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news you can trust I **TUESDAY 21 AUGUST 2018 I vol. 15, no 122 I N300

Nigeria’s economy struggles as NBS sees GDP flat in Q2 2018 ENDURANCE OKAFOR

igeria’s economy is still growing sluggishly almost 15 months after exiting recession, according to the National Bureau of Statistics (NBS). The economy is in its second stage of recovery after it contracted in 2016, the statistics office said in a statement posted on its Twitter account on Monday. The growth rate in the second quarter was “very similar” to the reading for the first three months Continues on page 34

Tinubu nursing presidential ambition in 2023 – Saraki

FMDQ Close

Everdon Bureau De Change Buy

Sell

$-N 357.00 360.00 £-N 456.00 464.00 €-N 403.00 411.00

Foreign Exchange

Market Spot ($/N) I&E FX Window 362.50 CBN Official Rate 306.10

3M 6M -0.02 0.08 11.58 13.32

Currency Futures ($/N)

fgn bonds

Treasury Bills 0.15

10 Y 0.01

20 Y 0.76

14.78

14.87

14.93

NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018 0.00 362.23

0.00 362.68

0.00 363.58

Investors slam Buharinomics as markets flat since 2015 Lags ex-Presidents OBJ, Jonathan performance Stocks fall again by 1.7% on Monday

Emeka Ucheaga

conomic policies embraced by the current administration has failed to significantly lift stock prices as the Nigerian Stock Exchange broad index is up only 1 percent since President Muhammadu Buhari came into power in May 29, 2015.

The Buhari administration has tremendously underperformed both the Jonathan and Obasanjo administrations which returned 29.7 percent and 904.2 percent respectively during their time in power. The stock market index is popularly used as a proxy for the performance of companies in a country as stock prices are

determined by estimating the present value of future cash flow of a business. If investors feel that companies will do well over a foreseeable future, stock prices typically rally. The index tends to retreat when risks are higher and the tendency for companies to perform well financially is lower. In 3 years since President

Buhari was sworn in as president of Nigeria, the stock market returned just 1 percent making it the worst market performance by any democratic President of the federal republic of Nigeria excluding former President Musa Yar’Adua who died in power. Continues on page 34

OWEDE AGBAJILEKE, Abuja

enate President Bukola Saraki has accused a former governor of Lagos State, Bola Tinubu, of nursing presidential ambition in the 2023 elections. Continues on page 34

Inside Stanbic IBTC sees politics as ‘Key Risk’ to second-half income P. 2

L-R: Udoma Udo Udoma, minister of budget and national planning; Vice President Yemi Osinbajo, and Ade Ipaye, deputy chief of staff, during the Economic Recovery and Growth Plan (ERGP) Focus Labs Central Steering Committee at the Presidential Villa, Abuja, yesterday.

Insight: How Oando, Seplat, Sahara, others navigated 2014-2016 oil crash DIPO OLADEHINDE, ABIMBOLA HASSAN & SOBECHUKWU EZE

rude oil prices started falling in mid-2014 to touch multi-year lows of $26.01 per barrel (pb) in January 2016, and ever since there have been a significant amount of uncertainty in the oil and gas industry, as it has remained well below the average of $103.43 pb and peak of $128 pb that was seen from the start of 2010 to September 2014 when the abrupt decline set in.

Business Day analysis into the operations of major indigenous oil firms during the industry turndown revealed how they performed, major investment made and how they survived the period. Oando The 2014-2016 oil slump of hit Oando energy resources hard, as it recorded a working capital deficiency of $835.8m in 2015 compared to $567.2 million in 2014 while accumulated deficit increased to $638.1 million in 2014, from $621.2 million in

2013. The volatility in oil prices impacted the balance sheet of oil companies globally which was evident in a decline in Oando’s crude oil and natural gas sales as revenues in the fourth quarter of 2015 were $99.8 million compared with $174.0 million in the same quarter of 2014. The $74.2 million decrease was the result of the significant reduction in crude oil and natural gas prices, which were partially offset by additional revenue from Qua Ibo coming

on-stream in the first quarter of 2015. “Low crude oil prices have taken a toll on the corporation’s finances, therefore, in response to the low prices, the corporation cooperated with its JV partners to cut operating costs and take steps to decrease its monthly general and administrative expenses through employee reductions and the intended delisting of the corporation from the Toronto Stock Exchange upon completion of the OER share buyout,” the company said in its

2016 report. Oando recorded a N49.7 billion loss for its Full year 2015 operations. In order to survive, the chief executive officer, Pade Durotoye, was quoted in 2015 to have said the company, would be focusing on maintaining its production levels through low cost rig less activities and intensifying its efforts on cash and cost management. “Also, our acquisition of ConContinues on page 35

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Bank credit to private sector down 1.69% in Q2 2018 ... loans to oil/gas sector dominate

Stanbic IBTC sees politics as ‘Key Risk’ to second-half income

redit facilities allocated to the private sector by Nigerian banks declined by 1.69 percent to N15.34 trillion in the second quarter (Q2) of 2018 from N15.60 trillion in Q2 2017 as shown in the most recent Nigerian Bureau of Statistics (NBS) report. The credit allocation to private sector divided into three sectors namely; Agriculture, Industry, and Services showed that the Oil and Gas sector with 30.57 percent of the total credit had the highest allocation of N4.69 trillion inclusive of both service and industry bound credit. Manufacturing sector came second with N2.02 trillion, 13.16 percent of the total lending by banks. Agricultural sector received 3.41 percent which is N523.08 billion of the total credit allocated by banks, a slight increase of 0.22 percent from its Q2 2017 sectoral share of 3.19 percent. Agriculture which contributed about 21.65 percent of the Gross Domestic Product (GDP) in Nigeria in Q1 2018, attracted about 3 percent of the total credit in Q2 2018. “Our findings show that the Agriculture sector in Nigeria is faced with many problems. Thus the sector is unable to attract the required credit,” analysts at FSDH Research said in a report. Some of the problems are: inadequate storage facilities; poor transport network; inadequate research to develop improved seedlings; and weak integration between the sector and the manufacturing sector in providing manufacturing inputs. The industrial sector gulped 38.5 percent of the total credits to the private sector, credit to the same sec-

tor stood at N 5.90 trillion. However, credit to the industrial sector fell by 5.18 percent compared to the corresponding period in 2017. The components of industry which include Oil and Gas (production) and manufacturing dominated credit facilities by 22.52 percent and 13.16 percent with an increase of 0.06 percent point and a decrease of 0.95 percent points from 22.46 and 14.11 percent respectively. Power and Energy had N416.34 billion (2.71 percent), and Mining and Quarrying N10.18 billion (0.07 percent). The service sector had a sectoral share of 58 percent down from N6.22 trillion in Q2 2017 to N5.90 trillion in 2018. Government share of credit facilities was N1.47 trillion (i.e. 9.61 percent), oil and gas (Services) N1.24 trillion (8.05 percent), trade/ general commerce N1.04 trillion (6.81 percent). Finance, Insurance & Capital market received N991.22 billion (i.e. 6.46 percent), Information and Communication 814.57 billion (5.31 percent), Real estate N744.56 billion (4.85 percent), construction N612.85 billion (3.99 percent) among others. Data on all electronic payments channels in the Nigerian banking sector revealed that Automated Teller Machine (ATM) transactions dominated the volume of transactions with a record of 217.42 million valued at N1.60 trillion out of the total volume of about 509.67 million transactions valued at N32.90 trillion that were recorded in Q2 2018. The total number of banks’ staffs increased by 13.67 percent quarter on quarter (QoQ) and 34.72 percent year on year (YoY) from 89,608 and 75,607 in Q1 2018 and Q2 2017 respectively to 101,861 in Q2 2018.

742,455 get at least 5 credits as NECO releases June/July results

EXPLAINER: Lagos embarks on geographic information mapping, here’s why it matters

Godsgift Onyidinefu, Abuja

JUMOKE AKIYODE - LAWANSON

CYNTHIA IKWUETOGHU

ut of the 1,041,536 candidates who sat for the 2018/2019 June/ July Senior School Certificate Examination (SSCE) conducted by the National Examination Council (NECO), only 742,455 got at least five credit passes including Mathematics and the English Language. This was contained in the result of the exams which NECO released on its official website www.mynecoexams.com on Monday. According to a statement signed by the acting Registrar of the Council, Abubakar Gana, there is a 0.63 per cent improvement in the general performance of candidates in 2018 compared to the 2017 results. He added that a total number of 20,181 candidates were involved in examination malpractices, less than the figure of 2017.

usiness Day reported last week that the Lagos state government has just commenced what is said to be the biggest geographic information system project to capture orthophotogrammetric data of the state. The State government through its Lagos Enterprise Geographic Information Systems, (e-GIS) upgrade and Integrated Land Administration and Automation System Project, (Lagos eGIS project) signed a memorandum of understanding (MoU) with Asseco Software Nigeria, a leading IT company, to procure Unmanned Aerial Vehicles, (UAVs) that will capture and update orthophotogrammetric data. What is orthophotogrammetric data? An orthophotograph is an aerial image that has been geometrically

Tuesday 21 August 2018

MICHEAL ANI

he political environment, declining yields on government securities and low deposit growth are “key risks” to income in the second half of 2018, Stanbic IBTC said yesterday in a presentation on its website following the release of Half Year (H1) results. The second tier lender revised its Full Year deposit-growth target to 5 percent – 10 percent, from 20 percent – 25 percent in 2017. This comes after deposits increased by 2 percent to N767.4 billion in H1. The lender also forecast net interest margins at 6 percent this year, compared to 6.9 percent in 2017. The Stanbic Group posted gross earnings of N114.21 billion in H1 2018, up by 17.5 percent from N97.20

billion recorded in the corresponding period of 2017. Profit before tax (PBT) grew by 73.9 percent to N50.73 billion from N29.17 billion, while PAT incresed by 78.7 percent to N43.08 billion from N24.11 billion. Non-Interest revenue grew by 33.6 percent to N53.83 billion in 2018 from N40.29 billion posted in 2017. Net income likewise, had a growth of 73.6 percent to N41.63 billion from N23.98 billion. Its balance sheet snapshot reflected a marginal increase in total assets by 7.8 percent year on year (YoY) to N1.37 trillion for the period ended June 2018 from N1.27 trillion in 2017. Total liabilities also grew by 4.47 percent to N1.16 trillion from N1.11 trillion. Shareholder’s fund, also known as total equity increased by 30.3 percent to N210.47 billion from N161.47 billion posted in half year

2017. Capital remained strong with Capital Adequacy Ratio (CAR) of 27.4 percent in spite of the implementation of IFRS 9. Return on Equity which measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested stood at 19.8 percent in H1 2018 from 14.9 percent in half year 2017. Return on Asset (ROA) a profitability metrics that measures how well a company is generating profits from its total assets stood at 3.0 percent from 1.9 percent in 2017. Earnings per Share (EPS) increased to N4.16 in H1 2018 from N2.30 in H1 2017, representing 80.9 percent growth year on year. Stanbic shares trading in Lagos are up 32 percent in the past year, compared to -0.24 percent return for the NSE all share index for the same period.

Adam Nuru (r), managing director, First City Monument Bank (FCMB), with Abdurrazaq Balogun, executive secretary/CEO, Lagos State Security Trust Fund (LSSTF), during a courtesy visit to the management of FCMB by LSSTF at the bank’s head office in Lagos.

corrected (orthorectified), such that the photo has the same lack of distortion as a map, and can be used to measure true distances, because it is an accurate representation of the earth’s surface. This data collected from this advanced large scale mapping process is then used for road mapping, structural planning and accurate representation of the surface area, which is in this case, Lagos state. Geographic information systems have been accepted all over the world, as an essential tool for effective decision making in urban and regional planning How the data is collected Unmanned Aerial Vehicles (UAVs), commonly referred to as (Drones), which is an aircraft piloted by remote control or onboard computer will be flown to capture imagery and provide accurate representation of Lagos State’s geography. The mapping is used in cartog-

raphy (particularly in photogrammetric surveys, which are often the basis for topographic maps), land-use planning, archaeology, environmental studies, power line inspection, surveillance, commercial advertising, conveyancing, and artistic projects. Why Lagos state needs the data Orthophotos have a variety of uses, and once in digital format, they can be viewed and printed at various scales, which are extremely valuable in the development of land information systems and land use planning issues such as zoning, transportation, and agriculture. Things like natural resources management, land use and allocation, water inventory, environmental planning and management, natural hazards monitoring and modeling are better managed with accurate representation of the area through updated orthophotogrammetric data.

Technological developments of recent years in the digital photogrammetry field have facilitated invention of reliable digital orthophotos, essential for various surveying and Geographic Information (GI) applications. These developments are driven by the demand for high resolution data for research and engineering projects -properties that digital orthophotos provide. The deal to procure Unmanned Aerial Vehicles for accurate representation of Lagos State’s geography was signed by Simon Melchior, chief executive officer of Asseco Software and Hakeem Fahm, Lagos State Commissioner for Science and Technology. As part of Asseco’s delivery of the UAVs, six UAV operators from Lagos State Ministry of Science and Technology will be trained and certified in Poland, to fly and maintain the UAVs in Lagos after delivery. With this development, a simulation environment has been deployed by Asseco in Lagos to train these operators in preparation for the training and certification in

Continues on page 34

Tuesday 21 August 2018

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Tuesday 21 August 2018

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Investors beam searchlight on viable infrastructure projects in Africa MIKE OCHONMA

nvestec Bank of South Africa is considering investment in renewable energy, water desalination and treatment projects, and transportation infrastructure and speciality buildings in Africa. This new thinking is investor appetite for well-structured infrastructure projects on the continent, but needs clarity from governments on regulations and the various projects earmarked for development, Andre Wepener, head, specialist banking company, Investec Bank power and infrastructure finance sub-Saharan Africa, says. Wepener believes that

government’s social infrastructure development initiative to build schools, hospitals and clinics and prisons through PPPs will create investment opportunities for private investors. He says Investec has an appetite to provide debt funding and investment in renewable energy, water desalination, treatment and bulk water projects, transportation infrastructure, fuel infrastructure, and specialised buildings. They are also exploring opportunities to invest in alternative technologies such as energy from waste and utilityscale energy storage. He highlights the bankability of off-takers as a key risk associated with invest-

ment in an infrastructure project as, if the off-taker fails to fulfil their contractual obligations, the project can ultimately fail. “As the procurement of infrastructure projects is becoming more competitive, developers have to structure their projects in more innovative ways, both technologically and financially to reduce costs and compete in the market,” Wepener says. Governments in Africa, he insists, must have to create a conducive environment in terms of a clear regulatory framework, policy certainty and transparent processes without corruption to unlock opportunities for private investment in infrastructure projects.

Relief as Nigeria escapes FIFA ban ANTHONY NLEBEM

he world football governing body, FIFA, yesterday suspended its planned ban of Nigeria from participating in its football activities. “FIFA received confirmations that the legitimate leadership of the NFF under President Amaju Melvin Pin-

nick and General Secretary Mohammed Sanusi has been given back effective control of the NFF and its offices. “In view of these circumstances, FIFA deems that the conditions set by the decision of the Bureau of the FIFA Council have now been met and consequently the suspension of the NFF will not take effect,” a statement from FIFA website read.

FIFA also confirms that it would continue to closely monitor the situation in order to ensure that FIFA’s rules and regulations are fully adhered to. The Federal Government also yesterday issued statement recognising the Amaju Pinnick-led Nigeria Football Federation (NFF) board as the legitimate and recognised board.

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Smallholder farmers get NIRSAL improved insurance scheme ONYINYE NWACHUKWU, Abuja

igeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) has developed a new insurance product to better safeguard farmers against risks along the agric value chain. The product is especially targeted at smallholder farmers - the most vulnerable segment in the agricultural sector and the Nigerian population as a whole. The deployment of the product, which improves on its pioneering Area Yield Index Insurance (AYII) mechanism introduced last year, begins immediately with a pilot phase as part of NIRSAL’s operations in the CBN’s Anchor Borrowers Programme. While the cover provided by the earlier product was limited to yield insurance,

the new insurance product, NIRSAL Comprehensive Index Insurance (NCII), is a combination of Yield Index, Price Index and Life Insurance, Anne Ihugba, head, corporate communications at the NIRSAL, said in a statement. “It is designed to mitigate the impact and losses of both yield risk and market price risk – fundamental risks associated with possible production shortfalls and the uncertainties of the marketplace,” Ihugba explained. The new insurance product, an innovative form of revenue insurance, is unique in Africa. It is also the first of such product to be achieved without government subsidies on the premium. Beyond the benefits to farmers, NCII’s comprehensive cover will also encourage financial institutions to lend more to primary production and ensure reduced premiums in comparison

with the earlier version. This will also lead to an additional benefit – the eradication of premium subsidy, to free up government funds for intervention in other areas. Leveraging on its $30 million insurance facility, NIRSAL’s goal is to expand insurance products and coverage for agricultural lending across the entire value chain by growing coverage from about 500,000 to 3.8 million primary producers. Speaking on the development, Aliyu Abdulhameed, managing director, NIRSAL, said the new insurance product was a testament to NIRSAL’s focus on expanding the frontiers of innovation in Nigerian agriculture in pursuit of practical and effective benefits. “At NIRSAL, our focus is on making positive impact at key points of the agricultural value chain that can trans-

late to significantly higher and sustained productivity and food security for the country. In line with our mandate to de-risk Nigerian agriculture, this innovative insurance product will help to secure farmers against key risks in order to make agriculture more attractive and more profitable,” Abdulhameed said. He expressed his appreciation to NAICOM, NAIC and the insurance companies who collaborated with NIRSAL on the project. NCII was developed by the Corporation in conjunction with key partners - NAICOM (regulator of the insurance industry), NAIC (lead of the consortium of insurance on NIRSAL Anchor Borrowers Programme), and members of the consortium (Axa Mansard, IGI, Leadway, Royal Exchange), and Pula Advisors (consultant to NIRSAL on agricultural insurance).

L-R: Oghenevwoke Ighure, executive director, digital services, BusinessDay; Chiamaka Osuchukwu, a participant; Feyi Olubodun, CEO, Insight Publicis/speaker; Gbenga Omolokun, COO, VFD Group/speaker, and Hameed Salman, a participant, at The CEO Apprentice, an entrepreneurship programme for teenagers organised by BusinessDay Media in Lagos. Pic by Pius Okeosisi

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Edo unveils strategy to mitigate operational cost for MSMEs, boost production scale, employment

overnor Governor Obaseki of Edo State says the establishment of production centres across the state, which will share support infrastructure such as electricity, security and low-cost financing, will boost economic growth. Obaseki said this at a meeting with leaders of the All Progressives Congress (APC) in Edo South Senatorial District on Sunday in Benin City, the state capital. He told the party leaders that his administration was partnering private investors to establish production centres across the state beginning with Edo South Senatorial District. “This will boost economic growth, reduce cost of operations and create employment opportunities while enhancing econo-

mies of scale,” he explained. He assured that efforts were being made to “expand opportunities for micro-credit of single-digit interest rate for women to encourage entrepreneurship and boost disposable income while improving the quality of lives of the beneficiaries.” In attendance were cabinet members, members of the Federal House of Representatives and leaders and representatives of the seven local government areas that make up the senatorial district, including women. The party leaders commended the focus of the administration and described the Ward Development Committees (WDCs) as a game changer, which they said were bringing the dividends of democracy to the grassroots.

NSIO debunks fake news on Abacha loot

ational Social Investment Office of the Presidency has disassociate the office from a message currently circulating on social media, conveying the impression that the disbursement of the repatriated money by the Swiss government, otherwise referred to as Abacha Loot, will commence in October with the TraderMoni Micro-Credit Loan Scheme. According to the message signed by Maryam Uwais, special adviser to the President on social investment, the ‘grant,’ derived from the recovered looted fund, is being anchored by Access Bank. The statement read in part: “The Federal Government had deemed it fit to grant it to Nigerians, especially small-scale business owners. The money will be paid to your account and you are to pay back within six

months. So, the programme is designated for small-scale business owners. “You are to walk into any Access Bank Branch ask them for Trade Form, which the Federal Government say they should give. Please note, it is free of charge, but Access Bank will ask you to pay N1200, for those who do not have Access Bank account, if you have an Access Bank account you don’t have to pay for any account opening and they will give you the form and fill. “It’s an instant form that you can fill and submit there immediately. Pls, go with a passport photograph, and your BVN number. I repeat, the form is free of charge. Don’t pay to anybody unless you want to open an Access Bank account, which is about N1,200 in other (sic) to make it fast. But if you have an account with access before its easy, they will link up your account with the form.”

Customs seizes 11,232 pieces of imported military outfit Ogbeh lauds CBN’s single-digit interest on agric lending IGNATIUS CHUKWU & INNOCENT ETENG

ustoms officials in Onne, Rivers State, have impounded not less than 11,232 pieces of illegally imported military outfit and arrested an importer said to be under watch. The 11,232 is the total of a combination of different types of military wears ranging from t-shirts to caps, jungle boots and others hidden in a container that also contained civilian wears and other materials. Sanusi Umar, Custom’s assistant comptroller general, revealed this last week, while inspecting the seized materials at the Command’s office in Onne.

Umar emphasised that the materials were seized because private individuals, groups and companies were legally prohibited from importing such. He said investigations into an earlier seized container of same materials imported by the same importer, in June, gave way to the recent seizure. The importer, identified as Ongwatabo Jerry, has been arrested and is under investigation, Umar said further. “After profiling the importer’s transactions, I am happy to inform you that we have arrested another container MRKU 4909151 (1×40ft) belonging to the same company, Ehigocho Nigeria Limited with Ogwatabo

Jerry as the prime suspect. “On examination, it was found to contain the following: 620 sets of complete sewn military camouflage uniforms and caps, 10, 000 pieces of inner military tshirts, 512 pairs of military jungle boots. The said Ongwatabo is the sole importer that opened the form M for the importation of these two containers. “Let me use this opportunity to draw the attention of Nigerians (to the fact) that importation of any kind of military wears by any individual, company, or group is prohibited by Nigerian law under the Customs and Exercise Management Acts (CEMA),” he said.

inister of agriculture and rural development, Audu Ogbeh, has described as laudable the announcement last Thursday by the Central Bank of Nigeria (CBN) on the agreement between the CBN and the Bankers’ Committee to offer single-digit interest rate loans to operators in the agricultural and manufacturing sectors of the economy from commercial banks’ Cash Reserve Requirement (CRR) with the apex bank. Considering the idea by the CBN, Ogbeh observed that this was a remarkable progress in government’s efforts towards boosting the real sector to which agricul-

ture was pivotal. This is expected to boost food security, employment creation and agro-industrial development. The minister also congratulated Vice President Yemi Osinbajo on the new policy reducing lending rates to Micro, Small and Medium scale Enterprises (MSMEs), noting that the CBN’s move was in compliance with the Presidential directive to lower lending rates to the productive sectors of the Nigerian economy, on which the minister had repeatedly assured Nigerians. That the central bank considered working with the Bankers’ Committee to finance agriculture from the commercial banks’ huge

reserves, running into billions of naira, is a cause for optimism in the agricultural sector. This is more so as the single-digit interest rate of 9 percent on long-term credit of a minimum tenor of seven years will support stable agricultural investment and predictable increase in food production. The multiplier effect of this initiative at a time of a restructured and recapitalised Bank of Agriculture (BoA) will be a reduction in uncertainties and avoidable risks in agricultural investments, where farmers will enjoy wider latitude of access to loans from either commercial banks or BoA with less hassles.

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World Mosquito Day: Nigeria slowing global fight to wipe out mosquitoes ANTHONIA OBOKOH

igeria suffers the world’s greatest malaria burden and accounts for a quarter of the burden of malaria epidemic globally with 97 percent of the population at risk of contracting malaria, according to latest report by the World Health Organisation (WHO), indicating that the country is slowing down global efforts to control the spread of mosquitoes. Nigeria has made enormous strides in lowering the national impact of mosquitoes, which is responsible for spreading the diseases like malaria, dengue, chikungunya, zika, and encephalitis. According to the WHO, mosquitoes are the world’s deadliest animals, as these diseases cause a million losses (deaths) every year, worldwide. However, health experts say the major problem with the prevalence of malaria is that the mosquitoes and parasites that cause and spread the disease are developing resistance to the insecticides and antimalarial

drugs used in fighting them. WHO defines resistance to insecticides as “an ability to tolerate doses of toxicants, which would prove lethal to the majority of individuals in a normal population of the same insect species.” Resistance arises from the selection of individuals able to survive and reproduce in an insecticide-treated environment or after being in contact with insecticides. World Mosquito Day is observed on August 20 to commemorate British doctor Sir Ronald Ross’ 1897 discovery that female mosquitoes were responsible for transmitting the malaria parasite. The yearly event creates awareness about the causes of malaria and how it can be prevented, as well as fundraising for research into the cure of malaria. Laz Eze, a public health expert, told BusinessDay that Nigeria could learn from the United States of America on how they tackle the spread of mosquitoes, saying it should be a joint effort to eradicate mosquitoes in the country. “The key is prevention, that is how it can be wiped out. The Federal Government

need to increase its political will in support of the global effort, and also the masses complying on behavioural change in there various environments will help reduce the spreads of mosquitoes causing the huge burden of malaria in the country,” Eze said. Studies conducted by the Nigerian Institute of Medical Research (NIMR) reveal that there is high level of resistant mosquitoes in several states in Nigeria. Chris Bode, chief medical director, Lagos University Teaching Hospital (LUTH), Idi-Araba, Lagos, says Nigeria is among the countries that are still unable to eradicate malaria, although there has been renewed interest in researches and innovations in diagnostics methods, drugs productions and the developments I control measures to eradicate malaria. “Increase in the number of people who sleep under long-lasting insecticidal nets, or protected as well as diagnostic testing of children and treatment of pregnant women will contribute to significantly lowering incidence and mortality in Nigeria.

Abduction of workers, cultism threaten businesses in Eket - Group AMAKA ANAGOR-EWUZIE

mall and big businesses situated in Eket, Akwa Ibom State, are closing down their operations due to increasing insecurity in the area, Dominion Akpan, chairman, Eket Business Forum (EBF), says. Akpan, who disclosed this on Monday, said the recent abduction of ExxonMobil workers; incessant cultism, protests and other security concerns, had made Akwa Ibom’s second largest city none conducive for business. According to Akpan, “In July, the Police had to rescue 19 ExxonMobil staff travelling from Port Harcourt for a crew change of duty at Qua Iboe Terminal. The abduction of the workers was very worrisome because it was said to have the blessing of some community leaders in the area. The suspected kidnappers reportedly draped sacks over their victims’ heads as they took them to their hideout, but were rescued by the Police. “Cultism is also a huge blight on Eket. Eket, which has significant presence of workers of ExxonMobil, is among the four local

government areas mostly affected by perennial cultkillings and related violence in the state. In June, cultists in the area killed three people. A contract worker with Mobil was among those killed. He was reportedly shot in the head at close range while drinking at a pub, somewhere in the city.” He said the cultists had also been terrorising businesses and residents of the area before 20 of them were arrested recently. “Earlier this year, youths under the aegis of Nigeria Youth Initiative Forum (NYIF) in Akwa Ibom State threatened ExxonMobil, demanding the employment of youths within the catchment area in contracting firms under the management of the multinational company or suffer disruption of their activities. “The youths threatened to barricade the Qua Iboe Terminal road and the Mobil airstrip should the company ignore their demand,” he said. The EBF chairman further disclosed that many businesses were moving out of Eket to other parts of the state and in some cases, to other parts of the country.

Tuesday 21 August 2018

NECA lauds CBN’s single-digit loan to real sector JOSHUA BASSEY

igeria Employers’ Consultative Association (NECA) has lauded the Central Bank of Nigeria (CBN) on agreement reached with the Bankers’ Committee to offer single-digit interest rate loans to operators in the manufacturing and agricultural sectors of the economy, from commercial banks’ Cash Reserve Requirement (CRR) with the apex bank. Olusegun Oshinowo, director-general of NECA, applauded the scheme, noting that it would aid the development of the real sector. Oshinowo, however, pointed out the need to extend the scheme beyond the real sector, saying, “Though the scheme is commencing with manufacturing and agricultural sectors, it should be extended to other sectors of the economy, especially sectors that would create jobs for the teeming youth population. We believe that the focus is to ensure the growth of the economy, especially now that we are out of recession and have achieved some stability.”

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Tuesday 21 August 2018

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Is there a common destiny between Buhari & Trump?

MAZI SAM OHUABUNWA OFR sam@starteamconsult.com

have been in the United States of America attending family events and attempting a vacation. Before I left Nigeria, I was really downcast with the turn of events in country, especially the show of shame happening in the political circles: Rumours of planned decamping, mass decamping and some descamping; threats of impeachment and attempted impeachments in the midst of worsening insecurity and growing poverty. Nigerian politicians seem to be taking the people for a ride. For me the political environment in the country was unpleasant especially the high display of impunity and rascality by the security agencies. Naturally many people were blaming President Muhammadu Buhari (PMB) and his ruling APC party for fouling the environment. However, when I arrived the USA and turned on the TV and listened to what people were saying about President Donald Trump (PDT), I realized that the social and political environment in the USA was also agitated and for some very unpleasant, though for different reasons and circumstances. Just as many Nigerians were blaming PMB, so were many Americans that I spoke to or watched on TV pissed off with PDT. That got me thinking. Are there parallels, coincidences and differences between these two leaders who though are being heavily criticized by many today, also seem to enjoy cult following by group of others

STRATEGY & POLICY

MA JOHNSON Johnson is a marine project management consultant and Chartered Engineer. He is a Fellow of the Institute of Marine Engineering, Science and Technology, UK.

“The transmission of knowledge and the capacity to sustain excellence, to produce relevant research results and to offer the society convincing and intelligent social criticism has been dwindling rapidly in our universities. This has resulted in societal stagnation rather than national development.” – Professor Eyitope Ogunbodede, Vice Chancellor, Obafemi Awolowo University, Ile Ife he above quote was sourced from a presentation delivered by the erudite professor of Preventive and Community Dentistry, Eyitope Ogunbodede at the First Rehoboth Dream Solid Foundation Annual Lecture 2018 edition which took place on 9 August at the Admiralty Conference Centre, Lagos. The paper titled “Public Education in the 21st Century: A Reappraisal of the Nigerian Education System since Independence,” generated a debate regarding

who seem unfazed by the criticisms? First I noticed that both PMB and PDT are not mainstream politicians, though they have long nurtured the desire to rule. They are not chartered politicians like my sibling- Senator Mao. Yes, they have had long political affiliations but seem to lack normative political skills. Trump has been a real-estate businessman and TV personality while Buhari has been essentially a soldier. Even in their political affiliations, they have moved around. PDT was a Democrat at some point (up till 1987, 2001-2009), Reform Party (19992001), Independent (2011-2012) and Republican (1987-1999, 2009-2011, 2012-Present). He also had made some attempts to join the presidential race at three previous times and actually went through Reform Party primaries before dropping out and then finally making the bold and audacious bid in 2016 that brought him to the Presidency. PMB we know seized power through a military coup in December 1983 and was, in turn, overthrown in August 1985. He contested three times under two political platforms (2003-ANPP, 2007-ANPP, 2011-CPC) before making the 4th and ultimate bid in 2015 on the APC platform that finally brought him to the presidency. Second, PDT is the oldest and wealthiest person to become President in America at age 70 just as PMB is the oldest person to become Nigeria’s civilian President at age 73. PMB was supported to become Nigerian President by Obama and he was the first African President to be invited to the White House by Trump. Third, both PMB and PDP won elections to the presidency against the run of play- coming from opposition parties and were heavily de marketed because of their past records. Fourth, both are strong willed and profess populist, protectionist

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Are there parallels, coincidences and differences between these two leaders who though are being heavily criticized by many today, also seem to enjoy cult following by group of others who seem unfazed by the criticisms?

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and nationalistic world views and currently have poor domestic ratings mostly for different reasons- PMB for poor security management, struggling and post-recession economy, one-sided anti-corruption fight and a rancorous political environment, while for PDT it is for his largely anti-American stand on many issues, his romance with Putin of Russia and the repudiation of global agreements- WTO, Paris climate agreements, Iran nuclear deal etc. He seems to be turning American values upside down, restricting freedom of speech and press freedom and currently has grave integrity challenges. Fifth, both have scant respect for diversity. In PMB’s security architecture and discretionary appointments, he has ignored the Southeast Nigeria and has focused heavily around his catchment area. The gains made by women in Jonathan’s era have been grossly eroded. Similarly,

PDT has expressed racial preferences and in his White House, most of the faces are white and the colour and gender diversity built by Obama has been fully annihilated. PDT is accused of trying to re-establish white supremacy while PMB is accused of trying to establish a Fulani empire. On the flip side, PDT is loquacious but PMB is taciturn though both have to be kept on point, to avoid accidental discharges, which happens more with PDT as he often feels obliged to comment on every issue from his twitter account. PDT is very active, pushing his agenda and fighting through several unpopular policies, executive orders and social commentary, but PMB is restrained and seems more strategic than tactical. As it stands, both seem to be fighting battles for political survival. Both men are in their first terms and from all indications want to do second terms as allowed by their respective country’s constitutions. PDT is facing tough challenges. He is at logger heads with most of the international community, except perhaps Russia and Israel. He regards the European Union (EU) as adversaries or even enemies. He is at war with closest Neighbours - Mexico and Canada and has problem with NATO allies. He is currently undertaking an economic warfare with China using unheard of tariff spikes with China struggling to retaliate. He has exacerbated the Middle East tensions with his unilateral recognition of undivided Jerusalem as the capital of Israel, moving the US embassy from Tel Aviv to Jerusalem. He has repudiated the Iran nuclear deal and is currently on a shouting match with Tehran, recently opening another shouting frontier with Turkey. The international community would wish for a change of leadership in America by 2020 or preferably earlier. Naturally they share similar views with the Democratic Party and now

many conservative Republicans are even sharing this view. Last week President Jimmy Carter spoke, following earlier comments by George Bush and Ronald Reagan’s daughter and several other leading Republicans like Senator John McCain. Even the intelligence community has joined in raising the red flag against PDT. Everybody is waiting for special counsel, Robert Mueller’s report on Russia and related matters! Fortunately, PMB does not seem to have much problem with the international community, though Nigeria is holding Africa back in many respects, more so now with its reluctance to sign the African Continental Free trade Area (AfCFTA) pact. He is widely respected abroad and has been made the anti-corruption champion by the African Union (AU). But PMB has plenty of issues domestically, the greatest of them being his patent inability to secure the lives of Nigerian civilians. Life has always been cheap in Nigeria since 1966, when the Military, of which he was a key player, turned Nigerians against themselves. But in the last three years, life has become completely worthless in many parts of Nigeria. This coupled with the inability of his ruling party APC to either unite its members or cause the government to unite the people of Nigeria. Many Nigerians say that the country has never been as divided as it is today under PMB as ever it has been since the end of the Nigerian civil war in 1970. Coincidentally Many Americans say that America has never been as divided as it is today under PDT since the end of the American Civil war in 1865. Would this be worthy legacies for PMB & PDT? I would rather not.

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An appraisal of public education in Nigeria the poor state of public education in the country. The gist of Ogunbodede’s presentation is that Nigerian educational institutions at all levels must undergo critical reforms and restructuring to enable them make meaningful contributions to national development in the Twenty-first Century. Certainly, this is not the first time one of our brilliant and intellectually gifted academic has drawn attention of policy makers to the fact that with technology changing rapidly, and the world becoming increasingly knowledge based, education has emerged as a key determinant of a nation’s economic development. The truth is that a country with low educational standard can never join the league of industrialized nations. As an observer and beneficiary of public education in Nigeria, one could assert that things have never been this bad with public primary, secondary and tertiary institutions in the country. Admittedly, it is not all bad news because the number of primary, secondary, and tertiary educational institutions have increased in the past four decades. These institutions have produced many brilliant students and outstanding teachers in the country. In the 1980s, Nigeria had 16 universities. Today, there are a total of 162 universities in Nigeria comprising 41 Federal, 47 State and 74 private, at various levels of development and growth, according to Ogunbodede. There is no state of the federation that does not have more than one university. So whilst we

concede that progress has undoubtedly been made, serious question still remains about the quality of public education in Nigeria. A visit to any public primary, secondary, and tertiary institution will expose the level of decay and inadequacies of facilities. Yet, students are enrolled beyond the capacity of classrooms and other structures without a corresponding increase in the number of teachers. Budgetary allocation to public education is poor and on a downward trend in the past few years. Lecturers in public universities are neglected because of inadequate funds for research, conferences, and capacity building workshops. We now have a situation where competent and dedicated university administrators are endangered species. Teachers and lecturers are poorly rewarded such that most people consider academic work as the job of last resort. That is why most teachers and lecturers engage in parallel time consuming occupations which undermine their performance. For public education to thrive, every aspect of the society must be involved. Education is the prime mover of any given society and a critical factor for improving the quality of human resources. Education, either in private or public institutions takes input from several factors of the society and gives outputs to these factors. These factors include but not limited to culture, human and natural resources, nation’s historical background, industrial development strategy and leadership amongst others. These factors must be of higher standard before Nigeria can have quality education. What a na-

tion provides as inputs into education is what she gets as outputs. It is a case of garbage-in, garbage-out (GIGO). Each factor, though discrete are at the same time mutually interdependent with other factors. Thus, a progress within any factor on its own or indeed a combination of a limited number of factors will not give rise to national development. The chances of success will rather increase if all factors including education are married together with the precision of a good orchestra. In order to have a high standard of public education, Nigeria must parade visionary leaders across the entire spectrum of the society. No nation can develop without visionary leaders. All things being equal, the probability of getting visionary leaders is higher in societies where the people are more educated and gifted than one peopled by dullards. Hence, the truism that nations get the leaders they deserve. When the culture is poor and investment in human resources is low, Nigeria cannot have quality education. The standard of education will not be high when there is disjointed national development strategies and policies. Therefore, national development is not merely the function of economic conditions alone but arises from the total situation within the society. Have we ever asked ourselves why poor societies remain poor? It is because those societies have neglected the cultural dimension to economic development. If a nation’s value system is poor, then she remains backward ad infinitum. Nigeria

cannot be an industrialized economy without adapting its culture to modern industrial realities. Nigerians generally have not imbibed the culture of using scientific means to solve industrial, medical, governance and managerial problems etcetera. Many Nigerians have not accepted science, and technology as a way of life. Rather, most Nigerians have remained superstitious and animistic. We want miracle to happen in national development. But there is no short cut, the people must work diligently to achieve national development. As primary, secondary and tertiary institutions increase, education has not significantly changed how most Nigerians relate to the natural world. Public education can improve in Nigeria provided all other factors of the society mentioned above are of higher standard. Otherwise, Nigeria will not be able to develop highly skilled and technologically adroit citizens that will enable her transit from backwardness to industrialization. Time has come for state and federal governments to overhaul curricula of public schools, and provide adequate funds to enable these institutions prepare students who are pro-industry. Contributions from families, communities and the Organized Private Sector will go a long way to improving public education because state and federal governments cannot do it alone.

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Tuesday 21 August 2018

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Fidelity bank: Steadily aiming high RAFIQ RAJI “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

our years ago, Fidelity Bank aimed to be Nigeria’s top tier 2 bank. It succeeded. Fidelity now aims to be a tier 1 bank by 2022. Rated B- by Fitch and S&P Global Ratings, Fidelity has a total asset base of $4.4 billion, 4.1 million bank accounts, 1.5 million mobile customers, and more than 3,000 professional staff. It is ranked amongst the top 10 banks in Nigeria, albeit with a market share of about 5 percent.

It is also reputed to be one of six Nigerian banks that conducts an interim audit of its financials and was the first to adopt a market reflective exchange rate for preparing them. Fidelity was also recently rated the 4th best bank in the retail segment by KPMG, a consultancy, in its 2017 Banking Industry Satisfaction Survey (BISS).The bank already maintains high standards for some regulatory metrics: its capital adequacy ratio was unchanged at 16 percent in its most recent reporting, above the regulatory minimum requirement of 15 percent. Chief executive Nnamdi Okonkwo attributes the successes under his four-year stewardship thus far to a strong management team and well-motivated employees. In fact, Fidelity staff are believed to be one of the best remunerated in the industry. It also has perhaps the most genderfriendly top management team of any Nigerian bank, with three female executive directors.

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In fact, Fidelity staff are believed to be one of the best remunerated in the industry. It also has perhaps the most genderfriendly top management team of any Nigerian bank, with three female executive directors

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Organic growth strategy How does Fidelity plan to operationalise its tier 1 ambitions? Okonkwo prefers an organic strategy, but would also consider acquisition opportunities if they align

with the bank’s strategy. Does Fidelity plan to raise new capital? There are no immediate plans to do so, the chief executive says in response. But it could seek funding in the local debt market during the course of the year. In any case, it sold a $400 million Eurobond in the 2017 financial year. Asked what his strategies for growth are, Okonkwo highlights three things: Digitisation, especially via its“Fidelity Mobile” platform, has attracted more than 1 million new customers in the past three years. In fact, digital banking now accounts for over 25 percent of the bank’s fee income. The bank is also counting on its digital banking platform to drive down the cost-to-income ratio to 50 percent (72.7 percent in Q1 2018) by ensuring at least 90 percent of total transaction volumes are via digital channels.“We will enhance our robust electronic banking processes and products thereby deepening our hold on the retail and commercial markets, small

and medium scale enterprises and niche corporate clientele”, Okonkwo told shareholders in May at the bank’s 30th Annual General Meeting (AGM) meeting in Lagos. For its SME clients, the bank plans an “SME Funding Fair” where it aims to fund as many SMEs as possible to the tune of N500 million. If successful, it would become an annual event, Okonkwo says. Bottomline, Fidelity aims to be the “go-to bank for SMEs”. Fidelity also sees growth potential in the fast moving consumer goods, manufacturing, retail and agriculture sectors and has set a 2018 loan growth target for these sectors of 10 percent. • The column is a partner statement I wrote for Fidelity Bank Plc following a business editors’ meeting with chief executive Nnamdi Okonkwo in June 2018. It was published by African Business magazine in July 2018

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When the worst of the best is better than the rest

KEHINDE BAMIGBETAN BAMIGBETAN is Commissioner Ministry of Information & Strategy, Lagos state

he set theory is a commonsensical heritage of arithmetic. By defining a selection from a universe as a set, it makes value judgments that could relate to the mass. The Economist Intelligence Unit, the research arm of the highly prestigious Economist newsmagazine experiments with the set theory every year. To execute its livability survey, it selects 140 cities out of millions of cities across the world. This means a set of 140 cities out of a million plus universe of cities. That a city qualifies to be among this chosen few is a loud announcement of its arrival in the league of international destinations of commerce, industry and tourism. It means it is being benchmarked in its region as the most important place people are likely to visit and companies are likely to open shop in that region. That is the positive message for Lagos: that its struggle to modernize its infrastructures and services has attracted the attention of the international players so much that is has been recommended for this study. Curious to know why and how Lagos got into the select group of 140 cities, I sent a tweet to Roxanna Slavcheva, the head of the City Practices Unit of the EIU, who put together the research. Her reply:

“To answer your question simply, the inclusion of Lagos in the survey was motivated by client demand. Currently we have a fixed list of cities that we conduct the live ability survey for. The ranking is globally focused on business centres around the world. That is why our survey is global and seeks to quantify tangible challenges to lifestyle according to the same set of criteria across all 140 locations.” The live ability report is an advisory data motivated by the need to give multinational companies seeking to send their staff to locations across the world a guide on what to pay them while there. How does the rating work? Read the EIU: “The concept of live ability is simple: it assesses which locations around the world provide the best or the worst living conditions. Assessing live ability has a broad range of uses, from benchmarking perceptions of development levels to assigning a hardship allowance as part of expatriate relocation packages. The Economist Intelligence Unit’s live ability rating quantifies the challenges that might be presented to an individual’s lifestyle in any given location, and allows for direct comparison between locations. Every city is assigned a rating of relative comfort for over 30 qualitative and quantitative factors across five broad categories: stability; healthcare; culture and environment; education; and infrastructure. Each factor in each city is rated as acceptable, tolerable, uncomfortable, undesirable or intolerable. For qualitative indicators, a rating is awarded based on the judgment of in–house analysts and in–city contributors. For quantitative indicators, a rating is calculated based on the relative performance of a number of external data points. The scores are then compiled and weighted to provide a score of 1–100, where 1 is considered intolerable and 100 is considered ideal.

The live ability rating is provided both as an overall score and as a score for each category. To provide points of reference, the score is also given for each category relative to New York and an overall position in the ranking of 140 cities is provided.” The EIU, a private research consultancy, did not survey all the cities in the world. Rather, it looked at locations “around” the world. Therefore, it couldn’t have reported on an assignment it did not undertake. It chose 140 cities across regions and ranked them based on its live ability indicators such as social stability, healthcare, culture, environment, education and infrastructures. This report is an annual research product or book sold to countries, companies and individuals. In marketing the report to attract the patronage of this global clientele, the EIU put a nice spin on it by branding it as a “world” report. That is not the problem. The problem is that the media gullibly swallowed it hook, line and sinker and misrepresented a survey of 140 cities as a survey of the world’s millions of cities. This hasty generalization is logically fallacious and calls to question the failure of rigour among the gatekeepers who are responsible for interrogating information disseminated by a company in a bid to sell its product before uploading for public consumption. It is more depressing that no controversy over the indices used is trending on Facebook, blogs and twitter handles of the country’s commentariat. For instance, this report uses New York, United States as its reference city. To demonstrate the contradictions of this modernization model which has been criticised by Third World scholars such as Samir Amir, Bade Onimode and others, resource mobilization influences the provision of infrastructures and services by cities. Considering prudent management as a constant factor between Lagos and New York, the

massive difference in the resources available to both cities already shows which lags behind the others. In 2017, New York City Council budgeted $82.2 billion (N29.5 trillion). Same year, Lagos budgeted N7.2 trillion. Or consider population. With hourly migrant figure of 186 persons, Lagos chokes under a population weight of 22 million people. New York’s most current census of 2015 puts its population at 8, 556,405. Let us add the increase over the years generously to estimate as 10 million today. Matching both resource and the population for both cities, we can see where the pendulum swings. Vienna, the best of the report’s 140 countries, spent 4 million US dollars to service its population of 1,800,000 residents in 2017. The failure to critically review the report from the perspective of economic development and appreciate the location of each of these cities in the international system of trade and development is a recent handicap of Nigeria’s media scholarship. It is indeed surprising that few, if any has bothered to read the report .The drawbacks in Lagos’ strive to catch up with the world such as the neglect it has suffered since the movement of the federal capital to Abuja and the denial of resources needed for its development due to its political distance from the party controlling the federal government for 16 years of the current democratic dispensation are well known. Today, 37 of the 57 local authorities of Lagos State still demand and deserve federal allocation. Despite these challenges, the reality is that Lagos is not resting on its oars. With the bold and daring push of its helmsmen-Bola Tinubu and Raji Fashola- since the resumption of democratic rule, the megacity has been experiencing transformation in all spheres and playing catch up with centuries –old metropoles. This

momentum has been scaled up in the last three years under Governor Akinwunmi Ambode with the massive investment in infrastructures earning the city the description of “a huge construction site”. Lagos not only means business, it is reforming its processes digitally and humanly to set up shop as the most desirable destination for commerce, industry and tourism. The emerging landscape of the 10-lane Murtala Muhammed Airport Road, Oshodi Transportation Interchange, the JK Randle Cultural Centre, the development of waterways and rail infrastructures, Oshodi-Abule-Egba Bus Rapid Transport route and first DNA centre in West Africa gradually rises into view. But it is not all about brick and mortar. More powerful testimonies are being recorded in entrepreneurship as billions of credit to small and medium scale businesses through the Lagos State Employment Trust Fund drive the jobless from the streets to factories. The deployment of massive security personnel and equipment, including CCTV technology and street lights elongate the city’s business into the wee hours of the morning. Social inclusion policies have brought the disabled, the youth and the women closer to public resources. Town hall meetings have shown an administration committed to good governance and transparency. These have contributed to the resilience that was globally acknowledged last year. Ranking 138th among business locations across the world is the recognition that Lagos has left behind millions of many other cities, including the federal capital, Abuja, to be among the 140 demanded by businessmen. And that is enough reason to conclude that the allegedly worst city among the world’s best 140 is, indeed, better than the rest.

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Frank Aigbogun EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya

EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

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

Tuesday 21 August 2018

When a government adopts falsehood as policy

hen the global corruption watchdog, Transparenc y In t e r n a tional (TI) released its 2017 Corruption Perception Index (CPI), which ranked Nigeria 148 out of 180 countries despite the efforts of the Buhari administration to tackle corruption in the country, the federal government went into denial mode, accusing TI of bias. After reeling off its own facts on fighting corruption in Nigeria, the presidency dismissed TI’s report as “a political distraction” given that some critics of his administration are patrons of the watchdog. It did not matter to the government that as an opposition party, it had consistently relied on TI’s ranking to discredit the previous government and position itself as a better alternative. The rational thing for the government to do if it disagreed with Nigeria’s ranking, is to fault the integrity of the primary data source (methodology) - which was not generated by the watchdog anyway – used for the study. But no, it did not. It couldn’t have anyway. Instead, it went the lazy way – attacking TI just because some of its board

members, who are Nigerians and are within their rights to hold their personal views, are critics of the Buhari administration. What a shame! But if we thought that was the lowest the government could go, it descended further into outright lies when the Brookings Institution, drawing its data from the World Poverty Clock, released its report, showing that Nigeria has overtaken India as the country with the most people living in extreme poverty in the world. Details of the report shows that Nigeria now has over 87 million of its citizens living in extreme poverty compared to India’s with just 73 million. But whereas, India, with a population of 1.35 billion, has continued to see a rapid decline in the number of its population leaving under extreme poverty, Nigeria, with just a population of under 200 million, has continued to see its desperately poor population rising at an alarming rate. According to the report, extreme poverty is growing by six people every minute in Nigeria while poverty in India continues to fall. Pronto, th e g o v ernm ent rolled out its propaganda machines to counter the report with otherwise intelligent ministers coming to voice inanities and outright lies to refute a fact that is as clear as daylight. It did

not bother the government that every rational individual with basic knowledge of economics can see clearly how its illconceived policies since 2015 have been throwing millions of Nigerians into extreme poverty. Now, even more insulting to Nigerians is government’s feeble attempts to deny and fault a UN report that the Nigerian government had paid “huge ransom” for the release of the kidnapped Dapchi school girls in February. The report identified these ransom payments as the major factor fuelling the nefarious activities of Boko Haram and other terrorist groups in the region. Now, virtually everyone with knowledge of Boko Haram activities and the negotiations that went into the release of some of the Chibok and later Dapchi girls know that the Nigerian government has been paying ransoms to Boko Haram – and it is indeed these ransom payments that is fuelling further kidnaps by the sect and largely funding the activities of the terrorist sect. It therefore beggars belief that the government is trying to deny the obvious! From these instances, what is becoming clear is that the government has adopted a policy of deliberate falsehood and disinformation as a means of communication and it is do-

ing great damage to the image of the country. These reports are results of carefully conducted research and facts gathered on the field by respected and apolitical international/global agencies. The reports are respected and accepted worldwide and most countries rely on them to formulate policies and or programmes. It therefore does not show us in good light when the Nigerian government tries to deny these reports just because they reveal inconvenient truths. The government may have come to power through propaganda, but it cannot continue to govern through propaganda while labelling all critical voices liars and agents of corruption. It may rely on propaganda to keep its support base, but it cannot rely on propaganda to gain international support and recognition. It’s rather making a mockery of the country and its intelligent people. Besides, the government’s belligerent attitude to factual reports and data about the country questions its capacity to listen to genuine criticisms and change course when it’s in the wrong. With a government that is impervious to criticism and accepts no wrong, Nigeria may be headed for the rocks except a miracle happens!

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Tuesday 21 August 2018

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APCON board re-constitution litmus test for Ikechi Odigbo-led AAAN

‘GEM’s mission is to enhance growth in light manufacturing industry’

… Industry practitioners expecting actions

Stories by Daniel Obi Media Business Editor

igeria’s Integrated Marketing Communication industry is relying on Association of Advertising Agencies of Nigeria, AAAN to lead the pack in negotiating and convincing Buhari administration to re-constitute the board of Advertising Practitioners Council of Nigeria, APCON. The absence of the APCON board in the last three years has not allowed the advertising apex body to function at full capacity and this has cold implications for the advertising industry valued at about N150 billion. Statutorily, AAAN has the largest number of 10 members in the 21 board membership of APCON. Though, out of the 10, it has ceded one each to OAAN and MIPAN respectively. Recently, the new president of AAAN, Ikechi Odigbo promised that there are plans to push for the proper constitution of APCON council. He did not elaborate. When he took office at the association’s general meeting in Abeokuta last month, Ikechi said “there are plans to push for the proper constitution of the Advertising Practitioners’ Council of Nigeria (APCON) Council”. The statement is however not certain whether he is leveraging the previous president, Kayode Oluwasona’s plans or he wants to construct another strategy for this purpose

Ikechi Odigbo

under his administration. According to sources, the statement will amount to rhetoric if there are not enough influence and sway on the presidency in Abuja since government sees the constitution of APCON council as a political decision. Another possible move could be to wrest APCON from the tight fist of government, move for the amendment of the law and allow it to operate independently with industry funds, the source said. The industry is therefore watching on which way Ikechi goes to realize industry expectation. For over three year, APCON, Nigeria’s advertising apex regulatory body is yet to function at full capacity

Ijedi Iyoha

due to absence of a board. During his tenure, Kayode pushed the agenda for APCON council re-constitution vigorously. In July last year, Kayode led a delegation to the Vice President, Yemi Osinbajo to plead with him for the board to save advertising practitioners from undue exposure and protect the country’s image by re-constituting APCON council. Oluwasona recognized that the absence of APCON made it difficult for the country to achieve descent and progressive advertising. He recognised that the non-constitution of the council has had grave implications for the industry. “So you can imagine in the last three years APCON

had barely had a council for longer than four months. And when the council is not there, our trade, our business, our industry actually suffers over exposure. The kind of campaigns, communication that is responsible, decent, progressive advertising cannot be achieved because it is the council that is set up to drive it.’’ Kayode attributed the unwholesome campaigns seen in the last national elections happened because there was no regulatory body to control political advertising. Kayode has however handed over the baton to Ikechi to continue where he stopped. Advertisers are waiting for the next move on this objective.

made by the President of Rotary Club of Akowonjo, Rotarian O labisi Taiwo during her investiture as the 3rd female president of the 33- year old club chattered by late Past Governor of Rotar y International District 9110, Martin Itotoi recently at the Westown Hotels, Ikeja, Lagos. In an interview after the event, the president said all was set for the commissioning of some of the club’s projects in the Alimosho/

Akowonjo area of the state by the District Governor, Rotarian Kola Sodipo. She identified the projects for commissioning to include the ICT facility at Abati/Rauf Aregbesola Primar y School, Alimosho; Flag off of the 2018 Adult Literacy Programme; launching of a new Adult Literacy Signage erected for the school by her club; Tree Planting at the school’s premises and donations to the Little Saints Orphanage,

try due to its huge potential for growth and job creation. “The current intervention is restricted to the automobile spare parts sub-sector, to assist the ever-growing need for vehicle spare parts across the country and government’s drive for import substitution responsibility. In a bid to start up the intervention with clear understanding of the value chain, GEM implemented an industry mapping of Nnewi automobile spare parts hubs, concluded a study on legality/licensing of replacement auto parts manufacturing in Nigeria (using Anambra and Kaduna as key areas of field research). The result of the survey reveals that most of the replacement parts produced by MSMEs in the Nigeria automobile spare parts industry are generic and do not infringe on the Original Equipment Manufacture’s (OEMs) Intellectual Property. In addition, GEM further said that it commissioned additional study in some other sub-sectors within the light manufacturing industry, aimed to spur investments and enhance their performance. The key objectives of the studies is to identify opportunities and market failure(s) for each sector with the focus of uncovering the potential areas for development through public and private sector investments. The study is therefore, expected to produce a market assessment report for the automotive / spare parts sector, the renewable energy industry and six (6) value chains in the Agroprocessing industry, which includes; Cocoa, Citrus, Cassava, Sugarcane, Tomatoes and Sesames.

Star Beer extends millionaires campaign

Rotary Club of Akowonjo earmarks project for execution, commissioning otary Club of Akowonjo, one of the clubs under the Rotary International, Nigeria, is set to commission various projects in the Alimosho Local Government Area of Akowonjo the club’s immediate catchment community which also is the largest local government in Lagos State. This is in line with the club’s promise to execute impactful projects for the 2018 to 2019 Rotary year. This revelation was

he last few decades have given birth to the rise of light manufacturing and this has in turn resulted in a dramatic rise to the country’s national income. It is not news that laborintensive industries provide growth opportunities and have become key economic drivers of many nations, this is why it is key to capture the opportunities arising from the relocation of light manufacturing from higher-income countries to lower income nations. To support this effort, GEM Project said it is investing in a number of initiatives including: Leather: Recognizing the important role of the leather sector to the Nigerian economy, the GEM Project said it is providing huge support in the development of the first Nigerian leather policy. “In line with Government’s commitment to diversifying the economy from oil to nonoil economy, and the position of leather as both domestic industrial raw material and export commodity, the GEM Project provided some expertise and funding to the multistakeholders’ effort to produce the much overdue policy that will govern the operation of the leather industry in Nigeria. The draft policy, which was validated in Sokoto and Aba by relevant stakeholders has been submitted to relevant Ministries and awaits presentation at the Federal Executive Council for consideration and approval. Automotive Industry: One of the key sectors of development is transportation; GEM, in a statement said it provided support to this indus-

Shasha, Alimosho, Lagos. According to Taiwo, the District Governor’s visit will give the club an opportunity to raise funds towards further execution of other projects within the Rotary year. As she puts it, “after the day’s projects commissioning, the evening fellowship with the District Governor will culminate in an auction sale with the immediate proceeds going to District 9110 Educational and Welfare Endowment Fund (DEWEF)”.

tar Lager Beer, has extended the Star United We Shine Millionaires Promo by another 30 days to allow for more consumers in more regions of the country to partake in the promo and win. The promo which was launched on the 15th of June, 2018 will now end on 15th of September, 2018 a month after the original end date. Consumers will continue to win prizes and millions of Naira from the crown corks of Limited Edition Bottles

Of Star Lager with a winning code that is redeemable via a USSD dial of *566*20# . The Star Lager promo has on offer cash prizes of N1 million, N2 million, N5 million and the mega dream cash of N10 million for Star consumers across Nigeria. These are in addition to millions of free drinks and other items available for win. Designed to reward loyal consumers, Star Lager with this move, is reinforcing its commitment as a consumer focused brand.

BUSINESS DAY

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‘Experiential marketing is biggest tool to engage consumers for value’ Owolabi Mustapha is the CEO of Maxxconnection, a five year old experiential marketing agency based in Lagos. Within five years of operation, it has made great strides in creating platforms for brands and consumers to interact with results to show. Owolabi said CMOs now appreciate the value experiential activity has brought to the marketing mix. He discussed other advantages and challenges the industry faces. Experts What is your assessment of the experiential marketing industry so far? xperiential marketing industry started very small some years back. Advertising and other segments of IMC had led the pack until about a decade ago when experiential took the center stage. Before experiential, CMOs of multinational were skeptical, about the value of experiential. But it is interesting to see these days that everybody now appreciates the value of what experiential has brought in the mix of marketing. Today, multinational now invest more in the experiential industry. Experiential was a major form of brands connection in 70s, then it disappeared to resurface again in late 90s, what happened? It was not experiential that time. It was just promotional activity as part of advertising. The traditional advertising used to have promotional part. At that time, there were not really media independent agencies. The practice then used to be a one-stop shop where advertising agency used to have media and promotion department among others. With the evolving and dynamic world, the media has to change direction. Because of the evolution of media in conventional advertising, they had to carve out their niche out of advertising. It is argued that experiential activity is expensive in the basket of media, PR, advertising and digital, do you agree? Experiential is about value and value comes with cost. The argument whether it is expensive or not should not arise because experiential gives the most value. Others don’t translate to target engagement as experiential does. The value of experiential is not quantifiable. Another challenge is that experiential is limited in scope and operates in a particular area, what is your comment on this? In marketing, you need to identify the challenges that you want to address. After that you still need to distil your target audience. If my target audiences are in a particular area, I don’t need to waste time and resources being everywhere. If your target

Owolabi Mustapha

audience is the entire nation, of course experiential marketing can address it. There are different strategic approaches to address different challenges. Majority of multinational companies have more of experiential agencies working for them than the other agencies. This is global phenomenon. You can employ advertising to reach to mass audience and use PR to allow people read about the product but when it gets to the point that the product needs to be dropped directly to the people that need the service, it is experiential. The value comes when the people engage the product or buy it. To what level would you say the government has engaged experiential firms to deliver services to the citizens? It is interesting to know that some of the biggest campaigns from government are handled by experiential firms. For instance one of the biggest campaigns in Lagos is the count-down in December. This is a multi-million naira project. The activities around it are driven by experiential firms. For us, we have worked with a couple of state govern-

ments in Nigeria. We have done lots of political campaigns. Other experiential firms are doing other activities for other states. Experiential marketing is one of the biggest tools to engage people for value. What is the place of measurement in experiential marketing activity as clients are passionate about impact? There are different approaches to measurement. It depends exactly on what you are measuring. If it is data, experiential marketing delivers it and that is why multinationals are engaging experiential agencies. Secondly,

there is the connection and the experience which experiential gives. We are bringing experience that is uniquely designed for a particular product on the table. I repeat that experiential is not about cost but the value. Unique experience that comes with experiential marketing lives with the people and it leads to uptake. In terms of creativity, experiential agencies are doing very well. They come up with ingenious creativity. We have done job for a client that involves brand engagement, sales and CSR at the same time. Any other IMC segment will address just one of them but we addressed the three challenges. The Nigerian Bottling Company campaign of taking people off the street was conceptualized by us. It was an idea of taking people off the street without applying force by giving them opportunity to sell NBC products and rewarding them with N1m. You established Maxxconnection 5 years ago, so what actually motivated you to start the firm? Movement is normal occurrence in human life either through challenges, the creative ingenuity and other couple of indices will determine movement. We looked at the industry and there were some quacks within the industry space, others are not tech driven and we thought that there was need for a unique agency that prides itself on creativity and technology. Our campaigns exhibit these features. Our Coca Cola campaign was example of really driving engagement. Your work on Campari drink was marvelous with Tuface as the ambassador. Could you talk more about it? In Maxxconnection, we take

In marketing, you need to identify the challenges that you want to address. After that you still need to distil your target audience. If my target audiences are in a particular area, I don’t need to waste time and resources being everywhere

research very seriously. Before any campaign, we engage thoroughly on research. Research gives you insight of what you want to do in the short, medium and long term period. We did extensive research on Campari as a brand. We looked at the journey of Campari and found that it was perceived as drink for the old. But these days, youth mix it with their beer. The campaign was driven on proper positioning of the drink as a youthful brand. Again, Trophy Beer is now everywhere but some years ago, it was perceived as Yoruba, Illesa drink. We are part of the success story of that brand today. The consumers are telling the story. How do you see experiential business in the next 5 years and where is the place of Maxxconnection? A whole lot of things will change for us and for the industry in the next 5 years. There will be a lot of strategic association and affiliation either local or foreign. Experiential will be placed in a better position as it is happening globally. There will be a lot of mergers and acquisitions in the industry. Also there will a lot of tech driven activities in the industry. Could you to talk more of your strength and challenges? We pride ourselves to be very young and this reflects on the employees. We believe that the power belongs to the youth and that is one of the strengths. We have also tried to retain most of our staff since inception. The challenges are enormous. It is a systemic and national problem. For instance the forex is not bringing strategic investment into the country. If this does not happen, it then limits most of the activities and number of clients for agencies. We have two clients that ought to have come in three years ago, and they are not certain about Nigeria’s system. Secondly electricity is a major challenge. It is costs us heavily to fuel the generator. There are a lot of unprofessional agencies in the industry and unfortunately, some clients still work with them because they charge ridiculous fees and some clients have got their fingers burnt. Financing and funding is a major challenge for the business as single interest rate is difficult.

Tuesday 21 August 2018

BUSINESS

COMPANIES & MARKETS

DAY

Nigerian Development Finance Institutions total assets up 36.8% to N1.3trn

Pg. 16

Co m pa n y n e w s a n a ly s i s a n d i n s i g h t

Ugandan authorities demand MTN listing on local bourse for license renewal

operating license that is set to expire in October. Godfrey Mutabazi, head of Ugandan Communication Commission (UCC) told Reuters that Ugandans should be able to own a stake in MTN Uganda which has been in operation for 20 years in the country. “We are evaluating the

conditions of the license renewal and that is one of the points we are discussing.” Mutabazi said referring to a possible listing on USE. In addition, when he was asked if the condition was a prerequisite for prolonging MTN’s license, he replied saying it was right. “The firm had not shown

any resentment to that proposal”, Mutabazi added. The firm has dominated the market in Uganda throughout its two decades in the East African country. It is the largest telecommunications firm by subscribers, followed by a unit of India’s Bharti Airtel and other smaller players.

The listing of MTN’s shares would cause a boost to the local stock exchange ust like Nigeria, the which is still quite small, Authorities in Uganda with 16 firms as of July 2014. have asked MTN’s The local stock exchange had group to list some of not attracted an Initial Public its shares on the local Offering (IPO) in Six years stock exchange, Uganda Sesince its last IPO of Umeme curities Exchange (USE) as (UMEM), a power distribua condition for renewing its tion company on the USE in 2012 until this month when a local drugs maker was listed on the exchange. “MTN is an investor here and they have been here for 20 years...to go beyond, I would argue that they have been here long enough they should be identified as Ugandans and the only way to do that is to list so that Ugandans can have a stake in that company,” Mutabazi said. “They should warm to the government desire to have some of their shares listed.” Mutabazi concluded. Recently, MTN Uganda has faced criticism on social media platforms like Twitter and Facebook from some subscribers about data bundles getting used up quickly, does not download music Adesola Adeduntan, managing director/chief executive officer, First Bank of Nigeria Limited (third right) flanked by some FirstBank customers, Ayo Daniyan (left), Mayowa Daniyan (second left), Onyejekwe Nnaemeka (third left), Nicholas Okonkwo (second right) and the firm not responding to their complaints. and Safiyanu Faisa (right) at the FirstBank Voice of Customer held with the Retail Youth segment in Lagos recently CYNTHIA IKWUETOGHU

Lifemate offers 55% discount on products in celebration of Eid El Mubarak MICHEAL ANI

igeria’s leading furniture manufacturing company, Lifemate Furniture is offering 55 percent discounts on its products as part of activities to mark celebration of Eid El Mubarak. The Ileya promo which is promises to reward customers this celebration period, from range of products carefully designed to make life better for Nigerians. Derek Dai, managing director of Lifemate Nigeria Limited, while unveiling series of exciting packages to celebrate the Eid El Mubarak in Lagos said the company will continue to put the interest of the Nigerian people first as the company itself is a Nigerian company even though owned by Chinese investors. The furniture giant reiterated its commitment and determination to setting the

pace in pushing for economic and social development in Nigeria through job creation and quality training to its staff across board. “We are relentlessly committed to unemployment reduction as we currently have over three thousand employees on our payroll” said Dai According to Dai, potentials of Nigeria are clear for the world to see. “The country is blessed with natural resources that aids production and we as a company will remain here contributing our quota to ensuring that Nigeria achieve her development and growth objectives” he concluded. The company in its culture of moving round major Nigerian cities for trade exhibitions is currently in Abeokuta, the Ogun state capital for trade exhibitions tagged “2018 Lifemate Abeokuta Trade Fair” The exhibition took off 17th August and will run till 31st of August and as usual with trade

exhibitions, all products on display comes with 50 percent discount during the fair. On his part, Midian Nanle the Ogun state chairman of union of civil engineering, construction, furniture and wood workers in Nigeria described Lifemate as a leader in the furniture space in Nigeria, offering quality office and home products that can stand the test of time. In the last 18 years the company since its entry into the Nigerian market has not looked back in driving innovation for the development and manufacturing of high quality home, office and outdoor furniture; sanitary wares ; kitchen cabinets, massage chairs and other interior décor materials. Lifemate in line with its policy of easing access to its products has showrooms in Oregun, Lekki and Shoprite in Ikeja all in Lagos. Other showrooms are in Abuja, Port Harcourt, Ibadan and Warri.

In May U C C s a i d i t would investigate MTN after criticism on social media about its mobile money policies. Mobile Money is a cell phoneborne service popular in Uganda and across East Africa that allows individuals to transmit cash between themselves and also quickly pay for goods and services. An extra headache for MTN and other telecoms in the country is also coming from a new tax measure on access to use of popular social media platforms like Facebook and WhatsApp which some analysts think will hurt growth in the sector. As part of the conditions of relinquishing part of MTN’s $5.2 billion fine, the company is expected to list on the Nigerian Stock Exchange. The Securities and Exchange Commission said recently it is awaiting the papers of MTN. According to the group’s financial results in 2017, MTN Uganda has a subscriber base of 10.7 million. It’s revenues for the year also surged by 10 percent to $356.34 million.

Use, payment for music royalties to be enforced in new copyright agreement

fforts to ensure that creative and talent is adequately rewarded in Nigeria’s music industry has received a boost with the reaching of a pact and signing a copyright contract for the exploitation of music in broadcasting and payment of royalties. The Broadcasting Organisations of Nigeria (BON) and the Musical Copyright Society Nigeria (MCSN), recently reached a pact and signed a copyright contract for the exploitation of music in broadcasting and payment of royalties. The contract was signed at a ceremony in Lagos between the managements of the MCSN led by its chairman, the legendary reggae Artiste, Pupa Orits Williki, and

the chairman, BON Copyright Committee, Kenny Ogungbe, who stood in for BON chairman, John Momoh respectively. Ogungbe explained that by the agreement, BON has been granted what can be described as a blanket licence by MCSN for the use of music in broadcasting by its members. “BON as a law abiding organisation has signed this agreement today in fulfillment of the law regarding the use and payment of royalties for the exploitation of music on our platforms. And it is hoped that by this agreement,a glorious dawn is here for our musicians who have lived in penury for too long”. On his part, the chairman of MCSN, Orits Williki

described the event as historic and declared that by the signing of the agreement the good times are here for musicians who have hitherto lived in penury. “I have always maintained that Nigerian musicians have no business with poverty if our copyrights are properly enforced. By this agreement,MCSN will ensure that all musicians are adequately rewarded for the exploitation of their works”. The CEO, MCSN there invites all Musicians, including owners and managers of works as well as young, established and rising Artistes to join the Premier and Authentic copyright society with the largest Repertoire as it restructures to connect creativity with prosperity.

BUSINESS DAY

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Tuesday 21 August 2018

COMPANIES & MARKETS Nigerian Development Finance Institutions total assets up 36.8% to N1.3trn HOPE MOSES-ASHIKE

he total assets of the even Dev e l o p m e nt Fi nance Institutions (DFIs), including Development Bank of Nigeria (DBN) and the Nigeria Mortgage Refinancing Company (NMRC), increased significantly by 36.8 percent on a year-on-year basis, to N1.3 trillion at the end of December 2017. The other DFIs include Bank of Industry (BOI), the Federal Mortgage Bank of Nigeria (FMBN), Development Bank of Nigeria (DBN), the Nigerian Export-import Bank (NEXIM), the Bank of Agriculture (BOA), the Nigeria Mortgage Refinancing Company (NMRC) and The Infrastructure Bank (TIB).

Analysis of the asset base by institutions indicated that the BOI accounted for 54.2 percent of total assets, FMBN 19.5 percent, the DBN 11.6 percent, the NEXIM 5.6 percent, the BOA 5.3 percent, NMRC 3.2 percent, and TIB accounted for 0.6 per cent of total assets. Similarly, the paid-up capital of the sub-sector increased by 2.7 per cent (yearon-year), to N236.99 billion, at end-December 2017. The net loans and advances of the institutions also increased by 21.3 percent to N693.75 billion in 2017, above N571.85 billion in 2016. The proportion of the industry net loans and advances, attributed to each institution, were: BOI, 73.3 percent; FMBN, 19.3 percent; NEXIM, 5.6 percent; NMRC, 1.1 percent; BOA, 0.6 percent; TIB, 0.1 percent; and

DBN, 0.03 percent. The shareholders’ fund increased to N247.31 billion in 2017, from N205.35 billion in 2016 due, mainly, to the consolidation of the financial data of the NMRC and the DBN. The draft annual report of the Central Bank of Nigeria (CBN) noted that the 3rd Bi-annual Consultative Forum for the stakeholders of the Development Finance Institutions was held in Abuja in 2017. The Forum identified weak corporate governance, poor risk management and inadequate capital as major challenges confronting the sub-sector. The Forum recommended policy options to address the challenges, enjoined stakeholders to guard against mission drift and reiterated the need for them to pay-up outstanding

equity contribution. The report disclosed that the total assets of the Nigeria Mortgage Refinance Company (NMRC) stood at N42.26 billion at end-December 2017, compared with N41.57 billion at end-December 2016. Similarly, refinanced mortgages increased by N0.15billion to N8.15 billion in 2017, above N8.0 billion in 2016, reflecting the creation of additional mortgages. The adjusted capital of N9.693 billion was higher than the minimum capital requirement of N5.0 billion for the Company. Similarly, the capital adequacy ratio and adjusted capital to net credit were 139.83 and 1:1.84 at the end of December 2017 and complied with the regulatory minimum and maximum of 10 per cent and 1:10, respectively.

FBNQuest Merchant Bank assigned “A” rating by Agusto & Co MICHEAL ANI

BNQuest Merchant Bank, the investment banking and asset management subsidiary of FBN Holdings Plc has been assigned ‘A’ rating by Agusto & Co. Limited, according to a statement published Friday, on the website of the rating agency. The rating agency said the rating reflects the bank’s affiliation with FBN Holdings, the non–operating holding company of one of the largest banking and financial services organisations in Africa with an asset base of N5.2 trillion(N15.7 billion @ 358;331/$) as at 31 December 2017. The bank was ranked first on local currency deposits of the five merchant banks operating in Nigeria as at FYE2017, but ranked fourth by total assets and contingents due to its experienced and stable management team which provides oversight of its daily operations. The rating recognises FBNQuest MB’s good capitalisation and good profitability during the period, supported by its acceptable asset quality, investment banking expertise and trading activities. “Nonetheless, FBNQuest MB’s rating is constrained by concentration in its loan portfolio which renders it vulnerable to adverse changes

in the performance of its lending sectors and obligors. The opinions expressed in this rating release do not represent investment or other advice and should therefore not be construed as such.” The rating agency said in a press statement. Agusto & Co is Nigeria’s first Credit Rating Agency and a Pan African leader in credit ratings and credit reports. It has assigned well over 1,500 ratings across various sectors. Our ratings are globally accepted, and a wide client base utilizes our ratings as benchmark for business. FBNQuest Merchant Bank recently acted as Lead Financial Adviser & Issuing House on the Listing by Introduction of the entire issued and paidup ordinary shares of Notore Chemical Industries Plc on the Main Board of the Nigerian Stock Exchange (NSE). The transaction added to FBNQuest Merchant Bank’s impressive portfolio of clients it had supported. It also highlights its capabilities in the successful execution of sizeable capital market and commercial debt transactions. Kayode Akinkugbe, Managing Director of FBNQuest Merchant Bank said: “We are proud of the instrumental role FBNQuest Merchant Bank played in this transaction, and appreciate the trust Notore placed in us to assist them. Our clients remain our priority, and we strongly believe their success is our success.

Lagos Digital Academy commits to empowering business professionals Darling Nigeria street Catwalk across various locations in Lagos showing their new innovative range of hair products.

HOPE MOSES-ASHIKE

Air Peace will unite Nigeria with flight operations - Onyema IFEOMA OKEKE

ir Peace, one of Nigeria’s leading carriers, says it’s embarking on massive expansion of its domestic flight operations to close the gap in air travel across Nigeria and also build bridges of unity in Nigeria. Allen Onyema, chairman/ chief executive officer of Air Peace made the remark in Kaduna in an address to mark the commencement of Air Peace’s daily flights from the Murtala Muhammed Airport, Lagos to the Kaduna International Airport. The launch of the airline’s Lagos-Kaduna service came exactly a week after the carrier started scheduled flights from Lagos, Abuja and Accra to Roberts

International Airport, Monrovia, Liberia. Onyema, who was represented by Chris Iwarah, corporate communications manager, Air Peace described the launch of the carrier’s Lagos-Kaduna service as a “significant milestone in our vision to unite our dear country, Nigeria through air travel and lift the nation’s economy through trade facilitation and massive job creation.” He said the airline, which also launched its daily flights to Kano and Yola on February 12 and 15, 2018 respectively, was working on setting up mini-hubs across Nigeria and the West Coast of Africa to strategically fix the challenges of air travel. “Our plan”, he said, “is to massively expand our operations from our base in Lagos into mini-hubs across all re-

gions of Nigeria and the West Coast of Africa. We assure you that the North of Nigeria will be one of the biggest beneficiaries of the massive expansion of our route network and fleet capacity. Since the first quarter of 2018, we have begun to take delivery of the six 50-seater Embraer 145 aircraft we recently acquired to serve cities with air transport difficulties under our subsidiary Air Peace Hopper. “There is no doubt that as the leading and biggest airline in Nigeria with a fleet size of 24 aircraft, we are now more positioned to transform air travel experience in Nigeria, the West Coast of Africa and beyond. But more importantly, we are proud to use our flight services to build bridges of unity in Nigeria. We are not just achieving this by extending our flight op-

erations across Nigeria without restriction, we also are doing so with our employment policy that does not discriminate on the grounds of religion, tribe and creed.” Onyema assured air travelers on the Lagos-Kaduna route of efficient, on-time and safe flight operations. “We are coming into the Kaduna route with a reputation for on-time performance and uncompromising stand on matters of safety. We promise to leverage the experience of our skilled staff and excellent business model to end the challenges of air travel on the Kaduna route and make Kaduna more accessible to leisure and business travellers,” he said. On his part, Shehu Idris, the emir of Zazzau, praised Air Peace for commencing flight operations to Kaduna.

he Lagos Digital Academy has launched a wide range of intensive and immersive digital marketing courses that empowers business professionals to make their products and services acceptable to potential consumers. Lagos Digital Academy is a social enterprise that is strongly committed to teaching and inspiring a new generation of digital professionals and entrepreneurs. Dotun Babatunde, founder/ managing director, said digital marketing was key to the success of any organisation. He admitted that the emergence of the mobile phone in the Nigerian market had changed the ways and patterns of doing business. “How best can you reach your customers? No other platform can give you that direct personal access to consumers

like the mobile phone. We have over 180 million Nigerians and averagely, people hold two to three network lines. In order to reach your consumers today, you have to be able to communicate with them on one-on-one basis,” Babatunde said. At the Lagos Digital Academy, participants are taught, guided and certifies by experienced practitioners from the digital marketing industry. Kunle Shittu, chief marketing officer, said training in digital marketing will lead to business growth, boost economic growth and enhance job creation. “We will be organising a free boot camp for Babcock University, University of Lagos and University of Ibadan. For us, we will not be charging them any fee; it is our own giving back initiative. They will make the necessary provision and we will take the training to their doorsteps. We will not rest until we have toured every university and polytechnic in Nigeria”, Shittu said.

Tuesday 21 August 2018

C002D5556

BUSINESS DAY

Tuesday 21 August 2018

C002D5556

Tips & Talking Points

Harvard Business Review TALKING POINTS Shopping Spree $20 billion: In the past year, China’s retail giant Alibaba and internet giant Tencent have invested more than a combined $20 billion to change the country’s consumer shopping habits. + A Digital Transformation Two-thirds: Nearly a decade ago, Xerox had begun heavily investing in new products and services for the digital age. By the end of 2011, two-thirds of the company’s revenues came from recent innovations. + Personal Development $11 billion: The thriving U.S. self-help industry is valued at an estimated $11 billion. + Women’s Worth $1.6 trillion: A study conducted by S&P Global reported that the American economy would be $1.6 trillion larger than it is today if female participation in the workforce had grown at the same pace as other advanced countries like Norway. + Looking Inward 10%: Although 95% of people consider themselves self-aware, only 10% to 15% actually are, according to research from author Tasha Eurich.

Does your team’s work style inconvenience remote employees?

Solve Complex Problems by Expanding Your Thinking

ife on a global team isn’t necessarily equitable. Employees far from headquarters often have less access to the team leader, and have to deal with regular inconveniences such as late night calls because they’re in a different time zone. As a manager, it’s your job to ensure that remote employees aren’t carrying an extra burden. Consider rotating the time of weekly team calls so that everyone takes a turn at having the meeting during regular business hours (or at the very least, find the least inconvenient time for your remote employees to participate.)

Even small courtesies can help distant team members feel noticed, such as translating meeting times into all the time zones that your people work in. And schedule periodic off-sites for the whole team to get together and connect. If your budget allows, you can even hold these meetings in different locations around the globe.

(Adapted from “How to Keep a Global Team Engaged,” by Andy Molinksy.)

oo many leaders approach complex problems with eitheror thinking: The answer is right or wrong, good or bad, win or lose. To cultivate a nuanced perspective, challenge your understanding of the problem. Ask yourself, “What am I not seeing here?” and “What else might be true?” Don’t seek out answers that just confirm what you already know. It’s also helpful to tackle this kind of challenge first thing in the morning, when your mind is fresh. Spend at least an hour on it without interruption. The dedicated time ensures that you give a complex issue the attention it needs — attention that might otherwise be consumed by less intellectually demanding tasks. And as you work, pay attention to how you’re feeling. Embracing complexity is an emotional challenge in addition to a cognitive one. You’ll need to manage tough emotions like fear and anger and get yourself out of flight-or-fight mode so that you can think more expansively.

(Adapted from “What It Takes to Think Deeply About Complex Problems,” by Tony Schwartz.)

Set boundaries when collaborating with a perfectionist Read the room before your next meeting

Instead of complaining about a colleague, talk to them

t can be exhausting to work with perfectionists. Their unrelenting standards can lead to unnecessary stress, conflict and missed deadlines. So how do you collaborate productively with them? To start, don’t internalize their expectations. Perfectionists tend to equate time with quality, so when you think a project is good enough to be considered done, you’ll need to be thoughtful and diplomatic in explaining why. Talk about the benefits of spending time on other tasks instead of getting every detail right on this one. You should also set boundaries so that your colleague’s nitpicking doesn’t interfere with your progress. For example, if

et’s be honest : Sometimes complaining about a co-worker feels good. But although it helps you release pent-up emotions, venting is a sideways move. In other words, we usually complain to a friend or colleague — and we rarely confront the person we’re complaining about. So the next time you want to complain, try taking it to the source of the problem. For example, let’s say a co-worker yells in a meeting. Your first instinct might be to complain to another colleague about their brash behavior. Instead, take some time to calm down. Think about exactly what bothered you and what you want to complain about (it’s not OK to yell and disrespect others in

the person sends you a lot of emails, each with a different question or suggestion, you might decide to respond once per day, but that’s it. And finally, focus on building your working relationship. Having a strong relationship will assuage your colleague’s anxiety, which is often the root cause of perfectionism.

(Adapted from “How to Collaborate With a Perfectionist,” by Alice Boyes.)

n every conversation at work, there’s the explicit discussion (the words being spoken out loud) and the tacit one — the things being communicated subtly. It’s important to know how to read a room so that you can understand what’s not being said. The best way to do this is to pay attention to the people in it. Note who’s next to whom, who’s relaxed, who’s not, who’s standing and who’s sitting. Look at their facial expressions, posture and body language. Does the mood in the room feel tense or relaxed? Then think about possible reasons for your colleagues’ emotional states. What’s

happening in their lives and jobs? This can be tricky if you don’t know the people in the room, but you can still come up with hypotheses. Then check those hypotheses by talking to colleagues in private. You might say something like, “In the meeting I saw you furrow your brow when discussion turned to the big project. How do you feel about it?” (Adapted from “Tips for Reading the Room Before a Meeting or Presentation,” by Rebecca Knight.)

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

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a meeting). Decide what you can do to shift the person’s behavior or improve the situation (perhaps saying, “Please don’t shout in meetings — let’s respect each other in our conversations”). And then follow through by speaking to the person directly.

(Adapted from “The Next Time You Want to Complain at Work, Do This Instead,” by Peter Bregman.)

BDTECH

BUSINESS DAY

Tuesday 21 August 2018

In association with

IBM introduces AI-powered solution in Nigeria ...Descassio deploys for employee productivity Stories by JUMOKE AKIYODE-LAWANSON

BM, one of the world’s leading technology companies, has made available its Watson Workspace, artificial intelligence (AI) powered solution that helps improve work productivity in Nigeria. The messaging application which is newly introduced in the country is said to substantially improve workplace efficiency through its integrated employee collaboration capabilities, such as enabling users to hold group conversations and share data files, can now be used by companies in Nigeria. Through its built-in artificial intelligence (AI) capabilities, the solution enables sales and technical teams to create workspaces where they can collaborate on all sales activities. Watson Workspace also enables companies to significantly reduce the time group members spend reading through conversations to obtain information relevant to them. Descasio, a leading cloud services provider in West Africa, has adopted IBM Watson Workspace

to enhance its existing email services and provide a smart employee collaborating tool on desktop and mobile devices. The company was looking for an application that could enable smarter and seamless communication, helping their teams to focus on the strategic aspects of their business.

”One of the things that really excites us about this platform is the ease with which we can build new solutions using APIs. We are now thinking about ways we can use IBM Watson APIs to create value-added solutions such as virtual assistants, which could help to automate repetitive tasks,” says

Dele Nedd, Co-Founder and CEO, Descasio. “As a new reseller of the IBM’s Watson Workspace Essentials in West Africa, Descasio plans to sign on clients for this solution. To achieve this, the company is working with a team from IBM to integrate IBM Watson Workspace

into its cloud services portfolio— enabling it to deliver the solution as a service to clients across the region” he adds Watson Workspace helps companies turn conversations into actionable insights, summarised information, prioritise next best actions and make recommendations enabling its employees to connect and collaborate with their teams and other work groups on any device. For example, the solution has enabled teams save up to 30 minutes per team member on responding to issues relevant to their role. It also provides a full, searchable history of all conversations and one central place for all shared images and resources. “Organisations have seen a proliferation of tools and applications that employees use to get their jobs done at the workplace which has often caused information overload, interruptions and difficulty getting back into the flow of productivity. What IBM Watson Workspace does, is take away these pressures, allowing employees to focus on the activities that really matter,” says Dipo Faulkner, the Country General Manager of IBM Nigeria.

Microsoft launches app for secure group communication, staff management in Nigeria

icrosoft has made available in Nigeria, a mobile application designed for large group communication, workflow management, reporting and analytics, integrated with Office 365, called ‘Kaizala Pro’. The app aims to improve the way businesses communicate and collaborate, as workers can interact whilst on the field, by sending messages, photos, video files, audio files, documents, polls, surveys, and other data which is protected by encryption in-transit through the mobile app. Akin Banuso, country general manager, Microsoft Nigeria, says the app addresses several challeng-

es faced by many businesses across the country who manage field staff remotely. “Mobile technology is enabling businesses to embrace the fourth industrial revolution and digitally transform their operations. Microsoft Kaizala is ideal for organisations that need to communicate with large numbers of task workers to enhance business agility, collaboration, and organisational productivity,” Banuso says. Unlike other chat-based apps in the market, Kaizala extends beyond a mere communication function. Because many workers in the region often don’t have an email address, Kaizala only requires a mobile number to sign a user up. The appis also

optimised to work on any network – including slow 2G networks. Kaizala provides actionable information through analytics and reports, while complying with industry security best practices. Managers can decide who has access to company data. All Kaizala data is stored in Microsoft Azure data centres,which adhere to industry standard security and compliance certifications. “This means only you and the people with whom you are communicating can see what you have sent them,” says Akin. “Microsoft Kaizala is currently Tier-A compliant and our engineers do not have access to any customer data.” “As we roll out Microsoft Kaizala

in Nigeria, we hope to connect the complete value chain, including the unconnected parts of organisations. Microsoft’s vision for Kaizala is to empower every organisation and community to achieve more through purposeful chat,” Banuso adds. Some of Kaizala’s other unique features include the ability to communicate with and manage an unlimited number of users. This includes employees, front-line workers, customers, suppliers and citizens. Organisations can create flat,hierarchical or discoverable public groups in minutes from contact lists, directories or ad hoc sharing. For users in remote areas, the app is optimised to work on slow

2G networks and users don’t need an email address to sign up, only a mobile number. The app is also able to broadcast and collect information in a structured way through action cards. This includes sharing announcements photos, videos or documents; hosting polls or surveys; assigning tasks; providing training content; marking attendance; and tracking workforces using location tracking. In addition, organisations are able to gather rich insights from data with built-in analytics. Organisations can view results in realtime, organise large amounts of information with an aggregated view of user responses and get reports at each level of the organisation.

BUSINESS DAY

Tuesday 21 August 2018

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

Could a tech-enabled GIG economy unlock solutions to Nigeria’s employment deficit?

devices amongst Nigerians makes technology-enabled marketplaces an even more attractive venture. Picture a courier delivery services platform, where freelancers can sign up to deliver packages around their neighborhood on the back of their own transportation arrangements and get paid a portion of the delivery fees. Such a service will likely provide cheaper rates and faster delivery times as compared to traditional courier, given the factors of scale and proximity. Imagine a platform that provides you as a client with a repository of artisans such as painters and carpenters in your vicinity, gives you an upfront view of their potential fees, and shows how well or poorly other users of their services have rated them, to assist you in making an informed choice. Imagine also,

the improved reach such a digital marketplace would afford those artisans, who, today, mostly rely on word of mouth of their relatively small circles, to get ‘gigs’. Think of this arrangement as the “organized informal sector”. In the midst of this optimism, one must reckon that for the average Nigerian, internet access remains a significant hurdle to meaningfully participate in a digital marketplace, and for startups, the incessant malaise of insufficient broadband persists. Nigerian digital platforms may want to consider the opportunities that lurk in leveraging sms/text messaging as an alternative tool in cognisance of the aforementioned connectivity constraints. Laudable contributions from the likes of Google Nigeria in looking to provide access to free wifi connection in over 200 locations in the country are welcome developments in this regards. The Gig economy, even in advanced countries, is still at nascent stages. Researchers and Scholars predict that the forthcoming decades will see the gig economy take a more dominant spot in global labour markets. The informal labour sector in Nigeria is overflowing with untapped opportunities to create a cohesive digital marketplace for artisans, masons, hair braiders, makeup artists and the likes. Bina Idonije is GE’s legal counsel responsible for the full spectrum of Labour & Employment matters in SubSahara Africa.

to teach the youths how to market their products online. She further disclosed that government and its agencies would purchase products of Ife ICT to encourage the participants. In his remarks, Ooni of Ife, Oba Enitan Ogunwusi, charged youths in the country to focus on the new trends of technology, adding that everybody looks onto them for a better future for the country. The monarch reminded the participants that the era of total reliance on government is gone, and opined that, with focus and resolve to be employers of

labour by the vast youthful populace Nigeria has, the challenge of unemployment could be effectively contained. In his goodwill address, the Director General/CEO, NITDA, Isa Ali Ibrahim Pantami, established link between ICT and employment, saying the success story of the Asian Tigers could be traced to revolutionary development in ICT. He added that acquisition of ICT skills has become a global requirement in employer-employee relations, while the growth and stability of the Nigerian economy is dependent

BINA IDONIJE Guest writer

8.8%. That is the official unemployment rate in Nigeria as of 2017 according to the National Bureau of Statistics. Anecdotal data off the street have long contested the accuracy and methodology of deriving the country’s unemployment numbers. Be that as it may, what cannot be contested is the fact that unemployment and underemployment contribute massively to the country’s socio-economic challenges. Across the world, a new type of labour force is emerging. They are termed “gig workers”; a derivative categorization for persons who make a living from the “gig economy” ecosystem. At a macro level, the gig economy, refers to work carried out outside the ambit of what is considered traditional employment, i.e. the equivalent of an 8- 5 job in Nigeria. It is mainly characterized by the following key attributes: i) short- term economic arrangement between the worker and the client; ii) Compensation is tied to specific tasks or projects, as opposed to a regular salary, and; iii) significant autonomy on the part of the worker. Taking these characteristics into consideration, it would seem disingenuous to postulate that this is an emerging labour force, as indeed, these characteristics are reflective of how work has been carried out in the informal labour sector since time immemorial. So, you may ask, what then is all this fuss

L-R: Chioma Iwuchukwu-Nweke, general manager, Personal Health, Philips West Africa; Nicole Dix, business marketing manager (Kitchen Appliance Africa), Philips Personal Health; Nneka Agbata, Philips marketing officer, Personal Health West Africa and Justin Ugboro, partner account manager, Philips Personal Health, at the Philips 2018 Resellers event held in Lagos recently

about a workforce which already existed prior to being attributed a fancy name like “gig work force”? The game-changing factor is Technology. Digital platforms are creating online marketplaces that efficiently connect providers of services with buyers of those services, in ways that have the potential to exponentially propel economies. McKinseyestimates that online talent platforms could improve global GDP by 2% by the year 2025, or put financially, add $2.7 trillion to global GDP. Global platforms that are already proving the ‘hype’ about the gig economy include: Uber, Deliveroo, Upwork, TaskRabbit and Catalant. These platforms provide services ranging from transport, to food delivery, to profes-

sional services. Pretty much anyone can sign up to render their services, determine their own working hours, and earn money while being their own boss. Here in Africa, there are digital market places such as South Africa’s getTOD (an innovative mobile application offering on-demand services for electricians, plumbers, handy-men, tied to the clients locality); Kenya’s Mr. Green Africa (a waste recycling venture that leverages technology to empower waste pickers to earn a living); and Nigeria’s Jumia J-Force (independent sales consultants and logistics officials who help to bridge the internet access and e-commerce gap by bringing the online shopping experience offline to those without access). The ubiquity of mobile

Patricia launches innovative e-commerce service JUMOKE AKIYODELAWANSON

a t r i c i a. c o m. n g , an information and communications technology firm has introduced a new e-commerce solution into the Nigerian market. The innovative service allows individuals to swap gift cards for cash while also giving them the opportunity to send gift items to loved ones in the United Kingdom, United States of America,Canada and some selected African and European countries. The ICT Company, which recently opened Room 19, an online luxury clothing store, has been described by industry watchers as one of the fastest growing e-commerce firms in Nigeria and Africa. Speaking at the launch of the new service in Lagos, Hanu Agbodje, CEO/ founder of Patricia, said the company would continue to do things differently, question the norms, come up with innovations tailored to make life easier for Nigerians through technology. “At Patricia, we work to change the world because if we are to succeed, we have to change how online businesses are perceived in Nigeria. Simply put, our vision is to make the e-commerce systemsafe for all; to offer peace of mind to people who do business with Patricia”, Agbodje assured.

Nigerian youths urged to create jobs from ICT ... As FG hands over Ife digital job centre to Ooni BOLADALE BAMIGBOLA, Osogbo

he federal government has urged youths to leverage the knowledge of Information Communication Technology (ICT), to become employers of labour, so as to help tackle the issue of unemployment in the country. This call was made in Ile Ife, Osun state by the the Permanent Secretary, Federal Ministry of Labour and Productivity, Ibukun Odusote, while declaring open 3rd Ife Youth Economic Summit and handover ceremony of Ife Digital Job

Centre constructed by the Federal Government. Speaking at the event with the theme: “Youth Unemployment and the Challenges of Enabling Empowerment -The way forward for Nigeria”, held in Oba Okunade Sijuwade Memorial Hall, Enuwa, Ile-Ife, Odusote enjoined the participants at the summit to tap into the golden opportunity that the ICT training offers them to become entrepreneurs. She disclosed that the administration of President Muhammadu Buhari would continue to support innovation and technology, stress-

ing that the priority encouragement the administration is giving to Science, Technology, Engineering and Mathematics is aimed at using technology to stimulate the economy. Assuring the youth of the federal government’s preparedness to give them social protection, she described those ones among them following politicians as thugs as “compound fool”, adding that government would also ameliorate the sufferings of the unemployed youth by creating more jobs. Odusote then charged the trainers on the need

on the employment of the youths. He advised participants in the training to realize that digital connectivity would expose them to opportunities in the global economy and urged them to tap into it. Earlier, in his welcome address, the Special Assistant to Ooni Ogunwusi on Youth Development and Wealth Creation, Olamide Awosunle disclosed that this year’s 6 weeks ICT training would afford 100 youth selected across the state to acquire ICT and business skills that will make them globally competitive.

BUSINESS DAY

Tuesday 21 August 2018

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Why science, technology education must drive much needed economy growth KELECHI EWUZIE

he advancement in science and technology education across the globe has no doubt thrown up a lot of opportunities for forward looking economies to grow their human capital. It is quite obvious that without science and technology education, no country will forge ahead with advancement in innovations and state of the act discoveries that is shaping the future of virtually every sector of the economy. It is also true that the quality of science tech education a country has determines her economy as no country can grow more than the quality of her specialised education system. Education today more importantly as it relates to science and technology has assumed an entirely new frontier and approach, such that from an early stage of learning, it has become a norm to tutor next generation of leaders to embrace this 21 century learning style.

While managers of the economy in Nigeria may claim to be funding development of education in the country, it is however important to note that building capacity in science and technology represents the driving forces in the current 21st century and a such needs to be catered for. For meaningful development to take place in the economy, those who know in the field of education insist the issue of funding this specialised form of learning need to adequately taken care of by government. They observe that science and technology aspect of education has a repository of potentials capable of transforming economies and has been behind the advancements in developed countries. According to them, science and technology aspect of education has not received adequate attention needed to push the growth in Nigeria. Tolu Odugbemi, former vice chancellor, Ondo State university of Science and Technology, Okitipupa (OSUSTECH) said there is need for Nigeria to pay adequate attention to sciencebased education in order to achieve the needed develop-

ment in the country. Odugbemi opines that universities and other higher institutions as innovation hubs have major roles to play in using science and technology to drive development in Science, technology , engineering and Mathematics. According to him, “De-

NBC partners Rise networks to empower Nigerian Youths KELECHI EWUZIE

igerian Bottling Company Limited, (NBC), has partnered with RISE Networks- Nigeria’s leading social enterprise to celebrate Nigerian youths as they join the rest of the world to celebrate 2018 United Nations International Youth Day which was held in Lagos. George Polymenakos, managing director, Nigerian Bottling Company while speaking at the event with the theme: Safe Spaces For Youth” said the partnership with RISE Network in the celebration of the 2018 International Youth Day is an affirmation of the company’s unflinching commitment to youth empowerment. Polymenakos who was represented by Sade Morgan, director, Legal, Public Affairs and Communications said

that the youths lack no excuse not to unleash their potentials to bring about needed change and innovation given the level of endless possibilities that has been aided by the rise of technology in this era and time. Morgan stated that though there are challenges in the environment, it is imperative for them to brave the odds if they are keen on achieving their dream. She added” In the Nigerian Bottling Company Ltd and indeed, the entire CocaCola system, we believe in the power of young people. The theme of this year’s International Youth Day is “Safe Spaces for Youth”. Safe spaces motivate young people to engage in sports and leisure, governance issues and crossborder interactions, especially because of internet and digital penetration and convergence. As a company, we will continue to demonstrate our unwavering commitment to youth development in un-

equivocal terms. Our annual Management Trainee Programme, the Technical Training Centre, Summer ship Programme and the Youth Empowered Programme are all platforms open for Nigerian youths to explore opportunities for their personal, career and economic advancement” Toyosi Akerele-Ogunsiji, founder of Rise Networks and convener of the conference said that youths cannot afford to fold their arms in the face of limitless opportunities around urging them to get involved politically and invest their energy in productive causes that would bring about economic empowerment. In his own remarks, Tunji Bello, Secretary to the Lagos state Government who represented the Governor of Lagos state, observe that there cannot be meaningful development if government fails to invest in its youth.

veloping economies, such as ours, can only fast-track and/or leap frog their growth through targeted research and development. A practical way to do this is to do what is generically referred to as reverse engineering. It is these institutions that must provide the roadmap to circumvent those

roadblocks to indigenous technology enhancement necessary for driving innovation and development of the nation. “The nation must be prepared to invest heavily in the higher education cutting across both the public and private the research facilities must orchestrate the brain power of

the staff, take responsibility for training new generation of talents and participate in the transformation of the nation’s science and technology base.” He noted that the world has moved from commoditybased and military power ranking to knowledge economies/societies, adding that the paradigm shift is propelled by advancements made through science and technology innovations. Isaac Adeyemi, former vice chancellor, Bells University of technology, opines that universities in Nigeria must focus on the modernising of forces of the society, for the promotion of the “values of science and technology” and for mediating between the political and industrial spheres of national life. He called for a coherent national Science and Technology strategy with framework developed in consultation with the National Academies of Science to specify the national priorities for research and development with the appropriate funding commitment, while disclosing that countries like China followed this path some 50 years ago to transform their economy.

UNIDO reviews vocational training curriculum to boost employability in Ogun RAZAQ AYINLA, Abeokuta

nited Nations International Development Organisation (UNIDO) has moved to review vocational training curriculum operational in Ogun state with a view to boosting youth’s employability and self reliance. The need to review teaching methodology and logistics required in grooming and teaching world standard skills that boost self reliance, employability and ease of doing business becomes necessary as UNIDO partners Ogun state government to rejig instructions, practicals and demonstrations embedded in vocational training Francis Ukoh, UNIDO’s National Project Co-coordinator courses while speaking during a working visit to Ogun state on the proposed partnership noted that effort

was ongoing to review vocational and entrepreneurial skills suitable for international standards that would not only boost employability and self reliance among youths, but would also improve ease of doing business in the state. Ukoh however, applauded State government’s initiative in the areas of skills and vocational acquisitions and its current efforts to review and modernize the curriculum, practicals and demonstrations applicable to entrepreneurial and vocational studies, just as he pledged the organisation’s support towards attaining its core objectives of human capital development. Modupe Mujota, commissioner for Education, Science and Technology expressed the State government’s readiness to partner with United Nations International Development Organisation (UNIDO) on skills acquisition for

its teeming populace. Mujota while addressing the UNIDO’s National Project Co-coordinator and members of the Association of Skilled and Vocational Artisans of Nigeria (ASVAN) in Abeokuta, said the proposed partnership would cover areas of logistics, such as venue, curriculum development for the training and resource persons. The commissioner observed that government’s support towards the initiative was borne out of its interest in promoting skills and vocational acquisition among the people, adding that the establishment of Institute of Technology, Idi-Aba, Abeokuta and investment in Technical and Vocational Education Training (TVET) through the State–owned Science and Technical Colleges, are all attestations to government’s effort to human capital development.

BUSINESS DAY

C002D5556

EDUCATION

Tuesday 21 August 2018

INSIGHT

Homework should be a collaborative effort

OYIN EGBEYEMI

omework time may be viewed as the most daunting par t of the day, both for children and parents. This period comes in towards the evening when all that children may want to do is play, sleep or watch television. At this time, some parents have only just returned from work and just want to have their dinner and relax, especially after a long stressful day and many hours in traffic. Some other parents who work longer hours may even miss this activity altogether. The importance of homework cannot be overemphasised. In addition

to academic development, children stand to gain many benefits from this practice of taking a bit of school back home, and these benefits help develop life skills that can be applied in the real world. They learn some level of independence from carrying out tasks on their own; they build retentive memory by repeating activities from the day and applying the knowledge gained to additional exercises; they build organisational skills and learn to manage time effectively; they develop a sense of ownership and responsibility, and gain that feeling of accomplishment when they return to school after having completed their tasks; and so many more. From the schools’ and teachers’ perspectives, apart from it being an integral part of the curriculum, giving homework provides some form of feedback on the quality of the style of teaching and the effectiveness of delivery. It also forms an additional means of iden-

tifying children who may have learning challenges or those who may not be getting enough support from home. As great as the benefits that children stand to gain from homework are, they will only be achieved if this activity is carried out and monitored properly. From schools, setting appropriate assignments is key towards the children’s development. Appropriateness may be a broad concept, but it is up to the schools and teachers to determine what this is in line with the curriculum they apply, the level of their students’ development and educational standards. Homework should be stimulating enough to ensure that the children are exposed to a healthy challenge, which would task them, further aiding their learning abilities and knowledge growth. After children return their homework to school, follow up is also important. Corrections need to be made and delivered

effectively. Wrong answers should not be punishable offences. Rather, children should be taught how to receive and accept constructive feedback. Support from the home is also extremely important when it comes to homework. Our current times are rather challenging, as parents spend more hours at work and may not be able to make enough time to help their children with their homework. While parents should strive to find this time, the reality is that they may not always be available. If they are not, it is imperative that a responsible adult or educated superior who is sufficiently knowledgeable supervises the homework sessions at home (grandparents, older siblings, afterschool services etc.). These support people should be able to assist with homework sessions, but also have to be mindful that they allow the children to do most of the work themselves. They

WOWBii Interactive deepens 21st century learning in ABUAD KELECHI EWUZIE

s part of its contribution to promote 21st Century Learning in the institution across the country, the management of Wowbii Interactive has donated an Interactive Touch Screen to Afe Babalola University, Ado-Ekiti (ABUAD). Gb o l a ha n O l ayo m i , founder, WOWBii Interactive while speaking at the presentation ceremony at the school said the company recognises ABUAD as an early adopter of technology

and knows that the WOWBii experience will transform learning in the institution. Olayomi observes that as educational technology (EdTech) adoption drives new and more efficient learning styles, Wowbii Interactive is partnering with African institutions to change the narrative by introducing interactive touch screen displays in EdTech. Designed and built as a multi-touch interactive screen, the WOWBUDDTM is an internet-ready platform offering a whiteboard and remote learning

functionality with in-built Android and Windows operating systems. The WOWBUDDTM promotes real-time collaboration for Educators and Learners; allowing for flexibility in learning styles and techniques whilst encouraging creativity leveraging Technology. Wowbii Interactive seeks to transform the way Africa learns, one interactive panel at a time. Afe Babalola Founder of the university while acknowledging receipt of the WOWBUDDTM appreciated the WowBii team for

their kind gesture towards ABUAD stating that the visit was timely. Babalola reiterated his commitment to transforming tertiary education in Nigeria and accepted the partnership offer; assuring both organisations of full adoption by Afe Babalola University. Afe Babalola University Ado Ekiti (ABUAD) is among innovative tertiary institutions in Nigeria that have adopted the WOWBii Touch screens alongside Covenant University, Ota and Mountain Top University, Ibafo.

should be patient with them and ensure that they do not give excessive leeway to the children such that they themselves end up answering the questions without getting the children to think for themselves and get the work done largely as a result their own abilities. When it comes to homework, a support tool that has recently become common and is of growing concern is the Internet. Google has literally become everyone’s best friend, for the reason that it has the answers to most questions. So people have gradually delegated their thinking process to computers. This same practice applies directly to homework. We need to be very careful that we ensure that our children do not abuse the availability of information online, and make more use of their own cognitive power to do their homework Additionally, giving children access to computers in general can be tricky

because we may not be fully aware of what they get up to. Distractions from games and other leisure activities on the Internet may impair the children’s concentration on their homework. In order to minimise this, parent may contact Internet Service Providers to discuss restriction options on such websites. They could also ensure that computers at home are well placed in central areas so that children’s activities can be monitored whilst they use the computers. In order to reap the full benefits, homework should be a collaborative effort involving children, teachers and parents; with support of resources and other tools which add value to the process. Close attention and supervision are paramount in order for this to work the right way.

Oyin Egbeyemi is an executive administrator at The Foreshore School, Ikoyi, Lagos.

WASSCE’s outstanding student gets N9m scholarship to pursue academic goals KELECHI EWUZIE

he Bridge House College, Ikoyi, Lagos has awarded a full scholarship worth N9 million to David Okorogheye Orisheneye, a 15-year old May/June 2018 West African Senior School Certificate Examinations (WASSCE) outstanding student to pursue a two-year Cambridge A’ Level course in the College. The scholarship award according to the sixth form college was in recognition of the brilliant performance of the prodigy, who in addition to obtaining a parallel A1 in all the nine subjects he wrote during the May/June 2018 West A f r i ca n S e n i o r S c h o o l Certificate Examinations (WASSCE), conducted by West African Examination Council also scored 332 in his JAMB. Carmen Latty, college administrator, in a letter conveying the news of the

scholarship award to the recipient said the scholarship award was in fulfillment of BHC’s tradition to celebrate academic success and to encourage students to pursue academic goals. According to Latty, “Your very brilliant performance in the May/June 2018 WASSCE where you obtained 9As in subjects including Mathematics, Chemistry and Physics and went on to score 332 in JAMB all at the age of 15 caught our attention. The N9 million scholarship will cover boarding, tuition, books and uniforms while the programme lasts from September 10, 2018 to June 20, 2020. “The Board of Directors, management and staff of Bridge House College heartily congratulate you and hereby offers you a full scholarship to pursue the two-year Cambridge A’ Level Course in the College effective September 10, 2018 to June 30, 2020”, the letter read.

Tuesday 21 August 2018

C002D5556

BUSINESS DAY

Energy Report Oil & Gas

Power

Renewables

Environment

Ibadan Disco to start another phase of supply pre-paid meters … invests over N11.5bn in metering, network upgrade, rehabilitation

OLUSOLA BELLO

lectricity consumers under the jurisdiction of Ibadan Electricity Distribution Company ( IBEDC), who have paid for pre-paid meters but are yet to get, would be serviced latest by December this year, the management of the company says . The company says it is ready to meter all those that have paid for pre- paid meters but they must provide evidence of payment. The management stated this while conducting stakeholders and journalists round some of it facilities that had been upgraded to enhance steady power supply. It also showed them the over 11, 000 pre - paid meters it said would be deployed to customers starting from this week. According to the company over N11.5billion has been invested in major capital projects such as metering,

network upgrade and rehabilitation last six months. According to John Ayodele, the chief operating officer who represented John Donnachie, managing director/ceo of the company said:“As part of our unwavering commitment to our mission, distributing power, changing lives, we have in the past 6 months invested over N11.5 Billion in major capital projects. These span across our franchise area covering – Oyo, Ogun, Osun, Kwara; parts of Kogi, Niger and Ekiti States. These projects are major game changers for IBEDC as a business and for our esteemed customers, which have significantly improved our service delivery, quality and quantity of power supply”. He said recently, the company commenced the procurement and supply of 10,000 Distribution Transformer (DT) Meters at a cost of N4 Billion. These DT Meters will greatly reduce the challenge of estimated bills and ensure customers

without meters are billed more accurately through its energy audit, accounting functionalities, and above all, assist in our Technical, commercial and collection (TC&C) losses. To further reduce safety related accidents and top achieve the vision Zero and Safety culture of IBEDC, the board awarded a whopping sum of N1.47 Billion for a major overhaul of the Health, Safety and Environment department.

The project will deliver on over 60 critical need areas with major focus on procurement and deployment of PPEs, IPEs, signages, Labels and symbols. This project is expected to map the layouts of 114 Substations in order to develop conceptual site models, training on emergency techniques, solid waste and hazardous management programme, production of occupational health and safety environmental policies and frame-

work for all technical and non-technical staff. In addition, it will ultimately aid us in attaining the certification required, thereby making us an internationally recognized health hazard compliant organisation. “In line with reducing the incidence of estimated bills, we have commenced our meter roll out with a 1st batch of 48,470 Energy Meters of various ratings and capacities. This includes 35,000 Single-Phase, 12,000 Three-Phase, 1,470 Whole current, C.T-Operated and Statistical Meters all at a sum of N3.1 Billion, ahead of the MAP initiative currently being finalized by NERC and the Discos,” he said. The continuous metering of Maximum Demand customers is also in place with the development of 13 High Voltage Energy Meters and delivery of 912 Low Voltage Maximum Demand Energy Meters at a cost of N405 Million. To further support the huge metering expenditure, we have invested extensively in the supply and installation

of Advanced Metering Infrastructure (AMI) Systems at over N1 Billion, this investment is critical to optimally implement the functionalities of DT Meters”. As we speak, we have recently received 95% of CAPMI meters for deployment for those that paid. The managing Director/ CEO informed that the ongoing Asset and Customer Enumeration (ACE) exercise estimated at a N5 Billion, is now fully rolled out across the franchise and is scheduled for completion early next year. The project on completion will greatly enhance service delivery by providing critical data needed for planning and provision of infrastructure, reduce estimated bills, improve the accuracy, enhance quality of power supply and quicker fault response rates. The pilot exercise at Elebu, (a community within Ibadan) has already identified additional customer population which is yielding fruits in terms of efficient customer service delivery.

How inefficient grid management is killing power generating plants

he power sector is made up of three mutually exclusive, but necessary parts – generation, transmission, and distribution. Nigerians are all very much conversant with the operations of the electric generator or generating set (I better pass my neighbour or other bigger ones) which is made up of three parts – the generator itself (machine), an electrical cable or wire (transmission) that connects the generator to a control panel or fuse box through which the generated power is distributed to equipment (distribution). All electrical appliances have set conditions under which they function at optimal levels. Any fluctuations in these conditions can cause the appliances to run at a lower efficiency. Power generators,like the Hydros and thermals used in Nigeria, are no exception to this. Thermal power plants, like the gas turbines (GTs) are designed to operate optimally and efficiently at base load. Operations of these gas turbines at operating points,

far away from their baseloads implies a reduction in efficiency or in other words an increase in consumption of gas by as much as 1520%,a cost not recognized by NBET nor captured in the MYTO. This reduction in operating efficiency is in addition to the huge fatigue damage leading to higher O&M cost meted out on turbines due to ramping up and down over wide temperature swings. It is common knowledge that GenCo power stations have been used by TCN, via its subsidiary SO/NCC to stabilise the national grid with no compensations. Generally, the damaging effects includes: thermal stress on Steam Turbine Blades, creep of compressor and turbine blades, Cracks on exhaust sleeves, Irregular heating and cooling cycles of hot gas path components, Cracks in ceramic tiles of the combustion chamber, Defective gas control valves due to wear and tear etc. It is a no brainer that the grid cannot conveniently take over 4500MW without rejecting load. Generation

above 5,000 MW may either be lost or rejected either by DisCos or transmission service provider (TSP) due to their inabilities largely caused by infrastructural challenges (Line cuts, Transformer faults and unavailability etc.) causing grid frequency to be very high. Fu r t h e r m o re, Pow e r Generation Companies are increasingly facing lower capacity utilization (dispatch) being forced to operate their dispatched Turbines/machines far from the baseload

settings sometimes even lower than 50% of rated capacity. On the plant level, less than 53% of average available power capacity is dispatched to the grid. For the month of April, 2018 for instance, on a daily basis, GENCOS had an average available capacity of 7485 MW but TCN could only transmit an average of 3985MW which is about 53% of the available capacity. This data as published by TCN (SO/NCC) is presented in the table below.

It is inexplicable that a country of over 180 million, is unable to utilise the GenCos available capacity of 7500MW, what then is the incentive for further capacity recovery and expansion? Despite GenCos efforts to increase their available capacity effectively nominating same on a daily basis, the SO has the “grid right” to instruct any GenCo to reduce or cut down on its nominated capacity. It should also be noted that for a GenCo to nominate

Power utilisation for the month of April, 2018 for six thermal and two Hydro plants

Olusola Bello, Team lead, Analysts: Isaac Anyaogu, Stephen Onyekwelu, Graphics: Joel Samson.

any capacity, it means effective commitments has been made as per gas and other equivalent overhead costs. This is a legitimate cost that must be recovered! Compelling a generator to ramp up and ramp down at unscheduled time affects it equivalent operating hours (EOH) and also stresses the internals of the machine thereby reducing the plants lifespan as well as attracts an associated costs, incurred in making such capacity available. Generating plants can no longer sustain these costs alone given the level of remittance in the market, which barely covers the operating cost. The only sane thing to do and save the sector from collapsing is for GenCos to shut down until when the networks (transmission and distribution) are efficient enough to take power and fully pay for both outstanding and current liabilities to GenCos. Section 12.6.6 of the Grid code allows the Generator to disconnect the Generating Unit for reasons of safety of personnel, Apparatus, and/or Plant.

Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378;

BUSINESS DAY

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Tuesday 21 August 2018

Energy Report

Nigeria ignores coal as Trump sets new emission rules to boost use …environmentalists fear rise in emissions STEPHEN ONYEKWELU

igeria’s vast coal resource wastes away for inefficienc y as the Trump administration plans to formally overhaul climate change regulations that would allow individual states to decide how, or even whether to curb carbon dioxide emissions from coal plants, come August 21, according to three people who have seen the full proposal. The plan would also relax pollution rules for power plants that need upgrades. That, combined with allowing states to set their own rules, creates a serious risk that emissions, which had been falling, could start to rise again, according to environmentalists. The proposal, which President Trump is expected to highlight August 21at a rally in West Virginia, amounts to the administration’s strongest and broadest effort yet to address what the president has long described as a regulatory “war on coal.” It would considerably weaken what is known as the Clean Power Plan, former President Barack Obama’s signature regulation for cutting planetwarming emissions at coal-

fired plants. Back to Africa’s most populous and energy hungry nation, Nigeria’s coal industry suffered a blow in the 1950s when oil was discovered. Up until this point, the Nigerian Railway Corporation was the largest consumer of coal in the country. However, after the discovery of oil, the Railway Corporation began to replace its coal burning trains with diesel-powered engines. An additional nega-

tive impact came when the Electricity Corporation of Nigeria began converting its power generation equipment from coal to diesel and gas as well. The Nigerian Civil War also negatively impacted coal production; many mines were abandoned during the war. Following the war, production never completely recovered and coal production levels were erratic. Attempts at mechanising production ended badly, as

Aramco charges Nigeria, other OPEC members to turn on the taps ISAAC ANYAOGU

audi Aramco has charged other oil producers to ramp up production to offset $1 trillion investment loss since the market downturn began address declining production in matured fields. In the organisation’s latest report, Saudi Aramco Annual Review, Khalid AlFalih, chairman of Aramco’s board said mature oil fields are seeing an increase in declining production rates, and this must be offset by continued investments in the industry if the world is to meet what is thought to be an 1-1.5 million barrel per day annual demand growth rate in coming years. “To respond to this situation, significant new investments are required in additional capacity and expanded and upgraded

infrastructure, as well as the development of pioneering technology to make petroleum energy more sustainable and accessible,” Al-Falih said in his opening message to the 42-page report published on Friday. Aramco’s annual report cites the International Energy Agency’s World Energy Outlook 2017 New Policies Scenario estimates that call for a 30 percent increase in global energy needs between now and 2040. Saudi Aramco, for now the world’s top oil producer, is doing its part to meet this future demand, according to the report. “Saudi Aramco is committed to playing its unique part in meeting the world’s energy needs today and tomorrow by continuing to invest wisely throughout the cycle and across the value chain, reinforcing our preeminent leadership position in the industry,”

Al-Falih added. Aramco referenced its new discoveries in the Sakab and Zumul oil fields, as well as its gas reservoir find in Sahba field. Other projects in 2017 that Aramco has invested include Khurais field (300,000 bpd by 2018), Fazran field (75,000 bpd by 2020), Dammam field (25,000 bpd by 2021; 75,000 by 2026). Fadhili Gas Plant (start up 2019, 2.5 billion scfd), Hawiyah Gas Plant (1.1 billion scfd). However for OPEC producers in Africa especially Nigeria and Libya, this will be a tough call considering the internal crises in these countries. Libya has to check activities of different groups fighting for political and economic power. The challenge for Nigeria is to raise production by attracting new investments. But in order to do this, it must embark on deep reforms in a sector that is beset by challenges.

both the implementation and maintenance of imported mining equipment proved troublesome, and hurt production. After the civil war, the Nigerian coal industry was not able to return to its peak production, this is hurting industries because the cost of electricity eats away profit margins. Against the backdrop of severe shortages in much needed supply of electricity, it is inevitable that Nigeria must move from rhetoric to concrete action in the

development and addition of coal-fired electricity to the nation’s electricity supply mix. Two of the biggest cement markers in Nigeria, Dangote Cement Plc and Lafarge Plc have been investing massively in coal as source of energy to power its plants. “Companies are turning to coal for their energy needs. What we tend to forget is that coal as a major source of energy might not be clean and it is ultimately cheaper to use liquefied natural gas (LNG) rather than coal because of social and environmental concerns” Eddy van Den Broeke, founder of Abujabased Greenville Oil and Gas Limited said at a gas development roundtable in Lagos. Dangote Cement switched to using coal at its cement plants in response to disruption to gas supplies and to lower input costs. The cement producer uses 12,000 metric tonnes (MT/day) of coal. Ashaka Cement, a fully-owned subsidiary of Lafarge Africa, said coal accounted for 82 percent of its power usage over the period, while work is ongoing on its 16-megawatt lignite-fired coal power plant at its factory in Gombe State. “Coal business is boom-

ing. I have some Chinese companies that need about a million metric tonnes (MT) of coal from me every month and I don’t meet up with the demand. Dangote Cement Plc is ready to buy up every piece of coal we excavate in Kogi state for its Obajana cement factory” Leo Nwankwo, a commodities analyst and trader told BusinessDay. “There are jobs to be created, when we develop our coal industry. I trade in commodities and coal is just one of the many commodities I trade in. When you visit our coal excavation sites in Kogi state and see the level of unemployment and poverty, I fear for this country. Let us focus on developing our economy and not let the shouts about clean energy deter us from creating jobs for our bulging youth population” Nwankwo said. Trump’s plan is the latest move in a string of efforts, including prodding grid operators to purchase more electricity from coal plants and asserting that coal plant retirements are threatening the reliability of the national power grid, to end what Trump has called his predecessor’s war on coal and a sure sign to the industry that the Trump administration still has its back, even as coal production continues to decline.

NNPC want timely delivery of gas project OLUSOLA BELLO

o l l ow i n g p u b l i c scepticism over the execution of the Ajaokuta Kaduna – Kano gas pipeline projects the group managing director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru has directed the Chinese Consortium and the NNPC team working on the Project to ensure timely finalization of the term sheet for the project’s contractor financing agreement The Chinese consortium is made up of Bank of China and Sinosure. Baru maikanti, who had to cut short his trip to Saudi Arabia for a stop-over in Dubai to meet with the Chi-

nese consortium reiterated the need for both parties to ensure speedy conclusion on the details of the agreement towards its full execution during President Muhammadu Buhari’s state visit to China next month. The is scheduled to attend the Forum of China-Africa Cooperation (FOCAC) Summit holding from the 1st to 4th September, 2018 in the Chinese capital, Beijing and it is expected that AKK Project will be top on Mr. President’s agenda. The NNPC had earlier clarified that the execution of the AKK gas pipeline project is progressing under the original concept of 100 percent contractor financing model contrary to some media report of a possible resort to ‘’proceed of gas tar-

iffs’’ as new means of funding because of purported collapse of negotiation with Chinese lenders. The Corporation noted that the successful conclusion of the contractor financing terms would pave way for the historic groundbreaking ceremony which would take place after the conclusion of the front-end activities. Already the Corporation had concluded the vital Front End Engineering Design (FEED) and the Environmental Impact Assessment (EIA) report while work on the detailed engineering design is nearing conclusion. Upon completion within a projected 24-month window, the NNPC stated that the AKK gas pipeline would enable connectivity between the East, West and North, which is currently non-existent. It would also enable gas supply and utilization to key commercial centres in the Northern corridor of Nigeria with the attendant positive spin-off on power generation and industrial growth.

Tuesday 21 August 2018

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BUSINESS DAY

In association with

RoI in prime office space under pressure as market continues to struggle

…rich development pipeline means investors in for stiff competition CHUKA UROKO

or investors in prime office market in the main cities of Nigeria notably Lagos, Abuja and Port Harcourt, improvement in macro-economic environment means little or nothing as the market’s continued struggle piles downward pressure on the return on their investment (RoI). Whereas increased supply from project completions and the rise and rise of co-working space is exerting a pull on demand in the Lagos market, security risks and environmental hazards in Port Harcourt sent office rents to their lowest in over five years. Grade-A office vacancies remain high and it appears the economy would need to strengthen much more to reverse this trend. The wait for the global brands looking to open up shop in Grade-A signature addresses worthy of their presence may be taking too long. As at the first half of this year (H1 2018), there was an average of 28 percent decline in office rents per square metres across the major cities. In the Central Business District (CBD) of Abuja, rents dropped 30 percent to N40/$0.11 per square metre per month down from N57/$0.16 per square metre per month. On Olu Obasanjo Way in Port Harcourt, rents declined from N16/$0.04 per square metre per month in 2017 to N12.5/$0.03 per square metre per month in H1 2018, representing -23 percent drop. This is slightly better than the situation in Ikoyi, Lagos, where rents dropped -33 percent to N207/$0.57 per square metre in H1 2018, down from N309/$0.85 per square metre per month in 2017. The implication of this is that investors will be under pressure from their financiers who are no Father Christmas and so, would get their agreed repayment sum plus the interest in spite of the market situation. Those who are not exposed to bank credit may decide to stick to old rents, leading to high vacancy factor which, in turn, leads to depreciation and high maintenance cost. But, on the other hand, demand for grade B and smaller office space remained stable when compared with last year and, according to a new report

Infrastructure Maintenance With Tunde Obileye Importance of key performance indicators in FM

by Northcourt Real Estate, coworking spaces continue to grow in popularity with a few service providers opening more locations. The report hopes that with increased flexibility in pricing and terms, a renewed focus on volume, partnerships and programmes will drive profitability. “The development pipeline remains rich and is much more active in comparison to H1 2017. With over 100,000 square metres of office currently available for lease on the market, completions scheduled for 2018 already have significant competition for the few multinationals and big brands that can afford grade-A space, not accounting for the brands that are willing to settle for the more flexible and affordable co-work option”, said Tayo Odunsi, Northcourt’s CEO. The retail market also continued to struggle with shrinking middle class and dwindling purchasing power of the customer. It however, differs from the office market because stable exchange rate regime makes planning around operational costs and profit projections much more feasible for retailers. Local investors, emboldened to make further investments, softly opened the Next Mall in Port Harcourt and The Atlantic in Lagos and the Novare Central Mall in Abuja.

Unlike the office market again, vacancy rates reduced largely across the Grade-A malls. For instance, The Palms and Ikeja City Mall had the lowest vacancies at 0 percent and 2 percent respectively. Novare Mall came in at 28 percent, down from 47 percent at the end of 2017. Artee’s Port Harcourt Mall, Big Treat and Genesis Centre had 8 percent, 15 percent and 25 percent respectively. But whereas Ceddi Plaza and Gateway Mall in Abuja recorded 21 percent and 38 percent respectively, Abuja’s largest mall – Jabi Lake (20,000square metres) recorded the highest vacancy rate in city at 40 percent and this was due to a number of stores that closed down in Q1 2018 coupled with high rentals. These high vacancy rates find explanation in some international investors finding business conditions in Nigeria less favorable and are instead pursuing retail interests in Eastern Europe and Eastern Africa, local HNI’s (High Networth Individuals) who are not disturbed by currency risks amongst others, are moving into the retail space to make large-scale investments. “Outside purpose-built and A-grade malls, high street retail within central locations continue to experience high demand.

Larger malls, though more appealing to international retailers due to better infrastructure, are less attractive to local brands due to higher rents and service charge costs, Odunsi noted. “Events, entertainment and leisure features continue to be a traffic pull for large malls with car park payments remaining a key income stream and a counter-weight to the pain of declined rents in major malls,” he added. Data from the Nigeria Bureau of Statistics (NBS) shows that payment channel transactions reached an all-time high of ₦86.1 trillion in 2017, representing a 32 percent increase from ₦65.1trillion recorded in 2016. Within this period too, online transactions came up thick, rising by 39.5 percent from ₦132 billion in 2016 to ₦185 billion a year later. “As such, it was only reasonable that online retailer, Konga, join forces with Yudala, an e-commerce company to become one of the largest online and ecommerce firms in Africa”, Odunsi said, pointing out however, that Jumia, a prominent player in Nigeria’s online retail space saw its adjusted loss before interest, tax, depreciation and amortisation widen to €80.7 million in the first nine months of 2017 even though revenues moved up to €57.3 million.

he role of a facilities manager in determining a facility’s performance is dependent on a holistic key performance indicator (KPI) approach and this is important for performance assessment. There are many KPIs that can be applied. However, the selected ones must be fit for purpose and must be calculated, analyzed and evaluated to allow for the future state of the facility to be acceptable to all stakeholders. A useful maintenance KPI drives reliability growth whilst guiding the choices for improving maintenance effectiveness and efficiency. The application of these KPIs allows the facilities manager to identify issues and helps in selecting the right strategy to support or correct the activities producing the results. Maintenance KPIs are of two types – those that improve maintenance impact on business performance and those that drive reliability. The KPIs assist the facilities manager to understand what maintenance is doing, what it is achieving and what more they can do to improve operational performance. Efficient maintenance is doing maintenance right so that higher equipment reliability and operational risk reductions are achieved with minimum resources and time. It is important that when a variety of maintenance KPIs is selected, they improve equipment reliability and maintenance performance and not simply indicate that problems exist. The facilities manager’s maintenance plan needs to support the business objectives and operating strategy. The best way to demonstrate this is to have a maintenance performance linked to the reasons for the company’s business. To develop maintenance KPIs require the creation of a KPI pathway from top to bottom which connects the operational activities with corporate goals. This clear connection enables everyone to see the benefits these maintenance activities bring to the built environment. In applying these KPIs, a facilities manager is able to identify opportunities

as well as errors. As a result, the facilities manager in conjunction with senior management can correct problems expediently and take advantage of the opportunities to reduce cost.

Some FM related KPIs to consider are:

1)Preventive Maintenance Programme Compliance: This KPI gives a clear understanding of how much time is spent on completing preventive maintenance activities rather than constantly fire-fighting issues. It allows the facilities manager to recalibrate the work to become less reactive. A disciplined PM programme managed by a competent maintenance team will produce results and success may be measured by a 99 percent PM activities completed on time. This may be measured on a monthly basis to make changes in real time and reduced cost. 2)Average Time To Complete Work Order: This helps the facilities manager to understand where gaps exist in the processes if a work order takes more than reasonable time to complete. For instance, a job of few hours takes two days to complete. It may also be used to determine skill gap within the maintenance team if a plumbing issue takes much longer to fix whilst an electrical issue is fixed on time. This KPI may indicate where work orders are held up in a process. Improvement can, therefore, be made. 3)Total Number Of Work Orders: Tracking the number of completed work orders in a given period will assist in determining the maintenance team’s workload and overall productivity. It can also assist in justifying budget requests where there’s a need to increase staff strength as a result of increase in work orders. KPIs can answer numerous questions which, in turn, will make a facilities manager to continually improve and create business value. Finally, a facilities manager can help make facilities management a key partner in achieving organizational goals by knowing which KPIs to consider and how to relate them to overall business goals.

BUSINESS DAY

Tuesday 21 August 2018

Why Nigeria’s 17m housing units deficit is no longer tenable …NBRRI sees need to rethink approach to housing

Stories by CHUKA UROKO

igeria and South Africa are Africa’s largest economies that differ significantly in terms of basic necessities of life including power supply and housing provision. This is why, for South Africa’s over 20,000 mega watts of electricity, Nigeria is struggling with 5,000 megawatts, and for the country’s 2-3 million housing deficit, Nigeria has as high as 17 million units. The federal mortgage bank of Nigeria (FMBN), the country’s apex mortgage, recently estimated the deficit at 17-20 million units with potential cost (value) of N6 trillion ($16 billion) and 900,000 annual unit deficit increase. But analysts argue that whether it is 17 million or 20 million or whatever figure, the deficit as paraded by government and other housing sector stakeholders is no longer tenable, citing population growth and lack of data that captures annual housing deliveries and demolition/ destruction. Nigeria’s population as at 2006, when the last headcount in the country was conducted, stands at 170 million. But World Bank’s annual growth rate estimates put Nigeria’s at 2.6 percent, meaning that from 2006 to date, the country’s population has increased significantly. “The 17 million units deficit is no longer tenable”, the Nigerian building and roads research institute (NBRRI) affirms, quoting findings by Worldometer, 2017, which notes that from 2012 to date, Nigeria’s population has increased from 168,240,403 to 191,835,936, showing a significant increase of 23,595,533 people to the population. And

that is five years ago. “The housing deficiency has, therefore, climbed and is likely to worsen in the nearest future if urgent steps are not taken by the government in conjunction with all stakeholders to address the problem”, Danladi Matawal, DG/ CEO of the institute, said at a forum in Abuja. The World Bank in 2013 stated that in order for Nigeria to keep up with the demand for housing, 700,000 houses annually are required to match growing population and urban migration but, according to Chudi Ubosi, an estate surveyor and valuer, annual housing delivery is less than 100,000 units. Erejuwa Gbadebo, CEO, International Real Estate Partnership (IREP), says Nigeria needs dependable data on its housing sector. “One of the biggest problems that we have is lack of data. People still quote 17 million units because there is no other data to prove or disprove it. We talk of homes demolished, burnt or new ones built, but the question is who is taking

record of the number of houses that are being built and the ones we are losing?”, Gbadebo queried in an interview. One of the first things the industry should do, she advised, is to start taking stock of what is available—what house-types are there and what they change hands for. “There should be a central system either online or from bodies such as Nigerian institution of estate surveyors and valuers, she said, adding, “there must be a way of capturing this data so that people can have accurate number so that we should not continue to fight a battle we may have won or will never win”. Housing data, which is taken for granted in other economies including South Africa, is still a big issue in Nigeria and that is why foreign direct investment in the housing sector, especially in the residential segment, is still in fits and starts because there is virtually nothing to guide potential investors. As a part of solutions to the deficit, Matawal canvasses a

Economics of concrete roads underpins need for more govt investment

paradigm shift in approach to providing housing from a conventional process base to more compartmentalised and adaptable strategies. “Conscious and timely efforts are required to adopt strategies that will significantly reduce the cost of building houses and I recommend the provision of affordable housing by harnessing and integrating alternative building technologies and building materials to reduce the cost of building houses in Nigeria”, he said. Building houses are highly capital intensive projects and a bulk of this capital is gulped up in procuring building materials which alone have been estimated to constitute 60 percent of the construction cost. According to Matawal, besides the cost implications of undertaking high volumes of construction projects, there is also the sustainability issue, hence the need to consider alternative building materials and technologies that would be substitutes or complementary to conventional building materials.

he economics of concrete roads pavement as reflected in their durability, safety, strength and cost-effectiveness in the long run underpins need for more governments’ investment in that type of roads infrastructure provision. Concrete roads are exceptionally durable and mostly maintenancefree with expected life of 30 - 40 years compared to 2-15 years for bitumen or asphalt roads. Such roads are also easier to maintain, more eco-friendly and more economical in the long run as attested to by independent reports from multilateral organisations such as the World Bank. The need for government to make the switch to concrete roads pavement arises from the pitfalls of other alternatives which have very high failure rate and short lifespan. Available records show that Nigeria has the largest road network in West Africa and second largest in SubSaharan Africa (SSA). The total road network in the country is estimated to be between 195,000 kilometres and 198,000 kilometres and about 2,627 kilometres of the roads are dualised. Roads are owned by the three tiers of government in the country. Approximately 18 percent is by the federal government, 16 percent by the state governments while 66 percent is owned by local governments. The condition of these roads are so poor that only about 35 percent of the network is motorable. This is why AG-Dangote Construction Company has called on governments

at all levels to invest more in rigid pavement for road construction, emphasizing that concrete roads are more affordable, durable, safer and stronger. Ahmed Mansur, Dangote Group’s executive director, stakeholders management and corporate communications, made that call at this year’s Engineering Assembly of the Council for the Regulation of Engineering in Nigeria (COREN) with the theme, ‘The Nigerian built industry: Building a sustainable structure with allied professionals’. Representative of the AG-Dangote at the event, Tunde Jimoh, pointed out, however, that the pavement type chosen depended on a number of factors, including expected traffic wheel loads, load repetition, cost of construction, and maintenance, among others. He said the AG Dangote was constructing the longest concrete road in the country located in Kogi State. The road, known as Obajana-Kabba Road, is a 43-kilometre concrete road project due to be commissioned in December while another one, the 24km ItoriIbese concrete road, has since been delivered. Jimoh, who is the company’s project manager, said the firm would also be delivering the concrete dual carriage Apapa Wharf Road in Lagos this month.“This vision of the development of concrete roads in Africa is being shared by more leaders and governments. The implementation of concrete roads can revolutionise infrastructural development in Nigeria and Africa as a whole,” he assured.

Expectation as Trinity Towers sets for market with innovations, standards in architecture

xpectation is high in the commercial office market as more pipeline developments get ready to come to the market to offer new opportunities and viable options in terms of quality and variety One of such developments is the Trinity Towers which is getting set for the market with its new innovations and standards in architectural designs. An ultra modern office complex located in Oniru, Victoria Island extension in Lagos, Trinity Towers is a flagship project being promoted by The City of David, a parish of the Redeemed Christian Church

of God (RCCG) and it’s designed to provide space for a blend of worship, work and recreation. The edifice, which sits on 10,000 square metres, will have three towers each linked together and separated by corridors. Its special features include a helipad, garden terraces, gymnasium, 5000- seater auditorium, wellness center, and parking spaces for over 650 cars. Trinity Towers will be Nigeria’s first three-tower building, each tower rising 13 floors to give what will be an integrated family centre in a neighbourhood steeped in history, yet at the

forefront of the future. Space, light and aesthetics make it a functional work of art, and its environmental credentials are impeccable with designs that maximise the use of natural light and ventilation with high efficiency glazing to reduce heat loss and reflect ultra-violet rays which will reduce demand on energy consumption. “This is a remarkable project for ITB Nigeria. The design and scope of the project with its attendant structural requirements speaks to our ability as a company to deliver excellent projects that set the standards for architecture

in Nigeria. It also reaffirms our position as leaders in the construction industry”, said George Makhoul, project manager at ITB Nigeria Limited. ITB Nigeria, an innovative construction company providing full and advanced integrated engineering and construction solutions to both private and public sectors, is the contractor on the Trinity Towers development. This iconic development boasts unequaled features and amenities. It is essentially a work of art brought to life with eco-friendly materials and proper utilization of natural light and

ventilation. “We employed high efficiency glazing that reduces heat loss and reflects ultra-violet rays for lower energy consumption. Upon completion, Trinity Towers will, no doubt, be the ideal place for business and relaxation in Victoria Island”, Makhoul assured. The entire project is valued at N2 billion and it’s positioned to raise the bar for contemporary office and relaxation space in Nigeria. It boasts an interior that will position it as a prime residential and commercial property. Its 5000-seater concert hall will have automated and integrated lighting,

sound and video system and state-of-the-art audiovisual facilities suitable for live broadcast. There are also indoor amusements for the kids, retail facility and cinema experience for all the family from the two cinema halls, recreational theme park and shopping Centre. Expectation is that when this property will be coming to the market, the economy should be on its way back to recovery. Gbenga Olaniyan, CEO, Estate Links, whose company is the project’s leasing agent, believes that in the next few months the economy won’t be what it is today, else Nigeria and its people will be in trouble.

Tuesday 21 August 2018

C002D5556

BUSINESS DAY

FEATURE What happened to party’s internal democracy? Political stakeholders and Nigerians have in recent time expressed concern about the eroding internal democracy in the nation’s political parties, Iniobong Iwok, examines the issue and it implications for the country.

n the recently concluded state congress of the ruling All Progressives Congress (APC), one of the grievances of some members of the APC in Lagos state for holding a parallel state congress was because of the refusal of the party leadership to give equal opportunity for all aspirants vying for positions in the party, imposition of candidates by the party’s leadership and abuse of the congress guidelines. Since the advent of the fourth republic in 1999, which also marked a return to democratic rule, after about fourteen years of military rule, there has been a return to party politics, while political parties have become a platform for politicians to contest elections in the country. However, one worrying trend over the years that has characterised party politics in the country is the party’s lack of internal democracy; which can be seen in the way candidates who becomes the flag bearer for these political parties during election are chosen. This trend often lead to crisis, distrust among party members; party structures have been hijacked by political leaders and state governors who turn themselves to semi –god, dictating who occupy a position, while party members seeking elective positions must get their support and blessing before clinching the ticket. In some cases the governor or few part leaders, and individuals who are classified as financials of these parties are often consulted when important decisions are to be taken. For instances , over the last three years since the APC assumed power, several state chapters of the party have been ploughed into internal crisis over control of party structure mostly by the governors and some chieftains of the party often leading to factionalisation of the party and eventual defection of the aggrieved members. Political researcher and Scholar, Michael Egbosiuba, accused state governors of hijacking political parties in the country to perpetuate their selfish agenda. “Some of the state governors have unprecedented sway over their state party machinery to the point of mandating the delegates to vote for a particular candidate. The governors highhanded approach over their state party has made it difficult for democracy to take root at the state and local level. Some House of Assembly members who disagrees with their state governors faces impeachment, suspension or expulsion from the House. “Some dissolves Local Government Areas where the chairman appears to be too independent even though they are supposed to be the third tier of government with separate budget. All Peoples Democratic Party (PDP) governors won re-election. Those who are term limited went as far as hand picking their successors”. Political scholar and writer, Michael Egbosiuba, berated state governors in the country for personalising and hijacking political party’s structures to perpetuate their selfish agenda. “Some of the state governors have unprecedented sway over their state

Adams Oshiomhole

party machinery to the point of mandating the delegates to vote for a particular candidate. The governors highhanded approach over their state party has made it difficult for democracy to take root at the state and local level. Some House of Assembly members who disagrees with their state governors faces impeachment, suspension or expulsion from the House. “Some dissolves Local Government Areas where the chairman appears to be too independent even though they are supposed to be the third tier of government with separate budget. All Peoples Democratic Party (PDP) governors won re-election. Those who are term limited went as far as hand picking their successors”. However, political analysts, Idowu Omolegan however believe political parties in the country have always lacked internal democracy from the first republic, stressing that it was kind of politics the early politician encouraged but had worsen in recent times. “Internal democracy with in political parties in Nigeria is nothing to write home about; I actually think over the years it has been institutionalised by our fore-fathers. In those days the likes of Azikiwe, Awolowo and co, may be with the exception of some northern politicians, they often handpicked those they want in positions. In the days of UPN if Awolowo wanted anybody to occupy any position he just point to who he want. “If you look at the history of the country, most of the political parties in the first republic were controlled by individuals and leaders, Akintola and co were in control. So the issue has been there since the country take over from the colonial masters. Except there is a change of approach and orientation among the political class; we may not be able to grow with this kind of politics. “Look at what happened in Ekiti; Fayose put his Deputy in office because; he was the one that would protect his interest when he leaves office. In the first republic the Sardauna of Sokoto choose Tafawa Balewa as the prime minister of the country against other people if Tafawa wanted to take any decision he run to Sardauna for consultations.

Uche Secondus

“Presently people take about Awoism what kind of ideology is that? And that is why you see them moving from one party to another. What is happening now is a minus to us. We need to change if we are to grow. However, former Deputy Speaker of the Lagos state House of Assembly Honourable, Toun Adediran, attributed greed and lack of contentment among the political elites for the scenarios, but stressed that the trend would change as democracy take it root in the country. “Everything depends on self-discipline, personally, I think a lot of our politicians are self-centred, they lack contentment, a lot of them believe everything should be for me alone, they are not patient and don’t think of the masses. That is why you see cross -carpeting everyday within the system, because when of you think you are qualify for a position and rather someone less qualified is chosen by a god-father; you would want to defect and go to a place where you are appreciated. “Thing are changing and would change as democracy take it root in the country. You saw what happened in the recent Ekiti governorship election, and now we have Osun governorship election coming soon, that is why the National chairman of the party have directed that we have an open system for the governorship primaries. “This is how things would change in the party; I think it would change gradually. But when you start favouring some people, they would say let us move to another party that is why we are having many political parties some of them should merge”. Also Lagos state chairman of the Alliance for Democracy (AD), and chairman of inter party alliance (IPAC), Kola Ajayi, attributed the increasing lack of democracy within political parties in the country, stressing that it had contributed to poor governance and make elected public office holders arrogant. “The internal democracy may not be there as you think, but we have it in the smaller parties; it is in our smaller parties, the major parties may not have it; if you complain they may hold the primaries and manipulate it to favour their loyalist”. “The trend portends danger, the

future of the country look bleak, because it is through the parties that leaders that govern the country are emerge from. That is why a lot of them are misbehaving after winning election and assuming office; because they think they can only be answerable and loyal to the god-fathers only” Political scholar and writer, Michael Egbosiuba, berated state governors in the country for personalising and hijacking political party’s structures to perpetuate their selfish agenda. “Some of the state governors have unprecedented sway over their state party machinery to the point of mandating the delegates to vote for a particular candidate. The governors highhanded approach over their state party has made it difficult for democracy to take root at the state and local level. Some House of Assembly members who disagrees with their state governors faces impeachment, suspension or expulsion from the House. “Some dissolves Local Government Areas where the chairman appears to be too independent even though they are supposed to be the third tier of government with separate budget. All Peoples Democratic Party (PDP) governors won re-election. Those who are term limited went as far as hand picking their successors”. However, political analysts, Idowu Omolegan however believe political parties in the country have always lacked internal democracy form the first republic, stressing that it was kind of politics the early politician but had worsen. “Internal democracy with in political parties in Nigeria is nothing to write home about; I actually think over the years it has been institutionalised by our fore-fathers. In those days the likes of Azikiwe, Awolowo and co, may be with the exception of some northern politicians, they often handpicked those they want in positions. In the days of UPN if Awolowo wanted anybody to occupy any position he just point to who he want. “If you look at the history of the country, most of the political parties in the first republic were controlled by individuals and leaders, Akintola and co were in control. So the issue has been there since the country take

over from the colonial masters. Except there is a change of approach and orientation among the political class; we may not be able to grow with this kind of politics. “Look at what happened in Ekiti; Fayose put his Deputy in office because; he was the one that would protect his interest when he leaves office. In the first republic the Sadauna of Sokoto choose Tafawa Balewa as the prime minister of the country against other people if Tafawa wanted to take any decision he run to Sadaruna for consultations. “Presently people take about Awoism what kind of ideology is that? And that is why you see them moving from one party to another. What is happening now is a minus to us. We need to change if we are to grow. However, former Deputy Speaker of the Lagos state House of Assembly Honourable, Toun Adediran, attributed greed and lack of contentment among the political elite for the scenarios, but stressed that the trend would change as democracy take it root in the country. “Everything depends on self-discipline, personally I think a lot of our politicians are self-centred, they lack contentment, a lot of them believe everything should be for me alone, they are not patient and don’t think of the masses. That is why you see cross -carpeting everyday within the system, because when of you think you are qualify for a position and rather someone less qualifies is chosen by a godfather; you would want to leave and go to a place where you are appreciated. “Thing are changing and would change as democracy take it root in the country. You saw what happened in the recent Ekiti governorship election, and now we have Osun governorship election coming soon, that is why the National chairman of the party have directed that we have an open system for the governorship primaries. “This is how things would change in the party; I think it would change gradually. But when you start favouring some people, they would say let us move to another party that is why we are having many political parties some of them should merge”. Also Lagos state chairman of the Alliance for Democracy (AD), and chairman of inter party alliance (IPAC), Kola Ajayi, attributed the increasing lack of democracy within political parties in the country, stressing that it had contributed to poor governance and make elected public office holders arrogant. “The internal democracy may not be there as you think, but we have it in the smaller parties; it is in our smaller parties, the major parties may not have it; if you complain they may hold the primaries and manipulate it to favour their loyalist”. “The trend portends danger, the future of the country look bleak, because it is through the parties that leaders that govern the country are emerge from. That is why a lot of them are misbehaving after winning election and assuming office; because they think they can only be answerable and loyal to the godfathers only”

BUSINESS DAY

C002D5556

Tuesday 21 August 2018

Markets + Finance ‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

FBN Holdings Plc: Profit growth driven by increase in non-interest income BALA AUGIE

irst Bank Nigeria (FBN) Holdings Plc just released its half year ended June 30th 2018 financial results that showed improvement in key ratio as the lender is gradually surmounting the headwinds caused by an economic downturn of 2016. For example, there have been remarkable improvements in asset quality as non performing loans (NPLs) and impairment on financial assets dropped, thanks to an excellent risk management strategy. Electronic banking was also a major driver of revenue growth as FirstBank opened a digital laboratory as part of its strategy to drive innovation in the digital banking space. The stellar performance means shareholders will drink from wine poured from

a flagon into a golden goblet as the company’s consistent earnings growth in 2918 will result in share appreciation, hence magnifying earnings. Growth in non interest income underpins revenue For the first six months through June 2018, gross earnings grew by 1.60 percent to N293 billion from N288.8 billion as at June 2017; driven by a 21.40 percent growth in non interest income. On the other hand, interest income declined by 3 percent to N225.40 billion in June 2018 from N232.37 billion the previous year. The drop was due to declining yields on investment securities as short term government securities have fallen to around 11 percent and 13 percent from an all time high of between 18 percent and 22 peecent in the most part of 2017. Noninterest income (NII) rose by 21.4 percent year on year (y-o-y) to close at N61.3 billion as at June 2018.

Adesola Kazeem Adeduntan, managing director, CEO, FBN Holdings Plc

The primary drivers were improved revenue from electronic banking fees (+40.8 percent), accounts maintenance (+40.7 percent), net insurance premium (+9.8

percent) as well as foreign exchange income (+158.5 percent). Fees and commission income (F&C) grew by 13.3 percent y-o-y to N41.7 billion

in June 2018 from N36.80 billion the previous year. Excluding FX revaluation gain, non interest income was up by 15 percent y-o-y indicating the underlying revenue generating capacity and reflecting the results of the ongoing digital banking initiatives. Fx gains, growth in E banking underpins profit Profit before tax increased by 14 percent to N38.90 billion in June 2018 from N35.60 billion as at June 2017. Profit after tax increased by 22.70 percent to N33.50 billion in June 2o18 as against N29.50 billion as at June 2017. The growth in profit was largely driven by a reduction impairment charge and gains from foreign exchange transaction. Total operating expenses increased by 2.30 percent to N119.30 billion as at June 2018, which is lower than the headline inflation rate of 11.20 percent. Net interest margins decreased to 7.10 percent in the period under review from 8.50 percent as June 2017 on the back of drop in short term government securities. Improvement in key profitability ratio FBN Holdings Plc has utilized the resources of shareholders in generating higher profit as return on average equity (ROE) increased to 10.0 percent in June 2018 from 9.90 percent the previous year. Similarly, return on average assets moved to 1.30 percent to N1.30 billion in June 2018 as against 1.2 percent as at June 2017. Excellent risk management strategy pays off as asset quality improves The lenders, nonperforming loans (NPLs) to gross loans reduced to 20.80 percent in June 2018 from 22.0 percent as at June 2017, thanks to strong recovery and mediation. Nonperforming loans fell to N455.80 billion in June 2018 from N520.0 billion in the previous year. There has been improvement in loan book as impairment charges on financial charges reduced by 52.80

BD MARKETS + FINANCE (Business Team lead: PATRICK ATUANYA - Analysts: BALA AUGIE and LOLADE AKINMURELE)

percent to N52.80 billion in June 2018 as against N62.40 billion the previous year. Cost of risk declined to 4.7 percent in June 2018 from 5.5 percent June 2017. Net gross loans and advances declined by 7.10 percent to N1.85 trillion in June 2018 from N2.0 trillion as at June 2017; The reduction in loans was due to moderated risk asset creation and pay down on existing facilities • 98 percent of the Group loans and advances is accounted for by the Commercial Banking business, while the balance of 2% is from the Merchant Banking and Asset Management business • Deposits from customers were up 4.10 percent to N3.20 trillion in the period under review from N3.10 trillion as at June 2017. “The Commercial Banking Group reported a relatively strong set of results and I am pleased to report consistent improvement towards our strategic objectives. This is reflected in a strong 28.5% y-o-y increase in noninterest income, 15.5% y-o-y reduction in the impairment charge and a marginal increase of 0.9% y-o-y in operating expenses, despite the high inflationary environment. It is clear that our efforts to enhance our revenue generating capabilities, strengthen the risk management and control environment as well as to optimise efficiencies within our business are paying off,” said Adesola Adeduntan, the MD/CEO of FirstBank and its Subsidiaries. “We remain focused on maximizing the potential of our business, innovating to expand access to new markets and increasing the contribution of our international subsidiaries, using technology as a key enabler. We expect further improvements in the coming periods, from growth in the quality and yields of the loan book to enhanced remediation efforts, service delivery excellence and the risk and control environment. I am confident in the capacity of our business to deliver the expected results,” summed Adeduntan.

Tuesday 21 August 2018

C002D5556

BUSINESS DAY

C002D5556

Tuesday 21 August 2018

Live @ the Stock exchange Prices for Securities Traded as of Monday 20 August 2018 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. 274,815.73 9.50 -1.04 159 32,685,162 UNITED BANK FOR AFRICA PLC 278,725.28 8.15 -2.40 359 42,720,793 686,013.39 21.85 -3.10 374 36,664,571 ZENITH INTERNATIONAL BANK PLC 892 112,070,526 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 344,594.81 9.60 -2.04 233 15,581,441 233 15,581,441 1,125 127,651,967 BUILDING MATERIALS DANGOTE CEMENT PLC 3,663,709.09 215.00 4.32 86 1,147,239 LAFARGE AFRICA PLC. 241,121.31 27.80 - 15 26,678 101 1,173,917 101 1,173,917 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY LTD 382,488.96 650.00 - 13 3,513 13 3,513 13 3,513 1,239 128,829,397 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 71,113.99 74.55 - 19 4,927 OKOMU OIL PALM PLC. PRESCO PLC 60,000.00 60.00 - 14 8,194 33 13,121 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,830.00 0.61 - 2 10,100 2 10,100 35 23,221 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 1,164.81 0.44 - 4 7,432 JOHN HOLT PLC. 225.71 0.58 - 7 46,686 S C O A NIG. PLC. 2,111.93 3.25 - 0 0 45,525.75 1.12 -2.61 67 3,749,757 TRANSNATIONAL CORPORATION OF NIGERIA PLC 36,304.34 12.60 - 34 189,048 U A C N PLC. 112 3,992,923 112 3,992,923 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 33,000.00 25.00 - 14 34,975 165.00 6.60 - 0 0 ROADS NIG PLC. 14 34,975 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT CO. LIMITED 4,079.48 1.57 -8.19 14 668,896 14 668,896 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 11,300.89 45.20 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 24,014.43 9.00 - 1 300 1 300 29 704,171 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 14,406.27 1.84 - 5 13,840 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 1 35,944 GUINNESS NIG PLC 197,134.45 90.00 - 21 131,079 INTERNATIONAL BREWERIES PLC. 302,574.34 35.20 - 19 56,458 NIGERIAN BREW. PLC. 799,690.21 100.00 -2.91 65 1,998,911 111 2,236,232 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 38,500.00 7.70 - 31 225,509 DANGOTE SUGAR REFINERY PLC 177,600.00 14.80 -1.35 57 954,454 FLOUR MILLS NIG. PLC. 88,158.16 21.50 -2.27 36 561,266 HONEYWELL FLOUR MILL PLC 11,578.09 1.46 -7.59 28 1,180,725 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 1 500 N NIG. FLOUR MILLS PLC. 1,158.30 6.50 - 1 279 NASCON ALLIED INDUSTRIES PLC 52,988.77 20.00 - 19 320,938 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 173 3,243,671 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,969.84 10.10 1.00 15 355,592 NESTLE NIGERIA PLC. 1,188,984.38 1,500.00 - 15 111,100 30 466,692 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 3,377.28 3.24 - 3 2,278 3 2,278 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 51,814.73 13.05 -7.12 32 193,443 UNILEVER NIGERIA PLC. 301,612.78 52.50 -4.55 34 322,127 66 515,570 383 6,464,443 BANKING DIAMOND BANK PLC 25,708.03 1.11 1.83 63 4,104,629 ECOBANK TRANSNATIONAL INCORPORATED 376,165.80 20.50 -2.61 63 2,707,180 FIDELITY BANK PLC 46,939.17 1.62 -2.41 65 3,178,892 GUARANTY TRUST BANK PLC. 1,087,482.07 36.95 -2.76 199 15,398,087 JAIZ BANK PLC 15,616.05 0.53 -1.85 13 534,137 SKYE BANK PLC 6,940.15 0.50 4.17 56 18,319,528 STERLING BANK PLC. 37,427.54 1.30 3.17 22 3,349,572 UNION BANK NIG.PLC. 161,620.18 5.55 - 26 293,685 UNITY BANK PLC 9,234.58 0.79 -2.47 23 1,682,115 WEMA BANK PLC. 25,073.40 0.65 - 15 80,645 545 49,648,470 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE COMPANY PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,851.14 0.70 2.94 24 3,335,155 26,775.00 2.55 - 9 137,898 AXAMANSARD INSURANCE PLC CONSOLIDATED HALLMARK INSURANCE PLC 2,100.00 0.30 - 2 500,000 CONTINENTAL REINSURANCE PLC 14,521.84 1.40 - 4 354,500 CORNERSTONE INSURANCE COMPANY PLC. 3,387.79 0.23 - 6 73,265 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 1,913.74 0.50 - 0 0 GREAT NIGERIAN INSURANCE PLC GUINEA INSURANCE PLC. 2,149.00 0.35 - 0 0 INTERNATIONAL ENERGY INSURANCE COMPANY PLC 539.32 0.42 - 0 0 LASACO ASSURANCE PLC. 2,343.50 0.32 3.23 7 250,710 LAW UNION AND ROCK INS. PLC. 3,480.03 0.81 - 0 0 LINKAGE ASSURANCE PLC 5,920.00 0.74 - 2 103,000 MUTUAL BENEFITS ASSURANCE PLC. 2,400.00 0.30 - 6 199,018 N.E.M INSURANCE CO (NIG) PLC. 15,049.43 2.85 - 15 456,734 NIGER INSURANCE CO. PLC. 3,095.79 0.40 - 2 500,085 PRESTIGE ASSURANCE CO. PLC. 2,175.92 0.57 - 1 1,000 REGENCY ALLIANCE INSURANCE COMPANY PLC 1,600.50 0.24 4.35 5 1,602,173 SOVEREIGN TRUST INSURANCE PLC 2,168.61 0.26 -3.85 13 997,100 STANDARD ALLIANCE INSURANCE PLC. 5,422.63 0.42 - 0 0 4,483.72 0.48 - 0 0 STANDARD TRUST ASSURANCE PLC SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 50,216 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 1 140 UNIVERSAL INSURANCE COMPANY PLC 7,040.00 0.44 - 0 0 VERITAS KAPITAL ASSURANCE PLC 3,605.33 0.26 - 0 0 WAPIC INSURANCE PLC 4,550.13 0.34 -2.86 77 10,363,046 175 18,924,040 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,658.62 1.60 - 11 622,000

11 622,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,914.00 1.17 - 1 1,170 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC 5,922.05 1.42 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,664.87 0.50 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 1,170 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,100.00 4.05 - 31 368,328 30,762.15 5.23 - 10 13,742 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 35,644.88 1.80 5.88 38 775,089 411.91 552.20 - 0 0 NIGERIA ENERYGY SECTOR FUND ROYAL EXCHANGE PLC. 1,389.25 0.27 - 1 1,000 508,717.82 50.30 0.50 23 1,888,281 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 16,920.00 2.82 -6.62 78 1,740,085 ValuAlliance Value Fund 3,312.39 103.20 - 0 0 181 4,786,525 913 73,982,205 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 1,030.41 0.29 - 3 104,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 3 104,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 9,225.00 6.15 - 2 5,700 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 18,296.91 15.30 - 21 133,755 MAY & BAKER NIGERIA PLC. 2,234.40 2.28 - 13 188,787 1,035.90 0.60 - 4 20,215 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 411.96 1.90 - 0 0 PHARMA-DEKO PLC. 40 348,457 43 452,457 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 680.40 6.30 - 2 598 435.56 0.88 - 1 1,000 TRIPPLE GEE AND COMPANY PLC. 3 1,598 PROCESSING SYSTEMS CHAMS PLC 1,596.66 0.34 - 0 0 E-TRANZACT INTERNATIONAL PLC 16,590.00 3.95 - 0 0 0 0 3 1,598 BUILDING MATERIALS BERGER PAINTS PLC 1,898.34 6.55 - 6 28,580 19,845.00 28.35 - 4 3,015 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 38,831.34 30.90 - 0 0 844.14 0.40 - 0 0 FIRST ALUMINIUM NIGERIA PLC MEYER PLC. 361.24 0.68 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 1,279.20 10.40 - 0 0 PREMIER PAINTS PLC. 10 31,595 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,681.16 4.18 - 11 124,785 11 124,785 PACKAGING/CONTAINERS BETA GLASS PLC. 38,997.82 78.00 - 4 1,509 GREIF NIGERIA PLC 388.02 9.10 - 0 0 4 1,509 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 3 1,000,500 3 1,000,500 28 1,158,389 CHEMICALS B.O.C. GASES PLC. 1,752.39 4.21 - 1 5,400 1 5,400 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 57.20 0.26 - 4 9,033 4 9,033 5 14,433 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,628.30 0.26 -7.14 20 712,453 20 712,453 INTEGRATED OIL AND GAS SERVICES OANDO PLC 59,049.21 4.75 -3.06 76 1,068,449 76 1,068,449 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 - 5 2,266 CONOIL PLC 16,863.04 24.30 - 7 11,869 ETERNA PLC. 8,216.11 6.30 - 24 431,838 FORTE OIL PLC. 29,957.07 23.00 -0.65 34 427,425 MRS OIL NIGERIA PLC. 8,701.65 28.55 - 1 15 TOTAL NIGERIA PLC. 62,132.50 183.00 - 10 5,472 81 878,885 177 2,659,787 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,818.75 1.93 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 541.12 0.46 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,360.13 5.70 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 365.70 0.78 - 0 0 0 0 HOSPITALITY TANTALIZERS PLC 674.44 0.21 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 5,799.84 2.79 - 5 201,200 IKEJA HOTEL PLC TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 51,302.73 6.75 - 1 600 6 201,800 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 5,280.00 0.44 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 LEARN AFRICA PLC 864.02 1.12 - 3 57,000

Tuesday 21 August 2018

BUSINESS DAY

Tuesday 21 August 2018

STRATEGYBRIEFING IDEAS THAT POWER High PERFORMANCE

How to make your strategy work: Why 90% of strategies fail and what you can do about it BRIAN REUBEN

arketing forklore has it that years ago a new manager took over Parker Pens. His first action was to assemble the management board and ask them a very simple question: who is our major competitor? One by one the board members began to educate the boss with what they thought the answer was. One answered Shaeffer, since Schaeffer was in the ball pen business as they were. The boss shook his head, it was not Schaeffer. Shaeffer produced a pen very similar to the Parker. It had a good reputation for quality, had a similar stylish finish and quite expensive like Parker. The boss explained that although they compete to an extent with Shaeffer, they were not their main competitor. Another stepped forward and offered his opinion, ‘it is Biro’. Although Biro Swan was not marketing at the top of the market like Parker, this person thought that they both served the same purpose, which is writing and that way can be seen as their direct competitor. So now the market definition has now moved from quality fountain pens to writing implements. Under this consideration makers of pencils might also be considered as part of the competition. The new director was impressed. His people

were beginning to think out of the box. But, no, Biro Swan was not. The board members became confused. One look at another. Minutes passed, the room was filled with much silence you could hear a pin drop. Another man summoned courage and stood up. Every eye was set on him. ‘Its the telephone! We are in the communication business. The telephone is fast gaining more wide spread use in recent years. People can either write with their pen or make a call.’ Everyone nodded, this must be it. The director looked up and smiled, apparently happy that his people were making use of their mind. Under this new model, typewriters and word processors form part of the competition. But again, it was not the telephone. Then the director offered his view of who their major competitor is. His answer will shock you. It was Ronson cigarette lighter! His explanation was that Parker was in the quality gift business rather than writing implement business. An analysis of the Parker sales revealed that people purchased the pens primarily as gift to other people.When they considered what to buy often a major alternative was a quality cigarette lighter and hence the definition of the market. The definition was the controlling factor in everything Parker did and how they did it. Packaging assumes a more important

role, as does the development and maintenance of a superior quality image. Price is perhaps less important than might have been thought under alternative market definitions. Distribution (through the outlets where potential customers buy gifts) also becomes more important. The most important element of a marketing strategy is the definition of the market in which a business is. If you miss this, your business is going to be a matter of trial and error. There are three basic question every business leader must find the accurate answers to if strategy must be done right. The first one is who are we? What defines us? What do we call ourselves? This is the starting point. Clearly all high performing businesses have an accurate definition of themselves. It is the purpose of your business that defines your business. First you have to understand what business you are into and why you are in that business. This purpose is what is called mission, often summarized in a mission statement. But the mission itself is defined by the business you are into in the first place. The definition of the business you are in is what defines your whole strategic direction. You have to get this right if you are going to build a high performing business. The clearer your view of what business you are in, the wider your chances of building that business into a global giant.

Consider Google(now officially Alphabet), in the beginning they set out to ‘organize the world’s information and make it universally assessable.’ By this difinition Google could not consider Yahoo, Ask or AOL as its major competitor. They did not define themselves a search company and that has seen them go from the core search business to the android operating system to nascent businesses like self-driving cars. That also defined how they pursued their mission which is what is called strategy. In all situations and under all circumstances in any environment, any business can thrive. When businesses fail, its an indication that the leaders of that business have disconnected from what they should be about. As we recite the mantra of change in the business world everyday, its important we understand that there are things which cannot change after all. The basic drivers of business success are timeless. They are not affected by disruption or business uncertainties. In fact, it is the understanding of these basic principles that empowers a business to conquer the challenges in its environment and win as it ought to. So before you pay for another TV advert,

before you bring in another business consultant or roll out a new product, sit down and ask yourself, ‘what business are we in?’ And think this through. Don’t be in a haste. You can’t get any strategy right neither can you know who your competitors really are nor how to draw your strategic map except you have the accurate answer to this. The book Profit from the Core by Chris Zook and James Allen revealed that between 1988 and 1998, seven out of eight companies in a global sample of 1,854 large corporations failed to achieve profitable growth. This means that these companies were unable to deliver 5.5% annual real growth in revenues and earnings while earning their cost of capital. Yet 90% of the companies in the study had developed detailed strategic plans with much higher targets. Is it any surprise to know why business leaders have a problem with executing strategies? Forming strategies is not as important as defining your business in the first place. Interestingly no one else can do this for you. This is what you sit down with your board and resolve once and for all. No matter how long it takes to figure it out, it will always worth the while.

Brian is an author, advisor to business leaders, keynote speaker and an entrepreneur. He has trained and advised senior executives at renowned organizations including Africa Reinsurance Corporation, UAC, United Securities Limited, BusinessDay among others. Brian is the Director of BusinessDay Training and sits on the board of a number of organizations in Africa.

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33 INSIGHT/INNOVATION

Tuesday 21 August 2018

BUSINESS DAY

Nigeria’s population: Asset or liability

China

Nigeria

Figure 1: China’s GDP per capita diverged from Nigeria’s starting in 1990 leading to a large gulf in wealth between the two countries. Source: World Bank ulation in the country. Even worse, only 401,996 or 27.2% of these people gained admission into university. In a country with a population of 180 million and a median age of 18.3 years, admitting only about 400,000 students into university in a year shows a criminal underinvestment in human capital. Worse, many argue that the quality of education, skills and learning acquired in these institutions is at best suspect, and at worst, non comparable to institutions in African countries such as South Africa and Egypt. According to the World Bank, Nigeria’s tertiary school enrolment in 2011 was 10% of the eligible population. In Brazil, China, and India enrolment was 43%, 25% and 22% respectively.

growth (quantity), without corresponding growth in productivity and income (quality), will continue to drive up competition for existing natural and fiscal resources. While there is a direct relationship between population and food, clothing, and housing challenges, there is an inverse relationship between rising incomes and those challenges. As incomes are squeezed, competition for available resources rises. Many of the conflicts we see today, though not caused, are underpinned by the competition for resources. In the context, unemployment is an indication that Nigeria’s young population is losing out. Following recession in 2016, and subsequent slow recovery, 52.7 percent of Ni-

Gross Capital Formation as a % of GDP

60 50 40

30 20

China

2014. More recently, in 2001, China has joined the World Trade Organization (WTO) in order to increase its exports and enable it to fully take part in the global economy. China’s extraordinary growth from a sleeping dragon to the second biggest economy in the world holds lessons for Nigeria - a large population is only an asset if proper investments are made, and the right policies are implemented. In contrast to China since 1978, Nigeria has failed to invest in the right areas. In comparison to China’s electric power consumption per capita growth of 1298% between 1980 and 2014, Nigeria’s consumption only grew by 111%. From Figure 2, the divergence in real income per capita that occurred after 1990 is no surprise - China invested in increasing its productive capacity while Nigeria did not. Instead, Nigeria has mostly squandered its oil wealth on expanding the civil service and on paying debts, which did not build the infrastructure they were purportedly incurred for. The situation has not improved in recent years - Nigeria’s capital expenditure in 2016 was only N173 billion or only 3.9% of the total expenditure of N4.4 trillion. Nigeria’s record on human capital development is just as bad as its record on physical capital development. According to the NBS’s 2016 Social Statistics Report, in 2014 the number of children in primary school fell to 23.1 million from 24.19 million in 2013. We find this incredible, that in a country with a growing population of primary-school aged children, the number of children in primary school is dropping. Just as alarming is that, according UNICEF, there may be as many as 10.5 million children out of school in Nigeria. The story is similar in the secondary and tertiary stages of education in Nigeria. The Social Statistics Report shows that in 2015 there were only 1.475 million applications into a Nigerian university, a tiny fraction of the youth pop-

$9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0

GDP Per Capita

1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

in the world, and yet, for much of the 19th and 20th Century, it lagged behind the West, and even its Asian neighbours, Japan and South Korea. Over the thirty-year period between 1960 and 1990, China’s GDP per capita grew at an annualized rate of about 4.3% from about $90 to $318 despite having a population of over 1.1 billion by 1990. In fact, despite China’s superior population size, it was slightly poorer than Nigeria, which had a GDP per capita of $322 in 1990. Additionally, Nigeria’s annualized GDP per capita growth rate, at 4.2%, was very similar to China’s. In effect, the Chinese and Nigerian economies performed very similarly over the 30-year period from 1960 to 1990 and both countries were in a nearly identical position by the end of that period. Clearly, China’s large population was not enough to magically make it a prosperous nation. However, by 2016, China’s GDP per capita had grown to about $8000 while Nigeria’s was only a little over $2000 - about a quarter of China’s (see Figure 1). How did the gap between two countries that were at par only 26 years ago become so large? The secret behind China’s spectacular economic growth over the last quarter century is in certain economic reforms that China took beginning in the late 1970s. After the death of Mao Zedong who had ruined China’s economy with disastrous policies and his tyrannical rule, Deng Xiaoping came to power in 1978 and soon after, he began to liberalize and modernize the Chinese economy. Among the important reforms that Deng Xiaoping undertook were de-collectivizing the agricultural sector, allowing private production by farmers; establishing Special Economic Zones (SEZs) such as Shenzhen where new free-market policies could be tested; allowing foreign investment; privatizing some state owned companies and removing price controls on some products. In addition to liberalizing the Chinese economy, Deng Xiaoping also reformed the Chinese educational system - increasing the focus on science and technology research and sending pupils to study abroad to develop skills that China did not have. Furthermore, these economic and education reforms and policies were underpinned by spectacular infrastructural development. According to the National Bureau of Statistics of China, railway mileage increased by about 39,000 km between 1978 and 2010 while highway mileage more than tripled over the same period. Additionally, electricity consumption increased from 281 kWh per capita in 1980 to 3927 in

Continued from back page

with hopelessness as their weapon, are responding with migration, both legally and illegally, robbery, advance fee fraud (419), and kidnapping; by abusing drugs such as codeine and Tramadol; or by engaging in militant activities in order to demand a larger share of government revenues. These outcomes are predictable in the context of “economics of conflict” that have been studied by economists such as Paul Collier of Oxford University, United Kingdom, and Karl Warneryd of Stockholm School of Economics, Sweden. Is manufacturing still a viable path to growth? Given current global economic and technology shifts, Nigeria’s necessary investments in education and infrastructure, does not necessarily confer on it the pattern of economic growth experienced in China. China grew at an annualized rate of 13.6% between 1991 and 2016 by becoming the world’s manufacturing centre. Although it has recently begun moving into more hightech industries, the foundation of China’s economic growth was low-cost manufacturing for developed economies. However, as a result of technological advancements in robotics, additive manufacturing, and artificial intelligence, this path to growth might be closed soon. These technologies will make it easier and cheaper for developed countries to move manufacturing back to their own countries since machines and software programmes will take the place of human beings in the production process. With less reliance on

Nigeria

Figure 2: Gross capital formation (the net increase in physical assets) as a percentage of GDP in Nigeria and China from 1981 to 2015. Source: World Bank If Nigeria fails to reverse its current spending trends and redirect its spending towards the requisite areas - education, infrastructure and health - it will fail to take advantage of its expected population boom. The Nigerian economy will be unable to provide enough jobs for the rapidly growing numbers of young people, which could lead to an increase in criminal activities and the number of people seeking to migrate both legally and illegally - out of Nigeria. The population bomb Nigeria’s population

gerians aged 15 to 34 were either unemployed or underemployed. Looking at just those aged 15 to 24, the numbers are even worse with up to 67.3% either unemployed or underemployed. 50% of people with post-secondary qualifications in the labour force are either unemployed or underemployed (although this data is for the total labour force, not just the youth). The result is an army of out-of-school, out-of-work young men and women with no marketable skills and few prospects for improving their situations. This “army”,

human labour in manufacturing, having lower labour costs and a larger labour force will become less of an advantage for developing countries such as Nigeria. Even jobs outside manufacturing are vulnerable to technological change. However, despite the threat presented by these new technologies, Nigeria’s path to development will still include investing in education. After all, many of these technologies are in early stages of development and there is a small chance that they may end up not fulfilling the early potential they have shown. More

likely though, these technologies will revolutionize manufacturing not by completely removing human beings from the production process but by complementing them. In such a world, highly educated people will work alongside these machines and the only way Nigeria can compete is if its workforce is highly educated. Furthermore, even if all manufacturing and even some service sector jobs become completely automated, a creative and highly skilled workforce will be needed to design further improvements to these technologies, and perhaps create new industries of the future. Just as Uber has made it harder for traditional taxi drivers to make a living, those who are able to operate a smartphone have seen new earnings opportunities opened up to them. To readers of BusinessDay, operating a smartphone might seem like a simple task, but for the 10.5 million out of school children who have never learned to read, it is an impossible task, which locks them out of participating in many simple activities. To enable Nigerians to benefit from the economic opportunities that technology opens up, all Nigerian students will need to be taught basic literacy and numeracy skills. For Nigerians to be able to create these technologies, the number of Nigerians in higher education needs to be increased and the quality of education they receive needs to be improved. Towards a bright 2050 In 1990, Nigeria and China had almost equal GDP per capitas. Now, there is a gulf between the two countries, which is widening every year. But the rapid progress that China has made in barely over a quarter of a century shows that Nigeria can have a bright tomorrow if it makes the right choices today. There are 32 years between 2018 and 2050, a similar period to that during which China transformed its economy and the lives of its people. If Nigeria invests in educating and providing health services for its people, and building the infrastructure that they need to power their homes and factories or to transport themselves or their goods within and outside the country, then the Nigeria of 2050 will be a rising economic power and a land of opportunities for its citizens. However, if it continues to spend the same way it has done in the past - with most spending going towards the bloated civil service, the political class, and their cronies - then it will squander the potential of its people, and turn what should have been a blessing into a curse. •Dr. Ogho Okiti is the former Chief Economist of Businessday, holds a PhD in economics and has served at the Uk Office of National Statistics and the office of the Chief economic Adviser to the President of Nigeria.

34 BUSINESS DAY NEWS

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Investors slam Buharinomics as markets... Continued from page 1

“The Nigerian economy has been very unconducive for business since 2015 which can explain why stocks have performed so poorly since President Buhari defeated Goodluck Jonathan in the election polls. Economic growth slowed, political uncertainty increased, Nigeria experienced a currency crisis and insecurity in the north and middle belt held back market performance for most of the past 3 years,” said Faith Ogedengbe, Research Analyst, GDL Asset Management. Following the current President’s swearing in on May 29 2015, it took six long months for the Presidency to name, screen and approve its cabinet members, a process that never exceeded 2 months since 1999. The political uncertainty during this period pulled the index down by around 14.87 percent before the ministers were finally appointed in November 2015. More trouble followed in 2016 as the problem moved from political to the economy. The continued decline in crude oil prices, followed by the first economic recession in 25 years weighed heavily on stock prices in 2016. Also in 2016, Nigeria suffered the biggest currency devaluation since 1999 in 2016 when Naira to US Dollar exchange rate moved from the official figure of 197 N/$ to 305 N/$. The inflation rate in the country doubled as a result of huge currency devaluation as inflation neared 20 percent at its

peak in 2016. As a result of the economic headwinds, 2016 became the year of the great loss for companies on the local bourse. A total of 17 companies from the NSE 30 index reported significant losses on the books as the economy slumped to a full year negative growth of -1.6 percent. NSE bellwethers that saw their earnings per share decline by over 50 percent in 2016 include Nestle Nigeria, Ecobank, Seplat, Transcorp, Guinness and PZ Cussons. Lafarge Africa and Nigerian Breweries saw their EPS decline by more than 25 percent. The stock market fell by around 9.41 percent in the first five months of 2016 as the administration delayed 5 months to pass an economic stimulus budget to pull the economy out of recession. The stock market rallied 4.56 percent till year end after the budget signing which helped to offset some of the losses earlier in the year, bringing the total market loss in 2016 to 5.27 percent. In 2017 as the economy rebounded to a full year growth of 0.8 percent, the stock market rallied 42 percent as investors got excited by the economic recovery story which was largely supported by the strong rebound in crude oil price. The stock market this year has given up a significant amount of its gains from last year as the NSE index is down 9.36 percent year to date largely due to the political upheaval in the country as the general elections draw closer. Stanbic IBTC bank said in an investor presentation published

yesterday that it sees the political environment as a key risk to income in the second half of the year while International Monetary Fund (IMF) forecast economic growth in Nigeria this year will be 2.1 percent a far cry from the periods between 1999 and 2014. The average economic growth during President Olusegun Obasanjo’s regime was 8.5 percent between 1999 and 2007. Under the stewardship of President Goodluck Jonathan between 2011 and 2015, Nigeria’s economy expanded an average of 4.7 percent, almost half the growth achieved by his predecessor. But under President Buhari, average economic growth fell to a paltry 0.61 percent between 2015 and 2017. If economic growth improves to 2.1 percent this year, average economic growth under Buhari will improve to 0.98 percent. In the last six months alone, the market is down 17.44 percent. With analysts expecting stock prices to decline further as political uncertainty ravages the stock market, it is not unlikely that come February at the day of election, the market performance under the current administration falls into negative territory. The NSE All Share Index dropped by around 602 points on Monday, representing a decline of 1.71 percent as the market closed at 34,663.48 points. Similarly, the Market Capitalization decreased by N220.07 billion, closing at N12.65 trillion. The market dipped significantly on the first trading day since Buhari announced during the weekend that he returned to the country to jail more looters.

Tuesday 21 August 2018

Tinubu nursing presidential ambition in... Continued from page 1

This, he said, explains why Tinubu is supporting President Muhammadu Buhari’s re-election bid in 2019, with the hope that power will return to the South West in 2023. The latest revelations seemed to have cast a doubt on the promise by the Presidency that the Igbo would produce the President in 2023, should the region vote for Buhari in the next general election. The Senate President was reacting to a statement credited to Tinubu where he accused Saraki, Speaker of the House of Representatives, Yakubu Dogara and other defectors that left the APC to PDP on account of automatic tickets promised to them. In a statement personally signed by him on Monday, Saraki traced the sour relationship between him and Tinubu to his opposition to the Muslim-Muslim ticket when the exLagos State governor wanted to be Buhari’s running mate in the build up to the 2015 general elections. Recalling the meetings he held with the APC stalwart to resolve the crisis in the party, Saraki said: “Tinubu himself will recall that during the various meetings he had with me at the time he was pursuing reconciliation within the party, I raised all the above issues. I can also vividly recall that he himself always expressed his displeasure with the style of the government and also mentioned that he had equally suffered disrespect from the same government which we all worked to put in office. I also made the point that whatever travails I have gone through in the last three years belong to the past and will definitely not shape my decisions now and in the future.

“However, during those meetings, the point of disagreement between me and him is that while I expressed my worry that there is nothing on ground to assure me that the administrative style and attitude would change in the next four years in a manner that will enable us deliver the positive changes we promised to our people, he (Tinubu) expressed a strong opinion that he would rather ‘support a Buhari on the hospital stretcher’ to get a second term because in 2023, power will shift to the South-west. This Tinubu viewpoint was not only expressed to me but to several of my colleagues. So much for acting in national interest. “It is clear that while my own decision is based on protecting collective, national interest, Tinubu will rather live with the identified inadequacies in the government for the sake of fulfilling and preserving his presidential ambition in 2023. This new position of Tinubu has only demonstrated inconsistency, particularly when one reviews his antecedent over the years.” The Nation’s Number Three Citizen accused the Buhari administration of consistently treating the “legislature with contempt and acting as if the law making body should be an appendage of the Executive.” According to him, the government excluded many stakeholders who worked strenuously to get the administration into office and treated them like second-class citizens. He pointed out that the National Assembly has not been constructively engaged or carried along in key policy decisions, particularly those that require legislative approval.

EXPLAINER: Lagos embarks on Geographic... Continued from page 2

L-R: Obinna Muogboh, faculty, Lagos Business School and Director of Programme, Management Development Institute; Oseyemwen Ndudi, participant at the programme; Bayo Aderiye, chairman, Health Service Commission, Lagos State; Rene Kiamba, senior manager, sub-Saharan Africa, Global Community Impact, Johnson & Johnson, and Nicole Zefran, communications and administrative officer, Global Business School Network, at the graduation ceremony for managers and leaders of healthcare organisations held at the Sojourner by Genesis Hotel, Lagos.

Nigeria’s economy struggles as NBS sees... Continued from page 1

of the year, when it was 1.95 percent,

Nigeria’s statistician-general Yemi Kale said in an interview with Arise TV aired on Saturday. While the information is still being calculated, “it is looking quite flat,” Kale said. “I expected the numbers should be much better. I think the economy is still struggling.” The statistics office is scheduled to release its second- quarter growth report on Aug. 27 as compiled from the NBS data release calendar.

Nigeria’s economy slumped after a 2014 crash in oil prices. It returned to growth in the second quarter of 2017 aftershrinkinginthepreviousfiveperiods. The economic recovery story of Africa’s largest economy has been a tale of fragile growth, eroded purchasing power of households and unfriendly borrowing rates which have inhibited economic expansion. The International Monetary Fund (IMF) however expects the economy of Africa’s most populous nation to expand by 2.1 percent for 2018, while the international organisation also projects the growth rate for Nigeria’s

GDP in 2019 to be 2.3 percent. The 2018 and 2019 GDP prediction for Nigeria is far less than the figures IMF forecasted for the Africa continent. The Washington-based organisation said in its World Economic Outlook that it expects the SSA region GDP to increase 3.8 percent in 2019. On whether or not the political uncertainties surrounding the forth coming election has effect on the economic growth, the statisticianGeneral, Kale said the political season in Nigeria and for most developing countries always affect the economy and it could be positive or negative. “Positive in the sense that if the atmosphere is not too toxic, then there

Poland and ongoing post-delivery training. Speaking at the signing of the MoU, Melchior said that, the project is currently the largest Geographic Information System (GIS) project in West Africa and a major export of technology from Europe to Nigeria. According to him, one of the key subjects discussed during the meeting was the pioneering nature of this project as the delivered UAVs constitute the most reliable, safest and cheapest way to accurately capture cadastral data less than 10cm accuracy on an ongoing basis. The Asseco CEO said that, “The platforms delivered have been internationally awarded in Poland, Australia and the United States. Their flights can be fully automated and they possess sev-

eral emergency features, such as parachutes enabling repeated vertical landing. “The six operators of Lagos State Ministry of Science and Technology will constitute a competence hub in Lagos and Nigeria in this field. “The project is handled in full cooperation with the Nigerian Civil Aviation Authority and the Office of the National Security Adviser to ensure adherence to all applicable safety and control procedures,” Melchior said. Hakeem Fahm expressed appreciation to Asseco Software Nigeria for the professionalism and performance so far. “Beyond the strategic collaboration between Lagos State Ministry of Science and Technology and Asseco Software Nigeria, this project is a practical example of localisation of technology and knowledge transfer from Europe to Nigeria,” Fahm said.

will be increase in economic activities; people will be spending, politicians will be spending and there will be a bit more money in the hands of consumer and the economy tends to benefit from that,” Kale said. On the other hand, when the political season is toxic, “foreign investors will get scared, they will be taking their money, I think that is what is happening in the Nigeria stock Exchange (NSE), and for the local investors, they will apply the wait and see approach,” kale explained. Comparing Nigeria with the United States, Kale said Nigeria is unlike the U.S where investors know that despite the election uncertainties,

the economy is structured to work in a particular way and the system continues to work. “But in Nigeria we understand that the system and the virtual system are tied to whoever wins, so everybody is nervous; who is going to win? Will the person change the policy? And so when it gets toxic it has a way of squeezing the economy,” kale concluded. Nigeria’s rising political tensions leading to the 2019’s presidential elections and a broader emergingmarket sell off have taken a toll on its Stock Exchange. The local bourse has returned -7.59 percent year to date (YTD).

Tuesday 21 August 2018

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35 NEWS

BUSINESS DAY

Insight: How Oando, Seplat, Sahara, others... Continued from page 1

oco Phillip’s Nigerian business in 2014 moved us from a small E&P

player to one of Africa’s largest indigenous hydrocarbon producers,” Oando told BusinessDay by mail. During the industry downturn, Oando was protected by a $95/bbl hedge on approximately 50 percent of its oil production; the hedge was later reset to $65/bbl resulting in an inflow to the company of $238 million which was used to significantly pay down its debt. Going forward, Oando said it will continue to explore ways to protect its income streams against future oil price shocks. Oando major producing assets includes: Abo Field (OML 125), Ebendo OMLs 60-63, OML 125, OML 56, Development Assets; OML 13, OML 90, OML 134, OML 131, OML 122, OML 145; Exploration Assets; Exclusive Economic Zone (EEZ) 5, EEZ 12, OPL 321, OPL 323, OPL 236, OPL 278, OPL 282. The company current production rate stands at 37,814 boepd (Oil 39 percent, Natural Gas 53percent, and Natural Gas Liquid (NGL) 8percent). “We will continue to explore ways to grow production on our existing assets whilst also looking to take advantage of opportunities to acquire more assets to grow exponentially,” Oando told BusinessDay. In an attempt to reduce exposure to debt and increase profitability, Oando has been restructuring its debt profile since 2014 which has led to a reduction in debt by 74 percent from $2.5 billion to $656 million which was made possible through consistent pay down of debt and restructuring of existing debt, the company told BusinessDay. Seplat Although production was up year on year for Seplat Petroleum Development Company Plc in 2015, the significantly lower oil price realisation and downtime of the third party operated TransForcados System adversely impacted revenue and more than offset the higher gas volumes and prices. “Having been the most active driller in Nigeria in 2014 when we drilled 23 wells, we reduced our rigbased activity to eight development wells in 2015 (four oil and four gas wells) and one work-over of an oil well, all of which were at OMLs 4, 38 and 41,” Stuart Connal, chief operating officer at Seplat said in 2016. In 2016, Seplat’s average total working interest production decreased year on year by 40 percent to 25,877 boepd. Prior to this, Seplat’s working interest production from mid-2015 to February 2016 averaged around 52,130 boepd. The year 2016 amounted to a revenue loss of 44 percent from N113 billion in 2015 to N63 billion in 2016 while it also recorded a post-tax loss up 449 percent in the sum N45 billion in 2016 from a N13 billion profit in 2015. In order to survive the turmoil, Seplat’s board embarked on portfolio expansion as investment were directed towards the gas business and in particular the Phase II expansion of processing capacity at the Oben gas plant. “I am particularly pleased to see the growth in our gas business which in 2016 exceeded the $100 million revenue milestone demonstrating its robustness and providing a solid base from which to grow,” Austin Avuru, CEO of Seplat said.

Also, the board accelerated various initiatives to diversify risk by reducing its reliance on a single export route, both in the short and the long term. One such initiative is the barging solution that utilises its 100,000 bopd capacity pipeline to the Warri refinery from where crude is exported via barge. Barging commenced in May 2016 and by the end of the 2016 3 MMbbls (1.4 MMbbls working interest) of Seplat crude had been monetised via this route. Going forward, the target is to export a gross average of 30,000 bopd on a regular basis, according to the firm. “We have now established a longer-term alternative export route via the Warri refinery jetty and are nearing completion of upgrade works to the infrastructure enabling a doubling of barging volumes to a steady 30,000 bopd gross during Q2 2017,” Austin Avuru, CEO of Seplat said in 2016. Despite recording a 160 per cent growth in revenue from contracts with customers to N105 billion in half year 2018 from N40 billion in half year 2017; Seplat announced plans in July 2018 to further expand profitability and increase operations by drilling it first well in its OML 53 asset. Shoreline Natural Resources In order to survive the tough conditions of 2016 when oil prices were trading below $30 per barrel, Shoreline Natural Resources cut 35 percent of its nearly 2,000 workers while it also halted plans to issue $500 million Eurobonds. Ladi Bada CEO of Shoreline said during the difficult periods of 2015 and 2016 the company reinvested every profit generated back into other businesses within Nigeria. “We are more comfortable working with other local Nigerian firms to obtain services which has a huge multiplier effect on the economy,” Bada said. In a bid to develop the Oil Mining Lease 30 in the Niger Delta and access funds to refinance its existing debt, Shoreline natural resources in January 2018 made a $530 million agreement with Vitol Group in exchange for access to some of the oil it produces which provided the company with cash to refinance existing debt and further develop OML 30 in Nigeria’s oil rich delta region. Chairman of Shoreline Group, Kola Karim, was quoted as saying that the “transformational” deal would enable the company to step up gross production to as much as 100,000bpd over the next year. “Shoreline would seek to boost production to between 80,000 and 100,000bpd this year,” Karim was quoted by Bloomberg to have said. Sahara Energy The triumvirate of Tonye Cole, Tope Shonubi and Ade Odunsi at Sahara Energy are carving a new niche in the oil and gas sector through some shrewd investment, hires and acquisitions. The global slump in prices of crude oil resulted in a significant reduction in upstream investment and Asharami Energy (Sahara Energy’s upstream firm) was not immune to this. “In managing risks, we have had to look internally to ensure that through creativity and innovation, we ventured into new countries, commencing operations in Tanzania, Zambia and looking at more opportunities in other countries,” Sahara Energy said in 2016. In 2016, Asharami Energy total

Late hour rush for Eid-e-Kabir ram at Diko Market, Suleja Local Government Area Council in Niger State. Pic by Tunde Adeniyi

asset value at $257,392,000 was spent on the exploration, seismic acquisition and drilling of three commitment wells, as required by the production sharing agreement. Asharami Energy has 4 onshore assets and 2 deep offshore assets in Nigeria; a shallow offshore asset in Ghana and two deep offshore assets in Cote D’Ivoire. It operates all Nigerian assets except OML 18 where it is in partnership with Eroton while the company is also in partnership with Foxtrot on CI 500 asset and Petroci on CI 502 asset in its investments in Cote D’Ivoire. “One of our major goals is to commence the lifting of past production entitlement of 1.1 million barrels in 2017 on this asset which has proven reserves of 38.2 million barrels,” Asharami Energy said in 2016. Sahara Group which also has a downstream firm known as Asharami Synergy said in 2016 that the organization needs to improve the inherent inefficiencies within the value chain towards creating opportunities for continuous and lasting sustainability of its downstream business. “We leveraged on our capacities and capabilities gained through the operation of our independent affiliates to bridge the existing gap currently faced by the sector,” the CEO of Asharami Synergy Moroti Adedoyin-Adeyinka said in 2016. Reacting to how Asharami Synergy survived 2016, CEO of Asharami Synergy said the company increased its storage terminal located in Ibafon by an additional 19.5Million litre of tank storage for Premium Motor Spirit (PMS); Also, the company increased its aviation storage terminal located at Omagwa International airport in Port Harcourt Rivers State by replacing the temporary 100,000-liter mini tank storage with a two million litres tank storage towards increasing operations following the opening of the airport after a significant period of closure. “These expansions created additional opportunities to better serve our customers and deliver increased value to them,” Adedoyin-Adeyinka said. In 2015, Sahara Energy commenced the process of realigning its assets, operations, and relationships towards building partnerships that would create more synergy for its operations and for improved service delivery which continued through to 2016 after oil prices crashed,

with the organization focusing on Governance and Compliance Management, Strategic Risk Management, Supply Chain Management Efficiency, Personal and Corporate Social Responsibility and its Future Investments. Sahara Group is a leading African Energy (power, oil, and gas) and Infrastructure Conglomerate with operating entities in over 10 countries across four continents - Africa, Europe, Asia and the Middle East. Forte Oil According to Julius Owotuga, Group Executive Director, Finance and Risk Management at Forte Oil the company managed its foreign exchange and subsidy exposure by reducing the importation of petroleum products for the year 2015 which resulted to a 31 percent drop in the sales of fuel. He added further that “Other income increased by 190% due to income from investment in securities held to maturity, freight income from the 100 trucks acquired the previous financial year and sale of investment property”. The firm also exited its dollar denominated loans and converted same to Naira at prevailing exchange rates. The firm recorded a 50 percent decrease in 2016 profit after tax (PAT) to N2.9 billion from N5.8 billion in 2015 despite growth in its revenue by 19 percent which rose to N148.6 billion in 2016 from 2015 in N124.6 billion. Aieto Group In March 2015, Aiteo Eastern E & P, a subsidiary of Aiteo Group, acquired SPDC’s interest in OML 29 as Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited – the other joint venture partners – also assigned their 10 percent and 5 percent interests respectively to Aiteo, giving the company a 45 percent interest in OML 29. OML29 stretches over an area of 983 square kilometres, and includes the Nembe, Santa Barbara and Okoroba Oil Fields, including related facilities such as the 97-kilometre Nembe Creek Trunk Line (NCTL). It also has a 100 kilometres long pipeline with a capacity of 600 thousand barrels per day. In a little over a year, Aiteo Group, a leading energy company in Nigeria, under the leadership of Benedict Peters has ramped up crude production to 90,000 bpd from an average production of the 23,000 bpd after acquiring OML 29 for $2.8 billion

from Shell at a time when local oil companies struggled to manage divested assets. Conclusion The collapse of the oil price from mid-2014 created serious economic crisis for oil-reliant countries, including Nigeria. It also revealed woeful weaknesses in many indigenous oil and gas firms as many of the businesses turned out to be little more than briefcase companies. The oil and gas space is however still systemically important to Nigeria’s financial services sector. Data from Nigeria Bureau of Statistics (NBS) revealed in Q1 2018, the oil and gas sector received the highest credit allocation by banks of 21.9 percent compared with 13.1 percent for manufacturing sector, or 9 percent to governmental institutions. Further analysis showed credits allocation to oil and gas firm as always gained dominance ahead of other segments of the economy with an average of 16.6 percent worth of credit in 2015 which grew to 20.9 percent in 2016 while 2017 allocation stood at 21.9 percent. BusinessDay analysis revealed loans from Access bank to oil and gas companies of N533 billion accounted for 26 percent of its total loan of N2 trillion in 2017. Access banks loans to oil and gas sector in 2017 increased by 7 percent when compared with N498billion of 2016 which had a 45 percent increase compared to N345 billion in 2015. First Bank loans to oil and gas firms in 2017 stood at N739 billion in 2017, which is 6 percent higher to N699billion of 2016 while Zenith bank loans to the oil and gas sector in 2017 stood at N660 billion which was 1 percent shy of N654 billion in 2016 while 2015 loans to oil and gas sector stood at N362 billion. United Bank of Africa (UBA) loan to the oil and gas sector in 2017 stood at N361 billion compared to N363 billion in 2016 while 2015 stood at N202 billion. Although the prices currently average within $70 to $73 per barrel, the apprehension about its continued sustainability is still substantial. Cees Uijlenhoed, financial director in First E&P in a recent interview with the Financial Times expects that by about 2020, based on a proven record of project development, there will be a handful of, maybe eight, strong Nigerian oil companies able to produce 100,000 barrels of oil a day.

Tuesday 21 August 2018

C002D5556

Four primary school teachers get all-expense paid trip to showcase Edo’s education reforms in Canada

our teachers championing the Edo Basic Education Sector Transformation (EdoBEST) Programme in schools across Edo State have clinched an all-expense paid trip to Canada to attend and showcase the state public education reforms at the 27th edition of the Edo National Association Worldwide (ENAW) convention. The teachers are Idehen Ejiye Isaiah of Eguare Primary School, Ujiogba in Esan West Local Government Area (LGA); Erhabor Osasumwen Priscillia of Aisologun-Akenzua Primary School in Ikpoba-Okha LGA; Ogboko Edoghogho Yvonne of Okogbo Primary School, Okogbo, in Orhionmwon LGA, and Noragbon Enogie Osaru, head teacher, Emotan Primary School, Oredo LGA. The trip, according to the special adviser to the governor on Basic Education and chairman-designate, Edo State Universal Basic Education Board, Joan Osa Oviawe, is a form of motivation for the selected teachers, who will showcase in practical terms the reform by the Governor Godwin Obaseki-led administration to Edo people in the Diaspora. “SUBEB created an online portal two weeks ago, asking teachers in Edo State to apply or nominate someone for the all-expense paid trip to Toronto, Canada. “The criteria included that they should tell us about themselves and why they think they

are the best for the trip. At the end, we got 89 entries. After screening we came up with the semi-final list. Those picked were made to face a panel. One Head Mistress, Noragbon and three teachers finally got the slot to represent Edo State in Canada after the final selection. Their passports were processed on Wednesday,” Oviawe said. In a message to the selected teachers, the SUBEB boss explained that the trip would be a mixture of educational and sightseeing experiences, as the teachers will meet with Edo people in Diaspora, visit schools in Canada and also key government functionaries. According to Oviawe, “You are going to Toronto on the Governor’s entourage to attend the annual convention of Edo people in Diaspora. By God’s grace, we will aim to leave by August 29. So, prepare yourself. After the convention, you will stay behind and will visit schools in Toronto and surrounding areas. If there is time, we will visit Ottawa, which is the Canadian capital. “We will do a tour of the Canadian Parliament and visit the residence of the Governor General of the country. The Governor General is the symbolic head of state of Canada, representing the Queen of England. If there is time, we may also visit Montreal, the French speaking part of Canada. Part of the school visit will be to observe their open day among other events.”

A1 NEWS

BUSINESS DAY

Nigeria’s $3.9bn e-commerce industry to spur economic growth JUMOKE AKIYODE-LAWANSON

lthough e-commerce in Nigeria is predominantly urban, the industry recorded about $1.9 billion in 2016, and has been projected to reach an estimated $3.9 billion by 2020 if the right regulations to guard online sales are put in place to match up with global standards, experts say. Electronic commerce is a thriving global industry and has become more popular in Nigeria with increased internet penetration and high numbers of smartphone ownership. In advanced climes where access to the internet, and of course, literacy levels stand at appreciable levels, e-commerce has become a lifestyle for many. Interest-

ingly, global retail sales, of which e-commerce makes up a major part, is projected to rise further to an estimated $27 trillion by 2020. Osita Anthony Aboloma, director-general, Standards Organisation of Nigeria (SON), said earlier this year that Nigeria would only be able to benefit from the digital advantage of e-commerce, which could add a significant value to the country’s Gross Domestic Product (GDP), if the industry was well monitored to ensure optimal service. “With the increasing volumes of consumer complaints being received on the quality of products sold online by the SON, Consumer Protection Council (CPC) and other sister regulatory agencies, it has become necessary to have a

robust regulatory framework in place for this sector. “For instance, products like mobile phones, electrical and electronic devices cannot be physically viewed and tested before purchase online, while the claims on what they can do have been found in many cases to be inaccurate or sometimes out rightly false,” Aboloma said. Also, at an e-commerce forum organised for government agency representatives and stakeholders earlier this year, the issues of lack of trust, security and safety and poor knowledge were all raised as challenges hindering the rapid growth of e-commerce in Nigeria. According to Ezekiel Oseni from the Bank of Industry (BoI) at the event, Nigeria does not have enough regu-

lation around e-commerce and so retailers often hide behind the anonymity of the online space to sell substandard goods to unsuspecting customers. “Apart from the five principles recently introduced by the CPC, which include among others, that any item to be sold online must have full disclosure of description to clearly state its colour, size and any relevant information; sellers must ensure consumer protection privacy, prompt respond time to complaints and redress and to ensure that consumers are not exploited.” Oseni also mentioned that the BoI would not support any substandard product to go into the market, unless it had met all the regulatory requirements.

NNPC, First E&P sign GMoU with host communities in Bayelsa

s part of its commitment to social performance and demonstration of value to its neighbouring communities within the Niger-Delta communities, the Nigerian National Petroleum Corporation (NNPC) and First Exploration and Petroleum Development Company Limited (FIRST E&P) joint venture have signed a global memorandum of understanding (GMoU) with the KEFFES Rural Development Foundation (KDRF) in Bayelsa State. The KRDF is the governing arm of the eight communities that have been identified as the communities to the Assets. The KEFFES communities comprise of Koluama 1, Koluama 2, Ezetu 1, Ezetu 2, Foropa, and Fish Town, Ekeni and Sangana. “KEFFES” is an acronym formed from the initial letter of the names of each of the eight communities. The GMoU is aimed at formalising the partnership between NNPC/FIRST E&P, KDRF and the Bayelsa State government as critical stakeholders in the development of oil mining leases 83 and 85 (the Assets). FIRST E&P is Nigerian oil

and gas company established in 2011 and commenced operations in July 2012. At the signing ceremony held at the Ministry of Mineral Resources, Bayelsa State, the representatives of the eight communities expressed their delight with the GMoU, which seeks to among other things, encourage socio-economic development within the communities. Speaking on the rationale behind the GMoU, Emmanuel Etomi, general manager, corporate services, FIRST E&P, said the joint venture partners were interested in the wellbeing of their neighbouring communities and wish to contribute to their development. “We are particularly happy with our neighbouring communities represented here today. Since we opened conversation and started engagement with them, the response has been good. At every level of our development, we have ensured that the communities are involved because they are critical to our collective success. “As a company, we are particular about our social performance and interested in the good of all our valued community stakeholders”.

L-R: Feyisayo Fatona-Ajayi, head of Lagos office, Nigerian Economic Summit Group (NESG); Lawrence Anukam, directorgeneral, National Environmental Standards and Regulations Enforcement Agency (NESREA); Christian Wessels, founder, Sunray Ventures; Folashade Ambrose-Medebem, director, communications, public affairs and sustainable development, Lafarge Africa; Jide Jadesimi, executive director, business development, LADOL, and Tunde Olatunji, chairman, house committee on industry, Osun State House of Assembly, at the NESG stakeholders’ workshop to unlock investments for a sustainable circular economy, in Nigeria held in Lagos. Pic by Olawale Amoo

TCN tells BEDC localised tripping not its affairs MMA2 to witness disruption over HARRISON EDEH, Abuja

enin Electricity Distribution Company (BEDC) recently alleged that the national grid was highly unstable, with over 2,000 tripping in its network between January and July 2018. In reply, the Transmission Company of Nigeria (TCN) says the alleged statement was clearly misleading because in the subsequent part of the same report, BEDC claimed significant improvement in its services, which could not have been possible if the national grid was weak as alleged. “BEDC has no imbedded generation hence it depends entirely on the national grid and could not have recorded such improvement if the national grid has not also improved,” TCN clarifies in a statement. According to the state-

ment signed by Ndidi Mbah, general manager, public affairs of TCN, since the BEDC does not have embedded generation and does not own its own transmission network, achievements like improved electricity supply to over 54 communities, provision of 24-hour supply covering over 20km in Asaba among others, though commendable, clearly cannot happen if the national grid was as problematic as alleged in the report. The statement further noted that TCN had good working relationship with BEDC management and that both companies were working towards improving power supply to BEDC consumers. TCN, hence, said it would not join issues nor engage in unnecessary blame game with BEDC; however, for the sake of clarity, most of the so-called 2,000 tripping were actually on 33/11kV feeders in BEDC’s network due to faults.

termination of staff appointment IFEOMA OKEKE

perations of not less than five domestic airlines may be disrupted following the decision of the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) National Executive Council (NEC) to picket the activities of Bi-Courtney Aviation Services Limited (BASL), operator of MMA2, over termination of appointment of union members. In a communiqué issued to the media yesterday, ATSSSAN states it condemns in the strongest terms the uncivil manner by which the management of BASL ingloriously terminated the appointment of 26 of its staff that voluntarily joined ATSSSAN. According to the communiqué, “The NEC commended the intervention of

the State Security Services (Airport Command), the Airport Police Command, the Military Commandant (MMIA Airport) and the Nigerian Civil Aviation Authority (NCAA) for the roles they played in seeking amicable resolution of the issue. “NEC thus condemned the deliberate frustration of the efforts of above government agencies by the management of Bi-Courtney. To this end, the NEC resolved that if the management of Bi-Courtney does not recall the terminated staff and allow unfettered unionisation of wiling staff of the company within two weeks from the date of the publication of this communiqué, ATSSSAN shall embark on a series disruption of operations at MMA2 until the management of BASL complies with its demands.”

BUSINESS DAY

Tuesday 21 August 2018

Access Bank Rateswatch Market Analysis and Outlook: August 17 - August 24, 2018

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.95

Q1 2018 — lower by 0.16% compared to 2.11% in Q4 2017

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

24.81 22.28 1.90 11.14 14 14 (+2/-5) 46.46 72.98 1.67

Decreased by 1.41% in June 2018 from N25.17 trillion in May’ 2018 Increased by 0.34% in June 2018 from N22.21 trillion in May’ 2018 Decreased by 1.56% in June 2018 from N1.93 trillion in May’ 2018 Decreased to 11.14% in July’ 2018 from 11.23% in June’ 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% August 15, 2018 figure — a decrease of 1.30% from August start August 17, 2018 figure— an increase of 0.87% from the prior week July 2018 figure — an increase of 4% from June 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI

Friday

17/08/18

10/08/18

Change(%)

35,446.47

(0.51)

12.87 0.27

12.94 0.19

(0.51) 41.08

2.72

2.03

33.94

Friday Rate

Change

(%)

(Basis Point)

17/08/18

10/08/18

Value (N’bn)

MONEY MARKET NIBOR Tenor

OBB

7.3300

8.4200

(109)

O/N

8.3300

9.2500

(92)

CALL 30 Days 90 Days

8.1250 12.4103 13.2799

8.4000 11.1140 12.4048

(28) 130 88

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

17/08/18

10/08/18

17/07/18

Official (N) Inter-Bank (N)

306.10 353.77

306.00 352.28

305.80 347.76

BDC (N) Parallel (N)

361.00 360.00

360.50 360.00

361.00 360.00

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

Tenor

YTD Change

Friday

Change

(%)

(Basis Point)

10/08/18

3-Year 5-Year

0.00 14.41

0.00 13.96

0 45

7-Year 10-Year 20-Year

14.74 14.52 14.79

14.10 14.01 14.33

64 51 46

0.87 (0.68)

13.22 (4.12)

2144.00 104.75 81.39 10.29 569.75

0.66 (1.97) (7.08) (3.65) (2.86)

10.74 (19.55) 5.02 (32.88) 31.43

1177.12 14.65 261.15

(2.79) (4.68) (4.90)

(10.66) (14.78) (20.33)

Friday

Change

(%)

(Basis Point)

1 Mnth 3 Mnths

10.42 11.67

9.89 11.30

53 37

6 Mnths 9 Mnths 12 Mnths

13.05 12.93 13.24

12.79 12.71 12.69

26 22 55

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Change

(%)

(Basis Point)

17/08/18

10/08/18

2,637.04

2,665.95

(1.08)

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%)

8.48 5.40 7.35

8.57 5.51 8.53

(1.10) (1.96) (1.18)

YTD return (%)(US $)

-48.03

-47.82

(0.21)

Index

Domestic The Central Bank of Nigeria (CBN) and the Bankers’ Committee have agreed to provide single-digit interest rate loans to operators in the manufacturing and agricultural sectors of the economy. These loans are expected to be availed from commercial banks’ cash reserve requirement (CRR) with the apex bank. The CBN Governor had, at the last Monetary Policy Committee meeting held in July announced that the apex bank was working on the modalities for the scheme. Speaking at the end of the meeting, the Director of Banking Supervision stated that these loans are long term loans of seven years with two year moratorium on principal. He further stated that although agriculture and manufacturing are the initial sectors that are being considered, a bank can apply if there is a job-creating sector that the bank is operating in. In a separate development, Nigeria’s annual inflation rate dropped further to 11.14% year-on-year in July 2018. The National Bureau of Statistics (NBS) disclosed this in its Consumer Price Index (CPI) report titled ‘CPI and Inflation Report July 2018’, released last week. The decline is 0.09% points less than the rate recorded inJune 2018 (11.23%) and represents an eighteenth consecutive disinflation in headline inflation year-on-year. Nigeria's inflation rate has continued to decline since February 2017 after reaching more than 12 year-high. According to the report,food index droppedat 12.85% in July 2018 compared to 12.98% in June 2018, representing the tenth consecutive decline in year on year food inflation since September 2017. Meanwhile, core inflation, which excludes the prices of volatile agricultural produce stood at 10.2% in July 2018, down by 0.2% from the rate recorded in June 2018 (10.4%). This represents the 16th consecutive decline in year on year core inflation since March 2017.

TREASURY BILLS (MATURITIES)

Disclaimer

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

72.98 2.93

10/08/18

Tenor This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

(%)

17/08/18

AVERAGE YIELDS

17/08/18

1-week Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET Tenor

17/08/18

(%)

35,266.29

Market Cap(N’tr) Volume (bn)

Indicators

Global In the US, core consumer inflation accelerated to 2.4% year-on-year (y-o-y) in July, up from 2.3% in June, data released by the Labour Department show. This is the highest in nearly 10 years and suggests that the Federal Reserve will remain on track to increase the policy rate in September. The acceleration in core inflation was mostly driven by steep increases in the rental cost of housing. Meanwhile, headline inflation reached 2.9% y-o-y, similar to June and the highest rate in more than six years. In a separate development, China’s overall trade surplus narrowed to $28 billion in July from $42 billion in June. Imports rose by 27.3% y-o-y, while exports increased by 12.2% y-o-y. Steel product exports dropped by 15% y-o-y in the wake of a 25% tariff introduced by the US. In contrast, aluminium products exports, now subject to a 10% tariff by the US, increased by more than 18%. On balance, imports were up on higher commodity shipments to China. One exception was soybean imports which fell by 26% y-o-y following the introduction of a 25% tariff by China on US soybeans. Elsewhere, in the Eurozone, gross domestic product (GDP) growth for the second quarter (Q2) was revised up as Germany and the Netherlands posted stronger-than-expected growth for the period. The Q2 GDP growth was revised upward to 0.4% quarter-on-quarter from the previous estimate of 0.3%, according to data released by Eurostat, the statistics agency of the European Union (EU). Analysts believe the upward revision to GDP growth in the second quarter will make policymakers at the European Central Bank more confident that they are right to be winding down their asset purchases.

91 Day 182 Day 364 Day

Amount (N' million) 3384.18 69,565.35 20,000.00

Rate (%)

Date

10 15-Aug-2018 10.4 1-Aug-2018 11.22 15-Aug-2018

Stock Market The bearish trend in the local bourse was unrelenting last week as the equities market closed in the red owing to negative sentiment towards large cap stocks across sectors. Accordingly, the All Share Index (ASI) fell 0.51%

week-on-week to settle at 35,266.29 points. Market capitalization also contracted N7 billion to close at N12.87 trillion. Investor sentiment remained shaky against the backdrop of a sell-off in emerging markets assets. This week, we expect the bearish performance to be sustained as investors continue to take profit following some less-than-stellar corporate scorecard releases. Money Market Money market rates trended downwards for th the week ended July 17 2018 due to net inflow from Open Market Operations (OMO) of about N300 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 7.33% and 8.33% from 8.42% and 9.25% respectively the previous week. Longer dated placements witnessed mixed direction. Call rate declined to 8.13% from 8.45, while the 30-day and 90-day NIBOR closed higher at 12.41% and 13.28% from 11.11% and 12.40% the prior week. This week, the liquidity seen in the market is expected to prevail as OMO maturity of N364 billion hits the market next week. Foreign Exchange Market The local currency remained unchanged at the parallel market at N3620/$, same as the previous week. In contrast, at the interbank window and official market, the naira depreciated marginally by 0.42% and 0.03% to close at N353.77/$ and N306.10/$ from previous week. The relative stability of the local currency continues to be supported by the apex bank’s resolve to keep the currency exchange rate stable. This week, we envisage the naira remaining at prevailing levels. Bond Market Last week, average bond yields trended higher largely on account of selloffs from foreign investors, a fallout of the current risk-off sentiment towards emerging markets, owing to the crisis in Turkey . Yields on the five-, seven-, ten- and twenty-year debt papers settled higher at 14.41%, 14.74%, 14.52% and 14.79% from 13.96%, 14.10%, 14.01% and 14.33% respectively the previous week. The Access Bank Bond index fell by 28.92 points to close at 2,637.04 points from 2,665.95 points the previous week. This week we expect that the bearish sentiment in the market will persist as macro fundamentals have not changed. Commodities Oil prices retreated last week after government data showed a jump in stockpiles of US crude. US commercial crude inventories rose by 6.8 million barrels according to an Energy Information Administration report. Oil prices were also weighed down by the ongoing trade dispute between the United States and China which continues to feed concerns that global economic growth will slow and ultimately shrink demand for oil. The OPEC basket of crudes price$2.56, or 4%, to $69.47. In a similar vein, precious metals prices edged lower amid a widespread downdraft in the metals sector, fueled partly by a strengthening US dollar. Gold fell $33.76 or 2.79%, to $1,177.12 an ounce,silver decreased 72 cents to $14.65 per ounce. This week, oil prices are likely to rise buoyed by reports that the US and China are to resume trade talks at the end of the month. For precious metals, prices may nudge higher following the announcement by Turkey’s Central Bank of a series of measures to offer liquidity and cut reserve requirement for banks, in a bid to save lira from its crisis driven by the US sanctions and doubled tariffs on silver and aluminum for 50% and 20% respectively. MONTHLY MACRO ECONOMIC FORECASTS Variables

Aug’18

Sept’18

Oct’18

Exchange Rate (Official) (N/$)

346.90

347.02

348

Inflation Rate (%)

9.34

9.00

Crude Oil Price (US$/Barrel)

76.75

76.00

77.00

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

Tuesday 21 August 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES Stocks rally ahead of US-China trade talks and Fed minutes

Too close for comfort: The incestuous ties that bind auditors and watchdogs Page A4

Page A5

World Business Newspaper

US banks tap the brakes on consumer credit

Spending is up, but concern is growing over credit quality and profitability Robert Armstrong

his is a good time to offer Americans credit. Economic growth is solid, unemployment is low, and wallets are open. In July, retail sales grew at a sturdy 6 per cent from the year before, faster than analysts had expected. The prosperity extends even to dowdy brick-and-mortar stores: Macy’s, the struggling department store chain, last week posted its third straight quarter of sales growth after several years of declines. Walmart, the vast discount retailer, reported its best quarterly sales growth in 10 years. At the other end of the price spectrum, Nordstrom, the upscale department store chain, reported a big jump in sales which drove its stock up 13 per cent. Nor does the spending seem to be especially reckless. When, at the beginning of last year, household debt surpassed its last peak, in 2008, many pundits speculated about the possibility of a new financial crisis. But US household debt — all $13.3tn of it, according to the New York Fed — is much lower, relative to both GDP and disposable income, than it was in the run-up to 2008. The big card-issuing banks are pleased. In second-quarter calls with analysts, JPMorgan highlighted that consumer purchases using their cards were up 11 per cent; Bank of America’s purchase growth was almost as high. Citigroup and Capital One pointed out loan balances were growing nicely. If the card business is picnic, though, it is a late summer picnic; the watermelon has already been served, and the skies are showing the early signs of darkening. The card issuers acknowledge that, as US consumers have gotten their mojo back, the competition for their business has become very competitive indeed. Savvy Millennials shuffle between cards to maximise rewards and introductory interest rates. Big spenders with good credit ratings are the prize in a “ rewards war”. At the same time, the current economic expansion, at the grand old age of nine years, is the second longest on record. That does not

provide any particular reason to think it is near an end. But trees do not grow to the sky. The competitive heat and the length of the cycle are making themselves felt in industry-wide data. Measure of credit quality, while not flashing amber, are unmistakably headed in the wrong direction. Quarterly write-offs of bad credit card debt at US banks peaked at nearly $19bn in the first quarter of 2010 and bottomed under $5bn in 2015, according the FDIC. Since then they have crept back over $8bn. The rate at which credit card holders are falling delinquent, while still at a low level, has also been creeping up since 2015. Bankers dismiss these trends as the natural “seasoning” of credit card loan portfolios that have been rebuilt since the recovery. But the numbers show that it is growing harder to sell cards to high-quality customers. Last month, the Federal Reserve’s Board of Governors released its annual report of credit card banks’ profitability. It showed return on assets falling in 2017, for the fourth year in a row. At 3.4 per cent, it is a full third lower than it was in 2013. The Fed noted that a moderate increase in provisions for losses cut into profits. More important, non-interest revenues — which are made up both of payments from merchants and the annual fees and penalty fees charged to card holders — are declining. Part of this is down to big merchants driving harder bargains with the banks and pushing down on fees. Costco, the big discount retailer, moved its branded cards from American Express to Citi last year, for example. “The banks are giving more to the merchants,” said Jason Goldberg, an analyst at Barclays. Another contributor to the squeeze in fee revenue is generous rewards offers for new customers, which are booked against revenue when the customer signs on. Finally, the compression of noninterest revenue is a long-term effect of the Credit Card Accountability Responsibility and Disclosure (CARD) act of 2009, a law that prohibited many punitive fees and limited the ability to raise customers’ rates.

Former UBS worker calls for police investigation into alleged assault ‘I want some form of justice — he wronged me’ Laura Noonan A former UBS employee has asked UK police to investigate an alleged sexual assault by a more senior colleague after deciding the bank had failed in its attempts to deal fairly with her case. After leaving UBS, the woman emailed the head of its investment bank, Andrea Orcel, to complain that she had been let down by the bank’s human resources department. That

email became public and reported widely, including in the Financial Times. The alleged assault took place last September, just before accusations about the abusive behaviour of Hollywood producer Harvey Weinstein became public and triggered a wave of activism against sexual harassment. The bank’s internal investigation took place during months of heightContinues on page A4

PepsiCo strikes $3.2bn deal to buy SodaStream Beverage and snacks group looks to continue health-conscious strategy for growth James Fontanella-Khan, Eric Platt and Arash Massoudi

epsiCo has agreed to buy SodaStream, the Israeli maker of home fizzy drink dispensers, for $3.2bn, just weeks after the US consumer group announced that its chief executive Indra Nooyi would step down this year. The acquisition of the healthconscious soda maker is a clear indication that Pepsi’s incoming chief executive, Ramon Laguarta, plans to continue developing the company in a similar direction as his predecessor. SodaStream fits with Pepsi’s broader strategy under Ms Nooyi’s 12-year leadership, during which she switched the company’s focus from sugary sodas to healthier snacks and beverages. Nasdaq-listed SodaStream, which fashions itself as a health and wellness alternative to cola drinks, would complement Pepsi’s healthier options, which include the flavoured sparkling water brand Bubly and the fruit and vegetable snacks maker

Bare Foods. “SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio, while catalysing our ability to offer personalised inhome beverage solutions around the world,” said Mr Laguarta. Pepsi has agreed to pay $144 per share in cash, an 11 per cent premium to SodaStream’s current price of $129.85 after a sharp rally in the company’s shares since the start of August. The gains had been attributed to better than expected results, given no news of deal talks had become public before Monday’s announcement. The offer, which needs to be approved by SodaStream shareholders, is also a 32 per cent premium to the company’s 30-day volume-weighted average price. The transaction is the latest blockbuster takeover of an Israeli company since March 2017 when US chipmaker Intel paid $15.3bn to purchase Mobileye, which makes sensors that detect obstacles while driving that are critical to autonomous

driving. Subsequent to that deal’s announcement, the US Securities and Exchange Commission pursued insider trading charges against two Israeli residents and two Americans after suspicious trading in Mobileye shares before the transaction. Global food and beverage companies have been carrying out a series of deals in recent years as they try to reposition their portfolios as health conscious consumers opt for fewer sugary drinks. Pepsi’s deal comes days after its main rival Coca-Cola agreed to buy a minority stake in BodyArmor, a sports drink maker backed by US basketball star Kobe Bryant. Coca-Cola’s move comes as it has struggled over the years to loosen the hold of Pepsi’s sports drink business Gatorade. SodaStream will continue to be led by its current chief executive, Daniel Birnbaum, as Pepsi aims to expand the Israeli company by giving it access to its strong global distribution, research and development firepower and marketing expertise.

Tesla hit as JPMorgan lops a third off its share price target Analyst acts after concluding funding for a buyout was not ‘secured’ Mamta Badkar

esla was hit on Monday after analysts at JPMorgan argued financing for a deal to go private has not been finalised, despite chief executive Elon Musk’s claim the funding had been “secured” earlier this month. Tesla shares were down about 3 per cent at $297 in early trade on Monday, extending a 9 per cent drop on Friday. In a note, JPMorgan analyst Ryan Brinkman lowered his price target by 37 per cent to $195. That had been his target before he raised it to $308 on August 8 — a day after Mr Musk tweeted he had funding secured to take Tesla private at $420 a share, which sent the stock to a near record high. Now, with more information having come out about what Mr Musk meant by his statement over funding, the bank has moved its target back. Mr

Brinkman also retained his “underweight” rating on the stock. “We are reverting to valuing Tesla shares on the basis of fundamentals alone, which entails a $113 reduction in our price target back to the $195 level where it stood before our August 8 note,” said Mr Brinkman wrote. “Our interpretation of subsequent events leads us to believe that funding was not secured for a going private transaction, nor was there any formal proposal,” he added. The Securities and Exchange Commission, the US regulator, has launched an investigation into Mr Musk’s tweet and a number of lawsuits have been filed on behalf of investors who bought Tesla shares in the wake of the founder’s Twitter pronouncement. “Am considering taking Tesla private at $420. Funding secured,” he wrote on August 7. Mr Musk’s tweet came hours after the Financial Times disclosed Saudi

Arabia’s Public Investment Fund had amassed a stake of 3-5 per cent in the electric car maker this year. His comments unleashed a firestorm, with some critics and investors arguing it was time to take some pressure off Mr Musk. “The revelation the Saudi fund is subsequently asking Tesla for details of how the company would be taken private suggests to us that any deal is potentially far from even being formally proposed, which is different from our understanding on August 8 which was based on Mr. Musk’s statement on Twitter that, “Only reason why this is not certain is that it’s contingent on a shareholder vote”. Mr Musk, who has been struggling to overcome production bottlenecks and ramp up production of the mass market Model 3 vehicle, gave an emotional interview saying he was overworked. That sent Tesla shares sharply lower on Friday.

BUSINESS DAY

NATIONAL NEWS

FT Former UBS worker calls for police investigation...

Eurozone hails Greece’s exit from bailout as end of crisis Country received €289bn of loans over eight years as economy collapsed

Continued from page A3 ened scrutiny of workplace culture and of corporate procedures for dealing with allegations of misconduct. UBS told the FT in July that it has “strong policies and procedures in place to handle such complaints and approach them with the utmost care”. UBS, like other banks, has programmes to attract and retain women and is committed to stamping out sexual harassment. But in an interview with the FT, the woman said she has decided to take it to the police. She alleges that she woke up on the morning after a September work drinks event, in an unfamiliar house with a colleague who was her senior. She had no memory of how she got there, but believed she had non-consensual sex. She says she left as quickly as she could, without causing an altercation. A graduate trainee at UBS, she went back to work on Monday and attended a training session. She then broke down after a comment from a colleague which she would usually have brushed off. A senior colleague took her aside and she says she told him what had happened, without revealing the identity of the man. He told her she needed to see human resources. “I was like, ‘I don’t want to see HR’,it was escalating really quickly . . . I didn’t know what I wanted to do,” she says. She did give HR her account that afternoon; the following day she was called back and someone “slid a rape victim brochure towards me”. “It took me a long time to put that word [rape] to it,” the woman says.“ I don’t like that word at all.” HR staff promised an investigation and offered support. They also encouraged her to go to the police, she says. The woman says that on UBS’s advice she went to a specialist centre for people who have been sexually assaulted or raped. She spoke to a police unit there. Afterwards, she says, “I told them [UBS] that ‘the advice the police themselves have given me is to let you [UBS] deal with it because if the police deal with it, it will be an 18-month long investigation’. It’s my word against his word essentially. “The police asked me what I wanted to come from this . . .[I said] ‘I need him gone, I don’t want to work with him, I want some form of justice in that he wronged me and that’s not OK.’” She soon became concerned about the bank’s approach. UBS interviewed her friends, she says, saying that they wanted to make sure that the alleged assailant could not poke holes in her story. “They were asking [my friends] for messages and screenshots and asking whether I’m the type of girl who’d have a one-night stand,” she says. “UBS wouldn’t have asked all his friends, ‘is [name removed] a rapist’? But they were asking mine ‘does [the woman’s name] sleep around?’ It was an investigation into me even though I’m the complainant.” UBS declined to comment on the investigation — or give details of company policies on sexual harassment and assault. “We will not go into details due to employee confidentiality,” the bank said in a two-line response to the FT’s questions. “We remain confident in our policies and processes, but following significant cases we conduct a review and if we find any improvement opportunities we will implement them.”

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Jim Brunsden and Mehreen Khan

Too close for comfort: The incestuous ties that bind auditors and watchdogs Concerns that audit market is too beholden to the clients whose numbers it vets Madison Marriage and Jonathan Ford

tephen Haddrill has the look of a man with the weight of the world on his shoulders. At his most recent public appearances, the 62-year-old boss of Britain’s accounting watchdog appeared tired and grey. It is no surprise, given that the Financial Reporting Council has recently faced the most intense criticism of its 28-year history. There are questions over how long Mr Haddrill, who has run the regulator for the past decade, will remain in his job. Pressure has mounted following the collapse in January of one of Britain’s largest construction companies, Carillion. This triggered heavy criticism of Carillion’s auditor, KPMG, which gave the group’s accounts a clean bill of health just nine months before it unravelled. It also fuelled calls from academics, politicians and investors for a break-up of the audit market over concerns that the industry is too beholden to the clients whose numbers it vets. In the eyes of its critics, the FRC is part of the wider problem. Observers highlight the regulator’s close ties to the firms it supervises, its plodding approach to investigations and its record of levying what are seen as Mickey Mouse fines. The watchdog is now facing the possibility of its own demise after the UK government commissioned an independent review of its competence led by former civil servant Sir John Kingman. Mr Haddrill, who earned nearly £500,000 last year, making him one of Britain’s bestpaid public officials, is clinging on. The FRC is hardly the first accounting body to face a crisis of public confidence. Since the second world war, the US has had no fewer than three standard setting bodies: the Committee on Accounting Procedure (1939-59); the Accounting Principles Board (1959-73) and the present Financial Accounting Standards Board (FASB). Each of FASB’s predecessors met their demise in part over concerns about their lack of independence from private interests. Karthik Ramanna, professor of business and public policy at Oxford university’s Blavatnik School of Government, thinks accounting bodies face a special set of challenges.

“These are highly technical areas that concern issues with low political salience,” he said. “They depend on deep experiential knowledge from practitioners and are prone to powerful and concentrated commercial interests. It is a model that is almost perfectly designed for regulatory capture.” This charge certainly tops the sheet for those challenging Britain’s FRC. Long criticised for its “light touch” when monitoring the Big Four audit firms, which include EY, PwC and Deloitte, the watchdog has come under fire over its investigation into the failure of HBOS, one of Britain’s largest banks. KPMG gave the institution’s accounts a clean bill of health in February 2008, eight months before HBOS collapsed and had to be rescued with a £20bn taxpayerfunded bailout. Yet the FRC then took eight years, and a great deal of political prodding, before it even launched an investigation. Its verdict last September cleared KPMG of misconduct after deciding that the HBOS audit did not fall “significantly short” of the standards to be expected. It later emerged that the regulator had raised the bar for proving misconduct in 2013. Instead of “falling short of standards”, firms had to fall “significantly short”. Paul George, a former KPMG partner, was executive director in charge of conduct at the regulator when the wording was changed. The verdict troubled observers, who fear that vested interests played a role in the outcome. These conflicts are not unique to Britain. Financial Times analysis of seven authorities involved in the audit market underlines their reliance on current and former Big Four staff. Take the European Financial Reporting Advisory Group, which advises the European Commission on accountancy rules. Nearly half of its 17 board members are current or former Big Four, as are nine of the 16 individuals on its technical working group. At the PCAOB, the US accounting regulator, two of its five board members are ex-Big Four. Four of the seven advisers to those board members are also alumni. South Africa’s accounting watchdog, which has similarly come under heavy scrutiny this year following high profile accounting scandals, has

four former or current Big Four staffers on its board of seven. Few question that the world’s top accountants should have some input into the rules they apply; the question is where the balance should be struck. Erik Gordon, professor at the university of Michigan, describes the dilemma: “The overlap creates regulatory capture danger but excluding people from the Big Four would deprive regulatory bodies of many of the most expert and experienced people in the field,” he said. “There is no easy way out.” So how captured are the regulators? One perceived index of undue influence is the relatively low fines they levy on their industry. (These are important because investors have historically been loath to punish auditors for sloppy or inadequate work by removing their contract). The PCAOB is one of the toughest accounting watchdogs globally, having secured an $8m settlement from Deloitte Brazil in 2016. The FRC issued its own record penalty of £6.5m in June against PwC. The largest fines ever handed out by the Dutch, German and South African accounting watchdogs total €2.2m, €50,000 and R200,000 respectively. These pale in comparison to the penalties issued to banks and other financial services companies. In 2010, the US Securities and Exchange Commission issued a record $550m fine against Goldman Sachs, while the UK’s Financial Conduct Authority meted out a record £284m penalty in 2015. Some doubt whether such penalties really drive behaviour. As one investor points out, these are largely paid by insurers anyway, and even a tripled or quadrupled fine would be little more than a flea bite to any of the Big Four. As with banking, the suspicion is that individual sanctions may be more important. The FRC’s recent decision to effectively ban Steve Denison, the PwC auditor who signed off the accounts of BHS shortly before the retailer went into insolvency, for 15 years is regarded as much more of a nuclear sanction. “If a partner faces a lengthy or lifetime ban from the industry, that cuts into their lifetime earnings,” says Tim Bush, head of governance at the shareholder advisory group, Pirc. “It’s a much more serious sanction.”

uropean leaders have heralded Greece’s exit from eight years of international bailouts as the end of the eurozone’s long financial crisis — while warning that Athens must stick to policy commitments it made in exchange for €289bn of loans. Monday was the final day of Greece’s third successive bailout programme, a period of financial aid stretching back to 2010. EU officials said the end of the bailout showed Greece’s turnround after it teetered on the brink of exiting the currency bloc in 2015. Pierre Moscovici, the EU’s commissioner for economic affairs, said it was a return to normality for the Greek people. “From today Greece will be treated like any other euro area country”, he said in Brussels. Mário Centeno, the president of the eurogroup of eurozone finance ministers, said Greece had “regained the control it fought for” during years of tough negotiations with its eurozone creditors. Greece is the final eurozone country to conclude a programme of emergency assistance. Similar help was given to Portugal, Ireland and Cyprus — but Greece’s crisis was of a different magnitude, with the size of the economy shrinking by a quarter. Youth unemployment rose to nearly 50 per cent and 40 per cent of the working age population was left at risk of poverty, according to the IMF. In Germany — which for many Greeks came to epitomise an obsession with austerity as a solution to the country’s woes — the end of the programme was welcomed by the government as proof that the years of financial aid had worked. “Greece’s salvation is also a sign of European solidarity,” Olaf Scholz, Germany’s centre-left finance minister, told Handelsblatt newspaper. “The conclusion of the Greece programme is a success. The bleak predictions of the prophets of doom have not come true.” Greece’s plans to celebrate the end of the bailout programmes were dropped as criticism mounted of the state emergency services’ bungled handling last month of a devastating forest fire near Athens, which left 96 people dead. But a government official said Alexis Tsipras, the prime minister, planned a live television address on Tuesday from Ithaca, which the official said was chosen “for symbolic reasons”. In mythology Ithaca was the home of Odysseus, the hero who made a safe return after a tempestuous 10-year journey according to Homer’s epic poem. Brussels underlined on Monday that Greece needed to persevere with reforms initiated during the crisis, such as a streamlining of civil court procedures and a new business licensing regime. The European Commission will lead a system of post-programme surveillance that will signal whether Greece is maintaining agreed deficit targets. Athens could potentially lose some of the debt relief it secured from other eurozone governments in a deal in June if the conditions are not met.

Tuesday 21 August 2018

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BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Stocks rally ahead of US-China trade talks and Fed minutes Wall Street joins global advance but its pace cools, dollar holds firm Michael Hunter and Alice Woodhouse

here is an optimistic feel to trade ahead of trade talks this week between the US and China, with the dollar remaining in demand and stock markets holding their nerve. On Wall Street, the S&P 500 is inching ever closer towards January’s record high. European markets are outperforming while China’s stocks bounced up off their lowest point in almost two years. The dollar index is up 0.1 per cent at 96.15, while oil prices have found support even as the currency in which they are denominated rises. Brent crude is up 0.7 per cent at $72.35. A delegation led by Wang Shouwen, China’s vice-commerce minister, will conduct two days of talks in Washington starting on Wednesday, the first formal negotiations since the US imposed tariffs on $50bn of Chinese imports. “Investors will be hoping that negotiations between China and the US can start to break the trade tariff deadlock or at the very least open the door to a summit between President [Donald] Trump and President Xi [Jinping], which might begin to ease the pressure.” Rebecca O’Keeffe, Head of Investment at interactive investor Attention is also starting to turn to the minutes of the US Federal Reserve’s August monetary policy meeting, set to be released on Wednesday, and the meeting of global central bankers in Jackson Hole, Wyoming, from Thursday to

Saturday. Investors will be looking for more information on the Fed’s assessment of the economy, inflation and its take on trade. Equities Wall Street’s S&P 500 is up 0.1 per cent in at 2,854, leaving it less than 0.7 per cent shy of the record high set in January at 2,872.87. The Europe-wide Stoxx 600 is up 0.8 per cent, with gains for industrial metals and mining stocks setting the pace. Frankfurt’s Xetra Dax 30 is up 1.3 per cent and the FTSE 100 is 0.6 per cent stronger. Mainland China’s indices bounced up off two-year lows after calls over the weekend from regulators urging banks to support infrastructure projects and exporters to bolster economic confidence. The CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 1.2 per cent, its first rise in six sessions. The index has fallen by about 20 per cent for 2018, tracking concerns about a slowing Chinese economy and the US-China trade war. Hong Kong’s Hang Seng rose 1.4 per cent with technology and telecommunications stocks in demand. Japan’s Topix slipped 0.3 per cent. Forex The Turkish lira is weaker by 2.6 per cent at TL6.1694 per dollar following a tumultuous week and a sharp fall on Friday after rating agencies Moody’s and Standard & Poor’s downgraded Turkey’s debt deeper into non-investment grade territory.

China’s largest lithium producer set for HK IPO to fund SQM purchase Henry Sanderson

ianqi Lithium, China’s biggest producer of the battery raw material, has chosen Morgan Stanley and CLSA for a listing in Hong Kong to fund its $4.07bn purchase of a stake in Chile’s SQM, according to a prospectus. The Chengdu-based company said 90 per cent of the listing proceeds will be used to “partially repay debt” for the deal, which was announced in May. The rest will be for general corporate purposes, it said. Tianqi still needs regulatory approval for its purchase of Nutrien’s 24 per cent stake in SQM, which will make it the second-largest shareholder in the company after Julio Ponce Lerou, a billionaire Chilean businessman. Tianqi said it has borrowed a total of $3.5bn to fund the deal. The transaction has raised concerns in Chile about Tianqi’s dominance in the lithium market. In June Chile’s national competition authority, the FNE, opened an investigation into the deal. “As a result, the SQM transaction might be delayed, modified or entirely blocked if the FNE determines that it entails antitrust risks and refers the SQM Transaction to the Chilean Antitrust Court,” Tianqi

said in its listing prospectus filed in Hong Kong. Chengdu-based Tianqi mines lithium in China and also at the Greenbushes hard rock mine in Australia, the largest lithium mine in the world. The company has become “a critical supplier in the supply chain system of many key battery and EV OEMs around the world,” according to its prospectus. Tianqi said it aims to expand its business into Northeast Asia and Europe, “to strengthen our ties with top-tier end customers in lithiumbased new energy sectors such as EV and energy storage systems.” “We plan to enter into mediumto long-term supply contracts with industry leading international customers which have stringent requirements on product quality and consistency with strict accreditation processes,” it said. Demand for lithium is set to grow by 19.8 per cent a year up to 2027 due to growing sales of electric cars and greater of use of batteries for storage of renewable energy, Tianqi said, citing data from consultancy Roskill. But shares in lithium producers have declined this year, on concerns about an oversupply of the battery raw material. Shares in SQM have fallen 24 per cent year-to-date in New York.

Wang Shouwen, China’s vice-commerce minister, is leading a delegation to Washington this week to discuss US-China trade relations © Reuters

Damaged cable forces Gatwick airport to switch to whiteboards Staff at UK’s second busiest airport write up flight departure details for several hours Josh Spero

wo days after a consumer survey showed UK aviation passenger satisfaction had fallen, a damaged cable at Gatwick, the country’s second busiest airport, led to staff writing flight departure gates on whiteboards for several hours on Monday. Telecoms company Vodafone apologised for the “problems”, which occurred in its network. It blamed it on “a damaged fibre cable”. Gatwick, which processed 45.6m passengers in 2017, said: “Conting encies are working — we have whiteboards and friendly staff on hand to help, and tens of thousands of passengers have departed on time.” The cable was fixed by mid-afternoon after a five-hour outage. While some passengers took to social media to castigate the airport for the confusion, Chris Han, who was waiting at airport for a flight to Los Angeles, said: “It’s slightly chaotic, and pretty difficult to see what’s at the bottom of the whiteboards, but I think the

staff are doing a pretty decent job, all things considered.” The disruption came against a background of falling passenger happiness, according to the UK Aviation Consumer Survey. Overall satisfaction has dropped from 90 per cent in March 2016 to 83 per cent in April 2018, and satisfaction with airport experience has declined from 83 per cent to 78 per cent over the same period. The Civil Aviation Authority, which is now carrying out its next survey, said that it was too early to tell if results would worsen, given a summer of strikes by airline staff and air traffic controllers across Europe and long queues at border control. Tim Johnson, director at the CAA, said: “While we note that some of this summer’s operational challenges have been outside of the industry’s control, some remain within industry control.” At Heathrow, Britain’s busiest airport, Border Force has missed its target for passport holders from outside the Eu-

ropean Economic Area for three years running. In June 2013, 99.7 per cent of non-EEA passengers passed through Heathrow’s flagship Terminal 5 in less than 45 minutes. In June of this year, just 76 per cent cleared passport control in the allotted time. At Gatwick, which has fewer non-EEA passengers than Heathrow, Border Force met its targets between November 2017 and April of this year for both EEA and non-EEA passport holders. Earlier this year, the Financial Times reported that the owners of Gatwick airport had paid themselves dividends of £643m in the past year as they issued £650m of debt. The dividends were an increase of more than half a billion pounds on the previous year’s £125m total. Gatwick is owned by a consortium comprising private equity firm Global Infrastructure Partners, with 42 per cent; the Abu Dhabi Investment Authority, with 16 per cent, and pension funds from California, South Korea and Australia.

Premier Oil gives green light to Tolmount field Development to begin at one of the North Sea’s largest undeveloped gas discoveries Sylvia Pfeifer

remier Oil will press ahead with the development of one of the largest undeveloped gas discoveries in the southern North Sea after the FTSE 250 company secured backing from infrastructure investors. The oil and gas independent said on Monday it had sanctioned the development of its Tolmount Main gasfield, which is expected to produce its first gas by the end of 2020 before reaching peak production by 2021. It will produce about 500bn cubic feet of natural gas in total and around 58,000 barrels of oil equivalent a day at its peak — equivalent to close to 5 per cent of Britain’s domestic gas supplies.

The field could produce gas for between 10 to 15 years. The approval of Tolmount is the latest in a series of new investments announced by oil and gas companies in the North Sea as the region, traditionally one of the most expensive given its maturity, recovers from the crash in oil prices. Tolmount’s go-ahead marked “a major milestone” for Premier, said chief executive Tony Durrant. The company, he added, had also secured “an innovative financing structure” for the project that would minimise Premier’s capital expenditure. Under the terms of the deal Premier, which owns a 50 per cent stake in the field, will spend about

$120m on developing the site, comprising of project management and development drilling costs. However, a joint venture between its partner Dana Petroleum, which owns the other 50 per cent, and CATS Management Limited, a UK gas infrastructure company owned by Antin Infrastructure Partners, will pay for the construction of a new platform and pipeline to export the gas to shore. In return Premier will pay a tariff for the transportation and processing of Tolmount gas through the infrastructure. The gas will be piped to the Easington terminal on the Yorkshire coast owned by Centrica, the energy company, which will process the gas.

Politics & Policy

BUSINESS DAY

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INEC condemns alleged extortion at voter registration centres … Vows to prosecute erring officials

he Independent National Electoral Commission (INEC) has condemned any form of extortion of Nigerians in the on-going Continuous Voter Registration (CVR), vowing to prosecute any of its officials found to be involved in the act. In a release to the media by the commission’s Lagos office yesterday, signed by its Public Relations Officer (PRO), Femi Akinbiyi, reacting to an online media report, which stated that an official of the commission in a registration centre in Ikorodu Local Government Area INEC office, was colluding with touts demanding an amount of money from unsuspecting members of the public before facilitating their registration. The commission said it had set up a panel to investigate the claim, while the official had been withdrawn from the centre, stressing that it does not tolerate extortion and had on several occasions warned its officials against the act.

Governor Udom Emmanuel of Akwa Ibom State and Senate President Bukola Saraki during a visit to the government house in Uyo

The commissions said it recently arrested some touts engaging in illegal registration in certain parts of Lagos State following a tip-off, with the assistance of the officers from Department of Security Services

Military commends Ortom over support to security operatives BENJAMIN AGESAN, Makurdi

he Nigerian Military has commended Governor Samuel Ortom for timely and consistent support to enhance activities of Operation Whirl Stroke in Benue State. Force Commander of the operation, Major General Mutiu Yekini gave the commendation yesterday when he received Governor Ortom who visited the Air Force Hospital, Makurdi to see soldiers recently attacked by armed herdsmen while on operation. He noted with satisfaction the concern shown by the governor over the welfare of their men, stating that such would spur them to step up their operations. Major General Yekini assured the governor and the entire people

of the state of the readiness of their operation to comb areas known to be hideouts for criminal herdsmen in the state and beyond. Also speaking, Governor Ortom applauded the Nigerian Army for the good work it had been doing since the operation was deployed to the state and urged it to maintain the tempo. He also acknowledged the Federal Government for deploying operation Whirl Stroke, pointing out that the performance by men of the operation had largely brought the attacks on Benue communities under control. He, on behalf of the government and people of the state, expressed sympathy over a member of the operation that had lost his life and others wounded during the attack and were receiving treatment in the hospital.

(DSS), while apologising for any stress Nigerians may be encountering in the course of carrying out their registration. “Attention of the Independent National Electoral Commission

(INEC) has been drawn to an online publication. In the said publication it was alleged that ‘some of the INEC officials in cohorts with touts illegally sneaked in people who had paid them N1,500.00 to fast-track their registration’ and one Prince Chucks was described as the link man.” According to the statement, “It is a fact that touts are around some of our CVR Centres going about with their nefarious activities, yet we have been doing everything possible to apprehend them and hand them over to law enforcement agencies for prosecution. The Commission few weeks ago with the assistance of the officers from DSS arrested some touts engaging in illegal registration in certain parts of Lagos State after tips off. “They will be prosecuted after the Police investigation. The Commission has zero tolerance for any form of extortion. Although, the Ikorodu matter is going through investigation.”

Tuesday 21 August 2018

Kwara targets 1.2m voters - INEC boss SIKIRAT SHEHU, Ilorin

arba Madami, the Kwara State Resident Commissioner of the Independent National Electoral Commission (INEC), has said that 1.2 million eligible voters are expected from the state for the 2019 general election but that so far, 900,000 (nine hundred thousand) have done their registration. Madami also disclosed that only 160,000 residents have so far taken part in the ongoing Continuous Voter Registration (CVR) exercise across the state. The REC, who spoke during a courtesy visit to the Correspondents’ Chapel of the state council of the Nigeria Union of Journalists (NUJ), said that about 315,000 permanent voters’ cards (PVCs) are yet to be claimed by registered voters since 2015 in the state. He said that some strategies had been mapped out to address poor registration of voters. According to him, part of the strategies was to deploy officers to villages and rural areas of the state to register eligible voters as against local government headquarters where registration points were.

Stop promoting violence - U.S Ambassador warns Nigerian leaders INIOBONG IWOK

he United State Ambassador-at-Large for International Religious Freedom, Samuel Brownback, has warned Nigerian political office holders, civil society and religious leaders to avoid amplifying ethno-religious tension in the country but focus on peace building. Brownback stated this at a oneday national youths dialogue on ethno-religious tolerance organised by the U.S Consulate General in Lagos, which was in partnership with the African Youths Initiative for Crime Prevention (AYICRIP). Brownback, who had met with a group of religious leaders during a recent visit to Nigeria in June,

commended increased inter-faith engagement and dialogue in Nigeria, but noted that the country can do more to protect citizens’ rights to religious freedom. “When I visited Nigeria in June, I met with communities from all different faiths located all over the country and heard about how interfaith groups and people from every religion have come together to begin stopping the violence at the community level, which is a great starting point,” Brownback said. “However, we need to do better than just achieving tolerance; we need to truly care for each other. The people who stand for peace do not do this because they are from the same ethnic group, or because they share a common religion. They believe the lives of everyone

are sacred,” he said. Speaking earlier, the U.S. Consul-General, John Bray, reaffirmed the United States’ commitment to supporting initiatives that promote peace, while admonishing Nigerians to ensure that cyclical communal violence does not threaten national unity. “Each of us has a role to play in tramping down tensions between communities of all kinds,” Bray said. “It is in your hands to ensure that this tragic violence does not descend into broader ethnic and religious fighting, and a cycle of reprisals. We must all make sure that the fighting does not eat away at the fabric of Nigeria, the multireligious and multi-ethnic tolerance that makes this a great and unified nation,” Bray said.

Violence in local by-election raises anxiety in Rivers ahead 2019 …PDP, APC trade accusation as INEC suspends collation IGNATIUS CHUKWU AND INNOCENT ETENG, Port Harcourt

iolence took a centre stage at a by-election in Rivers State to replace a local parliamentarian but it provided a test of muscles for the two bitterest rival political parties in the fight to control the oil-rich state. The Independent National Electoral Commission (INEC) in the state suspended the election citing massive violence and disruption by rampaging groups, but this was

at collation stage when one of the parties was already backslapping in advance. Both the ruling People’s Democratic Party (PDP) and the opposition All Progressives Congress (APC) have each accused the other of perpetrating violence and using different factions of the police to do its bidding. Observers said the preparedness by both parties to march for with force either with ‘youths’ or police backers points to what may happen in few months time as 2019 general elections fast approach. Guns began early to boom

on Election Day around Diobu as youths freely moved about chanting slogans and carrying out violent actions despite ban on movement. Later in the day, more shooting continued and teargas was heavy in Emenike Junction area. The police battled with hoodlums. Youths snatched bags and phones. INEC Obo Effanga announced suspension at collation stage and said miscreants and hoodlums backed by ‘heavily armed security operatives’ stormed the voting centres and destroyed, snatched and ruined voting materials and

card readers. In a state broadcast Sunday afternoon, the governor, Nyesom Wike, said the police failed completely. “Instead of providing security for voters and INEC officials the police brazenly colluded with political thugs of the APC to subvert the democratic process and denied the people of Port Harcourt Constituency III their rights to free, fair and credible elections.” He said while voting was underway, armed thugs from the APC moved freely from one polling unit to the other, violently assaulted voters and INEC officials and

carted away election materials, including smart card readers and ballot boxes.” He squarely accused the state chairman of the APC of leading thugs to destroy materials. “Consequently, the thugs and their police accomplices successfully disrupted the bye-election in virtually all the 142 polling units across the 8 wards of the Constituency and caused bodily injuries to several innocent voters and INEC officials.” On the other hand, the APC said the governor’s chief of staff led PDP thugs to disrupt the election.

Tuesday 21 August 2018

AVIATION

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GUIDE

BUSINESS DAY

in association with

The untold story of Dana air Ifeoma Okeke

he air transport narrative in Nigeria over the years has assumed different dimensions. Resultantly, it is becoming difficult to pass a verdict without looking at the twists and turns operators continue to navigate around in the last few decades. But, Nigeria’s aviation industry trajectory has been replete with challenges; albeit culminating in the bust and boom circles of many domestic carriers. However, a litany of operational and safety challenges continue to alter the stakes, with Nigeria contributing significantly to Africa’ s poor safety record. Verdict: Many aircraft fell off the skies between 2005, 2006 , including DANA Air’s 2012 air crash in Iju Ishaga area of Lagos. But, global coalition in stepping up regulation; enhanced safety management system and other measures being put in place has change the narrative. Apparently trying to get its act right following the loss of its aircraft in the crash the airline has since deployed appropriate strategies to get on the turf again. The airline like the seam proverbial Phoenix has not only risen from the dead but is recognised as one of the four top competitive domestic airlines in Nigeria. It still thrives to fulfil its mission to consolidate its operations, despite the backlash of the 2012 air crash. Airlines such as Nigeria Airways, ADC airline, Bellview Airline, Sossoliso Airlines and EAS which had also fallen from the skies claiming the lives of hundreds of people, never lived to tell the story. The question resonate is: What is Dana Air’s winning streak? To players both at home and abroad the lingering question lingers: What exactly did Dana Air do differently to get back its market share? It’s only apt to situate the Dana Air’s narrative as: ‘Experience is the best teacher.’ Having flown over 2.7 million passengers in the last nine years of its operation in addition to receiving multiple awards for aviation excellence and corporate social responsibility,

Dana Air was also unveiled as one of Nigeria’s 100 Most Respected Companies by Business Day Newspaper’s Research Unit. The airline is reputed for its innovative online products, world-class in-flight service and unrivalled on time performance. Over the years, the airline has gained the confidence of passengers in its unrivaled and unmatched on time departure in addition to payment of insurance claims to relatives of members that lost beloved members in the crash in Lagos. IOSA Certification The airline is definitely not taking safety for granted as it passed its International Operations Safety Audit (IOSA) and was admitted into the association’s global safety registry. This is as the airline is currently the newest member of the International Air Transport Association (IATA). Obi Mbanuzuo, the Accountable Manager of Dana Air, while responding to the airline’s recent achievement said,’’ becoming a member of IATA is a significant milestone for us at Dana Air and this only demonstrates our level of professionalism and commitment to operational efficiency in terms of providing our guests with safe, seamless and world-class air transport service in Nigeria. “Apart from the fact that this membership will further strengthen our relationship with other international airlines, we see it as an opportunity to take our amazing products to the global stage through interline and code-share agreements.’’ NCAA audit Dana Air was the first airline to undergo an operational audit con-

ducted by the Nigerian Civil Aviation Authority and its foreign partners – The Flight Safety Group, and is determined to reinforce our strategic route network within and beyond Nigeria. Special Services Unit/Pilot training Dana Air in furtherance of its much-vaunted customer- centric products, recently launched a Special Services Unit attend to passengers with special needs, urgent complaints, update passengers on current promos and benefits of Dana Miles at the airports in Lagos, Abuja, Port Harcourt, Uyo and Owerri. On the newly – introduced Special Services Unit, Obi said the airline introduced the Special Services Unit to further deepen customer service, offer multiple issue-solving options and provide seamless travel experience for our teeming guests.’’ Following industry counsel by AIB on the need to train its pilots and crew regularly, Dana Air has swung into action in recruiting and training more Nigerian Pilots in Johannesburg, South Africa and Madrid –Spain, as part efforts towards contributing to the growth and development of the Nigerian aviation industry. According to Mbanuzuo, “Dana Air is committed to the growth and development of the Nigerian aviation industry. As at 2015, more than 500 Nigerian pilots were unemployed but with our recruitment and frequent training both locally and abroad since 2015, we have been able to reduce the number, by engaging these pilots and paying for their training in South Africa and Spain. “We will continue to encourage

professionalism in the industry and support our Nigerian Pilots to ensure constant growth and development in the industry.’’ Top 50 brands in 2017 In furtherance of its innovation, CSR, popularity, National spread and online engagement, Dana Air made the list of top 50 brands 2017 for the third time consecutively, at the Brands Nigeria Leadership Forum held recently at Oriental Hotels, Lagos. According to Taiwo Oluboyede, the CEO of Top 50 Brands Nigeria, Nigeria is becoming more attractive to investors across the world in spite of our many challenges. He said :” More people are coming to invest and there is need to provide information about corporate Nigeria. The Brands that have made it today are home-grown brands that have shown resilience, contributed to the economy of Nigeria, have good national spread, innovative and have good online engagement and popularity.’’ Kingsley Ezenwa, the Communications Manager of Dana Air, while responding to the unveiling of Dana Air and Dana Group as one of Nigeria’s Top 50 brands for the 3rd time consecutively said, “we are highly honored to have been listed among the top 50 brands in Nigeria. We are a responsible corporate citizen and giving back to the society, contributing positively to the economy of the country, and churning quality products are the ways we have shown commitment to the Nigerian dream. Our investment across Nigeria and in various sectors of the economy, speaks volume of our commitment to continue to provide jobs for our people and assist the government to achieve

a positive growth trajectory in the economy.’ “We are nine years plus in the aviation industry and we have shown massive resilience in spite of the multiple challenges, providing value added services at all times and our guests should expect an all-round improvement in 2018.’’ On the sampling of drinks on its flights, Ezenwa said, Dana Air is always open to giving more to its guests and partnering Ideas House to sample a new brand of soft drink on our flights is just another way of achieving this.’’ Official airline of Akwa Ibom christmas carols festival The airline was also announced as the Official Airline of one of the biggest festivals in the world- The Akwa Ibom Christmas Carols Festival, which held on 22nd of December, 2017 at the Uyo Township Stadium, Akwa Ibom state. Aniekpeno Mkpanang, the Permanent Secretary, Akwa Ibom State Ministry of Culture and Tourism and Coordinator of the Festival, said: ‘The Akwa Ibom Christmas Carols Festival is one of the biggest and well-attended Festivals in the world and we are expecting over 20,000 artistes and visitors to fly in from other parts of the country, Africa and the world, hence the need to join ranks and partner with one of the most consistent Airlines in Nigeria right now to ensure a hitch-free, hassle free, seamless, and on-time travel for all our guests and visitors.’’ Other CSR activities Dana Air has been supporting worthy causes since inception in 2018. The airline has consistently carried out charity collection on board to support sickle cell patients, and has entered partnership relevant to carry out voluntary blood donation to those in need, and carrying out community development initiatives across the country. Dana Air has also supported the ravaged cities and displaced person in the north with household materials and food stuffs. The airline has been supporting various non-governmental Organisations (NGOs), particularly the Children Living with cancer foundation, EMAC cancer walk, Project pink Blue and many more for over 6 years now. Dana Air has been supporting their awareness initiatives, victims and free screening initiatives to date.

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Tuesday 21 August 2018

Live @ The Exchanges Top Gainers/Losers as at Monday 20 August 2018

GAINERS Company

Market Statistics as at Monday 20 August 2018

LOSERS Opening

Closing

DANGCEM

N220

N229.5

9.5

N103

N100

-3

AIRSERVICE

N4.45

N4.85

0.4

UNILEVER

N55

N52.5

-2.5

N50.05

N50.3

0.25

GUARANTY

N38

N36.95

-1.05

CADBURY

N10

N10.1

0.1

N14.05

N13.05

-1

FCMB

N1.7

N1.8

0.1

ZENITHBANK

N22.55

N21.85

-0.7

STANBIC

Change

Company

Opening

Closing

Change

ASI (Points)

35,341.90

DEALS (Numbers)

3,054.00

VOLUME (Numbers) VALUE (N billion)

220,495,783.00 3.187

MARKET CAP (N Trn

12.902

Customs Street edges lower by 1.71% ...investors lose N221bn in one day Stories by Iheanyi Nwachukwu

i g e r i a stock index opened this week negative despite that some investors still raised wagers on stocks like Dangote Cement Plc, Airline Services & Logistics Plc, Stanbic IBTC Holdings Plc, FCMB Group Plc, and Cadbury Nigeria Plc. The Lagos Bourse was down by 1.71 percent at the close of trading session on Monday August 20, 2018 as declining stocks outnumbered advancers. The Exchange’s trading statistics showed eleven stocks edged higher against 22 laggards, thus pushing Year-to-Date (YtD) negative returns higher to minus -9.36percent.

“Given that the second-quarter (Q2) 2018 earnings season is closing out, we expect geopolitical events and policy changes to impact more on global equity Indexes. However, in the near term, we expect the stronger economic outlook and double-digit earnings increases to provide support for rising stock prices in the U.S markets. “We also expect the

market to remain largely downbeat in the local market due to a continued absence of bullish triggers. Also, we expect investors to take profit during early trades ahead of the holiday”, said the Kayode Tinuoye-led team of research analysts at United Capital Plc in their investment view for this week. The Nigerian stock market’s broad Index

–the NSE All Share Index (ASI) depreciated by 1.71percent to close at 34,663.48points as against 35,266.29 points at the beginning of trading while the value of listed equities measured as Market Capitalisation decreased from N12.875trillion to N12.654trillion, representing N221billion decline. Despite the Dangote Cement-driven recovery witnessed last Friday, research analysts at Lagos-based Vetiva Capital Management foresee a return to negative territory this week “given that underlying investor apathy remains in the market”. They had expected milder losses on Monday August 20, 2018 . In 3,054 deals, stock traders exchanged 220,495,783 units valued at N3.187billion. Trading

in banking stocks helped buoy market transaction volume. For instance, UBA Plc, Zenith Bank Plc, Access Bank Plc, Skye Bank Plc, and FBN Holdings Plc were the actively traded stocks on the Nigerian Stock Exchange on Monday. UBA and Access Bank Plc are among stocks in most analysts watch list as they are of the last Tier-1 banking institutions that are yet to release their first-half (H1) 2018 financial statements. Dangote Cement Plc led the league of gainers after its share price increased from N220 to N229.5, up by N9.5 or 4.32percent; while Airline Services & Logistics Plc advanced from N4.45 to N4.85, up by 40kobo or 8.99percent. Stanbic IBTC Holdings Plc increased from N50.05

to N50.3, up by 25kobo or 0.50percent; FCMB Group Plc advanced from N1.7 to N1.8, up by 10kobo or 5.88percent; while Cadbury Nigeria Plc increased from N10 to N10.1, up by 10kobo or 1percent. Nigerian Breweries Plc recorded the highest loss after its share price declined from N103 to N100, down by N3 or 2.91percent; followed by Unilever Nigeria Plc which declined from N55 to N52.5, down by N2.5 or 4.55percent; and GTBank Plc which lost N1.05, from N38 to N36.95, down by 2.76percent. Likewise, PZ Cussons Nigeria Plc stock price dropped from N14.05 to N13.05, representing N1 or 7.12percent loss, while Zenith Bank Plc declined from N22.55 to N21.85, down by 70kobo or 3.10percent.

RAK Unity Petroleum intensifies efforts to boost sales

AK Unity Petroleum Company Plc is determined to achieve its strategic objectives by driving growth inorganically through a merger or acquisition; thereby enabling the company to respond competitively to the emerging changes and trends in the business operating environment. As part of RAK Unity Petroleum Company Plc five-year business plan that commenced in January 2016, the company aims to boost sales through the production of branded lubricants and increase profit margins by investment in direct importation of Diesel (AGO). “There are currently ongoing plans to lease four new retail stations and refurbish the old retail stations. These plans will be executed on the back of the merger or acquisition,” Edo-Abasi Bassey Ukpong, chairman, RAK Unity Petroleum Company Plc told sharehold-

ers at the company’s 15th annual general meeting held in Lagos on Thursday August 16, 2018. He assured that going forward, with the anticipated improvement in the Nigerian economy facilitated by increasing

oil production and revenue, growth in trade and investment, a stable and transparent FX market, “we will position your company to take advantage of opportunities and offer value to you.” “To continue to grow

our business, despite the tough operating environment, RAK Unity Petroleum Company Plc board has begun a strategic review process of our business to evaluate all the options open to us to significantly improve our

Moroti Adedoyin – Adeyinka, director, RAK Unity Petroleum Company Plc, James Ogungbemi, managing director, RAK Unity Petroleum Company Plc, Ukpong Edoabasi, chairman, RAK Unity Petroleum Company Plc, Oyindamola Ehiwere, company secretary, RAK Unity Petroleum company Plc at the company’s 15th annual general meeting in Lagos.

company’s performance. Once the board has fully evaluated these options, we intend to return to you, our shareholders, to report on our new strategic direction,” Ukpong further told shareholders. At inception, the company had as its main object, the marketing of and distribution of petroleum products, purchased from the Nigerian National Petroleum Corporation (NNPC), within Nigeria and the West Africa sub region. The products distributed by the company include Petrol (PMS), AGO, Gas (LPG) and Kerosene (DPK). The company also distributes Engine Oil, Brake Fluid and Distilled Water. RAK Unity Petroleum Company Plc is listed on the Alternative Securities Market (ASeM) of the Nigerian Stock Exchange (NSE) and was the first indigenous petroleum company to be so listed. Toparte Nigeria Limited currently holds 85per-

cent of the 56,624,893 issued share capital of RAK Unity Petroleum Company Plc and a diverse group of Nigerians hold the remaining 15 percent. Robert Igwe, a shareholder said at the meeting that “the company has good board, management and staff. One good thing in any account is when retained earnings and shareholders fund are growing. With what I see in the account, I can only tell the company to keep it up. For the dividend, we will always ask for more.” Another shareholder Anthony Omojola said “The company revenue increase is a welcome development to us, the shareholders.” At the annual general meeting, the shareholders of RAK Unity Petroleum Company Plc received and adopted the audited accounts of the company for the year ended December 31, 2017 together with the reports of the directors and the auditors thereon.

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NEWS YOU CAN TRUST I TUESDAY 21 AUGUST 2018

INSIGHT/INNOVATION

Nigeria’s population: Asset or liability

OGHO OKITI Dr. Okiti is the president, Time Economics Ltd @ Dr_Okiti 081.7153.0058

recent Brookings report found that Nigeria has overtaken India to become the country with the largest population of people living in extreme poverty. The report, authored by HomiKharas, Kristofer Hamel, and Martin Hofer, all associates of the World Data Lab (see Brookings.edu), claims that Nigeria has 87 million people in extreme poverty category and that this number is increasing by 6 people every minute. So, by the time you have finished reading this report, there will be 60 more Nigerians living in extreme poverty. The report was based on surveys conducted in April this year, recent economic growth data from the International Monetary Fund (IMF), and computed poverty trajectories for 188 countries in the world. It concluded that the rise in Nigeria’s poverty is driven by three parameters – low economic growth, high inequality, and population growth. Nigeria’s population growth rate, currently at 2.6 percent according to the World Bank, has been growing above Nigeria’s economic growth rate except for one quarter in the last three years. This report is thus one of many recent issues that demonstrate the seriousness of the implications of Nigeria’s population dynamics for poverty, growth and jobs. At the current growth rate, the United Nations Department of Economic and Social Affairs (UN DESA) estimates that Nigeria’s population will have grown to 410.6 million by 2050, making Nigeria the third most populous country in the world, after China and India. The median age of these 410.6 million people is projected to be 22.5. In the past, many analysts and public officials have regarded Nigeria’s rising

52.7%

The percentage of Nigerians aged 15-34 years who are either unemployed or under employed.

growth pattern in developed economies of the movement of surplus labour from low productivity sections of the economy into high productivity ones, raising incomes, providing jobs, and provide a platform for sustained economic growth. However, that view is now being questioned. As Nigeria’s population continues to grow, the country is confronted with a combination of domestic and international developments that means that the growth of its population is now seen, more as a disaster waiting to happen, rather than a blessing. Technological changes, unpredictable and unsustainable economic policies, poor and weak education, out of school children, immigration dynamics and populist policies in the West are few of the dynamics that have the possibility of turning Nigeria’s population boom into an unmanageable doom. How many are there? According to the Nigeria Population Commission (NPC) and the National Bureau of Statistics (NBS), Nigeria’s population is currently approaching 200 million. The last census was conducted in 1991, following the promulgation of Decree 23 of 1989, which established the NPC. The results of the census, and that of the 2006 population and housing census that followed have never been widely accepted. Indeed, since the first Nigerian census in 1963, it is widely accepted that Nigeria has manipulated her population figures, and doubts have been cast on successive census. For instance, Yemi Kale, the Statistician General stated in a tweet that he doesn’t “think [the population figures] are correct” and has repeatedly called for a valid census to ascertain the correct population of the country. Nigeria’s census data figures is not only underpinned by irregularity, since it has not met the United Nations 10 year benchmark, but also lack of trust, due to political reasons, data fragmentation, poor data management, and Nigeria’s very week data on birth, deaths, and migration – three key parameters responsible for the dynamics of population. Therefore any extrapolations made on the assumption that Nigeria’s population is currently 190 million are suspect, given that it starts from a potentially inaccurate base. Notwithstanding, it is clear that Nigeria’s population is large, it is rising, growing rapidly, and that the majority of these people are young; driving up competition for scarce resources, and resulting in hunger, poor access to health care and education and high rate of unemployment and underemployment. This has been compounded by

10.5m

The number of out school children in Nigeria, Africa’s largest oil exporter

population, especially young population, combined with its vast natural resources, as a concrete basis for the attraction of investments. This view was based on the notion that a rising population will feed, wear clothes and require shelter, all fundamental bases for investments. Also, a large and youthful population, it is argued, will provide a labour force that can turn Nigeria into the world’s next manufacturing centre. Expanding the argument, it is assumed that, with a large population, Nigeria can follow the established sustained economic

1.47m

The number of applications Nigerian universities receive yearly out of which only about 400,000 are admitted.

significant and serious economic shifts in the last two decades. Technology, jobs, and immigration Today, the economic shifts are strongly underlined by technology changes. More than ever before, these changes are having serious implications for the number, the nature, and the location of jobs. These technology shifts, underpinned by automation and digital platforms and similar innovations, are changing the face of work. They are peculiar because the shifts are faster, on a huge scale, and transnational. Nadya

Zhexembayeva, a strategist and Founder of Chief Reinvention Officer, in her TEDx talk argued that “disruptive” inventions now happen every three and a half years, whereas it used to be over 30 years, just 20 years ago. While these shifts are providing basis for increasing productivity and income growth, they are also driving the polarisation of the current and future of work, according to a May 2017 briefing of McKinsey Global Institute (MGI) – Technology, Jobs, and the Future of Work. We are now seeing a huge gulf of highly and lowly skilled work, inequality and unemployment. Indeed, in a developing and emerging economy like Nigeria with very low technology adoption, there are concrete examples that technology is displacing and changing the nature of work required. For instance, just in a matter of few years, the number

This “army”, with hopelessness as their weapon, are responding with migration, both legally and illegally, robbery, advance fee fraud (419), and kidnapping; by abusing drugs such as codeine and Tramadol; or by engaging in militant activities in order to demand a larger share of government revenues of low skilled “recharge card” sellers that have been displaced by the emergence of the possibility to buy airtime on our phones from bank application platforms is huge. In Games Village, one of Nigeria’s largest enclosed estates, situated in Abuja, there used to be about 12 young men “fighting” for customers just two years ago. These days, you rarely see up to three, and they often sit idly. Similarly, the emergence of Uber, and its competitors such as Taxify, international ride sharing service providers, are driving unprecedented changes in commercial rides in Nigeria’s urban areas. Consequently, traditional taxi drivers, usually of middle age, are giving way to upwardly mobile youths taking advantage of the technology changes that underpin ride-sharing services. From a customer perspective, Uber and competitors alike such as Taxify are removing the challenges associated with traditional taxi such as haggling, unpredictable behaviour, anonymity and security problems associated with it. But technological changes do not happen in isolation. They are driving social, economic and cultural changes around the globe. As technological changes have made some jobs redundant while enabling outsourcing of others, there has been increasing discontent by working class people in developed countries, which has led to a marked cultural attitudinal change on immigration. The last decade has not only seen an increasingly hostile environment to immigration in Europe and the US, but this has coincided with rising unemployment and inequality in developing countries, which is in turn,

driving up migration from these countries. For instance, according to Frontex, the European Border and Coast Guard Agency, between January 2016 and December 2017, 56,120 Nigerians were detected attempting to illegally enter Europe. Many do not even reach Europe, and either die attempting to cross the Sahara, end up enslaved in Libya, or die crossing the Mediterranean. In addition to the Nigerians leaving illegally, increasing numbers of middle class professionals are migrating to Canada, the UK, and other countries where their skills are needed. According to the Canadian Government, the number of Nigerians admitted into Canada through its Express Entry program in 2016 was 1036, more than ten times the number in 2015. If technological changes and attitudinal changes in developed countries are imposed on Nigeria, soft, weak, and poor economic policies have certainly contributed to deliver disastrous job figures. According to the latest NBS unemployment report, 40% of all Nigerians, or 34 million people, were either unemployed or underemployed in the third quarter of 2017, demonstrating Nigeria’s inability to create jobs for its citizens. Worse, as bad as the figures look, our estimation is that the underemployment is double the current figures, when the number of redundant public sector employees is taken into consideration. For instance, whereas it is common to see 20 – 30 immigration officials at our Lagos and Abuja airports, all involved in checking passports, you typically find about 5 in bigger entry points in developed economies. Unemployment and underemployment is just one of the challenges that Nigerian youths face. Violent crimes ranging from kidnapping to robbery and terrorism have been on the rise in recent years. According to the NBS, the total number of reported crimes increased by 7% between 2016 and 2017. Although there is no data available for the years before 2016, it is likely that the situation has worsened from earlier years given the economic deterioration since the data was published. As increasing numbers of young people look towards a bleak future with no light at the end of the tunnel many are choosing to escape Nigeria either physically or mentally. According to estimates by the Nigerian Senate, over three million bottles of cough syrup with codeine are consumed every day in just two states, Kano and Jigawa , while some ignoring the high possibility of kidnap, rape, slavery, and even death, to cross the Sahara and the Mediterranean for a chance at a better life in Europe. Demography is not destiny: Lessons from China In the future, therefore, population growth may not provide the platform for sustained economic growth as it did in the past. In theory, a young and large population should be an asset for Nigeria. Global manufacturing has tended to move from richer, more developed countries, which have high labour costs to poorer countries with lower labour costs and large labour forces. Therefore, given its low wages and large population, Nigeria should be able to attract a sizeable portion of global manufacturing from other more developed countries where wages are rising. Put another way, as countries develop, average wages rise, but capital becomes cheap. The movement of that capital towards cheap labour often leads to increases in growth, then incomes, then cheap capital in previously cheap labour countries. But this is not given. Policies matter. Demography is not destiny. Let us look at the Chinese example. In modern history, China has always had the largest population

Continues on page 33

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