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Politicians smile as economic slump makes Nigerians grab cash for votes LOLADE AKINMURELE

fam Emmanuel stood his ground against vote-buying politicians who offered him N20,000 ($100) at the last general elections in 2015. He had a job then and so did his wife. This year, the scenario is different. He lost his job with clothing retailer, Truworth, which closed shop in 2016 after an acute dollar shortage meant the South Africanbased firm didn’t have enough dollars to replenish its inventory. His wife’s job was one of the millions cut by commercial banks in the same year as lenders buckled under the pressure of spiralling non-performing loans and a contracting economy. Jobless for three years and with a family of four to feed, Emmanuel has struggled since then. After Continues on page 46

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

Spot ($/N)

362.79 306.85

0.21 11.86

-0.06 14.27

0.13

10 Y 0.28

20 Y 0.06

15.22

15.40

15.24

NGUS MAR 27 2019 364.89

NGUS JUN 26 2019 365.34

NGUS DEC 24 2019 366.24

Back Page BusinessDay is pleased to announce Nonso Obikili as Chief Economist. Read Obikili’s article on ‘Lessons from the Zimbabwe economic protests’ on the back page.

S. African, Ethiopian leaders fly Africa’s flag at Davos as Buhari absent ENDURANCE OKAFOR

L-R: Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI); Funmi Iyayi, CEO, Lagos Chamber of Commerce International Arbtration Centre (LACIAC); Babatunde Fashola, minister of power, works and housing, and Tunde Fagbohunlu, chairman, board of directors, LACIAC, at the LACIAC regional training workshop on dispute management in Africa infrastructure projects, in Lagos, at the weekend. Pic by Olawale Amoo

FGN BONDS

TREASURY BILLS

t h i o p i a’s Prime Minister Abiy A h m e d and South Africa’s President Cyril Ramaphosa w ill be carrying the African flag at the elite gathering of business and politics in Davos this week when focus will shift to the increasing fragmentation a n d nat i o na l i s m threatening to unravel the gains of globalisation.

They will be joined by other leaders from the continent like the new President of Zimbabwe and his Rwandan and Botswana counterparts as well as 46 leading CEOs from Africa. As was the case last year, the president of Nigeria, the continent’s most populous country and its biggest oil producer, Muhammadu Buhari will be conspicuously absent. Of the 46 CEOs there will be Continues on page 46

Inside

2 BUSINESS DAY NEWS

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Monday 21 January 2019

DisCos remit only 33% of electricity bills collected to operators … create N100bn deficit every three months ISAAC ANYAOGU

B L-R: Oba Ewuare II, Oba of Benin; Godwin Obaseki, governor, Edo State; and President Muhammadu Buhari, during the President’s visit to the Oba’s Palace, in Benin City, Edo State.

Analysts expect CBN to keep rates unchanged as MPC meets today HOPE MOSES ASHIKE & ENDURANCE OKAFOR

head of the Monetary Policy Committee (MPC) meeting decision tomorrow (Tuesday), analysts in the financial services sector anticipate no change in the key monetary policy stance of the Central Bank of Nigeria (CBN). With uptick in Nigeria’s inflation rate and fragile economic growth, economists and analysts polled in a BusinessDay survey said it would be best for the Monetary Policy Committee of the CBN to retain interest rate at 14 percent. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, expects the CBN to hold rates at current levels and to continue to use the sale of government securities to manage price stability in the country. This is based on expectations of increase in the interest rate in the advanced countries and potential drop in the crude oil price and production, which may put pressure on domestic inflation rate and exchange rate. “In that situation, tight monetary policy will be appropriate. However, weak GDP growth rate and weak credit growth should justify interest rate cut, but that will not address the potential exchange rate and inflation rate pressure,” Akinwunmi said. “Therefore, the best strategy is

to hold policy rates at the current levels and continue to use sale of government securities to manage price stability hoping that crude oil price will remain between US$60-US$70/b so that the external reserves will not be drawn down aggressively,” he said in an emailed response to BusinessDay. The MPC, which has the statutory duty to manage the central bank’s interest and exchange rate policies, is scheduled to hold its meeting from today, Monday, 21st through Tuesday, 22nd January, according to a statement on CBN’s website. Henry Ogbuaku, head, asset management at Growth & Develop. Asset Mgt Ltd, suggested that MPC should retain rate, considering a sovereign economy like Nigeria should be more concerned about driving economic growth. “I do not see them changing the rate for now because of a number of reasons. The macro-economy still requires a lot of support to actualise the growth target that was projected for the year,” Ogbuaku said. At 14 percent, he said, “the real interest rate is still positive and until inflation climbs to 13 percent, it will not be a major issue for MPC”. The policy rate has remained unchanged since July 2016, when the committee voted by five to three for a 200 basis point hike to 14 percent in a response that was

aimed to fight inflation. Gbenga Sholotan, head of research at RMB Nigeria, is optimistic that “the MPC will leave the rate unchanged”. Data from the National Bureau of Statistics (NBS) show that annual inflation hit a seven-month high of 11.44 percent in December 2018, up from 11.28 percent in November. Nigeria is forecast to grow at 2.1 percent in 2019, according to a report by the UN Secretary-General on the ‘Socioeconomic Trends’ West African sub-region. The country’s economic growth projection is expected to drive the regional growth forecast of 2.9 percent. The country’s GDP growth rate stood at 1.81 percent in Q3 of last year, compared to Q2 figures of 1.50 percent. “I see members voting for a hold on the policy parameters. The reality is that in spite of the increase in last month’s inflation rate to 11.4 percent, the MPC is not likely to further tighten monetary policy in order not to jeopardise the chances of the ruling party in the coming elections. So, in a way, political consideration will be a major factor,” said Uche Uwaleke, professor of finance and capital markets at Nasarawa State University, Keffi. “This appears to be the trend in many countries regardless of central

Continues on page 46

etween October and December last year, Nigeria’s eleven electricity distribution companies (DisCos) collected from consumers only 65 percent of the value of electricity sold but remitted back to other operators only 33percent of what they collected, a report by the regulator said. In monetary terms, total billing to electricity consumers by the eleven (11) DisCos was N172.9billion but only a total collection of N106.7billion representing 65.5 percent of billing was recorded according to the third quarter report of the regulator, the Nigerian Electricity Regulatory Commission (NERC). “The collection efficiency indices indicate that a sum of N3.45 out of

every N10 worth of electricity sold during the third quarter remains uncollected as and when due,” NERC said. Thirty-three percent of the remittance indicates a value of N2.1 for every N7 worth of electricity sold. NERC in the report said the DisCos were issued a total invoice of N162.5billion for energy received from the Nigerian Bulk Electricity Trading company (NBET), a clearing agency for the sector, and for service charge by the Market Operator, but only a sum of N54.1billion (33.3%) was settled, creating a significant deficit of N108.4billion in the market. Meanwhile the Ajaokuta Steel Ltd, referred to as a special customer was issued electricity invoice worth N316 million but only managed to return N1million or 0.32 percent of

Continues on page 46

ANALYSIS

Is Atiku’s entry into US a tacit endorsement by foreign powers? OWEDE AGBAJILEKE, Abuja

s next month’s general elections gather steam, so many blockbuster movies are competing for attention in the Nigerian political arena in the week under review. From the trial of the Chief Justice of Nigeria (CJN), Walter Onnoghen, at the Code of Conduct Tribunal (CCT) for false assets declaration to freezing of his bank accounts, release of the controversial election guidelines by INEC, multiple gaffes and unforced errors of President Muhammadu Buhari at the town hall meeting and APC presidential campaign rally in Kogi and Delta States, the list is endless. But perhaps the biggest story of the week is the ‘triumphal entry’ of former Vice President Atiku Abubakar into the United States, which political observers say has laid to rest a 12-year deprivation of visa to a country in which he once lived and owned properties. Although the entry of a private citizen into the US soil is not a campaign issue, the Presidency and the governing APC made a mountain out of a molehill when they taunted and mocked the PDP presidential candidate to enter the shores of US to campaign. Commentators say the representation of Atiku by his running mate, Peter Obi, at a town hall meeting in the United States recently exacerbated the situation. Specifically in November 2018,

Festus Keyamo (SAN), director, Strategic Communications of the President Muhammadu Buhari Campaign Organisation, had declared on national television that the moment Atiku sets foot on United States soil as a private citizen, he would face criminal charges. Also in a press statement, Keyamo listed the $40 million laundering case against Atiku, the Siemens bribery scandal, a $145 million PTDF indictment by a Senate subcommittee and a slew of other corruption allegations which prominently featured Atiku’s name. “The U.S Congress in a report titled ‘Keeping Foreign Corruption out of the United States: Four Case Histories’ featured Atiku as one of the four notorious cases of money laundering in the world!” Keyamo said. Quoting the report, he said: “Jennifer Douglas Abubakar, a U.S. citizen, is the fourth wife of Atiku Abubakar, the former Vice President of Nigeria and a former candidate for the Presidency of Nigeria... from 2000 to 2008, Ms. Douglas helped her husband bring over $40 million in suspect funds into the United States, including at least $1.7 million in bribe payments from Siemens AG, a German corporation, and over $38 million from little known offshore corporations, primarily LetsGo Ltd. Inc., Guernsey Trust Company Nigeria Ltd., and Sima Holding Ltd. Atiku’s co-conspirators, Williams Jefferson and Siemens in the bribery deal were convicted and Jefferson went to jail.” •Continues online at www.businessday.ng

Nigeria’s dairy farmers suffer setback as lack of competitiveness stalls industry growth JOSEPHINE OKOJIE & BUNMI BAILEY

igeria has failed to grow its dairy industry in recent years despite efforts by the government to boost local production. The lack of competitiveness on the part of manufacturers is stalling the hope of ever having a flourishing dairy sector. The farmers’ situation is further worsened by the low productivity of local cattle breeds and increasing tension and conflicts between herders and farmers.

...may reverse progress made Experts say that the inability of local manufacturers to compete could halt investments in the sector and progress made by the government in boosting local milk production to meet domestic demand. “We are not globally competitive in dairy production. It costs about N300 to produce a litre of milk in Nigeria, as against imported powdered milk which is about N150 per litre,” Muhammadu Abubakar, managing director, L&Z Integrated Farms

Limited, told BusinessDay. “This is coupled with the fact that the Federal Government had lowered the tariff on imported milk last year and with the difficult operating environment, then how can local dairy farmers compete with producing a litre of milk at N300?” he asked. Livestock productivity in Africa’s most populous country is among the lowest globally. Average milk yield of Holstein Friesian, a breed of dairy cattle from Netherlands, is 35-40 litres

per day, while Nigeria’s most popular cattle breed Bunaji (white Fulani) has an average milk yield of 1-2 litres per day. This underscores the need for the government to prioritise breed improvement for farmers to increase their yields per litre. Nigeria’s dairy industry comprises milk, cheese, yoghurt, ice-cream, butter and infant formula. A report by Agusto & Co. says that the milk segment remains the largest in the industry, accounting for an estimated 61 percent of the industry’s turn-

over. “The problem we have in the sector is not just production but the harnessing of the milk, and getting it at a right quality to the processing centres is also a problem,” IIan Bones, manager, Milky-Way Farms, said. “There are little dairy infrastructures for farmers in the country and all these factors make it difficult for Nigerian farmers to compete, and this as well is hindering the growth of the industry,” Bones said. •Continues online at www.businessday.ng

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Nigeria’s cashew nuts face woes in Vietnam on speculative buying impact TEMITAYO AYETOTO

ome of Nigeria’s cashew nut exports to Vietnam have been facing hard time getting sold out over the last two months, and speculative buying by exporters is being blamed. Over 37,000 metric tons were reportedly stranded in Vietnam on processors claim that prices were too high. They are pricing for as low as between N180,000 and N210,000 per ton for the commodity with cost price from Nigeria around N650,000 and N750,000, despite earlier agreement onconsignmentorders.Internationally, prices vary but hover between $1,800 and $2,000 in December. Interventions have come from the Federal Ministry of Industry, Trade and Investment and Cashew Association of Nigeria, but nothing

9mobile appoints Phillips Oki as new CFO JUMOKE AKIYODE-LAWANSON

mobile has appointed Phillips Oki as its new chief financial officer (CFO). The company says Phillips Oki, who has already resumed duties, emerged through a meticulous process that sought to identify the best fit for the towering requirements of the critical position, given the new phase of the business as it moves to explore new grounds of success. The new CFO brings to 9mobile over two decades of cognate work experience in functional areas across financial accounting and management, audit, business and project management, financial reporting, and budgeting. With robust experience cutting across private and public sectors, including the academia, Oki possesses a rare blend of invaluable insights and working knowledge in the vast field of finance. Prior to joining 9mobile, Oki’s career progressed steadily over time across organisations where he played strategic roles resolving challenges innovatively and creating commendable solutions. From a successful audit role at KPMG Nigeria and consulting experience with Price Water Coopers (PWC), he joined Royal Marchant Bank and moved on to other organizations including Pepsico International, TBIC Nigeria Ltd and Babcock University. He joined Visafone Communication Ltd from 2007 to 2015 as Financial Controller where he gained extensive experience in Treasury, Commercial, Reporting and Planning operations. An Economist and a Fellow of the Institute of Chartered Accountant of Nigeria (FCA), Oki is an astute project manager having delivered projects across multidisciplinary organisations like Adam Smith International, UK, Department for International Development (DFID), UK and Pension Transitional Arrangement Directorate (PTAD), Nigeria.

positive has come out yet. This might spell woes for the harvest expected to begin by the end of February, as more of the commodity will be available on the edge of poor pricing. Victor Iyama, the national president, Federation of Agricultural Commodity Associations of Nigeria (FACAN), acknowledged that some of the shipments might have arrived later than expected dates but said it was not the first time Vietnamese partners had reneged on agreements on orders. He faulted exporters for encouraging speculative buying throughout last year in the competition to amass huge stockpile, a situation helping prices to shoot out of proportion. He said traders were still watching inanticipationofturnaroundbutmight soon be forced to consider the offering, whichwouldamounttoalossasmuch

asover70percent,sincethecommodity had already arrived Vietnam. “Part of the problem is speculative buying. People will just get into the field and start skyrocketing prices and buying. I don’t see any reason why they should have bought cashew for more than N350, 000 and they were buying for N650,000 and N700,000. What informed that?” Iyama told BusinessDay. “If after waiting for some time and we still can’t sell, we don’t have a choice than to sell at what they are giving. If we take it back to the country, what are we going to do with it? Another set of harvest is coming out very soon and that is even if they want to buy. The truth is even at N210,000, they are not buying,” he said. But Ade Adefeko, vice president, corporate and government relations Olam Nigeria, an international marketer of cashew, said the firm was not

hit by the unfair pricing as it had been delivering huge consignments of cashew to clients in other parts of Africa and East Asia without hindrances. He suspected the contractual basis of those consignments could be faulty from the onset, saying, “Once there is a verified order for delivery, shipments were simply without alteration agreements.” Last year saw a heightened level of production among leading producers of cashew nut including Tanzania, Kenya, Ivory Coast and Benin Republic, birthing a surplus that could have added to price crash scheming Nigeria’s nut out of profit despite its forte in nice aroma. The volatility in price might also be worsened by the spread of Vietnamese traders over Nigeria’s cashew farms, engaging in competition with local traders, according the FACAN president.

Expressing dissatisfaction, he said: “There are some businesses that must be restricted to Nigerians. Can you go to Vietnam or India and run into their villages to start buying goods?” If the situation persists, cashew nut earnings for the first quarter may be shot in the foot and may struggle to make N2.1 billion out of Vietnam like it did in the first quarter of 2018. Vietnam plays a significant role in the foreign earnings accruing from Nigeria’s cashew export and has remained a top contributor alongside India. At the end of the first three quarters of 2017, earnings rose to N33.5 billion from N21.7 billion in 2017. At large, the Southeast Asian country imported 825,000 tons of raw cashew from West Africa as of last August, and was looking to import additional 300,000 tons on expecta-

tions of higher export demand. It holds reservations however about the quality of African materials on grounds that quality was often lower than stated in contracts and losses were incurred as a result. As a result, the Việt Nam Cashew Association had vowed imports must meet certain requirements such as grading, sensory requirements, physical properties and food safety, according to Viet New daily. But it is not clear whether the stranded stocks are also found wanting of these standards. The silver lining for Nigeria might be to start looking inwards for value. Through that, the expected harvest from the current season might be salvaged by value addition and growth in internal consumption, which will help lift price. Hope could also lie in strengthening trade ties with India where there are yet no row over prices.

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But why was he missing from the bench? Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

egardless, we shall not present before the court damning evidence – when the freak accident occurred, the nearest doctor was an old boy of St. Gregory’s College. Good grief!! I am not at liberty to disclose his name. It is up to him to volunteer the information. It was inevitable that the freak accident would engage the attention of social media. Perhaps, that was what prompted a Professor of Law at Stanford University to interject that if the accident had occurred in California, the police would have invaded the scene and cordoned it off with yellow tape in addition to seizing both the phone and the chair for forensic investigation. Thereafter, the legal process (criminal or civil) would commence – starting with the chair being subjected to laboratory tests by experts in ergonomics. Having regard to the fact that Chief Akinrele was a Trustee and former Commodore while Ademola, the Gregorian is a former Commodore of the Lagos

Wole Famurewa Famurewa is former West Africa Editor, CNBC Africa

n January 28, 2019, Lafarge Africa’s N89.2 billion rights issue will close. So investors have a few more days to pick up this offer. The capital raise comes at the end of another difficult year for the cement maker. Following the consolidation of Lafarge’s operations in Nigeria and South Africa in June 2014, the company has reported a few negative earnings surprises. Things appeared to get worse after the second quarter of 2017 when inventory write-offs, impairment charges, other restructuring costs, and elevated finance costs pressured earnings further. Expectedly, investor sentiment for the stock has turned sharply negative, with the stock price down 80% since mid-August 2017. Many investors have become very wary of the stock. However, it may be useful to look beyond thefirm’s recent history and consider what Lafarge offers

Motor Boat Club, there is no chance that matters would proceed beyond accepting the will of the Almighty. At Chelsea Football Club, those players who are relegated to the bench are those who cannot make the first eleven. In the case of Uncle Frank, he was in a class of his own. All the more reason why “The Gregorian” should have employed his abundant persuasive skills to steering his superstar father towards the bench – either local or international. While we mourn the loss of a rare gem, the bench is still being kept warm for either Ademola and/or Adedolapo as well as Adebayo. Truly, Chief Akinrele is fully entitled to the swan song: “I Did It My Way” except that he never got round to writing his autobiography for which he had ample time following his retirement from the practice of law in 1986. As for politics, he had a pretty dim view of Nigeria’s brand of politics and even dimmer view of our avaricious politicians whose incompetence and unscrupulousness he found most nauseating and baffling. He had come to the conclusion that the damage done to our national character has become irreversible. What is beyond dispute is that he was an encyclopaedia endowed with vast knowledge and wisdom nurtured and nourished by his insatiable intellectual curiosity. He was always abreast of international affairs. Not only was he a quintessential gentleman, his sense of humour was legendary. He was a raconteur extraordinaire. It was consistent with his large heartedness that he readily supported my campaign as the next president of St. Gregory’s College Old Boys Association. The case is

‘

As for politics, he had a pretty dim view of Nigeria’s brand of politics and even dimmer view of our avaricious politicians whose incompetence and unscrupulousness he found most nauseating and baffling. He had come to the conclusion that the damage done to our national character has become irreversible

’

now in court!! When I presented him with the video tape of my posters being pulled down within the college premises and beyond; manipulation of the primaries; stuffed ballot boxes; compromised electoral officers; doctored list of eligible voters; announcement of wrong results; election being conducted after midnight and intimidation/harassment of my teeming supporters – all in an effort to rig me out, the great Chief was in top form: “Election in Nigeria is not cricket!!” Now that our nation is in disarray with insurgency, kidnapping, ritual murder and treasury looting as the order of the day is precisely when we

desperately need a much longer life for the great Ondo Chief. The national newspapers have today 3rd January 2019 provided us with proof of evidence on their front page: i.) “ThisDay” “We Are Under Armed Bandits’ Siege, Governor Of Katsina State, Alhaji Aminu Masari Cries Out.” “Our state is currently under serious siege by armed robbers, kidnappers and armed bandits, who arrest rural people at the grassroots at will and demand ransom, which if not paid, they kill their victims” ii.) “Nigerian Tribune” “Katsina Under Siege, Governor Cries Out” iii.) “Vanguard” “Nobody’s safe in Katsina now, Gov Masari cries out” • Says state under siege by bandits, kidnappers, armed robbers • Discloses electricity poles stolen in front of Government House • Visitors to Governor trailed, robbed after visit It was his call but he chose to draw the curtain with the blessing of the Almighty at the ripe old age of 88. When Chief Akinrele was rushed to the hospital following his accident, the admission nurse enquired: “How old are you sir?” In spite of his considerable pain, in the tradition of King’s College he replied: “Two fat ladies” (in Bingo lingo it translates as 88!!). If only the Gregorian had lodged his objection, the great chief would have felt compelled to tarry a while longer – to dust of his abandoned wig and gown and show up in court to defend himself no matter for how long the case would drag on. Even in his old age he could sing the King’s College song: “Floreat Collegium” flawlessly. He had taken to heart the command: “When the call is

sounded, we must all answer HERE!!”. From all accounts, Chief Frank Akinrele was a very patient man. It was to no avail he awaited a counter motion or summons of the court. In the end, he delivered his final goodbye to his family and friends with the cryptic message: “I rest my case. The storm is over.” The burial of Chief Akinrele is scheduled for next week. In the meantime, it seems inconceivable to venture into the ambience of the Lagos Motor Boat Club in the evening without immediately sighting the late Chief at his usual table reading the latest edition of the French newspaper “Le Monde”. One salutary lesson has emerged from the demise of the much adored Chief Akinrele, at the Lagos Motor Boat Club, old boys of King’s College now sit only on benches (not chairs!!) and they check that no old boy of St. Gregory’s College is lurking in the vicinity. They also leave their phones at home or in the car. On a final note, a few months ago Chief Olufemi Majekodunmi (ex- St. Gregory’s College) and I were in the midst of a heated argument over his handling of the Chief J.K. Randle Memorial Hall when Mrs. Ibidun Akinrele walked in. Without prior consultation, we simultaneously declared that if there was a competition for the family with the most courteous and respectful children, the first prize would go to the Akinrele family. Rather than start an even more heated argument, I refrained from telling Olufemi that the prize already belonged to J.K. Randle. May the soul of Chief Frank Akinrele rest in perfect peace.

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Four things to consider about the Lafarge Africa rights issue investors going forward. Here are four things that are worth considering before you make a decision on Nigeria’s second largest cement producer. 1.The stock is cheap: At N12, the Lafarge rights issue offers a low risk entry opportunity for the patient investor. Several analysts report that the rights offer price is at a discount to their post offer valuation of the stock. While Renaissance Capitalputs the offer at a 10.4% discount to their fair value of N13.40, RMB Nigeria is a lot more bullish and says, the rights offer presents a potential 66% upside potential to their fair value of N20.00. Given, the series of negative earnings surprises over the last 3 years, it’s easy to understand why many analysts and investorsare hesitant. However, it’s important to isolate the biggest challenges facing the company. While many observers are quick to point out that Lafarge Africa operates older and less efficient production plants than main rival Dangote Cement, I think the more “fixable” issues could be summarised into two major challenges; the drag of an underperforming subsidiary (in South Africa) on earningsand

the finance burden of the cost of debt capital. Later on, I will explain why I think these issues are less of a concern today than a year ago. Clearly, these issues remain a concern in the short term but the overwhelming majority of analysts that I have spoken to hold the view that the worst is over and while a rebound in sustainable earnings growth could be slow, the low rights price limits the downside risk. The big question is “what will catalyse a recovery in the share price?”. I think that the improving performance of the company will eventually attract investors seeking exposure to the industrial good sector. Dangote Cement currently remains the toast of the market but at some point, the market valuation of that stock will become too expensive for even the most optimistic investor. Lafarge Africa should offer an attractive alternative for portfolio diversification. 2.Post-rights issue performance should be a lot better: Over 67 percent of the rights issue proceeds will be used to pay down loans. This will further address the impact of leverage on the company’s earnings. In addition, Lafarge Africa is set to continue

to optimize its operations. It’s noteworthy to state that its South African subsidiary became EBITDA positive in the third quarter of 2018 and, for the first time since the South African operations became a serious drag on earnings, management recently provided earnings guidance for the S.A. operations, projecting a sustainable EBITDA marginof 10% (compared to -14.6% in the second quarter of 2018). Additionally, going forward, the company’s bottom line will be buoyed by less administrative expenses following some restructuring. Management projects that the company should pay down the last tranche of cost associated with the implementation of SAP in the first quarter of 2019. I think the biggest takeaway on this point is that while Lafarge is still owing a lot of debt but the outstanding loans should reduce significantly over the next 2 years. This puts the company in a stronger position to achieve sustainable earnings growth. 3.Dollar loans less of a problem going forward: Forex related losses were a major drag on Lafarge Africa’s earnings in 2016 and 2017. Total forex losses linked to dollar loans was N36.2 billion over the two years.

However, in the event that the central bank bows to pressure to depreciate the currency later this year, Lafarge has bought some fx loss protection for its dollar loans in the form of non-deliverable forward contracts provided the central bank of Nigeria. Unlike in prior years, Lafarge’s dollar loans are hedged. 4.Management may decide to sell its South African subsidiary: ok, this is a bold prediction that could take several years to pan out but this reflects my view on the outlook for the company in Africa. I believe that the company will focus a lot on operational efficiency and while it has come a long way with the “clean up” of the S.A. business, I think that the dynamics of Africa’s second largest economy does not present a great opportunity over the longer term. I expect Lafarge Africa to seek higher margin opportunities across the continent while consolidating on its operations in West Africa. A sale of the S.A. operations will not only provide much needed cash but will also enhance Lafarge Africa’s profit margins going forward. Send reactions to: comment@businessday.ng

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Has Buhari been unlucky with the Nigerian economy?

Patrick Atuanya Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

t the time of President Muhammadu Buhari’s first coming in 1983 as head of the military regime that overthrew civilian President Shehu Shagari, Nigeria’s economy was already showing signs of stress from falling oil prices and an overvalued currency. Growth had begun to decelerate from 4.2 percent real growth recorded in 1980, to a -13 percent contraction in 1981, -1.05 percent slide in 1982, and another -5.05 percent contraction in 1983 (World Bank estimates). The oil glut of the 1980’s was largely fingered as the culprit as Nigeria’s economy was even more tied to oil then, than now. A surplus of crude oil caused by falling demand following the 1970s energy crisis meant that the inflation adjusted real 2018 dollar value of oil fell from an average of $106 per barrel in 1980

Olubunmi R.Adeyinka Adeyinka is a public affairs analyst

major challenge to effective productivity for governments and organisations in Nigeria is how to adequately capture and interpret data. Creating good strategy is premised on the ability to understand the current state of affairs, its nuances, and changes over time in order to implement an approach that best fulfils the desired objective. The country lacked credible data from authentic and rigorous data gathering tools. Ngozi Okonjo-Iweala, a globally renowned economist and two-term Nigerian finance minister who served as the vice president of World Bank, founded NOI Polls Limited in response to this vacuum. Established 12 years ago as West Africa’s first country-specific opinion survey firm, it has built its methodology in technical partnership with The Gallup Poll (USA). Over the past twelve years, NOI polls has produced independent research, provided strategic consulting, analytics and data banking services that have helped corporations, policy makers, government agencies, international donors, CSOs, and private enterprises to understand the opinions of Nigerians. This has focused on issues of governance, market trends, management of the economy, provision of social and health services, as

to an average of $23 per barrel in 1986. Nigeria suffered a sharp drop in government revenues on account of the slump and rising cost of foreign debt service. Buhari responded by imposing austerity economic policies when he came to power, cutting down on imports and government expenditures, and trimming the civil service. In 1984 the economy however contracted by -2.02 percent, meaning most of the policies enacted by Buhari and his team to kick-start growth had largely failed. Buhari’s tenure was shortlived though as he was soon overthrown in another coup in 1985 led by General Ibrahim Babangida. Come 2015 and Buhari was again elected as President of Nigeria, at a time of falling oil prices, slowing growth and growing economic stress. And unluckily again, in the 32 years since he last ruled the country, Nigeria had still not managed to wean itself off of oil (at least in terms of its impact on the macro-economy through dollar inflows and the FGs fiscal health), as proceeds from the sale of crude accounted for 95 percent of Nigeria’s dollar earnings and 70 percent of the Federal Governments budget. Once again the familiar oil fuelled boom bust cycle seemed to have occurred. GDP growth that printed at

‘ The key seems to

lie in making your own luck, by having counter cyclical buffers in place to ease the fiscal stress as in 2009 or embarking in wide ranging reforms to attract private capital and ease the strain on the government’s balance sheet

’

6.31 percent in 2014, slowed to 2.70 percent in 2015, -1.6 percent in 2016, 0.8 percent in 2017, and estimates of 1.8 percent for 2018. In other words growth rates more than halved (since the most recent peak) and a prolonged U or L shaped recovery from the recession seems to be staring the country in the face. Brent crude oil prices also fell from an average of $98.89 per barrel in 2014 to $52.32 in 2015, $43.74 in 2016, $54.15 in 2017 and $71.4 in 2018. On the basis of the above analysis alone one could argue that

Buhari has been extremely unlucky in the timing of his entry into Nigeria’s political space, either through the barrel or ballot. But that would not be entirely accurate. This is because Nigeria has seen periods of low oil prices before that combined with high growth rates. Another reason would be that at any period between 1999 and 2018, oil as a share of Nigeria’s Gross Domestic Percent (GDP), has never been lower and today is at somewhere close to 10 percent. Between 1999 and 2002, which coincided with the period when another ex-military dictator Olusegun Obasanjo came to power in his first term, Brent oil prices were much lower than today and averaged $17.44 per barrel (1999), $27.6 per barrel (2000), $23.1 per barrel (2001), and $24.36 per barrel (2002). Growth rates for the same periods were 0.47 percent (1999), 5.3 percent (2000), 4.4 percent (2001) and 3.78 percent (2002), according to World Bank data. In 2008/2009 at the depths of the great recession when oil prices fell from as high as $147 (2008) to below $35 per barrel (2009), Nigeria still managed 6.9 percent expansion for 2009. So what might account for the lacklustre economic performance this time around given we have seen periods of low oil prices before that didn’t translate to mediocre growth rates?

The key seems to lie in making your own luck, by having counter cyclical buffers in place to ease the fiscal stress as in 2009 or embarking in wide ranging reforms to attract private capital and ease the strain on the government’s balance sheet as was the case between 1999 and 2002. That means that policy responses and choices in the context of an economic crises, do matter. Doing simple things like quickly adjusting your currency (which helps to act as a stabilizer), when the price of your main export earner collapses by more than 50 percent from its recent high, getting rid of wasteful (fuel) subsidies, especially when they are becoming increasingly unsustainable, pushing inefficient government owned enterprises off the government balance sheet and unto the private sector through privatisation to free up funds for more critical spending (health and education), having a pipeline of infrastructure projects that can be financed by private capital, are all necessary steps to help staunch the bleeding and return the virtuous growth cycle. It may also help to reduce/ eliminate regulatory tolls, and harassment of the private sector. In that sense the fault may not lie in the stars, but in our (bad policy making) selves. Send reactions to: comment@businessday.ng

NOI polls: 12 years of tracking and interpreting Nigeria well as performance of government and private sector institutions. Comprising a team of over 500 researchers including enumerators, field supervisors, field managers, research analysts, associates, and managers, NOI has published some of the most groundbreaking research in Nigeria. In the run up to the 2019 elections, NOIPolls has been instrumental in assessing the impact of voter education being carried out by the Independent National Electoral Commission (INEC), as well as the preparedness of INEC and the electorates towards the 2019 elections. Election polls attract a great deal of attention for their ability to predict the outcome of elections, however their most critical function is to help journalists and citizens understand the meaning of the campaigns and the electoral process. Polls help to explain, among other things, what issues are important, how candidate qualities may affect voters’ decisions, and how much support there is for particular policy changes. NOIPolls also published its monthly approval ratings assessing President Buhari’s 3rd year in office across a 3-year period (June 2015 to May 2018). The results revealed that over the tenure, the President’s performance rating had taken a downward plunge, plummeting from his highest rating of 80% recorded in October 2015, to 37% recorded in August 2016 and more recently 39% in April 2018. It also helped predict the results of the Ekiti State guber-

natorial elections, as well as assessing the major factors that premised voters in their choice of candidates. The most recent elections related poll conducted in September 2018 assessed the collection of Permanent Voters Cards (PVC). It revealed a low rate of collection as that almost 7 in 10 Nigerians (68 percent) who registered since the commencement of the Independent National Electoral Commission (INEC) Continuous Voter Registration (CVR) exercise in April, 2017 are yet to collect their permanent voter’s card (PVC). Most people who were yet to collect their PVCs at the time of the survey reported that they have checked but were told by INEC officials that their PVCs were not yet ready for collection. Given the low collection of PVCs, 34 percent of the electorates suggested that INEC should send text messages to citizens whose PVCs are ready, recruit more ad-hoc staff (25 percent) and create more collection centers across the country (15 percent) amongst other recommendations to boost collection of PVCs. Surveys to understand the barriers to women and youth participation in politics have been particularly insightful in this electoral cycle. They exposed that most Nigerians (91%) believe there is gender disparity in politics, with culture and religion cited as the greatest barriers to Nigerian women in politics. Young people on the other hand cited financial constraints and “god-fatherism” as the two largest constraints militating young profes-

sionals from contesting for office. These findings have helped CSO’s involved in enhancing wider political participation to create strategies to mitigate these barriers. Outside the elections, surveys on social issues such as rising drug and child abuse, have helped shape the advocacy strategy for stakeholders. Research on the nature and origins of “fake news” revealed that social media propagates fake news far more than word of mouth, the internet, television and newspaper combined. NOIPolls also partnered to develop the manufacturing Purchasing Managers’ Index (PMI), the first in Nigeria used in developed markets and larger emerging markets such as China, India and Brazil. Based upon manufacturers’ responses to set questions on core variables in their businesses, it indicated that structural issues continue to stifle the growth and expansion of Nigerian manufacturing firms which limit manufacturers’ ability to produce standard products profitably. Power supply tracking has helped power companies understand perceptions of their deliveries in order to improve consumer relations. These have provided estimates of the electricity demand within specified clusters, estimates of off-takers’ willingness to pay for improved electricity services, and assess the demand for electricity within the specified clusters. The presentation of findings in easy to understand info-graphics allows all citizens to comprehend the

status of the sectors. Base and end line surveys in agriculture and food security have also been undertaken to provide socioeconomic baseline data at the level of smallholder farmers along preidentified Green Innovation Centers. A baseline survey was also carried out to assess the City Infrastructure Quality Index, which will serve as an indicator for measuring improvements in the quality of infrastructure in Nigeria over time. This will provide insight of the economic health of the selected cities and measure access to urban transport and solid waste management services. The wide scope of topics covered illustrates how NOIPolls is making progress in achieving its mission of giving Nigerians a voice on the issues that impact their lives as well as supporting businesses. Surveys on citizen’s perception in particular have provided timely and relevant information on public attitudes and opinions on various social and economic issues. These have given a voice to ordinary citizens to aid decision makers in the public and private sectors for better performance and improved governance. With an expansion plan to cover West Africa over the next five years using the latest methodologies for data collection, NOI aims to magnify the significance of public opinion research across the continent.

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Monday 21 January 2019

Lagos airport road: Abode’s legacy

s entr y points, roads leading to key airports are kept in the best conditions possible as they give the first impression of the country to visitors and investors. Sadly, Nigeria’s case is different. For decades, the road leading to the Murtala International has been was an eyesore and in perpetual disrepair. It elicited concerns from all quarters and provided uncomplimentary headlines for local and international media. For air transport passengers using the road, it was always a case of getting stuck in interminable traffic congestion and missing their flights in the process. Fo r s e v e ra l o t h e r s , i n th e bid to ke ep app ointments around the airport precincts, commercial motorc ycles (popularly als o known as ‘Okada’) became the alternative mode of transportation, thus mocking Africa’s biggest economy as perhaps the only country

in the world where air passengers ride on motorcycles into the airport. Apart from the fact that the two-lane road fell short of the standard expected of an international airport road, it was almost perpetually in darkness as the streetlight poles only stood menacingly to remind users that governments in this part of world cares less about the safety of the citizens and visitors. Of course, the darkness provided the needed hideout for hoodlums to rob unsuspecting airport travellers and residents of the adjourning Mafoluko settlements. That was the story of the airport road. Government after government promised to repair and expand the road but all failed, until the current governor of Lagos state decided to act decisively. Being a federal road, the governor secured the approval of the federal government to redesign and expand the road in June 2017 and eventually flagged off the reconstruction work in September of same

year. If all goes well as recently hinted by Adebowale Akinsanya, the Lagos State commissioner for works and infrastructure, the Lagos airport road, which links the Murtala Mohammed International Airport (MMIA) from Oshodi, will be completed and handed in a couple of months. Although initially targeted to be delivered in December 2018 as a ‘Christmas Gift’ to Nigerians, issues bordering on relocation of utility facilities had pushed forward the projected completion date. The road is designed as a sixlane dual carriage expressway (three major lanes on both directions), plus two-lane service roads on both directions. The reconstruction is with a ramp bridge designed to provide a U-turn from Ajao Estate to the airport. Also incorporated is a flyover at NAHCO/tollgate, and drainage works. The road, which is nearing completion, is also coming with two new pedestrian bridges at Ajao Estate and NAHCO/ Hajj Camp, as well as slip road to provide access to Ajao Es-

tate, lay-bys and streetlights to meet required international standards. The road will also link up with the Oshodi Transport Interchange (OTI), also being constructed by the government, to provide a seamless and stress-free ride for passengers arriving the airport and driving into the commercial city. Governor Ambode, who undertook an inspection tour of the road and other projects in the state, said his administration took the decision to reconstruct the road because it is one of the busiest roads in the state, with average vehicular volume of 50,000 daily. According to him, the poor state of the road was not acceptable for the status of the state as the fifth largest economy in Africa and the nation’s commercial hub. This is commendable. It shows that a determined government can change the narrative of broken and dilapidated infrastructure in the country. We thank governor Ambode for this worthy legacy!

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Monday 21 January 2019

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Britain’s crisis

Too challengers Unclemany Sam’s game

Brexit, mother of all messes

America’s legal forays against foreign firms vex other countries

Solving the crisis will need time—and a second referendum

O PLAN BY any modern British government has been so soundly thrashed as the Brexit deal thrown out by Parliament on January 15th. The withdrawal agreement, the centrepiece of Theresa May’s premiership, which she has spent nearly two years hammering out with the European Union, was rejected after five days’ debate by 432 votes to 202. Her own Conservative bankbenchers voted against her by three to one. The mother of parliaments is suffering the mother of all constitutional crises (see article). Three years ago, in the biggest poll in the country’s history, Britons voted in a referendum to leave the EU. Yet Parliament, freshly elected a year later by those same voters, has judged the terms of exit unacceptable. The EU shows little willingness to renegotiate. The prime minister ploughs obdurately on. And if this puzzle cannot be solved by March 29th, Britain will fall out with no deal at all. To avoid that catastrophe, the priority must be to ask the EU for more time. But even with the clock on their side, MPs seem unlikely to agree on a solution to Brexit’s great riddle: what exit terms, if any, truly satisfy the will of the people? With every week in which MPs fail to answer this question, it becomes clearer that the people themselves must decide, in a second referendum. The rout this week was the result of two years of political misjudgment. The referendum of 2016 was won by just 52% to 48%. Yet rather than consult the defeated side, Mrs May pursued a hardline Brexit, hurriedly drawn up with a handful of advisers and calibrated to please her Conservative Party. After she lost her majority in 2017 the need to build a consensus became clearer still, but she doubled down. Even after Parliament established its right to vote on the final deal, she didn’t budge, instead trying (and failing) to frustrate Parliament’s vote by running down the clock. The doggedness that has won her many admirers now looks like pig-headedness. The prime minister’s promise after this week’s crushing defeat to work with opposition MPs comes two years too late. But the crisis is not just about poor

Monday 21 January 2019

Canada’s arrest of Meng Wanzhou, Huawei’s finance chief, is the latest example

ANCOUVER AIRPORT is an unlikely venue for the genesis of a global spat. But repercussions from the detention by Canadian authorities of Meng Wanzhou while in transit there on December 1st are still spreading. Ms Meng, finance chief of Huawei, and daughter of the giant tech company’s founder, Ren Zhengfei, was arrested at the request of American prosecutors investigating the firm’s alleged business ties with Iran, which is under American sanctions. Chinese authorities have arrested a number of Canadians in response; this week a court sentenced

leadership. Brexit has exposed two deeper problems. One concerns the difficulties that will face any country that tries to “take back control”, as the Leave campaign put it, in a globalised, interconnected world. If you take back the right to set your own rules and standards, it will by definition become harder to do business with countries that use different ones. If you want to trade, you will probably end up following the rules of a more powerful partner—which for Britain means the EU or America—only without a say in setting them. Brexit thus amounts to taking back control in a literal sense, but losing control in a meaningful one. Leavers are right that the EU is an increasingly unappealing place, with its Italian populists, French gilets jaunes, stuttering German economy (see article) and doddery, claret-swilling uber-bureaucrats in Brussels. But they could not be more wrong in their judgment that the EU’s ominous direction of travel makes it wise for Britain to abandon its seat there. The second essential problem Brexit has exposed concerns democracy. Britain has a long history of representative democracy, in which MPs are elected by voters to take decisions on their behalf. The referendum of 2016 was a rarer dash of direct democracy, when the public decided on a matter of

policy. Today’s crisis has been caused by the two butting up against each other. The referendum gave a clear and legitimate command to leave the EU. To ignore it would be to subvert the will of the people. Yet the people’s representatives in Parliament have made an equally clear and legitimate judgment that Mrs May’s Brexit deal is not in their constituents’ interests. To sideline MPs, as Mrs May has all along tried to do, would be no less a perversion of democracy. The prime minister has piled moral pressure on MPs to back the deal anyway, arguing that even if they don’t much like it, it is what their constituents voted for. It is not so simple. Mrs May’s deal is not as bad as some of her critics make out, but it is far from what was promised in 2016. Ejection from the single market, the decline of industries ranging from finance to carmaking, the destabilisation of Northern Ireland and an exit bill of some $50bn: none of this was advertised in the campaign. Voters may be entirely happy with this outcome (opinion polls suggest otherwise). But there is nothing to say that the vote to leave must entail support for Mrs May’s particular version of leaving. That is why all sides can claim to represent the “real” will of the people. For MPs to back a deal that they judge harmful out of respect

for an earlier referendum which issued a vague instruction would be neither representative democracy nor direct democracy—it would be one doing a bad impression of the other. The first step to getting out of this mess is to stop the clock. Because Mrs May’s deal is dead and a new one cannot be arranged in the ten remaining weeks, the priority should be to avoid falling out on March 29th with no deal, which would be bad for all of Europe and potentially disastrous for Britain. If Mrs May will not ask for an extension, Parliament should vote to give itself the power to do so. This desperate measure would up-end a long convention in which government business takes precedence over backbenchers’. But if the prime minister stays on the road to no deal, MPs have a duty to seize the wheel. With more time, perhaps a deal might be found that both Parliament and the EU can agree on. Either a permanent customs union or a Norwegian-style model (which this newspaper endorsed a year ago as the least-bad version of Brexit) might squeak through. But both would demand compromises, such as Britain relinquishing the right to sign its own trade deals or maintaining free movement, that contradict some Leave campaign promises.

another to death for drug- smuggling Ms Meng is not accused of breaking Chinese laws, nor those of Canada. That matters little. Since the turn of the century, America has ramped up judicial programmes whose reach is not restricted by its borders. Focused on enforcing its sanctions, reducing corruption in poor countries and fighting money-laundering and terrorism financing, it has found ways of prosecuting companies and their executives far beyond its shores. Ms Meng, who is out on bail and preparing to fight extradition in a hearing expected next month, could face decades in jail. America’s aims are often laudable. Much wrongdoing has been brought to light, and probably prevented, as a result of its actions. But the continued growth of such programmes is raising questions about the fairness of America imposing its mores in overseas jurisdictions. Most of the companies caught in its legal net are foreign, often European. Some come from countries in which doing business with Iran, for example, would be no problem were it not for America’s Continues on page 15

Monday 21 January 2019

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America’s legal forays against foreign firms ...

Judge dread

The trouble with America’s

Facing little scrutiny from the courts, prosecutors have overreached

OR EUROPE AN firms operating in Asia, or Latin American and Asian firms hustling in Africa or the Middle East, business risks abound. Surprisingly high on the list of things that keep bosses awake with cold sweats at night is falling foul of America’s Department of Justice (DOJ) or its Treasury Department. The United States leads the world in punishing corruption, moneylaundering and sanctions violations. In the past decade it has increasingly punished foreign firms for misconduct that happens outside America. Scores of banks have paid tens of billions of dollars in fines. In the past 12 months several multinationals, including Glencore and ZTE, have been put through the legal wringer. The diplomatic row over Huawei, a Chinese telecoms-equipment firm, centres on the legitimacy of America’s extraterritorial reach (see article). America has taken it upon itself to become the business world’s policeman, judge and jury. It can do this because of its privileged role in the world economy. Companies that refuse to yield to its global jurisdiction can find themselves shut out of its giant domestic market, or cut off from using the dollar payments system and by extension from using mainstream banks. For most big companies that would be suicidal. Wielding a stick is often to be applauded. Were it not for America’s tough stance against FIFA, for instance, the dodgy officials who ran world football would not have been brought to book. But as the full extent of extraterritorial legal activity has become clearer, so have three glaring problems. First, the process is disturbingly improvised and opaque. Cases

Continued from page 14

rarely go to court and, when they are settled instead, executives are hit with gagging orders. Facing little scrutiny, prosecutors have applied ever more expansive interpretations of what counts as the sort of link to America that makes an alleged crime punishable there; indirect contact with foreign banks with branches in America, or using Gmail, now seems to be enough. Imagine if China fined Amazon $5bn and jailed its executives for conducting business in Africa that did not break American law, but did offend Chinese rules and was discussed on WeChat. Second, the punishments can be disproportionate. In 2014 BNP Paribas, a French bank, was hit with a sanctions-related fine of $8.9bn, enough to threaten its stability. In April ZTE, a Chinese tech firm with

80,000 employees, was banned by the Trump administration from dealing with American firms; it almost went out of business. The ban has since been reversed, underlining the impression that the rules are being applied on the hoof. Third, America’s legal actions can often become intertwined with its commercial interests. As our investigation this week explains, a protracted bribery probe into Alstom, a French champion, helped push it into the arms of General Electric, an American industrial icon. American banks have picked up business from European rivals left punch-drunk by fines. Sometimes American firms are in the line of fire—Goldman Sachs is being investigated by the DOJ for its role in the 1MDB scandal in Malaysia. But many foreign executives suspect that American firms

get special treatment and are wilier about navigating the rules. America has much to be proud of as a corruption-fighter. But, for its own good as well as that of others, it needs to find an approach that is more transparent, more proportionate and more respectful of borders. If it does not, its escalating use of extraterritorial legal actions will ultimately backfire. It will discourage foreign firms from tapping American capital markets. It will encourage China and Europe to promote their currencies as rivals to the dollar and to develop global payments systems that bypass Uncle Sam. And the DOJ could find that, having gone all guns blazing into marginal cases, it has less powder for egregious ones. Far from expressing geopolitical might, America’s legal overreach would then end up diminishing American power.

Engine trouble

France and Germany plan to sign a new treaty in Aachen

But the planned celebration is really a sign of weakness

OU CANNOT doubt the ambition. By choosing Aachen as the place where they will sign their renewed treaty of friendship and co-operation on January 22nd, Emmanuel Macron and Angela Merkel aim to send a strong signal: France and Germany are still at the heart of the European project, guiding and dominating it, even as the British prepare to depart. Aachen was the capital of Charlemagne’s ancient Frankish empire, his reincarnation of the lost Roman one. His kingdom encompassed most of the lands of the six founding members of the European Union. The Aachen treaty is intended to reinvigorate the Franco-German partnership at the core of the EU, and strengthen the Elysée treaty of 1963 which institutionalised it. Alas, the jamboree may do more harm than good. One reason is that, by focusing on form rather than substance, it exposes how far the two countries have drifted apart. Another is that the show of unity perpetuates the notion of a duumvirate that irritates other members of the EU.

This is dispiriting. Even without Brexit, the EU needs new energy and leadership to confront its many problems. One difficulty with Aachen is that, despite the smiles, Franco-German relations are at a low ebb. Mr Macron came into office with ambitions to build up Europe as well as France, but his plans have come to little. The huge new euro-zone budget he proposed has been rejected by the flinty Germans, and will be tiny if it exists at all. Progress

towards full banking union, including euro-zone-wide deposit insurance, is glacial. France has been disappointed by German reluctance to boost spending, which would generate extra demand across the EU. Now the German economy is flirting with recession. Germany is just as disenchanted. Mr Macron has done nothing to help Mrs Merkel draw up a Europe-wide scheme for sharing out refugees. He is trying to break up the party-group sys-

tem at the European Parliament, which will diminish Mrs Merkel’s Christian Democrats. He is pressing his form of European defence co-operation as a rival to a German model, though at least there is a promise to increase Europe’s ability to act. His surrender to the gilets jaunes protesters will bust his budget, damaging his credibility. And the hope of French support for Germany’s diplomatic ambitions, in the shape of a shared EU permanent seat at the UN Security Council, has evaporated. Set against this discouraging backdrop, the Aachen meeting was a chance to forge a new consensus. But the treaty and its various side-documents contain remarkably little: a promise to co-ordinate positions on some issues (but agreement on exactly what these should be has proved elusive with, for instance, no common view on how to tax global companies); the creation of a cross-border assembly that will meet twice a year, though only to talk; and some deepening of cross-border links on health care and education. Charlemagne would not have been impressed.

stance. As a result, critics who decry what they call America’s financial imperialism are looking for ways to limit its reach. Policymakers and business figures in Europe are peeved at having to heed American laws, and they suspect other motives. “European companies are increasingly impacted by the extraterritoriality of US sanctions,” says Pierre Gattaz, head of BusinessEurope, the European Union’s main employer federation. “Moreover, these are increasingly instrumentalised to promote economic interests,” he adds. There are instances where America’s long legal reach may have given an edge to its own firms over foreign rivals, as in the case of General Electric’s purchase of Alstom of France in 2014 (see article). Ever mindful of diplomatic norms, President Donald Trump has linked Ms Meng’s legal fate to the prospects of America getting a good deal in trade talks with China. It is America’s central role in the global economy that gives it the exorbitant privilege of imposing its way in boardrooms across the world. Some forms of sanctions merely ban companies trading in embargoed countries from selling to America. Other programmes, notably the Foreign Corrupt Practices Act (FCPA), which battles against corporate graft, can result in prosecutions in criminal courts. Several elements tie together America’s various legal forays abroad. The first is their creeping extraterritoriality. American law starts with a presumption against application of its statutes beyond its borders. But prosecutors have wide authority over how the laws are interpreted. They have adopted an ever-moreexpansive interpretation of who is subject to American law, lawyers say. A banking transaction that ultimately passes through New York—as many do, given the centrality of American dollars to global trade— can give prosecutors a toehold to inspect it. If two executives outside America use Google’s Gmail to communicate about a bribe, say, American prosecutors can claim that the Americanness of the email provider can make it their business.

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Monday 21 January 2019 In Association With

Plain sailing for Sall

Macky Sall, Senegal’s president, will probably win a second term His main opponents are barred from running

EVERAL TIMES a week, police block off Dakar’s roads and 4x4s tear through the Senegalese capital. It is election time and Macky Sall, the president, has no time to waste in pesky traffic jams as he races from opening infrastructure projects to meetings at plush hotels. He need hardly bother. Mr Sall (pictured) looks far too powerful to be unseated in the presidential election on February 24th. Although Senegal has avoided the worst of the corruption—not to mention the coups and civil wars—that have plagued its neighbourhood, it is hardly the model democracy it is often held to be. Last year the government introduced a law that made it harder to qualify as a presidential candidate. Thousands protested against the act which, by reducing the number of

contenders, was widely seen as a way of improving Mr Sall’s chances of winning more than 50% of the vote and thus avoiding a run-off. Sure enough, on January 14th the constitutional court released the shortest candidate list in three decades, with just five names. Mr Sall’s two most threatening rivals, the former

mayor of Dakar, Khalifa Sall (no relation) and the son of a former president, Karim Wade, have been disqualified because of convictions for fraud and corruption respectively. Many voters think the charges were politically motivated. “This is an ill democracy,” says Alioune Tine, a former regional director of Amnesty International, a hu-

man-rights group. None of the remaining candidates seems powerful enough to force a second round in which, with a united opposition, they might have unseated the incumbent. Yet two still stand out. Ousmane Sonko is a former tax inspector who gained prominence when he published a book exposing corruption around Senegal’s gas discoveries. Mr Sonko’s firebrand call to abandon the CFA franc, which is pegged to the euro, may strike a chord with young voters. But he is campaigning on a shoestring budget and is barely known in the countryside. The other noteworthy candidate is Issa Sall (no relation to either the president or Khalifa Sall), who is backed by the Tijaniyyah Muslim brotherhood and has a following among conservative voters. The president, in contrast, has all the advantages of in-

cumbency. He won office in 2012 against Abdoulaye Wade, whose term was marred by allegations of corruption and who had sparked huge protests when he contorted the constitution so that he could run for a third term. Although Mr Sall is unpopular among urban voters, he has a large following in the countryside and villages, where his government has built roads and water supplies. Dakar’s streets are lined with campaign posters of the president. One shows him next to a new motorway to the holy city of Touba, an offering to his backers, the Mourides, Senegal’s most powerful Muslim brotherhood. Another shows him next to a sports stadium in Diamniadio, a futuristic new city that is intended to ease pressure on Dakar. Looking at the posters and the motorcade, you might think that Mr Sall is sure to win. He probably will.

Zollarisation

Zimbabwe’s economic crisis prompts protests and repression People have taken to the streets against a higher fuel price

N JANUARY 16TH Zimbabweans awoke to a text message from Econet, the country’s main internet provider. Citing a warrant from the office of the president, the firm said that the day before it had suspended its services. “The matter is out of our control,” it added. States do not order blackouts unless they have something to hide. In response to protests sparked by a rise in fuel prices announced on January 12th, security forces unleashed a violent crackdown. According to local activists, soldiers and police went door-to-door in townships, beating or shooting at protesters. In the capital, Harare, roadblocks manned by thugs from Zanu-PF, the ruling party, stopped the wounded reaching hospitals. Amnesty International says at least eight people have been killed and more than 200 arrested. The threat of violence served only to encourage participation in the national “stay away” called by trade unions. As The Economist went to press, schools, shops and offices in the main cities had been closed since January 14th. “The whole coun-

try is at home,” said Eddie Cross, a 78-year-old former opposition MP. “I’ve never in all my life seen anything like this.” After Emmerson Mnangagwa succeeded Robert Mugabe in a coup in late 2017, the new president claimed that Zimbabwe would be “open for business”. The events of the past week make that sound hollow. And the crisis has no end in sight. That is because the ruling junta is more willing to attack protesters than tackle Zimbabwe’s fundamental economic problems. After the profligate printing of money prompted a bout of hyperinflation in 2008-09, a government of national unity

(with a finance minister from the opposition) cut spending and abolished the Zimbabwe dollar. The American one became the main currency, quenching inflation. The economy recovered swiftly. But the parsimony did not last after Zanu-PF took full control of the government in 2013. Unable to print real dollars, it made its own version, known locally as “zollars”. Though the government insists that a zollar is worth the same as a greenback, the black market says otherwise. On January 16th the zollar was fetching just a quarter of a dollar. Zimbabweans’ frustration was apparent even before the

rise in the fuel price. In November official inflation reached 31% (many think this is an understatement), its highest level for a decade. Earlier this month doctors, teachers and nurses went on strike, demanding to be paid in real dollars. Many businesses are on the brink. On January 11th Olivine Industries, which produces cooking oil, halted business and sent home workers, saying it owed its foreign suppliers $11m. To start to bring an end to the Ponzi scheme of zollars and dollars, the government would need to give up the myth of parity. But Zanu-PF has a vested interest in this arrangement. Some members of its ruling elite can convert a zollar to a dollar at the central bank, while letting ordinary Zimbabweans starve. Instead of facing reality, Mr Mnangagwa has left the country. After announcing a rise in the price of petrol from 1.32 to 3.31 zollars, he boarded a private jet bound for Russia, the first leg of a jaunt that ends in Davos. In Moscow he signed a deal to give Alrosa, a Russian company, access to the country’s diamond fields. This may help a few real

dollars trickle into the pockets of Zanu-PF bigwigs, but is unlikely to improve the lot of the rest of the country. Later on January 16th the internet was switched back on. Social media carried pictures of bloodied bodies. The blackout is over. But Zimbabwe’s darkness remains.

Monday 21 January 2019

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Live @ The Exchanges Investors exchanged stocks worth N2.40trn on NSE in 2018 …Market gained over N430bn last week Stories by Iheanyi Nwachukwu

n twelve months to December 31, 2018 stock investors on the Nigerian Bourse exchanged equities valued at N2.404trillion. This cumulative transactions from January to December 2018 represents a reduction by 5.44percent, from N2.542trillion recorded same period in 2017. Foreign investors accounted for N1.219trillion representing 50.87percent of the total value of stocks traded last year, while domestic investors exchanged equities valued at N1.185trillion, representing 49.13percent. Foreign inflows into the stock market stood low at N576.45billion against foreign outflow of N642.65billion in the review month. Domestic retail investors accounted for N524.63billion in equities transaction while do-

mestic institutional investors exchanged equities worth N660.67billion. Equities trading highlights between 2011 and 2015 show foreign transactions consistently outperformed domestic transactions. However, domestic transactions marginally outpaced foreign transactions in 2016 and 2017, and remained almost at par in 2018. Also, foreign transactions which stood at N1.539trillion in 2014 declined to N1219billion in 2018. Over a twelve (12) year period, domestic transactions have decreased by 66.67percent, from N3.556trillion in 2007 to N1.185trillion in 2018. Month-on-month (MoM), the total transactions at the nation’s bourse reduced by 15.93percent, from N149.72 billion recorded in November 2018 to N125.86 billion (about $488.8 million) in December 2018. Domestic investors

outperformed foreign investors by 4.54percent in December 2018. Total Domestic transactions increased marginally by 0.64percent from N65.36 billion in November to N65.78 billion in December 2018. In contrast, total foreign transactions reduced by 28.78percent from N84.36 billion to N60.08 billion driven by a reduction in foreign inflows which reduced by 34.31percent from N34.97 billion to N22.97 billion and foreign outflows which reduced by 24.86percent from N49.39 billion to N37.11 billion

eTranzact gets shareholders’ approval to raise authorised share capital to N9.1bn

Tranzact International Plc, Africa’s premier electronic payment solutions provider has gotten the express approval of Shareholders of the company to raise its Authorised Share Capital from N2.1billion to N9.1billion. The capital raise proposal ofN7billion was tabled by Wole Abegunde, Chairman of eTranzact, at an Extraordinary General Meeting (EGM) of the Company held in Lagos recently. He stated that the decision to raise additional capital became imperative considering the need of the Company to expand its operations, deepen

its market share and to remain competitive in the financial technology industry. According to Abegunde, the capital to be raised will be used to upgrade and enhance the Company’s technology infrastructure and network security systems and also to improve on its service delivery. He further stated that the Company will also invest in its Agent Network Expansion Program, Human Resources and Employee Development. Also, speaking with journalists at the EGM, the Managing Director/CEO of eTranzact, Niyi Toluwalope, believes that the injection of additional equity will enable the Company’s Management to strategically maintain the Company leading position as a key market leader within the electronic payment industry. The eTranzact boss

affirmed that eTranzact will acquire state-ofthe-art infrastructure, ensure that the Company retains the best skill set available, achieve a fast response rate, reduce downtime, and expands its service offerings and market reach. Founded in September 2003, eTranzact is Nigeria’s first award winning, multi-application and multi-channel electronic transaction switching and payment processing platform. It has evolved into a brand with global reach with operations in Nigeria, Ghana, and South Africa, with expansion inclination to more countries in the world. Since Inception, eTranzact has deployed mobile payment solutions to banks, nonbank financial institutions and was recently granted license by the CBN to provide Mobile Money services to individuals with a special focus on the unbanked.

over the same period. Meanwhile, the stock market closed last week ended January 18, 2019 in the green as the Nigerian Stock Exchange (NSE) All Share Index (ASI) increased by 3.94percent. The gain seen last week narrowed year-to-date (YtD) negative returns to -1.35percent. Last Friday’s rally by +1.38percent pushed the NSE All Share Index (ASI) to close at 31,005.17 points while the value of listed stocks reached new highs of N11.562trillion, from week-open low of N11.124trillion.

Arunma Oteh joins Ecobank’s Board

cobank Transnational Incorporated (ETI), parent company of the Ecobank Group, has appointed Arunma Oteh to its Board of Directors as a Non-Executive Director. This was disclosed in a statement sent to the Nigerian Stock Exchange (NSE) on Friday and signed by Mireille Bokpe, Group Communications, Ecobank Transnational Incorporated Oteh recently joined Oxford University as an Academic Scholar at St. Antony’s College and an Executive-in-Residence at SAID Business School. Her research areas of focus are capital markets, development and financial technology. She was Treasurer of the World Bank from 2015 to 2018 where she led a team that managed the World Bank’s $200 billion debt portfolio as well as an asset portfolio of $200 billion for the World Bank and 65 central banks and other public sector clients. She was also responsible for an extensive public sector financial advisory business and back office operations, administering payments of over $7 trillion. Prior to joining the

World Bank, Oteh was Director General of the Securities and Exchange Commission (SEC), Nigeria from 2010 to 2015. During this period, she led the rebuilding of the Nigerian capital markets after the global financial crisis and served on Nigeria’s Economic Management team. Previous to SEC Nigeria, she worked at the Africa Development Bank for 17 years in a variety of roles including Group Vice President, Corporate Services (2006 to 2009) and Group Treasurer (2001 to 2006). Her career in Finance started at Centre Point Investments Limited, Nigeria in 1985. During her stellar 33year career, Oteh also served on several Boards, notably, the International Organization of Securities Commissions (2010 to 2015), which regulates 95% of the world’s securities markets and the pioneer Board of the International Financing Facility for Immunization (2006 to 2011). She also served on the Board of the Nigerian Pension Commission, the World Economic Forum Agenda Council on Institutional Governance, and the Africa Advisory Council for World Women’s Banking.

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Afreximbank lends $170m to Orascom for Pan-African expansion

Pg. 22

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

CONSUMER GOODS

Nestle, Presco, International Breweries shine in NSE 30 Ten-year challenge OLUFIKAYO OWOEYE & SEGUN ADAMS

n the spirit of the 10YearsChallenge, we decided to evaluate the 10 years performance of NSE 30 stocks. Leading the chart is Nestle Plc. with a whooping return 830% over the 10 years while Energy companies, Oando and Forte Oil led the laggard list as they lost over 87% of their values in 10 years. Interestingly, with or without accounting for devaluation some stocks and indexes have outperformed in the last 10 years. Top Gainers Nestle Plc Despite the harsh economic environment and the economic contraction of 2016 which saw a reduction in the purchasing power of consumers in the country, Nestle has continued to show resilience through a strong understanding of the Nigerian market, a continuous improvement of its products, and top notch management team. The Company has also over the years invested in backwards integration which has seen a sharp reduction in its operating cost. It also grew its profit by a whopping 326% from N7 billion in full year 2106 to N33 billion in 2017. Presco Plc The gain in the Stocks of Presco and Okomu Plc can be attributed to the CBN policy which restricted importers of Crude Plam Oil into the country from accessing the FX market created by the CBN. The policy has resulted in the revival and creation of more cottage industries which now engage in the production of the restricted items across the country. The policy saw Presco’s revenue surged by from 15.72 billion in 2016 to 22.36 billion in 2017 while Profit After Tax grew by from 21.73 billion in 2016 to 25.4 billion in 2017. International Breweries Plc. Beer maker, International Breweries has been in the news in recent times following of the entry of SABMiller, then, the world’s second-largest brewer, into

the country, and its acquisition of majority shares in International Breweries Plc, makers of Trophy Beer, located in Ilesa, Osun-State. However, in 2017, AB InBev the world’s largest brewer, acquired 72.17% of SABMiller’s shares in International Breweries Plc, in a series of transactions which resulted in AB InBev acquiring controlling interests in the company. The launch of a new product Budweiser which is dubbed as the king of beer has also intensified the competition in the market GUARANT Y TRUST BANK Guarant y Tr ust Bank Plc., a tier one lender which provides commercial banking services to its customers is renowned for its innovative approach to banking. GTBank has over the years earned a good reputation for its corporate governance. The recipient of numerous awards, including the 2018 award for the categories: ‘Most innovative bank ’, ‘Best Digital wallet’, “Best Mobile Payment ser vice’, “USSD Channel Champion’’, ‘Best Customer experience’’, ‘Best Retail Bank’ to mention a few, has over the years revolutionized Nigeria’s banking industry by offering services that appeal to the younger, tech-savvy generation; morphing from the traditional service delivery approach to a more cost efficient approach and retaining its young customers as they join the labour force. ‘The bank has been able to define its market, focusing on the youthful population. The model of the bank is very clear and they have a well-articulated strategy they use in actualising goals associated with this model’’ Gbolahan O logunro, an analyst at CSL Stockbroker explained. Guarant y Tr ust Bank also has a good risk assessment framework which has enabled the bank to keep its Non-Performing loan (NPL) ratio lower than the for most of its peers, although in H-1 2018, the NPL was

GTB’s digital channels. Oan do an d Fo r te Oil Plc have seen a massive drop in its vale in the last years. Market watchers attribute this shed in value to series of leadership problems that has hampered the growth of the two energy giants. Oando was recently enmeshed in crisis when some shareholders of the company

some 5.8 per cent which was above the regulatory benchmark of 5 percent. In addition, the tier one lender has one of the lowest costs of funds in the industry buoyed by its large

customer base of youthful working class population who have also contributed to the growth of its noninterest income which has been on the back of improved transactions over

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

alleged the management of the company over poor handling of the firm’s finances. Also the fluctuating oil prices in the global m a r k e t h av e n e g a t i v e l y affected the profitability o f t h e s e e n e rg y c o mp a nies. While tier 2 lenders, Union Bank, Fidelity and Eco Bank Transnational I n c o r p o r a t e d h av e a l s o slump in their value.

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BANKING

Afreximbank lends $170m to Orascom for Pan-African expansion HOPE MOSES-ASHIKE

he African ExportImport Bank (Afreximbank) on Thursday in Cairo signed a facility agreement lending $170 million to Egypt-based conglomerate Orascom Investment Holding (OIH) to assist the company expand its pan-African activities in pursuit of its short and medium-term expansion strategy. Speaking at the signing ceremony, Afreximbank President Benedict Oramah Said that the facility agreement was part of the Bank’s effort to promote intra-African investments and export manufacturing using the framework of its Intra-African Investment Finance Facility. Oramah said that the transaction was a significant opportunity for OIH’s targeted investments in companies across Africa to support their transformation, increase their production capac-

ity and produce higher quality exports through better value addition, especially in the agroprocessing sector. The facility would complement on-going macroeconomic and safety net reforms in Egypt, which seek to foster sector-specific economic growth, especially in strategic sectors with proven record of creating jobs and reducing poverty, he said. The President said that the agreement would set up long-term strategic partnership between Afreximbank and Orascom, describing OIH as one of the most successful and diverse holding companies in the North Africa region, with the potential of assisting the Bank in expanding its operations in the regional and Egyptian markets. “Our collaboration opens the potential for our two institutions to strengthen their relationship and mutual cooperation in order to make significant contributions towards unlocking the full potentials of intra-African investment,”

he added. Also speaking, Naguib Sawiris, Chairman of OIH, said that that the company’s main focus was currently on investing in Africa, adding that the continent would only achieve progress if intraAfrican trade and investment growth happened. It was up to the Africans to come together to work for that goal, he said. In that regard, Orascom Investment would explore business and investment opportunities referred to it by Afreximbank in such countries as Rwanda, Togo, Eretria, Nigeria and Sao Tome. Sawiris commended Afreximbank for the quick turnaround in processing the transaction and for the professionalism and dedication shown by the Afreximbank team. Accompanying Sawiris to the signing ceremony were Tamer Elmahdy, Chief Executive Officer; and Khaled Elleithy, Chief Financial Officer.

L-R: Femi Odugbemi, director, MultiChoice Talent Factory Academy; Vikram Joglekar, senior manager, Content Relations Dolby Laboratories; Quinton Schmidt, regional manager, Africa Dolby Laboratories and John Ugbe, CEO, MultiChoice Nigeria during the MultiChoice Talent Factory - Dolby Masterclass Series in Lagos.

APPOINTMENTS

Stanbic IBTC Holdings appoints new Non-Executive Director OLUWASEGUN OLAKOYENIKAN

he Board of Stanbic IBTC Holdings Plc, a local unit of South Africa’s Standard Bank, has appointed Barend Johannes Kruger as a NonExecutive Director of the company with effect from January 18, 2019. In a notice sent to the Nigerian Stock Exchange (NSE) Friday, the lender said Kruger’s appointment followed the receipt of all required regulatory approvals. “The Board is pleased to welcome Mr. Kruger and will undoubtedly benefit immensely from his wealth of experience,” Stanbic IBTC said. Kruger had an extensive career in the financial services industry spanning over 30 years. He joined the Standard Bank Group (SBG) in 1985, taking up various roles in Standard Corporate and Merchant Bank (SCMB). Between 2006 and 2008,

he held the position of Chief Executive of Global Corporate & Investment Banking (CIB) and assumed the position of Deputy Group Chief Executive of SBG in 2009. From March 2013 to September 2017, Kruger was Joint Group Chief Executive of SBG alongside Sim Tshabalala. He recently retired as an Executive Director on the Boards of SBG and Standard Bank of South Africa on December 31, 2018. Prior to his retirement, he was responsible for the leadership, management and governance of Africa Regions; guiding the digitization of the group; the group’s relationship with its strategic partner ICBC; helping with the management of the Group’s risks; and key client relationships. Kruger is an alumnus of the University of Pretoria where he obtained a Bachelor of Commerce (Honours) degree. He has undertaken the Harvard Business School, Boston,

Advanced Management Programme and is also a Chartered Accountant. Stanbic’s gross earnings for the period of nine months ended September 2018 rose by 9.45 percent to N168.8 billion from N154.22 billion recorded in the corresponding period of 2017. Profit for the year surged by 59 percent to N59.76 billion in the review period as against N37.67 billion recorded in the same period of 2017. Stanbic shares stood at N47 per share on Friday after it dropped 1.05 percent on Thursday. The stock has lost 1.98 percent so far this year, still outperforming the NSE All Share Index which improved to -1.35 after the close of business last week. Stanbic IBTC Holding, which operates in the midtier of the competitive Nigerian banking sector, provides investment banking, wholesale banking and brokerage services.

L-R: Wole Abegunde, chairman; Niyi Toluwalope, MD/CEO, and Olayimika Phillips, non-executive director, all members of the board of directors of eTranzact International Plc, during the company’s extraordinary general meeting in Lagos recently.

Charlie Walker, head of equity primary markets, London Stock Exchange PLC, presenting a certificate to Femi Akintunde, group-managing director, Alpha Mead Group at the launching of the London Stock Exchange ‘Companies to Inspire Africa Report› which recognized Alpha Mead Group as one of the Companies to Inspire Africa.

COMPANY RELEASE

Halogen revalidates self as top security outfit with ISO certification CHUKA UROKO

alogen Security Company Limited, a Nigerian security risk solution provider, has re-validated itself a top-rated and exclusive Nigerian business that subscribes and subjects itself to the strict standard of operation (SOP) protocols developed by the international organization for Standardization (ISO). ISO, a global quality management organization with headquarters in Geneva Switzerland, announced recently the elevation of Halogen Security to its certification category of ISO 9001:2015. The new ISO 9001:2015 certification builds on Halogen’s previous ISO certification in the category of ISO 9001: 2008. Halogen achieved the new

ISO certification following a rigorous certification exercise during which representatives of the ISO conducted a companywide audit of Halogen’s operations. The exercise which took the ISO representatives to all Halogen offices nationwide, featured exhaustive interrogation of Halogen’s executives, systems, processes and operations, with a view to determining the company’s compliance with ISO’s stringent quality management system (QMS) stipulations. “We are excited to receive certification to ISO 9001:2015. This, no doubt, is an impetus for us to do more for our clients and the industry”, said an elated Wale Olaoye, the group managing director, Halogen Security. “For us, we believe this will

provide renewed assurance to our customers and other stakeholders that we are focused on service excellence, endless improvement of our work processes and continuous desire for client satisfaction. With this award, we will continue to improve our processes across all the spectrum of the enterprise security risk enterprise professional service offering”, he added. Olaoye noted that it was also good news that they were the first private security company in Nigeria and West African regional market to be ISO Certified in 2007. “We are proud to say that our cardinal unique selling values of professionalism, integrity, passion and excellence are defining how we do what we are known for—top-notch enterprise security risk solutions,” he enthused.

L-R: Yemi Faseun, head, human resources, FBNQuest Merchant Bank; Olajumoke Obembe, people/business operations, manager, Cars45; Austin Okere, founder/executive vice chairman, Computer Warehouse Group Plc, and Mark Igbinedion, founder/CEO, Get Qualified, at the Exceptional Leadership & Employee Conference in Lagos.

Monday 21 January 2019

BUSINESS DAY

Monday 21 January 2019

BUSINESS DAY

NATIONAL DISCOURSE

MODESTUS ANAESORONYE

he Wednesday January 15, 2019 presidential candidate interview organised by the Nigerian Television Authority (NTA) Abuja and recent happenings at the ongoing All Progressives Congress (APC) nationwide campaign, especially those of Delta and Edo states, have revealed the level of incompetence and unfitness of incumbent president,

www.

Monday 21 January 2019

APC: Is Osinbanjo the face behind our votes? Mohammadu Buhari to lead Nigeria in the next four years. At the Abuja town hall interview, it was obvious that vice president Yemi Osinbanjo saved the day for the APC, by providing intelligence, eloquence in some of the issues addressed by the interviewers and the audience, while President Mohammadu Buhari only managed to stay through, displaying little or no core understanding of a lot of the issues raised. There was also a kind of impairment in hearing as well as poor communication. In Delta State, Buhari caused a stir when he wanted to hand over the APC flag to the party’s governorship candidate, Great Ogboru, calling him the presidential candidate, the senatorial candidate, before at the third trial he got it right, after getting help from party supporters on the side. His words, “I am handing over this flag of honour to our

presidential candidate.” A man on the stage to his left corrected him, saying “gubernatorial”, but Buhari responded with “to our senatorial candidate”. Again, the man corrected him, saying “gubernatorial” and this time, Buhari said “governortorial candidate”. In Edo State, Mohammadu Buhari, led party supporters in singing the national anthem, but it was obvious he did not flow from the movement of his mouth to the little version heard from him, while his supporters around him were very unsettled. If the ruling APC want to be sincere with themselves and to Nigerians, they will definitely accept the truth that Buhari is not fit to lead Nigeria in the next four years, with the heap of problems facing this country which require urgent attention. Nigerians are getting more frustrated on daily with the direction the country is going

and while the political class, even the very religious ones among them seem to derive joy from deceiving Nigerians in their selfish interest. If the leadership of the APC sincerely wants to move Nigeria forward, not just for the reason of holding on to power for power sake, they should know that Buhari at this stage in time should not be the president of Nigeria after this tenure. But if Osinbanjo, the vice president becomes the face of the APC and they win this election, will he be allowed to play a key role without obstructions from the cabal. The little time Osinbanjo had to provide leadership when the president was away on medical attention was eventful and helped in moving the nation forward somewhat, particularly in the area of security and peace in the Niger Delta. Will relying on Osibanjo to vote APC back to power be

a costly mistake Nigerian’s will make? Is it enough to hold Osinbanjo accountable if things do not go the way they should if the party gets power again? Many who supported the APC before now are presently ruminating over these questions and asking themselves whether this is worth the trouble. The 2019 presidential election is less than one month from now and political parties and their candidates are devising all manner of imaginations to woo the electorate. As the election draws nearer, capacity and competence are critical to providing the right leadership. Who among the candidates has the capacity or competence? This should be what the electorate will focus on. Voting out of sympathy does not only rob us our voice, it inflicts pain on our conscience. Let us vote rightly, the choice to change our destiny is in our hands.

NEWS

Buhari to review BEDC’s operational licence over inefficient service FG blames ECOWAS Protocol ...as Oba Ewuare II supports Obaseki’s plans for alternative power source for herders-farmers clashes OSA VICTOR OBAYAGBONA & YOMI AYELESO,

resident Muhammadu Buhari has assured electricity consumers in Edo State that he would look into calls for the withdrawal of Benin Electricity Distribution Company’s (BEDC) operational licence over the company’s inefficiency. Edo State governor, Godwin Obaseki, revealed the President’s stance during the All Progressives Congress’ (APC) presidential campaign rally in Benin City, Edo State. Meanwhile, His Royal Majesty, Omo N’ Oba N’ Edo, Uku Akpolokpolo, Oba Ewuare II, the Oba of Benin, also urged President Buhari to look into the continuous blackout occasioned by the BEDC operations in order to address the situation. At the rally, Obaseki said the President would ensure Edo people get electricity if he was reelected, noting, “If we want light, if we want to progress, if we want industrialisation, if you want me to conclude everything I have started, we need to vote for President Buhari.” He explained: “We generate more than 700 megawatts of electricity in this city alone, but unfortunately, we do not have electricity and the reason is not President Buhari. The reason is that those people who were there before sold our DISCO to their friends. President Buhari told me even at the Oba’s Palace that we will do everything to make sure that Edo people get electricity.” Oba Ewuare II, at his palace, appealed to President Buhari to

support Governor Obaseki’s quest to find an alternative source of electricity supply, noting, “Mr. President, I will not fail to mention the challenge of electricity supply in Edo State. Electricity supply is no doubt key to the development of any society. Unfortunately, over the years, the people of Edo State have experienced inadequate electricity supply by BEDC. “In fact, during one of the meetings of the Edo State Council of Traditional Rulers and Chiefs, we issued a communiqué condemning the inefficiency of BEDC, including its estimated billing system.” “We also support the efforts of Edo State government in seeking alternative source of electricity to meet the demands of the people” I would be recalled also that the people of Ode-Aye community in Okitipupa Local Government Area of Ondo State, last week, decried the arbitrary services and estimated charges by the BEDC after five years of mass disconnection from the national grid. The community, under the aegis of Bring Back Our Light (BBOL), a pressure group campaigning for the restoration of light in the six councils of the South Senatorial District of the state since 2014, accused BEDC of gross misconduct. In a statement signed and made available to BusinessDay in Akure, the Ondo State capital, by the BBOL convener, Olumide Akinrinlola, and the group’s secretary, Dare Omopariola, they lamented the “fraudulent estimated electricity billing system in Ode-Aye community.”

The electricity company had light up the community after several failed attempts on December 25, 2018, enduring five years of mass disconnection of the entire district, but the BBOL convener disclosed that the company “haven’t issued any new bill to electricity users since epileptic power supply was restored to the community. “They also issued a-10 day ultimatum to the community to appear individually at their Ore office to make the payment and fill enumeration form, failing which, they threatened to disconnect the whole Ode Aye community again.” BBOL faulted the notice noting that the power restoration on Christmas Day was to some parts of the community and it lasted only for seven days. “The last electricity bill served on our people was in November, 2014. No new one has been issued till date. For reasons best known to BEDC, they have abandoned the reconciliation of the outstanding electricity debts in order to muddle it up with current one by injecting the pre-privatisation bills into the current one, which has already been cancelled by NERC.” However, the BEDC public relation officer, Kayode Brown, refuted the allegations levied against the company, revealing that the enumeration notice sent to Ode-Aye was in line with the agreement signed with the community. He, however, noted that the customers were giving BEDC a bad name so as to blackmail despite all efforts put in place to reconnect the district.

STELLA ENENCHE, Abuja

ederal Government last week identified the ECOWAS Protocol as one of the factors responsible for the perennial clashes between herders and farmers in some parts of the country. Minister of defence, Abdulrahman Dambazau, stated government’s position during a Ministerial Press Briefing held at Radio House, Abuja. The briefing was part of activities to showcase the Ministry’s modest successes in the last three years. The minister said the issue remained a complex one, and so, should be handled in such a way as not to compromise internal security. “When he (herder) enters into a country, there must be a checkpoint area where the cattle will be inspected, there must be international clearance certificate, know the number of cow he is moving with, ensure that he does not carry weapon of any kind, show him the route he must follow and so on. “So, in doing that, all these clashes between herders and farmers will be completely reduced, if not eliminated. Because, what is happening is that herders along the routes go into farms and somehow destroy the crops,” the minister said. He went further to note that:

“Part of the problems is that there have been cattle routes over the years, but because population growth and climate change even farmers are moving from their traditional communities, moving elsewhere because of climate change, so now they are occupying the routes created for cattle. “Now, population growth has made it possible for people to also build homes along those routes, so when those herders are moving, they now have to look for alternative routs, in the event they destroy farm. So, this is what is happening. “And we (Nigeria) is signatory to ECOWAS Protocol and free movement. What is happening is that we cannot stop the free movements. About 60-65 percent of ECOWAS is here and we also move en-mass to ECOWAS countries. We move our goods to ECOWAS countries,” he said. “This is why I said it is a complex issue and it is a regional issue, which must be tackled accordingly. The second issue is that certain politicians also politicise this issue for their own benefits, particularly when the election is approaching and they have not been able to do well in their states, so they politicise it. So, at that meeting, we discussed with the governors that politicising this crisis is of no benefit to anyone rather it endangers the public,” he said.

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Jobs: Averting the coming anarchy Chris Akor

obs are central to the economic development of any nation. Economists have long established a link between the employment rate and economic growth. When citizens are gainfully employed and produce valuable goods and services, both the citizens, the economy and the society prosper and vice versa. And that is the first indices with which leaders are judged in advanced economies is the number of jobs created and how low the unemployment rate is. As at 2010, the unemployment rate was 5.9 percent. It rose steadily yearly to 8.19 percent in Q2 of 2015 at which point the current government came to power. In Q3 2017, the unemployment rate had more than doubled from to 18.8 percent and peaked at 23.10 percent in the Q3 2018 while unemployment rate and underemployment had also jumped from 26.53 percent in Q2 2015 to 43.3 percent in Q3 2018. In concrete terms, 20.9 million Nigerians are currently unemployed while 18.2 million are underemployed. This brings the total of unemployed and underemployed to 39.1 million people out of a total labour force of 90.4 million. The youth (45 per cent of the population is aged below 15) account for the majority of the unemployed and underemployed in Nigeria. While youth unemployment in 2010 was 8.05 percent, it has climbed to 13.41 percent in 2017 and climbed to an all time high of 38 percent in Q2 2018. It however decreased to 36.50 percent in Q3 2018.

how can they collectively ‘createSpecifically, 39.1 million jobs for those currently unemployed and underemployed and plan for about 3 million youths joining the labour force each year? What specific policies will make it possible, and what untapped opportunities exist to create jobs and what number of jobs could these yield? Concretely, there are 44 million youth in the active labour force. Out of these, only 19.73 million, representing just 45 percent of the active labour force, are in full time employment. The other 55 percent are just trying to eke out a living or as we say in Nigerian parlance, hustling with no full time employment. Sadly, youth unemployment has been growing steadily since 2010. However, it has intensified since 2015, fuelled, no doubt, by a weak economy and huge population growth. While estimates in 2014 by the NBS show that 1.8 million graduates in the country move into the labour market every year, the Stutern Graduate Report (2016) suggests that 2.5 - 3 million young Nigerians annually enter the labour market without the prospect of jobs. This is not to talk about those who could not go to school (a recent report from UNESCO put out of school children in Nigeria at 13 million), those who only completed primary or secondary school and couldn’t proceed to higher institutions. Ac-

’

tual figures from the NBS show that about 9 million youth have entered the labour market since 2015 and are not able to find employment. This is scary! The problem is not just about not finding work; it is also about those in employment losing their jobs as a result of the weak economy. While according to available statistics at the NBS, Nigeria created a total of 1.6 million jobs in 2015 and 1.538, 208 jobs in the first three quarters of 2016, a total of 7.956 million Nigerians became unemployed between January 2016 and September 30, 2017. The NBS estimated that the number of unemployed Nigerians rose from 8,036 million in 2015 fourth quarter to 15.998 million in third quarter of 2017. Equally, data from the Manufacturers Association of Nigeria show that about 272 manufacturing plants were shut down across the country in 2016 alone. The import of this is clear: the economy is not creating opportunities fast enough for its youthful and growing population. A clear sign is

that while the country’s population is growing at a healthy 2.6 percent per annum with a youth population of over 60 percent, economic growth has remained well below 2 percent. A journalist, Robert Kaplan, in 1994, in a provocative piece for The Atlantic wrote, “The Coming Anarchy” suggests that West Africa will in the near future be crisis capital of the world fuelled mainly by the abundance of idle youth. In his words, “West Africa is becoming the symbol of worldwide demographic, environmental and societal stress, in which criminal anarchy emerges as the real “strategic” danger. Disease, overpopulation, unprovoked crime, scarcity of resources, refugee migrations, the increasing erosion of nation-states and international borders, and the empowerment of private armies, security firms, and international drug cartels are now most tellingly demonstrated through a West African prism.” Certainly, this is becoming true in Nigeria where youth unemployment is fuelling the Boko Haram insurgency in the northeast, kidnapping and violent crimes in the southeast and other parts of the country. Jobs for Nigeria’s ballooning population appears to be the most pressing national emergency in Nigeria today because as Tunji Adegbesan, Gidomobile, an education learning app, puts it, the problem with Nigeria right now is “not infrastructure but our ability to provide our many children with the tools to survive and thrive.” Stressing on the importance of jobs, he said “If we like, we can fix power [electricity], fix all the roads, but omit to fix [read education and jobs] of the over 80 million children, the Boko Haram insurgency will look

like Father Christmas. We will just be providing kids with excellent infrastructure to use to murder us all.” Are our politicians jostling for offices aware of this existential threat to the peace and continued survival of the country? How do they hope to tackle this problem? Specifically, how can they collectively create 39.1 million jobs for those currently unemployed and underemployed and plan for about 3 million youths joining the labour force each year? What specific policies will make it possible, and what untapped opportunities exist to create jobs and what number of jobs could these yield? The first realisation must be that governments do not have the capacity and resources needed to create the kinds of jobs needed to absorb Nigeria’s young population and keep them away from mischief. Only a strong collaboration with the private sector and massive private sector investments will create the opportunity for creation of jobs at that scale. But just allowing the private sector to take charge of the economy alone won’t do the magic. There should be a high level government plan on job creation to delineate sectors and their potentials to create massive jobs. With that, the government can then begin a strategic engagement with the private sector and investors to nudge them towards its plan while at the same time removing bottlenecks and obstacles through policies to aid massive investments at the scale required to creating the desired jobs. Nigerians must engage aspiring political leaders to appreciate the extent of the problem and reveal their detailed plan(s) towards solving the problem.

Nigeria must build in order to foster development, prosperity – Fashola GBEMI FAMINU

abatunde Fashola, minister for power works and housing, has said that there is a need to build infrastructure in the country in order to foster prosperity and development in the country. He said that most developed countries had to build themselves to become developed, stressing the need for Nigeria to follow suit. He further stated that there was nothing wrong with Nigeria as a country but the wrong choices being made in terms of infrastructure investment were creating problems for the country. Speaking to participants at the maiden edition of the training workshop on dispute management in Africa Infrastructure Projects organised by the Lagos Chamber of Commerce and In-

dustry (LCCI) weekend, Fashola stated that infrastructure was beyond buildings and constructions, being one of the parameters that defined the status of a nation, ranging from the developed, developing and under- developed nations. He mentioned that building infrastructure also involved using tools to speed up work, adding that scanners had been ordered for the Apapa ports and would be installed in order to speed up the process of examining containers. Speaking on opportunities in the infrastructure sector for Nigeria business owners, he made reference to the Mambilla hydropower plant going on in Taraba, which would require 18 million bags of cement, 42 thousand tons of steel and some other materials, and the 2nd Niger Bridge, which

would require two million cubic meters of sand, 68 thousand tons of cement and 21 thousand tones of reinforcement, as opportunities. According to him, this was the opportunity for many business owners, especially MSMEs to become prosperous. He further stated that building these infrastructures would foster prosperity, employment opportunities and development in the country Also in an interview with journalists, Fashola mentioned that there were sacrifices that needed to be made in order to achieve infrastructure goals. “If we apply international processes, there must be some room to reflect international diversity and some of the ways that we do things without necessarily trying to be optimal. For example, our land tenure processes are not like that of Europe, so if we use con-

tracting rules based on land tenure processes of another jurisdiction, it might be sensible to want to adapt if you really want to use the infrastructure to create growth employment and prosperity.” He advised that various methods of dispute resolution, dispute anticipation and dispute avoidance should be examined in order to ensure that infrastructure development really achieved its objectives of providing work rather than causing disputes. Speaking at the workshop, Babatunde Paul Ruwase, president of the LCCI, stated that infrastructure was critical to economic development, especially with respect to achieving the potential, promoting the ease of doing business and enhancing opportunities for the micro, small and medium enterprises (MSME) in Nigeria. Ruwase, who was represented

by Leye Kupoluyi, chairman of Construction and Engineering Group of LCCI, added that infrastructure developments in African countries were largely driven by government expenditure on capital projects. He further stated that litigation process came with crude cost to the economy, advising that everything possible should be done to avoid litigation. Babatunde Fagbohunlu, the chairman of the Lagos Chamber of Commerce International Arbitration Centre (LACIAC), said that Africa was in dire need of infrastructure such as ports, rail, roads, refineries and power, stressing that the effect of the shortage of these infrastructure was intense and the efforts of African governments to solve the infrastructure problem was being frustrated by disputes of different kinds, which also happened in the private sector.

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NSE Insurance index emerges second best performing sector index in 2018 IFEANYI JOHN

L-R: Davis Iyasere, head, Corporate Affairs, Nigerian Insurers Association (NIA); Yetunde Ilori, director general, NIA; Mr. Tope Smart, Chairman, NIA; Bola Omole, Controller, IT, Research & Statistics, and Lanre Ojuola, Director of Operations, NIA, during press briefing/interaction on the association activities and prospects in Lagos.

Insurers look to reviewed rates on group life, motor third party for premium growth in 2019 Stories by Modestus Anaesoronye

nsurers are hopeful that recent rate reviews on two compulsory products including group life insurance and motor third party policy will have positive impacts on their premium income this year. They said that these policies will enable it weather the storm expected to come from economic lull, which may be exacerbated by pre and post elections risks in 2019. Insurance regulator, the National Insurance Commission (NAICOM) had in 2019 reviewed the rates for motor third party insurance and group life insurance for employees, after it discovered a lingering price war among operators, which was undermining capacity and ability of insurance companies to meet their claims obligation. According to Mohammed Kari, commissioner for Insurance, such rates were uncompetitive and do not

help the sector to contribution meaningfully to the country’s GDP. In the new policy, NAICOM said minimum price for motor third party policy will be N5,000.00 while the group life policy was put at 6-per mill, and therefore warned operators that companies found charging below approved rates will be sanctioned. For later part of 2018 when this policy was put in place, the industry recorded improved premium from these classes of business and this is expected to continue in the New Year when most policies will be renewed. Tope Smart, chairman of the Nigerian Insurers Association (NIA) said “we are hoping to have better improvement in premium this year on the backdrop of implementation of the new rates” Smart noted that these were some of the positive developments that happened in the industry in 2019, stating that renewals now are in the new rates and the industry will be better for it. Ganiyu Musa, group

managing director/CEO, Cornerstone Insurance Plc said that reforms which were driven by the National Insurance Commission (NAICOM) has helped to correct the pricing of the products and enhanced compliance of operators. Musa who spoke in Lagos during an interview section with a select journalists said the insurance market had suffered huge losses as a result of uncompetitive pricing of these products due to unhealthy competition by operators, stating that with the intervention of NAICOM which stabilized Motor Third Party at N5, 000.00 and group life at 6 per-mill, companies have garnered resources to meet claims obligation. “Before this policy on group life, some life businesses were getting to stress level as a result of uncompetitive pricing, while claims kept coming”. He said today, majority of them can be able to pay their claims because premium is right, “what is the need being in business and you

cannot be able to pay claims, Musa asked. NAICOM had said that the industry at end of third quarter 2018 has grown its gross premium by 22 percent, from N258 billion during the same period in 2017 to N315 billion. According to the commission, gross claims figure for the third quarter 2018 was N143 billion, a 30 percent increase over the N110 billion reported for the same period in 2017. Going into 2019, NAICOM said though the outlook may not be as rosy, but it sees the silver lining and is fully committed to making the most of it. “We have set for ourselves a clear, unambiguous task: to improve the aggregate number of insurance consumer by enabling individual operators to optimally serve a much larger customer pool with a more varied basket of products. The end game for us is to increase the insurance uptake ratio among the Nigerian populace and we have a number of initiatives in place towards achieving this.”

f you were looking to insure your market risk and you were out of options, then adding some insurance stocks into your portfolio in 2018 may have adequately done the job. Last year, insurance sector was among the best performing sectors on the broad market, shedding only around 9.25 percent compared to the overall Nigerian Stock Exchange All Share Index which declined by 17.81 percent. In the first half of the year, the insurance index gained 7 percent in the first half of 2018 making it the best performing index on the bourse for the period before its performance nosedived in the second half on the year. NEM Insurance, the fourth best performing stock of 2018, recorded the highest growth of 62.5 percent in the sector and was followed by AIICO (21.15 percent) and Linkage Assurance (9.09 percent). The 2018 NSE Market Recap and 2019 Outlook presentation by CEO, Oscar Onyeama on January 14, 2019, highlighted the 2018 index performance alongside the 2019 economic review and strategic performance of the local bourse. The breakdown of all 13 indexes show that excluding the Insurance Index and Oil and gas index, all major market indices suffered high double-digit losses. On a sectorial basis, oil and gas sector was the best performing sector in the market as the index declined by only 8.61 percent, as the industry benefited from rising oil price in the first half of the year before oil prices began to decline in the last 3 months of

the year which wiped out gains in the sector. Insurance sector followed closely behind as the secondbest performing sector in the market, declining by around 9.25 percent. The banking index performed slightly better than the overall index after it declined by only 16.09 percent. Consumer goods index and industrial goods index were among the worst performers after they declined by 23.28 percent and 37.34 percent respectively. The 16 paged report delivered by Onyema described 2018 market performance aptly, saying, “the NSE All Share Index reached a ten-year peak of 45,092.83 index points in January. This was largely driven by the positive performance of the NSE ASI in 2017 which emerged as the 3rd best performer globally. As we approached the second quarter, political risk, oil price volatility and rising yields resulted in bearish sentiments that saw the ASI and equity market capitalization fall by 17.81 percent and 13.87 percent closing at 13,430.50 and N11.73 trillion respectively.” The NSE All Share Index closed higher yesterday at 0.58 percent while the NSE insurance index returned 3.5 percent yesterday. The 15 stocks on the NSE Insurance Index include, AIICO Insurance Plc, Lasaco Insurance, Law Union and Rock Insurance, Linkage Assurance, Sunu Assurance, AXA Mansard, Mutual Benefits Assurance, NEM Insurance, Niger Insurance, Prestige Assurance, Consolidated Hallmark Insurance, Cornerstone Insurance, Regency Assurance, Sovereign Trust Insurance and WAPIC Insurance.

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Analysts see modest growth in investment income in 2018 on lower yields BALA AUGIE

nsurers who invested in government securities when yields were high were rewarded with profit growth despite rising claims and underwriting expenses and annuity on life contracts. However such growth in investment income may be difficult to replicate when firms release their 2018 audited financial statement. This is because yields on treasury bills (T-bills) yields nosedived in the beginning of last year but it started a gradual increase in the second quarter, but such uptick is too late to make an impact on investment returns. T-bills yield on one year securities hovered between 18 percent and 22 percent for the month part of 2017, but it fell to between 11 percent and 13 percent in early 2018, and it is now between 15 percent and 16 percent. Analysts at Coronation Merchant Research think OMOs will be issued in a range of 17 percent to 19 percent and that T-bill rates will be very close to this level during 2019. This is means insurers with a strong capital base can make money from the expected high yield environment. Insurance firms usually channel premiums from their clients to government securities, shares and real

estate from which they look to earn interest. “I don’t think they will see much growth in investment income in their full year income statement because they had thought what happened in 2017 will happen the following but yields dipped and the increase around July 2018 was too late to make a positive impact,” said Moronfola Monsuru - Actuarial Analyst - Wapic Insurance Plc. While firms are yet to release 2018 audited financial statement, 2017 should give investors an insight into those that were aggressive in using shareholders money in generating higher returns. For instance, the cumulative investment income of 29 largest insurers- Composite, Life, and Non-Lifeincreased by 47.68 percent to N63.58 billion in December from N43.05 billion as at De-

cember 2016, data gathered by Markets and Intelligence show. Investment income help augment net profits, after rising total underwriting expenses have shrunk underwriting profit. For instance, for the year ended December 2017, Leadway Assurance Limited recorded an underwriting loss of N10.41 billion due to huge claims expenses and increase in annuity fund, but the company made a net income N13.83 billion, thanks to a N35.26 billion it realized from financial assets. A breakdown of investment income shows leadway realized N13.04 billion in income on debt securities. First Bank Insurance Limited’s underwriting income dipped by 31.92 percent to N2.73 billion in

2017, but a N3.97 billion income from treasury bills, and N1.76 billion interest incomes from bonds added impetus to bottom line as profit increased by 54.20 percent to N3.67 billion. A.R.M Life Plc’s recorded underwriting loss of N121.01 million in 2017, but it made a profit of N106.82 million, thanks to interest income from short term government securities of N1.28 billion. Custodian Assurance Life recorded an underwriting loss of N1.12 billion in December 2017, but it posted a profit after tax of N1.01 billion, thanks to investment income of N3.69 billion. While the industry operates in a tough and unpredictable macroeconomic environment, analysts see Life Insurers record improved margins in 2018. Fola Lawal, an industry expert said short term in-

surance companies suffered or concluded negotiations on a number of high profile loses in 2018, and this would put pressure on margins. Lawal however added that life companies, particularly those who sell annuity, may see improved margins from investment returns. “Whether they end with lower or higher margins compared with prior year depend on how they manage underwriting expenses including claims and reinsurance expenses,” said Lawal. Despite the bullish returns on government securities, which impacted other money market investments positively in 2017, Nigeria’s insurance industry’s estimated investment yield is still at single digit of about 8 percent, according to Agusto & Co. The foremost credit rating and research firm says the abysmal poor returns in the industry are as a result of inefficient asset allocation and weak balance sheet management. Poor regulatory enforcement, weak corporate governance and risk management framework, as well as general inefficiencies, are responsible for low insurance penetration. Nigeria has an insurance penetration of 0.30 percentone of the lowest figures in the world-, this compares with South Africa (14.7%), Kenya (2.8%), Angola (0.8%) and Egypt (0.6%). Similarly, the sector’s insurance density (a measure of industry

gross premium per capita) is still one of the lowest when compared to peers – South Africa (US$762.5), Egypt (US$22.8), Kenya (US$40.5) Angola (US$30.5) and Nigeria (US$6.2). Nigerians are getting poorer every minute, which means they don’t have money in their pockets to purchase a cover. According to a recent World Bank data, 92.10 percent of Nigerians live at below $5.50 a day. The reality is that most people cannot afford to buy a packet of Spaghetti or proteins. Nigeria with a population of 180 million people has 87 million people, nearly half its population, in extreme poverty; as high inflation environment continues to erode discretionary income. The economy has been sluggish as GDP for the third quarter stood at 1.80 percent, this compares to 2.10 percent fourth quarter of 2017, when the country existed a recession. The harsh operating environment makes it practically difficult for insurers to thrive. “The cost of doing business has gone up as we are paying more for diesel. Staff costs have spiked because we have to pay more to retain a talented workforce. The price of air-ticket has gone up. There have also been pressures on rates,” said Owolabi Salami, executive Director, Allianz Nigeria Insurance Plc.

AFIG acquires 29.9% stake in NEM, as insurer position for next growth phase Modestus Anaesoronye

EM Insurance Plc (“NEM” or the “Company”), a leading insurance group in Nigeria has announced that Advanced Finance and Investment Group (“AFIG Funds”), a leading African private equity fund manager has, through AFIG Fund II, completed an investment in the Company, by acquiring 29.9 percent of the Company’s shares from some existing shareholders of the Company (the “Transaction”). This Transaction now makes AFIG Funds the largest shareholder in NEM, and marks the commencement of a strategic partnership between AFIG Funds and NEM, as the Company embarks on its next growth

phase as a top-tier player within the Nigerian Insurance Industry. NEM Insurance is a top-tier non-life insurance company which has been in operations in Nigeria for over 60 years, and more recently in Ghana. The Company offers all classes of non-life insurance prod-

ucts to individuals and corporates in Nigeria, and has over the years become a household name. NEM has over the last decade built asolid recordof service delivery excellence, superior financial performance including consistent profitabilityand healthy returns to its shareholders.

Tope Smart, group managing director of NEM Insurance, said of the investment: “We are delighted to welcome AFIG Funds as a significant shareholder in NEM at such an exciting time in the Company’s evolution. This partnership with AFIG Funds is the outcome of several years of constructive engagement, as well as a thorough internal strategic process to identify and engage with the best longterm institutional partner for our Company. We look forward to continue to benefit from AFIG Funds’ extensive experience investing in strong African companies particularly in financial institutions. We believe this partnership will accelerate the realization of our growth ambitions within Nigeria and

across the continent. We are confident this will be a fruitful and mutually rewarding partnership.” Kelechi Okoro, director of Investments at AFIG Funds, said: “Through our engagement with NEM over the last several years, we have had the opportunity to observe its solid trajectory, and to develop confidence in the management team’s ability to seize growth opportunities in the increasingly competitive landscape”. Commenting further, Papa Madiaw Ndiaye, CEO of AFIG Funds, said: “We are excited about our partnership with NEM Insurance and the Company’s strong growth prospects. NEM is one of the fastest-growing, best-capitalized and most consistently profitable un-

derwriters in Nigeria. Our decision to invest in NEM during an election year in Nigeria, which is a time when foreign investors tend to shy away from emerging markets, is testament to our strong belief in the prospects of the Company and in the resilience of the broader economy. We are keen to begin working with management, the Board of Directors and other shareholders to execute on the many promising initiatives to further unlock the Company’s significant potential.” CardinalStonePartners Limited and Koya Kuti Solicitors acted as Financial and Legal Advisers, respectively to NEM Insurance Plc, while PWC Nigeriaand Banwo&Ighodalo were Transaction Advisers to AFIG Funds.

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Monday 21 January 2019

Innovative industries make inroads into global market

to Sierra Leone, Ghana, Liberia and Cape Verde. Beta Glass’ 2016 financial statement showed that the company made N1.913 billion foreign exchange gain that year owing principally to its export sales focus to Cameroon, Cape Verde, Gambia, Ghana, Guinea, Liberia and Sierra Leone. Flour Mills Of Nigeria exported recycled polypropylene black, wheat bran pellets, dried raw cashew nuts and plastic pvc valve bags to the United States Of America, Morocco and Vietnam. Friesland Campina Wamco Nigeria exported

$3.87 million worth of Full Cream Milk Powder Peak (12x400g), Full Cream Unsweetened and Evaporated Peak Milk (96x30g) to Ghana and Sierra Leone. “As a company, we will continue lead in steering economic solutions in the dairy sector and will continue to play a key role in the on-going efforts to improve and maximise the potentials of dairy farming in Nigeria,” Ben Langat, managing director of FrieslandCampina WAMCO Nigeria PLC, said at Dairy Farmers’ Day held at Iseyin , Oyo State, in December 2017. Nigerian Breweries also exports its malt and beer brands to African countries. According to Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), one of the ways in which Nigerian exporters can increase their dominance of the global market is by being competitive and pervious to adequate information. “Trade is about competition. If you have all the agreements and you are not competitive, you will make no headway,” said Yusuf. “Many of the industries that are surviving in the country are doing so on the basis of protection. You have to be price and quality competitive and sometimes there is insufficient information and awareness among exporters, which should not be so,” he said.

earn additional foreign exchange and to create more job opportunities for Nigerians, both young and old.” President Muhammadu Buhari, who was represented by the Secretary to Federation, Mustapha Boss, noted that the government would ensure the creation of special inter vention funds to drive science and technology in Nigeria. Commending the ministry, he stated that the government had noticed the contributions of science and technology to national development and job creation.

“This exhibition showcases that science and technology can be used to solve human problems, and to also contribute to the national development. We will use effective promotion of science and technology to move Nigeria to the next level. The use of science and technology is improving job creation and the national security. “We would provide the policy framework that will fast-track commercialisation of all R&D results of the research institutes under the Ministry of Science and Technology,” he said.

Stories by ODINAKA ANUDU

reative local manufacturing and agrobased industries are making inroads into the global market, defying all odds to earn foreign exchange at a difficult moment. British American Tobacco exports various forms of cigarette to many countries. In 2017, its shipped products valued at $145.48 million to Liberia, Guinea, Ghana, Cameroun, Cote D’ivoire and Niger, according to Central Bank of Nigeria export data. Olam Nigeria exports many agro-based products such as sesame seeds (Dhs) and fermented cocoa beans. Olam exported these commodities worth $110.892 million to India, Netherlands, Poland, Syria, United Kingdom, Singapore, Turkey, Jordan, Poland, and Japan. Also, Indorama Eleme Fertilizer & Chemicals Ltd exported $69.815 million worth of granular urea in bulk to Uruguay, Brazil and Argentina. Indorama Eleme Fertiliser & Chemicals Limited got $1 billion from the International Finance Corporation (IFC) in June last year for the construction of a new fertiliser plant in Nigeria. Atlantic Shrimpers Limited shipped out $38.397

Solomon Abebe Tessema, ambassador extraordinary & plenipotentiary of the Federal Democratic Republic of Ethiopia to the Federal Republic of Nigeria, and Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI) during a courtesy visit of the Ambassador to LCCI in Lagos

million worth of sea frozen shrimps and crabs to the Netherlands, China (Taiwan), United States Of America and Vietnam. Tulip Cocoa Processing Limited was not left out as it exported cocoa cake, pure prime pressed and cocoa butter worth $32.60 million to Netherlands, Mexico and Spain. De-United Foods Industries Limited gave a good account of itself, exporting $30.568 million worth of Indomie and Minimie noodles to Ghana, Cameroon and the United States of America. As of 2013, De-United had been exporting Indo-

mie noodles worth close to $30 million to he US, BusinessDay gathered. More so, Dangote Cem e nt Pl c s h i p p e d ou t $21.496 million worth of grey ordinary Dangote Portland Limestone Cement (42.5R) to Niamey, Niger Republic, Togo and Ghana. “Beside our continuous expansion, we also export to counties like Ghana, Benin and Togo. These are sources foreign exchange for our dear nation. Where ever we operate we operate as economic partners because we add value to the economy by creating employments,” Joseph Makoju, group managing director of Dangote

Cement Plc, said on July 4 last year during a plant facility tour by officials of the Standards Organisation of Nigeria (SON). Rubber Estates Nigeria Limited exported technically specified natural rubber (tsnr) and processed renl 20 estimated at $20.392 million to Spain, France, Italy, Poland Spain and Singapore. Guinness Nigeria Plc shipped out Malta Guinness and Guinness FES valued at $15.06 million to the United Kingdom, Ghana and Cameroon. Beta Glass on its part shipped out bottles estimated at $14.134 million

FIIRO unveils solar boiler, fruit washer, mobile garri processor ODINAKA ANUDU

s part of its mandate to carry out research and development in food and agro-allied processing technologies, pulp and paper processing, packaging and product designs and fabrication of equipment, the Federal Institute of Industrial Research, Oshodi (FIIRO) has unveiled its newly fabricated Innovative Steam Boiler. FIIRO unveiled it at the 2019 Science, Technology Innovation Expo in Enugu. Gloria Elemo, professor

and director- general of FIIRO, said the innovative steam boiler was primarily designed for process heating in food related industries, saying that it can be used in all major industrial sectors such as food and beverages, pulp and paper products, textile, chemical and other industries. “Steam provides heat and pressure for manufacturing processes. FIIRO developed technologies process equipment that uses steam which include: drum dryer, pasteurizer, parboiler, palm oil refining plant, ginger oleo-resin, essential

oil distillation plant, fruit juice/paste concentrate ethanol processing plant, pulp and paper digester, blanching, sterilisation and others,” Elemo said. She noted that the mobile garri processor was necessitated to bring garri processor to the door steps of the small-scale processors, adding that the technology had made garri processing cheaper, easier and more profitable. Ealier in his opening remarks, Ogbonnaya Onu, minister of Science and Technology, had said that technology and innovation

were the weapons needed to fight poverty, hunger, sickness and unemployment, as well as to effectively manage sickle cell anemia. O nu n o te d t hat t h e Economic Recovery and Growth Plan of 2017 – 2020 was a major responsibility of ministry of science and technology, stating that the ministry had over three years developed four key policies to drive the economic recovery process. “We have deployed science and technology in our various natural resources exploration and export to other nations to enable us

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real sector watch

Why Nigeria must protect PZ Wilmar, Okomu, Presco’s investments ODINAKA ANUDU

igeria’s manufacturers are hard hit by man-made setbacks such as multiple taxation, energy crisis, port congestions, naira instability, smuggling and policy flip-flops, among others. Yet, they are defying these hiccups to make huge investments and commitments in the Nigerian economy through various sub-sectors. Between January 2013 and June 2018, these manufacturers invested N4.43 trillion in plants, machines, buildings, vehicles and land, despite borrowing at a double-digit interest rate of between 20 and 21 percent within the period, according to a survey done by the Manufacturers Association of Nigeria (MAN). In the first six months of 2018, they pumped N305.56 billion in investments, which, of course, represented 7.2 percent decline from N329.28 billion recorded in the corresponding half of 2017. The palm oil makers are among the biggest but sometimes neglected manufacturers who have created much value in the economy in terms of investments, job creation, and foreign exchange earnings. PZ Wilmar, for example, has pumped approximately $150 million in palm oil plantations in Cross River State alone, said Santosh Pillai, managing director. “We are determined to continue with these investments and looking for opportunities to expand our plantations in the state. We have also invested around N20 billion in an oil palm refinery in Lagos,” he told

BusinessDay last year. PZ Wilmar, a subsidiary of PZ Cussons, has almost 26,500 hectares of palm oil plantations in Cross River State. About 5,549 hectares (ha) of oil palm plantation are located in Calaro Estate, while 2,369 ha are in an area known as Calaro Extension. The firm also acquired Ibiae plantations with 5,595 ha; Ibad plantations in Akampa with 7,805 ha; Kwa Falls in Akampa Akpabuyo with 2,014 ha, and Oban plantations, also in Akampa, with 2,986 ha. PZ Cussons has completed two palm oil processing plants in the Calaro Estate. Presco, another major player, has so far invested N75 billion into the palm oil industry. Felix Nwabuko, managing director of Presco, told BusinessDay recently that the company planned a capital expenditure investment of N46 billion between 2018 and 2022. Nwabuko said the investments would go into

plantations development, processing facilities, energy infrastructure and other supporting machinery, equipment and infrastructure. He revealed that the company had a total land bank of 40,000 hectares, of which total planted areas were 20,136 hectares of oil palm plantation and 138 hectares of rubber plantation. Presco currently operates in Edo State. Also, Okomu Oil Palm Company Plc is planning to boost Nigeria crude palm oil production to 80,000 metric tons per annual in the next five years with the investment of $50million milling facilities. Gbenga Oyebode, chairman, Okomu Oil Palm Company Plc, said recently that the company plans to boost production with the installation of $50million milling facilities with the capacity to process 30-tons per hour. Okomu operates in Edo State communities. However, these investments must be guarded jealously. The reason is simple:

Nigeria is mulling a non-oil economy and palm oil can play a big role in it, say analysts. A 2016 research by BudgIT using data from Indexmundi, the United States Department of Agriculture (USDA) and Vetiva Research found that Nigeria had a 45 per cent share of world’s palm oil market in 1960. The numbers showed that if Nigeria maintained its 45 percent share in 2016, it would be earning $17.5 billion annually from just one product—palm oil—in 2016. As of October 2018, one ton of palm oil was around $499.15, using Malaysian prices. Total palm oil output was 58.84 million metric tonnes. Assuming that Nigeria was still controlling 45 per cent of the global palm oil market that month, the country should be producing 26.48 million metric tonnes. Local demand is about 2.1 million metric tonnes, meaning that Nigeria would be able to satisfy local demand and still exported 24.38 million tonnes, earning $12.17

billion as foreign exchange. Nigeria only scratched 900,000 metric tonnes of palm oil per annum in 2016, representing just 1.52 per cent of global production. Now, compare this with data from the National Bureau of Statistics (NBS), which show that Nigeria earned N577 billion from total export in the first quarter of 2018 and N218.98 billion in the second quarter. This is about $2.20 billion for the half-year of 2018. Even if Nigeria tripled this number by the end of the year, it would still get less than what it should have been earning from just palm oil, at the end of the year. Nigeria’s total non-oil export earnings are often far less than $5 billion. However, last year, Malaysia made over $18 billion from selling palm oil alone, despite that prices of the commodity were low. This shows that if Nigeria provides incentives to palm oil makers, it can make huge foreign exchange from it. This is not theoretical, but practical. “Today, we are yet to benefit from the Anchor Borrowers Scheme, despite how important our industry is,” a senior management member of a palm oil firm told Businessday over the weekend. Secondly, the industry needs to be protected from influx of smuggled products coming in through Kano. Apart from obnoxious health implications of such palm oil, there is also a negative impact on the local industry, which is struggling because the country has failed to police its borders. It is estimated that palm oil worth 400,000 tonnes per annum are smuggled into the country annually. “Visit any supermarket or traditional market in Ni-

geria and you will see that plenty of imported vegetable oil, which is banned in the country, is easily available. The current policies are only aiding cross-border trade and smuggling. The leading domestic refineries in Nigeria are facing a crisis and many in the country are not operational,” Pillai of PZ Wilmar said. Palm oil is currently one of the commodities restricted by the Central Bank of Nigeria (CBN) from accessing the foreign exchange market in 2016, but smuggling from Malaysia to Ghana, down to Kano, is rife and hurts local investors. “This discourages further huge investment by investors like us and creates unhealthy competition in the market,” Felix Nwabuko of Presco, told BusinessDay. Romanus Oguegbu, managing director of a mediumscale palm oil mill in Uburu, a community in Imo State, said he is cutting down production as purchases from Kano, Abuja and Lagos oil traders have dropped significantly because they prefer to buy smuggled brands that are relatively cheaper. “I normally produce 400 gallons (of 25 litres) each week. But this has dropped by half. This affects the number of workers we employ. The number of workers has fallen to eight, from over 15 during peak demand,” Oguegbu said. “This is too bad to us, and no one knows the type of palm oil smuggled into Nigeria. It could be hazardous to health,” he added. Moreover, state governments have the responsibility of protecting these firms from touts who approach them with various of taxes, said Ike Ibeabuchi, managing director of MD Services Limited.

sovereign challenge on economic wealth. Organisers of the threeday event, in a statement, pointed out that a strong Africa in a globalised world requires open borders that are safe and controlled by modern technologies and proven equipment. It is hoped that secure land, sea and air borders must remain dynamic areas of exchange allowing safer mobility of people and the

transit of goods. Border control is one of the issues of national and international security. It requires modern and efficient African customs administration and dynamic effective regional cooperation structures between countries, the organisers say This edition is expected to address the multiple security needs of the continent with a special focus on border security.

How security can boost trade across Africa ...as Shield Africa exhibition debuts in Ivory Coast HARRISON EDEH, Abuja

he Ivorian capital, Abidjan, will play host for three days, beginning from today, to security stakeholders from various African countries as part of the fifth edition of the Shield Africa, an international security and defence exhibition. The event, which holds at Ecole de Police d’Abidjan, is

being organised by COGES Africa, an Ivorien company and sponsored by the Ministry of the Interior and Security of Cote d’Ivoire. It is meant to unveil how security and defence can play a role in trade across Africa. A statement from the organisers noted that SHIELDAFRICA has remained Africa’s security and defence event of reference that offers land-sea-air solutions to protect Africa’s

development, ensure necessary security to economic development, restore or maintain peace in order to prevent and combat natural and industrial disasters. The exhibition also helps to ensure the safety of cities to develop necessary services for public institutions and private bodies. As a fast emerging event that focuses on excellence, public and private sector security and defence actors

from all over the Africa are meeting at the show to connect with industry players from all over the world offering equipment, services and innovative solutions, tailored to their needs. Coming with the theme, ‘Secured and Controlled Land, Sea & Air Borders, Conditions for the Development of Africa’, the exhibition pledges to stoke high-level discourse on border-related issues with respect to the

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Monday 21 January 2019

Interview with Private Sector Leaders

‘Some Nigeria fintech products have Fintech has gained traction and changing the financial services landscape world over. SUSANNE CHISHTI, CEO of the Fintech Circle, Europe’s first angel investment network for fintech start-ups shades light on how Nigeria can build a fintech ecosystem. She spoke to STEPHEN ONYEKWELU. Excerpts:

ne way to start is by congratulating you on emerging ‘Social Media Influencer of the Year’ at London-based Investment Week’s ‘Women in Investment Awards 2018.’ Social media is technology applied to social interaction and fintech is technology applied to financial transactions, how much of your passion for technology shines through the award and your involvement with fintech? My love for technology started 20 years ago, and then I was a student at Berkeley in California and was pursuing my master of business administration (MBA) at the time. I was living in Berkeley, California in 1994/5. This time, 20 years ago was the time the internet was been invented. The internet which we use today was invented in the Silicon Valley. I was studying there and met other entrepreneurs who were developing internet companies. I met investors that were part of this exciting ecosystem. But I was Austrian and a young student. So I went back to Vienna but I thought at the time that I wanted to go into traditional career. So, I went into consulting and worked for Accenture. Accenture sent me to London. I worked in London for two years and my boss wanted me to come back to Vienna or go back to Frankfurt. I said no. I liked London so much. I was determined to stay in London, so I went to work for Morgan Stanley. At Morgan Stanley I worked in investment management. For seven years I was the vice president there both for London and Hong Kong. Afterwards I moved on to Lloyds Bank and then to Deutshe Bank. In 2014, I attended the first networking event of fintech in London and all of sudden, I felt the same feelings, which I had 20 years ago, at the Silicon Valley, when the internet was been invented. This is because it is now hitting my sector. The fintech revolution, which was started on the internet 20 years ago, is now hitting finance and I am a banker. I have worked all my life in banking. I know technology. I know banking. Now I want to be part of the future and that is why I left banking to launch Fintech Circle, Europe’s first angel network for fintech start-ups. That is where my love for technology comes from. It comes from being close to technology entrepreneurs. I learnt coding when I was a student and worked for Accenture. I was learning C++; nowadays it is

an out-dated computer language. At that time it was the most modern one. I learnt how to program computers and in fact it is very important nowadays to understand both the technology and finance sides in order to develop business models of the future. That is a key thing. In your view, what makes Silicon Valley’s ecosystem tick? This is an important question because it critical that Nigeria and Lagos in particular develops its fintech ecosystem. To do this, you need a couple of ingredients. The first is that you need a finance hub. You need commercial banks. You need insurance companies. You have got these in Lagos. You have got good financial services sector here. Secondly, you need technology. You need good universities that produce excellent students in computer science and technology related subjects. You need technology education. You need to respect fintech entrepreneurs. I met lots of great fintech entrepreneurs here in Lagos and Nigeria at the African Fintech Festival. It is important that entrepreneurship is seen as an important and interesting career choice. Thirdly, if you have got entrepreneurs, you need investors. You need investors you invest locally in your entrepreneurs. These might be angel investors investing in early stage start-ups. When the start-up scales up, it will look to funding from venture capitalists or private equity houses. It is important that ideas generated in Nigeria do not have to leave the country to get funding. They should be able to stay here and get funded and grow here. There should be partnerships among banks, insurance and fintech companies. This helps accelerate the process of moving from being fintech start-ups to fintech scale-ups, which are bigger fintech organisations with 30 or 50 employees. Fintechs need to work with established banks, insurance and asset management companies. This is often very important because fintech companies need the expertise and network of a bank to roll out their products and reach millions of Nigerians. A fintech start-up is not known in the market and cannot acquire many customers, because it is very expensive. But they can work with a bank which has got millions of customers already. You have got two choices; either right label the product in the bank’s name, so the bank’s customers will receive a product with the bank’s, which has not been developed inhouse information technology (IT)

but a fintech company outside. Or the start-up fintech could seek funding and commercialise the product. These partnerships are very important and fintech companies need customers that are banks, which give them contracts to grow. The fintech ecosystem then comprises the entrepreneurs, investors, established companies and the next ecosystem stakeholder is the regulator. The government is important, because it should showcase talented Nigerians and advertise Nigerian successes outside Nigeria. When Nigerian regulators speak about

Nigeria, they should highlight the talented entrepreneurs you have got here, and the fintech companies you have got here. This was what the United Kingdom did. Four years ago, the U.K. government said it was going to make the Kingdom a fintech hub. This was a government commitment. If the government says it, everything else falls into place. Everybody wants to achieve the goal government has set. It is wonderful when government is the spokesperson. The regulator has to be open to work with fintech companies to explain to them what they can do

and what they cannot do. This needs to be an open dialogue. The last stakeholder is the media. The media has an important role to play because you want to celebrate successful fintech entrepreneurs. You should write about them. You should write stories that show the best fintech companies in Nigeria and why. What challenges they have overcome and why are they successful? This makes entrepreneurship an exciting career path. I remember 20 years ago, when I was still at the university, the best students in Austria or the U.K. wanted to go into banking or consulting. Nobody wanted to become an entrepreneur. It was regarded

Monday 21 January 2019

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BUSINESS DAY

SUSANNE CHISHTI CEO, Fintech Circle

application in Asia and the UK’ as being for people who could not find a better job. It is was either a second or even last choice. However, the world has change. In London, the best graduating students do not want to go to banks and do not want to go to consultancy. They want to set up their own business and run their own companies. Organisations are finding it difficult to hire the best students from universities because they want to be entrepreneurs now. The world has changed to some extent. It always makes sense to work and learn in large company but you have to be brave enough to leave and do your own thing. Well, these are basically the stakeholders in a fintech ecosystem. The media has got an important role to play, to highlight the successes and celebrate them. You founded Fintech Circle and currently its CEO, what is it about? Fintech Circle does three things. The first thing is that we invest in fintech start-ups. We are a group of 80 investors and we invest in early stage fintech companies, the first time they look for money. The second thing we do is that we focus on fintech education. This is why I am here in Nigeria, to bring fintech education designed by Fintech Circle to Nigeria. We have got a partnership in Nigeria with the Africa Fintech Network and with Segun Aina, president of the Fintech Association of Nigeria and chairman of the African Fintech Network to bring fintech education to Nigeria and to Africa. This is the partnership we signed at the Africa Fintech Festival. We have written three books already about fintech: The Fintech Book; The Wealth Tech Book and Insure Tech Book. All these three books are published by Wiley publishing house and have become global bestsellers. This is because everybody wants to learn about fintech. We also offer courses. We offered our first fintech master class in Africa to the board members of Accion Micro Finance Bank. We educate the board and C-level executives of large banks to understand what fintech means to them and how to develop a strategy for their banks to be competitive in the future of finance. This is our education focus through books and courses. We also have online courses that last for as short as an hour or two for individuals who want to up-skill and learn. The third thing Fintech Circle does is that we work with banks implementing enterprise innovation projects. For example we are working with a bank in France. We are basically accelerating internal start-ups. It is a very interesting innovation model. The bank said they have a lot of talented and creative employees that it wanted to help come up with fintech ideas. These employees takes six months off their day jobs but work on a fintech start-up and during those six months they still get paid by the bank. But they have got six months to launch a fintech internally, after the six months, they could either return to their jobs or continue developing the start-up if it has become so successful and the company supports them. This is a way of changing the culture internally to make your employees in the bank more agile

and fintech experts. And they may hopefully come up with interesting business models and new products. So, we basically advise banks on how to innovate internally and what innovation methods are there internally. How would you describe fintech as it is known today: disruptive or innovative? The way I describe it is applying technology to finance, any type of technology applied to the financial sector. When you look at financial services there is retail banking, corporate banking, asset management, payments and insurance. These financial services are all touched by fintech. And there various business models too business to business (B2B), business to customer (B2C), business to government (B2G) or a platform or peer to peer (P2P). Uber, the car hailing company is an example of P2P business model. The third dimension is the nature of technology applied: artificial intelligence (AI), blockchain and big data analytics. In summary it means, innovation, new business models and technology applied to financial services. This is what fintech is all about. Let me draw you a picture of what this looks like on paper. And she did in less than five minutes. How do you see fintech development in Nigeria? I think there is a lot happening in Nigeria. There are fintech products that have been developed in Nigeria, which have application in Asia or the U.K. In the U.K. there are about 4 million unbanked adults. So, Nigerian fintech entrepreneurs have a large market to export their fintech ideas and products to. How is fintech regulated in Europe and what can Nigeria learn? The fintech sector is only regulated when it becomes a finance business. For as long as you are a software business, which most fintech companies are, they are not regulated by the financial regulator because they are software businesses selling to banks. You are regulated when you sell to the public. If you are fintech company that sells to the end-user, then you have to make sure you protect the investors and customers, then regulation becomes important. When you become a public financial services provider, then you have to be regulated. But if you are just a software provider, you do not need to be. Another thing the Financial Conduct Authority (FCA) in the U.K. does is they use the proportionality principle. Proportionality principle means if you are a start-up with five employees and you want to create a service for end customers, the regulation will apply to you when you launch. But it will be softer than if you were a bank with 5, 000 members of staff. So, it is about the impact you could cause. The FCA created a regulatory

sandbox and has opened up to speak to and help fintech companies to understand regulation better and free of charge. This is really important because fintech start-ups have no money and many of them are still bootstrapping. A start-up has no money for a lawyer that can help it understand regulations. It is then important that the regulator gives them free advice. The FCA has got an innovation unit which helps startups to get access to advice on which regulation is important to them. Back to the regulatory sandbox, this means that a start-up can experiment with business models in a controlled environment. This helps the regulator to also learn about new technologies. People in regulation have got a difficult job nowadays because it is all change around them. How should regulators regulate areas they do not understand yet? This is very difficult because you do not want to stop innovation by over regulating it. The best way, is for regulators and fintech companies to work closely together. This is very important in Nigeria too; the regulators need to support fintech start-ups. You were recently appointed non-executive director at the Crown Agents Bank, what does the bank do? The Crown Agents Bank is a bank which goes back 200 years to the U.K. Royal Family. Now, the big focus of the bank is Africa and may be other emerging markets in Asia and Latin America. Our customers are central banks in most countries. We work with World Bank and International Monetary Fund to help the central banks have enough foreign exchange liquidity reserves and do forex payments. For example, if there is money payment coming in from a large charity and the money is in US dollars and in Ethiopia they need it in the local currency. In a situation such as this, Crown Agents Bank will convert US dollars into the local currency and allow people to be paid in the local currency. This is what we do at the bank. We also have very strong focus on social inclusion. We want to make sure all African countries have got access to the right currency and people can pay to Africa and also repatriate funds out of Africa. Telecommunication companies will soon start playing in Nigeria’s financial services sector, providing payments solutions. What lessons can we learn from Safaricom’s mobile money product, mpesa in Kenya? For us in Europe and the U.K. we always talk about mpesa as a big success story in Africa. Everyone is saying they invented mobile money and I have not heard of anything which did not work, to be honest. The telcos have clearly found a niche in the market where banks were not active. It is the case that lots of people

who have no bank accounts have mobile phones. Your mobile phone might become your bank. Being able to provide your financial services on a mobile phone is very important for anybody’s survival. People do not want to go to a branch necessarily, may be the older generation like it. They want to talk to the bank manager but most people want to do everything on the phone. Fintech does not mean it should be complicated for the customer. It should be very convenient and simple, even when it took two years of hard work to develop the product. How much of coding among citizens does a country need to thrive in a knowledge economy driven by digital technology such as fintech? I think it is something lots of people should learn. You should encourage girls, boys in school already to take up coding lessons and establish coding clubs in secondary schools. From 10 years onwards, children should be exposed to computer, just as they are exposed to other human languages. Coding teaches you how to talk to a machine, a computer. In the future everybody needs to understand machine language. Coders will not be the only ones needed. Creative designers who might understand coding will also be in high demand. These people can design new products and customer experience solutions. You also need people who are empathetic, who can see the world from the customers’ point of view. An empathetic person understands how people who live in the villages or outside of nowhere feel and what problems they want solved. In terms of education, I think everybody should be given a chance to learn coding. But if it is not their strength, you can still become a very successful person in fintech. You could become a marketing man-

ager, operations or human resource personnel at a fintech company. Fintech has got lots of jobs to offer. I will recommend the government makes coding part of the secondary school curriculum. What we do in the U.K. is that everybody has access to coding classes. You have so much drive in you. Where is this from, what drives you? I think it comes down to having a happy childhood. A happy childhood is important; having loving parents. In Austria we say, happy childhood lasts a lifetime. This is true because if you had a happy childhood, you will be doing okay for the rest of your life, normally. I also love to build bridges among companies, countries and other people. Diversity for me is very important. There is so much we can share together. We will organise the first Fintech Bridge conference in London between the U.K. and Asia. Many China companies will come to London to attend. This is social inclusion, financial inclusion and fintech inclusion. Fintech is a global industry. Fintech unites us all. Technology unites us all. Tell us about Fintech Circles coming master classes for Nigerian financial institutions. Here in Nigeria the fintech master classes for banks are in the offing. There will be three to five days seminars for the board and leadership teams of banks. We teach banks to prepare themselves for the financial future and digital transformation. These master classes we organise them in partnership with Lagos-based Fintech Associates Limited and Fintech Institute here in Lagos. It is part of the African Fintech Network. We will come back in 2019

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Monday 21 January 2019

Access Bank Rateswatch Market Analysis and Outlook: January 18th – January 25th, 2019

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.81

Q3 2018 — Higher by 0.31% compared to 1.50% in Q2 2018

Broad Money Supply (M2) (N’ trillion)

31.79

Decreased by 0.007% in Nov’ 2018 from N32.03 trillion in Oct’ 2018

Credit to Private Sector (N’ trillion)

23.08

Decreased by 0.002% in Nov’ 2018 from N23.14 trillion in Oct’ 2018

Currency in Circulation (N’ trillion)

2.1

Increased by 0.074% in Nov’ 2018 from N1.93 trillion in Oct’ 2018

Inflation rate (%) (y-o-y)

11.44

Increased to 11.44% in December 2018 from 11.28% in November 2018

Monetary Policy Rate (%)

Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor)

14 (+2/-5)

Lending rate changed to 16% & Deposit rate 9%

External Reserves (US$ million)

43.05

January 16, 2018 figure — an increase of 0.07% from January start

Oil Price (US$/Barrel)

58.31

January 18, 2019 figure— an increase of 2.62% from the prior week

Oil Production mbpd (OPEC)

1.736

November 2018 figure — a decrease of 1.64% from October 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Change(%)

18/01/19

11/01/19

31,005.17

29,830.70

3.94

11.56

11.12

3.94

Volume (bn)

0.30

0.20

52.88

Value (N’bn)

3.76

2.39

57.45

NSE ASI Market Cap(N’tr)

MONEY MARKET NIBOR Tenor

Friday Rate

Change

(%)

(Basis Point)

18/01/19

11/01/19

Indicators

18/01/19

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.)

1-week Change

YTD Change

(%)

58.31 3.31

2.62 8.88

(9.54) 8.31

2343.00 103.70 74.54 12.92 521.50

(0.80) (0.72) 2.32 1.41 0.53

21.02 (20.35) (3.82) (15.72) 20.30

1285.34 15.47 271.60

(0.74) (1.65) 2.28

(2.45) (10.01) (17.14)

OBB

15.3300

20.0000

(467)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N

16.1700

22.5000

(633)

Tenor

Friday

Change

CALL

13.9717

21.0000

(703)

(%)

(Basis Point)

30 Days

15.1889

15.9485

(76)

18/01/19

11/01/19

90 Days

13.6232

14.9702

(135)

FOREIGN EXCHANGE MARKET Market

1 Mnth

14.24

15.23

(99)

3 Mnths

11.76

13.46

(170)

6 Mnths

13.88

14.64

(75)

Friday

1 Month

9 Mnths

16.59

16.74

(15)

(N/$)

Rate (N/$)

12 Mnths

17.17

17.30

(13)

18/01/19

11/01/19

18/12/18

Friday

Official (N)

306.85

306.90

306.95

Inter-Bank (N)

362.79

364.84

359.38

BDC (N)

363.50

0.00

Parallel (N)

362.00

363.00

365.00

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Change

(%)

(Basis Point)

18/01/19

11/01/19

2,725.39

2,712.39

0.48

Mkt Cap Gross (N'tr)

8.55

8.51

0.48

5.30

5.28

0.49

10.95

10.42

0.53

-44.90

-45.37

0.47

BOND MARKET AVERAGE YIELDS Tenor

Friday

Change

(%)

(Basis Point)

18/01/19

11/01/19

3-Year

0.00

Mkt Cap Net (N'tr)

5-Year

15.41

15.35

YTD return (%)

7-Year

15.36

15.41

(5)

10-Year

15.23

15.29

(6)

20-Year

15.34

15.48

(14)

Index

YTD return (%)(US $)

TREASURY BILLS (MATURITIES) Tenor

Disclaimer 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.

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

91 Day 182 Day 364 Day

Amount (N' million) 10,000.00 20,000.00 44,837.72

Rate (%) 11.1939 14.0155 16.9512

Date 2-Jan-2019 2-Jan-2019 2-Jan-2019

Global Economy In the US, inflation rate dipped to 1.9% in December 2018 from 2.2% reported in November. According to the Bureau of Labour Statistics, it is the lowest rate of inflation seen since August 2017 and came on the back of lower gasoline price. On a monthly basis, consumer prices eased down 0.1%, after a flat reading in the prior month. In a separate development, the Office for National Statistics, reported that the UK trade deficit contracted by £13 million to £2.9 billion in November 2018 from £3.04 billion in the previous month. Exports of goods and services from the UK climbed to 0.4% from a month earlier an all-time high of £53.95 billion in the prior month, supported by an increase of 1.2% sales of services while goods exports fell 0.3%. Imports of goods and services to the UK edged up 0.1% to £56.86 billion in November. The slight increase was driven by a 0.5% advance in purchases of services, while goods imports were unchanged. Elsewhere in China, the trade surplus expanded to $57.06 billion in December 2018 from $53.85 in December 2017. It is the largest, trade surplus in the past 3 years according to the General Administration of Customs. Exports fell the most in two years and imports posted the largest dip since July 2016 amid growing disruptions from an escalating trade war with the US and slowing global growth. Local Economy The Consumer Price Index (CPI) which measures inflation rose by 11.44% year-on-year in the month of December 2018, which is 0.16% points higher than the 11.28% recorded in November 2018. The food index increased by 13.56% (year-on-year) in December, slightly higher than 13.30% recorded in November, thus indicating increasing pressure in the prices of food items. The core sub-index, which excludes prices of farm produce remained unchanged at 9.8%, same as November 2018 figures. During the month, the highest increases were seen in the prices of potatoes, yam and other tubers, bread and cereals, milk, cheese and egg, vegetables, coffee, tea, & cocoa, oil and fats, fish, meat. Others are tobacco, narcotics, garments, domestic and household services, dental services, cleaning, repair & hire of clothing, medical services and major household appliance whether electronic or not. In a separate development, the Central Bank of Nigeria (CBN) has expressed its commitment to improve credit allocation in the economy. The apex bank stated that this was part of its long-term strategy for strengthening the Nigerian economy. According to the CBN, it has established initiatives to resolve the underlying challenges to long-term Gross Domestic Product (GDP), economic productivity, unemployment and poverty that have pervaded the economy over the past decades. Among others, these initiatives include the Credit Bureau and the National Collateral Registry aimed at instilling a stronger credit culture and unlocking access to finance for deserving Nigerians, including those who may not have fixed assets to provide to banks as collateral. Stock Market Bullish sentiments prevailed on the local bourse last week. The renewed buying interest in the market was due to low price attraction ahead of the full-year earnings reporting season. The All Share Index (ASI) gained 3.94% or 1174.47 points to close at 31,005.17 points from 29,830.70 points the previous week. Similarly, market capitalization rose by 3.94% to close at N11.56 trillion from N11.12 trillion the previous

week. This week, market volatility is likely to continue amidst repositioning for 2018 full year earnings season. Money Market Market rates moderated last week boosted by retail refund of N300 billion and net OMO and PMA maturity credit into the system totalling N107bn. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 15.33% and 16.17% from 20% and 22.50% respectively the previous week. Longer dated placements did likewise as the 30-day and 90-day NIBOR closed lower at 15.19% and 13.62% from 15.95% and 14.97% the prior week. This week, we expect rates to trend slightly higher as a result of wholesale Secondary Market Intervention Sales (SMIS) to be carried during the week. Foreign Exchange Market The naira appreciated across all market segments last week as offshore investors continue to inflow funds for portfolio investments. At the Investors' and Exporters' window the naira gained 0.56% to close at N362.79/$ compared to N364.84/$ the prior week. Similarly, the official window and parallel market appreciated by 5 kobo and N1 to close at N306.90/$ and N362/$ from N306.95/$ and N363/$ respectively. This week, the naira is expected to remain around current levels due to the apex bank's continuous market intervention. Bond Market Average bond yields trended lower in the week ended January 18, 2018. The bonds market traded with buying interest although with wide bid/offer spreads which stifled market activity. Yields on the seven-, ten- and twenty-year debt papers settled lower at 15.36%, 15.23%, and 15.34% from 15.41%, 15.29% and 15.48% respectively the previous week. The Access Bank Bond index rose by 13 points to close at 2,725.39 points from 2,712.39 points the prior week. We expect this sentiment to continue in the near term as we expect more coupon payments into the system this month. Commodities Market Oil prices closed higher last week as reports that the U.S. could be ready to ease tariffs on China inspired investors to pick up perceived riskier assets. Bonny light, Nigerian benchmark crude gained $1.49 to settle at $58.31 a barrel, 2.6% up from the prior week. In contrast, precious metals prices slipped after a month of increasing prices. This came on the back of a bounce in Chinese stocks which stoked interest in riskier assets. Gold prices eased 0.74% to $1,285.34 per ounce last week, while silver prices settled lower by 26 cents, or 1.7%, to $15.47 per ounce. This week, oil markets may continue its upward trend as long as the trade deal talk remains positive. Precious metals prices are expected to trend lower, as hopes for a U.S.-China trade deal generate more demand for higher risk assets, dampening interest in safe-haven assets.

MONTHLY MACRO ECONOMIC FORECASTS Variables Exchange Rate (NAFEX) (N/$) Inflation Rate (%) Crude Oil Price (US$/Barrel)

Jan’19

Feb’19

Mar’19

364

365

11.5

11.61

11.7

58.00

62.00

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

Monday 21 January 2018

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Why Banks may not take lending risks in 2019 BALA AUGIE

anks are to continue with their conservative approach to credit growth in 2019 as the combination of high yield environment and macroeconomic uncertainties have hindered them from turning on the tap on lending. Experts are of the view that lenders will remain majorly on the side-lines pending the outcome of the forthcoming election. They added that a reversal of policy due to change in leadership could expose financial institution to the high risk environment. The cumulative loans and advances of 13 largest banks that have released third quarter 2018 results fell by 4.66 percent to N13.70 trillion, from N14.37 trillion the previous year, according to data gathered by Markets Intelligence. The fastest loan growth was recorded in 2013 and 2014 when loans and advances were up 21.78 percent, and the economy had not been hit by a precipitous drop in crude oil price that paralyzed business activities. In the period between 2014 and 2015, combined loans and advances of banks under our coverage fell by 1.46 percent, as crude price had begun to take its toll on the economy.

t hasn’t been a fabulous year for 12 large cap stocks on the NSE30 in 2018. The NSE30 is an index that tracks changes in prices of the largest stocks in the equity market. NSE 30 companies account for more than 95 percent of the total stock market capitalization of the Nigerian Stock Exchange (NSE). After a blistering start to the year that saw the NSE30 index move from around 1,800 points to over 2,000

P.E

SHORT TAKES N145.80 Average price paid by consumers for premium motor spirit (petrol) fell by 15.1% year-on-year and 1.1% month-on-month to N145.80 in December 2018 from N147.50 in November 2018. States with the highest and lowest average price are Taraba (N150.27) and Yobe (N143.33) respectively.

31, 005.17

Banks are expected to be cautious in extending credit to the oil and gas, as they are grappling with rising non-performing loans. Tier 2 lenders, with weak capital buffers, could not weather the storm of the headwinds. “Partly driven by the impact of IFRS 9 implementation on credit portfolios (following the onetime write off ), as well as a still cautious stance on risk asset creation, average loan book growth across our coverage was negative for most of 2018, with loan portfolios down -4% on average as at 9M’18,” said analysts at Vetiva Capaital

Management Ltd. An economic growth could motivate lenders to lending to the critical sectors of the economy. Nigerian economy has been growing at slow pace as GDP expanded by 1.80 percent in the third quarter, this compares with 2.10 percent recorded in the fourth quarter of 2017. Inflation for the month of December stood at 11.44 percent, this represents a 16 basis point increase from 11.28 percent November figure. “We are of the view that two factors may constrain a hasty deployment of funds to risk assets. Firstly,

events in the global environment may keep yields on treasury securities elevated,” said Analysts at United Capital Research. “Secondly, depending on the outcome of the election, a delayed postelection policy signal may imply that uncertainty in the local economy will persist,” said analysts at United Capital Ltd. The continued rate hike by the United States Feds and the trade war between China and the U.S has caused equity sell off in developed and emerging market economies. Zenith Bank’s loans and advances were down 11.78

percent to N2.36 trillion in September 2018 from N2.67 trillion as at September 2017. Access Bank’s loans and advances were up 1.04 percent to N2.08 trillion in September 2018 from N2.06 trillion the previous year. Guaranty Trust Bank (GTBank) Plc loans and advances fell by 12.34 percent to N1.27 trillion in the period under review as against N1.45 trillion as at September 2017. Ayodeji Ebo, managing director and CEO of Afrivest Securities Ltd said for banks to turn on the tap on lending, government will have to derisk the economy.

Large cap stocks take a beating as NSE 30 tumbles 2.11 percent year to date Emeka Ucheaga

points within the first 3 weeks of the year, the NSE30 has since reversed all its gains in January and is now down -2.11 percent, after dropping to 1,709 points at market close on Thursday. Large cap equities such as Nigerian Breweries, Total and Nestle are currently down -14.78 percent, -3.17 percent and -1.91 percent respectively. As a result of the significant price losses in Nigerian Breweries this year, the market valuation of the company has now dropped below N1 trillion to about N910 billion.

Market bears have been extra powerful this year and their might has been felt most by Forte oil. The company is the least performing stock on the NSE30 index and is currently down -39.4 percent. Forte oil has now dropped to N28.50 on Thursday, its lowest point since late 2013. The rout is still not over for Forte oil shareholders who have seen their wealth sharply eroded after the stock began its current downward trend from its record high of N342 per share in February 2016. Alongside Forte oil as

NSE30 biggest market laggards this year are Union Bank of Nigeria (-26.92%), International Breweries (-22.29%), Dangote Flour (-16.47%) and Lafarge Africa (-10.19%). The market rout appears to be far reaching across different companies in multiple industries as almost every sector is represented among the big losers. Dangote Sugar and Fidelity bank which were the top market performers in 2017 are both down this year by -2.79 percent and -7.34 percent respectively. Diamond bank which re-

ported significant losses in 2017 and Transcorp which suffered around 30 percent drop in profit between 2016 and 2017 were punished by investors as the stocks are currently down -6.67 percent and -7.79 percent year to date respectively. While the bears have been very busy this year, the bulls haven’t been idle either. Equity prices of 19 publicly listed companies on the NSE30 index have all trended northwards this Continues on page 36

The Nigerian Stock Exchange AllShare index appreciated by 1.38% to 31, 005.17 points at the close of trading Friday January 18, 2019, an uptick over 30, 583.28 points recorded in the previous day. Market capitalization surged by N22.96 billion to close the day’s trade at N11.56 trillion last Friday.

11.44% Inflation rate rose to a 7-month high at 11.44% in December 2018. Inflation rate on food price index was 13.56% in December, up from 13.30% a month ago. Urban and rural index stood at 11.73% and 11.18% respectively.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: samuel iduh )

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com

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Markets Intelligence Companies that out performed the NSE ASI in 2018

Tier one lenders trading below 5 year low BALA AUGIE

Olufemi Owoeye

he current downturn in the equities market is an attractive entry opportunities for investors to buy the stock of tier 1 lenders. This is because their stocks are trading below the intrinsic value. Analysis by Market and Intelligence reveals that big banks are trading at a discount to their respective 5 year price to book value (P/BV), as analysts expect lenders’ full year profit margins and return on equity to improve. For instance, Guaranty Trust Bank (GTBank) has a P/BV of 1.8 as at Jan, which is lower than the 5 year P/BV average of 1.90. Zenith Bank Plc has a P/BV of 0.80, which is lower than its 5 year P/BV average of 10.0. United Bank for Africa (UBA) Plc has a P/BV of 0.50, which is lower than its 5 year average of 0.70. Access Bank Plc has a P/BV of 0.30, this compares with its 5 year average of 0.60. First Bank Holdings has a P/BV of 0.40, this compares with 5 year average of 0.50. The local bourse has been under pressure since mid-2018- as investors dump shares over election jitters while the trade spate between China and the United States, and continued rates hike by the U.S Federal Reserve have made Naira assets less attractive to investors foreign investors. The NSE ASI has shed -1.35 percent since the start of the year while Banking index has year to

date (YTD) -4.87 percent The economy has been growing sluggishly. Nigerian Gross Domestic Product (GDP) of 1.80 percent is less than 2.0 percent, but some analysts expect a rebound to solid growth in the third quarter of 2019- after the elections-Also continued rally in crude oil price and foreign availability will help add impetus to the economy. Profit of big banks have been growing at a slow pace since the start of 2018 compared to 2017, 2016, 2015, when the devaluation of the currency and high yield environment bolstered bottom line. Procrastinators have divergence of opinion over future earnings, but they concur that performance of lenders depend on improved market conditions. “Banks are unlikely to post large gains in profit this year. They are unlikely to experience much loan growth, given the weak economy and the fact that they can

benefit from T-bills yields,” said analysts at Coronation Research. “So, if interest rates come down later in the year and the market conditions improve, and then there could be a sharp rally in bank stocks later in the year,” said analysts at Coronation Research. Combined profit of 13 largest lenders were up 13.80 percent to N573.27 billion in the third quarter of 2018, this compares with 17.911 percent uptick in 2017 financial period, but higher than 13.39 percent recorded in 2015. Kayode Tinuoye, fund manager with United Capital Research however said that banks performance this year will be better than 2018 as he expects yields to be higher. He added that lenders are more cautious in giving loans because they are still recovering from the financial crisis of 2016 that resulted in deteriorating assets quality and accumulation of loan loss expense.

Hopes for US-China trade breakthrough lift stocks S&P 500 hits one-month high; Brent oil tests $63 a barrel

lobal stocks rose for the fourth week in a row as optimism mounted that progress was finally being made in resolving the trade dispute between the US and China. On Thursday, reports claimed that Steven Mnuchin, US Treasury Secretary, was considering scaling back tariffs on Chinese imports — although the Treasury department was quick to deny the talk. Further grounds for optimism emerged on Friday when Bloomberg said China had offered a path to eliminate its trade imbalance with the US by ramping up purchases of American goods over the next year. “Recent comments continue to suggest that a US-China trade deal is on the cards in the weeks ahead, and this impression was affirmed in our meetings with policymakers in Washington during the course of the past week,” said Mark Dowding, co-head of developed markets at BlueBay Asset Management. “The sharp sell-off in financial markets during the fourth quarter appears to have caused a shift in the US administration, and while issues such as intellectual property theft and data security have not gone away, there is a desire not to create outcomes which exacerbate downside risks to global growth.” The latest reports of progress helped drive the US S&P 500 equity index to its highest level for more than a month, with the index on track for a weekly gain of more than 2.7 per cent. European indices put in similarly robust

performances. Oil prices also benefited, with Brent crude testing the $63 a barrel level — after ending the previous week at $60.64. US Treasuries sold off, pushing the yield on the 10-year note to a threeweek high, while the Japanese yen and gold also retreated. The “risk-on” mood was also helped by data pointing to underlying strength in US industrial production, which belied recent signs of slowing in more forward-looking manufacturing indicators. The figures came at the end of a week that saw China unveil fresh stimulus measures to bolster its faltering economy, while concerns about the outlook for global growth were heightened by German GDP data that indicated the country had narrowly avoided going into recession at the end of last year. “China led the growth slowdown last year, which accelerated as US tariffs came into force at the end of the third quarter,” said strategists at BofA Merrill Lynch. “That has spilled over into the rest of the world, with particularly weak growth in Europe and even the US manufacturing sector feeling the impact. We almost certainly need a US-China trade deal to be confident that the macro economy can start to bottom out.” Meanwhile, markets spent a large part of the week focused on the UK as the Brexit political drama continued to unfold. Sterling rallied strongly — climb-

ing to within a whisker of the $1.30 level yesterday — as the scale of the defeat of prime minister Theresa May’s proposed deal fuelled widespread expectations that a “no-deal” Brexit now looked far less likely. However the pound gave back some of its gains on Friday, as a weak UK retail sales report for December offered a welcome diversion from politics. Equities By mid-afternoon in New York, the FTSE All World equity index was up 1.1 per cent, while the S&P 500 was 1.2 per cent higher at 2,667 — its highest intraday point since December 12 — and the Nasdaq Composite was up 1.1 per cent. The pan-European Stoxx 600 index ended 1.8 per cent stronger, as Frankfurt’s Xetra Dax leapt 2.6 per cent and the FTSE 100 in London rose 2 per cent. Chinese stocks had a predictably robust session with the CSI 300 gaining 1.8 per cent and Hong Kong’s Hang Seng up 1.3 per cent. In Tokyo, the Topix rose 0.9 per cent. Forex and fixed income The dollar index was up 0.3 per cent at 96.35, as the euro shed 0.3 per cent to $1.1363 and the greenback rose 0.4 per cent against the yen to ¥109.71. Sterling was down 0.9 per cent against the dollar at $1.2874 — after touching $1.2993 earlier in the day — but was still up 0.3 per cent for the week. The euro rallied 0.7 per cent versus the pound to £0.8824 on Friday, after ending the previous week at £0.8926.

he impressive gain that was recorded in the equities market in 2017 could not be sustained in 2018 as the market closed on a negative 17.8% YTD return. This according to market experts can be attributed to broader emerging market sell-off, US Policy normalization, higher US Treasury yields, coupled with sluggish domestic recovery and overhang of political jitters that weighed on investors ‘sentiment in 2018 A sectorial glance at the year’s performance underscored underwhelming performances across sectors. The Industrial players (-37.3%) led the laggards. Notably, WAPCO fell 72.3%y/y owing to companyspecific pressures amid cash-flow concerns and intense competition in the cement sector. However, despite all the challenges in the industrial goods sector, Paint makers, Berger and CAP recorded a 1.3% and 2.5% gain, Beta Glass gained 33.1% to end the year in green. While CCNN led the movers chart in 2018 at 104.2%. CCNN Regarded as an efficient company, the impressive performance by CCNN was as a result of the company’s cost control mechanism that shows cost are been minimized. The company’s shift to the use of coal in its new plants which is cheaper than the lower pour fuel (LPO) is part of the company’s cost-cutting mechanism. It recently completed a merger deal with BUA group owned subsidiary Kalambaina cement. The merger according to Abdul Samad Rabiu, Chairman of CCNN is to further boost efficiency, productivity, output and better returns of CCNN. With the merger, CCNN will have a total installed capacity of 2million metric tonnes and will set the company as the dominant cement player in the key regional markets in Northern Nigeria with almost unfettered access to key export markets in West Africa. CCNN also has the fastest growing margins. An analysis of financial performance of CCNN during the period 9 months 2018 revealed that

the company grew its earnings by 97 percent to N4.01 billion against N2.036 billion in the previous year. While Profit margin of CCNN in the first nine months of 2018 grew by about 6 percent to 20.5 percent of N19.57 billion in revenue against a 15 percent profit margin of N13.628 billion in revenue as at 2017. For Consumer Goods sector factors ranging from a new charge on alcoholic beverages and the intense rivalry among brewers (following the entry of AB-InBev), Poor Purchasing power among consumers which means manufacturers cannot transfer the increasing operating cost to consumers, to weaker revenue growth for the food producers due to the Apapa gridlock, resulted in a -23.3% decline in the sector. Major gainers in this sector include Healthcare giant, Fidson which gained 33.8%, Neimeth also gained 4%, May & Baker down by 5.8%, while Nestle was also down by 4.6%. Performance for the Banks (-16.1%) largely mirrored the state of the market even though Tier-2 lenders reported a better return due to their low market pricing; Tier-1 (-17.4%) and Tier-2 (+15.3%). And unlike 2017, Banks were unable to make money from short time securities in 2018 as yield was high hence interest income grew at a sluggish rate compared to 2017. Leading the Banking sector gainers chart is Unity Bank which gained 101.9%, followed by Sterling with 75.9%, Diamond and FCMB with 45.3%, 27.7% respectively. The rally in Unity Banks was initially due to news of a planned $1 billion investment by Milost Global, a private equity firm. The PE firm later terminated the agreement following threats from an unnamed investor. The insurance sector was more resilient in 2018 buoyed by news of a possible reconsolidation in the insurance sector. NEM Insurance top gainers in the Insurance sector with 62.7% followed by Custodian Insurance and AIICO with 45.2% and 21.2 % respectively. Elsewhere, policy inertia consistently weighed on investments in the downstream subsector as players continued to battle with capped margins, while oil price

Large cap stocks take a beating.... Continued from page 35

year. All of these companies have outperformed their market benchmark. The best performing stock on the NSE30 this year has been Okomu oil (+40.86), Skye bank (+38%) and NASCON (+31%). Yes, Skye bank is the second best performing stock this year but don’t be fooled, the stock is currently trading at 72 kobo as at market close on Thursday and still has an ocean to cross to get to its 2014 level of N4 before the rout began. On a positive note though the Central Bank of Nigeria (CBN) recently announced that it will extend the tenure of the board it put in place to manage Skye bank till 2020. The current board has managed the Skye bank on behalf

of the CBN after the apex bank took over control of the troubled bank in 2016. This news has increased market confidence in the bank and fed into the stock price, lifting share prices higher. Other top performing stocks with double digit growth in the first half of the year include Unilever (+26.83%), Stanbic IBTC (+26.74%), FBN Holdings (+21.74%) and Ecobank Transnational (+17.65%) as at Thursday, 5th July 2018. On July 28th, NSE reviewed the NSE30 index composition, removing Conoil and including Fidelity bank. More reshuffling may be on the way if the some lightweights on the NSE30 continue their downward spiral.

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Nigeria’s creative entrepreneurs think global in aggressive expansion push ODINAKA ANUDU

igeria’s innovative entrepreneurs are thinking beyond Nigeria as they plan or embark on aggressive expansion to tap offshore opportunities. They are aware that playing locally is not enough at the moment, as global push affords them the opportunity to earn foreign exchange while tapping emerging opportunities. Many, by the nature of their business, are online already, which makes global expansion easy. Blessed Ilukor Idornigie founded IbakaTV in his sister’s room in 2011 with just N1 million. From a small business with few viewers, he has been able to raise funds that enabled him to reach more than one billion viewers. Through his channels, Nigerians in the Diaspora can now watch movies while paying in dollar. He leveraged YouTube to reach Nigerians and Africans in the Diaspora, having acquired premium partnership with the video-sharing platform, which o p e n e d d o o r s t o c ha n n e l s such as IbakaT V|Nollywood, IbakaTV|Yoruba, AfricaMagicClip and IbakaTV. “You can pay in naira but it converts automatically into dollars. The success story is that it is like a DSTV on the internet. But this has no limitation,” he told Start-Up Digest in an earlier interview. “I started with N1 million. Over time, I brought in investors. The initial fund that came in was N100 million. With that, we were able to start. From there, we were able to expand. We started on YouTube

Idornigie Blessed

and we had over $2 million, which we pumped into Ibaka,” he said. Blondie Okpuzor creates soaps, lotions and other beauty and skin care products using unconventional raw materials such as jollof rice and goat skin milk. As the chief executive officer of BathKandy, a beauty company that creates dessert-inspired beauty treats, Blondie uses locally available raw materials to create value for Nigerians, saving the country some foreign exchange. She has a small manufacturing set-up in Lekki, Lagos, and has established a second store in Abuja. “We sell internationally now. We do have a lot of international demands and we can get across to buyers in five business days,” she said. “We are looking more interna-

Toyin Onigbanjo

tionally. We are looking at Ghana, Kenya and South Africa, because these are the biggest beauty markets in Africa.” Another entrepreneur, Steve Babaeko, has his legs in Nigeria and other parts of Africa. He is the CEO of X3M Group, made up of X3M Ideas, X3M Music, and Zero Degrees, among others. He is doing well in advertising and entertainment at the moment, waxing strong at a time when many of his peers are struggling. Babeko is an advertising/ branding/ marketing guru who has also delved into audio-visual production and record label, with clear-cut plans to diversify into other countries. Fewer than seven years after starting, he has set up offices in Accra, Johannesburg and Lusaka,

among others, winning a couple of pan-African awards. “I am really excited because we are the only local agency in the country today operating at that regional level. We are like trailblazers, if you like. We are sort of experimenting and paving the way for other agencies on the continent to be able to go this route,” he told Start-Up Digest recently. Furthermore, Oluwatoyin Onigbanjo is another entrepreneur that is looking outwardly. She is the founder and head cook of AugustSecrets, which produces babyfoods such as Veggie Beans, Nutty Meal, Fish Powder and Crayfish Powder. She is a child nutrition educator and recipe developer. Toyin is a journalist, but her achievement shows that men (no ‘woman’ in journalism) of the pen

profession can do well in other areas of endeavour. Toyin exports packaged baby foods to Ghana; New York and Atlanta in the United States, and other countries, making her money in hard currency Toyin started this business officially in July 2016. This has been a rewarding experience. The first raw materials she bought cost her N20, 000. She then spent between N200, 000 and N500, 000 on purchasing the next set of raw materials and setting up the factory. “We are selling in about 24 Nigerian cities and states of the country now. We sell in Ghana; we sell in Atlanta, and we sell in New York. We sell outside Nigeria. It is amazing that we now take our foods to places where we bring our foods from,” she told Start-Up Digest last year. Jason Njoku established iROKO TV six years ago. Before 2011, no Nigerian firm had ever thought of providing films on-demand that could be paid for. Jason found out that it was a huge opportunity to blend Nollywood with technology and bring quality films closer to Nigerians. He started as a mainstream online movie and, within the first year, provided instant access to over 5,000 Nollywood film titles not only to Nigerians but also people across the globe willing to pay $5. As of 2014, iROKO was the largest distributor of African content globally on YouTube with 950 million video views across its managed channels. He has crossed well over a billion viewers. In January 2016, Jason announced multiple deals of $19 million from French media giant CANAL+ and an existing investor Kinnevik AB.

FG, BoI restate commitment to intervention schemes for MSMEs Gbemi Faminu

emi Osinbajo, vice president, has said micro, small, medium enterprises (MSMEs) are the most important business component for economic growth and therefore should be supported for growth. Osinbajo said this at the weekend while launching the MSME clinic in Minna, Niger. “The MSME clinic is a response to the fact that we recognise that MSMEs are the most important business component of our economy. “In any economy, what small businesses contribute is really the super structure of the economy. And that is why the President decided that we must have this clinic in every state of the federation and so for the past two years we have been going round flagging MSME clinics state by state and one-stop

shop”, he added. He noted that having MSME clinics in each state has become necessary to facilitate the work of MSMEs, adding that most small businesses find it difficult to travel all the way to Abuja and Lagos just to get regulatory permission. “That is why we think it is best to bring those authorities to them under a one-stop shop. Toyin Adeniji, executive director, Micro Enterprises in the Bank

of Industry (BoI), said the bank has given out over N400 million in loans to SMEs across Nigeria. She said that the BoI has recorded 7,500 beneficiaries for the Market Moni initiative unveiled by the administration. Adeniji stated that SMEs across Nigeria need financial enablement to succeed, necessitating the ‘Market Moni’ initiative. “The objective of the loans is to provide financial inclusion to

make sure that every citizen is empowered. Access to finance is a major problem to all businesses at every level and remains critical to the success of any business. “ The administration has deemed it fit to make sure that even the people at the bottom of the pyramid are able to access finance without any hassle.” In his remarks, Abubakar Bello,state governor, said his administration has accessed over N2 billion from the CBN to assist MSMEs in the state. Bello commended the Federal Government for setting up MSME programmes in the country, saying that small businesses are known to create millions of jobs in the country. Some of the beneficiaries at the MSME Clinic said the Market Moni has helped them in improving their businesses. Abdul Mohammed, a brass maker in Bida, said he has ben-

efited a lot from the Market Moni as it provided him the avenue to improve on his business. Deborah Jemimah, a head-tie seller, said with Market Moni, she was able to employ five people and begin an online training program which has boosted her income.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Start-Up Digest

Ruth Okhah: I turn ordinary pieces of fabric into amazing attire Gbemi Faminu

uth Okhah is a young and innovative fashion designer. She is the chief executive officer of Ariah Khah Fashion, which according to her, is a fashion house where women’s delectable custom-made outfits are designed and created. A holder of both the bachelor’s and master’s degrees in Economics from the University of Lagos, her love for fashion did not let her stay in the corporate world despite having an opportunity to intern as a corporate finance analyst for PricewaterhouseCoopers. She enrolled in a fashion school to pursue her passion. She started her business in 2016 and has since been able to register it at the Corporate Affairs Commission. She was inspired to go into the fashion world because of her love for beauty and modesty. “I was inspired by my love for

Ruth Okhah

fashion and penchant for transforming ordinary pieces of fabric into amazing attire,” she tells Start-

Up Digest. She says that her love for what she does gives her inspirations to

Why I chose sculpting as business — Daniel Ayeobasanmi Jonathan Aderoju

aniel Seun Ayeobasanmi is the chief executive officer of Daniel Seun Arts. The 28-year-old entrepreneur is in the business of sculpting, designs and crafting. He hails from Ondo state and has a Higher Nigeria Diploma (HND) from Yaba Technical College, Lagos, where he studied Sculpture. Many young Nigerians ordinarily do not consider Sculpture as a lucrative course, but Daniel has shown that it is after all a course to beat. Daniel started his business with as little as N2, 000 obtained from his parents. He used the profit from his first work to obtain more instruments.

Daniel Ayeobasanmi

He has worked for clients who today recommend him for jobs all over Lagos. The young entrepreneur was motivated to study Sculpture and take it as a profession when he discovered his love for the arts and decided to do what gives him joy. This prompted him to put in more efforts and think more creatively. While growing up, he would sit for hours to draw his friends and families. He would likewise wait at the market square to obtain clays from heaps of yams which he would eventually use for moulding objects. He began to get encouragements from his family and friends who supported him to study the art he loved, seeing that he had passion for it. Today, Daniel’s dreams have come to light. “People in my field find it hard

to make a lot of money because most people do not appreciate the arts in Nigeria today,” he explains. Speaking on the challenges he faces, the young entrepreneur says he needs more funds and regular power supply to enable him use his machines effectively. “I need a lot of finance to get good materials that will enable me deliver good jobs. Also, power issue in Nigeria has been a serious problem. I have welding machines that need light to function. More so, my electric oven which I use in baking clays most times requires energy.” He urges the government to look in the direction of arts and crafts, saying that doing so will help attract tourists who would in turn help boost the economy. He further says that the government should be able to provide start-up funds for entrepreneurs, and must look into energy issues to cut production or operations costs of running business in Nigeria. Speaking on his long term plans, he says, “I plan to start having my own exhibitions at least twice every year. I also plan to start having training classes for interested persons in arts and to make contacts with top artists in the country.” He is yet to have permanent staff, but he has friends who help out whenever there is a big job that needs to be accomplished in a short period. Advising other entrepreneurs and youths he says, “Have the zeal because it is like the engine that drives you to your final destination. Have the passion for what you are doing as it goes a long way. Also remember Rome was not built in a day.”

make innovative and beautiful designs from any piece of fabric. She enjoys buying and discovering new materials, which she gets from major markets in Lagos. Although her first sewing machine was a gift from a family friend, her initial capital was N30,000 which she got from her savings, as well as profits she got from doing few jobs she got. Ruth explains that her company creates affordable outfits to suit the clients’ tastes while being prompt in delivery. She says this has allowed continuous patronage and generous referrals from customers. Her company remains distinct by offering image consulting services to candidates. She further states that since its establishment, the company has attained high profit margins and has an extended customer database. She has also been able to employ two full-time staff members. She plans to expand her business by opening a ready-to-wear store and a fashion school that includes 3D fashion illustration in its cur-

riculum. Ruth also attends trainings and workshops both digitally and physically as she believes there is room for improvement while gathering certifications to improve her business. Despite the love for her work, Ruth outlines some of the challenges she encounters. “Some of the challenges I face include raising enough capital to acquire sufficient space for the ready-to-wear store and the fashion school,” she says. “Aside that, getting good designers to help me is quite difficult too. Nonetheless, I am putting back the profit into the business with the hope of getting grants which would facilitate the execution of the business expansion plan”. She adds that government can also help by providing cheap loans and grants as well as encouraging skills acquisition. Advising other entrepreneurs, she says that they should think intentional about things concerning them and must trust God too.

Atunwa pledges commitment to Kwara economy through entrepreneurship SIKIRAT SHEHU, Ilorin

azak Atunwa, governorship candidate of the People’s Democratic Party (PDP) in Kwara State, has pledged to collaborate with investors in businesses and inject capital funds into the private sectors to drive Kwara economy and build a more prosperous society. The PDP standard bearer equally assured commitment towards patronising indigenous businesses and contractors to help them grow in their capacities, if elected as the state governor, come 2019. He said he will prioritise entrepreneurship if elected as governor. Atunwa, who made the promise in the course of a stop-gap campaign in several communities in Ekiti local government area of the state recently, pointed out that having been part of the executive and legislative arms of government, he is better prepared than any of his opponents in the race. The PDP candidate had, while expressing confidence about his programmes of action to boost the state economy, as well as rural development, stated his government will engage private sectors and collaborate with investors to drive the Kwara economy. “This way, our local businesses will begin to thrive and our industries will grow.We will not abandon our rural communities; we will work to build rural roads and provide water for our communities and I can assure you that we do everything possible to provide jobs

Razak Atunwa

for our youths. “Our administration will ensure infrastructural development to every local government of the state, revitalise health sector and revisit education budget, diversify our economy through agriculture and entrepreneurship, prioritise youths and women development and improve people’s welfare.” Atunwa enjoined members of the party not to sell their voters’ cards in the coming election, adding that there is no need to recourse to the kind of violence that was witnessed in part of the state recently. “We don’t need violence to win any election. Our party is not associated with violence and so we plead with you all to eschew violence. Those who want to use violence for this election we know that God will not allow them succeed,”

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Start-Up Digest

Meet Joy Echipue, entrepreneur driving Nigeria’s digital media Josephine Okojie

oy Echipue is the founder of U-rock Media, a start-up digital media platform that allows customers view, read and listen to any radio station of their choice through their mobile platforms. Joy, who is also the author of ‘Discover Your Unique Self’, was inspired to establish U-rock Media when she identified an opportunity in the digital media space in Nigeria. “At U-rock Media, we are committed to providing our audience all over the world with a platform where they can read quality magazine monthly (U-rock Magazine), listen to radio stations of their choice and watch their favourite TV stations around the world,” Echipue says. “We have made it easy on our platform for people all over the world to locate and access radio and TV stations of their choice using our mobile app available both of Google Play Store and Apple Store,” she says. “With U-Rock Media Mobile App, people can access hundreds

Joy Echipue

of radio and TV stations around the world and also read our per-

sonal development/lifestyle magazine,” the entrepreneur explains.

The Mass Communication graduate says she was attracted to the $6.4 billion industry after reading a report by PricewaterhouseCoopers (PwC) on the opportunity in the country’s media and entertainment industry. The report she read also showed that the industry was expected to grow at a compound annual rate of 12.2 percent. To tap from the opportunity, she established her business in 2018. “As a company, we are positioning ourselves to tap into these opportunities. We want to be big in media and entertainment,” the young entrepreneur says. Since establishing starting, the business has grown so well that the magazine now has a print edition. “We started last year and we have grown so fast. We started with printed edition, now we are mobile. To read the magazine, you have to download u-rock mobile app to read both the old and new edition.” She says that the goal of the business is to give its customers access to quality entertainment, information and education

through the provision of a global content. Speaking about the U-rock Magazine, an arm of the business, the presenter and producer of a radio show in Dublin, Ireland, says that the magazine content is for all seasons and it helps to validate excellence and promotes hard work. “U-Rock magazine is passionate about a lot of things such as youthpreneurship, recipe for great success, career guidance, book reviews, latest happenings in the fashion world, events, how to stay healthy and kid zone, among others,” she explains. She notes that the business is starting a radio live show every Tuesday from 8am-9pm on URock Radio where people can call in and also stand a chance to win quality gifts weekly. Currently, the radio station has a Star Lounge with Kehinde Ajose every Tuesday by 11am-12 noon and Wisdom for Single and Married with Samuel Olagbenjo, among others. She urges the audience to download the U-rock mobile app on Google play store and Apple store.

rials include printed labels and nylon rolls. All these are 100 percent available locally. Since the machine will process 1,250,000MT per annum, the total sales revenue is N437.5million from which we deducted our total inputs of N315. 5million, thus realising a gross profit before tax of N122.5million in the first year. Many Nigerians have burnt their fingers while sourcing local machinery from inexperienced and dishonest fabricators who produce machines with very low efficiency. To guard against this, prospective investors can contact this writer for free investment advisory services. On the whole,

a toilet roll project is a very good small-scale industry, which can launch a small investor into the world of millionaires within one year. A three-bedroom flat garage or warehouse may serve, as accommodation while staff strength of eight is required for effective production, marketing and administration. Bigger or smaller plants are also available at competitive prices. For details on preparation of comprehensive & bankable feasibility studies/ report, sourcing & installation of quality & durable machines; Recruitment & Training, Sourcing of Investment funds,

Setting up tissue paper/serviette production plant

he level of unemployment in Nigeria is increasing on daily basis. One of the best ways to tackle it is to empower entrepreneurs to establish small and medium scale industries. Government should pay much attention to small-scale manufacturing, local industrial developments and agriculture. Any type of manufacturing engaged by individuals or groups of individuals or corporate organisations will go a long way in contributing towards the growth of the nation’s economy. It will generate employment opportunities and add to GDP. The purpose of this write-up is to educate Nigerian businessmen and enlighten potential investors on the commercial viability and profitability of tissue paper/serviettes production. Most Nigerians consume toilet rolls. Its demand is influenced by population explosion, rapid urbanisation and social awareness. It is generally used for cleaning and sanitary purposes in households, restaurants, hotels, canteens, social gatherings, parties, maternity homes, clinics, hospitals, educational institutions, churches, night clubs, shops, fast food centers and offices. Research findings indicate that Nigeria alone now needs over

950 million tons of tissue papers per annum. While our total local production output is still less than 150 million tons, the supply gap offers a tremendous opportunity for investors. Nigerian investors can now go into this lucrative business using locally made machines. Though there are imported machines as well, our local investors do not need to waste their scarce foreign exchange for the importation. The writer will assist you in procuring and installing quality machines that stand the test of time at moderate and affordable prices. The attractiveness of this project is that both the raw materials and equipment are locally available and the technology involved is very easy to understand and master. The essential equipment needed are: (1) Core making machine (2) Rewinding System (3) Band Saw cutter (4) Embossing Unit (5) Perforating Unit These pieces of equipment are portable, simple to operate and durable. The machines will be procured from highly experienced local producers. You can go for either imported or locally assembled machinery. Any of the options is good depending on the budget of the investor. Secondly,

the source of your locally assembled machines is very important. If you make mistake in this regard, it will hurt you forever and frustrate your plans. You can get the machines— both locally made and imported ones— from us. The machinery being introduced here is rugged, reliable and high performing with a capacity of 5,000kg per day. Operating on a single shift for a minimum of 250 days per annum, a total of 1,250,000 MT of tissue paper will be procured and processed into quality tissue products (toilet rolls & serviettes). Raw materials include jumbo reels and glue. Packaging mate-

Estimated Cost Implications (N’000) Preliminary Expenses 300 Machiner y & Equipment 2,500(locally assembled machines) Working (Variable) 3,500 Accommodation (Rented) (variable) 500 Contingencies 750 Total N7,550 For further enquiries, please contact the writer; Uba Godwin, Global Trust Consulting, 56, Ishaga Road (1st floor),Surulere, Lagos. Tel: 08034494437, 08023664368. E-mail: ubagodwin@yahoo.com

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How leaders can get honest, productive feedback John Baldoni

ithout c l e a r per formance targets and data measuring how close or far they are from reaching them, leaders find it difficult to grow and improve. When delivered thoughtfully, however, feedback can provide leaders with the actionable data they need to become more effective. If you want to get the feedback that is necessary to improve your leadership, here are a few steps you can take: BUILD A PSYCHO-

LOGICALLY SAFE ENVIRONMENT. Sharing feedback is often interpersonally risky. To increase the likelihood of your colleagues taking that risk with you, show them that their honesty won’t be met with negative repercussions. ASK SKILLFULLY. Asking “What feedback do you have?” rarely elicits a useful response. REQUEST BOTH POSITIVE AND NEGATIVE DATA. Clients tell me all the time that they just want to hear “the bad stuff” when it comes to feedback. What they fail to appreciate is that positive feedback that targets a specific behavior is use-

ful. GIVE YOUR FULL ATTENTION AND LISTEN CAREFULLY. Eliminate

distractions, including your phone and laptop, and focus fully on the person giving the feedback.

Monday 21 January 2019

DON’T DEBATE OR DEFEND. If you find yourself disagreeing with some feedback, practice self-awareness and notice this reaction, but do not offer contradictory evidence or challenge your colleague. OWN YOUR REACTIONS. You may feel happy, angry, confused or frustrated by what you hear. Recognize that your reactions are about you, not the other person. D E M O N S T R AT E GRATITUDE. Say thank you in a way that conveys sincere appreciation. REFLECT AND EVALUATE. Now that you have some new data, reflect on what you’ve heard even if

you don’t like reflection. MAKE A PLAN. All the steps before this set you up to make a plan and put it into practice. Pick one or two capabilities you want to improve, get really clear about what “improved” looks like, and then consider the steps necessary for you to learn and adopt that new behavior. Great leaders are great learners. Getting and learning from feedback isn’t always easy, but it is necessary, if we want to become better.

(Jennifer Porter is the managing partner of The Boda Group.)

The tactics media unions are using to build membership Marick F. Masters and Raymond F. Gibney

elimination of “pre-existing agreements.” Finally, they’ve convinced media workers that organizing — and agitating — is a risk worth taking.

nion membership as a share of the workforce in the United States has fallen to its lowest point in 80 years, but news media workers have bucked the trend, winning union recognition at roughly 30 digital news sites since 2015 and in numerous other traditional newsrooms. Looking at how they’ve done it offers a blueprint for would-be union organizers in other industries and is perhaps even an early sign that conditions are ripening for a labor comeback. HOW THEY’VE DONE IT

How have organizers changed the equation? First, they have convinced workers that having a union as a bargaining representative will actually help workers do better. Next, they

have focused intensely on getting a first contract, even embedding their bargaining campaign into the organizing drive, as was done at Fast Company. In many cases, the contracts that have been negotiated

are providing more than just baseline provisions: The contract at Thrillist includes merit-based raises, eight weeks paid parental leave, just cause for discipline and discharge, severance pay enhancements and the

A TIPPING POINT? Individually none of the strategies we’ve outlined above point to a new type of organizing. But taken together, and in the context of the gains that the labor movement has made among media workers, they signify a broader renewal for organizing. There are other signs, too. First, a recent survey reveals that nearly 50% of the nonunion workers would support union representation. Second, other industries are experiencing similarly growing protests.

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Finally, it’s worth noting that unionized media workers posses the communication skills and followings necessary to constitute a mobile corps of labor ambassadors. As such, unionizing them may lead the way to the much wider unionization of creative professionals, millennials, lower-paid workers and industrial workers.

(Marick F. Masters is director of Labor@Wayne and a professor of business at Wayne State University. Raymond F. Gibney is associate professor of management at Penn State University at Harrisburg.)

Monday 21 January 2019

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Davos 2019 INTERVIEW

Ahead the annual WEF gathering, founder of Davos speaks on confronting nationalism and inequality When Klaus Schwab, the founder and executive chairman of the World Economic Forum, hosted the first summit in Davos in 1971, the global community was on the precipice of profound change. Mass poverty was endemic, computers were the size of Xerox machines, and globalization was still a theory taught to economics students. Forty-eight years on, the world is utterly transformed. Extreme poverty has halved over five decades, roughly 2.5 billion of us now carry supercomputers in our pockets, and globalization has become the bedrock of the modern economy. But once again, we are facing a period of tumultuous change. In the coming years, the 80-year-old Schwab predicts, our planet will undergo what he calls the fourth industrial revolution: An era of rapid innovation catalyzed by automation, artificial intelligence and other technological advances. Recently, Schwab sat down with TIME ahead of this year’s WEF summit to discuss the unique suite of challenges facing the world today: In the 1970s, you helped develop the multistakeholder concept: the idea that business must serve not only shareholders but everyone with a stake in the company. Does that idea still have merit today? ell, today I see the stakeholder concept applied on a global level. The big issues in the world, like climate change, cannot be solved by governments alone. We need new technologies, so business has a role to play. Civil society has a big role to play. We are all stakeholders in our global future. And the World Economic Forum acts as a kind of catalyst for this process. That requires collaboration, at a time of shattered alliances, rising misinformation and bitterly divided politics. How can you look at the current state of the globe and feel hope? We are faced with tremendous change, but change has to be shaped—and it has to be shaped by human beings, by policymakers, by the people. I would call the phase we are in innovative destruction, or perhaps destructive innovation. When you focus on the destructive part, it can make you pessimistic. What we try to do is see the innovative part. Is the erosion of trust in traditional institutions—from democratic governments to the multilateral order—a hallmark of this period? If there’s an erosion of trust, it has to do with the imbalances we have in the system. We have trade imbalances, we have social imbalances, we have inequality. So what we have to do is to address those imbalances. Our international system was created after World War II, and since then the world has fundamentally changed. Cybersecurity, artificial intelligence, self-driving cars ... we have no global standards. So we have to create new mechanisms and institutions designed for new challenges. How do we do that, when inequality is fueling the rise of populists and nationalists who don’t believe in institutions at all? Well, it’s not just inequality

driving this. I think it’s a capability to cope with change. Those who feel overwhelmed by the changes which are happening can look for simple solutions to very complex issues. And so-called populists tend to say, Look, we have the solution—which is to retreat to a good old world, which, in reality, doesn’t exist anymore. Does that explain the void in global leadership we are currently seeing? No, it’s not a void. It’s a transition from a unipolar to a multipolar world. The first industrial revolution created the economic and political power of Great Britain. The second industrial revolution permitted the superiority of the United States, reinforced by the third industrial revolution: the computer age. Now what we are seeing is a struggle of who will be leader in the fourth industrial revolution. We have to recognize that even if we have different philosophies, we are united by common interests. Do you worry that technology, and specifically social networks, are being used to divide us and undermine those common interests? Yes, of course. We are living not only in a multipolar and mul-

tistakeholder world, but in a multiconceptual world. And what has happened with media broadly reinforces this tendency to create our own values. I think every media organization should make sure that what they disseminate is the truth, including social media. Who should be responsible for that? I’m usually in favor of an independent, self-governing body. Probably “shaming and blaming” is a better weapon in this respect than a big book of regulations. “Shaming and blaming” doesn’t seem to have affected Facebook’s behavior. If you were the head of Facebook, wouldn’t you come to the conclusion that you have to address those issues? Because at the end you depend on the trust of your users. But Facebook has repeatedly abused the trust of its users, allowing their data to fall into the hands of Cambridge Analytica and other shady actors. And we’re not seeing a mass abandonment of Facebook. I don’t have the solution. You can argue for more laws, sure. But in the long run, if you are not able to maintain trust, the business is not sustainable. I see many people who don’t use Facebook anymore.

Schwab

Klaus Schwab, Angela Merkel

How can we prepare ourselves for the fourth industrial revolution? Is there a need for a shift in values? I think the fourth industrial revolution will create a world where we have less need for labor, and where production can be robotized to a large extent. So the question we need to answer is, What is the purpose of life? Up until now we defined our purpose of life by production and by consumption. Perhaps now, we move from that narrative to one of sharing and caring. You can see the first signs already. When I talk to young people, they don’t dream of owning the big villa. They depend much less on consumption. It will be this generation that will force companies to follow suit. How? By boycotting and socially conscious investing and purchasing? Yes. Today you see already a tendency to buy products that have less sugar, for example. Next

it will be buying products that do not hurt the environment, or that are not made under socially unacceptable conditions for the workforce. I think this will come. What does the future of employment look like for this generation, as automation eliminates low-skill jobs? At the moment, a key challenge is the reskilling and upskilling of workers. We must equip people with the means so they can earn a decent living, and we are failing to do that. But in the long term, I think the jobs of the future will require a combination of talents. One is the digital world, so coding even for first-graders. But that’s not enough. You will also need human qualities. What makes us different from a robot? It’s the fact that we can have feelings. A robot can maybe one day be much more intelligent than we are, but the robot cannot show love, feelings, empathy, solidarity and so on.

42 BUSINESS DAY NEWS Reps get copies of 2019 budget proposal, begin debate Tuesday www.businessday.ng

KEHINDE AKINTOLA, Abuja

acts emerged weekend that all the members of the House of Representatives have received copies of the 2019 budget proposal, thereby paving way for the debate on the general principles of the budget. The debate, initially scheduled to tale place last Thursday, was botched sequel to the suspension of the House Rules to enable the House pay tributes to the late former President Shehu Shagari who died on Friday, December 28, 2018, at the age of 93. Copies of the 2019 budget proposals were handed over to secretaries of various lawmakers through the House Committee on Appropriations. BusinessDay gathers that the joint Committees on Appropriations, Finance, Loans, Aids and Debt Management as well as National Assembly Budget Research will converged to finalise work on 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategic Paper (FSP) during the week. President Muhammadu Buhari had on Wednesday, December 19, 2018 presented N8.73 trillion budget proposal to the joint session of the National Assembly. Key assumptions in the 2019 budget proposal showed that 2.3mbpd oil production; $60 per barrel; 9.98 percent inflation

rate; N119.28 trillion nominal consumption; N139.65 trillion; N139.65 trillion as nominal GDP and 3.1 percent GDP rate for the year 2019. The sum of N500 billion was proposed for Social Intervention Projects (SIP), consisting of N350 billion recurrent and N150 billion capital expenditure. The sum of N2.28 trillion was proposed for capital expenditure, inclusive of capital in statutory transfers; one percent of the Consolidated Revenue Fund amounting to N51.22 billion for the Basic Health Care Provision Fund and other related commitments As encapsulated in the budget proposal, Federal Government set revenue target of N6.97 trillion to fund the 2019 budget tagged ‘Budget of continuity. According to the President, the sums of N65 billion was proposed for implementation of Presidential Amnesty Programme; N45 billion as North East Intervention Fund; N10 billion as take-off grant for the North East Development Commission; N15 billion to support Small and Medium Scale Enterprises; N15 billion for recapitalization of Bank for Agriculture and Bank of Industry as well as N10 billion as grant to Bank of Industry for the purpose of subsidising the interest rates charged on loans to Small and Medium

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Scale Enterprises with the view to make it possible for them to access single digit interest rate loans from the Bank of Industry. Buhari further unveiled the administration’s plan to include “N275.88 billion representing capital for the larger GOEs and N556.02 billion for Multi-lateral/Bi-lateral project-tied loans, the aggregate capital budget is N3.12 trillion. This represents 30 percent of the total Federal Government’s proposed expenditure for 2019. While giving breakdown of the sources of revenue, Buhari disclosed that the sum of N6.97 trillion (3 percent lower than the 2018 estimate of N7.17 trillion), consist of N3.73 trillion oil revenue while non-oil revenue is estimated at N1.39 trillion. Buhari also unveiled plans for N305 billion ($1bn) for under-recovery by NNPC on PMS in 2019. The estimate for non-oil revenue consists of N799.52 billion from Companies Income Tax (CIT), N229.34 billion from Value Added Tax (VAT) and Customs Duties of N302.55 billion. We have reduced our expectation from Independent Revenues to N624.58 billion. Other revenues expected in 2019 include various recoveries of N203.38 billion, N710 billion as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of N104.11 billion.

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Monday 21 January 2019

Three investors show interest in Aero Contractors 3 years after IFEOMA OKEKE

hree years after the Assets Management Corporation of Nigeria (AMCON) took over the management of Aero Contractors, the troubled airline is currently attracting three investors, BusinessDay’s findings show. Confirming this on Sunday, Ado Sanusi, managing director of Aero Contractors, said these investors are interested in the entire

assets of the company including its Maintenance Repair Overhaul (MRO), the aircraft, amongst others. Aero Contractors, Sanusi said, had attracted 19 willing investors in the past two years with the investors streamlined to just three for talks with the management. This is as Ayo Obilana, CEO, Selective Securities International Limited, said lack of transparency, due

diligence and policy summersaults on the part of the government w ould make it difficult for the nation’s aviation industry to attract willing investors. At present, the three wiling investors are holding talks with the management of the airline on the possibility of investing in the business, but it was not clear the level of their talks, BusinessDay gathered.

Future Brand Idol launches, seeks to breed creative giants in Nigerian campuses MICHEAL ANI

s part of efforts to discover and celebrate creative young talents in Nigerian Universities, a new creative contest, Future Brand Idol (FBI) has launched in Lagos. The launch, which held at the Oxygen Academy Lagos, had in attendance key stakeholders from the integrated marketing communications sector and seeks to provide a viable platform for Nigerian students who are interested in Advertising and Public Relations to be exposed and become wellbred creative talents while on campus. Sp e a k i n g d u r i n g t h e launch, Ahmed Abdullahi, team lead, FBI, explained that the platform was borne out of the need to provide

capacity development for the huge creative talents that abound in Nigerian campuses. “Our intent is to build a credible brand immersion platform for students of communication, advertising, marketing and other related courses in Integrated Marketing Communication, through an annual creativity contest,” Abdullahi said. The FBI is a competitive event that seeks to bring together communication students in Nigerian Higher Institutions with keen interest in Advertising and Marketing Communications. The objective is to build students who will grow to be future brands problemsolvers across the globe. Commenting on the initiative, Provost, 02 Academy, Ozone Mbanefo, de-

scribed the initiative as laudable and timely, especially at a time when the industry thrives on creative ideas that are relevant and impactful. “Whether on the client or agency side, creative talents are valuable assets that help to positively project the image of the brand, this is why a platform like FBI is laudable,” Ozone said. Executive creative director, Noahs Ark, who was also present at the launch, likened the platform to Portfolio Night in Nigeria and expressed confidence in the capacity of the platform to improve and increase the level of creativity, especially as it concerns brands among Nigerian students. On the impact that FBI would have on the industry

Monday 21 January 2019

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44 BUSINESS DAY NEWS

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Experts urge FG to grant education, health sectors tax holiday DIPO OLADEHINDE

inancial experts, economists and leaders of thought that gathered at the 2018 Vanguard Economic Discourse advise the government to grant the education and the health sectors tax holiday and further put the right policies mix that will align the nation’s economic growth and human development performance on the same path. According to Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), this will help mitigate the imminent social crisis bewildering the sectors. “We find a situation today where you have more private schools in many of the states than public schools. We are faced with a situation today where we have more private hospitals than the public hospitals, that goes to show the role that private hospitals are playing even in the social sector space,” Yusuf said. “We should grant them complete tax holiday and all the input into the educational sector, either education material or laboratory materials; all this should come into the country free of import duty. So that the private sector may be able to complement the effort of the government in delivering quality human capital because we need human capital to drive the economy.” At the events experts brainstorm on the theme “Human Development Index vs Economic Growth: Nigeria’s Policy Options.” were they also proffer appropriate policy mix needed to galvanise

Nigeria’s human resources and economic growth. Keynote speaker, Fola Adeola, reeled out the immediate problems fighting the economy and unravelled palliative measures that could put an end to the human development problem. Speaking on the country’s current condition, Adeola said we have over 87 million Nigerians in extreme poverty. Nigeria is irresponsibly procreating every minute, he said, noting that the act stands as a challenge to any the economic policy created by any government. Illiteracy, corruption, Crookedness, etc, are factors bedevilling government policies and human development index. Erudite economist and former member of Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) Doyin Salami said the debate about economic growth and human development index is a stall debate as economic thinking had move long away from and move towards the notion of inclusive growth which will help bridge the gap between two indices. “If we are going to develop we must record real inclusive growth because if Nigeria does not grow with at least double digit growth which must continue for at least a decade the social consequences are best imagine,” Salami told the audience. Salami explained that private capital should be the way forward for a country suffering from capital insufficiency but the country have fooled its self into believing it’s the giant of Africa. “Nigeria is capital deficient

that the little money we have we are spending it wrongly. Imagine if we have legislative law which protect private investment or government regulations that encourage private investment and give them security for example don’t we think private money will build rail?” Salami said. Other experts at the event such as Professor Pat Utomi, brainstorm on the theme, Human Development Index vs Economic Growth: Nigeria’s Policy Options. They proffer appropriate policy mix needed to galvanize Nigeria’s human resources and economic growth which came from the backdrop of the recent World Bank Group ranking of Nigeria 152 out of 157 countries on its first-ever Human Capital Index. Similarly, a report by the Brookings Institution said Nigeria had overtaken India as the nation with the highest number of extremely poor people. The report showed that about 87 million Nigerians are in extreme poverty, with six Nigerians falling into extreme poverty every minute. Furthermore, data from National Bureau of Statistics, NBS, showed that the number of unemployed Nigerians rose by 3.3 million or 19 per cent to 20.9 million in third quarter of 2018 (Q3’18) from 17.6 million in third quarter of 2017 (Q3’17). The need for the right mix of policies to align the nation’s economic and human development performance informs the theme of the Vanguard Economic Discourse.

FG extends submission date for licensing round for uptake of flare gas HARRISON EDEH, Abuja

igerian government has extended the submission date for the first step of the licensing round for uptake of flare gas sites in the country. The submission deadline for Registration and Submission of Statement of Qualification (SOQ) for the Request for Qualification (RfQ), for the Nigerian Gas Flare Commercialisation Programme (NGFCP), was previously slated for Sunday, January 20, 2019. However, a statement issued by Justice O. Derefaka, who is the programme manager of the programme (NGFCP), confirmed that the current submissions date had been shifted to February 28, 2019. Other major step taken by of the NGFCP include the Shortlist of Qualified Applicants, which was to end by March 31, 2019; Issue of Request for Proposal (RFP), which was limited to first quarter of 2019; Submission of Proposals and Selection of Preferred Bidders, both of which

were not expected to last beyond the end of September 30, 2019. Would be bidders have been hoping for postponement of the submission deadline, largely because the first announcement of the licensing round came in during the last six weeks of 2018. The Nigerian Gas Flare Commercialisation Programme is the first auction targeted at licensing of subsurface hydrocarbon property in 11 years. It is not a conventional licensing round. It is for uptake of natural gas that is currently being flared in hundreds of sites in the country’s Niger-Delta basin. The government expects licence winners to take over the flare sites, monetise the molecules and boost the micro and macro economy in the process. “The auction presents a significant opportunity for domestic and international developers alike to participate in the largest market driven flare gas monetization program undertaken on this scale globally,” Derefaka had declared in

earlier statements. “Bidders will have flexibility of choosing which flare site(s) to bid for, determine the gas price, and their end – use market or gas product, as well as the technology to be deployed. Interested parties will need to demonstrate project development experience and proposed proven technology, which we expect to be in commercial application. “Additionally, parties will need to demonstrate technical and commercial capacity. Successful bidders will be granted title to the flare gas through a gas sales/supply agreement with the Federal Government of Nigeria. An interested party (applicant) is not required to be a Nigerian entity in order to submit its SOQ. Following a successful bid, each Preferred Bidder will be required to act through or establish a Nigerian corporate entity, which will enter into the necessary Commercial. It is important to note that only registered parties on the programme web portal can participate in the NGFCP bidding process.

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Monday 21 January 2019

IEA expects ‘mixed picture’ for oil demand in 2019 ... expects ‘challenging’ 2019 for oil refiners DIPO OLADEHINDE

aris-based autonomous intergovernmental organisation, International Energy Agency (IEA), says in its latest report that it expects “mixed picture” for global oil demand in 2019. “Falling prices in Q4 18 helped consumers and there are signs that trade tensions might be easing. In many developing countries, lower international oil prices coincide with a weaker dollar as the likelihood of higher US interest rates fades for now,” the Paris-based IEA said. “However, the mood music in the global economy is not very cheerful as Confidence is weakening in several major economies.” IEA oil market report reveals in the short term, there is added uncertainty about oil demand due to the onset of the northern hemisphere winter season, with low temperatures seen in the past few days in many places. “For now, we retain our view that demand growth in 2018 was 1.3 million bpd, and this year it will be slightly

higher at 1.4 million bpd, mainly due to average prices being below year-ago levels.” The IEA, which coordinates the energy policies of industrial nations, explains that refiners face a challenging year as processing capacity will increase by 2.6 million bpd, the biggest growth for four decades, while margins are already pressured by low gasoline cracks due to oversupply and weak demand. “The well-trailed changes to the International Maritime Organisation’s marine fuel regulations due in 2020 are another big issue for some refiners as they seek to find outlets for unwanted high sulphur fuel oil,” IEA says in its report titled ‘A marathon, not a sprint.’ “By the end of the year, all industry players, upstream and downstream, may feel as if they have run a marathon.” The IEA noted that nonOPEC production growth was set to slow to 1.6 million bpd in 2019 after record annual gains of 2.6 million bpd in 2018 while it’s also keeping its estimate of oil demand growth for this year unchanged at 1.4 million barrels per day, close to 2018 levels.

“The impact of higher oil prices in 2018 is fading, which will help offset lower economic growth,” the Parisbased IEA says in its monthly report. The IEA also warns that it expects the United States crude output to exceed the capacity of either Saudi Arabia, which will further reinforce its leadership position as the world’s number one crude producer. “While the other two giants voluntarily cut output, the US, already the biggest liquids supplier, will reinforce its leadership as the world’s number one crude producer,” the Paris-based IEA said Friday. “By the middle of the year, US crude output will probably be more than the capacity of either Saudi Arabia or Russia.” US crude production has soared in recent months, rising by more than 2 million bpd to an unprecedented 11.9 million bpd. The IEA report comes shortly after OPEC and nonOPEC producers officially implemented a fresh round of supply cuts.

Monday 21 January 2019

India to assist Nigeria with $100m credit line to develop broadband INNOCENT ODOH, Abuja

ndia has indicated interest to provide Nigeria with $100 million credit line to develop Nigeria’s broadband to boost connectivity in rural areas. Indications to this development emerged last Thursday during the Celebration of the Indian Technical and Economic Cooperation (ITEC) Day 2019 at the Indian High Commission in Abuja, which was attended by nearly 250 ITEC alumni, Indian community and Nigerian friends of India. Shri Abhay Thakur, India High Commissioner to Nigeria, said the assistance to Nigeria was to strengthen the bilateral relationsbetweenbothcountries in the spirit of the South-South cooperation, adding that ITEC was a flagship capacity building programme that had trained more than 5,000 participants every year under the banner of India-AfricaForeigncooperation. “We have experience in the area of broadband network and reaching the masses of India. We have a whole range of IT programmes and projects, particularly in the last five years, and we think we can meaningfully assist Nigeria on the development of ICT and in the field of rural broadband network,” the envoy said. He said India had become a giant in the field of IT and also a research and development hub in the world, an experience he said his country was ready to share with Nigeria. In telecommunication, broadband is a wide bandwidth data transmission, which transports multiple signals and traffic types, which allows for fast internet connection. Responding, Adebayo Shittu, Nigeria’s minister for communications, praised the capacity building efforts of the Indian Government through fully funded training programmes as well as India’s readiness to support Nigeria in IT-related projects such as the rural broadband connectivity network. He lamented that India, which was at the same level with Nigeria about 50 year ago, had surpassed Nigeria in the area of industrialisation and development, particularly in the area of ICT, but urged India to continue to give Nigeria the required assistance. He, however, noted that modalities were being out in place to secure the credit line facility to Nigeria, adding the country had a lot to learn from the strides that India was making. High Commissioner of India later called on Nigeria, Benin, Cameroon and Chad to fully utilize the ITEC slots they have been given so that the same can be increased next year.

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BUSINESS DAY

Investors shun FG’s appeal to invest in power sector ... as industry records 3,513.14mw loss daily OLUSOLA BELLO

overnment refusal to give sovereign guarantee to interested investors in power generation is hampering the successful utilisation of the daily stranded 3,513.41 megawatts (mw). Stranded power is electricity generated by various generating stations but cannot be transmitted to consumers through distribution companies, and subsequently become commercial loss. In 2018, national available actual generation capacity was an average of 7,380mw per day from January to November, but it dropped suddenly to 5,207mw in December, a situation that is said to be respon-

sible for the current electricity supply outages and fluctuations across the country. Out of this 7,380mw was the actual available generating capacity everyday in 2018, the average generation on daily basis by the plants was put at 3,867.13mw per day, while 3,513mw was stranded. Analysts say if the 7,380mw were able to get to consumers the power situation in the country would have been a lot more different from what it is today. The main idea behind Eligible Customers Policy by the government was informed by the fact that the government wanted the stranded generations to be pushed to consumers, such as industries currently having challenges to get power for their productions.

The investors need the sovereign guarantee so as to be sure that they would be paid for the services they render by making the power available for users. A company like Azura Power is currently enjoying such facility. Whether what the company generates is picked or sent to the national grid or not, the government has obligations to pay the company for the power it generated. An industry source told BusinessDay that many investors had come forward in response to government’s call that they should invest in the sector but became frustrated when they could not secure any guarantee for the payment of their services. On why the generation dropped from the actual

7,380mw to 5,207mw in December, an industry source said a number of things were responsible. He said the reasons for the poor services currently being experienced by Nigerians ranged from cutting of gas supply to some of the plants to planned maintenance, and gas constraints caused by lack of infrastructure. The other reasons are low water level, which has affected the generating capacities of hydro power plants, and load demand rejection by Discos. According to Joy Ogaji, executive secretary, Association of Power Generation Companies, the factors mentioned above are responsible. Explaining further, she said for instance, Afam Power plc

(Afam V1 Gas /Steam), GT12,13 and ST10 power plants were shut down for a period of about 16 days due to planned maintenance carried out by the gas suppliers on the facilities. Although Afam Power was duly notified about the maintenance, it resulted in a problem, which made it difficult for the plant to immediately reached optimal utilisation of its capacity. Consequently, it crashed from available generation capability from about 490mw to 0mw. Also, within this period, most of the National Integrated Power Project (NIPPs) - Sapele NIPP, Olorunsogo, Omotosho NIPPs. Some of the companies’ generation capability dropped to 0mw as a result of gas constraints.

Nigeria marks first fuel scarcity-free yuletide in years … as petrol hits 13-month low OLUWASEGUN OLAKOYENIKAN

L-R. Gbenga Iluyemi, CEO, Wragby Solution; Wale Olokodana, Intelligent Cloud Microsoft Mea Emerging Markets; Gbenga Shobo, deputy managing director, FirstBank; Arjan Oude Kotte, director, Microsoft Middle East & Africa, and Chuma Ezirim, group executive, e-Business and Retail Products, FirstBank, at the FirstBank Microsoft SME Partnership launch in Lagos.

Nigeria to become largest exporter of fertilizer as $2bn Dangote Fertilizers Company comes on stream in May … CBN to increase restricted items to 50 soon OLUSOLA BELLO

igeria is to become the largest exporter of fertilizer in Africa as the $2-billion Dangote Fertilizers Company is set to commence full production by May this year. Already, pre-commissioning activities have started, Aliko Dangote, president of Dangote Refinery and Petrochemical Company, disclosed while conducting Godwin Emefiele, Governor of Central Bank of Nigeria, round the complex at the Lekki Export Processing Zone, Lagos at the weekend. Reacting to the development at the complex, the CBN governor praised the efforts of the president of Dangote Group for taking bold steps to change the base of the Nigerian economy Emefiele said although Nigeria was almost self-sufficient in fertilizer production, the size of the fertilizer company is twice that existing fertilizer company in the country, stating that by the time the refinery in the complex takes off by the first quarter of 2020, Nigeria will

not only be self-sufficient in the production of refined products, but will also join the league of those that export petroleum products. “I am sure by that by the time Dangote completes all these projects, the CBN will begin to ask Dangote to sell foreign exchange to it.” Commenting further, the CBN governor also said petrochemical plant is also about 10 times that of the existing petrochemical plant in the country. “This is certainly a transformational project for Nigeria and it totally keys into the objectives of this government - that is, advocating for conservation of foreign exchange and diversification of the economy,” Emefiele said. To put the significance of the project in proper perspective, he added that: “By the time you dimension the size of the foreign exchange that is used to import petroleum products, it is at least one-third of the foreign exchange CBN spend to bring goods and services to the country.” Emefiele said that the apex

bank would raise to about 50 the 42 items that are currently restricted from accessing foreign exchange. When importation of petroleum products is added to the restriction list, when Dangote refinery comes on stream, this would have helped the country to save a lot of foreign exchange in the nearest future, Emefiele explained. The CBN would get more aggressive in ensuring that more of food items are added in to the foreign exchange restriction list, he added. He said by the time the foreign exchange on importation of petroleum products and food items is saved, the government would have boosted its foreign exchange reserve, as about 55 per cent of the foreign exchange spent by government or CBN goes to importation of petroleum products and food. He said the CBN would support any Nigerian company that engages in manufacturing items, agriculture value chains. “I have said before and I am repeating it, that if there are companies that are interested in diversify the economy, and

want to join government in restructuring the base of the Nigerian economy, CBN will be ready to stand by them to provide funding both in foreign exchange and naira needed to get that project off the ground.” The Dangote Refinery, he said, is a $9 billion project that is being funded by both local and foreign banks, adding that CBN had committed only about N75 billion in supporting it “We would continue to show support to individuals and companies that displayed the determination to support thegovernmentandsupportthe CBN in restructuring the base of the Nigerian economy, he said. Commenting further on the project, Aliko Dangote declared that Nigeria’s biggest challenge was the country imports more that it produces, like any other African country. He that by the time the fertilizer company was completed, Nigeria would be the largest-exporting fertilizer country in Africa, the largest exporter of petrochemicals products, and the biggest in Africa in export of petroleum products.

ederal Government’s intention behind an upward review of pump price of Premium Motor Spirit (PMS), otherwise known as petrol, was fully achieved in 2018, as Nigerians did not only have access to the product, consumers could also buy fuel at government approved price, according to recent data. The average price paid by petrol consumers fell by 15.1 percent in December 2018 to N145.80 from a year earlier, the lowest since November 2017. When compared with N171.80 consumers paid in the same period in 2017, it represents the biggest monthly drop so far, according to available data from National Bureau of Statistics (NBS). This means that Nigerians bought the least expensive fuel during festive season last year since 2015, despite several uproars over a likely reoccurrence of fuel scarcity during the period. According to the NBS latest PMS data, Taraba, Gombe and Bayelsa were states with the highest average pump prices of petrol at N150.27, N150.20 and N150 in December, while Yobe, Bauchi and Jigawa sold the cheapest fuel N143.33, N144.20, N144.21 in the review month, respectively. Nigeria has been faced with perennial fuel scarcity in previous years, particularly during yuletide when commercial activities were on the rise. This resulted in significant transport fare hike across the nation with commuters and manufacturers bearing the brunt. The Federal Government through the minister of state for petroleum resources, Ibe Kachikwu, in May 2016 announced an upward review of PMS pump price from N86.50 to N145, and directed filling stations across the country not to sell the product above the fixed price. The hike was the only way out of the scarcity and exorbitant prices of N150 to N250 Nigerians were subjected to at many filling stations across the country during yuletide, according to Kachikwu.

46 BUSINESS DAY NEWS

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Politicians smile as economic slump makes Nigerians grab.... Continued from page 1 disposing a chunk of his modest assets to survive, he will dislodge his ideologies of old and sell his vote to get by.

“A middle-aged lady in my Shomolu, Lagos neighbourhood approached me and offered me cash for my Permanent Voter Card (PVC) number and I accepted out of my need for it,” Emmanuel said. It was N10,000 (less than $30). “I can’t tell you that,” Emmanuel said when asked to give details on who this woman was and who she worked for. “But I can tell you my family and I found good use for the money.” Emmanuel had sold his vote at a 100 percent discount compared to 2015. Large swaths of Nigerians, like Emmanuel, have been hit by similar predicaments in an economy that has haemorrhaged jobs and investments in the last three years and has overtaken India to become the poverty capital of the world, according to a 2018 Brookings Institution report. The rising misery of Nigerians means less is needed by powerseeking politicians today to buy votes in a country where six people slide into extreme poverty every minute. Vote buying was widespread in the Ekiti State elections of 2018 and conducted with “impunity” in many cases, according to the Nigerian Civil Society Situation Room group, which monitored the election, with some reports putting the price of a ballot between N3,000 ($8.30) and N5,000 ($13.8). For many of Nigeria’s 87 million people living below $2, any offer in exchange for their vote may be one too hard to resist at this time as their

economic hardship deepens, even if it is much less than past offers, as Emmanuel found. Vote buying is not new and has dogged Nigerian elections for decades and has evolved from enticing impoverished voters with stockfish and bags of rice in the First Republic to the now widely used cash handouts anywhere between $10 (N3,060) and $50 (N15,300). With rising job losses, a falling naira, and lower purchasing power, the cheaper cost of vote buying increases Nigeria’s risk of selecting a leader lacking in the qualities required to set the country on the path of inclusive economic growth and better living

L-R: Harrison Ehimiyen, convener, Edo Youth Leadership Summit; Emmanuel Ibe Kachikwu, minister of State for Petroleum; Yemi Osinbajo, vice president, and Godwin Obaseki, governor, Edo State, at the Edo Youth Leadership Summit 2019 in Benin, Edo State.

DisCos remit only 33% of electricity bills collected... Continued from page 1

the value of electricity supplied. This pattern of payment was replicated throughout 2018 thereby increasing the liquidity gaps in the sector which has risen above N1trillion according to operators. “While the low remittance by DisCos to NBET and MO is partly due to tariff shortfall, the DisCos must improve on their technical and commercial efficiencies for improvements on the payment obligation to the market thereby improving sector liquidity,” the regulator said in the report. The electricity generation companies (GenCos) are feeling the squeeze over the low remittances by DisCos which have made it difficult to service turbines, pay workers and settle debt to gas suppliers. But the situation seems to be only getting worse. With power distribution infrastructure in tatters and without sufficient investments to improve the network, DisCos routinely reject electricity capacity they are unable to distribute and do not pay for the stranded power. This is has led to decline in power generation, squeezing the margins of GenCos. Joy Ogaji, executive secretary of the Association of Power Generation Companies (APGC), a trade group GenCos, in a January 15 release said operators are reporting decline in available generation due to gas constraints, on-going maintenance of power plants and low demand by

standards for the people. “The politicians are licking their lips, knowing that Nigerians have gotten poorer,” a political commentator said. “It means it is easier to entice them to sell their votes, but the risk that electorates will be worsening their plight in the long run by selling their votes to undeserving politicians is very high,” he added. Nigerians head to the poll next month to elect a leader for the next four years, in what many say will be a tight contest between incumbent President Muhammadu Buhari of the All Progressives Congress and main opposition candidate, Atiku Abuba-

kar of the People’s Democratic Party. To reduce poverty and create sufficient jobs for a teeming youth population, President Buhari plans to ramp up infrastructure spending and expand his socialist intervention schemes, while Atiku has vowed to privatise government assets and open up the economy to more foreign direct investment. The signs are there to show that Nigerians are growing poorer for the first time since the return to democracy in 1999 as an economic slowdown combines with still high population growth rates to curb income per capita. Average incomes in Nigeria will probably fall the fifth successive time in 2019, according to IMF forecasts. Since peaking at $3,000 in 2014,

electricity distribution companies (DisCos). GenCos have also protested the adoption of a new invoice procedure by NERC which recognises actual generation capacity against available generation saying it threatens their investments and could undermine the growth of the sector. “This redefinition of capacity by NERC means that if a GenCo declares 500MW as available on any day and the grid or TCN only nominates to take 100MW, which, to a large extent, is based on what the DisCos want to take and distribute, that GenCo will only be paid energy and the capacity equivalent of 100MW “The GenCo is left to bear the capacity cost of making available the remaining 400MW.” Ogaji said “no country can grow its power base on this flawed and lopsided regulation that penalises/punishes a generator for investing to increase its available capacity,” Ogaji told journalists in Abuja last week. GenCos say this regulation inadvertently provides support for any DisCo to decide and take less and less power that is available and still lobby for a higher tariff. But the regulator has provided the eligible customer regulation which allows GenCos sell power directly to consumers which could resolve the problem of stranded power. Ogaji is yet to respond to BusinessDay’s questions on why GenCos are not taking advantage of the regulation before publication.

Monday 21 January 2019

average incomes in Nigeria last contracted in 1999 but have now plunged to below $2,500 as a slowing economy takes its toll. Growth in Africa’s largest economy has remained fragile at best after exiting a recession in 2017. Growth averaged 1.7 percent in the first three quarters of 2018, lower than the country’s population growth rate of 3 percent. The country’s misery index, an economic indicator which gauges the economic well-being of the average citizen, rose every year between 2014 and 2017. The index draws from annual inflation and unemployment rate. While inflation has since cooled from an average of 16.5 percent in 2017 to 12.4 percent in 2018, unemployment has not looked back since 2011. Some 20.9 million Nigerians were unemployed as at the third quarter of 2018, as the rate of unemployment quickened to a seven-year high of 23 percent, according to the government-funded data agency, National Bureau of Statistics (NBS). This excludes the number of underemployed Nigerians which stood at 20.1 percent. Of the total unemployed people, the NBS reported that 8.77 million of them were first-time job seekers, 0.93 million people were unemployed because they lost their jobs and 11.1 million people were working for

less than 20 hours a week. “To ensure we don’t expand poverty, Nigeria must attract private capital on a large scale and do away with policies that stifle investment,” said Ogho Okiti, an economist and CEO of consulting firm, Time Economics. “If we don’t do that, everyone will soon be needing the N10,000 Tradermoni hand-outs from government to survive,” Okiti said.

Analysts expect CBN ...

S. African, Ethiopian leaders fly Africa’s flag ...

Continued from page 2

Continued from page 1

banks’ independence. Recall that in the run-up to the presidential elections in the US, the then chairman of the US Fed Reserve was accused by Donald Trump of deliberately keeping the policy rate low to favour the Democratic Party. The point here is that the MPC will be mindful of the current political uncertainties and so will go for maintaining the status quo. Of course, the usual justifications with respect to global and domestic factors will be used to support the hold-rates stance,” he said. At the last MPC meeting, CBN and its monetary committee decided by a vote of all 11 members to retain the monetary policy rate (MPR) at 14 percent, the asymmetric corridor at -200 basis points, -500 basis points around the MPR, Cash Reserve Requirement (CRR) at 22.5 percent, and liquidity ratio at 4 percent. CBN Governor Godwin Emefiele explained that to hold is an expression of confidence in the policy regime given the gradual improvement in both output growth and price stability. “On this premise, the forward risk to growth and outside risk to inflation appears contained,” Emefiele said. Paul Uzum, managing director, Halo Nigeria Capital, said MPC will retain rate as the increased inflation rate was as a result of election spending and the yuletide season, adding, “I don’t see them taking any action now until after the elections.”

only two women according to information from the World Economic Forum, organisers of the annual gathering. Ethiopia has suddenly become an investor’s delight on the back of a rapid reform programme being pursued by the 42-year old prime minister who is bringing down age long barriers to investment in a market seen as rival to Nigeria because of the size of its population. On the other hand, investor sentiment about South Africa has improved significantly after Jacob Zuma was replaced by Ramaphosa, a former labour leader with a pro-market disposition. This year, the meetings in Davos that lies on the Swiss alps, will focus on such issues as how to draw a new and more effective architecture for global collaboration as a vital anchor for progress in the world. “People around the world are getting increasingly impatient about failures of globalisation because they feel global trade is not working for them. So we will need to bring stakeholders together to discuss how to rebuild the platforms for how the world

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engages,” Elsie Kanza of the World Economic Forum told BusinessDay in an interview. She explained, “the world has changed and is changing rapidly, we are seeing new processes, new technologies, new ways of doing things all of which are leading to disruption in ways unforeseen.” The discussions will also focus on raising awareness about how the world is failing to deal with perceived global risks by getting leaders to pay the required attention to areas as water crisis as well as a new partnership for a new vision for averting food crisis in Africa, the DRC crisis and the work to cut ocean plastics blamed for mounting death of fishes. In the past the forum has been credited with collaborating with the African Development Bank, the Africa Union and others in focussing attention on the continent’s massive infrastructure deficit and how to bridge it through creative private sector funding. Teams from the forum have joined other critical stakeholders to work on interrogating projects around Africa, identify those that bankable so as to help in locating funding partners with a view to securing blended finance.

Monday 21 January 2019

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Nigeria’s presidential election is Buhari’s self-succession project - Obasanjo

… likens Buhari’s transition to Abacha’s transmutation to civilian president … accuses INEC, security agencies of ploy to rig polls for Buhari RAZAQ AYINLA, Abeokuta

ess than 30 days to the much awaited Nigeria’s general elections, ex-President Olusegun Obasanjo, on Sunday, revealed high-level machination already perfected by President Muhammadu Buhari’s All Progressives Congress, APC-led Federal Government to rig the general elections slated between February 16 and March 2, 2019. Obasanjo said security reports and available intelligence gathered so far by him indicated there were clandestine moves and efforts by the Presidency to engage Independent National Electoral Commission (INEC) and the nation’s security agencies for the purpose of election rigging targeted to reinstall Buhari as Nigeria’s President all costs. The former President, who addressed a team of journalists at the conference room of Olusegun Obasanjo Presidential Library (OOPL) in Abeokuta on Sunday, categorically said desperate moves by the Presidency to rig the elections in favour of Buhari and all candidates of APC accounted for President Buhari’s blatant refusal to sign the revised Electoral Reform Bill into law, having been duly passed by the National Assembly. While reading from a 16page pamphlet tagged, “Points for Concern and Action,” Obasanjo said desperate moves to retain Buhari as Nigeria’s President were akin to planned, but botched infamous transmutation of former Military Head of State, late General Sani Abacha from military head to the civilian president sometime in 1998. He said, “What is happening under Buhari’s watch can be likened to what we witnessed under Gen. Sani Abacha in many ways. When Abacha decided that he must install himself as Nigerian President by all means and at all costs, he went for broke and surrounded himself with hatchet men who on his order and in his interest

and at high costs to Nigeria and Nigerians maimed, tortured and killed for Abacha. Buhari has started on the same path in mad desperation. “From available intelligence, we have heard of how Buhari and his party are going about his own self-succession project. They have started recruiting collation officers who are already awarding results based on their projects to actualise the perpetuation agenda in which the people will not matter and the votes will not count. It is the sole reason he has blatantly refused to sign the revised Electoral Reform Bill into law. “His henchmen are working round the clock in cahoots with security and election officials to perfect their plan by computing results right from the ward to local government, state and national levels to allot him what will look like a landslide victory, irrespective of the true situation for a candidate who might have carried out by proxy presidential debate and campaigns. “The current plan is to drape the pre-determined results with a toga of credibility. It is also planned that violence of unimaginable proportion will be unleashed in high voting population areas across the country to precipitate re-run elections and where he will be returned duly elected after concentration of security officials as it happened in Osun State. “We are monitoring them and we call on all democrats across the world to keep an eye on the unfolding anti-democratic agenda of President Muhammadu Buhari. This is the time for preventive measures to be taken otherwise Nigeria may be presented with a fait accompli with impunity and total disregard of all pleas. “His scheme bears eloquent testimony to this road similar to Abacha whom he has praised to high heavens and as an archsupporter and beneficiary from Abacha, he has seen nothing wrong done by him. It is clear from all indications that Buhari is putting into practice the les-

sons he learned from Abacha. Buhari has intimidated and harassed the private sector, attacked the National Assembly and now unconstitutionally and recklessly attacked and intimidated the Judiciary to cow them to submission. “I was a victim of Abacha’s atrocities against Nigeria and Nigerians – high and low. At the height of Abacha’s desperation for perpetual power, he did not brook any criticism because Nigeria was seen as his personal property. You must go along with him or be destroyed. All institutions for ensuring security, welfare and well being of Nigeria and Nigerians, particularly the Police, the Military and the Department of State Services (DSS) were abused and misused to deal with critics of Abacha and non-conformists with Abacha. “Today, another Abacha Era is here. The security institutions are being misused to fight all critics and opponents of Buhari and to derail our fledgling democracy. EFCC, Police and Code of Conduct Tribunal are also being equally misused to deal with those Buhari sees as enemies for criticising him or as those who may not do his bidding in manipulating election results. “Criticism, choice and being different are inherent trademark of democracy. If democracy is derailed or aborted, anarchy and authoritarianism will automatically follow. “Today, as in the day of Abacha, Nigerians must rise up and do what they did in the time of Abacha. Churches and Mosques prayed. International community stood by us Nigerians. I was a beneficiary and my life was saved. Well-meaning Nigerians took appropriate actions and made sacrifices, some supreme, some less than supreme but God had the final say and He took the ultimate action. “God of Nigeria is a living God and a prayer-answering God. Nigerians must cry out to God to deliver Nigeria.” See full text online

CardinalStone urges NEM Insurance on AFIG Funds investment

ardinalStone Partners Limited has acted as the financial adviser to NEM Insurance plc on the equity investment by AFIG Funds LLP. AFIG is a private equity firm registered in Mauritius and headquartered in Dakar, Senegal. NEM Insurance is a nonlife insurance company, which commenced business in Nigeria in 1948, as Edward Turner & Co. and has over several decades emerged as a leader in Nigerian insurance industry. The company became quoted on the Nigerian Stock Exchange in 1989 following its privatisation by the Federal Government of Nigeria.

Speaking on the transaction, Tope Smart, CEO, NEM Insurance, said: “CardinalStone was very instrumental in spearheading an efficient process that ultimately paired NEM with the ideal partner. Their commitment and demonstrated professionalism in negotiating and managing the transaction was highly commendable.” Speaking on the transaction, Michael Nzewi, managing director, CardinalStone, said: “We are honoured to have assisted NEM to secure a suitable growth partner as it embarks on its next phase of growth. We believe that this strategic partnership will serve as

a major catalyst in driving the ongoing penetration of insurance in Nigeria and will provide NEM with the right platform to continue delivering exceptional service and quality products to its customers.” CardinalStone is an indigenous investment banking, securities and investment management firm providing financial advisory, capital raising, and investment management services to its clients across various sectors of the Nigerian and the broader West African region. The transaction reinforces the competence of CardinalStone to facilitate private equity transactions in Nigeria.

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Refinery: FG will source forex from Dangote – CBN

ederal Government will soon start sourcing foreign exchange (forex) from Dangote Group, as soon as the latter’s refinery, petrochemicals and fertilizer projects come on stream. This potential reversal of roles was disclosed by the Central Bank of Nigeria (CBN) governor, Godwin Emefiele, after he spent over four hours touring the Dangote Refinery, Petrochemicals, Fertilizer projects and Dangote deep-water jetty at the weekend. Emefiele toured the project sites in the company of the president/CE of the Dangote Group, Aliko Dangote; deputy governor of the CBN, Aishah Ahmad; group managing director, Dangote Industries Limited, Olakunle Alake; group executive director of Dangote Industries, Devakumar Edwin, and the managing director of GTBank, Segun Agbaje. The CBN governor premised his comment on the huge forex earnings that were expected to accrue from the export of the petrochemical and fertilizer products from the Dangote refinery and fertilizer plants by the “time the fertilizer plant begins operations in May this year, and the refinery takes off as planned in 2020.” Emefiele, who commended Aliko Dangote for the volume of work done on the Dangote projects since his last visit over

two years ago, also enthused that the refinery and fertilizer projects would help Nigeria to create thousands of Jobs and check importation of fuel by the federal government; thereby saving government huge amounts of forex currently being spent on fuel import. He said about 55 to 60 percent of Nigeria’s spending on foreign exchange for the importation of petroleum products and food items would be saved when the Dangote Refinery come on stream. Emefiele said one third of Nigeria’s spending on forex would also be retained when the Dangote Refinery was completed. Emefiele described the Dangote Refinery as transformational project for Nigeria, which totally keys into the objectives of President Muhammadu Buhari on selfsufficiency in petroleum products, conservation of forex and diversification of the economy. “I am sure by that time, the CBN will be begging Dangote to sell its dollars to the bank,” he said. He noted that the completion of the refinery would make Nigeria self-sufficient in the production of refined products and also make the country to be among the league of exporters of petroleum products.

He declared the CBN’s support to any company or individuals who are ready to invest in the transformation of the Nigeria economy. “We are ready to support in Naira and also ready to provide foreign exchange for any investor who is ready to support Nigeria’s transformational agenda. “I use this opportunity to repeat that we are ready to support any individual like Aliko Dangote who is willing to invest in this country. We will continue to support companies that display the determination to support the CBN. I feel so delighted and I am happy this is happening in my own life-time and I am sure you are all so happy.” Speaking also, president, Dangote Group, Aliko Dangote, said the project would definitely transform the Nigerian economy. “We have a couple of projects at hand and we will continue with these transformative projects. The biggest problem we have in Nigeria is that we currently import more than we produce like any other African countries. “But, by the time we finish our fertilizer plant, Nigeria will be the largest exporter of fertilizer in Africa. We will also be the largest exporter of petrochemicals and the largest exporter of petroleum products in the whole of Africa. This is a major transformation.”

Akinwunmi Ambode (2nd l), governor, Lagos State; in a handshake with President Muhammadu Buhari (r), with them are, Abubakar Atiku Bagudu (l), governor, Kebbi State, and Abdul›aziz Abubakar Yari (2nd r), governor, Zamfara State, during the All Progressives Congress (APC) Presidential Campaign in Kaduna.

Our passion is bigger than our problem, Adebola Williams says at EU Parliament

o-founder of RED, Adebola Williams, has urged the international community to support the aspirations of young Africans changing the negative narratives about the continent. He said this at the inaugural edition of the European Conservatives and Reformists African Summit that took place in Brussels, Belgium, recently. The conference, which was witnessed by policy makers and thought leaders from across the world, was aimed at examining and strengthening opportunities for collaborative partnership between the European Union and Africa on democracy, security, economy, health related issues, emergent technologies, the use of development aid, developing a future relationship on trade

cooperation, among other key areas. Speaking at the event, the media entrepreneur and youth advocate called on Europe to discontinue its top-down foreign policy approach towards Africa, while emphasising the need for a culture and citizendriven engagement. “Africa needs a citizen-driven, culture-based approach to governance, and not the top-bottom, imported one that has been propagated for years without desired results. With this understanding and using media as a tool, StateCraft Inc. has captured the imagination of young people and governments across Africa and beyond by mobilising young people to vote for credible candidates, designing effective policies, driving qualitative

governance, and promoting citizen action and engagement,” Williams said. He also highlighted the corruption allegations surrounding millions of Euros in aids finance from donors to support African countries, explaining that such monies are re-routed to safe havens and personal accounts. “If the EU really wants to help Africa, it must assist those with their feet on the ground to make change. If the EU cannot achieve this, the youth of Africa will, because our passion is bigger than our problem. The European Union, more than ever in its history, needs to collaborate actively with these foot soldiers of democratic growth in Africa to promote good governance and demographic dividend.

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Monday 21 January 2019

ABUJACITYBUSINESS COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

Absence of forensic investigative auditing portends danger for Nigeria’s financial system - CIFIAN CYNTHIA EGBOBOH, Abuja

he Chartered institute of Forensic and Investigative Auditors of Nigeria (CIFIAN) raised alarm over the impeding dangers to Nigeria financial system, with the absence of forensic investigative auditing. Victoria Enape, CIFIAN President who disclosed this during a press briefing held in Abuja recently, argued that criminal offences in Nigeria now involve the use of digital technologies which speak to the need for a forensic and investigative auditing through the use of science and technology for fraud prevention and detection. She said: “The absence of the appropriate legal framework for the regulation of forensic and

investigative auditing practice in Nigeria portends great danger to the integrity and safety of the Nigerian system, the first noticeable consequence of such a lacuna is that Nigeria current spends hundreds of million of her scarce foreign exchange to hire forensic experts to investigate corporate fraud.” She explained that the CIFIAN as well as other professional bodies aims to entrench excellence, proficiency, discipline and specialization and ensure best practice among practitioners as against the proliferation as alleged by opponents of the bill. According to her, the proposed CIFIAN bill are forensic analysis of financial statements to eliminate material misstatement, whether caused by error

or fraud and preventing assets misapplication scam; cyber crimes, global anti-fraud and corruption compliance and enforcement. “CIFIAN is coming to fill a huge vacuum in its proposed area of operation, the absence of which Nigeria will continue to spend her scarce foreign exchange to hire expatriate to do forensic auditing in Nigeria, this is an era of technology and we must key into it in order to compete in the global market. “We wish to state that the primary domain of forensic and investigative auditing is to work within the investigative processed form the scene of fraud to the curt, providing information and evidence for administration of justice and to ensure that the courts are presented with the

300 women benefits from PIN/Peace Direct empowerment, Kano, Jos JACOB AJAKAIYE, Kano

eace Initiative Network (PIN), and Peace Direct, a United Kingdom based Not-For-Profit Organisation, has empowered 300 women and youths with functional skills and other forms of employable competencies in conflict areas in northern Nigeria. The programme was executed in the two conflict prone cities of Kano, in the North West, and Jos, in the North –Central. The bulk of the beneficiaries were provided three (3) month training in sustainable micro-businesses, such as: Tailoring, Shoe and Bag Making, Phone Repairs, Hair Dressing, and Vulcanizing. At the end of the training programme, each of the beneficiaries were provided with working Kits in the area where they were trained. Those who learnt tailor were provided with sewing and waving machines each, those who major in shoe and bag making were given the required tools for starting a business along that line. Those taught Phone repair, were provided with implements

for their trade, and those that acquired Hair Dressing capability were given Hair Dryer, Head Washing Basin, and other working tools. While, those who acquired skills in Vulcanizing were also provided working tools and a Generator-Set each. In addition, several youths and women, who were idling away, without any means of sustainable income in the two cities were also provided with Grinding-Machines, for the purpose of generating daily stream of income. One of the success stories of the programme, is that the beneficiaries have been empowered and moved away from being a potential hands to be recruited by extremist groups for the purpose of causing conflicts in their communities, to being functional members of their communities. The impact of the programme is that, the beneficiaries now have basic skills to earn a living, and their peace- building skills sharpened which put them in a position to be an active agents of resistance to conflicts in their communities.

85% FCTA-FCDA staff are tenants - Oluwakorede JAMES KWEN, Abuja

L-R: Kevin Brett, incoming general manager, Transcorp Hilton plc; Jan Vanderputten, vice president, Operations, Africa and Indian Ocean; Vanentine Ozigbo, president/CEO, Transcorp plc, and Etienne-charles Gailliez, outgoing general manager, during the farewell and welcome cocktail reception in honour of the outgoing and incoming general managers in Abuja. picture by TUNDE ADENIYI.

1,000 rural communities benefit from Satellite TV OYIN AMINU, Abuja

o fewer than 1,000 villages across Nigeria have benefited from the Satellite T V for 10,000 African villages initiated by China-Africa Cooperation. The initiative was aimed at helping Nigeria meet the International Telecommunications Union’s (ITU’s) demand for African countries to achieve digital migration of TV industry before year 2020. Speaking to journalists at the launch in Kpaduma Village, Abuja, Justin Zhang, Chief Executive Officer, StarTimes Nigeria, explained that the launch was one of the major programmes designed to strengthen the bilateral relationship between China, Nigeria and by extension Africa. Zhang disclosed that a lot of jobs were created during the implementation of the project including training on how to re-

charge, operate and provide the required maintenance support for all the products installed, with a plan to make some of them dealers as time goes on. “We are all here today because of the promise made by Chinese President Xi Jinping, that China would implement access to satellite T V for ten thousand villages across Africa, as one of the major cooperation programs to boost cooperation between China and Africa. “Out of the 10,000 Villages, Nigeria alone will get 1,000 and StarTimes is playing a great role as the contractor for this project across all the African countries that will benefit. “Some of the work we have done in the villages include installation of 2 solar power projector TVs for the community, 1 32’ digital TV set with solar system, 20 Satellite dish and decoders where they can watch more than 100 international

and local channels. The 2 solar powered projector TVs and 32’ digital TV are for public use and free of charge,” said Zhang. In his remarks, Lai Mohammed, Minister of Information and Culture, expressed optimism that the project will complement the ongoing efforts of the President Muhammadu Buhari’s administration to democratise access to information and entertainment in the country. He noted that the 1,000 villages project could not have come at a better time than now as the general elections are just a little over one month. “In just a little over one month, Nigerians will be voting in the 2019 general elections. They need access to information now, more than at any other time, to know about the over 70 political parties that will be participating in the elections as well as about their various candidates,” said Mohammed.

atilukuro Oluwakorede, Chairman Joint Union Action Committee (JUAC) of Federal Capital Territory Administration and Federal Capital Development Authority (FCTA-FCDA) has lamented that 85 percent of FCT workers do not have houses. Oluwakorede said it is shameful that FCTA-FCDA staff do have land to build houses even when it is the management of the Administration and the Authority that allocate land in the Territory. The Chairman spoke at the commissioning of renovated JUAC Secretariat in Abuja when

he stressed that accommodation is a major problem of FCT with some living as far as Nyanya, Keffi, Yaba and Abaji where they struggled to get to the office every morning. He suggested that for the provision of affordable and quality houses to staff, the management must cushion cost of housing by providing basic infrastructure on sites and giving loan facilities for staff to acquire houses. “So what we are saying is that they should provide the land, provide the infrastructure, let developers come and develop it so that houses that are ordinarily supposed to go for N5 million can come down to N3 million, for example, and staff can take it up as a load and gradually pay it up and everyone will be happy.

Smuggling is a killer to the Nigeria economy – Minister CYNTHIA EGBOBOH, Abuja

eineken Lokpobiri, Minister of State for Agriculture and Rural Development on Friday announced that smuggling activities in Nigeria remains a killer to the Nigeria economy. Lokpobiri speaking at the campaign against “illegal importation of foods and indiscriminate use of chemicals on food items” in Abuja, said that there is need to discourage traders from buying and selling smuggled goods as a way of controlling further use of smuggled goods. “It’s either we kill smuggling, or smuggling will kill this nation, it is challenge to our economy

hence we must discourage farmers and traders from purchasing smuggled products.” Speaking further, Lokpobiri stressed the need to promote and ensure sustainability of the campaign as most of the imported food items poses threat to the human health. “We will continue to encourage and promote this campaign against for consumption of imported items because they are poisonous to our health,” the Minister said. While speaking, Ruth Agbo, Women Wing Leader, National Association of Nigeria Traders stressed the need for government and citizens to rise up against illegal importation of food items into the country.

Monday 21 January 2019

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Monday 21 January 2019

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Monday 21 January 2019

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Trump defends shutdown offer after attacks from conservatives

White House hopes to build support with individual Democrats for deal on wall funding Kiran Stacey

onald Trump hit back at critics from the conservative wing of his own party on Sunday, after his latest attempt to end the longest government shutdown in US history was met with hostility from both Republicans and Democrats. With the president’s poll rating slipping and the US economy showing signs of strain, Mr Trump made an unexpected offer on Saturday to extend protections offered to some undocumented immigrants in return for $5.7bn in funding for a wall along the border with Mexico. But before the offer was even formally made, it was rejected outright by Democratic leaders. Within hours Mr Trump faced attacks from his own supporters on the right. Ann Coulter, a conservative pundit, who has pushed Mr Trump to take a hard line on immigration, on Saturday compared the president to Jeb Bush, one of the centrist candidates he defeated in the Republican primary race two years ago. Ms Coulter tweeted on Saturday night: “Trump proposes amnesty. We voted for Trump and got Jeb!” Mr Trump defended his offer on

Sunday. Referring to the protections given to those who entered the US as children without documentation, he tweeted: “No, Amnesty is not a part of my offer. It is a 3-year extension of DACA [Deferred Action for Childhood Arrivals]. Amnesty will be used only on a much bigger deal, whether on immigration or something else.” With Mr Trump’s room for manoeuvre also penned in by his critics on the right, the administration is hoping they can appeal instead to individual Democrats to break with their leadership. Mike Pence, the vice-president, on Sunday told Fox News: “The president has been sitting down and talking to rank and file Democrats. We’ve been in contact with Senate Democrats and the president has told us to listen.” He told CBS News that he would be willing to amend Mr Trump’s proposals on the floor of the Senate if Democrats came forward with their own suggestions The president’s televised offer was the first sign that he is willing to compromise in the four-week long stand-off that has brought large parts of the government to a standstill and left some 800,000 workers without pay. As the shutdown enters its fifth

French influence raises issue of decolonisation in Madagascar Behind the political theatre is the shadow of France’s continued involvement

Nanjala Nyabola

n January 8, the High Constitutional Court of Madagascar confirmed that Andry Rajoelina, a former radio DJ and mayor of the capital city, Antananarivo, was duly elected president of the island nation. Outside Madagascar, the information barely registered. But on the island it was another twist in more than a decade of political theatre. Mr Rajoelina becomes the eighth president of Madagascar since independence in 1959. Among the eight, one was deposed by Mr Rajoelina, another was impeached, yet another served for only six days before he was assassinated in a coup orchestrated by a fourth, Didier Ratsiraka, who remains the only Malagasy leader to fully complete a second term in office. Mr Rajoelina is Mr Ratsiraka’s protégé and in 2009 he was the face of the coup that deposed his main 2018 electoral rival, Marc Ravalomanana, barely two years into the latter’s second term. Given Mr Rajoelina’s scant political pedigree, many Malagasy people believe that Mr Ratsiraka was behind his ascent. Mr Ratsiraka looks like the quintessential authoritarian. But to some sections of the public he represents a period of stability they remember fondly. This perhaps explains why, despite serious questions around Mr Rajoelina’s victory, pro-Ravalomanana protests have been relatively poorly attended. Behind the chess match is the shadow of continued French involvement on the island — a pat-

tern across France’s former African colonies that raises the question of just how constructive its foreign policy in Africa is. It is worth noting that after the 2009 coup almost all other countries reduced full diplomatic relations with Madagascar in protest but not France. When members of the military mutinied to protest at orders to shoot at opposition supporters, Mr Rajoelina received protection at the French embassy. France retains a strong footprint in public life in Madagascar. The largest constellation of Alliance Française cultural centres in a single African country is in Madagascar. This network is important to the promotion of contemporary culture, but some Malagasy people see it as an extension of the cultural colonialism that made political colonisation possible. Madagascar is experiencing an intense version of the classic post-colonial question: can political progress be achieved when decolonisation is incomplete? In 2002, Mr Ratsiraka lost resoundingly to Mr Ravalomanana, also a former mayor of Antananarivo. A crisis ensued when he refused to accept defeat. Mr Ravalomanana, an anglophile Christian, was nonetheless soon recognised as the island’s rightful leader, quickly attracting American support. Under Mr Ravalomanana, the amount of US aid increased dramatically. Some analysts have argued that this aid directly undermined many francophone business and political interests, eventually leading to the formation of a clandestine network that bankrolled the 2009 coup.

AU chair and Rwanda’s president, Paul Kagame, right, gestures at the start of a high-level consultation meeting with fellow African leaders on the DR Congo election at AU headquarters in Addis Ababa on Thursday © AFP

week, the economy has started to suffer, with businesses in areas of high government employment reporting reduced revenues and demand at food banks increasing. Meanwhile polls suggest most voters blame Mr Trump for the failure to reopen government. The president proposed reopening the government if the Democrats agreed to spend $5.7bn on a border

wall in return for a three-year extension for the protections offered to both those who qualify for Daca and those with temporary protected status. Senators will on Tuesday vote on those proposals, although they are unlikely to pass. Chuck Schumer, the leader of the Democrats in the Senate, said on Saturday: “It was the president who

single-handedly took away DACA and TPS [temporary protected status] protections in the first place — offering some protections back in exchange for the wall is not a compromise but more hostage taking.” The Democrats have insisted that Mr Trump reopen the government before discussing border security and have also said they will not contemplate funding for a border wall.

EU seeks to keep Iran nuclear deal alive despite US pressure Bloc seeks to kick-start payments channel while stepping up sanctions against Tehran Michael Peel

ermany, France and the UK are scrambling to win EU backing for a dual pronged approach on Iran that would threaten Tehran with further sanctions while shoring up the landmark nuclear deal with the Islamic republic. The three powers want to agree a common EU position ahead of a February 13-14 meeting on Middle Eastern security that has been jointly convened by the US and Poland. Some European ministers see the Warsaw gathering as an attempt by Washington to push the bloc towards a more hawkish line on Iran. But the EU is also seeking to reconcile its efforts to preserve the nuclear pact with anger among member states over alleged Iranian assassination plots on European soil. While Iran has denied all involvement, the EU imposed sanctions this month over alleged conspiracies to murder opposition figures in France and Denmark. In a recent letter the Netherlands accused Tehran of two killings of Dutch nationals of Iranian origin in 2015 and 2017 and European authorities have carried out arrests over a failed bombing of an Iranian opposition group near Paris last year. “We need to accept that the [nuclear deal] is important and it has been a signal achievement,” said one EU diplomat supportive of the moves to hammer out a

new consensus in the 28-member bloc. “Equally, we need to stress that there are real reasons to be concerned about what Iran has been doing — and we need to apply pressure.” Diplomats said potential sanctions back up for discussion included travel bans and asset freezes over Iran’s missile programme and its support for armed groups in Syria, Yemen and Lebanon. Germany, France and the UK — all of which signed the 2015 nuclear accord — planned missile programme sanctions against Tehran early last year, shelving the idea when it failed to stop US president Donald Trump leaving the atomic agreement. But technical problems and continuing differences over the new policy’s mix of carrots and sticks mean that ministers are unlikely to agree a joint statement on Monday. One obstacle is the long-delayed launch of a planned special European non-dollar financial channel to shield trade with Iran from US sanctions. Diplomats see this as crucial to persuading Tehran to stay in the nuclear deal after Washington pulled out last year. But many EU countries were nervous that any involvement would provoke retribution from the US. The trade channel is now envisaged to be set up within weeks. It would be based in France, headed by a German and have UK, French and German shareholdings, diplomats said.

European diplomats maintain it is essential for the bloc to have a clear common direction on Iran ahead of a historic first meeting on February 24 and 25 between EU and Arab League foreign ministers. The League’s 22 members include Saudi Arabia and the United Arab Emirates — both noted Iran hawks. The Warsaw meeting organised by the US and Poland is still more pressing. Mike Pompeo, US secretary of state, said this month that an “important element” of the gathering would be “making sure that Iran is not a destabilising influence” in the Middle East. Tehran has formally protested to the Polish government over a gathering that it brands a “hostile act against Iran”. Some other EU countries are also deeply uncomfortable with the meeting, diplomats said. France is unlikely to send JeanYves Le Drian, its foreign minister, while Germany and UK have not yet decided at what level they will be represented, diplomats said. Federica Mogherini, the bloc’s foreign policy chief, will not attend, citing a previous travel commitment, a senior EU official said. “The US move to hold the meeting in Poland intends to strike at the heart of EU unity on Iran policy,” said Ellie Geranmayeh, a Middle East specialist at the European Council on Foreign Relations think-tank. “European member states, particularly stakeholders to the nuclear deal, intend to preserve this unity — and read from the same song sheet at Warsaw.”

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Martin Fayulu, Congo’s outsider scents power

Trump offers deal on immigrants in exchange for wall

Other African leaders have rallied to his cause after huge electoral fraud

Democrats say they will reject president’s offer as longest government shutdown continues

Tom Wilson

Kiran Stacey

onald Trump on Saturday made an offer to end the month-long US government shutdown that would see some undocumented migrants get three years additional protection in return for $5.7bn of funding for a border wall. “Both sides in Washington must come together . . . put down their armour, build trust, reach across the aisle and find solutions,” the president said in a live address from the White House. “I am here today to break the logjam and provide Congress with a path forward to end the government shutdown.” The president said he would extend protection against deportation for undocumented migrants who came to the US as children — a group known as “Dreamers” — for another three years. He also offered a three-year reprieve for immigrants from some Latin American and African countries who have temporary protected status (TPS). But the offer was promptly rebuffed by Democrats, who described it as a rehash of ideas they had previously rejected. “It’s clear the president realises that by closing the government and hurting so many American workers and their families, he has put himself and the country in an untenable position,” said Chuck Schumer, the leader of the Democrats in the Senate. “It was the president who singlehandedly took away DACA (the Deferred Action for Childhood Arrivals status enjoyed by the Dreamers) and TPS protections in the first place — offering some protections back in exchange for the wall is not a compromise but more hostage taking.” Mr Trump’s proposal also included $800m for humanitarian assistance, medical support and new temporary housing, and $805m for drug detection teams at the border, as well as the hiring of 2,750 extra border agents and law enforcement professionals. He said he would hire 75 new immigration judge teams to reduce what he claimed was a backlog in the immigration court of 800,000 cases. The president attempted to recast his request for money for a wall, saying that it would not be a “2,000 mile concrete structure from sea to sea”. Instead, he said he wanted to build steel structures wherever there were not already natural barriers, such as forests or mountains, or existing border fences. He called his proposal “a compassionate response to the ongoing tragedy on our southern border”. Mitch McConnell, the Republican leader in the Senate, would put forward the measures in a bill to be voted on next week, he said. Mitt Romney, Mr Trump’s former presidential rival and now a Senator, described the plan as “a reasonable, good faith proposal that will reopen the government and help secure the border.” But it looks sure to struggle in the House, where the Democrats now hold the majority. Nancy Pelosi, the Democratic leader in the chamber, tweeted: “What is original in the President’s proposal is not good. What is good in the proposal is not original. Democrats will vote next week to add additional border security funding for ports of entry, advanced technology for scanning vehicles for drugs & immigration judges.”

Monday 21 January 2019

Congo heads for isolation after rebuffing African Union’s calls Regional group had called to suspend presidential election result Tom Wilson

he Democratic Republic of Congo took a step towards continental isolation on Friday after it rebuffed calls from the African Union to back down from confirming the winner of December’s presidential election. The latest twist in Congo’s election saga followed a Financial Times analysis of leaked polling data on Tuesday that pointed to huge electoral fraud. According to that analysis, opposition leader Martin Fayulu was the clear winner of last month’s vote while Felix Tshisekedi, the rival opposition candidate who was declared the victor, should have finished a distant second. “The heads of state and government attending the meeting concluded that there were serious doubts on the conformity of the provisional results, as proclaimed by the National Independent Electoral Commission, with the votes cast,” the AU said on Thursday. “Accordingly, the heads of state and government called for the suspension of the proclamation of the final results of the elections.” The group, which included the African members of the UN Security Council and representatives from at least six regional bodies, said it would dispatch a high-level delegation to Congo to find a solution to “the post-electoral crisis in

the country”. Congo’s government said the AU had no authority to instruct the country’s constitutional court to halt plans to rule on the outcome of the vote. “No country in the world can accept that its judicial process be controlled by an (outside) organisation,” Lambert Mende, government spokesperson, told Reuters. The robust AU intervention sets up an inevitable confrontation between the African leaders and the Congolese government. The constitutional court was set to rule on the election this weekend and Mr Tshisekedi’s inauguration is scheduled for Tuesday. If Congo ignores the regional body and pushes ahead, the possibility that African leaders would refuse to recognise the new president is strong, and other governments would probably follow their lead. The EU said on Friday that it backed the AU’s intervention and called on the Congolese to co-operate with the incoming AU delegation. Congo is a vast country of 80m people and a big producer of copper and cobalt, an essential ingredient in smartphones and electric vehicles. With President Joseph Kabila stepping down after 18 years in power, December’s vote was set to be the country’s first transfer of power via the ballot box. Mr Fayulu has challenged the election results at the constitutional court, but until now few observers believed that the body,

which was set up by the outgoing president, would rule in his favour. Mr Fayulu’s supporters alleged that, when voters failed to come out in enough numbers for Mr Kabila’s chosen successor Emmanuel Shadary, who finished third, the election commission was told to install Mr Tshisekedi instead. “The African Union publicly stating that there are serious doubts about the veracity of a member’s announced election results and calling for a suspension of the certification process is new territory,” said a senior western diplomat. “Even couched in diplomatic language the communiqué is a bombshell.” The announcement from the meeting chaired by Paul Kagame, Rwanda’s president, was starkly different from the position taken by the smaller Southern African Development Community earlier in the day. “We believe that the situation in the DRC has been managed and handled well and international constitutional processes are ongoing,” SADC said. “Any electoral grievances must be addressed in line with the DRC constitution and relevant electoral laws.”. Representatives from SADC, an inter-governmental group of 16 African countries including Congo, also participated in the wider AU meeting but it is not clear whether they changed their position or were over-ruled.

Twelve killed in Zimbabwe fuel protest crackdown Government imposes internet shutdown as nation buckles under currency crisis Joseph Cotterill

t least a dozen Zimbabweans have been killed by security forces as Emmerson Mnangagwa’s government reimposed an internet shutdown on the southern African nation buckling under a currency crisis. The Zimbabwe Human Rights NGO Forum said on Friday that it had recorded the 12 deaths as well as dozens of gunshot injuries and hundreds of arbitrary detentions since protests over a sharp rise in fuel prices were put down with brutal force this week. Zimbabwe was descending into “days of darkness”, the civil society group said. The US, EU and the UN have all called for Mr Mnangagwa to end the crackdown, which has rounded

up opposition leaders and activists amid an information blackout. On Friday Econet, Zimbabwe’s largest telecoms company, said it had been “served with another directive for total shutdown of the internet until further notice”. Activists said that the outage provided cover for security forces to carry out violent house searches in several cities. The NGO Human Rights Forum said it had “received disturbing reports of armed security personnel breaking into private homes of citizens, indiscriminately torturing occupants, including children as young as nine years old”. Energy Mutodi, the deputy information minister, denied that there was any shutdown and blamed “congestion” for Zimbabwe’s internet being down. Mr Mnangagwa is a former se-

curity chief elevated to power by Zimbabwe’s army in 2017 after it toppled Robert Mugabe, the country’s strongman of four decades. His pledge to make Zimbabwe “open for business” has been undermined by his ruling Zanu-PF’s failure to tackle severe shortages of US dollars. The shortage and the rapid collapse in the black-market value of government-issued surrogate currencies have led to surging prices for basic items and misery for ordinary Zimbabweans. Mr Mnangagwa’s decision to more than double fuel prices overnight triggered this week’s demonstrations, which included trade unions calling for workers to stay at home. The protests were unusually widespread and analysts said that they appeared to reflect growing desperation of the country’s urban poor.

artin Fayulu may be the most wronged man in world politics. The oil executive turned political leader won the Democratic Republic of Congo’s historic presidential vote last month by a massive margin only for the country’s electoral commission to declare someone else the victor. The huge electoral fraud, uncovered this week by the Financial Times, threatens to halt a remarkable rise for the former Exxon Mobil man. But if Congo’s rightful president-elect feels aggrieved he shows no signs of bitterness — yet. “I won’t let the victory of the Congolese people be stolen,” he says over a patchy phone line from the heaving riverside capital, Kinshasa. “If they don’t get the truth now, no one will trust any election ever again.” Mr Fayulu is a rare breed among senior Congolese politicians, most of whom sit at the head of a large party or have ricocheted between opposition groups and government posts as the giant copper-producing country has lurched from crisis to crisis. Elected to the capital’s provincial assembly and the national parliament in 2006, much of Mr Fayulu’s political career has been spent mobilising grassroots support in the country’s biggest city — a warren of teeming slums, pulsating music and crumbling colonial villas. The political party he formed in 2009 had only three seats in parliament before last month’s election. Its scruffy headquarters opposite the country’s national stadium was often without electricity, cloaked in darkness. During the election campaign, though he sat at the head of a popular coalition, his rivals said he was a marginal figure who lacked experience in public office. For many Congolese people, who have suffered for years at the hands of corrupt and self-serving officials, it was his very status as an outsider that meant they voted for him. The FT’s analysis of two separate sets of voting data showed Mr Fayulu won 59.4 per cent of the vote — a conclusion supported by the election observation mission run by the country’s Catholic Church. “Martin has spent less energy making his case to internationals than earning the respect of the Congolese people, who feel sold out by the entire political class,” says Tom Perriello, a former US Special Envoy to Congo. “I was always struck in meetings how he focused on principles, not personal gain. That’s rare in any country, including my own.” It would be a game changer in Congo, a nation created at the end of the 19th century as the personal fiefdom of the Belgian King Leopold II that has been plundered to enrich its leadership ever since. Born in Congo’s capital in 1956 in the final years of Belgian rule, Mr Fayulu was the seventh of eight children. His father was employed at a Belgian-Congolese industrial plant and his mother was a market trader, hawking home-made doughnuts and other goods. The family was lower-middle-class at best, he says, and after his parents divorced he made it to university in Paris only through the generosity of his extended family.

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Huawei chief warns of job losses amid 5G security concerns Ren Zhengfei says tech group must prepare for ‘times of hardship’ Kathrin Hille

en Zhengfei, founder and chief executive of Huawei, has publicly warned of job losses as several more governments bar the embattled Chinese technology group from supplying equipment for 5G networks. “In the coming years, the overall situation will probably not be as bright as imagined, we have to prepare for times of hardship,” Mr Ren said in an email to staff. He added that goals found to be unrealistic needed to be revised. “We also need to give up some mediocre employees and lower labour expenses.” The warning comes as security concerns over Huawei are snowballing across the western world. The detention of Meng Wanzhou, Huawei’s chief financial officer and Mr Ren’s daughter, in Canada on a US extradition request in December and the arrest of a Huawei executive in Poland on allegations of spying for Chinese intelligence earlier this month have fuelled western suspicions of the group. Germany last week became the latest country to indicate that it would not allow Huawei equipment to be used in its 5G rollout. In the US a bipartisan group of lawmakers proposed legislation that would ban the sale of American semiconductors and other electronics components to Huawei and ZTE, in what would be a re-introduction and expansion of earlier sanctions against the Huawei rival. Mr Ren, a former People’s Liberation Army officer, issued his warning

about a rocky road ahead at an internal cadre management seminar in November. But the CEO’s office sent it out to all staff and published it on Huawei’s online community on Friday, as the company stepped up its efforts to manage the growing crisis. “5G cannot possibly become as easy as 4G,” said Mr Ren in a speech peppered with military jargon and war metaphors. “Maybe a mine will go off here and there,” he said. “And even if there won’t be a big explosion all over the place, we will still need to feed 180,000 staff. Wages, salaries and dividends amount to over US$30bn a year.” Huawei’s revenues are expected to have grown to $100bn last year from less than $1bn 20 years ago. Mr Ren suggested in his message that the days of uncontrolled growth were over. “Things went too smoothly for us in the last 30 years,” he said. “We were in a phase of strategic expansion, our organisation expanded in a destructive way. We have to review carefully if all geographical subsidiaries are efficient. […] In order to achieve overall victory, we need to conduct some organisational streamlining.” In a message to human resources executives delivered last October, also sent out on Friday, the Huawei chief called for a “revolution” at the entire company. The tough messages come only days after Mr Ren, who normally shuns media attention, swung into action to rebut the US’s allegations against his company in a rare interview with a group of international journalists.

Market delivers humiliating verdict on Dell Languishing equity price means core computer business is valued at less than nothing Mark Vandevelde and Sujeet Indap

nvestors have delivered Michael Dell a humiliating verdict on his company’s return to the stock market, where the computer maker’s core business is now reckoned to be worth less than nothing. Dell shares have closed below $49 every day since they began trading in late December, despite the technology company — which was taken private in 2013 by Mr Dell and private equity firm Silver Lake — previously telling investors that a fair price would be far higher. The disappointing valuation follows activist investor Carl Icahn’s warning that Dell was using “magical accounting” when it mooted a potential share price of $79.77, in what he said was an effort to “hoodwink” investors into giving up their holdings of a security that traded under the symbol DVMT. Holders of that security, which was supposed to track the value of shares in a fast-growing software company called VMware, eventually consented in December to swap them for new Dell shares after the computer company sweetened the terms. A month later, Dell’s equity is worth $33bn, significantly less than the company’s financial assets, which include $52bn of holdings

of shares in three publicly traded affiliate companies, including VMware. That implies that investors place a negative value on Dell’s core business selling computers and IT services. This bruising stock market debut is now the backdrop for a planned transaction in which one early Silver Lake investment fund will sell some of its Dell shares to the private equity firm’s newest fund. The price is to be calculated by averaging its trading performance over a period of days. That transaction, originally announced in October, is intended to allow Silver Lake to hold on to its Dell stake even after the liquidation of the early fund, through which it originally took control of the company in a buyout in 2013. It is not clear how many Dell shares will move between the two Silver Lake funds. Some of the investors in the early Silver Lake fund are expected to retain their shares instead of selling them to the new vehicle, according to securities filings. Analysts broadly expect Dell shares to appreciate over time, especially if President Donald Trump lifts the threat of an extended US government shutdown and other macroeconomic headwinds subside.

Heady returns for Burgundy investors as index climbs a third

Growing demand and scarcity saw the wines outperform equities and gold last year Emiko Terazono

nvestors in burgundy wines will be toasting their gains after the fine wines outperformed equities and gold last year. The index that tracks the movements of the most actively traded wines from the Burgundy region on the secondary market, the Livex Burgundy 150, jumped 35 per cent last year, setting a record high in November, before falling back slightly in December. This compared with pound-denominated gains of 5 per cent for gold and a 12 per cent fall for the FTSE 100 last year. Growing worldwide demand in wines from France’s Burgundy region has pushed prices to dizzying heights during the past few years. The scarcity of supplies from the region due to bad weather has also fuelled the increase in prices. Interest from Asian buyers — including the Chinese, who had previously deserted the fine wine market after Beijing’s anti-corruption and austerity campaigns

— has also been high, according to wine experts. Once solely focused on the top Bordeaux red wines, Chinese fine-wine buyers have matured and are diversifying into other producing regions, including Burgundy. “Within the fine wine world, Burgundy is regarded as the final destination,” said Justin Gibbs, cofounder of Liv-ex, the online wine exchange. With more than 400 of the world’s largest wine merchants as members, the exchange’s indices serve as a proxy for the whole market. The interest from oenophiles for burgundies has been such that auctions for the wines have been breaking records. Most recently, Sotheby’s auctioned two bottles of Romanée Conti 1945 at record prices — one for $558,000 and another for $496,000. The momentum behind burgundies has meant that the Burgundy 150 has jumped almost 170 per cent since 2010, compared with a 19 per cent rise in the Livex Bordeaux 500 and a 7 per cent

decline in the Liv-ex 100 broader fine wine benchmark. However, there are signs that the market may be peaking, said Mr Gibbs. The number of burgundies traded on the secondary market, which has been rising since 2009, fell for the first time last year to 847 from 878 in 2017. If the broadening of the market has stopped, this could be an indicator that growth in the region’s share of overall fine wine trading has reached its highest point, according to wine experts. While the high prices have brought more sellers to the market, pushing up the “offer” or the selling price for the wines, there are fewer buyers willing to chase prices up to these levels. “You’re running out of people who can pay the higher prices,” said Mr Gibbs. The test for the market will come from the 2017 vintage, which is being marketed this month. After several years of poor harvests due to bad weather, that year’s production is set to be the largest since 2009.

Buffett’s lithium venture promises secure supply for US carmakers Berkshire Hathaway’s geothermal wells could produce up to 90,000 tonnes a year Henry Sanderson

arren Buffett’s Berkshire Hathaway has made a move into lithium, signing an agreement to allow extraction of the battery mineral from its geothermal wells in California. The venture hopes to produce up to 90,000 tonnes of lithium carbonate a year from Berkshire’s Salton Sea geothermal plants, worth $1.5bn at current prices, according to a fundraising document. It has been in discussions to supply Tesla with lithium, a component for batteries to power electric cars, said people familiar with the company. If successful, the project could offer US carmakers and battery producers a secure supply of the metal, reducing reliance on the handful of large producers in Chile and Australia. The only current US supply comes from the Silver Peak mine in Nevada, run by Albemarle. “We see a lot of interest in getting

North American supply as automakers start to get further into electric vehicles,” said Eric Besseling, a vicepresident at BHE Renewables, a unit of Berkshire Hathaway Energy. He declined to comment on any agreement with Salton Sea Industries. The Salton Sea geothermal plants have “the potential to become one of the world’s largest lithium resources rivalling the Lithium Triangle in Chile and Argentina,” according to a fundraising term sheet seen by the Financial Times. Tesla has shown interest in the potential of the Salton Sea before. In 2014 the carmaker run by Elon Musk made a $325m bid to acquire Simbol Materials, a company that was looking at extracting lithium from the area’s geothermal plants, but that offer was turned down by the company. Lithium prices have fallen by 17 per cent over the past year, as new supply from mines in Australia has entered the market. But analysts expect demand for

lithium to more than double by 2025 as electric cars become more affordable. “The technology risk is apparent but the upside should this work and disrupt the lithium industry’s traditional production base and timelines in getting new supply into the EV battery space is too great not to explore,” said Simon Moores, managing director at Benchmark Mineral Intelligence in London. Berkshire Hathaway Energy has licensed the right to extract lithium from its 10 geothermal facilities in the Salton Sea to a newly formed company, Salton Sea Industries, which is initially looking to raise $20m in a private placement. The project will eventually cost $2.5bn, the company estimates. Mr Besseling said initial projections show that, if the technology works, the cost of production could be as cheap as the lithium produced in Chile — currently among the lowestcost production in the world.

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Monday 21 January 2019

ANALYSIS Ireland rejects bilateral Brexit border proposal

Liam Fox floats ‘alternative mechanism’ to backstop Henry Mance and Arthur Beesley

Investment banking: The battle for Barclays

The UK lender has wrangled for decades over whether to maintain its investment bank. Now an activist investor is trying to force the issue David Crow and Stephen Morris

es Staley does not act like a man under siege. He comes across as confident and relaxed, but his breezy demeanour belies the fact that Barclays, the bank he has run as chief executive since December 2015, is the target of the most audacious assault by an activist investor on a UK company in recent history. At stake is the future of Britain’s last remaining global investment bank, which Mr Staley has pledged to protect in the face of an onslaught by Edward Bramson, arguably one of the most successful forces in British activist investing. Mr Bramson is campaigning for the investment bank to be scaled back, claiming Barclays would do better to focus on its UK retail operation and its credit card business. The bank first revealed that Sherborne, Mr Bramson’s investment vehicle, had built a stake in March 2018, during what was already shaping up to be a tumultuous year for Mr Staley. He was censured by regulators in the UK and US for trying to unmask a whistleblower who accused him of covering up the personal problems of a former colleague he subsequently hired at Barclays. After narrowly surviving that scandal — which cost the bank $15m in fines — Mr Staley is confident he will prevail in the fight with Mr Bramson. “Having a major player in the global capital markets that is British is an advantage, I think, for Barclays, for our investors, and for the UK overall,” he said in a recent interview on the top floor of Barclays’ Canary Wharf tower. Following several months of polite stalemate, Mr Bramson in December stepped up his campaign to use his 5.5 per cent stake in Barclays to force his way on to the board and engineer a shift in strategy. An initial attempt to secure a board seat was rebuffed by the bank’s directors in November, and Mr Bramson, the company’s fourth largest investor, now plans to take his fight directly to other Barclays shareholders already frustrated over the slide in the share price under Mr Staley. It sets the stage for a bitter, months-long proxy war that could be decided by a vote at the company’s annual meeting in May. “This could go either way,” says Philip Augar, author of The Bank that Lived a Little, a book about Barclays. “It will only be settled by Barclays demonstrably succeeding at investment banking, or it failing so badly that shareholders demand

it gets out.” The battle has implications not just for Barclays and the City of London, but also for Europe’s financial services industry, given that it comes at a time of retrenchment among most of the continent’s global investment banks. RBS, once a major force in capital markets, has vacated the space, while Deutsche Bank, Credit Suisse and UBS are dramatically pulling back. Meanwhile, US players like JPMorgan and Goldman Sachs are becoming ever more dominant in European trading and deal making. “Will Europe have any global banks left?” asks Ronit Ghose, banks analyst at Citi. Some investors are wary of American hegemony at a time of tensions over global trade and rising nationalism. “Corporates will want to use a European investment bank,” says Richard Buxton, a veteran fund manager and long-term Barclays shareholder now at Merian Global Investors. “There is an argument for having [one] that is not subject to the whims of the US president”. The internal fight over Barclays’ global investment strategy has raged for three decades with one shareholder likening it to dancing the hokey cokey — “they have been inout, in-out”, he says. With “Big Bang” deregulation imminent, the group merged its merchant bank with stockbroker Zoete & Bevan and market maker Wedd Durlacher in 1985 to create BZW. Little more than a decade later, it broke up the poorly-performing division and sold off large chunks to Credit Suisse, leaving Barclays without a presence in equities trading or a mergers and acquisitions practice. During the depths of the 2008 financial crisis, Barclays revived its interest in global investment banking by purchasing the US operations of Lehman Brothers out of bankruptcy, while also building a large European operation. Bob Diamond, the architect of that expansion, became chief executive in 2011 only to be ousted less than 18 months later — a casualty of the bank’s role in the Libor scandal. More recently, Mr Staley’s predecessor, Antony Jenkins, tried to shrink the investment bank, having concluded it could not make decent returns in the post-crisis regulatory environment, where trading is treated as inherently hazardous. Mr Jenkins wanted to reduce the division’s risk-weighted assets — a measure of a bank’s assets adjusted for how risky they are deemed by regulators — from £122bn at the end of 2014 to

£80bn, and then halve them again to just £40bn, according to a person briefed on the plan. But Barclays’ directors got cold feet. Mr Jenkins lost out in a boardroom showdown and was fired in July 2015, opening the way for Mr Staley to take over. Today, the corporate and investment banking division — an amalgamation of the investment bank and the unit that lends to large businesses — accounts for £176bn in risk-weighted assets versus £75bn at the retail bank. During the Jenkins era investment bankers at Barclays became dispirited, according to several people who worked there at the time. One former employee says the only contact they had with the former chief executive was a “regular memo” demanding that they shrink the size of their trading book. But under Mr Staley, a Bostonborn trader who spent three decades at JPMorgan, the division has regained its verve. Some at the bank date that change to the arrival in 2017 of Tim Throsby, a former head of equities at JPMorgan, to run the division. Barclays subsequently stepped up its recruitment, bringing in 55 managing directors from rivals such as Goldman Sachs and Credit Suisse. It is also investing £500m in new technology, in part to improve its electronic trading platform. In more than a dozen interviews, executives and managers at the investment bank say morale improved dramatically once Mr Staley killed the debate over the future of the unit. Stephen Dainton, the bank’s global head of equities, says Mr Staley has replaced “inconsistency” with “equilibrium”. He says his unit now has the right level of resources but that the bank needs to stop flipflopping on its strategy. “If you look at what separates [Premier League football champions] Manchester City from Manchester United, it is more consistent execution.” In the third quarter, revenues at the bank’s equities and fixed income trading units grew by 35 per cent and 10 per cent year on year, respectively, outpacing most rivals. However, given the poor performance of some of its Wall Street rivals in the fourth quarter, Barclays may struggle to sustain that kind of improvement. And the corporate and investment bank is still struggling to generate good returns. Its return on equity — a key measure of profitability — stood at 6.6 per cent in the third quarter versus 20.1 per cent at the UK consumer bank division.

he UK has floated the idea of a bilateral deal with Ireland as part of its Brexit plan B but the Irish government immediately rejected it. Liam Fox, the international trade secretary, said on Sunday that the UK was looking for “an alternative mechanism” to reassure Dublin that there would be no hard border on the island of Ireland after Brexit. The EU-UK withdrawal agreement was voted down by the UK parliament last week, partly because of Eurosceptics’ concerns about the so-called backstop, which would keep Northern Ireland in a customs union with the EU in order to avoid border checks. The Irish foreign ministry said on Sunday there had not been “any official request for a bilateral treaty” to replace the backstop. A government spokesman insisted that such ideas would not be entertained.

“Ireland negotiates as part of the group of 27 European nations,” he said. Simon Coveney, Ireland’s deputy premier, stressed in a tweet on Saturday the Irish government’s “absolute” commitment to the entire withdrawal agreement, “including the backstop to ensure, no matter what, an open border between Ireland and Northern Ireland” is kept open. EU officials dismiss the idea of a bilateral UK-Irish treaty, arguing that such a text could not cover crucial governance issues for the bloc’s external border or address areas of exclusive EU competence. A similar proposal to the one suggested by Mr Fox was previously backed by the former UK Brexit secretary, Dominic Raab, but did not come to fruition. Leo Varadkar, Irish prime minister, and Philip Hammond, UK chancellor, are scheduled to appear together on a panel this week at the World Economic Forum in Davos. Mrs May will present a revised Brexit plan to parliament on Monday. Tory and Opposition MPs have expressed dismay at the prime minister’s failure to move her red lines so far, although their precise demands are contradic-

tory. Many Eurosceptics want Mrs May to limit the backstop and to rule out delaying the UK’s March 29 departure date from the EU. Europhiles want her to rule out the possibility of a no-deal Brexit and to keep the UK in a customs union with the EU. Mrs May’s statement to parliament on Monday is likely to focus on the process by which she expects to develop a new strategy rather than substantive changes to her existing deal. Keir Starmer, Labour’s shadow Brexit secretary on Sunday accepted that any Brexit deal “probably does require a backstop”. He also suggested that Labour’s demand of a general election was no longer “realistic”, because Tory MPs would not vote for it. Sir Keir told the BBC’s Andrew Marr Show that “the options are now in effect down to two”: a close economic relationship with the EU, and a second referendum.

His comments seem designed to increase pressure on Labour leader Jeremy Corbyn, whose preference remains to push for a general election, even though Labour failed this week to pass a no-confidence vote in the government — the necessary first step. Labour’s official policy, agreed at last year’s party conference, is to push for all options remaining on the table, including a second referendum, if the party “cannot get a general election.” Despite the failure of last week’s confidence vote, speculation about a general election has risen in Westminster, with former Tory leader William Hague saying the media has under-reported the prospect. David Lammy, a Labour backbencher backing for a second referendum, warned that Labour could split because some pro-EU MPs are “so frustrated [with Mr Corbyn that they might] go off and form another party”. “The danger is, just like 1983, a new party built around a relationship with Europe keeps the Labour party out of power for a generation,” he told Sky News, referring to the period after Labour breakaways founded the centrist Social Democratic party.

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Live @ the Stock exchange Prices for Securities Traded as of Friday 18 January 2019 Company

Symbol

Deals

Current Price

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 161,996.64 5.60 -2.61 201 15,869,145 UNITED BANK FOR AFRICA PLC 249,655.78 7.30 -2.67 164 10,478,395 ZENITH BANK PLC 675,024.62 21.50 -0.92 374 49,699,742 739 76,047,282 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 262,035.64 7.30 -0.68 188 11,786,119 188 11,786,119 927 87,833,401 BUILDING MATERIALS DANGOTE CEMENT PLC 3,321,194.89 194.90 2.58 54 478,781 LAFARGE AFRICA PLC. 111,019.88 12.80 1.99 86 1,300,888 140 1,779,669 140 1,779,669 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 338,944.07 576.00 - 15 11,721 15 11,721 15 11,721 1,082 89,624,791 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 15,876.20 5.95 - 1 147 UPDC REAL ESTATE INVESTMENT TRUST 1 147 1 147 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 3,312.39 103.20 - 0 0 VALUEALLIANCE VALUE FUND 0 0 0 0 1 147 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 5,000 OKOMU OIL PALM PLC. 78,220.62 82.00 - 9 79,352 62,000.00 62.00 - 12 91,826 PRESCO PLC 22 176,178 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,440.00 0.48 -9.43 12 325,849 12 325,849 34 502,027 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 820.66 0.31 6.90 7 386,020 JOHN HOLT PLC. 186.79 0.48 - 4 26,383 1,903.99 2.93 - 0 0 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 51,622.95 1.27 -1.55 37 3,084,102 25,355.41 8.80 - 30 62,594 U A C N PLC. 78 3,559,099 78 3,559,099 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 37,488.00 28.40 - 26 67,797 165.00 6.60 - 0 0 ROADS NIG PLC. 26 67,797 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,287.35 1.65 - 5 5,344 5 5,344 31 73,141 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,135.72 1.55 - 1 100 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 155,517.18 71.00 - 37 65,394 INTERNATIONAL BREWERIES PLC. 260,024.82 30.25 - 5 6,825 NIGERIAN BREW. PLC. 647,749.07 81.00 2.86 70 372,600 113 444,919 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 32,750.00 6.55 1.55 34 501,384 DANGOTE SUGAR REFINERY PLC 174,000.00 14.50 -0.34 28 226,105 FLOUR MILLS NIG. PLC. 79,752.38 19.45 - 35 162,591 HONEYWELL FLOUR MILL PLC 9,833.45 1.24 -2.42 22 671,308 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 703.89 3.95 - 2 2,099 NASCON ALLIED INDUSTRIES PLC 47,689.89 18.00 - 9 10,736 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 130 1,574,223 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,782.02 10.00 - 15 64,083 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 3.49 36 106,742 51 170,825 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,690.67 4.50 - 22 108,100 22 108,100 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 47,050.15 11.85 - 21 164,697 UNILEVER NIGERIA PLC. 212,565.20 37.00 -0.27 38 5,918,541 59 6,083,238 375 8,381,305 BANKING DIAMOND BANK PLC 48,636.82 2.10 -0.47 120 72,177,497 ECOBANK TRANSNATIONAL INCORPORATED 256,893.72 14.00 1.45 42 5,196,289 FIDELITY BANK PLC 58,239.34 2.01 0.50 87 15,543,435 GUARANTY TRUST BANK PLC. 940,326.18 31.95 -1.39 363 46,258,001 JAIZ BANK PLC 14,732.12 0.50 -7.41 34 4,136,225 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 57,868.74 2.01 0.50 31 3,421,851 UNION BANK NIG.PLC. 196,565.08 6.75 9.76 58 1,047,476 UNITY BANK PLC 10,637.30 0.91 9.64 4 162,859 WEMA BANK PLC. 23,916.17 0.62 1.64 48 2,497,131 787 150,440,764 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 500 4,366.03 0.63 -1.56 18 486,810 AIICO INSURANCE PLC. AXAMANSARD INSURANCE PLC 19,530.00 1.86 - 9 151,470 CONSOLIDATED HALLMARK INSURANCE PLC 2,660.00 0.38 - 0 0 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 5 1,086,972 2,411.47 0.53 - 0 0 GOLDLINK INSURANCE PLC GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 GUINEA INSURANCE PLC. 1,412.20 0.23 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 5 172,804 2,148.17 0.50 -5.66 2 464,844 LAW UNION AND ROCK INS. PLC. LINKAGE ASSURANCE PLC 4,480.00 0.56 -5.08 7 411,830 1,680.00 0.21 - 4 566,953 MUTUAL BENEFITS ASSURANCE PLC. NEM INSURANCE PLC 13,095.65 2.48 9.73 23 836,500 NIGER INSURANCE PLC 1,857.48 0.24 - 2 6,346 2,691.28 0.50 - 3 25,714 PRESTIGE ASSURANCE PLC REGENCY ASSURANCE PLC 1,467.13 0.22 10.00 9 1,553,925 SOVEREIGN TRUST INSURANCE PLC 2,168.61 0.26 8.33 52 11,804,844 4,483.72 0.48 - 0 0 STACO INSURANCE PLC STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 2 10,280 2,800.00 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 3,050.67 0.22 - 1 50,000 WAPIC INSURANCE PLC 5,353.10 0.40 -4.76 47 6,566,483 190 24,196,275 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,338.49 1.46 - 4 27,902 4 27,902

Company

Symbol

Deals

Current Price

Trades

Volume

MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 2,945.73 0.26 -7.14 1 100,000 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 100,000 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 - 23 77,919 CUSTODIAN INVESTMENT PLC 37,938.02 6.45 9.32 41 1,108,290 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 34,852.77 1.76 -3.30 64 6,128,837 ROYAL EXCHANGE PLC. 1,389.25 0.27 3.85 19 1,940,335 STANBIC IBTC HOLDINGS PLC 481,305.99 47.00 - 16 386,656 UNITED CAPITAL PLC 18,120.00 3.02 -4.73 79 2,311,178 242 11,953,215 1,224 186,718,156 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 2 918 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 959.35 0.27 -6.90 8 358,592 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 1 528 1 528 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,425.00 4.95 - 1 50 GLAXO SMITHKLINE CONSUMER NIG. PLC. 14,350.52 12.00 - 27 194,974 MAY & BAKER NIGERIA PLC. 2,401.00 2.45 - 5 248,926 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,272.44 0.67 9.84 25 1,283,276 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 58 1,727,226 69 2,087,264 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 - 2 600 NCR (NIGERIA) PLC. 648.00 6.00 - 1 1,473 TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 - 0 0 3 2,073 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 1 200 E-TRANZACT INTERNATIONAL PLC 14,952.00 3.56 - 1 100 2 300 5 2,373 BUILDING MATERIALS BERGER PAINTS PLC 2,246.13 7.75 -9.88 9 224,595 CAP PLC 22,050.00 31.50 - 21 109,849 CEMENT CO. OF NORTH.NIG. PLC 329,901.87 25.10 9.13 39 276,420 FIRST ALUMINIUM NIGERIA PLC 654.21 0.31 - 3 29,000 MEYER PLC. 313.43 0.59 - 1 33,000 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 73 672,864 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,170.38 1.80 - 10 90,215 10 90,215 PACKAGING/CONTAINERS BETA GLASS PLC. 27,498.46 55.00 -8.79 10 190,228 GREIF NIGERIA PLC 388.02 9.10 - 0 0 10 190,228 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 10 1 10 94 953,317 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 7 12,231 7 12,231 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. 50.60 0.23 - 0 0 0 0 7 12,231 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 11 2,450,130 11 2,450,130 INTEGRATED OIL AND GAS SERVICES OANDO PLC 55,319.79 4.45 1.14 58 1,836,253 58 1,836,253 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 67,791.91 188.00 - 16 15,867 CONOIL PLC 16,134.39 23.25 - 15 24,343 ETERNA PLC. 5,803.44 4.45 1.14 21 376,157 FORTE OIL PLC. 39,074.43 30.00 -0.50 63 657,452 MRS OIL NIGERIA PLC. 7,055.81 23.15 - 1 5 TOTAL NIGERIA PLC. 66,206.76 195.00 - 15 25,907 131 1,099,731 200 5,386,114 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 19,988.83 2.05 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 2 9,756 2 9,756 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,593.79 4.40 - 2 6,079 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 1 30,000 3 36,079 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,159.77 1.52 - 1 100 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 46,362.46 6.10 - 1 144 TRANSCORP HOTELS PLC 2 244 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 4,000 1 4,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 1 1,500 LEARN AFRICA PLC 941.17 1.22 - 3 61,766 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 862.82 2.00 - 8 70,600 12 133,866 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 447.58 0.27 - 1 33,000 1 33,000 SPECIALTY INTERLINKED TECHNOLOGIES PLC 852.12 3.60 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 0 0 TRANSPORT-RELATED SERVICES GLOBAL SPECTRUM ENERGY SERVICES PLC 4,600.00 5.75 - 0 0 NEWREST ASL NIGERIA PLC 4,533.10 7.15 - 5 13,876 NIGERIAN AVIATION HANDLING COMPANY PLC 5,229.98 3.22 -3.01 76 3,139,423 81 3,153,299

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This is M NEY A daily guide to your Personal Finance

or many people who have devoted their time, resources, and energy to build a business, it is natural that no matter how things get, selling it off would be the last option. For many others, this is not even an option. There are many reasons why a business owner will want to sell his or her business off and they are not farfetched. Some of the reasons include: retirement, burn out from being drained and losing motivation, owners of a business wanting to cash out to reap the rewards of their efforts, health issues, to pursue new ventures, partner disputes caused by interest misalignment, financial challenges like shrinking cash flow, bad business decisions, debt, a decline in profitability as a result of negative industry changes as well as economic and political downturn. At least one of these

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving.

sell top dollar

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If you delay paying the immediate price of preparing your business for sale, you will pay the ultimate price of selling your business at a giveaway price

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Grace Agada

to create sellable value that is in line with your potential buyers’ value requirement. The question therefore is not whether you will sell your business; the correct question is how ready will you be when the time comes? There is nothing wrong in being in a saleready mode; in fact, it is a helpful thing that will help you rack top dollars. Whatever the reason for selling your business is, there are three important questions that you must first answer: How much money do I need to live a life of true financial liberation and wealth? What am I doing in my business today to deliver

Monday 21 January 2019

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

The Solid Positioning your business to Wealth ...even if you don’t think you are ready Messenger things will befall you over the course of your business lifecycle. Therefore, it is important to start preparing before that time comes so that it isn’t too late to get a good deal out of it. Preparing a business for sale can take years of planning and this is the reason you need to start planning now. Most business owners believe that growing their businesses to serve their financial needs and growing a business to sell, are mutually exclusive. But, in fact, both can be accomplished at the same time and is often a much better route to take. Prepare now that you see the light and not when you feel the heat To make this possible, you have to concentrate on preparing your business well ahead of time to enable you find strategic buyers who will best optimize your business potential. You also need to develop scenarios for possible sale. This means determining well in advance, by category or by name, who is a likely buyer of your business, so you can think about why they will buy, what will be attractive to them, and how you might need to adapt your business in advance to fit their preferences. It is not enough to expand your business or create value. You have

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that amount of money to me? If I was an outside investor making a decision to buy my business, what would I need to see or what would need to be in place for me to buy? Your goal as a business owner is to accumulate business wealth as well as assets that have predictable future income that spark the interest of any investor. The main types of asset a business can own that can make it sell at top dollar are usually either two; its present asset and its future asset. Present assets are today’s sales and profits while future assets value include the relationships with your customer initiated today and nurtured to provide several future pay days. Future assets are more important than present assets, because present assets represent only income being spent. However, a future asset is an equity that can be seen and sold to an Investor. Businesses with only present asset values are solely about what the business is doing today to earn income, and because income gets spent as you proceed in a business, businesses with high present asset values are not potential high dollar sales business. On the other hand,

businesses with present asset and future asset structure do the things that earn current income today but also build and own future equity assets. These future equity assets are the things that make businesses valuable because an investor knows that he or she can hit the ground running with cash, almost immediately. Solid wealth is not created from income-only businesses; rather, it is created from owning valuable present and future income generating assets. There are about 14 future assets that you need to create in your business to help you attract potential investors that will buy your business at top dollar when the time is right. To get the 14 future asset info graphics, Send the Text “Send me the Future asset” to 08101860042” to get the list Whether you are planning to sell your business in ten months, ten years or not even planning to sell at all these future business assets will increase the value of your business. You no longer have any excuse not to profit from your years of hard work. These 14 future assets is all you need to kick start your journey to top dollar sales. If you need help implementing any one of the fourteen assets, we have a team of professionals that can guide you. If you delay paying the immediate price of preparing your business for sale, you will pay the ultimate price of selling your business at a giveaway price My name is Grace Agada and my goal is to give you everything you need to create solid, civilized and irreversible wealth as long as there is wealth inside of you. Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

Monday 21 January 2019

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Monday 21 January 2019

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Insight The anatomy of Nigeria’s ‘progressive’ politicians GLOBAL PERSPECTIVES

OLU FASAN Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

olitical ideology or orientation means very little in Nigeria, yet no political label is more widely used than “progressives”. While hardly any Nigerian politician calls himself or herself a “conservative”, several describe themselves as “progressives”. Elsewhere, particularly in the US and the UK, politicians proudly call themselves “conservatives”. Of course, there is a world of difference between conservativism and progressivism, and any allegiance to either must reflect a person’s political beliefs and the party and policies he or she would support. Which is why a Labour Party member would rarely join the Conservative Party in the UK, or a Republican become a Democrat in the US. And, in these countries, voters know what to expect from a conservative or a progressive politician or government. Of course, some could argue that this discussion is otiose considering the fluidity of party affiliation and allegiance in Nigeria. A politician may be loyal to the All Progressives Congress (APC) today and, tomorrow, to the People’s Democratic Party (PDP), and vice versa. Indeed, it’s interesting that virtually all the candidates in the PDP

presidential primaries last year, including the winner, Atiku Abubakar, were in the APC just a few months earlier. But let’s assume that there are Nigerian politicians who genuinely like to describe themselves as progressives, and that, after separating the wheat from the chaff, the APC is essentially a progressive party. So, what attitudes and policies should one expect from Nigeria’s progressive politicians and government? But, first, what is progressivism? Well, progressivism is a philosophy based on the idea of progress and the need to improve the human condition. While conservatism is resistant to radical change, the greatest tool of progressives is reform. Progressives usually see themselves as radical reformers, with a modernising and structuralinstrumental agenda. The periods of greatest reforms in the US and the UK were the periods often described as the “progressive era”. So, a progressive politician or government that is not passionate about reforms is not genuinely progressive. Now, the Buhari government is a “progressive” one, at least by self-definition. But it is not a reformist government. Of course, like all progressive governments, it is statist, believing that government can be a tool for change. As the former British prime minister, Tony Blair, says in his memoir, A Journey, progressive parties always believe that if they have power “they will use it for the benefit of the people; and the more power, the more benefit”.Well, the Nigerian progressive party, APC, has had power for nearly four years, yet there is little evidence that the people have benefitted from the use of that power. This is not because the APC has no good

intentions; its leaders are very religious, some are even preachers. The problem, though, is that the APC’s brand of progressivism doesn’t recognise the relationship between social justice and economic efficiency,

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A key belief of progressives is that the problems of society, such as poverty and inequality can best be addressed by providing good education, a safe environment and an efficient workplace

i.e., if you want to increase common welfare you must run the economy in a way that generates economic prosperity. The APC government is a pro-poor party, pursuing “propoor economics” through social intervention programmes. But progressive governments must be pro-middle-class, pursuing middle-class economics. Tony Blair, a progressive politician, said in his book, referred to earlier, that the old Labour party “wanted to celebrate the working class, not make them middle class”, adding: “But middle class was precisely what your average worker wanted himself or his kids to be”. Think of it, every Nigerian graduate wants a job in which he or she can be well-paid to start a good life, rather than receiving N30,000 (about $82) a month under the government’s N-Power programme, and no market woman wants the indignity of collecting N10,000 (about $27) TraderMoni from government! But graduates can only be

well-paid and market women have money to do real business if the economy is growing and generating prosperity, which can only be achieved through market reforms that spur entrepreneurship and private sector development. Yet, Nigeria’s “progressive” administration is fixated on government-led economic development rather than on private-sector-led growth that creates jobs and reduce poverty. Furthermore, progressive politicians in Nigeria are less concerned about inequality; at best, they want to reduce extreme poverty by giving a pittance to people rather than transform their lives through policies that take them from poverty to prosperity. A key belief of progressives is that the problems of society, such as poverty and inequality can best be addressed by providing good education, a safe environment and an efficient workplace. But how is Nigeria’s progressive government improving the quality of education and healthcare in this country? How is it ensuring a safe environment and reducing the number of people who are working but can’t make ends meet because they are in low-productivity jobs, and because working Nigerians are not earning a living wage, a core belief of progressives? In Lagos State, Nigeria’s model “progressive” state, despite being the fifth largest economy in Africa, with a GDP of $136bn, poverty and inequality are so widespread. According to the World Bank, 2 out of 3 people in the state live in slums, and, in the words of the Financial Times, in Lagos, “Nigerian’s millionaires and billionaires share a city with people living in indescribable squalor”.Progres-

sivism is anathema to elitism, but Lagos State is governed, more or less, in an elitist way. A few years ago, while speaking in London, Dr Kingsley Moghalu, now presidential candidate for the Youth Progressives Party (YPP), took a dig at the elitist nature of Lagos State government’s programmes by asking: “Where is the Eko Atlantic for the poor”, in a reference to the government’s Eko Atlantic project. But if Nigeria’s progressive politicians and government have fallen short of the progressive ideals in terms of expanding the middle class and reducing poverty and inequality, what about institutional and political reforms? As noted earlier, the progressives transformed American politics and government during the first two decades of the 20th century. Similarly, in the UK, most of the institutional and constitutional changes happened under the Labour or Liberal party. In recent years, it was the Labour government of Tony Blair that created devolved governments in the UK, transferring powers to Scotland, Wales and Northern Ireland, and creating a mayoralty for London. The same Blair government created the Supreme Court as a distinct entity from the House of Lords, where the highest court used to sit. Truth is, progressives are principled reformers and modernisers. In Nigeria, however, the “progressives” pay lip service to political and institutional reforms. Take even bureaucratic reforms, has the Buhari government done anything to reform Nigeria’s inefficient public sector, including the seemingly untouchable customs service? Why is President Buhari, a supposed progressive, so opposed to the political restructuring of

Nigeria? Why is it that all the “progressive” politicians who used to advocate restructuring vociferously in their NADECO days have gone quiet, or even changed their tune, now that they are in government? If any party or government should be mobilising Nigerians to reform Nigeria’s federalism, it is the APC and the Buhari government. But Buhari and the APC are the obstacles to restructuring this country. Recently, 71 members of the House of Representatives introduced a bi-partisan bill to return Nigeria to the parliamentary system of government, but Professor Itse Sagay, a presumed progressive, lambasted them, calling those who advocate returning Nigeria to the parliamentary system “ignorant”, “mischief makers” and “foolish”. Appealing to his authority as a constitutional lawyer, Prof Sagay painted a terrible picture of the parliamentary system, using the UK system as an example. But almost everything he said about the UK parliamentary system, including his description of the Speaker of the House of Commons as the figure-head, was wrong. Surely, if he had been following the Brexit issue in the UK, he would have known that the Speaker is not subservient to the Prime Minister, and that the parliamentary system works. Nearly 153 out of the 193 membercountries of the UN, and 32 out of the 50 sovereign states in Europe, practise the parliamentary system. How could a true progressive not see the merit in the parliamentary system? But Nigeria’s progressives say one thing out of government and something different in government. Continue online @ www.businessday.ng

Lessons from the Zimbabwe economic protests ECONOMIST

NONSO OBIKILI Dr. Nonso Obikili is Chief Economist at Business Day.

imbabwe is mired in yet another mini economic crisis which has culminated in protests and a crackdown by the government. What happened this time? Earlier in January the Zimbabwean government decided to increase fuel prices by 150 percent. The Zimbabwean people did not take it too well. I know what you are thinking. Did the government not know that people don’t like fuel price hikes? Have they not

seen this situation play out in many other countries? What were they thinking? On the surface it seems like yet another government taking the people for granted and enacting a policy that has turned the masses against them. But what is the real story here? Zimbabwe like many other countries fixes the prices of some goods like fuel and foreign exchange. In some cases, the country does not actually produce the goods whose prices it fixes. In this instance the Zimbabwean government does not produce any crude oil and it certainly does not print any US dollars. It attempted to fix these prices regardless. Fixing prices is expensive though. Because governments are typically filled with politicians, they always want to make the people happy, sometimes by refusing to adjust prices when they should be adjusted. For example, say the price at which they import fuel goes up by five percent, the typical politician would say “Oh my people will

be unhappy with this increase. Let us see what we can do to protect them.” They then go on to prevent higher prices from transmitting to consumers. As time goes on, the cost of protecting the con-

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if you did that you would be wrong. The real error was fixing them in the first place and refusing to adjust them in tandem with reality

sumer increases and the burden on the government increases as well. Some governments can maintain this burden for a long time but eventually they always get to the point where the burden gets so large that something

has to be done. Essentially they get to the point where they can no longer afford to protect the consumer and large adjustments to prices are needed. The Zimbabwean case is little bit more complicated than this, but the underlying actions were the same. The government while fixing the prices of fuel and its indirect currency, their US bond notes or “zollars” as they are sometimes called, got to the point where it could no longer afford to do so and was faced with no option but to let prices go. Prices for fuel at least. Cue the protests. So, what was the policy error here? You might be forgiven for thinking that adjusting prices and sparking a protest was error. If you did that you would be wrong. The real error was fixing them in the first place and refusing to adjust them in tandem with reality. What policy makers in these countries always fail to realize is that people are generally okay with small price increases. We may grumble and com-

plain but you would struggle to hear of a case where mass protests erupted because prices went up by two percent. A 100 percent increase though and the story is different. The message then for policy makers is obvious. Try to never end up in a scenario where you require big increases in prices overnight. The economy and the polity are always much better off allowing small changes over time than trying to hang on to fixed prices until a day of reckoning. Don’t fix prices but if you must, be smart about it. Like South Africa who has a formula for setting prices for fuel and adjusts prices every month even if the consumers grumble. Why is this story important? If you have followed the Nigerian policy space you would know that we are fixing key prices in Nigeria again and are heading towards the inevitable point where large overnight adjustments are required. The foreign exchange rate has been fixed for almost two years with policy makers clapping for themselves

in spite of significant pressures building as is obvious if you observe the movement in foreign reserves. The prices for fuel and electricity have also been fixed for some time now with pressures building there as well. The NNPC spent an estimated one trillion naira in 2018, maybe more if you add the exchange rate disparity, to keep prices fixed with grumbling coming from the state governors. The consequences of fixing prices for electricity are also clear with the distribution companies and other players in the sector in dire straits. The official line by most politicians is that you can’t heat up the polity by allowing these sharp adjustments before elections. No doubt we will have the same debates about whether or not these prices need to adjust after the elections as well. I hope we correct the real policy error, which is to stop fixing prices in the first place and allow flexibility so that we never end up in a scenario where large adjustments are needed.

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