and tourism. “Those have been critical losses and will be critical parts of the reopening,” he said. “Interaction with advanced economies will be the single biggest step to recovery for the developing world.”
German investors’ optimism about economic outlook grows Lifting of coronavirus lockdowns helps fuel confidence in future prospects MARTIN ARNOLD
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nvestors are growing more bullish about a German economic rebound as the government steadily lifts the lockdown it imposed to contain the spread of coronavirus, according to a survey of investors. The Zew poll of German investors, which was published on Tuesday, found that sentiment about the outlook for Europe’s virus-stricken economy had surged to its highest level in years, even as their assessment of the current economic climate worsened to its lowest point for more than a decade. “Optimism is growing that there will be an economic turnround from summer onwards,” said Achim Wambach, Zew president. “According to the financial market experts surveyed, economic growth is expected to pick up pace again in the fourth quarter of 2020.” But Mr Wambach said most investors still believed a full economic recovery from the
A woman in a department store following its reopening in Berlin, Germany © Getty Images
pandemic would take two years, adding: “Only in 2022 will economic output return to the level of 2019.” The Zew survey of 202 analysts and investors, which was carried out last week, found they anticipated a sharp economic rebound now lockdowns are being loosened. For the first time in two months, Germans are able to eat out at restaurants, get their hair cut or go to the gym, albeit with social-distancing rules www.businessday.ng
in place. Sentiment about the German economic outlook rose by 22.8 points month-on-month to reach a five-year high of 51 in May. However, the gauge of sentiment about the current economic situation in Germany fell by 2 points to minus 93.5. Investors’ assessment of the current eurozone economic climate dipped even lower to minus 95, though their outlook for the eurozone economy also
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rebounded — albeit slightly less strongly — to 46 points. While most economists expect Germany to suffer its deepest postwar recession this year, there are growing expectations that it will emerge from the crisis in better shape than many other European countries, which have had stricter lockdowns. “The lifting of the lockdown measures, as well as the huge fiscal support by the German government — more than 30 per cent of GDP — support the view that the German economy could leave the crisis earlier and stronger than most other countries,” said Carsten Brzeski, economist at ING. In the first three months of this year, the G erman economy shrank 2.2 per cent quarter on quarter, much less than the 3.8 per cent decline in the eurozone as a whole. France’s economy shrank 5.8 per cent in the first quarter, while Spain’s contracted by 5.2 per cent and Italy’s by 4.7 per cent. @Businessdayng
On Monday, the Bundesbank added to the more optimistic mood by saying there was “much to suggest that overall economic developments will move up again in the course of the second quarter as a result of the easing measures and a recovery being under way”. Economists are tracking real-time economic indicators, such as the volume of heavy goods vehicles on toll roads, electricity use, customers in stores and passengers on public transport. Many of these indicators suggest that activity has been picking up in Germany since the lockdown started to be lifted in late April, although it is still below normal levels. “As many European countries have started to ease their lockdowns, the outlook, albeit still uncertain, is turning less uncertain,” said Florian Hense, economist at Berenberg. “Both activity and sentiment have started to recover, and should gather more pace by the day.”
Wednesday 20 May 2020
BUSINESS DAY
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FINANCIAL TIMES
COMPANIES & MARKETS
@ FINANCIAL TIMES LIMITED
Market rally stalls as investors assess pace of economic recovery Shares on Wall Street broadly flat after previous session’s sharp gains BRYCE ELDER, PHILIP GEORGIADIS AND HUDSON LOCKETT
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broad rally in global markets stalled on Tuesday, as investors assessed hopes for a rebound in economic activity in the coming months. Stocks on Wall Street were mixed by mid-morning, with the S&P 500 and Nasdaq edging higher while the blue-chip Dow Jones Industrial Average held steady even after forecastbeating results from index member Walmart. In Europe, London’s FTSE 100 ended down 0.8 per cent as sterling bounced against the dollar and the euro, making UK stocks more expensive for international buyers. Frankfurt’s Xetra Dax closed 0.2 per cent higher while in France the lifting of a ban on short selling helped drag the CAC 40 lower by 0.9 per cent. The subdued moves meant equities were largely holding on to Monday’s sharp gains, after investors welcomed several developments that boosted hopes for a strong economic recovery once lockdowns are lifted. Notably, biotech company Moderna said its potential Covid-19 vaccine had delivered positive results in early small-scale human trials. The news helped global markets
Emmanuel Macron, French president, and Angela Merkel, German chancellor, announce the initiative for a €500bn EU recovery fund in a videoconference © POOL/AFP via Getty Images
record their best sessions since early April on Monday, with the continent-wide Stoxx Europe 600 benchmark closing up 4.1 per cent and the US S&P 500 ending the day 3.2 per cent higher. “When you have a lack of clarity in the market, any kind of headline with some credibility to it is going to lead to quite sharp swings,” said Willem Sels, global chief market strategist at HSBC Private Banking. Also lifting market sentiment on Monday was news that Germany and France had joined forces to push for a €500bn EU recovery fund, boosting the effort to create a
co-ordinated European fiscal response to the crisis. But analysts at Rabobank warned against welcoming these developments as though they were “already with us”, as there remained significant hurdles for both the EU recovery fund and the Covid-19 vaccine. “Virus experts urge caution [on a vaccine], so I’ll listen to them,” said Kit Juckes, macro strategist at Société Générale. US 10-year Treasury yields slipped 0.015 percentage points to 0.727 per cent on Tuesday, as investors inched back into the relative safety of government debt. Expectations for an eco-
nomic rebound from the pandemic, due in part to robust support measures by big central banks, have helped drive a sharp rise in global stocks over the past two months. The S&P 500 is up about a third from a low in late March. “Equities are pricing in an optimistic path forward,” said strategists at ClearBridge Investments, noting that investors were focused on the potential path of the economic recovery. The positive sentiment spilling over from Monday’s trading helped overshadow growing concerns over a US-China rift, with Huawei emerging as a significant source of tension. The
Chinese telecoms equipment maker this week warned that new sanctions from Washington put its survival at stake. Beijing also hit back at Donald Trump’s threat to withdraw from the World Health Organization, accusing the US president on Tuesday of attempting to shift the blame for his own handling of the coronavirus crisis. In the Asia-Pacific region, Hong Kong’s Hang Seng index rose 1.9 per cent, while China’s CSI 300 index of Shanghai and Shenzhen-listed stocks added 0.9 per cent. Japan’s Topix index climbed 1.8 per cent and Australia’s S&P/ASX 200 rose by the same margin. Oil prices also paused following a recent rally spurred by signs that crude demand was picking up and supply cuts led by Opec had begun to take effect. Orderly trade awaiting Tuesday’s expiry of oil futures contracts suggested that there would be no repeat of last month’s unprecedented plunge to negative prices. US marker West Texas Intermediate was 0.4 per cent lower at $31.71 a barrel after jumping 8 per cent a day earlier, having moved back above the $30 mark for the first time since mid-March. Brent crude, the international benchmark, slipped 1.4 per cent to $34.31 a barrel.
Investors show little faith in ‘bear market rally’ BofA survey reveals few fund managers expect swift economic recovery HARRY DEMPSEY
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majority of investors believe the global stock market rally will soon swing into reverse, with a second wave of coronavirus cases topping their list of worries. About two-thirds of fund managers polled in a monthly Bank of America survey said the rise in stocks since March was a “bear market rally” — a strong but doomed bounce — against a background of dire economic data. Only 10 per cent of those surveyed expect a V-shaped economic recovery from the pandemic, echoing warnings from Jay Powell, the US Federal Reserve chair, who said a rebound in the US economy was likely to be protracted. Most believe the development of a vaccine to address coronavirus would be needed to fuel a swift recovery.
A second wave of coronavirus infections tops fund managers’ list of worries © REUTERS
Financial markets were hit hard in late February and most of March, when lockdowns kicked in across major economies in an effort to slow the spread of coronavirus. Since then, though, the FTSE All-World index has risen about a third — comfortably surpassing the definition of a bull www.businessday.ng
market — while the tech-focused Nasdaq Composite is in positive territory for the year. These rallies came after a surge in stimulus from central banks and governments aimed at averting a full-blown financial crisis triggered by the pandemic. But many investors do not
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believe the rebounds are sustainable. “Equities are now back at the same levels as the summer of 2019, which is of course remarkable if you remember that the global economy and corporate earnings could be down by as much as 20 per cent,” said Joost van Leenders, senior investment manager at Kempen Capital Management, an asset manager. “We are not convinced that the flood of negative data still to come has been fully priced in,” he added. The mismatch between soaring stocks and dour economic data poses a puzzle for many investors, although it is not unusual for markets to speed ahead of economic reality. “The disconnect between rising equities and weak macro is unsettling, but the equity market is a discounting mechanism and typically moves ahead of fundamentals,” said @Businessdayng
analysts at Barclays. The BofA survey showed that fund managers are opting to pile into the shares of US tech giants — beneficiaries from life under lockdown — and gold, the classic haven asset that rose to a sevenand-a-half year high on Monday. Another wave of Covid-19 infections tops investors’ worry lists. Second on the list is the fear of permanently high unemployment. “While the most impacted businesses in areas like retail, travel and leisure have undergone widescale lay-offs, many businesses that are less impacted by the virus have also reduced headcounts,” said Jeffrey Schulze, director at ClearBridge Investments. “This will likely only compound headwinds from shifts in behaviour until a vaccine or proven treatments for the virus emerge.”
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Wednesday 20 May 2020
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ANALYSIS FT Pakistan: Imran Khan tackles sugar barons in push to hold on to power
Sidelined by the military during the pandemic, the prime minister is targeting his former backers STEPHANIE FINDLAY AND FARHAN BOKHARI
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hen Imran Khan was elected Pakistan’s prime minister in July 2018, he tasked his top adviser Jahangir Tareen with recruiting independent members of parliament to support him after failing to win an outright majority. The sugar baron criss-crossed Pakistan in his private jet scooping up politicians one by one, flashing a winning smile as he welcomed them to the party alongside Mr Khan. His nationwide headhunt was immortalised in satirical memes that showed him leaping out of his luxury SUV to capture candidates and successfully recruiting others from Mars. Mr Tareen’s horse-trading gave Mr Khan’s Pakistan Tehreeke-Insaf, or the Movement for Justice, a razor-thin majority by the time the former cricket superstar was sworn in three weeks later, with many of the new recruits coming from the leading political families of Punjab, the country’s most populous province and heartland of the powerful sugar industry. The formation of PTI’s parliamentary majority perfectly captured the indispensable role of sugar barons in Pakistan’s government, who along with the military and Islamic groups dominate the country’s politics. In the absence of an organised public donation system for campaign funding, the barons bankroll every party in Pakistan, simultaneously serving as MPs and, in Nawaz Sharif ’s case, as prime minister. That cozy relationship was upended in April when Mr Khan released the initial results of a probe into a 20 per cent rise in the price of the commodity over the past year that has prompted heavy criticism of the sugar industry. The calculation is straightforward. Mr Khan has been under intense pressure from the military, which has undermined his authority during the coronavirus crisis, and is encroaching on his civilian government. In a bid to re-establish his political standing with the people, he has decided to do battle with the sugar barons. The probe alleged Mr Tareen and others close to the ruling party colluded to influence policy that allowed them to continue exporting sugar despite low stocks and benefit from an export subsidy worth Rs2.5bn ($15m). They then subsequently gained, the report said, from the steep rise in prices caused by the sugar shortages at home. The final report — which could pave the way for criminal prosecutions — is to be released later in May. Mr Khan removed Mr Tareen as the chair of the task force on agriculture and reshuffled his cabinet, declaring that “no powerful lobby
will be able to profit at the expense of our public”. By isolating Mr Tareen, Mr Khan hopes to quell turbulence in his heavily factionalised party and burnish his anti-corruption credentials in his quest to build a “New Pakistan” after being criticised for failing to act decisively to address a balance of payments crisis and mismanaging the response to the Covid-19 pandemic. Yet if Mr Khan’s gambit backfires, he will have alienated a crucial benefactor who holds influence over the power centre of Punjab. Without that support, Mr Khan is vulnerable to opposition groups and the all-powerful military, which pushed him aside to take control of the country’s coronavirus outbreak. “It’s good for his image but he can only go so far,” says Arif Rafiq, president of political risk company Vizier Consulting. “If push comes to shove he could face dissent in his party, lose the coalition majority and trigger the downfall of his government.” If Mr Khan falls, the worst-case scenario would be nuclear-armed Pakistan returning to military rule in a big blow to the country’s fragile democracy. Experts warn that political instability and economic ruin in Pakistan, a country of 200m people that is a volatile mix of Islamic extremism and mass poverty, poses a great danger to western security interests in the region. Mr Tareen is not going down without a fight. In the first 48 hours after the report was released, he denied any wrongdoing and threatened to spill election secrets on how he recruited the prized Punjab candidates. The owner of JDW Group, whose carefully side-parted silver hair and simple eyeglasses suggest a clinician rather than a tycoon, appeared on TV networks to dispute the findings of the report. He brushed off allegations that he is part of a sugar cartel and used the airtime to warn the prime minister over his crucial role in forming the government. “I brought most of them. We picked pearl after pearl that became the necklace worn by the prime minister,” he told Samaa TV. “This is how Imran Khan became the prime minister and Punjab was won by the PTI.” The sugar barons www.businessday.ng
Jahangir Tareen Born in 1953, Mr Tareen graduated with a masters degree in business administration from the University of North Carolina. He built experience at his family farm in Lodhran in the province of Punjab before launching JDW Sugar Mills In 1992. A decade later he entered politics, when he was elected to the lower house of parliament as part of a military-backed political party during the rule of General Pervez Musharraf. He joined Mr Khan’s PTI in 2011. Today Mr Tareen’s factories produce about 20 per cent of Pakistan’s sugar output, making him the largest industry player. Sweetening politics Sugar is the lifeblood of Pakistani politics. Of the more than 80 sugar mills in Pakistan, many have links to political families that hold huge sway over the rural voters who are key to winning elections. The phenomenon dates back to General Muhammad Zia-ul-Haq in the 1980s, who established prosugar policies with the aim of cultivating sympathetic politicians by offering subsidies, rebates and duty drawbacks that persist to this day. Today the barons run for office outright or fund political campaigns in return for concessions including a freight subsidy on the export of sugar — a system that is at the heart of the corruption report and which has been criticised for benefiting the country’s richest families. The industry is synonymous with crony capitalism. In 2017 Mr Tareen, then a member of the National Assembly, was disqualified from holding office by the Supreme Court for not being honest over the disclosure of his assets and offshore companies. The sugar barons Shamim Khan Heads the Al-Moiz group, which owns five sugar mills. But Mr Khan has only shot to prominence with the government’s investigation into the sugar industry, which reported that Al-Moiz exported more than 29 per cent of its total production last year. Al-Moiz has diversified into other areas such as processed food and steel manufacturing, reflecting its sizeable returns from its sugar businesses. Unlike Mr Tareen, Mr Khan does not have a
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visible political role. “Imran Khan is a product of the political marriage between the military and the sugar barons,” says Husain Haqqani, a former Pakistan ambassador to the US and now a senior fellow at the Hudson Institute, a Washington-based think-tank. “The sugar barons are an integral part of Pakistan’s deeprooted corruption, along with the military.” As public outrage mounted over sky-high sugar prices, analysts say Mr Khan had to act. For a politician who cultivated his image as an outsider promising to clean up Pakistan’s endemic graft and end the reign of corrupt elites, his relationship with Mr Tareen had become a liability. “He understands that he has made so many compromises that if he does not go back to his roots he will gradually lose his power base, the urban middle class,” says Mian Abrar, a political commentator in Islamabad. While the final report into the sugar scandal could issue demands for reform of the sector, others are sceptical that there is a genuine will for change. They suggest that the investigation has as much to do with internal PTI politics as the price of sugar. The sugar barons Makhdum Omar Shehryar A member of a politically influential farming family in central Pakistan, Mr Shehryar began his career in banking, working with Citigroup and United Bank, but then moved to head the familyowned RYK Group focused on sugar production. His two brothers, Khusro Bakhtiar and Hashim Jawan Bakht, are both politicians in Imran Khan’s PTI party, serving as ministers in the central government and the provincial government of the populous Punjab province. Some in the party say friction had been growing between Mr Tareen and planning minister Asad Umar and foreign affairs minister Mahmood Qureshi. Another theory suggests that Mr Tareen fell foul of Mr Khan’s influential third wife, the faith-healer Bushra Bibi, who guided Mr Khan to victory after exchanging vows months before the 2018 vote. “Imran Khan may tame the @Businessdayng
sugar lobby for the time being with his recent action, but not permanently,” says Mahmud Durrani, a retired major general and former national security adviser. “They must be accountable for their actions.” So far Mr Khan has not removed any members of his government linked to beneficiaries of the sugar price rises, highlighting the limits to his war on corruption. Buying some ‘breathing space’ Like other parts of the world, Pakistan is tentatively emerging from its coronavirus lockdown, with parliament and sections of the economy reopening last week. The virus has infected over 42,000 people and killed more than 900 in the country, according to Johns Hopkins University, though experts warn that low testing may be concealing the true scale of the crisis. But the economic impact has been grave. Pakistan’s central bank expects gross domestic product to contract by 1.5 per cent in 2020, after growing 3.3 per cent last year. The government’s Small and Medium Enterprises Development Authority revealed in April that 89 per cent of businesses it surveyed were in financial trouble, with nearly half laying off employees. Authorities now insist that the worst is over. If Islamabad can keep its death rate down, experts say Mr Khan could emerge stronger from the pandemic — even though he bungled the government’s initial response and was forced to cede control of the crisis to the military after resisting a harsh lockdown that was subsequently imposed. Before the pandemic, Islamabad was struggling to implement a $6bn IMF programme, its 13th since the late 1980s. The government was refusing to impose additional taxes and electricity tariffs on people already struggling with soaring consumer price inflation that hit 14 per cent in January. The pandemic has completely changed that scenario. The programme is on hold and the IMF separately approved a $1.4bn zero-interest loan to help Pakistan address the economic impact. Islamabad is also applying for a $1.8bn debt repayment referral under a G20 initiative. Meanwhile, the State Bank of Pakistan has lowered the interest rate from 13.25 per cent to 8 per cent in four successive cuts.
Wednesday 20 May 2020
BUSINESS DAY
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NIWA frowns at Lagos Assembly’s move to interfere with activities of licensed dredgers AMAKA ANAGOR-EWUZIE
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L-R:Obafunke Denloye, deputy provost, College of Medicine, University of Ibadan; Jordi Borrut Bel, managing director, Nigerian Breweries plc.; Olubunmi Olopade-Olaopa, provost, College of Medicine, University of Ibadan, and Tayo Ogundana, brewery manager, Ibadan and Ijebu Ode, Nigerian Breweries, during the donation of Clinical Laboratory Simulators to the College of Medicine, University of Ibadan by Nigerian Breweries held at the College in Ibadan.
COVID-19: Reps order health minister to provide details of whereabouts of Chinese medical team James Kwen, Abuja
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he House of Representatives Tuesday mandated the minister of health, Osagie Ehanire, to give a detailed full status report of activities of the supposed Chinese Medical Team to the speaker as agreed during their meeting on April 7, 2020. It directed the House Committees on Health Services, interior, National Security and Intelligence and Foreign Affairs to investigate the reports of Chinese Medical Team whereabouts and who they really were. The health minister on two occasions, during the daily briefing of the Presidential Taskforce on Covid-19, said he could not provide information on the whereabouts of the Chinese Medical Team since they were not guests of the Federal Government but Chinese companies in Nigeria.
The House however reached this resolution following the adoption of a motion of urgent importance moved by Dachung Bagos (PDP, Plateau). Moving the motion, Dachung said the House was aware that on April 3, 2020, the Federal Government announced that an 18-member Team of Medical Personnel, comprising doctors, nurses and other medical advisors would arrive the country along with a plane-load of additional Personal Protective Equipment (PPE). He explained that on April 8, 2020, a 15-member team of Chinese Medical Personnel arrived the country to share their experiences in fighting the Covid-19 pandemic and were received at the Nnamdi Azikiwe International Airport, Abuja, by some government officials, including the minister of health. The Plateau lawmaker said the House was also aware that the decision to bring in Chinese Medical Personnel into the country to
help the fight against Covid-19 by Federal Government sparked a lot of controversies from some Nigerians who kicked against the decision, saying the country had enough doctors and nurses who were able to tackle the pandemic. According to him, the House is: “Further aware that in response to the controversies, the Hon. Speaker; Femi Gbajabiamila convened a meeting between the leadership of the House and Minister of Health on 7th April 2020. The Rt. Hon Speaker insisted that the Medical Team must undergo the necessary checks as provided by the NCDC and also go on 14 days isolation before any interface with Nigerians. “Further aware that on the arrival of the supposedly 15-member Chinese Team Medical Personnel on the 8th April, 2020, the Minister of Health in a press statement while welcoming them, told Nigerians that first of all, they were medical experts.” The minister of health also
noted, “There seems to be a lot of interest in these doctors but they are staff of a company. l would be very happy if you do not ask me where they are and further said they are unaware of the location of the 15 Chinese nationals who recently came into the country. “Notes that following the complaints and concerns of Nigerian citizens, it is incumbent on us to duly investigate this issues as it is our duty as lawmakers and representatives of our constituents to protect the Nigerian citizens even while respecting or interacting with foreign Nationals”. Meanwhile, the House resolved to convene an emergency meeting with Federal Capital Territory (FCT) minister, Muhammad Bello, minister of finance, Zainab Ahmed, director-general of Budget Office, Ben Akabueze, and IPPIS officials for an emergency meeting on Wednesday, to address the irregularities in salary payment of FCT Health workers.
Insecurity: Over 5,000 Nigerians have already migrated to Niger Republic - senator
Nigeria to prosecute first set of pirates under new Anti-Piracy Law
and Niger states. Gobir said: “The situation in Sokoto East as far as armed banditry is concerned, is pathetic and tragic because it is only Nigerien Army that had been coming to their rescue while the Nigerian Army looks the other way round . “In fact, based on very reliable and verifiable information from the area, many at times, that the people of the affected areas called on Nigerian Army for help and protection against the bandits, no response. “But graciously, the Nigerien Army has been assisting in wading off the bandits, the very reason while not less than 5,000 people in the affected areas have migrated to Niger Republic for safety.” Stating further, he said: “Fallout of this is grinding poverty ravaging the affected people in form of serious hunger since their cows and other animals are on daily basis being stolen and even made from some of the cows they hurriedly sold. “The situation is so bad that we only get help from Niger Republic and not from Nigeria at all, be it from the Military or the Police.
… hands over 10 pirates arrested by Navy for persecution
Solomon Ayado, Abuja
S
enator representing Sokoto East, Ibrahim Gobir, said on Tuesday that due to insecurity in the area, about 5,000 people had so far relocated to Niger Republic to save their lives. Specifically, the lawmaker said the people were left at the mercy of the Nigerien soldiers for protection against armed bandits, as according to him, “Nigerian Army has completely abandoned them.” Gobir stated this during plenary while contributing to a motion on urgent military action against banditry in Niger State. He disclosed that in the last three months, “not less than 300 people in Sokoto East Senatorial District have either been killed or kidnapped by the rampaging armed bandits on daily basis”. Also, he further revealed that scores of cows and other animals worth N2.5 billion have been rustled by the bandits. Consequently, the Senate has urged President Muhamnadu Buhari to direct the military for immediate expansion of their operations against banditry from Katsina and Zamfara to Sokoto
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AMAKA ANAGOR-EWUZIE
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he Nigerian Maritime Administration and Safety Agency (NIMASA) has restated its commitment to collaborate with relevant agencies in order to achieve its goal of eradicating piracy and all forms of illegality on Nigerian waters. Bashir Jamoh, director-general of NIMASA, stated this in Lagos during the official handover of pirates arrested by the Nigerian Navy for prosecution. Recall that the 10 arrested pirates had on May 15 attacked and boarded a Chinese vessel, MV HAILUFANG II, off the coast of Côte d’Ivoire and directed it towards Nigerian waters. They were arrested by the Nigerian Navy, which dispatched a ship to intercept the vessel after it got an alert. The prosecution of the pirates would be the first trial of bandits arrested in international waters under the implementation of the Suppression of Piracy and Other Maritime Offences (SPOMO) Act signed into law in June 2019 by President Muhammadu Buhari.
The law made Nigeria the first in West and Central Africa to have a distinct antipiracy legislation. Jamoh attributed the successful operation that led to the arrest of the pirates and rescue of the ship and its crew to collaboration between NIMASA and the Nigerian Navy. “We have just witnessed the handover of pirates. This is as a result of the robust collaboration between NIMASA and the Nigerian Navy. There has been a lot of synergy between NIMASA and the Navy with regard to the Suppression of Piracy and Other Maritime Offences Act,” Jamoh said. Represented by Victor Egejuru, head of Legal Services, Jamoh assured that with the anti-piracy law, there was ample legal framework to prosecute pirates and other perpetrators of maritime offences in the country to bring the menace to the barest minimum. Ibrahim Shettima, commander of Nigerian Navy Ship (NNS) Beecroft, who gave details of the naval operation, said the vessel had 18 crew members comprising Chinese, Ghanaians and Ivorians.
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he faceoff between the National Inland Waterways Authority(NIWA)andLagos State government over dredging activities may enter another phase as the authority has frowned at the attempt by the Lagos State House of Assembly to interfere with the extant mining laws of the Federal RepublicofNigeriathatempowers NIWA to oversight access through the waterways. This, according to the authority in a statement issued on Tuesday, is sequel to moves by Lagos Assembly to interfere with the activities of dredging companies through the composition of a seven-man committee to investigate and make recommendations on dredging activities in Lagos State, a development NIWA considers as an attempt to muzzle its mandate. George Moghalu, managing director of NIWA, in a letter to Lagos State government, which was also copied to Boss Mustapha, Secretary to Government of the federation (SGF) and Rotimi Ameachi, minister of transportation, called on the state government to caution the leadership of state House of Assembly to stop with the current move. Moghalu described the attempt as breach of peaceful resolution between NIWA and Lagos State government over
clash of interest on dredging and sundry waterway matters. “Recall that there was a recent clash between National Inland Waterways Authority and Lagos State Waterfront and Infrastructure Development during which NIWA staff and indeed companies registered with the authority were arrested by your staff and arraigned before special offences court, the resolution of that is still under consideration,” Moghalu stated, while detailing the background to the current impasse. While warning that Lagos State House of Assembly attempt may thwart the ongoing efforts to reach amicable settlement, the NIWA boss drew the attention of the state government to the extant laws on Minerals and Mining Act of the Federal Republic of Nigeria, which states that where there are issues arising from the operations of any Federal Government’s licensed operator, section 141 of the Act and sections 15, 16 and 17 made provision for its resolution. Moghalu further called mind of the state government on the ruling of the court of appeal on mining cadastral office vs Petroleum and Transport Investment LTD and another (2018) LPEIR 46046,whichclearedtheaironthe vexedissueandfurtherrecognises waterway use permit exclusively within the ambit of NIWA.
Q1 FY2020: Jumia performs well as losses shrink
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ith exactly one full year post IPO, the Jumia Q1 2020 report shows a better future ahead for the eCommerce company, recording a decent result in this quarter, especially after surviving a tough 2019. The Q1 report shows a decrease in the operational costs for the first time in six quarters, with gross profit after fulfilment expense reaching a record €2.5 million, compared to less than €0.1 million in the first quarter of 2019. While being optimistic about the opportunity that the COVID-19 situation has presented for growth, its losses stood at $47.4 million in Q1, which is lower than losses from both the previous quarter ($69.2m) and Q1 2019 ($49.4m). JumiaPay, the brand’s fin-
tech platform has continued to show impressive growth since 2019. Transactions in this quarter reached 2.3 million, a year-over-year increase of 77%, representing 35% on-platform penetration in terms of orders, almost matching the 2.4 million transaction volume it recorded in the very busy last quarter of 2019. The company’s adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) losses decreased by 10 percent year-over-year. It is also important to note that orders through the platform grew to 6.4 million, which was 28 percent higher than the same period in previous year. These positive results were achieved by Jumia amid the coronavirus pandemic, which has hammered the global economy since the beginning of 2020.
Lagos Assembly confirms two more nominees for state audit service Commission Iniobong Iwok
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he Lagos State House of Assembly on Monday confirmed two additional nominees for the State Audit Service Commission. The nominees were Yakub Ishola Balogun and Jimoh Akanbi Ibrahim. Balogun replaced Abiodun Oladipupo Akhigbe, who was rejected by the House. The Assembly had on Thursday May 14, 2020, rejected one of the five nominees of Governor Babajide Sanwo-Olu for the State Audit Service Commission, Abiodun Oladipupo Akhigbe, while Ji@Businessdayng
moh Akanbi Ibrahim was absent. Three other nominees were confirmed by the Assembly then and they were the Chairperson, Oluwatoyin Adepeju AdegbujiOnikoyi, Emmanuel Sunday Kappo (member), and Jokotola Ojosipe-Ogundimu (member). A letter containing the names of the five nominees was sent to the Assembly by the governor on Wednesday 13th May, 2020 as read by the Clerk of the House, Azeez Sanni. The three nominees were confirmed after a voice vote supervised by the Speaker, Mudashiru Obasa.
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Wednesday 20 May 2020
BUSINESS DAY
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Wednesday 20 May, 2020
BUSINESS DAY
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Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 19 May, 2020 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. 234,598.49 6.60 3.13 212 80,649,497 UNITED BANK FOR AFRICA PLC 218,876.30 6.40 2.40 218 16,968,168 ZENITH BANK PLC 497,634.43 15.85 2.26 526 39,746,368 956 137,364,033 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 183,065.99 5.10 4.08 307 33,872,849 307 33,872,849 1,263 171,236,882 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,259,350.95 111.00 - 136 842,899 136 842,899 136 842,899 BUILDING MATERIALS DANGOTE CEMENT PLC 2,513,474.84 147.50 2.79 235 3,938,670 LAFARGE AFRICA PLC. 182,018.09 11.30 -0.44 190 4,534,365 425 8,473,035 425 8,473,035 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 280,334.99 476.40 - 13 2,073 13 2,073 13 2,073 1,837 180,554,889 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 2 3,500 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 9,072.12 3.40 - 0 0 2 3,500 2 3,500 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 2 3,500 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 100 OKOMU OIL PALM PLC. 61,431.80 64.40 9.99 49 964,140 PRESCO PLC 41,500.00 41.50 3.62 44 498,722 94 1,462,962 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,100.00 0.70 - 6 168,308 6 168,308 100 1,631,270 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 198.47 0.51 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 29,673.03 0.73 5.80 54 9,910,515 U A C N PLC. 20,025.01 6.95 2.21 35 966,819 89 10,877,334 89 10,877,334 BUILDING CONSTRUCTION ARBICO PLC. 344.52 2.32 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 35,640.00 27.00 - 55 325,810 165.00 6.60 - 0 0 ROADS NIG PLC. 55 325,810 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,078.72 0.80 - 3 12,800 3 12,800 58 338,610 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 5,950.42 0.76 - 8 2,160 GOLDEN GUINEA BREW. PLC. 829.98 0.81 - 0 0 GUINNESS NIG PLC 37,236.51 17.00 - 282 11,212,785 INTERNATIONAL BREWERIES PLC. 130,281.03 4.85 -3.00 46 589,784 NIGERIAN BREW. PLC. 299,883.83 37.50 - 45 1,141,958 381 12,946,687 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 153,600.00 12.80 - 44 267,403 FLOUR MILLS NIG. PLC. 86,107.97 21.00 -5.71 91 3,099,612 HONEYWELL FLOUR MILL PLC 7,771.59 0.98 - 8 116,244 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 2 400 NASCON ALLIED INDUSTRIES PLC 29,143.82 11.00 4.27 61 1,840,733 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 206 5,324,392 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 14,086.52 7.50 - 63 1,015,467 NESTLE NIGERIA PLC. 788,692.97 995.00 - 80 139,503 143 1,154,970 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 6,817.10 5.45 4.01 37 1,106,466 37 1,106,466 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 18,065.67 4.55 1.11 23 323,316 UNILEVER NIGERIA PLC. 86,462.33 15.05 9.85 80 516,311 103 839,627 870 21,372,142 BANKING ECOBANK TRANSNATIONAL INCORPORATED 89,912.80 4.90 - 52 673,238 FIDELITY BANK PLC 53,023.88 1.83 5.17 40 857,072 GUARANTY TRUST BANK PLC. 685,746.48 23.30 2.42 521 41,887,746 JAIZ BANK PLC 16,205.34 0.55 - 14 487,958 STERLING BANK PLC. 37,427.54 1.30 - 28 1,366,622 UNION BANK NIG.PLC. 186,372.82 6.40 - 19 50,379 UNITY BANK PLC 6,078.46 0.52 6.12 7 598,316 WEMA BANK PLC. 22,373.19 0.58 -1.69 51 2,608,816 732 48,530,147 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 10,763.69 0.95 5.56 54 2,754,878 AXAMANSARD INSURANCE PLC 17,955.00 1.71 - 11 118,000 CONSOLIDATED HALLMARK INSURANCE PLC 2,926.80 0.36 - 1 2,500 CORNERSTONE INSURANCE PLC 8,248.52 0.56 1.82 14 827,940 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,684.39 0.23 -8.00 38 19,746,753 LAW UNION AND ROCK INS. PLC. 4,296.33 1.00 - 2 74,272 LINKAGE ASSURANCE PLC 3,280.00 0.41 - 1 8,500 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 5 1,666,400 NEM INSURANCE PLC 10,561.01 2.00 - 4 59,326 NIGER INSURANCE PLC 1,547.90 0.20 - 2 910 PRESTIGE ASSURANCE PLC 3,229.53 0.60 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 1,050,000 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 4 180,150 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 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 2 5,153,000 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 6,957.59 0.29 -3.33 11 214,123 150 31,856,752 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 4,436.08 1.94 6.59 43 1,098,816 43 1,098,816
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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,671.82 1.36 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,900.00 3.95 3.13 42 901,633 CUSTODIAN INVESTMENT PLC 34,408.91 5.85 2.63 6 2,279,250 495.00 0.33 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 34,456.72 1.74 -0.57 51 2,900,935 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 1 5,000 341,411.44 32.50 1.09 11 751,632 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 15,360.00 2.56 1.19 82 11,699,776 193 18,538,226 1,118 100,023,941 HEALTHCARE PROVIDERS EKOCORP PLC. 2,991.61 6.00 - 1 2 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1,101.47 0.31 - 7 190,111 8 190,113 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,467.72 3.10 -0.32 89 7,235,750 GLAXO SMITHKLINE CONSUMER NIG. PLC. 8,131.96 6.80 - 82 905,644 5,261.97 3.05 1.67 62 2,952,205 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,500.33 0.79 - 13 212,381 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 246 11,305,980 254 11,496,093 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 1 40,000 1 40,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 911.95 0.31 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 216.00 2.00 - 41 615 287.07 0.58 - 2 3,651 TRIPPLE GEE AND COMPANY PLC. 43 4,266 PROCESSING SYSTEMS CHAMS PLC 1,033.13 0.22 -4.55 27 1,604,546 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 2 2,045 29 1,606,591 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 15 1,095 15 1,095 88 1,651,952 BUILDING MATERIALS BERGER PAINTS PLC 2,028.76 7.00 - 8 35,939 BUA CEMENT PLC 1,076,886.46 31.80 - 10 16,045 CAP PLC 14,455.00 20.65 - 20 81,789 MEYER PLC. 265.62 0.50 - 1 629 1,769.32 2.23 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 39 134,402 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 2,624.37 1.49 9.56 11 308,000 CUTIX PLC. 11 308,000 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 8 1,923 GREIF NIGERIA PLC 388.02 9.10 - 0 0 8 1,923 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 58 444,325 CHEMICALS B.O.C. GASES PLC. 1,664.98 4.00 - 15 97,200 15 97,200 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 15 97,200 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 7 3,110,419 7 3,110,419 INTEGRATED OIL AND GAS SERVICES OANDO PLC 34,186.38 2.75 2.23 33 1,016,293 33 1,016,293 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,789.30 176.90 - 25 47,729 ARDOVA PLC 20,839.70 16.00 - 24 131,350 CONOIL PLC 13,254.49 19.10 - 13 11,420 ETERNA PLC. 3,338.61 2.56 - 15 228,477 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 1 20 TOTAL NIGERIA PLC. 34,902.84 102.80 - 41 52,234 119 471,230 159 4,597,942 ADVERTISING AFROMEDIA PLC 1,376.10 0.31 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,871.69 3.10 0.98 33 1,042,804 TRANS-NATIONWIDE EXPRESS PLC. 412.59 0.88 - 0 0 33 1,042,804 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,181.71 2.70 - 0 0 IKEJA HOTEL PLC 2,182.74 1.05 - 2 19,800 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,401.62 4.00 - 1 5,000 3 24,800 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 1 194 1 194 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 0 0 LEARN AFRICA PLC 925.74 1.20 - 9 356,551 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 448.67 1.04 - 0 0 9 356,551 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 580.20 0.35 - 1 5,270 1 5,270 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0
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BUSINESS DAY Wednesday 20 May 2020 www.businessday.ng
Coronavirus crisis: Does value investing still make sense? The strategy that once worked for Keynes and Buffett has performed badly. The pandemic has compounded the pain Robin Wigglesworth
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hen Joel Greenblatt went to Wharton Business School in the late 1970s, the theory of “efficient markets” was in full bloom, approaching the point of becoming dogma among the financial cognoscenti. To the young student, it all felt bogus. Mr Greenblatt had already developed a taste for calculated gambles at the dog racing tracks. Reading the wildly fluctuating stock prices listed in newspapers also made him deeply sceptical of the supposed rationality of markets. One day he stumbled over a Fortune article on stockpicking, and everything suddenly fell into place. “A lightbulb went off. It just made sense to me that prices aren’t necessarily correct,” recalls Mr Greenblatt, whose hedge fund Gotham Capital clocked up one of the industry’s greatest ever winning streaks until it was closed to outside investors in 1994. “Buying cheap stocks is great, but buying good companies cheaply is even better. That’s a potent combination.” The article became his gateway drug into a school of money management known as “value investing”, which consists of trying to identify good, solid businesses that are trading below their fair value. The piece was written by Benjamin Graham, a financier who in the 1930s first articulated the core principles of value investing and turned it into a phenomenon. One of Graham’s protégés was a young money manager called Warren Buffett, who brought the value investing gospel to the masses. But he isn’t the only one to play a role in popularising the approach. Since 1996, Mr Greenblatt has taught the same value investing course started by Graham at Columbia Business School nearly a century ago, inculcating generations of aspiring stock jocks with its core principles. Mr Greenblatt compares value investing to carefully examining the merits of a house purchase by looking at the foundation, construction quality, rental yields, potential improvements and price comparisons on the street, neighbourhood or other cities. “You’d look funny at people who just bought the houses that have gone up the most in price,” he points out. “All investing is value investing, the rest is speculation.” However, the faith of many disciples has been sorely tested
over the past decade. What constitutes a value stock can be defined in myriad ways, but by almost any measure the approach has suffered an awful stretch of performance since the 2008 financial crisis. Many proponents had predicted value investing would regain its lustre once a new bear market beckoned and inevitably hammered the glamorous but pricey technology stocks that dominated the post-2008 bull run. This would make dowdier, cheaper companies more attractive, value investors hoped. Instead, value stocks have been pummelled even more than the broader market in the coronavirus-triggered sell-off, agonising supporters of the investment strategy. “One more big down leg and I’m dousing my internal organs in Lysol,” Clifford Asness, a hedge fund manager, said in April. Value investing has gone through several bouts of existential angst over the past century, and always comes back strongly. But its poor performance during the coronavirus crisis has only added to the crisis of confidence. The strength and length of the recent woes raises some thorny questions. Why has value lost its mojo and is it gone forever? Berkshire Hathaway’s annual meeting is usually a party. Every year, thousands of fans have flocked to Omaha to lap
up the wisdom of Mr Buffett and his partner Charlie Munger, the acerbic, terse sidekick to the conglomerate’s avuncular, loquacious chairman. Last weekend’s gathering was a more downbeat affair. A shaggy-haired Mr Buffett sat alone on stage without his usual companion, who was stranded in California. Instead of Mr Munger, Greg Abel, another lieutenant, sat at a table some distance away from Berkshire’s chairman. Rather than the 40,000 people that normally fill the cavernous CHI Health Center for the occasion, he faced nothing but a bunch of video cameras. It was an eerie example of just how much the coronavirus crisis has altered the world, but the “Oracle of Omaha” tried to lift spirits. “I was convinced of this in World War II. I was convinced of it during the Cuban missile crisis, 9/11, the financial crisis, that nothing can basically stop America,” he said. “The American magic has always prevailed, and it will do so again.” Berkshire’s results, however, underscored the scale of the US economy’s woes. The conglomerate — originally a textile manufacturer before Mr Buffett turned it into a vehicle for his wide-ranging investments — slumped to a loss of nearly $50bn in the first three months of the year, as a slight increase in operating profits was swamped
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Many proponents had predicted value investing would regain its lustre once a new bear market beckoned and inevitably hammered the glamorous but pricey technology stocks that dominated the post-2008 bull run
by massive hits on its portfolio of stocks. A part of those losses will already have been reversed by the recent stock market rally triggered by an extraordinary bout of central bank stimulus, and Mr Buffett’s approach has over the decades evolved significantly from his core roots in value investing. Nonetheless, the worst results in Berkshire’s history underscore just how challenging the environment has been for this approach to picking stocks. After a long golden run that burnished Mr Buffett’s reputation as the greatest investor in history, Berkshire’s stock has now marginally underperformed the S&P 500 over the past year, five years and 10 years. But the Nebraskan is not alone. The Russell 3000 Value index — the broadest measure of value stocks in the US — is down more than 20 per cent so far this year, and over the past decade it has only climbed 80 per cent. In contrast, the S&P 500 index is down 9 per cent in 2020, and has returned over 150 per cent over the past 10 years. Racier “growth” stocks of faster-expanding companies have returned over 240 per cent over the same period. Ben Inker of value-centric investment house GMO describes the experience as like being slowly but repeatedly bashed in the head. “It’s less extreme than in the late 1990s, when every day felt like being hit with a bat,” he says of the dotcom bubble period when value investors suffered. “But this has been a slow drip of pain over a long time. It’s less memorable, but in aggregate the pain has been fairly similar.” Underrated stocks Value investing has a long and rich history, which even predates the formal concept. One of the first successful value investors was arguably the economist John Maynard Keynes. Between 1921 and 1946 he managed the endowment of Cambridge university’s King’s College, and
beat the UK stock market by an average of 8 percentage points a year over that period. In a 1938 internal memorandum to his investment committee, Keynes attributed his success to the “careful selection of a few investments” according to their “intrinsic value” — a nod to a seminal book on investing published a few years earlier by Graham and his partner David Dodd, called Security Analysis. This tome — along with the subsequent The Intelligent Investor, which Mr Buffett has called “the best book about investing ever written” — are the gospel for value investors to this day. There are ways to define a value stock, but it is most simply defined as one that is trading at a low price relative to the value of a company’s assets, the strength of its earnings or steadiness of its cash flows. They are often unfairly undervalued because they are in unfashionable industries and growing at a steadier clip than more glamorous stocks, which — the theory goes — irrational investors overpay for in the hope of supercharged returns. Value stocks can go through long fallow periods, most notably in the 1960s — when investors fell in love with the fastgrowing, modern companies like Xerox, IBM and Eastman Kodak, dubbed the “Nifty Fifty” — and in the late 1990s dotcom boom. But each time, they have roared back and rewarded investors that kept the faith. “The one lesson we’ve learnt over the decades is that one should never give up on value investing. It’s been declared dead before,” says Bob Wyckoff, a managing director of money manager Tweedy Browne. “You go through some uncomfortably long periods where it is not working. But this is almost a precondition for value to work.” The belief that periodic bouts of suffering are not only unavoidable but in fact necessary for value to work is entrenched among its adherents. It is therefore a field that tends to attract more than its fair share of iconoclastic contrarians, says Chris Davis of Davis Funds, a third-generation value investor after following in the footsteps of his father Shelby MC Davis and grandfather Shelby Cullom Davis. “If you look at the characteristics of value investors they don’t have a lot in common,” he says. “But they all tend to be individualistic in that they aren’t generally the type who have played team sports. They weren’t often president of their sororities or fraternities. And you don’t succeed without a fairly high willingness to appear wrong.”
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