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news you can trust I ** tuesDAY 21 january 2020 I vol. 19, no 481

Amotekun: Face of future Nigeria as regions opt for self-help Joshua Bassey, Iniobong Iwok, Lagos; Godfrey Ofurum, Aba, & Remi Feyisipo, Ibadan

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he declaration by the Federal Government of Nigeria that the operation of Amotekun, the security outfit set up by the six states of the Southwest, is illegal and that it must cease, is unlikely to lead to its cessation. On the contrary, demand for similar units will rise across the nation.

Amotekun in the Yoruba language means Leopard, a symbol of a relentless fighter. Now, since the governors of Southwest region inaugurated their security outfit early this month and called it by that name, Amotekun has come to represent the yearning for self-defence by Nigerians, who have been traumatised by rising insecurity.

Governor Seyi Makinde of Oyo State declared recently that Amotekun was established to complement the work of the security agencies and bridge the gaps in the security of the geopolitical zone.

He spoke in response to the order by Nigeria’s AttorneyGeneral and Minister of Justice, Abubakar Malami, who days

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Nigeria’s appetite for subsidies shows little sign of waning LOLADE AKINMURELE & DIPO OLADEHINDE

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igeria may be set to throw on a new consumption subsidy despite a long history of the damaging practice that has knocked

As FG plans CNG subsidy as alternative to petrol

investor confidence and deterred economic growth.

Minister of State for Petroleum Resources, Timipre Sylva, said last week that plans were ongoing by the Federal Govern-

ment to expand the use of Compressed Natural Gas (CNG) as an alternative to petrol.

The problem with that plan is not only its lack of viability but also that it may be the start-

Continues on page 38

Inside

IMF maintains 2.5% growth for Nigeria in 2020-2021 P. 2

3M 0.00 2.19

I&E FX Window CBN Official Rate ($/N)

fgn bonds

Treasury bills

L-R: President Muhammadu Buhari; Tony Elumelu, founder, Tony Elumelu Foundation, and Babajide SanwoOlu, Lagos State governor, at the UK-Africa Investment Summit in London.

ing point for another expensive subsidy.

Sylva said CNG could be made available at a cost of between N95 and N97 for Nigerians who found petrol too expensive.

But that price is an 11-fold discount to the market price of CNG, which is between $2 (N723) and $3 (N1,084.50), according to CNGprices.com.

Despite being a huge premium compared to the subsidy on petrol, Sylva said the switch to CNG will help reduce the burden of petrol subsidy on the finances of the country, adding that the government was working towards encouraging Nigerians to use CNG as fuel for transportation.

“The Minister may have other plans in mind but you can’t help but think here we go again with subsidies,” a fund manager who needed authorisation to speak publicly told BusinessDay on condition of anonymity.

“It’s hard to see how that will work,” the person said, referring to the viability of turning to CNG as an alternative to petrol.

Sylva also said government had over the years done a pilot scheme on CNG in Benin City, and it had proven that it would go a long way in serving Continues on page 38

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news IMF maintains 2.5% growth for Nigeria in 2020-2021 … Nigerians to remain poorer – analysts HOPE MOSES-ASHIKE & BUNMI BAILEY

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nternational Monetary Fund (IMF) on Monday retained2.5percentgrowth for the Nigerian economy in 2020-21, as earlier estimated in October 2019.

The Washington-based Fund released its World Economic Outlook (WEO) titled ‘Tentative Stabilisation, Sluggish Recovery,’ in Davos on Monday.

IMF had in October 2019, projected that Nigeria’s real economy would grow by 2.3 percent in 2019 and 2.5 percent in 2020 compared with 1.9 percent projected in 2018.

In its January 2020 Global Economic Prospects, the World Bank, in January 8 2020, projected Nigeria’s economy to remain broadly unchanged, rising only to an average of 2.1 percent in 2020-22.

Damilola Adewale, a Lagos-based economist and independent consultant, says although the IMF is more optimistic than World Bank that predicted 2.1 percent for FY2020, this points that growth

for 2020 will be subdued at about 2 percent. And this kind of growth is weak to lift millions of people out of poverty and generate jobs for the unemployed.

“It also indicates that many Nigerians will be poorer given that per capita income will continue to decline. Not until policy makers take the bold steps to implement friendly policies in line with free market principles, foreign investment will continue to elude the economy and this 2 percent growth syndrome will last at least for five to six years,” Adewale states.

Nigeria’s Gross Domestic Product grew by 2.28 percent (year-on-year), in real terms, in the third quarter of 2019, according to the National Bureau of Statistics (NBS).

The Fund projected global growth to rise from an estimated 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent for 2021—a downward revision of 0.1 percentage point for 2019 and 2020, and 0.2 for 2021 compared to those in the October World

Economic Outlook (WEO).

Gbolahan Ologunro, a research analyst at Lagosbased CSL Stockbrokers, says most likely the underlining assumptions to this projected growth is based on favourable oil prices and continued improvement in the real sectors, particularly the agric, manufacturing and telecommunication sectors.

These, according to him, are the bright spots in the nonoil sectors that have shown signs of improvement over the last six quarters. So, with expectation of favourable oil prices, subdued tension between farmers and Fulani herdsmen, which will support agricultural output and continued stability in the FX market, should continue to also support recovery in the manufacturing sector.

“I also believe they are also of the view that the recent policy of the Central Bank of Nigeria trying to improve flow of credits to the private sector with the use of Loan-to-Deposit Ratio might also impact on the economic activities

positively,” Ologunro notes.

The downward revision primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years. In a few cases, this reassessment also reflects the impact of increased social unrest.

In sub-Saharan Africa, growth is expected to strengthen to 3.5 percent in 2020–21 (from 3.3% in 2019). The projection is 0.1 percentage point lower than in the October WEO for 2020 and 0.2 percentage point weaker for 2021.

This reflects downward revisions for South Africa (where structural constraints and deteriorating public finances are holding back business confidence and private investment) and for Ethiopia (where public sector consolidation, needed to contain debt vulnerabilities, is expected to weigh on growth).

•Continues online at www.businessday.ng

Nigeria’s infrastructure challenges dampen investors’ sentiment at UK-Africa summit ENDURANCE OKAFOR, London

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arketing Nigeria to investors at the UK-Africa Investment Summit in London should have been an easy task owing to the country’s glaring opportunities, but to some investors, its infrastructural challenges are too big a risk to overlook.

According to three investors who spoke with BusinessDay at the summit on Monday, the investment opportunities in Nigeria will be more attractive if the country bridges its infrastructural gap.

“Yes, I see a lot of investment opportunitiesinNigeria;thebiggest economy, large population size and the most heard about around the world,” an investor who simply identified himself as Gorge told BusinessDay in London. “But I also hear about the state of your infrastructures and that scares me a lot.”

According to the National Infrastructure Master Plan, Nigeria needs to spend $3 trillion and five percent of its GDP annually to bridge the infrastructure gap. From roads

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$1.1bn Malabu oil deal: FG files fresh 42-count charge against Adoke, Malabu Oil Felix Omohomhion, Abuja

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ederal Government of Nigeria Monday filed fresh 42-count charges against former Attorney-General of the Federation and Minister of Justice, Mohammed Bello Adoke.

He is charged along six others over alleged fraud in the $1.1 billion Malabu Oil deal.

The suit with charge number CR/151/2020, filed at the High Court of the Federal Capital Territory, Abuja, accused Adoke and others of receiving bribes to seal the fraudulent oil deal.

The Federal Government alleged that as Attorney-General, Adoke mediated controversial agreements that ceded OPL 245 to Shell and Eni who in turn paid about $1.1 billion to accounts controlled by former petroleum minister, Dan Etete.

Etete, now at large, was a former petroleum minister under the regime of General Sani Abacha.

Since he left the country after the administration of former President Goodluck Jonathan, Adoke only returned into the country on December 19, 2019, from Dubai, United Arab Emirwww.businessday.ng

ates, into the waiting arm of operatives of the Economic and Financial Crimes Commission (EFCC) at the Nnamdi Azikiwe International Airport, Abuja.

Adoke, who fled the country in 2015, has pending criminal charge brought against him by the EFCC for alleged abuse of office and money laundering in respect of the granting of the Oil Prospecting License (OPL) 245 to Shell and Eni. In the charge dated January 14, 2020, the Federal Government also charged Rasky Gbinigie, A. Abubakar, Malabu Oil and Gas Limited, Nigeria

Agip Exploration Limited, Shell Ultra Deep Limited and Shell Nigeria Exploration Production Limited.

According to the charge, the former AGF in August 2013 in Abuja while serving as a minister knowingly received United State dollars equivalent of N300 million, which is reasonably suspected of having been unlawfully obtained and thereby committed offence punishable under Section 319A of the Penal Code, Cap. 532 laws of the Federation of Nigeria 1990.

•Continues online at www.businessday.ng

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African tech start-ups get €60m to develop solutions for SDGs Jumoke Akiyode-Lawanson

L-R: Arunsi Chuku, senior consulting partner/international projects coordinator, Rosebud Engineering Consultants LLC; Robin Podmore, president, Incremental System; Ahmed Bolaji Nagode, DG, National Power Training Institute of Nigeria, and James Momoh, chairman/CEO, Nigerian Electricity Regulatory Commission (NERC), at the 11th International Conference on Energy Power System Operation and Planning (ICEPSOP), theme ‘Empowering Micro Grid with Smart Grid Attributes: A Case Study of United States of America and Africa’ in Abuja. Pic by Tunde Adeniyi

to bridges, down to power and railways, the country’s infrastructure has recorded significant depletion in the last 20 years, owing to poor maintenance culture, insufficient funds, and corruption.

“What investors are talking about here at the UK-Africa summit is infrastructure challenges; energy, roads and less bureaucracy,” Ngozi OkonjoIweala, former minister of finance, told BusinessDay. For a country like Nigeria to bridge its infrastructure deficit, some industry experts have said it requires borrowing to meet the desired revenue generation that can propel accelerated development.

Nigeria’s total public debt, comprising the debts of the federal government, 36 States and the Federal Capital Territory (FCT) as at September 2019 stood at N26.215 trillion.

The Debt Management Office (DMO) said recently that the country will borrow N1.549 trillion from domestic and international markets to fund its 2020 budget.

frican technology startups challenged by lean funding options available in the continent now have something to delight in.Janngo,Africa’sfirstsocialstartup studio, has pledged to invest €60millioninthetechspace,after seeing humongous potentials that innovative solutions can help in successfully achieving the united nations sustainable development goals (SDGs).

Janngo revealed its plans to dedicate its €60 million venture capital fund to financing techenabled startups accelerating progress towards the SDGs in Africa, with €15 million anchor investment by the European Investment Bank at the ongoing 50th World Economic Forum (WEF) in Davos.

The fund is a first of its kind Venture Capital and impact vehicleinvestingfromseedthrough growth stages across Africa and targeting at least 50 percent of startupsfounded,co-foundedby orbenefitingwomen.Thisinitiative is part of Janngo’s broader commitment on financing the SDGs in Africa, as a member of the Goalkeepers Community and the Global Future Council on the New Economic Agenda of the World Economic Forum.

Locally developed technology solutions with global appeal and ability to scale up, are essential in Africa’s move towards development.

With a €60m investment vehicle 100% dedicated to African startups achieving an economic performance and a social impact, Janngo’s commitment is paving the way for @Businessdayng

SDGs financing in the Venture Capital Space in Africa. This pool of capital which includes a €15m ticket from EIB – the world’s largest multilateral financial institution and the biggest provider of climate finance, will help mitigate the challenge of sourcing start-up capital whichkeepstechnology-driven businesses at ground levels longer than expected.

“Thanks to the support of the EIB, we will be able to invest between €50,000m and €5m, from seed through growth stage in startups all across Africa demonstrating the ability to deliver financial and social returns. Every past investment and every startup in our dealflow is mapped against the 17 SDGs; their ability to create jobs for women, for young people and green jobs is also assessed,” Fatoumata BA, executive chair of Janngo and managing partner of Janngo Capital said.

“We act not only as financial partners but as operating partners with a very hands-on and long-term approach as well as an ecosystem thinking.

That is why we have engaged with stakeholders sharing the same vision through our partnership with the EIB, our contribution to the WEF conversation on financing the SDGs during Davos annual meeting and our commitment to the Goalkeepers community. We have a decade to deliver on the Goals and the clock is ticking: we need more than a positive capitalism, we need stakeholder capitalism.”

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Hospitality sector to soar on slightly stable economy … as stakeholders predict 70% average occupancy, more investment OBINNA EMELIKE

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ith the relative stability in the economy and political scene, most stakeholders in the Nigerian hospitality business are optimistic of appreciable growth in the sector this year.

For the stakeholders, the outlook is very positive as most hotels are better managing the traditional lull in the business this year than same time last year.

The lull is usually between late December till February ending resulting in huge revenue loss due to very low occupancy, poor government and corporate patronage, as businesses and government agencies are just opening and adjusting for New Year’s activities.

Comparing occupancy rate this time last year and now, the Nigerian hospitality sector is experiencing better patronage, hovering between 30 and 40 percent, which is unprecedented in a lull season.

Speaking on the development, Shola Adeyemo, public relations/marketing manager, Transcorp Hilton Abuja, notes that early passage of the 2020 budget has impacted positively on the sector. The budget, which is the nerve of the economy, has generated lots of economic activities that have also benefited the hospitality sector, unlike this

time last year when businesses were skeptical of the direction of the economy.

He also discloses that the traditional lull in business last year lasted through the first quarter of the year because 2019 was an election year. With the postponement of the elections, business activities did not stabilise across the first and second quarters of 2019.

Also speaking on the outlook for the sector this year, Ronald Stilting, general manager, Ibom Hotel and Golf Resort, assures 2020 would be good for the sector because of the slightly economic as well as political stability, with the election tribunals over.

The positive development, according to him, would encourage more activities in the economy, boost hotel patronage and woo more investments, especially foreign investors who are going to take advantage of the stability.

Despite the fact that 2019 was an election year, the Ibom Hotel and Golf Resort general manager notes that the Nwaniba-based resort in the outskirt of Uyo, Akwa Ibom State, recorded 13 percent more room night in 2019 than in 2018. With the stability, he assures that the resort hopes to make additional 14 percent growth this year, while the Nigerian hospitality sector at large would gain more with an occupancy expected to average

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70 percent this year.

In the same vein, Adeyemo predicts that Transcorp Hilton Abuja would maintain an average occupancy of between 60 and 65 percent, while occupancy nationwide would average 60 percent.

He hinges his growth prediction on improvement on security and relative stability in the economy and political scene.

Ada Ojukwu-Mathews, sales and marketing director, Radisson Blu Hotel Lagos Ikeja, assures that the Radisson brand, which has seen steady growth in Nigeria since its debut in the country with the converted Radisson Hotel Lagos Ikeja, would continue this upward growth in 2020.

“Although it has been a tough year, we are working hard to achieve a year-on-year growth,” Ada says and further noting that Radisson and its sister brands within Radisson Hotel Group has identified potential for more growth and presence in the market due to the increase in local and international engagements, and new entrants.

Emmanuel Ele, CEO, Six Regions Hotel, a hospitality consulting firm, notes that the early passage of the budget has truly boosted economic activities, clear the air on the direction of the economy to investors and encourage spending by government, which is expected to impact corporate and the public at large Including hotel guests.

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news

Corruption war: Buhari seeks British help to prosecute fugitives Tony Ailemen, Abuja

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resident Muhammadu Buhari Monday in London appealed for cooperation from the British government’s National Crime Agency of United Kingdom to help in the investigation and prosecution of Nigeria fugitives hiding in the UK. President Buhari made the appeal when he met British Prime Minister Boris Johnson on the side-lines of the UKAfrica Investment Summit 2020, in London, Monday.

Buhari also used the opportunity to bring the British Prime Minister up to speed with developments in Nigeria, reeling out gains in different areas of national endeavour.

Buhari told Johnson of the strides in agriculture, leading almost to self-sufficiency in rice and other grains, saving the country billions in foreign exchange, now deployed to other areas of development.

The president, while speaking on the anti-corruption war, said though it was slow and painstaking, “the cooperation of the National Crime Agency of UK was still

needed, particularly in the investigation of fugitives from Nigeria finding accommodation in the United Kingdom.”

On the war against insurgency, he said things were a lot better with the disabuse of the minds of the people on the true philosophy of Boko Haram, and the main challenge being in the area of resettling displaced people, which is being tackled frontally.

“We have a long history with the British military, and we are collaborating,” President Buhari said.

Climate change, President Buhari said, was a challenge to Nigeria and neighbouring African countries, especially with the shrinkage of the Lake Chad to a minuscule of its original size.

The Nigerian leader also said the country was focused and making progress on education, particularly that of the girl child.

Johnson thanked Buhari for being a regional leader who gives strong encouragement to the West, congratulating him on jobs being created through agriculture, and urging him to do more.

After recent killing of soldiers, Army insists Boko Haram has been defeated Godsgift Onyedinefu, Abuja

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ollowing the recent attacks launched by the Boko Haram insurgents on the Bama-Gwoza Highway that claimed the lives of no fewer than 17 soldiers, the Nigerian Army says the Boko Haram sect has been defeated.

The Nigerian Army in a statement issued by Aminu Iliyasu, a colonel, on Monday described the recent “moribund activity” of Boko Haram, otherwise known as Islamic State West Africa Province (ISWAP) insurgents, as synonymous with the kicks of a dying horse gasping for the last breath.

The army said its counterinsurgency troops have renewed their zeal and determination to take their operations to its logical conclusion “with the recent decimation of many Boko Haram/ ISWAP including some of their

top commanders amidst several arrests of the insurgents’ logistics suppliers and collaborators, numerous capture of the criminals’ arms and ammunition as well as the rescue of many captives from the bondage of the insurgents.”

The army warned all local and foreign interests to exhibit more commitment and restraint on issues of national security and avoid taking sides, stressing that all actions and utterances must be tailored towards supporting the national cause with a view to restoring peace and tranquillity.

The Chief of Army, Staff Lt-Gen Tukur Buratai, assured troops that their sacrifices and that of their fallen colleagues would never be in vain as he reiterated the unreserved commitment of the Nigerian Army to defend the country and her citizens, no matter the prize or odds.

Frequent grid collapses question competence of managers … TCN’s $1.66bn donor funding fails to dent problem ISAAC ANYAOGU & HARRISON EDEH

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igeria’s fragile electricity grid collapsed again Thursday last week, the thirteenth such collapse in the past 13 months, casting doubts on the competence of the system operator, a unit of the Transmission Company of Nigeria (TCN) managed by the Federal Government and the billion-dollar funding the organisation has received.

The Systems Operator is responsible for keeping the grid stable. From its headquarters in Abuja, it coordinates supply of electricity generation from Generation Companies (GenCos) through its National Control Centre (NCC) in Osogbo where at least 30 percent of the capacity generated is lost through weary transmission lines.

It claims that its office in Oshogbo is equipped with a stateof-the-art Supervisory Control and Data Acquisition (SCADA)/ Energy Management System,

Tele-control Interfaces, Human Machine Interfaces, Communication Equipment, System Planning tools etc, and supervises all the Regional Control Centres in the grid network, but the reality tells a different story.

To maintain the integrity of the grid, GenCos are obligated to maintain spinning reserves - generation capacity that is online but unloaded and that can be used to compensate for generation or transmission outages – but the operator has over the past year been unable to enforce provisions that require GenCos to maintain these reserves.

Last year, spinning reserves fell from over 200MW to less than 40MWandonsomedaysthinned to zero and threats to remove GenCos who flout the rules on spinning reserves from the grid, have largely been unenforced.

Worse still, the technological systems required to keep the system operational, SCADA, is broken. The SCADA control system architecture comprising

computers, networked data communications and graphical user interfaces (GUI) for high-level process supervisory management of the grid.

ButtheSCADAsystemhasnot functioned in years, thereby preventing the gathering and analysing of real-time data. The process ofrelayingcommunicationtosubstations is tardy as operators have to make phone calls to engineers in the event of a problem.

Nigeria’s dodgy telecommunication services ensure that sub- station operators do not receive information timeously, so they allocate electricity to DisCos even when capacity is limited. Drawing on insufficient capacity, reserves are spent and this triggers a collapse.

“Much of these frequent collapses is the result of poor communication between the Systems operator and those managing the sub stations,” says Chuks Nwani, an energy lawyer based in Lagos. “The process has to be automated to end this situation.”

Minister rules out April deadline for Apapa seaport rail extension MIKE OCHONMA

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igeria’s minister of transportation, Rotimi Amaechi, on Monday ruled out the April 2020 target of extending the Lagos-Ibadan standard gauge rail to Apapa seaport, as previously set by the government.

It may no longer be achievable completing the extension of the project and also get it ready

by April this as earlier envisaged, he said.

A statement on the minister’s verified twitter handle @Rotimi Amaechi said he made declaration during an inspection visit to the project, accompanied by Seyi Makinde, governor of Oyo State.

The minister twitted: “Looking at the state of work in Apapa, completing the project in April

doesn’t seem feasible, especially the extension of the rail line to the seaport. We’ll however, continue to work and redouble our efforts to complete the project and meet set targets”.

Reacting to the minister’s comment on twitter, Kufre Abasi, advised the transportation minister to sit down with the Chinese Civil Engineering & Construction Corporation (CCECC); the technical partners and fix issues.

Abasi worried whether the Lagos-Ibadan rail project could be delivered in 2020. He lamented that up until the time of filing this report, stations had not been completed. He also noted that there were no points and crossings/turn-outs, and that signalling not been done. These, according to him, would take as much as six months to test-run after installation, including the

signalling equipment installation.

A 7-man federal government delegation led by Hussaini Adamu, director of procurement in the Federal Ministry of Transport accompanied by other top officials of the ministry and the Nigerian Railway Corporation (NRC) returned from China Wednesday last week at the end of a trip for the final acceptance test of 44 units of coaches and locomotives.

The implication of the delayed completion of the project is that planned deployment of the coaches and wagons earmarked for the axis may be delayed.

A breakdown of the 44 units of coaches being acquired by the federal government shows that 29 are standard and 15 executive, with additional 16 diesels multiple units (DMUs) already

PenCom directs PFAs to implement second pension enhancement exercise for PW retirees Modestus Anaesoronye

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ational Pension Commission (PenCom) has directed Pension Fund Administrators (PFAs) to implement the second edition of the pension enhancement exercise for retirees on Programmed Withdrawal mode of retirement.

The pension enhancement is forContributoryPensionScheme (CPS) retirees who have accumulated significant growth in their Retirement Savings Accounts (RSAs) and had retired between July 2007 and December 2017.

Accordingly to PenCom, the retirees referred to above are to contact their respective PFAs to confirm their eligibility and complete requisite documentations.

Programmed Withdrawal is a product of the Pension Fund Administrator (PFA) that pays pen-

sion over an expected lifespan This is the second enhancement programme being implemented for retirees under the programmed withdrawal. The first was in December 2017, when PenCom announced a maiden pension enhancement for this category of pensioners, with subsequent reviews to be advised

by PenCom from time to time.

This was contained in a frameworkontheissue,releasedbyPenComtoPensionFundAdministratorsandPensionFundCustodians.

Theobjectiveoftheframeworkwas to provide uniform modalities for the implementation of periodic pension enhancement for the affected category of pensioners, using the surpluses generated from the return on investment, and the RetirementSavingsAccount(RSA) balance as at 31 December, 2016 as the basis of the enhancement. www.businessday.ng

Industry analysts also blame the Nigerian Electricity Regulatory Commission (NERC) which has repeatedly failed to sanction stakeholders involved in the recurring collapses which continuously put intense pressure on the socio-economic activities in Africa’s largest economy.

They also attribute some blame to load rejection by most of the 11 distribution companies across the country, putting greater pressure on the national grid and the spinning reserve.

“The problem of incessant grid collapse is systemic. TCN will blame Discos and Discos will blame TCN. The truth is that TCN has improved its capacity but not too significantly. The Discos carry most of the blame.

They have underinvestment in their network such that they cannot take and utilise all available generation, which results in load rejection and inadvertent pressure on the grid,” Sam Amadi, former chairman of the NERC, told BusinessDay.

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shipped coaches and wagon The $1.53 billion rail contract was awarded in 2012 to the CCECC for the construction of the Lagos–Ibadan segment (156km) of the standard gauge railway by 2016.

It is the first segment of the Lagos-Kano standard gauge rail project, under construction across Nigeria, from the Atlantic ocean port of Lagos to Kano, near the Niger border. It will run parallel to the British-built narrow gauge line, which has a lower design capacity and is in a deteriorated condition after many decades of neglect.

The standard gauge rail lines are being built in segments. Only the segment between Abuja and Kaduna has been completed so far, and services began officially in July 2016. The segment between Lagos and Ibadan is under construction.

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Apapa: A port city eaten up in shameful disorderliness STRATEGY & POLICY

MA JOHNSON

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papa in Lagos State is one of the 774 local government areas in Nigeria with a projected population of 307,100 (2015), according to the National Population Commission. Notwithstanding this doubtful population figure, Apapa is a major port city located to the west of Lagos Island. Apapa has container terminals, several tank farms, commercial banks, shipping and customs clearing agencies, primary and secondary schools, as well as businesses in the hospitality sector. Apart from various military and police units located in Apapa, unconfirmed sources have it that the port city has investments worth more than $10 billion.

As a maritime nation, port operations are very key to Nigerian economy. An examination of the impact of port operations on the Nigerian economy conducted by experts’ show that more than 75 percent of goods imported into Nigeria come into the country through Apapa ports in 2017.

Apapa and Tin Can ports operate less than full capacity, according to terminal operators because of gridlock and other operational/logistics problems.

Unfortunately, Nigeria loses fortunes to over-dependence on Apapa ports while other sea ports within the country are underutilised.

The Apapa gridlock is not a permanent feature but appears on and off like a toggle switch. I remember

my days in public service shortly before retirement in 2014, it was a challenge getting to my office at Apapa. At that time, the incessant gridlock at the port city was frustrating and devastating. The situation was bad that many organisations had to relocate their offices to other parts of the State. Indeed, many companies shut down because accessibility to their business for customers became an issue.

It is worrisome that three executive governors of Lagos state-retired and serving-Fashola, Ambode and Sanwo-Olu- have at one time or the other given direct orders either in situ or outside the port area to truck owners and truckers to leave the roads leading to the port city. The Vice President Yemi Osinbajo and President Muhammadu Buhari on different occasions also gave direct executive orders to truck owners and truckers to leave the roads for ease of traffic in the port city. Unfortunately, these orders fell on deaf ears. Those who are familiar with the port city have a feeling that something is wrong somewhere. The disorderliness in Apapa gives an impression that the port city is an ungoverned space in Lagos State. Today, the aesthetic of Apapa as a port city has been significantly compromised.

Who is to blame? Is the disorderliness at Apapa a failure of the Nigerian ports Authority (NPA) that governs and operates the ports? What about the concessionaires, and security personnel deployed to manage the deplorable situation in Apapa and within the ports? Why is it difficult for mere mortals to submit to constituted authorities? Your guess is as good as mine because we are in a society where most people- rich and poor- find it difficult to obey the law.

May be the truck owners and truckers

want a court injunction before they can take their trucks off the roads leading to the ports? It is a pity that most Nigerians have not imbibed the culture of compliance.

Since truck owners and truckers found it convenient to disobey constituted authority at state and federal levels, a Presidential Task Force was set up by the federal government to put an end to the gridlock. Although, the task force achieved some success initially, its achievements have become a “mere flash in the pan.”

The initial success accomplished by the Presidential Task Force is not followed by significant accomplishments. It is now business as usual with all the pain and stress that define Apapa as a port city characterised by shameful disorderliness.

Apapa’s gridlock has become a national embarrassment such that port operators and all stakeholders had to go spiritual in order to use main access road- Ijora/Wharf Road.

Going spiritual has not solved the man-made gridlock because God is not a man; He cannot be mocked.

The feeling one has is that nobody is in charge of Apapa. Or is it that truck owners and truckers do not understand the directives from constituted authority?

At the time of writing, the traffic chaos in Apapa is back in full force.

It is in a chaotic condition. Apapa has moved away from orderliness because of corruption. The behaviour of truck owners and truckers including port operators leaves much to be desired. Some members of security agencies deployed to the port city to assist in easing traffic are caught in a web of activities unbecoming of their professional calling. This is a reflection of our society.

It is really sad that most Nigerians do not obey orders especially when

‘

Your guess is as good as mine because we are in a society where most people- rich and poor- find it difficult to obey the law.

May be the truck owners and truckers want a court injunction before they can take their trucks off the roads leading to the ports?

such directives are in the overall interest of the country. A pity, you may say. That the gridlock in Apapa has not been cleared after several efforts by the Federal and Lagos State governments as well as stakeholders has left much to be desired about governance in the country.

A German-born political philosopher, Hannah Arendt (1906-1975) once said that “the sad truth is that most evil is done by people who never make up their minds to be either good or evil”. Arendt during her life time believed firmly that meaningful action depends on careful thought.

The chaos in Apapa is very embarrassing that this article has to be written with the belief that those in authority are thinking about the best possible solution to the problem. The outlook of Apapa today reflects failure of the nation’s infrastructure and in particular the transport system. The gridlock presents problems of urban transit with attendant consequence on safety of lives and properties.

The economy, environment and people in the port city are negatively affected because of Apapa’s gridlock.

Apapa is turned upside down and business in this part of Lagos State cannot thrive on chaos at a time both the state and federal governments need more revenue to implement the 2020 Budget. The port city is eaten up in shameful disorderliness. Perhaps, the time is ripe for the Federal and Lagos State governments to display a strong confrontational character to dislodge the insanity that has eaten deep into the skin of some “powerful individuals” who perpetrate disorderliness in the port city. Thank you!

Johnson is an author and a retired naval engineer who has passion for African development and good governance

70% broadband penetration target by 2025: A possibility

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he Ministry of Communications and Digital Economy working with the Nigeria Communications Commission (NCC) set an ambitious target when they projected that by 2025 Nigeria would have attained 70 percent broadband penetration. This target is striking because currently, broadband penetration stands at 37 percent, consequently tasking the Ministry to more than double broadband penetration in the next 5 years.

As with all progressive policies and plans, there are those who conclude prematurely that things would not work or change. The same goes for the pessimistic remarks made recently by a prominent member of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) who stated that the 2025 target was dead on arrival, despite all evidence pointing to the fact that policy makers have what it takes to achieve the target this time.

The 70 percent penetration target is clearly achievable especially when we consider that even with lower Gross Domestic Product (GDP) Per Capita Income, Kenya and Rwanda have far more impressive broadband penetration figures than Nigeria. Though, both countries are smaller than Nigeria in landmass and population, with consistent policy implementation and a deep desire to gain the economic benefits of pervasive broadband, they have achieved

high broadband uptake in both countries.

At present, broadband penetration stands at circa 89 percent and 70 percent in Kenya and Rwanda respectively.

This is a clear indication of the broadband possibilities that lay ahead in Nigeria, if only the right plans could be put in place.

It is important to note that from about 425,000 analogue phone lines in 2001, less than two decades later, the country recorded over 180 million Mobile (GSM) lines in October 2019, according to NCC data. The reason for this success is due to the policies put in place to encourage telecoms growth, which the market embraced to drive these developments. On this basis, it is therefore myopic to suggest that the same population with proficient hands at the helm, is incapable of meeting this new 5-year broadband target.

It is also worthy to note that ALTON has representation on the National Broadband Plan Committee which has been tasked to deliver the plan to meet the 70 percent target by the Government. The plan is a sequel to the first NBP 2013 – 2018. So, it is indeed curious on whose behalf and to what benefit these disparaging statements are being made.

Ms. Funke Opeke, CEO of MainOne, who has exhibited passion and demonstrated capacity for enabling a digital and connected West Africa, heads the Committee www.businessday.ng

as the Chairperson. Others on the team are Engr. Ubale Maska who is Executive Commissioner, Technical Services, Nigerian Communications Commission (NCC). He will serve as the Secretary to the Committee. Maska will be supported by four staff of the Ministry in the secretariat. The Committee also boasts membership from MTN, ATCON, ALTON, NCS and other distinguished experts.

As part of its mandate, the Committee is to take a critical look at where Nigeria stands in terms of broadband penetration with a view to accelerate progress. What is even more interesting is that the new NBP has the support of the United Kingdom (UK) Government and the Committee has set a target of Q1 2020 for release of the plan.

While speaking at the inauguration of the Committee, the Honourable Minister of Communications and Digital Economy, Dr. Isa Ali Ibrahim Pantami pointed out that “the work of the Committee will go a very long way in supporting the national digital economic policy and strategy for the Federal Government because digital economy is strategically dominating the World economy today.”

On her part, Ms. Opeke who responded on behalf of the Committee thanked the Minister for the opportunity to serve and said the target of the committee is to

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EJIRO OBODO

achieve at least 65-70 percent broadband penetration across Nigeria in the next five years. “The Minister has set the goal and I am sure the NCC is in agreement,” an obviously elated Ms. Opeke said.

According to data gathered from the NCC, the telecoms industry’s contribution to GDP has maintained consistent growth in the past seven years growing from 7.7 percent in 2002 to 11.39 percent in Q2, 2019.

The industry can contribute much more considering that pervasive broadband will lead to quantum leaps in productivity and improvements in activities including security, transportation management, health care, job creation among others. The World Bank studies show that emerging countries can expect a growth of over 1.3 percent in GDP for every 10 percent increase in broadband penetration.

Ejiro is an award-winning data journalist, Manger, Communications Strategy & Research at Caritas PR

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Tuesday 21 January 2020

COMMENT

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Democracy & African development (3) RAFIQ RAJI

F

or better or worse, democracy has become the preferred form of government in Africa. If as it has been found, it does not always deliver development, the obvious next step is to determine how to ensure that it does. Even so, there are a number of democratic exemplars on the continent. What have Mauritius, Cape Verde, Botswana done differently? These top three African democracies are in addition to being models of good governance also economic successes. They also have one common characteristic: they are small countries. South Africa, which is Africa’s most advanced country and one of its largest, while having relatively strong democratic institutions, suffers from rampant corruption, poverty and anaemic growth. South Africa’s increasing economic decline exemplifies how institutional design could still fail to deliver expected economic benefits. This background is useful for contextualising any proposed reforms.

Nonetheless, there is a strong case for urgent political reforms in many currently floundering African democracies.

Making the electoral process more credible and less expensive might be a good place to start. A sense of urgency with such reforms would be crucial to stemming the increasing slide to autocracy on the continent. More importantly, it would ensure that current African democracies endure long enough to deliver the expected developmental benefits that the literature suggests tend to take time to come to fruition. With palpable benefits from democratisation over time, these should then spur yearnings for democracy in current African autocracies.

Tune African democracies for greater development I propose solutions to the earlier identified challenges faced by African democracies of lack of accountability, political exclusion, weak state capacity, and the perception and practical realities of democracy as still a foreign concept.

Improve the electoral process Osaghae (2004) recommends the fol-

lowing measures for improving the electoral process, upon “which the stability and survival of democracy ultimately hinges”: “Control of electoral commissions should reside with the legislature and/or judiciary rather than with the executive” and “the first-past-the-post electoral system should, wherever possible, be replaced by the proportional representation system, which guarantees more opportunities for power sharing and bargaining among competing parties.”

I believe electronic voting would also help a great deal in reducing electoral fraud; albeit it has not been quite successful in doing so in the few African countries that have tried thus far. For instance, the 2018 presidential election in the Democratic Republic of Congo (DRC) was adjudged to have been easily rigged because of e-voting. In the more recent 2019 Namibian presidential election, where electronic voting was similarly used, there were hiccups here and there.

Still, these challenges could be easily fixed. And even in the DRC example, just as the electronic system probably made it easier to manipulate the results, it made a forensic determination of fraud relatively easier as well.

More direct democracy for greater accountability According to Matsusaka (2005), “direct democracy works.” “The spread of direct democracy is fuelled in part by the revolution in communications tech-

Top 10 African Democracies 1.

Mauritius

2.

Cape Verde

3.

Botswana

4.

South Africa

5.

Lesotho

6.

Ghana

7.

Tunisia

8.

Namibia

9.

Senegal

10.

Benin

Source: 2018 EIU Democracy Index

nology that has given ordinary citizens unprecedented access to information and heightened the desire to participate directly in policy decisions.” What is direct democracy? Matsusaka (2005) defines direct democracy as “an umbrella term that covers a variety of political processes, all of which allow ordinary citizens to vote directly on laws rather than candidates for office.” Bottomline, there is a growing need for more effective, representative and participatory political systems; especially in Africa.

I recommend a truly representative and egalitarian unicameral “People’s Assembly” legislative system where lawmakers would all be independents and not belong to any political party. That way, no party controls the legislature.

Registration and other formalities for election into the legislature would be free or for pittance and via the electoral body.

And while independent candidates would still be qualified and eligible to participate in elections to executive positions (president, governors, premier, etc.), political parties would be the primary vehicle for executive positions. If the rational assumption, in light of history thus far, that political parties are likely already captured by the rich elite, an egalitarian and truly representative People’s Assembly of independents would be a wellsuited counterbalance.

Fo r e i g n t e c h n i c a l a s s i s ta n c e t o strengthen state capacity This would have to be an ongoing process, for sure. That is, even as the effectiveness of aid is debatable. For instance, while on the face of it, aid could potentially contribute to democratization through technical assistance with electoral processes, capacity-building for legislatures and judiciary, conditionality, and education, Knack (2004) finds no evidence it promotes democracy. When properly designed, however, it could be effective. In fact, Gibson, Hoffman & Jablonski (2015) argue that foreign aid not easily converted to patronage by incumbents like technical assistance enabled greater and economic and political freedom in African countries. That said, the international community must look beyond election monitoring and other mostly ex post measures to more cogent ones aimed at preventing electoral irregularities in the first place.

Africa should develop its own form of democracy

Cheeseman (2015) suggests “Africanizing” democracy, arguing some of the “most successful innovations on the continent, such as zoning in Nigeria or the best loser system in Mauritius, have been homegrown.” Cheeseman (2015) advocates “a more indigenous set of political arrangements” is best suited for Africa’s peculiarities. In Ghana, “the integration of traditional rulers into the formal political system has helped to generate a sense of inclusion, and has made it easier to manage intercommunal tensions around elections” (Cheeseman, 2015). Recall, Mauritius and Ghana are in the top 10 of African democracies.

Kenya is another example of an African country continually evolving its political system with its realities. As politics is ethnically entrenched in Kenya, with elections almost always strictly along ethnic lines, a process is now underway to ensure the typical bickering and violence in the aftermath of elections are reduced or avoided altogether. The Kenyan proposal would ensure that both winners and losers end up feeling their efforts were not in vain. True, the likely outcome would be administratively expensive, a triumvirate of sorts, with a president, deputy president and prime minister and an official leader of the opposition. Still, the potential benefits outweigh the costs.

Cheeseman (2015) also notes the incorporation of traditional norms on social relationships and decision-making into the formal political structure and system of Somaliland.

The point is that democracy engenders development when the government it produces is truly representative of the will of the people, less expensive to manage than other forms of governance, with elected officials truly held accountable, and all of its institutions having legitimacy with all stakeholders. Perhaps, western liberal democracy in its unadulterated form has not quite succeeded in doing that in Africa because it runs at variance with some local cultural entrenchments.

R eferen ce s available at https :// rafiqraji.com/2019/12/27/macroafricaintel-demo crac y-african-development/

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

On Operation Amotekun

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he Nigeria Police Force (NPF) is the principal security agency saddled with internal security in Nigeria. There are other internal law enforcement agencies such as the Nigerian Correctional Ser vice (NC S), State Security Ser vice (SSS), Nigeria Immigration Service (NIS), Nigeria Customs Service (NCS) and the Nigeria Security and Civil Defence Corps (NSCDC). The powers of Nigerian police officers are expressly posited under Sec 4 of the Police Act. The police are conferred with the full onus to ensure the safety of people and property, guarantee equality before the law and protect the fundamental human rights of all citizens. In these regards,

the activities of other internal security agencies are regulated by the legislation authorizing their establishment. Each agency has a jurisdiction in enforcing laws unlike the police who are vested with oversight security powers across Nigerian territory.

The disorderly growth in the Nigerian states necessitated an alternative outlook to checkmate the prevalent insecurity since the police have been continually eroded in their constitutional duties.

The unchecked insecurity challenges by the federal police precipitated a clarion call for a decentralized police force through a constitutional amendment process but the National Assembly has jettisoned the demand.

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Giving the foregoing situation, the South West governors jointly established Amotekun security operative to consolidate the combat against crimes in the geopolitical zone. Sec 14 (2b) of the 1999 constitution, as amended empowers the government to provide adequate security for its people. The Amotekun initiative therefore led to a constitutional crisis between the Sec 14 and the provision of item 45 of the 1999 constitution, as amended. This item technically places security matters on Nigerian police and other security services established by the extant laws.

Whether Amotekun initiative survives the current controversy or not, it is not the most effective means to combat in-

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BINZAK AZEEZ

security. The prevalent crime rate and anarchical approach to survival would diminish if the state policies are hinged on e conomic e quality, employment opportunities and good governance. A conducive environment is the most effective anti - crime operation.

Binzak Azeez writes from the faculty of Law, Obafemi Awolowo University, Ile Ife

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Tuesday 21 January 2020

BUSINESS DAY

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Opportunity in the Amotekun of the South-West

A

declaration by the Minister of Justice and AttorneyGeneral of the Federation Abubakar Malami that the Western Nigeria Security Network, codenamed Project Amotekun, is illegal has set off a firestorm with potential consequences for positives and negatives.

Many groups, associations and learned men from the South dispute Malami’s claim, asserting that only the courts have the rights to such a pronouncement. The Federal Government has dug in on Malami’s side with defence chiefs stating that states should avoid alternative sources of defence.

Project Amotekun is the effort by the six states of the South West to provide a backup civil defence mechanism in response to the rash of banditry, abductions and herdsmen attacks in the region in the second and third quarters of 2019. Federal law enforcement authorities such as the Nigerian Police and the Nigerian Army were conspicuously absent and failed in their duty of protection of citizens in the

period. Something had to give: enter Amotekun.

Ekiti State Governor Dr Kayode Fayemi, who is also chairman of the Nigerian Governors’ Forum, affirms that the initiators of the Amotekun project had the buy-in of the federal security apparatus. He stated, “We see Amotekun as a logical end product to the community police debate. That is why we say it is to complement the police in response to security challenges, information gathering, and so on. In the process of doing this, the conventional security agencies were taken along and they have agreed to collaborate with us.

“They agreed that there is a need for multi-dimensional solutions to our security challenges, the paradigm shift, which is the direct involvement of the local population and government in the grassroots for protection. It is a model open to public scrutiny in improving the quality of the protection of the people”.

The Amotekun matter has, unfortunately, taken on a NorthSouth divide. Supporters are mainly from the South of Nige-

ria while opponents are from the North. Supporting voices include those of Africa’s first Nobel laureate Prof Wole Soyinka, founder of Afe Babalola University, Are Afe Babalola, SAN, and the presidential adviser on legal matters Prof Itse Saga. Ohanaeze Ndigbo, IPOB, Afenifere and socio-cultural and political organisations of the South West, the South East and the Middle Belt are all in support. On the other side are groups and individuals from the North such as Miyetti Allah, Balarabe Musa and former President Ibrahim Babangida.

The statements by the Federal Government and military authorities unfortunately also fall into the ethnic trap. It is the first challenge and riddle of Nigeria that Amotekun has exposed. All the defence chiefs are Muslims of Northern Nigeria extraction.

They sing from a hymn book that does not include nor represent the south of Nigeria.

A second and more significant challenge is the question of the legality of Amotekun and similar civil defence structures in place across the country.

History helps. In February 2006,

the Kano State Government unveiled Hisbah, a local sharia implementation organisation with paramilitary orientation. The Federal Government declared it illegal, arrested two of its officials and charged them to court on three counts of felony and running a clandestine organisation. The government claimed that Hisbah contravened Section 214, subsection 1 of the 1999 Nigerian constitution. The Kano State government sued the Federal Government seeking a constitutional interpretation. They went directly to the Supreme Court, which declined based on lack of original jurisdiction and directed that they start at the Federal High Court. The case went cold, but the arrested officials won their separate lawsuit against the federal government.

Amotekun would require a forthright judicial pronouncement on its legality. It would force a much-needed conversation about Nigeria’s federal status, the duties, responsibilities of constituent parts and the limits thereof. Nigeria should take advantage of the Amotekun Opportunity to examine all issues that it throws up.

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Tuesday 21 January 2020

BUSINESS DAY

COMMENT The story of Trump’s perilous Iran escalation (2)

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DAN STEINBOCK From Bolton’s “Shah scenario” to regime change he Trump administration has greenlighted clandestine efforts to weaken Iran’s “moderates” hoping to incite “hawks” into strategic moves that could be used as a pretext for regime change. In April 2018, Trump hired the neoconservative uber-hawk John Bolton as US National Security Advisor (he was booted less than a year and half later). A relic of the Bush era, Bolton had engaged in the “weapons of mass destruction” pretense that led to the Iraq War. Now he advocated regime change in Iran and other countries.

By November 2017, Bolton urged the US to have a contingency plan for a “Shah of Iran scenario” and regime change before February 2019; the 50th anniversary of the Iranian revolution.

His change agent was Mojahedin-e Khalq (MEK), an Iranian opposition group which advocates a violent coup in Iran. In the early 2010s, the UK, EU and the US considered MEK a terrorist organisation until then-State Secretary Hillary Clinton de-listed the group, to exploit it in US-led destabilization.

To support his economic sanctions with clandestine operations, Trump named Michael D’Andrea as the head of CIA’s Iran operations. Nicknamed “Ayatollah Mike,” he inspired the character of The Wolf in the Oscar-awarded movie Zero Dark Thirty (2012). Although D’Andrea failed to track Nawaf al-Hazmi, one of the hijackers who

T

crashed American Airlines flight 77 into the Pentagon on September 11, 2001, he was made head of the CIA’s Counterterrorism Center few years later. With President Obama’s blessing, he also presided over hundreds of US drone strikes in Pakistan and Yemen.

His operatives oversaw several interrogations, which a US Senate report has described as torture. And he has been blamed for the Camp Chapman attack in Afghanistan in which seven CIA operatives were killed.

When the then-CIA chief Mike Pompeo became Secretary of the State, his deputy Gina Haspel took charge of CIA. Following 9/11, Haspel oversaw a secret CIA prison in Thailand, which housed suspected Al-Qaeda operatives.

Relying on “enhanced interrogation techniques,” she, like D’Andrea, was deeply involved in the detention and interrogation program condemned by the 2014 Senate report.

Worse, Haspel played a key role in the destruction of 92 interrogation videotapes that showed the torture of detainees in black sites. While the Bush and Obama era CIA leaders supported her CIA nomination, more than 100 retired US generals and admirals expressed “profound concern,” due to her record.

Plunging oil production D’Andrea and Pompeo favor regime change in Iran and some observers see their covert-operation influence in the 2019-20 Iranian protests in many cities.

As Iranians have greatly suffered from US efforts at domestic destabilization and international insulation, some demonstrators are obviously motivated by economic woes. But it also seems that Bolton’s Shah scenario and its variations remain on the table, as evidenced by the role of the US-sponsored Pahlavi loyalists among some protesters.

In contrast, Iranians see oil as the main reason to US interest in the Middle East. Iran and Iraq hold some of the world’s largest deposits of proved oil and natural gas reserves. Combined, their

Figure 2 Iran: GDP growth and supply side components, 2011-22

Source: World Bank; Difference Group

reserves exceed those of Venezuela, which has the world’s largest proved reserves.

Between 2010 and 2013, the sanctions hurt Iran’s economy contributing to the fall of crude oil exports from 2.5 million barrels per day to 1.1 million by mid-2013. That, in turn, was compounded by the plunge in oil prices since early 2014. Following the nuclear deal, Iran’s production soared back to 4 million barrels. With Trump’s efforts at regime change, the capacity steadily decreased to 3.7 million barrels per day (Figure 1). Recent OPEC estimates suggest it has plunged to 2.8 million barrels.

Figure 1 Iran’s petroleum production and consumption, 2011-2018 Source: EIA; Difference Group.

If Iran’s production capacity takes a further hit, that will penalize particularly its biggest importers China, India, South Korea and Turkey.

Diminished prospects Since Russia and China were expected to stay behind the Iran nuclear deal, the real question was whether the European powers - Germany, France, the UK, and the EU itself - would defend it. Unsurprisingly, the Trump administration targeted European businesses that did business in and with Iran after the nuclear deal.

In June 2019, the EU created a mechanism (INSTEX) that allows European countries to trade with Iran despite US sanctions. But it was too little, too late. Brussels failed to sustain the Iran nuclear deal against Trump’s unilateral moves.

Before 2015, Iran’s economy shrank by 9 percent two years, due to sanctions. After stabilization, sanctions relief enabled Iran’s oil exports to return to nearly pre-sanctions levels, permitted Tehran to regain access to funds held abroad, boosting 7 percent overall economic growth in 2016. Foreign energy firms made new investments in the energy sector and major aircraft manufacturers sold Iran’s commercial airlines new passenger aircraft. The relief contributed to the victory of Iran’s President Hassan Rouhani in the 2017

presidential election. Growth broadened to the non-oil sector. Real GDP growth was projected to rise toward 4.5 percent over the medium-term as financial sector reform was anticipated to take hold.

But then came the Trump U-turn.

In May 2018, he had the U.S. withdraw from the nuclear deal, while secondary sanctions drove Iran’s economy into mild recession as major companies exited the country rather than risk being penalised by the US. The value of Iran’s currency declined sharply. Even before the US escalation, Iran’s economy was expected to undergo a second consecutive year of recession and contract by 8.7 percent in 2019/20. Inflation was estimated to reach 38 percent annually with mounting fiscal pressures. Economic expansion, which began after the nuclear deal, has been undermined.

Neither is stagnation enough for the Trump administration. What the White House is fostering is progressive contraction (Figure 2).

Following the drastic re-escalation, Iran’s economy will have to cope with even more challenging downward risks.

And if oil exports were to be curtailed further, the economy could enter into a steeper recession and suffer from high inflation rates. In such a status quo, the challenge of protecting the vulnerable households would put additional pressure on the government finances and potentially the rial. Unfortunately, that may be precisely the White House’s objective.

Dr. Steinbock is an internationally recognised strategist of the multipolar world and the founder of Difference Group. He has served at India, China and America Institute (US), Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). For more, see https:// www.differencegroup.net/ The original version was published by The Manila Times on December 16, 2019.

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Sexual harassment in the workplace

S

exual harassment in the workplace takes various forms, ranging from unwanted sexual advances to requests for sexual favours, amongst others. Worthy of note, is the fact that sexual harassment is not the same as a mutually-agreed relationship but an action which is unwelcome, causes offence and distress and is physically and emotionally dangerous. Sexual harassment in the workplace could distort and disorientate the victims with very lasting consequences and impact on performance and their entire social well-being.

Examples of sexual harassment Sharing sexually inappropriate and suggestive text, images or videos such as pornography with co-workers (especially of opposite sex) Displaying inappropriate sexual images or posters in the workplace Making inappropriate sexual gestures Looking or staring at a person’s body Making sexual comments about appearance, clothing or body parts Inappropriate touching, patting, rubbing or purposefully brushing up against another person Asking sexual questions, such as enquiries about someone’s sexual history or their sexual orientation.

It is pertinent to note that any actions or words with a sexual undertone that interferes with an employee’s ability to work or create an uncomfortable atmosphere for an employee are considered as sexual harassment. Victims of sexual harassment may not just be the target

of the offence, but anyone who is affected by the inappropriate behaviour.

Handling sexual harassment in the workplace Step I: Prompt challenge of the situation It is necessary to address the issue firmly and directly by informing the person(s) whose actions or words are offensive to stop, and that if the act continues, you will have no choice but to report it. If the harassment does not stop, then you have at least put the person on notice. Victims of physical abuse should however report immediately.

Step 2: Document the occurrence After confronting the person and he/she refuses to stop, then you can start building a case by gathering evidences. Ensure you back up any allegations you make with evidences.

Collect as much detailed evidence as possible about the harassment including any offensive texts, photographs, cards or notes you receive.

Keep details about incidents of harassment, you should also include the names of everyone involved (both those that saw or heard about the harassment), what happened, where and when it took place. Apart from documenting the actions, you also need to document the effect it had on you, on your psyche, your job performance, your health, and so on.

In some unfortunate cases when people make allegations of sexual harassment, they are being victimized by their supervisors/ employers and a common allegation they use to cover this victimization is “incompetence”.

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It is important you begin to make copies of any work performance evaluations or letters of commendation you received from your supervisors. You need to be able to prove that you are a competent worker, and any victimization you are faced with which may include transfer, demotion or even dismissal on the excuse of poor performance is actually as a result of your complaints.

Step 3: Make a formal report In any well-structured organisation, there is an employee handbook that lays out the procedures to follow in order to make a complaint. It is important you follow such laid out process.

Ensure you inform your supervisor and the Human Resources Department and if your supervisor is the person you are complaining about, then report to your supervisor’s supervisor. Make available all the information you have gathered and wait for them to address the issue. What reporting does is that it starts the disciplinary process where the harasser will be given an opportunity to defend him/herself.

Step 4: Explore escalation options Most harassments that have continued beyond the first occurrence have resulted from perpetrators believing that the issues end with the victims who they generally have advantage or power over, while many have succumbed to such situations imagining being helpless, others have quit in fright without challenging the situation or seeking help beyond the perpetrator. Opportunities to escalate the occurrence to higher authorities or individuals

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CIPM NIGERIA with powers above the perpetrator most times are very strong deterrent that keep the actors in permanent check.

Step 5: Reconsider continuing on the role Many one-man businesses in Nigeria do not have proper HR system for making complaints. So, in a situation where the alleged harasser is actually the owner of the business, the best advice is to think through the decision to continue on the role. There is no point reporting someone who is the person you are complaining about. Even if you had followed all the steps mentioned above, it is unlikely you will get a favourable outcome. The victim should weigh different options (including resignation) before final decision.

Step 6: Monitor Monitor to check if there are changes in the harasser, whether positive or negative. You need to ascertain whether the person is still harassing you or the harassment has This will determine what further step you should take: If the person has stopped harassing you, then that is great news. You can stop here.

If the person has stopped harassing you, but then starts to victimize you, you should report the situation to HR, this time not as harassment but as victimization.

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Tuesday 21 January 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

BANKING

Union Bank follows up on debut commercial paper with fresh N20bn issue SEGUN ADAMS

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nion Bank of Nigeria, has commenced sales of series 3 and 4 of its N100bn commercial paper programme, seeking to raise additional working capital in line with its goal to be Nigeria’s most trusted and reliable banking partner, the mid-tier lender has said.

The issuance, a year after the bank’s debut CP, comes amid declining cost of borrowing in the economy as CBN’s move to limit OMO participation force investors into bonds, equities and other asset classes.

The offer for the Series 3 and 4 CPs tenured 180-day and 268-day for Series 3 and 4 respectively opened on January16, 2020 and will close on January 21, 2020 with Union Bank seeking to raise up to N20bn across both tenors.

The CP offer is targeted at institutional investors

including pension and nonpension asset managers, as well as eligible high networth investors.

“The new funding is expected to provide the

Bank with further working capital as it delivers on its promise to be Nigeria’s most trusted and reliable banking partner,” Union Bank said.

The Commercial Paper will be listed on the FMDQ OTC Securities Exchange platform with Stanbic IBTC Capital Limited and Union Capital Markets Limited as

L-R: Chu Maoming, consul general of China; Laurence Monmayrant, consul general of France; Toki Mabogunje, president, Lagos Chamber of Commerce and Industry (LCCI); Francisco Soares, consul general of Brazil; Michael Olawale-Cole, deputy president, LCCI, and Kim In Taek, consul general of South Korea, at a Luncheon organized by LCCI with Members of the Diplomatic Corps in Lagos

the Dealers on the Commercial Paper Issuance by the Bank.

Union Bank has been assigned ratings of A - (Agusto & Co.); A - (DataPro); BBB+ (GCR).

The issuance of up to N20 Billion in Series 3 and 4 Commercial Paper follows the successful registration of its N100 billion Commercial Paper Programme in 2018.

In January 2019 Union Bank made its debut issuance of the Series 1 and 2 offer in the domestic capital markets in which it raised N24.3bn.

Union Bank is one of Nigeria’s leading financial service institutions, with approximately 5.6 million active customers serviced across 280 branches and cash centres nationwide, an asset base of over N1.8 trillion and total equity in excess of N240 billion as at September 30, 2019.

Union Bank of Nigeria, PLC. Established in 1917 and listed on the Nigerian

Stock Exchange in 1971, Union Bank is a household name and one of Nigeria’s long-standing and most respected financial institutions.

The Bank has a network of over 280 Sales and Service Centers across Nigeria.

Following recapitalisation in 2012 from new investors and a new Executive Management team, Union Bank has undergone an awardwinning transformation programme to re-establish the bank as a leading provider of financial services in Nigeria. Union Bank is focused on Retail, Commercial and Corporate Banking businesses.

In addition to standard current and savings product portfolio, Union Bank has launched pioneering products into the Nigerian retail market including Union Korrect, Union Goal and Union Betta.

As of Friday, Union Bank shares are up 8.3 percent since the start of the year.

TRANSPORT

Plentywaka expands routes, calls for partnership GBEMI FAMINU

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ith the advent of technology and digitalization, start-ups have continued to proffer solutions to various challenges perturbing people’s daily life.

Plentywaka, which was launched September 2019 began operations plying routes from Ajah to CMS has expanded to Abraham Adesanya and Awoyaya and also launched a new route from CMS (Outer Marina) to Eko Hotel Roundabout with future plans of expansion to even more routes, cities, and states within the country.

Johnny Enagwolor, managing director and co-founder, Plentywaka, says that improving the country’s transportation system is it’s core objective and in 5 months, it has achieved over 20,000 ride bookings monthly, in addition 1000 riders have been moved daily and over 20,000

mobile app downloads have been recorded.

Plentywaka launched its services with 25 vehicles and in 5 months since its launch, the technologydriven platform has increased its capacity with the launch of new vehicles.

These new vehicles were introduced through the Plentywaka Vehicle Partnership Scheme, in a bid to accommodate the growing number of its users.

The Plentywaka Vehicle Partnership (PVP) was introduced to provide individuals the opportunity to not only register their vehicles on the platform for free, but they also earn up to 500 thousand monthly.

The PVP Scheme has 3 onboarding opportunities available, these include the Vehicle Onboarding package which allows vehicle owners to register their own vehicles on the platform, the Vehicle Lease Financing package which provides the

opportunity for individuals to incur 30 percent of equity cost and 70 percent is provided by a Vehicle Leasing Company through a partnership that will generate revenues for all the parties involved.

The final package is the Vehicle Purchase with Cars 45 which provides the opportunity to simply sign up to purchase a quality vehicle and the vehicle will be registered on the platform. Please note that all the vehicles will remain the assets of its owners and will not belong to Plentywaka or its partners.

Enagwolor, said “Aside from being another venture channeled at infrastructural development, Plentywaka is also providing employment, investment options as well as other opportunities for people who are involved. This Plentywaka partnership will introduce Nigerians to a new way of not only making money

but also empowering their fellow citizens by creating multiple job opportunities for individuals with little or no source of income” The vehicle hailing ser-

vice also launched a new feature where both new and existing riders can simply take a ride, check-in and check out using the QR codes on the vehicles. This is called

the ‘Scan and Ride’ feature.

With this feature, riders can simply scan to download the app, check-in and check out of the vehicles using their smartphones.

L-R: Julius Adelusi-Adeluyi, chairman, MTN Foundation; Juliana Omosalewa Adelusi-Adeluyi, administrator and agriculturist; Hephzibah Itimi, manager, Love Home Orphanage, and Mazen Mroue, chief operating officer, MTN Nigeria, at the handover of items to the Love Home Orphanage, Magodo, Lagos, at the MTN Foundation Orphanage Support Initiative

Tuesday 21 January 2020

COMPANIES&MARKETS

BUSINESS DAY

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Business Event

FCA blindsided by investment fund suspensions

Regulator admits it does not track frequency of funds that block investor OWEN WALKER

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he Financial Conduct Authority has conceded it has failed to keep track of investment fund suspensions, an admission that raises questions over the effectiveness of its oversight and its ability to protect investors.

The UK financial watchdog has been severely criticised for its lack of oversight of several funds that have run into difficulty in recent years, including the high-profile collapse of Neil Woodford’s investment empire and a spate of property funds following the Brexit vote in 2016.

A lack of liquidity is one reason why funds that offer daily dealings can be suspended.

Last week the Labour party urged the government to delay installing Andrew Bailey, head of the FCA, as the new governor of the Bank of England and demanded an independent inquiry into the role of the regulator over

the implosion of Mr Woodford’s flagship fund.

Under the Freedom of Information Act, FTfm asked the FCA to provide data on the frequency of fund suspensions. When the regulator declined to provide the information, FTfm appealed against the decision and asked for an internal review.

After the regulator carried out its review, it provided a report to FTfm, which revealed the FCA “does not hold any central record or ‘index’ detailing” investment fund suspensions.

“The information sought in your request has not been stored in a way that would make it easily identifiable without reviewing each piece of information held by the FCA,” it stated.

Th e re ve l at i o n s w i l l alarm critics of the regulator, who believe it has not done enough to oversee funds and ensure they do not buckle, putting the savings of British investors at risk.

Alan Miller, chief investment officer of SCM Direct, said: “If the FCA cannot be

trusted to properly record its own supervisory and enforcement activities, how can anyone have confidence in the ability to properly regulate the industry and ensure customers are treated fairly?”

He said he supported an independent review of Mr Bailey’s appointment at the BoE, adding senior managers at the FCA were “simply not fit to hold such crucial regulatory positions of authority”.

The regulator — which has statutory objectives to protect consumers, financial markets and competition — carried out an investigation into the spate of property funds that were forced to suspend following the UK’s vote to leave the EU in 2016.

Its report, published late last year, introduced new rules for funds holding hard to sell assets.

It has also launched formal inquiries into the failures surrounding the Woodford fund’s collapse, as well as into the influential authorised corporate director sector.

L-R: Folakemi Emem Akpan, author; Imaobong Akpan of department of Education, University of Uyo; Seyi BabatundeOjo, and Modupe Oshinmakinde, at the launch/public presentation of three books Titled; Children of the Light, These Issues and Unravelled in Lagos

L-R: Kunle Adebiyi, chief sales and distribution officer, MTN Nigeria; Olufunke Oyelami, CEO, Bodlink Communications; Mazen Mroue, chief operating officer, MTN Nigeria; Beatrice Makinde, CEO, Apple Tree Communications, and Boni Obieze, LMD, Ringo Telecommunications Limited, at the Y’ello Partners Appreciation Day event that in Lagos

Reasons to beware the growing $1tn tech club Investors must not be complacent about the risks of concentration

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he elite club keeps on growing. Google’s parent Alphabet last week became the fourth US company ever to achieve a $1tn market valuation, something that once seemed unthinkable. The search engine joined technology peers Apple, Amazon and Microsoft in crossing the prized market threshold, driven up by investors’ appetite for their shares.

The broader stock market too has hit a record as valuations responded to the truce between the US and China on trade and surging profits from Wall Street banks. The S&P 500 went over 3,300 for the first time last week.

Yet the seemingly relentless march of the markets and the concentrated gains of these tech stocks raise some uncomfortable questions for investors. The tech giants now make up a significant chunk of the market. They account for more than 15 per cent of the S&P 500’s total value, according to Bespoke Investment, and provided one-fifth of the market’s growth in 2019.

For the wider economy and the market, this is a big deal. The growing dominance of passive funds has only exacerbated this trend; the money flowing into these stocks has forced passives to follow suit as their weighting in the index has increased.

Apple, whose market cap of $1.3tn exceeds the total value of stocks on many exchanges, accounted for almost one-tenth of the 29 per cent rise of the S&P 500 last year, according to Bespoke.

This level of dominance should give investors pause for thought.

There are echoes of the “Nifty Fifty” era of the 1970s when the market became fixated on a relatively small number of stocks. More recently, the last time there was such a high concentration at the top of the market was during the dotcom bubble 20 years ago. That era saw companies achieve inflated valuations based on little more than hot air, while stocks of average companies were shunned by investors.

There are crucial differences this time round. Even though the largest stocks today represent a greater share of the S&P’s overall value than their peers did in 2000, their valuations are not as stretched. The fundamentals of today’s $1tn companies are also built on more solid ground. They have strong balance sheets with significant cash-generating capability. Revenue growth rates, too, have kept pace even as these companies have grown bigger.

But the high growth rates of Big Tech will start to slow as core businesses mature.

Calls for stronger privacy and antitrust regulation are growing louder. These are risks that are not easy to price.

There are uncertainties also for the wider market. Investors have become inured to a world of low interest rates and seem to expect the perfect backdrop of favourable financial conditions and steady growth to continue indefinitely. But the overall macroeconomic climate cannot be ignored. Figures out on Friday showed that China’s economy grew last year at the lowest rate since 1990. Despite the truce in the US-China trade war, the retention of American tariffs could have a further impact on the Chinese economy.

Europe’s largest economy faces headwinds, too; Germa n e c o n o m i c g row t h slowed last year to its lowest rate in six years. The all-important automotive industry is shedding jobs.

Some 50,000 job losses were announced last year as the industry grapples with the costs of investing in electric vehicles and pressure from falling sales.

There is no sign of the rally in the equity markets ending anytime soon. Seasoned market watchers, however, will note that complacency often comes before a correction. Until then, the big are likely only to get bigger.

L-R: Oladele Afolabi, director, portfolio management, Debt Management Office (DMO); Sherif Idi, cofounder/chief marketing officer, TAJBank; Patience Oniha, director-general, DMO; Norfadelizan Abdul Rahman, MD, TAJBank; Hamid Joda, founder/chief operating officer of the Bank; Monday Usiade, head, market development, DMO, and Olanrewaju Oyeniyi, head of treasury, TAJBank, during a courtesy visit by the Management of TAJBank to the DMO in Abuja

L-R: Muhammadu Buhari, president with Kayode Ajulo, former national secretary, Labour Party, at a dinner in honour of Presidenial Election Tribunal Legal Team hosted by the President in Abuja.

Pic by Tunde Adeniyi.

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Tuesday 21 January 2020

BUSINESS DAY

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Tuesday 21 January 2020

BUSINESS DAY

AVIATION GUIDE in association with IATA to improve efficiency of cargo handling audits

FAAN, NCC partner to check copyright piracy

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Stories by Ifeoma Okeke

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he International Air Transport Association (IATA) has launched a new program to raise global standards in cargo handling operations.

The Smart Facility Operational Capacity (SFOC) program aims to reduce audit complexity and duplication for cargo handling facilities.

This new IATA initiative has two components: Standardized Global Audit Program: IATA has introduced the Smart Facility Operational Capacity Audit Certification (SFOC Audit Certification) to provide airlines with the assurance that SFOC Certified facilities are adhering to IATA’s Resolutions and Recommended Practices in cargo handling and with IATA’s Cargo Handling Manual (ICHM).

It is estimated 360,000 days per year are wasted annually on redundant cargo handling audits. The SFOC Audit Certification program aims to reduce redundant efforts across the industry by 50percent through removing the need to validate generic cargo operation procedures.

Committed Audit Reduction: The Audit Reduction Commitment (ARC) is an industry pledge to reduce audits. Airlines participating in the SFOC program will undertake a gap analysis to determine which audit standards will not need to be assessed for SFOC certified facilities. The revised audit scope is then defined through the ARC. Individual airlines will provide clear visibility on the potential audit reduction for SFOC certified facilities, ensuring there is a solid mechanism to eliminate redundant audits.

“Auditing is critical to ensure the global

standards that underpin the safe and efficient operations in the aviation industry. IATA’s strong capabilities in auditing have been proven in the successful IATA Operational Safety Audit (IOSA) and CEIV programs. The SFOC program will bring this expertise to general cargo handling operations,” Glyn Hughes, IATA’s Global Head of Cargo said.

Singapore will be the initial focal point for this important new initiative. SATS Ltd and Singapore Airlines are the first organizations to join the Smart Facility Operational Capacity (SFOC) program. SATS is the first Cargo Handling Facility to receive the new SFOC Audit Certification and Singapore Airlines is the first airline to join the program by signing the ARC. “The SFOC certification, which we have worked closely with IATA to refine, allows us to sharpen the focus of our own audits of our handling agents. This zooms in on SIA--specific

procedures, and enabling even greater emphasis on safety and security.

“The combination of both the SFOC audits and our own audits serves to provide a comprehensive picture of our service partners’ capabilities and operational quality, while improving audit efficiency for us and our service partners,” Chin Yau Seng, senior vice president cargo, Singapore Airlines said.

“SATS is delighted to be the world’s first cargo ground handler worldwide to achieve the IATA SFOC Certification. We are delighted to have Singapore Airlines as our partner and the first carrier to commit to ARC. “The certification affirms SATS’ consistent standards and the quality of our service. We hope other airlines will follow this example to realize the SFOC program’s full audit efficiencies for the entire industry” Yacoob Piperdi, CEO, SATS Gateway Services said.

Aero expands routs, increases frequency

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s Nigeria’s foremost carrier, Aero Contractors continues its successful run; the airline has expanded its routes in order to meet the demand of its customers.

From January 20, 2020, Aero Contractors, which has the highest record of air safety in Nigeria, operating for over 60 years, would extend its services to Abuja-Kano, Lagos-Asaba, AbujaAsaba and Warri-Port Harcourt.

According to Rogers Cookey, the Head of Commercial of the airline, the routes will be operated as follows: Abuja-Kano, 11:10 am;

Kano-Abuja, 12:20 pm; Lagos-Asaba, 8:30 am; Asaba-Lagos, 15:10 pm.

Others include Asaba-Abuja, 9:50 am; AbujaAsaba, 13:50 pm; Warri-Port Harcourt (NAF Base) and Port Harcourt-Warri, 12:45 pm.

Aero Contractors has been expanding its operations since last year and has recaptured significant segment of the domestic market.

Cookey remarked that with the new routes expansion, the airline continues to play a dominant role in scheduled flight operations.

The airline, which has fixed wing, rotary wing and maintenance, repair and overhaul (MRO)

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facility, has been recording success in all the divisions of its operations.

Cookey said that the airline effectively maintains all its aircraft, conducting C and D-checks on its Boeing Classics and also engages in thirdparty maintenance.

It also conducts maintenance on its Bombardier Dash 8 aircraft and the same with its helicopters, which in addition to maintenance, assembles the equipment.

In 2019, Aero Contractors maintenance division conducted major checks for Nigerian and foreign carriers, from different parts of Africa.

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he Federal Airports Authority of Nigeria (FAAN) and Nigerian Copyright Commission (NCC) have committed to the development and implementation of a national anti-piracy strategy to address the sale of pirated books, films, music and other copyright infringing materials in and around the nation’s local and international airports.

Both Federal agencies agreed to work out the modalities for sustained proactive enforcement to ensure that the interest of right owners are adequately protected in line with the Federal Government policy of guaranteeing adequate return on investment and growing the creative sector.

Rabiu Yadudu, managing director of FAAN, and John Asein, director-general of NCC, disclosed these in Lagos yesterday, 16 January 2020, during a consultative meeting held at FAAN Headquarters, Ikeja, Lagos. Yadudu gave firm assurance that FAAN would partner with NCC to ensure that its premises do not become a safe haven for copyright criminals. He reiterated the commitment of FAAN to support NCC in its renewed fight against piracy in Nigeria.

According to him, “We are committed as Government agencies to protect public interest even in copyright matters and we owe a duty to assist each other in executing our mandates. The legal and commercial teams of FAAN will be deployed to assist NCC to strengthen its enforcement actions at airports across the country”.

While decrying the pervasive piracy in all copyright sectors, the FAAN MD urged right owners and other stakeholders in the industry to address the challenges in the distribution networks so as to make genuine copyright works more readily available in the market.

Earlier, Asein, the director general NCC, had expressed concern at the high volume of pirated materials at the nation’s airport and the negative impact of this, not only on the fortunes of right owners but also on the nation’s image.

He stressed that the criminal activities of a small percentage of Nigerians were capable of distorting the country’s image as a land of talented, industrious and law-abiding people.

Asein noted with regret that the activities of pirates have adversely affected the educational sector and threatened the book industry.

According to the Director General, some of the authors whose books were highly pirated included those of Nobel laureate, Wole Soyinka; former Presidents like Olusegun Obasanjo and Goodluck Jonathan as well as renowned authors like Olusegun Adeniyi.

Explaining the commitment of NCC to ridding Nigeria of reckless distribution of pirated materials, he remarked that his agency in collaboration with relevant sister agencies, would intensify efforts at different production, distribution and sales points; at border posts; air and sea ports; hotels, malls and other public places; and on the streets, as part of a comprehensive action plan against all forms of piracy and copyright abuses.

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Tuesday 21 January 2020

BUSINESS DAY

Media business 7.5% VAT hike: Manufacturers may consider overburdened consumers

Expert charges organizations on millennial question in the new decade

Daniel Obi

he Convener of the Employee Marketplace (EMP) Initiative Nduneche Ezurike has noted that ahead of the famed disruptive technologies and digital transformation, the millennial question could determine the success or failure of many organizations in the new decade.

Writing on “2020: The decade of the millennials” Ezurike noted, “For the first time, three out of every five employees will be millennials and one a centennial.

This means that many CEOs in this decade will emerge from the cohort of those who are described as entitled, open, connected and confident with little regard to traditional hierarchies” Ezurike, a Marketing Communication specialist

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anufacturing companies, especially in the FMCG sector say they are presently studying the Finance Act expected to take effect in the first week of February, this year with caution not to hike product prices with intention not to overburden the consumer.

The Finance Act directs an increase in the VAT rate from five per cent to 7.5 per cent and the 2020 Appropriation Bill is based on this new VAT rate. This means that there supposed to be increase in price of products by manufacturers to accommodate the increase.

But a source in a top FMCG company told BusinessDay yesterday that manufacturers will be cautious in effecting changes in price as consumers are already overburdened.

“The Finance law through which government is trying to raise money to finance critical infrastructure will definitely raise our operational cost and overhead cost but it will be difficult to pass them on to the consumer”, the source said.

The source said that the company is planning other options but said the company will try to bear the additional cost that the Finance Act will bring.

In addition to VAT increase, Federal Government had in June, 2019, on the recommendation of the Tariff Technical Committee of the Ministry of Finance,

approved an increase to the excise duties on tobacco and alcohol.

The increase in the excise duty was introduced in phases over a three-year period (from 2018 to 2020) to lighten the impact of the increment on the price of the products for consumers.

For instance, Beer and Stout would in 2018 pay N0.30k per centiliter (“Cl”) and pay N0.35k per Cl for both 2019 and 2020. Wines would pay N1.25k per Cl in 2018 and N1.50k per Cl for both 2019 and 2020.

In his reaction to the new Act, Timothy Olawale, Director General of NECA warned that government should not see the private sector as a “cash cow” in its drive to raise revenue, as it will do more harm to the already burdened private sector and further impoverish the citizens

that the President promised to take out of poverty.

“Apart from the increase in VAT, some other changes would include a situation where Nigerians who want to open or maintain accounts with the Deposit Money Banks will not have to provide their Tax Identification Number to do so, which is commendable.

Again, the fact that the Federal Government has raised the threshold from which stamp duty will be charged fo r o nl i n e t ra n sa c t i on s from the current N1,000 to N10,000 is also noted.

However, Olawale cautioned that: “the common man will definitely be at the receiving end of the increase in VAT. Even if businesses are taxed more through likely illegal levies and rates outside the provisions of the law, they will naturally pass the

cost to the customers whose purchasing power is already at the lowest ebb.”

While proposing a way out for Nigeria, Olawale noted that “what needed to be done by the government is an aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens as it’s been posited, arguably that less than 40 percent of Nigerians are tax compliant. Secondly the government should put mechanisms in place to eliminate leakages as a large chunk of the IGR realised does not find their way into government coffers.

He also called on Nigerians to ensure compliance, as it is now a law. NECA, however, expressed concerns about the implications of the recent increase in VAT on businesses and the purchasing powers of masses.

Eat’N’Go plans to increase investment in Nigeria from N8bn Daniel Obi

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at ‘N’ GO Limited, operators of Domino Pizza, foremost pizza chain globally has resolved to increase its investment in Nigeria from over N8 billion with opening of more branches across Nigeria.

The company which started operation in Nigeria in 2011 has invested over N8 billion on its 104 stores and it says it intends to set up additional 38 new outlets across Nigeria. The new stores will increase its employment of Nigerians from the present 2,600 employees.

According to the company, in a statement, the 38 new outlets will be located across Kaduna, Benin, Awka, Asaba Owerri, Warri, Onitsha, Sagamu, Choba, Umuahia, Osogbo, Lagos

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Island, Ejigbo, Ado Ekiti. This means it will lease properties in those cities for operations as it wants parties with properties for lease in high profile sites in these cities to indicate interest.

Olusola Adeeko, Head of Development Eat’N’Go Limited said “The opening of new outlets in these new cities we have identified, represents a very exciting time in the growth of our business.

Our goal is to keep investing strongly and creating more opportunities to provide access to all our customers across the country, while also creating employment.”

The expansion to these new cities, he said in the statement are in line with the company’s plans to increase its physical outlets by up to 50 outlets a year over the next five years and progressively grow its workforce across Nigeria.

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and Head of Brand Communication in one of Nigeria’s Commercial Banks explained that most organizations in Africa seeking to build sustainable businesses must be ready to confront four defining workplace challenges, first of which is to always design and implement a bottom-up approach to organizational strategy.

He also charged organizations to entrench a crossgenerational workplace that combines the digital capability of the millennials with the emotional intelligence of the X Generation as this will enable a more harmonious working environment.

In the era of talent economy, he advised employers to embrace an environment where employees can work remotely, virtually and mobile.

Nigerian Bottling Company appoints Matthieu Seguin as Managing Director

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on-alcoholic beverage giant, Nigerian Bottling Company Limited (NBC) has announced the appointment of Matthieu Seguin as the company’s Managing Director effective October 3, 2019. Seguin succeeds George Polymenakos who was appointed in August 2016. Until his appointment, he was the General Manager for Coca-Cola HBC Ireland & Northern Ireland for almost 4 years.

According to the company’s Public Affairs and Communications Director, Ekuma Eze, Seguin will lead the organization and its over 2,700 employees to deliver growth, business optimization and profitability for Coca-Cola Hellenic Business in Nigeria.

Eze stated that Seguin is a thoroughbred professional

Matthieu Seguin @Businessdayng

with multi-industry experience and a remarkable track record in business turnaround as well as a strong passion and commitment for people development, having served in different capacities in top management positions.

He further disclosed that Seguin is not new to the company or the Nigerian business environment, having previously worked in Nigerian Bottling Company as the Commercial Director between 2011 and 2016.

Seguin joined Coca-Cola HBC in December 2009 as Group International Customer Director. In May 2011, he was appointed the Country Commercial Director for Nigerian Bottling Company.

Before this, he had worked with Procter and Gamble for almost 18 years in different commercial roles across Europe, Middle East & Africa.

During his time as General Manager for Coca-Cola HBC Ireland and Northern Ireland, Seguin led the organization through a period of considerable success, delivering profitable growth through focus on prioritization, simplification and team development.

Matthieu Seguin is an alumnus of the INSEAD School of Business, IMD Business School and Ecole de Management de Normandie.

Tuesday 21 January 2020

BUSINESS DAY

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ADVERTISING Expert links start-up failures to difficulty in accessing data, cost of skills acquisition Daniel Obi

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ifficulty in accessing data to build successful business model and high cost for skills acquisition in reputable institutions for businessbeginners, especially in Africa have been identified as part of causes of start-up’s failures within the first five years.

African business beginners face numerous challenges that threaten their business. In an interview with BusinessDay recently, Kwame Senou, Senior Vice President of Opinion & Public in Abidjan, Ivory Coast said information to build a successful businesses are unreachable to most entrepreneurs. “Graduates to become talents need skills they can’t afford to pay to be trained for”, he said.

According to him most businesses don’t start with the required capital leading to failure because of underinvestment in talents, tools, and innovations.

“Even when the funding is available, the cost is so high that the local businesses can’t sustain a serious rivalry in the market. Even the ones that are surviving are living on suppliers’ credit or huge debt, is a marketing services” Explaining that everywhere in the world, doing business is about making a bet on an idea and putting the required capital behind it, whether it is financial or human, the marketing expert who has worked

with many multinationals like Omnicom Media Group, Starcom Media Vest, Havas Africa and WPP in Frenchspeaking African countries on marketing, said in the first 5 years, businesses are exposed to challenges that don’t have vaccines.

Senou gave some action points that are needed to get a business past these times. This include getting the business model right, building a winning team with diverse individuals, winning the trust of customers, getting the required funds, building the culture and the way of working that come with it. He however noted that this is very difficult in a complex business landscape disrupted by digital to make this happen.

He said Public policies are seriously needed to help our businesses to be more success-

ful and have more to survive beyond the 5 years”, he said.

The context in Africa makes it more complicated for business to survive.

“We must change the whole mindset about businesses, that’s the first step. Entrepreneurs around the world have brought development to their countries but we still perceive them as greedy people which make officials not to empower them.

On how African countries and business concerns can do business among themselves Senou said African countries should first understand that “our countries are artificial in order to sense the importance of being together. In business, the size matters. 54 small countries can’t be relevant separately. “ If you look at the global players, size is always involved from USA to China or Rus-

sia. Even France and UK (to complete the 5-veto holders in UN), built on their colonial empire. If we can successfully develop regional giants in ECOWAS, SADC, EAC we will really leverage from this consistent size and develop competitive companies that can hire people, empower SMEs supplying or servicing them. For that, we need to move beyond the emotional mindset of basic nationalism based on artificial reasoning”.

On how to achieve this, he said we need visionary leaders in the region and create modern businesses with large shareholding, corporate governance and active government support at regional level. Ecobank was started right from the beginning as a regional business, I think that way of thinking is more consistent. Partnership is the ultimate formula to this”.

Stanbic IBTC Bank wins Best Foreign Exchange Provider award erage, transaction volume, innovative technologies, competitive pricing and market share.

The panel of judges at the Global Finance award, according to the statement also considered various inputs from industry analysts as well as corporate executives and technology specialists.

Headquartered in New York, with offices around the world, Global Finance awards identifies and awards top performers among banks and other providers of financial services.

Daniel Obi

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tanbic IBTC Bank PLC, a subsidiary of Stanbic IBTC Holdings PLC, has emerged the Best Foreign Exchange provider in Nigeria at the Global Finance World’s Best Foreign Exchange Provider Awards. The event was held at RSA House in London recently, according to a statement.

Stanbic IBTC Bank PLC won the award having performed excellently in the following areas: customer service, scope of global covwww.businessday.ng

The best performing financial institutions are recognized at three levels: global, regional (continent) and country. Standard Bank, the parent company of Stanbic IBTC Holdings PLC, was awarded as the Best Foreign Exchange Provider for Africa at this year’s awards.

The Nigerian Capital Importation reports of the Nigerian Bureau of Statistics identified Stanbic IBTC Bank PLC as attracting the highest volume of capital investments into Nigeria in the second and third quarters of 2019.

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Media practitioner links future of PR practice to disruptive innovation Daniel Obi

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he Lead Consultant of TPT International, Adetokunbo Modupe has said that disruptive innovation remains the critical life support that will define the future of Public Relations (PR) practice in Nigeria.

Modupe who spoke at Brandcomfest conference recently in Lagos recently explained that “the future will be service driven as no one will own anything.”

Modupe who spoke on Digital Disruption and the Future of Public Relations Practice, noted that in no distant future, material possession will have a little significance in today’s global market as real-time lending equips practitioners with the many benefits of ownership.

“Uber doesn’t own any vehicle, Airbnb doesn’t own any real estate. Facebook, as the world’s most popular social platform, almost creates no content. Ali baba, as the world’s

most valuable retailer, has no inventory,” he said.

Quoting Clayton Christensen who described disruptive innovation as a technology or concept whose application significantly affects traditional market or industry functions, Modupe maintained that disruptive innovation is like a virus which does not happen suddenly, but surely will change the ways things are done “An example is how the internet as a disruptive innovation has caused the remodelling of the book selling industry.

All the big book selling chains market share have been swallowed by Amazon because without having to own brick and mortar stores, it can display its inventory,” he said.

He also pointed out other dimensions of disruptive innovation to include a process by which a product, service or culture takes root slowly and it is sometimes ignored but relentlessly climb up to displace tradition, citing the local example of Cowbell versus Peak Milk.

BD Brand Talk

Revisiting the debate on brand potential Mike Umogun

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he Longman business dictionary defines potential as the possible future success of a brand in a market. Nigel Hollis a brand and marketing strategist at Kantar once wrote a post about the spurious dichotomy between the short and long-term effects of marketing. In it he argued that the separation between the two-time frames was a spurious one, but how do you predict whether your marketing will have a positive effect in the longer-term?

Every marketer is interested in the potential of their brand because it determines how the brand reacts to its marketing environment.

“Long-term effects are generally measured through increased brand awareness, brand equity, increased loyalty or higher price elasticity and I must add increased revenue, better bottom line.

Chief Executive Officers would always ask their marketing team what would be the potential and return on investment for the millions of naira you are asking for?

The marketer’s interest in any business is therefore fueled in the short and long run by the potentials and opportunity the business holds.

Where the potentials are not glaring interest in the business is dampened.

One output of the Meaningfully Different Framework

by Kantar is an equity summary we call Potential, which is designed to anticipate how likely it is that a brand will grow. We report Potential as a probability of growth because there is no guarantee that to@Businessdayng

day’s potential will be realized in future.

Potential is exactly what the name implies; it is a latent strength. To realize a brand’s potential the marketer must extend the reach of the brand to new customers and do so in a way that is more compelling than the competition’s marketing efforts.

According to Kantar a brand that intends to achieve its full potential must always act quickly to gain competitive advantage , ensure it’s the first to come to mind at the point of truth in the front of shelves , understand what drive sales now and in the future and must understand where to and how to invest in the near future.

The only other way to anticipate whether a brand is likely to grow is to look at trends over time and assume that they will continue (which is a risky assumption if the brand does something different or the context changes). But what trends should we look at? Overall sales may increase simply because of price discounting which could undermine the future strength of the brand.

Far better to look at the trend in base sales – the proportion of sales not dependent on shortterm marketing activities – and see whether that is increasing or decreasing.

To my mind a brand that is growing base sales faster than total (provided the total is growing) is one that is becoming stronger over time.

And a brand that was lowering price elasticity over time at the same time it was growing sales would be even stronger. But what do you think?

Please share your thoughts.

Michael Umogun (michael. umogun@kantar.com)

20

Tuesday 21 January 2020

BUSINESS DAY

FINANCE ACT, 2020 CHAPTER 2

General Implications of the Finance Act on the Nigerian economy Continued from yesterday

(iv) Restriction of deductible interest to 30% of EBITDA

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he Finance Act introduces interest deductibility rules for Nigerian companies and any fixed base of a foreign company in Nigeria. The rules limit the deductibility of interest and similar expenses incurred by a Nigerian company, in respect of debt issued by a foreign connected person, to 30% of the Nigerian company’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) in the accounting period.

Interest expense in excess of this cap will be disallowed in the current tax year but can be carried forward and treated as tax-deductible for a maximum of five tax years.

Violation of the interest deductibility rules will attract penalty and interest charges on any adjustments made by the FIRS on the excess interest deducted in a tax year. This provision is based on Action 4 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) report.

Companies will therefore need to review the interest payable on their related party loan arrangements, on an annual basis, to ensure consistency with the limitation of interest deduction rule. This rule does not however apply to subsidiaries of foreign companies engaged in the business of banking or insurance.

2.2.4 Simplification of commencement and cessation rules and elimination of the double taxation risks associated with their application.

The CITA hitherto provided special rules for determining the tax base of a company in the first three years of business and in the last two years of business. These rules, which were referred to as the “Commencement” and “Cessation” rules, respectively, had often resulted in double taxation of profits earned in one or more financial years of the company during these periods.

The Finance Act modifies the commencement and cessation rules such that companies pay taxes based on their accounting periods.

The implication of this modification is that companies will now be allowed to prepare and file tax returns in their first, second and third years of assessment based on their first, second and third sets of financial statements thereby eliminating the double tax risk associated with application of the erstwhile commencement and cessation rules.

2.2.5 Moderation of Foreign Loan Exemption Under the erstwhile provisions of the CITA, foreign companies were allowed to enjoy full (100%) or partial (10%, 40% or 70%) WHT exemption where the terms of a loan provided to a Nigerian person meet the specific grace period and loan tenor requirements under the CITA. However, the Finance Act modifies this exemption by revising downward the WHT exemption applicable on interest income on foreign loans. The revised exemption rates are now 70%, 40% and 10%.

Furthermore, the Finance Act also attempts to resolve the extensive debate on the conditions for qualifying for the exemption by providing a definition for the terms, “repayment period” and “moratorium period”.

The impact of the modification may be significant to several companies who have existing foreign loan facilities structured to enjoy the exemption. Thus, these companies may consider proactively evaluating the potential impact of the above change to their financing model.

procedure for computing minimum tax, under the CITA, with a simplified base rate of 0.5% of the qualifying company’s turnover less franked investment income.

This modification was made in recognition of the need to shift the impact of minimum tax from capital basis to a purely revenue-based approach.

The more far-reaching amendment of this section is the deletion of the previously available exemption for companies with at least 25% imported equity capital and the addition of a new class of companies exempted from minimum tax, being small companies with an annual gross turnover of less than N25 million.

In effect, all non-resident companies and many foreignowned companies operating in Nigeria, which were hitherto exempted from paying minimum tax, will now fall within the minimum tax net (unless they meet the other criteria for minimum tax exemption).

It is expected that this change will create equity between multinational and indigenous companies.

2.2.7 Introduction of a progressive CIT system Prior to the enactment of the Finance Act, the generally applicable CIT rate in Nigeria was 30% of taxable profits.

However, manufacturing and agric businesses in their first 5 – 7 years were allowed to pay tax at a reduced rate of 20%.

Unfortunately, this incentive did not apply to start-ups, Small Enterprises (SEs) and Medium-sized Companies (MSCs).

In line with the Federal Government of Nigeria’s commitment to encourage growth and development of the SEs and MSCs, the Finance Act introduces a new progressive CIT rate regime. Under the revised regime: a) Start-ups and SEs with annual gross turnover of not more than N25 million would be completely exempted from paying CIT subject to timely filing of CIT returns. b) MSCs whose turnover exceeds N25 million but is less than N100million will be subject to CIT at 20%.

c) Every other companies with annual gross turnover of N100million and above, which are defined by the Finance as “large companies,” will pay tax at the standard CIT rate of 30%.

2.2.8 Changes to Modalities for payment of tax Prior to enactment of the Finance Act, companies were allowed to pay their taxes either in full, within 60 days of the due date of filing their returns, or in a maximum of six-monthly instalments with the final instalment being paid before the 30th day of November in the relevant year of assessment.

However, the Finance Act modifies the applicable payment terms by: a) requiring companies filing selfassessment to pay their taxes in full on or before the due date of filing; and b) offering a tax credit equal to 1% (2% for medium-sized companies) of the amount of tax paid, where a company pays its taxes 90 days before its due date for filing. c) increasing the applicable penalties and interest for late payment of taxes d) increasing the applicable penalties for late filing of tax returns to N50,000 in the first month and N25,000 subsequently.

These changes are intended to improve taxpayer compliance, ease tax administration and enforce prompt payment of taxes. It is, however, unclear whether the early tax payment incentive offered is significant enough to stimulate the type of taxpayer behavior envisaged by the government, or whether the penalties may be considered excessive.

a) Requirement for every company to provide a Tax Identification Number as a precondition for opening or continued operations of an account with a bank or any other financial institution. b) Non-deductibility of any penalties prescribed by any Act of the National Assembly for violation of any statute. c) Modification to the tax rules for insurance companies. Please refer to Chapter 5: Financial

The Finance Act replaces the cumbersome www.businessday.ng

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2.3 Petroleum Profits Tax Act (PPTA) Cap C4. Laws of the Federation (LFN) 2004 (as amended) Under the erstwhile PPTA framework, dividends paid out of after-tax profits were exempted from tax under any other taxing legislation. Consequently, investors in upstream petroleum operations in Nigeria were allowed to enjoy tax free returns on investment.

The amendment revokes this exemption and subjects such investors to WHT, which is the final tax payable by the investors on those profits.

Please refer to Chapter 6: Oil and Gas Industry Impact Analysis for details.

2.2.9 Other noteworthy changes

2.2.6 Minimum tax

Services Industry Impact Analysis for details. d) Removal of the seeming restriction on the ability to carry forward first year losses indefinitely. e) Introduction of a specialised tax framework for Securities Lending Transactions.

Please refer to Chapter 5: Financial Services Industry Impact Analysis for details. e) Introduction of specialised tax rules for a Real Estate Investment Company.

Please refer to Chapter 4: Consumer Markets and Infrastructure Industry Impact Analysis for details. f ) Reduction of the WHT rate on road, bridges, building and power plant construction contracts from 5% to 2.5%.

Please refer to Chapter 4: Consumer Markets and Infrastructure Industry Impact Analysis for details. g) Introduction of minimum holding period rules for related party business reorganisations under Section 29(9) of the CITA. Please refer to Chapter 7: Impact on Business Reorganisation for details. h) Amendment to the export profit exemption rules. Please refer to Chapter 4: Consumer Markets and Infrastructure Industry Impact Analysis for details. i) Amendment of the incentives available under the Gas Utilisation (Downstream Sector) Incentive. Please refer to Chapter 6: Oil and Gas Industry Impact Analysis for details j) Deletion of redundant provisions relating to replacement of obsolete plant and machinery under Section 41 of the CITA. k) Exemption of unit trust dividend from WHT. Please refer to Chapter 5: Financial Services Industry Impact Analysis for details.

2.4 Personal Income Tax Act (PITA) Cap P8 Laws of the Federation (LFN) 2004 (as amended) The Finance Act provides the following modifications to the PITA: a. Requirement for every person (body corporate, trustee, partnership, etc.) to provide a Tax Identification Number as a precondition for opening a bank account and for continued operations of its bank account in respect of its business operations. b. Replacing reference to Federal Board of Inland Revenue with Federal Inland Revenue Service. c. Removal of the requirement to obtain approval from the FIRS as a precondition for claiming contributions made to a pension, provident and other retirement benefits fund as a tax-deductible expense. d. Deletion of the provisions granting children and dependent relative allowances.

This amendment seeks to resolve the controversies surrounding the entitlement of chargeable persons to children and dependent relative allowances in addition to the consolidated relief allowance granted under the PITA. e. Clarification that a notice of objection submitted via electronic e-mail will be considered valid.

@Businessdayng

Tuesday 21 January 2020

BUSINESS DAY

21

CHAPTER 3

Indirect taxes The Finance Act 2020 contains amendments to the legislation on indirect tax across the ke y thematic areas. These changes are discussed under the relevant Acts as follows :

3.1.5 Other noteworthy amendments

3.1 Value Added Tax Act (VATA), Cap V1, LFN 2007 (as amended) 3.1.1 Increase in VAT rate and palliative measures to manage its impact

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tenet of Nigeria’s National Tax Policy is a gradual shift from reliance on direct tax to indirect tax for economic growth.

To achieve this, a progressive increase in the VAT rate and a gradual reduction in income tax rate is recommended. According to the National Tax Policy, indirect taxes are more efficiently realised by the FIRS and, therefore, yield a higher rate of return, when compared to direct taxes.

The Finance Act provides for a VAT rate increase by 50%, i.e., from 5% to 7.5%.

The rate increase, when combined with other VAT-related changes, is expected to increase VAT revenue significantly.

To mitigate the impact of the revised VAT rate increase to 7.5% and facilitate economic grow th and development through SMEs, the Finance Act introduces palliative measures for micro and small enterprises.

One palliative measure is the introduction of a VAT compliance threshold. The threshold is to exempt companies with an annual turnover of N25,000,000 or less from registering for the tax, charging the tax, rendering a monthly return of its sales and purchases and from the penalties prescribed by the Act for non-compliance with the administrative provisions.

It is expected that, by introducing a VAT compliance threshold, the cost of tax administration will reduce because the FIRS can now focus its compliance monitoring efforts on large businesses only. When combined with an increased VAT rate, increased tax yield may be achieved on an overall basis. This measure also encourages many more companies to come voluntarily into the formal tax net for the purpose of enjoying the tax benefits available. It is hoped that once businesses then come into the tax net, they would stay even after their businesses grow beyond the exemption threshold thus allowing their contribution to the treasury in future years.

Another noteworthy palliative is exemption of services rendered by microfinance banks (unit, state and national) from VAT. This will, hopefully, create a wider opportunity for growth and development of micro, small and medium enterprises.

3.1.2 Broadening the scope of coverage of the Nigerian VAT Act The erstwhile provisions of the VAT Act did not contain a definition of goods.

Consequently, VAT-able goods had, in practice, been limited to tangible goods that are not exempted under the First Schedule to the Act. Incorporeal property was generally accepted as non-VATable, by taxpayers, on the basis that such property neither constitute goods nor services and supply thereof cannot attract VAT. In fact, the Federal High Court had

ruled in the case between CNOOC Exploration and Production Nigeria Limited and the FIRS that interest in rights in an oil concession is an incorporeal property; it is neither a good nor service, which are the two categories of taxable items under the VAT Act. This judgement further validated the view that transactions in incorporeal property should not attract VAT. The Finance Act seeks to expand the definition of “goods” to include ‘any intangible product, asset or property over which a person has ownership or rights, or from which he derives benefits, and which can be transferred from one person to another, excluding interest in land”.

Consequently, the VATability of incorporeal property, such as rights, patents, trademarks, royalty, etc., that was hitherto debated has now been legislated in favour of the treasury.

3.1.3 Place of supply rules Another controversial issue that may potentially be resolved by the Finance Act is the VAT-ability (in Nigeria) of services provided outside Nigeria by a nonresident company (NRC) to a Nigerian company.

One view on the subject is that such transactions should be liable to VAT in Nigeria because the recipient is in, and consumed the services, in Nigeria – meaning the services were effectively supplied in Nigeria.

The contrary view is that a service supplied outside Nigeria should not be liable to VAT in Nigeria simply because it was enjoyed by a Nigerian-based customer.

The differing views on the subject have been debated extensively by taxpayers and the FIRS,and has even been submitted to the courts, including the Court of Appeal (CoA), for determination. According to the CoA, in the case between Vodacom and the FIRS2, such services should be liable to VAT in Nigeria if provided to a Nigerian-based customer and enjoyed in Nigeria. It is noteworthy that this conclusion aligns with the Organisation of Economic Cooperation and Development’s Destination Principle.

The Finance Act seeks to resolve this ambiguity by introducing “place of supply rules” for services.

According to the Finance Act, a service would be deemed to be supplied in Nigeria if the “services are rendered in Nigeria by a person physically present in Nigeria at the time of service provision, or the services are provided to a person in Nigeria, regardless of whether the services are rendered within or outside Nigeria”.

By implication, every service supplied (either locally or imported) to a Nigerianbased customer and enjoyed in Nigeria

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becomes VATable in Nigeria.

Furthermore, the Finance Act also seeks to resolve the current controversy on the definition of “exported service”, which is zerorated for VAT purposes by redefining exported service as a “service rendered within or outside Nigeria by a person resident in Nigeria, to a nonresident person outside Nigeria”.

These amendments would align Nigeria’s VAT Act with the global best practice of subjecting a transaction to VAT only in the jurisdiction of consumption, i.e., the Destination Principle.

Certainty around taxation is critical for raising revenue and for business planning purposes. It also gives the FIRS the opportunity to collect revenue that would otherwise be lost simply because of the ambiguity in law and significantly reduce the costs incurred in adjudicating the matter.

3.1.4 Cash basis for accounting for VAT and VAT refunds The Finance Act provides clarification that VAT should be accounted for on cash rather than accrual basis.

Accounting for VAT on cash basis means that a taxpayer can only recover input VAT that has been “paid” against output VAT that has been “collected”.

For taxpayers who do not have input VAT to claim, it is only VAT that has been collected that should be remitted to the FIRS. The amendment would help manage taxpayers’ cashflows and reduce the risk that a business ultimately bears the VAT burden for its customers, particularly in cases of bad debt.

A taxpayer who is entitled to a VAT refund is required to first recover its overpayment as a credit against subsequent VAT collections. Any excess over and above the amount credited against VAT collections would then be refunded. By so doing, the current practice of applying VAT overpayments as a credit would be prescribed into law. Furthermore, the administrative cost to businesses for making refund claims should reduce significantly.

Although the Act does not prescribe conditions under which a refund claim may be made, it may be reasonable to conclude that refund claims should only be made after it has been determined that the Company would not collect enough output tax from which recoveries can be made. Such circumstances, in our view, would include dormancy, cessation or companies whose inputs are used in the creation of zero-rated goods, etc.

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a) Remov al of the requirement for an NRC to register f or VAT in Nigeria and the imposition of an obligation on a Nigerian customer to self-account for VAT, regardless of whether the NRC charges the VAT or not. b) Requirement f or a customer to self-account for VAT where the supplier of VATable goods or services f ailed to charge VAT. c) VAT ex emption on assets transferred pursuant to a related-party business reorganisation, subject to satisfying the minimum holding (of shares) period requirement. d) More punitive penalties for noncompliance. F or e xample, an increase in the penalty for f ailure to register for VAT as prescribed from N25,000 f or the first month in which the def ault occurs and N5,000 in subsequent months of def ault to N50,000 in the first month, and N25,000 in subsequent months. e) I ntroduction of a requirement to deregister for VAT in the ev ent of business cessation. f ) A definition of “basic f ood items” and an enumeration of f ood items that qualify as basic food items. F or e xample, a clear articulation that bottled w ater qualifies as a basic food item. g) Widened scope of VAT ex empt items to include locally manufact ured sanitary tow els, pads and tampons, t uition relating to nursery, primary, secondary and tertiary education. h) D eletion of redundant provisions in the VAT A ct, such as section 32, whic h is a duplication of the penalty for failure to register sta ted in Section 8 of the VAT Act. 3.2 Customs and Excise Tariff etc.

(Consolidated) Act, Cap C49, Laws of the Federation of Nigeria 2004 Prior to enactment of the Finance Act, excise duty (ED) was applicable on excisable goods However, such goods when imported into Nigeria did not attract ED. The Finance Act seeks to address this disparity by subjecting imported excisable products to ED. Please refer to Chapter 4: Consumer Markets and Infrastructure Industry Impact Analysis for details.

3.3 Stamp Duties Act (SDA) S8, LFN 2007 The Finance Act provides for modifications to the SDA that legalises the charge of stamp duties on electronic receipts and also appoints the FIRS and State Internal Revenue Service as the relevant competent authorities responsible for collecting stamp duty on behalf of the Federal Government and the State Governments, respectively.

This addresses the dispute between the NIPOST and the FIRS as to which body is responsible for collecting the duties.

Ajibola Olomola Partner Continues tomorrow

@Businessdayng

22

Tuesday 21 January 2020

BUSINESS DAY

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Nigerian varsities grapple with upholding worthy in character, learning tenets

Greensprings student beats off competition to win Mascot design challenge

KELECHI EWUZIE

KELECHI EWUZIE

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he University system in Nigeria that pride itself as beacon of hope with high moral, ethical and academic standards in the sixties and seventies where world class engineers, doctors, academia and architects are churned out appears to have lost its bearing going by recent happening.

In the past, citadel of higher learning has as one of its cardinal functions, the role of superintending over the production of graduates who have being found worthy both in character and in learning.

But alas! Today, the situation is quite the opposite of what obtains in the past. The university system rather than keep up with the intellectual vibrancy that epitomises its esteem image, have being replaced by reported incidences of massive corruption in the degree awarding process, admissions process, nepotism in the employment, promotion processes, forged certificates; production of substandard doctoral degree theses, submission of papers to international journals that are none existence and by inference substandard doctoral degree holders.

Joseph Mba, an education expert lamented that graduates are not groomed for successful living because they passed

C Said Olayinka, Bursar; Oyedamola Oke, Deputy Vice Chancellor (Administration); Olanrewaju Fagbohun, Vice Chancellor; Peter Okebukola, Director, ACEITSE; , Joseph Olagunju, Dean Postgraduate School and Olayinka Amuni, Registrar at the Commencement Lecture of ACEITSE at Lagos State University.

through a system that encouraged dishonesty, corruption, mediocrity and other vices, while calling on other stakeholders especially the policy drivers who are more in position to address the problem.

“Often, academic contents are not relevant to the needs of the society especially to the employers. Graduates from these institutions are usually theoretically baked but halfbaked for the business/practical world,” he said.

Sola Nasir, Chairman of the Lagos Zone of ASUU while commenting on the criteria for promotion into professorial status, observe that transiting from an associate professor to full-fledged professorship re-

quires a lot of steps, including publications of many articles in standard local and international journals and subjecting those papers to further scrutiny at different levels of committees before arriving at the appointment and promotion committees usually chaired by the vice-chancellors.

On his part, Peter Okebukola in a recent interview regrets that a growing number of Nigeria Lecturers are now caught in the plagiarism net.

“A growing number is implicated in plagiarism demonstrated in copying materials from others verbatim to form their self-published textbooks and cooking data for research without conducting the stud-

ies” he noted.

For decades, our institution of higher learning has become weaker and weaker and this is a challenge to managers of the education space. Each time we talk about corruption. It is not so much about the larger society; it is more likely that our citadel of higher learning has lost their essence of showing the light to mould human capital that is worthy in character and in learning.

The onus lies with the minister of education and other agencies of government to work at redesigning and retooling the universities to deliver the ideals upon which they were set up in the first place.

The disparity between education and development in today’s Nigeria

OYIN EGBEYEMI

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ducation today has taken a turn quite far away from the way that it was organised and delivered in the past. Traditional theoretical teaching and learning may be losing its relevance in today’s fast paced world. Educational systems and curricular in developed countries in particular are beginning to see the criticality of this and are therefore responding by adopting new strategies that should be relevant and directly applicable to the new and evolving “everyday life”.

It is extremely important to realise that education plays a key role in determining the value of the workforce, and therefore the value of any organisation, state or country. If educational systems are not strong enough to provide the relevant skills, where would this

leave us as a nation in terms of employment, development and even morality?

If people do not have the skills to be employed, they will not get jobs, not just because the jobs are not available but also because these people themselves are unemployable.

If skilled labour is not available for the jobs that are available then efficiency, effectiveness and development cannot occur. If efficiency, effectiveness and development cannot occur, there will be a huge deficit in returns, thereby leading to setbacks and frustration which in turn could lead to immoral and anti-social behaviour. If people are not continuously exposed to environments of adequate standards and values, they will not have a good enough understanding of what value actually is. Unfortunately, people cannot give what they do not have.

We in Nigeria are beginning to experience the frustrations caused by these deficiencies described above. They reflect in almost every aspect of our lifestyles, and as a nation, we www.businessday.ng

are getting to the point where we may soon start to wail for help (because many of us are already crying). There is a link between all of this and the products of our educational systems, people.

One example I can give as an employer of labour in a medium sized enterprise is my experience in the recruitment process for candidates for various positions. I find it rather alarming that graduates of universities in the country lack basic literacy skills. Reviewing Curriculum Vitae alone can be an excruciating process, not to talk of interviewing candidates.

If skills as basic as literacy are a problem, where do we start to tackle the dearth of other skills that are becoming more and more relevant in today’s workplace, some of which include teamwork, critical thinking, attention to detail, problem solving, communication and leadership. Technical knowledge, which is traditionally built by cramming and memorising information, will not be enough to survive in the

modern dynamic workplace.

Even if we think that there are many people who are exceptions to this (and there are), it is very important to recognise that this is a mere reflection of our population and probability.

With a large and growing population, it might appear relatively easy to identify the smarter people, especially in the formal sector, which is where the cluster of these people exists. If the elite took some time to move vastly far out of our comfort zones, we would then realise that the many clever people we know are just a tiny fraction of the larger population of the country.

There are just so many of us who are concentrated in the major cities and are in continued communication with people of like minds, so sometimes the lack in skills in the general population may not be apparent to us.

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

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omfort Samuel, a student of Greensprings School, Lagos has been declared the winner of the World School Games 2020 mascot design competition.

After several reviews and public voting, Comfort’s design named “The Eagle” was chosen as the overall best and the official mascot for the 2020 edition of World School Games taking place in Dubai.

The competition started in November 2019, and students from schools all over the world submitted their designs.

When asked why she chose an eagle for her design, Comfort said, “My inspiration comes from the issue of gender inequality in the world. Personally, I have been stereotyped many times because of my gender.

My idea is to pick an eagle, which portrays perseverance and never giving up.”

Jesimiel Samuel, Head of department, Physical Education at Greensprings School Lekki campus expressed his gratitude to people all over the world that voted for Comfort.

According to Samuel “When Comfort came up with the idea of The Eagle mascot and designed it, we were impressed by her creativity and had no doubt that the design would make it to the Top 10.”

“The design ended up making it to the top 2, alongside another design by a South Korean student; then it was all down to voting on social media to pick a winner. Comfort’s design was favoured over the South Korean who equally had a good mascot design. We are thankful to everyone that voted and helped us to win this competition, especially the entire Greensprings community, both at home and abroad for their impressive support.”

World School Games 2020 will be held in two batches.

The first batch, called U11, is meant for students under 11 years old, and it will run from the 30th of January to the 2nd of February. The second batch, called U13, is meant for students under 13 years old, and it will run from the 27th of February to the 29th of February. During the period, students from countries all over the world that are participating in the games will be competing in sports such as football, basketball, swimming, golf, tennis, netball and more.

Quickteller offers simplified JAMB registration process option for candidates

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arents and guardians of wards intending to sit for the 2020 UTME (Unified Tertiary Matriculation Examination) and DE (Direct Entry) examinations can now obtain the required JAMB (Joint Admissions and Matriculations Board) e-PIN from the comfort of their homes via Quickteller.

Quickteller, the consumer payment platform of Pan-African integrated digital payments company, Interswitch, has opened its platform for the sales of JAMB (Joint Admission and Matriculation Board) ePIns. Registration for both exams – UTME and DE – will end on Monday, February 17, 2020.

The Quickteller platform simplifies the registration process and eliminates the previously cumbersome JAMB registration process @Businessdayng

faced by many candidates nationwide.

Candidates who wish to explore other channels can purchase the e-Pin via the options below; Olawale Akanbi, Group Head, Quickteller Marketing, said: “Quickteller is committed to ensuring that payment is one less thing to worry about for our customers.

One of such payments is the JAMB ePin. With our platform, prospective candidates can seamlessly initiate their registration process and purchase their 2020 JAMB ePins. In fact, the process is so easy, the candidates can actually complete it from their mobile phones. We like to reassure our customers that with Quickteller, Everything is Possible.”

The Computer Base Test examination will commence from March 14 to April 4, 2020.

Tuesday 21 January 2020

BUSINESS DAY

23

EDUCATION

Five reasons high cumulative grade point average is profitable STEPHEN ONYEKWELU

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nyone who followed what was trending for in Nigeria on Twitter, at the weekend would have noticed that cumulative grade point average (CGPA) was one of the highest trending issues, with close to 40 thousand tweets. It trended for 48 hours.

This shows the importance many Nigerians attach to the CGPA, but what is it and why does it matter?

Cumulative Grade Point Average (CGPA) is the average of Grade Points obtained for all semesters and courses completed up to a given academic term, whereas the Grade Point Average (GPA) may only refer to one term.

Many students get to know about the importance of grade point average late, some as late as the 300 Level of their undergraduate studies or after their the Ordinary National Diploma (OND) as the case may be.

“I got to understand better how important a good CGPA

L-R: Bright Ekweremadu, country director, Christoffel Blinden mission (CBM); Peter Salovey, president of Yale University; Aguocha Chinyere, lecturer, Imo State University, Owerri and Nkwam Uwaoma, deputy vice chancellor, Academies, Imo State University, Owerri at the signing of an MOU on the Happiness Project in Lagos

is when I graduated. Education isn’t a scam, work hard on building a good CGPA while in the tertiary institution,” @ KateDembe tweeted. “However, CGPA isn’t the yardstick for success but it helps.”

Dípò Awójídé, a United Kingdom-based senior lectur-

er of strategy highlighted in a tweet that a high CGPA at the undergraduate or postgraduate level might open fantastic doors and life-changing opportunities for those who strive after it. Anyone who still has the opportunity is advised to please make it as high as

possible.

Here are five benefits of a high CGPA: whether it is worth the time and effort one puts into it, depends on what one wants to do with it.

A high GPA allows you to sit for all the campus placements for your relevant field

How AI is changing the education industry

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rtificial Intelligence is now a part of our normal lives. We are surrounded by this technology from automatic parking systems, smart sensors for taking spectacular photos, and personal assistance.

Similarly, Artificial Intelligence in education is being felt, and the traditional methods are changing drastically.

The academic world is becoming more convenient and personalised thanks to the numerous applications of AI for education. This has changed the way people learn since educational materials are becoming accessible to all through smart devices and computers.

Today, students don’t need to attend physical classes to study as long as they have computers and internet connection. Here are five ways AI is changing the education industry.

Simplifying administrative tasks AI can automate the expedition of administrative duties for teachers and academic institutions. Educators spend a lot of time on grading exams, assessing homework, and providing valuable responses to their students. But technol-

ogy can be used to automate the grading tasks where multiple tests are involved.

This means that professors would have more time with their students rather than spending long hours grading them. We expect more of this from AI. Actually, software providers are coming up with better ways of grading written answers and normal essays.

The other department that is gaining a lot from AI is the school admissions board.

Artificial Intelligence is allowing for automation of classification and processing of paperwork.

Smart content AI and education go hand in hand and the new techniques could be all that is required to ensure that all students attain their ultimate academic success.

Smart content is a very hot subject matter today. Smart content includes virtual content like video conferencing, video lectures. As you can imagine, textbooks are taking a new turn. AI systems are using traditional syllabuses to create customised textbooks for certain subjects. As a result, textbooks are being digitised, and new learning interfaces are being created to help www.businessday.ng

students of all academic grades and ages.

Personalised learning Have you checked the type of personalised recommendations on Netflix? The same technology is being utilised in how students are taught at schools. The traditional systems are supposed to cater to the middle but don’t serve pupils sufficiently.

The curriculum is designed to suit as many pupils as possible by targeting 80 percent of the middle. However, the pupils are struggling to attain their full potential when in the top 10 percent.

Still, when they are in the bottom 10 percent, they have difficulties following along.

But when AI is introduced, teachers are not necessarily replaced, but they are in a position to perform much better by offering personalised recommendations to each pupil. AI customises in-class assignments as well as final exams, ensuring that students get the best possible assistance.

Global learning Education has no limits, and AI can help to eliminate boundaries. Technology brings drastic transitions by facilitating the learning of any course from anywhere across

the globe and at any time. AIpowered education equips students with fundamental IT skills. With more inventions, there will be a wider range of courses available online and with the help of AI, students will be learning from wherever they are.

New efficiencies AI improves IT processes and unleashes new efficiencies. For instance, town planners could use it to minimise traffic jams and improve the safety of pedestrians.

Similarly, schools can determine the appropriate methods of preventing students from getting lost in crowds when they run in corridors. AI can also be used in the modeling of complex data to enable the operations department to create datadriven forecasts. This, in turn, allows proper planning for the future, for example assigning seats during school functions or ordering food from local cafeterias.

A study published by eSchool News indicates that by 2021, the application of AI in education and learning will be increased by 47.50 percent.

The impact of this technology will be felt from the lowest education levels through higher learning institutions.

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– this places you in the good books of professors, certain interviewers and some peers and making recommendations from professors easy.

Gives you an edge over applicants with lower GPA – this is helpful especially when applying for a Masters’ course internationally. A very high GPA can also in some cases make up for not-so-good Graduate Record Examination (GRE) score.

“When this thing pained me the most was when I was putting in an application to Oxford University. Had paid for English proficiency letter, requested reference letters from my referees, started writing my essays. Only for me to discover the 2:1 minimum required was from 4.0,” @ OgbeniDipo tweeted.

GPA is the only truly quantitative assessment of yourself - your GPA is the only truly quantitative measure that has a standardised scale almost in every country in the world (0.0-4.0), even though the grading criteria and assessment can be different between universities and countries.

However, it is again the

only quantitative measure that enables other people (or recruiters) to directly compare (quantitatively) among candidates which are best.

A high GPA is not only a reflection of your academic capabilities, but also your commitment, perseverance and time management skills.

Yes, GPA is a reflection of your academic performance at college/university, but it means so much more than just your academic performance.

You will be ‘judged’ socially by your GPA. Now you need to be careful in interpreting the fifth reason. What is meant by the term ‘judged’ is simply that society (your professor, friends, stranger) can brand you based on your GPA. If a student comes to you and told you that his GPA is 3.99, a natural response of a rational human being is that you will brand this person as a highly intelligent and diligent student. In contrast, when you are introduced to a student with a GPA of 1.78, you will see this person as someone who does not excel in their academic studies and you might brand him or her as a lazy student.

Commissioner pledges creative intervention to tackle issues in tertiary education SIKIRAT SHEHU, Ilorin

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a’adatu Midibbo Kawu, Kwara commissioner for Tertiar y Education, Science and Technology has pledged to introduce innovative and creative interventions that will address some of the challenges confronting tertiary education in the state.

Kawu gave the assurance in Ilorin during her maiden meetings with members of staff of the Ministry recently.

She observes that the new administration is keen towards ensuring that the education system in the state is turned-around for the better. The Commissioner equally vowed to operate an open policy to ensure the various challenges are overcome.

The commissioner called for the cooperation of the staffs of the ministry, Kawu @Businessdayng

appealed to staffs to go extra miles in assisting the government to achieve its set goals.

Earlier, Musa Dasuki, permanent secretary, Ministry of Tertiary Education, Science and Technology lamented that the ministry has been having a series of challenges that hinder smooth operation.

Some of the challenges mentioned include staff welfarism, the need for professional training of staffs and innovative ideas among others. Dasuki noted that the ministry holds staff strength of 107 in six directorates, emphasising that improving staff welfare will go a long way to boost workers’ morale.

Issues and challenges raised by staffs of the ministry during the interactive meeting included transportation, training of staff and professionalism among others.

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Tuesday 21 January 2020

BUSINESS DAY

Jensen Huang, chief executive of Nvidia, was ranked as the best company boss in the world in 2019 by the Harvard Business Review © David Paul Morris/Bloomberg

The impossible task of picking the best leaders Managers matter but it is hard to gauge what individuals contribute

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S chief executive turnover almost certainly hit a new high-water mark last year. According to Challenger Gray and Christmas, as of the end of November, 1,480 CEOs had left their post, four short of the record for any full year since 2002, when the outplacement consultancy started collecting figures.

The high turnover rate raises the question: to what end?

Boards set great store by succession planning. They are serviced by hordes of headhunters, with data on the record and potential of candidates. Yet it is hard — some would say impossible — to work out the portion of a complex organisation’s performance that is owed to a single senior leader, let alone measure that input.

That does not stop people from trying. One ranking, from Claremont Graduate University’s Drucker Institute, founded

by management thinker Peter Drucker, selected Amazon as the best-managed US company of 2019. The Wall Street Journal, which publishes this list, lauded its culture, set “from the top down” by founder Jeff Bezos.

Another ranking, in Harvard Business Review, picks the 100 “best-performing CEOs in the world”. Its latest list was topped

by Jensen Huang of Nvidia, the technology group. Mr Bezos, despite leading on financial performance, did not even make

the cut, held back by the group’s low environmental, social and governance score.

Hard-headed investors would argue chief executives’ financial performance is all that counts.

But it is difficult to disentangle their contribution from that of their team or sector. Investors’ assessment tends to be reflected in share price gyrations on the day the chief executive’s departure is announced. Even then, rational assessment of any successor is often skewed by com-

‘‘

Good managers make a difference as much by doggedly pursuing tested management methods as by showing leadership flair

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The editorial board

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parisons with their previous role.

When Carolyn McCall (then running the Guardian Media Group) was appointed in 2010 to head easyJet, sceptics doubted her ability to switch her skills from media to aviation. Yet during her seven-year tenure, easyJet’s share price more than trebled.

Identifying chief executives who are directly responsible for destroying value is easier, but not much. Research by Spencer Stuart, the search firm, suggests S&P 500 chief executives enjoy their “golden years” of share performance only after surviving for more than a decade. Chief executives of HSBC, Thyssenkrupp, and Renault, all of whom left abruptly this year, after, respectively, 18, 14 and nine months in the senior job, would argue they never had time to show their mettle. Meanwhile, chief executives who overstay their welcome risk having to shoulder all the blame for poor performance.

Good managers make a difference as much by doggedly pursuing tested management @Businessdayng

methods as by showing leadership flair. The World Management Survey identifies practices such as target-setting and talentspotting that led to improved productivity. Separate research suggests companies whose chief executives focus more attention on staff than on investors and other stakeholders are better managed. But even managers often overstate how well-run their companies are, so good luck picking the best bosses from outside the boardroom.

This is one reason private equity groups monitor chief executives of companies they own so intently. It is also why activists like having a seat on the board, where they can observe leaders at close quarters.

Non-professionals are ill-placed to spot managerial nuances.

Above all, they should beware using media coverage to predict the success of the new crop of CEOs: according to one study, business magazine cover stories often herald an end to outperformance.

Tuesday 21 January 2020

BUSINESS DAY

25

No degree, no problem as MBA courses diversify Many prestigious schools will accept students who have not gained a first degree Jonathan Moules

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Henry Oakes (see panel) completed an MBA at Imperial College Business School in London in 2017 having left school at 16 to co-found an internet start-up © Anna Gordon/FT

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While many schools stay quiet publicly, there are strong internal cultural reasons for accepting a few non-graduate students, even for institutions that are very oversubscribed

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ome of the most popular MBA courses will accept students who don’t have a first degree. That comes as a surprise to many people as information on these opportunities can be hard to find. Most institutions, it seems, are not keen to publicise flexible admissions arrangements.

Dan Bauer, owner of the admissions consultancy MBA Exchange, says the reticence is because schools are worried about being inundated with applicants who do not have a degree. This reflects a solid reputational worry, as students who arrive without previous qualifications could lower schools’ overall scores in some business school rankings (this would not be the case in the FT’s rankings).

Nevertheless, Mr Bauer has helped clients without degrees to gain places at several leading MBA providers, including Wharton, London Business School, Columbia Business School and the University of Chicago’s Booth School of Business.

While many schools stay quiet publicly, there are strong internal cultural reasons for accepting a few non-graduate students, even for institutions that are very oversubscribed. Diversity of background and experiencehelps enrich the classroom discussions that are a core part of the MBA teaching method.

The University of Edinburgh Business School is one of the schools that is open about its entrance procedures. It accepts candidates without a bachelors degree provided they pass a verbal and numerical reasoning test as well as the standardised GMAT business school entrance exam and complete an essay assignment.

Entrepreneurs, women reentering the workforce after a career break, and people in public service are among those who have come to Edinburgh this way, according to Copil Yáñez, executive relationship manager at the school. “These are great candidates,” he says.

This willingness to widen the

applicant pool also reflects a shift in power from school to student, according to Lawrence Linker, founder and chief executive of admissions agency MBA Link.

Applications for MBA courses are down for a second successive year globally and in a majority of US schools they have fallen for five successive years, forcing even the most sought after MBA programmes to cast their nets more widely.

“The general tone from the top admissions teams to applicants without previous degrees has changed tremendously,” Mr Linker says. www.businessday.ng

One of the biggest challenges for those coming to business school without a degree is dealing with imposter syndrome: the nagging sense that they do not deserve to be among those who have already gained a university qualification.

Emily Brydon was a professional skier for 13 years, including competing in three Winter Olympics for Canada, before getting a place at Imperial College Business School.

Initially she kept her sporting past a secret, convinced that her classmates would not respect her if they knew that she had

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only managed to complete a year of an undergraduate degree because of skiing commitments.

“Having been in competitive sports for so long I thought I knew what pressure was,” she says. “But that was nothing compared to the pressure I felt among all these talented people on my course, where a part of me kept asking ‘am I smart enough?’”

Her fears evaporated after she realised that her previous life experiences were an asset. “I realised that the best MBA candidates are people who have done something unique,” she says.

Danny Jansen had quit fulltime education to pursue a career in American football, playing for the Dutch national side before retiring and moving into the corporate world, rising to senior executive roles at Maersk and Fortis Bank, all without a first degree.

He was 43 when he visited the campus of Nyenrode Business Universiteit as a contestant in a corporate strategy competition organised by a Dutch business newspaper, with the top prize a place on Nyenrode’s executive MBA programme.

“Up to that point I never @Businessdayng

thought I was missing out by not going to university because none of the companies I had worked for had asked about my education background,” Mr Jansen says. “I did not win the MBA place but it made me wonder whether I could do it.”

Nyenrode also has a process for admitting applicants without first degrees, including a special entrance exam. “I was lucky that I aced that one,” Mr Jansen says.

“It confirmed to me that I was a quick learner.”

The diversity of the class, which ranged in age from 23 to 46 and included local government workers, sales people and IT consultants, also reassured Mr Jansen that he would not be judged for coming via an unconventional route.

Mr Jansen thinks that having a leading business school in the Netherlands on his CV is noticed by recruiters. But the main benefit he gained from completing the course was the confidence to leave the corporate world and set up on his own as an independent consultant.

“Nyenrode made me brave enough to make that step,” he says. “That was six-and-a-half years ago and it still feels good.”

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Tuesday 21 January 2020

BUSINESS DAY

Investments

ENERGY INTELLIGENCE

Market Insight Companies Commodity Tracker Policy

OIL

GAS

PETROCHEMICALS

POWER

POLICY

FG considers two regulators for Nigeria’s petroleum sector in proposed PIB Stories by ISAAC ANYAOGU

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he Petroleum Industry Governance Bill that could be passed before the end of this year will seek to create two regulators for Nigeria’s oil and gas sector, a move that could break apart the functions of the current regulator.

Timipre Sylva, in a recent press conference said: “Special focus will be placed on the Midstream and Downstream sectors. Consequently, we are considering two regulators, one for the Upstream (the Commission) and another for the Midstream & Downstream (the Authority),” the minister said.

Under the current system, the Department of Petroleum Resources enforces all the regulatory measures relating to the general control of the petroleum sector. It regulates critical sections including acreage management, petroleum products pricing, local content, technical and commercial regulation and environmental regulation through Environment Impact Assessments.

However, the regulatory environment in Nigeria’s oil and gas sector is characterised by multiple regulators who duplicate functions. The different agencies carry out similar regulation as DPR and also the President and Ministers of Petroleum Resources and Environment, even the NNPC all carry out regulatory function.

This leads to a crowded regu-

latory space raising cost for operators, delaying projects, slowing decision making, causing heavy political influence and regulatory arbitrage.

In the previous PIGB, the eight assembly sought to create a single regulator, the Nigerian Petroleum Regulatory Commission (NPRC) merging the DPR with the Petroleum Products Pricing Regulatory Agency (PPPRA). It would have been the primary regulatory with board supervision and inbuilt accountability mechanism From the minister’s pronouncement, Nigeria will be moving away

from a multiple regulator model to a value chain or product regulation model where two or three regulators exist focused on different elements of the value chain.

This is a similar to the system in the United Kingdom where the Oil & Gas Authority (OGA) is an independent regulator funded by levies from the private sector and is concerned with the upstream sector. Ofgem is a cross sector regulator handling electricity and gas and the government issues specific regulators for environment, planning, health and safety.

In Ghana, the Petroleum Com-

mission regulates the upstream sector, the National Petroleum Authority regulates the country’s downstream petroleum liquids and LPG, while the Energy Commission regulates the midstream and downstream natural gas and electricity.

“Whatever the regulatory architecture, the regulatory philosophy needs to be smart,” says Adeola Adefulu, energy partner at Odujinrin & Adefulu, a law practice based in Lagos, in a presentation at a recent BusinessDay Oil and Gas Forum.

“Smarter regulation equals to optimal way to design and im-

plement the rules of regulation” Adefulu said.

Adefulu said that smarter regulation focuses on improvements to policy and processes. Policy-wise, smarter regulation is consistent and coherent, proportional, targeted at risk, fair and non-distortive, clear and certain.

The process addresses a clear need, is transparent, reduces compliance burden, is opened to review, affords a right of appeal to an unhappy operator, is borne out of wide consultation and measures its impacts on the operators.

“On the upstream side, we are coming up with more robust fiscal provision, acreage management, drilling-or-drop programme, etc.

We are not only going to retain investors, multitudes will join the leagues of high-value operators,” Sylva says of the new law.

The new PIB is however not going to be materially different from its predecessors. Like the previous ones, it will still be broken into four sets: Petroleum Industry Governance, Administration & Host Communities Bill, Petroleum Industry Fiscal Bill which he said could be passed within the first anniversary of the administration.

But for the regulatory aspect to meet international best practices, regulations must be efficient and effective, backed by appropriate institutional frameworks and related governance arrangements.

MARKET

Saudi Aramco, ADNOC reap benefits from listing as NNPC dithers

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hree years after three national oil companies – Saudi Aramco, Abu Dhabi National Oil Company (ADNOC) and the Nigerian National Petroleum Corporation (NNPC) in response to falling oil prices, began talking about raising cash by listing their shares, only the NNPC is yet to achieve that goal.

After a tonne of noise about the world’s biggest initial public offer, Saudi Aramco, raised a record $29.4 billion, in a December IPO, largely from local investors as the valuations failed to impress foreign institutions.

ADNOC without the spectacle Aramco has made, has quietly raised more than $19 billion over the past three years from overseas investors, according to Reuters calculations based on publicly released size of investments, signing fees and share sale.

But Nigeria’s NNPC, has been unable to list the NNPC. In 2018, Maikanti Baru, then group managing director of the state-owned corporation, at a conference in Lagos said 40 per cent of NNPC shares

would be floated on the Nigerian Stock Exchange (NSE) when the President assents the Petroleum Industry Governance Bill (PIGB) helping to make the company commercially driven.

The PIGB, passed by the eight assembly requires the minister to within six months after its enactment, take such steps as are necessary under the Companies and Allied Matters Act (CAMA) to incorporate the two entities – the

Nigerian Petroleum Assets Management Company (NPAMC) and the Nigerian Petroleum Company (NPC) as companies limited by shares which will be vested with certain liabilities and assets of the NNPC. “The NPC shall be an integrated oil and gas company operating as a fully commercial entity across the value chain. Essentially, it shall be responsible for all assets currently held by NNPC except the produc-

tion sharing contracts (PSCs). The NPC shall be a limited liability company registered under CAMA,” Baru had said.

According to the plan, the initial shares shall be held by the Ministry of Petroleum Incorporated (40 per cent), the Ministry of Finance Incorporated (40 per cent) and the Bureau of Public Enterprises (20 per cent). However, 10 per cent and an additional 30 per cent of the shares of the company shall be floated on the Nigerian Stock Exchange between five years and 10 years from incorporation respectively.

But these plans were brushed aside when Muhammadu Buhari refused to assent the PIGB. lawmakers in the 9th assembly have begun to discuss the latest version of the bill which has suffered untold delay.

In his recent press conference, Timipre Sylva, minister of state for Petroleum Resources said his third agenda would be to list the NNPC. “We are considering the incorporation of NNPC and its existing joint venture companies,” said Sylva.

Analysts say enormous work

will be involved to list the NNPC or its subsidiaries on the stock exchange. For one, the corporation does not even publish regular audited statements and valuations will be difficult considering that transparency is not the organisation’s forte.

Meanwhile, Saudi Aramco and ADNOC continue to reap huge benefits from listing on the stock market. Raising funds on the stock market have helped both companies to cushion the effect of fallen oil prices and they are now reforming their oil sector to attract foreign investment.

Saudi Aramco and ADNOC are modelling their operations after International Oil Companies by expanding in downstream, trading and petrochemicals and deepening gas investments.

For NNPC to compete in the evolving oil and gas market, it would need to reform its operations become more transparent and commercially oriented to attract the attention of foreign investors and become profitable.

Tuesday 21 January 2020

BUSINESS DAY

27

ENERGY INTELLIGENCE Analysis

Market

Nigeria’s first national grid collapse in 2020 points to four perennial challenges STEPHEN ONYEKWELU

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ixteen days into 2020 Nigeria’s national electricity grid collapsed throwing the country into darkness. The grid had collapsed four times before the end of January in 2019.

There have been some blames games across the value chain, among the generation companies (GenCos), the stateowned Transmission Company of Nigeria (TCN) and the electricity distribution companies (DisCos), Sam Amadi, former chairman of the Nigerian Electricity Commission (NERC) told BusinessDay in an earlier phone interview.

This phenomenon points to at least four perennial problems that need to be solved to prevent persistent grid collapses.

Limited use of technology – the Supervisory Control and Data Acquisition (SCADA) mechanism, a computer system for gathering and analysing realtime data at National Control Centre in Osogbo, Osun State has not worked for many years.

This handicap slows communication to and from Abuja, where the Systems Operator is headquartered.

This makes delays the relay of

communication to sub-stations as operators have to make phone calls to engineers in the event of a problem.

Poorly capitalised DisCos - the has made DisCos to underinvest in their networks such that they cannot take and utilise all available generation, which results in load rejection and excess pressure on the grid.

Since the power sector was privatised by the Goodluck Jonathan administration in 2013 the 11 electricity distribution companies have technically gone bankrupt and carry a debt burden of over N713 billion. This makes a case for recapitalisation to reinvigorate distribution networks so that DisCos can take more load and ease the pressure on transmission lines.

But the Federal Government with a 40 percent stake in the DisCos continues to bail out the sector. This retards the need to start taking requisite action to check the excesses of the investors.

Unattractive domestic gas market - pressure from the government to meet domestic supply obligations (DSOs) remains intense in Nigeria. The current administration’s policy is to not award or renew licences for companies that are failing to meet their DSO. But suppliers don’t just want to find any off-takers, they want to find reliable off-takers who demand a steady supply of gas and will pay the regulated price of US$2.50/mn Btu. Non-payment for gas remains a chronic problem and the power

sector is the major culprit. The sector deficit from 2015 to 2016 was nearly US$2bn. In 2017, the government established a central bank facility of US$2bn over two years to ensure that generators are paid.

This, in turn, should help them pay their gas bills. But the facility will need continual replenishment as long as the industry lacks electricity metres and below-cost tariffs are maintained.

Review of the Multi-Year Tariff Order (MYTO) – cost-reflective tariffs ensure that players on electricity supply value chain are able to recoup operational costs with some profit margin that can be reinvested into the business.

The MYTO 2015 specified the electricity distribution tariffs for the period 2015 to 2024 but had an effective commencement date of 1 February 2016.

NERC was also required to carry out biannual minor reviews of the tariffs and vary it accordingly, taking into consideration changes in certain macroeconomic variables outside the control of electricity distribution companies (DisCos) in line with the requirement of the MYTO Methodology.

These variables include inflation rates, foreign exchange rates, gas prices and available generation capacity. The MYTO has missed more than six reviews.

Policy

Transcrop outlines two major mistakes in privatisation of power sector DIPO OLADEHINDE

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alentine Ozigbo, president and CEO of Transnational Corporation of Nigeria Plc (Transcrop) has said mismanagement of expectations and non-implementation for the master plan are the two major mistakes made in the privatisation of Nigeria’s power sector.

Despite privatisation, the problems in Nigeria’s grid-connected power are enormous.

Power plants do not get adequate gas supply which sees at least 8,000MW of their installed capacity of over 12,000MW constrained. Gas suppliers complain they do not receive full payment for gas supplied and pricing is regulated preventing legacy plants from paying commercial price for gas.

Yet, generation companies who use the gas as feedstock do not get their own market invoices fully settled too by the DisCos. “Two key mistakes have been made in the past around the management of the sector. The first emanates from the misman-

agement of expectations and the second is the non-implementation for the master plan,” Ozigbo told BusinessDay in an exclusive interview.

Ozigbo said Nigeria must look at the entire value chain issues together not in part and solve the problem holistically, aligning at the technical, commercial and political levels.

Nigeria’s power sector is riddled by debts and Transcorp Power is owed about $250 million.

“It is unfortunate that we are owed about N80 billion ($250 million). This type of exposure would have been more catastrophic if not for our strength and capacity, we would have collapsed with that level of debt,” Ozigbo said.

Ozigbo admitted that if Nigeria doesn’t have solutions to deal with the problem in the future there will be more accumulations as time progresses.

“There are plans to put some of this debt obligation in the budget as subventions that government will need to now take care of which will clear the arwww.businessday.ng

rears and fix the issues going forward however it must not be allowed to fester and continue in the future,” Ozigbo admitted.

As a Genco, Ozigbo said the existing agreement with government is to generate power and sell to a government agency which is known as Nigerian Bulk Electricity Trading (NBET), so the government has taken the sole responsibility to pay Transcorp its debts not Discos.

Responding to a new World Bank loan announced by the federal government last year which is expected to pay special emphasis to transmission and distribution just like the Siemens deal, Ozigbo said there are boxes to be ticked when it comes to loan.

“I am optimistic that we will get it right and because the World Bank cannot lend money without asking the right questions or asking for proof they can payback. I hope the government applies the best execution skills towards ensuring the success of it,” Ozigbo said.

Recall in October last year,

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the Minister of Finance, Budget, and National Planning, Zainab Ahmed said the World Bank had approved a $3 billion loan request for the transmission and distribution of Nigeria’s power sector.

Many nations in the world have adequate supply of electricity. Nigeria has been an exception. In spite of her rich human and natural resources, the country has struggled to maintain a stable and efficient power sector. This is even more hurtful, considering the array of technocrats that the nation parades, the series of meetings between stakeholders and regulatory interference, all availing to nothing.

“There are many gaps such as the inability to transmit everything we generate, power theft and government debt leading to many losses and inefficiencies where a few people are paying for power which is inadequate to cater for the value chain. Hence the importance of good policies cannot be overemphasised,” Ozigbo told BusinessDay. @Businessdayng

Nigerian oil rigs slide to 17, OPEC records plus 12 DIPO OLADEHINDE

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igeria ended the year 2019 on a slightly negative note as its rig count witnessed an decrease to 17 as against 20 rig count last month, at a time the 14-member Organisation of Petroleum Exporting Countries (OPEC) recorded an addition of 12 rig counts while the total world rig count increase by just one.

Data obtained from Baker Hughes Incorporated and OPEC showed all through 2019 Nigeria’s oil rig, which depicts the level of oil production activities by operators have been hovering around 16 rigs count, a sharp decline from a three-year high of 35 rigs count recorded in February 2018.

Rig count is largely a reflection of the level of exploration, development and production activities occurring in the oil and gas sector.

According to OPEC’s report, Africa biggest oil-producing country recorded 17 oil rigs in the last month of 2019, which was three rigs less of what was obtained in November 2019, an indication of decreasing exploration activities.

Nigerian Association of Petroleum Explorationists (NAPE) recently alerted the nation about the risk of low exploration activities in the petroleum industry as well as the continuous depletion of the country’s crude reserve.

NAPE had last month warned that the reduction in hydrocarbon exploration and steady depletion of the oil reserves could drive Nigeria into the risk of long-term disruption to oil and gas supplies, power generation, the collapse of industries and significant loss of revenue.

NAPE’s outgoing President and staff of Agip, Ajibola Oyebamiji, in a pre-annual conference meeting with energy correspondents in Lagos stated that the nation’s oil and gas business was being hampered by several factors, including long procurement and contracting cycles, insecurity, oil theft and illegal refining, saying, the later even poses a bigger threat to the sector than the fall in oil price.

Also, analysts at the Lagosbased investment bank United Capital in a 2020 outlook, report said the newly signed Deep Offshore and Inland Basin Production Sharing Contract (DOIBPSC) Act could have a negative effect on investments, as IOCs move exploration to countries with better fiscal terms or channel resources towards American shale production.

The 14 OPEC members recorded a total of 587 rig counts in March as against 575 recorded the previous month with Saudi Arabia and Algeria both recording a highest marginal increase of 8 rig counts and 3 rigs count respectively.

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Tuesday 21 January 2020

BUSINESS DAY

OFFGRID BUSINESS Research

Cost of third-generation mini-grid could fall to $0.20/kWh by 2030- report DIPO OLADEHINDE

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technical report released by World Bank has revealed the capital cost of thirdgeneration mini-grid could fall to $0.20/kWh by 2030.

Globally, leading developers are now leveraging transformative technologies and economic trends to build third-generation mini-grids with the potential to provide high-quality, affordable electricity on an unprecedented scale.

A typical third-generation mini-grid consists of a solarhybrid generation system that includes solar panels, batteries, charge controllers, inverters, and diesel backup generators.

These mini grids typically use smart, remotely controlled electricity meters that allow customers to prepay for their electricity in a

pay-as-you-go (PAYG) model.

They use remote monitoring systems to manage the status of the system in real time from a distance.

The detailed World Bank’s Energy Sector Management Assistance Program (ESMAP) showed a survey of mini-grids in Africa and Asia showed capital cost has decreased down from more than $8,000

per kilowatt of firm power output (kWfirm) in 2010 to $3,900/kWfirm in 2018.

“The Levelized Cost of Energy (LCOE) of these “thirdgeneration” mini-grids can be reduced by up to 25 percent ($0.41/kWh) by 2020.

If component costs also decline as expected, ESMAP analysis suggests that the LCOE could fall by 60–70

percent to around $0.20/kWh by 2030,” says World Bank’s 2019 report titled Mini-Grids for Half a Billion People.

Research shows that the uptimes of third-generation mini-grids often exceed 97 percent less than 2 weeks of scheduled maintenance per year. This performance is significantly better than previous generations of mini-

grids and most utilities across Sub-Saharan Africa.

The World Bank report noted that third-generation mini-grids provide higherquality service in terms of reliability, availability, and customer service than many national utilities in low-income countries.

“The combination of falling costs, new technologies, and favourable enabling environments has made thirdgeneration mini-grids an option to connect 490 million people, complementing grid extension and solar home systems to reach universal electrification by 2030,” World Bank report said.

The report admitted that third-generation mini-grids can promote inclusive growth in remote rural areas through income-generating uses of electricity to support economic activities.

ESMAP analysis indicated that the profit potential for private-sector companies

across the third-generation mini-grid supply chain is expected to increase dramatically over the next decade, approaching $25 billion of cumulative profits by 2030 based on today’s corporate margins, with the largest proportions attributable to solar and storage providers.

The estimated profit implies that more value maybe at stake as companies use economies of scale to drive down costs with the expanding mini-grid sector.

For developers, ESMAP projects an annual profit in excess of $3 billion by 2030, which was derived by assessing current and projected tariffs and the levelized costs of electricity, as well as analyzing the audited financial statements.

“For the private sector to accelerate its investment in mini-grids, sufficient profit margin is needed along the full value chain,” World Bank report said.

Funding

Guide

USADF, All On Open 2020 Edition of $100,000 Nigeria Off-Grid Energy Challenge

Five things you should know when buying a Home Solar Battery System

ISAAC ANYAOGU

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he US African Development Foundation (USADF) and All On have officially opened the application window for the 2020 Nigeria Off-Grid Energy Challenge, which will provide up to $100,000 in blended finance per enterprise for the successful applicants.

The 2020 application window opens on January 15th and closes on February 29th, 2020. The Rockefeller Foundation is also providing funding support for the 2020 edition of the program.

USADF, a founding member of Power Africa and an independent United States of America Government agency established by Congress to support and invest in African owned and led enterprises and All On, an off grid energy impact investing company seeded by Shell in Nigeria, established the challenge as a multi-year partnership to identify and help scale innovative off-grid solutions to “power up” unserved and underserved areas in Nigeria.

Now in the third year of the partnership, the parties

will jointly provide funding to 100% African owned and operated small and medium enterprises that improve energy access through off-grid energy solutions spanning solar, wind, hydro, biomass and gas technologies.

The enterprises may be developers of their own technology and/or acquiring and implementing technologies developed elsewhere. To benefit, applicants need to be legally registered in Nigeria, demonstrate the capacity to track and manage project resources and operate in good standing with the local governments in their areas of operation. Up to $50,000 per selected company will be provided in the form of convertible debt along with up to $50,000 of grant capital.

Sixteen Nigerian companies have been selected through the 2018 and 2019 editions. The winners of the 2019 Nigeria Off-Grid Energy Challenge were ICE Commercial Power, Sosai Renewables, Greenage Tech, Pirano Energy, Sholep Energy, Entric Power Systems, ACOB Lighting, NexGenEnergy and Protergia Nigeria.

In the first edition of the Challenge in 2018, the recipients were PradoPower Ltd, Darway Coast, Auxano, Eastwind, Alyx, Creeds Energy and iKabin.

According to 2018 Challenge winner Ola Abraham, CEO of EastWind Labs, “The USADF-All On blended finance has enabled my company EastWind Labs to profitably provide solar-powered Refrigeration as a Service (RAAS) to Ile-Ife, touching hundreds of families and businesses daily. The USADF and All On due diligence process is brutally thorough. You’d think they want to deny you the funding. On the contrary, that’s just the secret sauce for your business success. APPLY, COMPETE, WIN.” Aaron Esumeh, CEO of Enugu based 2019 Challenge recipient Greenage Energy, added, “The selection process for the USADF - All On Off Grid Challenge was very detailed and transparent and winning the challenge has inspired us greatly. This opportunity will make us more impactful to the society, providing electricity to the underserved.”

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f you’re one of those homeowners looking to add a home battery system to your solar installation, here are five things you should know: Not all battery chemistry is the same. Most home solar storage systems use a lithium ion battery, the kind used in smartphones and electric cars. The problem with lithium ion is that it’s prone to thermal runaway, in which the battery rapidly overheats and combusts, potentially releasing toxic cobalt. Tests have also shown that lithium iron phosphate batteries last longer than ordinary lithium ion batteries.

The importance of capacity and power. Solar batteries come with all kinds of specifications, but these are the two most important performance indicators. Capacity is the total amount of energy a battery can store, measured in kilowatt-hours (KWh).

Power indicates how much inverting power the energy storage system has.

Think of this like speed.

ANALYSTS: Isaac Anyaogu (Team Lead), Stephen Onyekwelu, Dipo Oladehinde

High capacity combined with high power means this system can power more appliances for a longer time than competitors in its class.

Whole-home backup protection is not possible for very long. No residential storage system on the market has enough power and storage capacity to run an entire home, regardless of their advertising.

Think of it like this: A 5,000-watt inverter will afford the home 5,000 watts of energy use, or approximately 20.83 Amps of power. So, a larger, more powerful inverter can power more of the home.

Most homes use between 20 and 60 amps or more of power per hour. Highamperage appliances like air conditioning, electric ovens, and electric water heaters use massive amounts of power when running, so whole-home backup is not realistic with today’s battery and inverter technology. What the right system can do is

keep your lights and your critical appliances on long enough to get you through a blackout and have your solar panels recharge your battery the next day.

Again, look at the ratings for capacity and power when comparing systems.

The balance between Time of Use optimizing and resilienc y. When choosing a home solar battery, you want a system that can reduce utility costs by powering the home after sunset, when utility rates are highest, and provide power when a grid outage occurs. Balancing both needs is not as easy as it sounds. If a battery is powering an appliance that uses a high amount of electricity such as an air conditioner, the battery can drain quickly, leaving nothing left for a grid outage. Look for a system that can balance the two benefits.

Compatibility is key. Make sure to choose a storage system that’s compatible with the rooftop solar installation.

Feedback: 07037817378, 08137433034, 08135447789

email: isaac.anyaogu@businessday.ng, stephen.onyekwelu@businessdayonline.com, oladehinde.oladipo@businessdayonline.com

Tuesday 21 January 2020

BUSINESS DAY

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In association with

E-mail: jumoke.akiyode@businessdayonline.com

How new technologies will transform businesses in Africa JUMOKE AKIYODE LAWANSON

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he rise of electronic business activities in Nigeria, its substantial contribution to the growth of the economy as well as the significance of constant development of new age technology cannot be over emphasized.

A lot of information technology (IT) companies who have monitored the growth of businesses in Africa as a result of improved technology have predicted that the next phase of business of revolutionisation will be due to an increased adoption of artificial intelligence, blockchain, 5G, Chatbots and other new technologies.

Already, businesses and economies are experiencing radical transformation in ways of operation due to the introduction and adoption of technology systems. The role of ‘customer service representative’ has been somewhat overtaken by the adoption of Chatbots in different industries, while the use of drones’ is overtaking traditional delivery and viewing methods, and traditional media is left to compete with vloggers, bloggers and social media for the delivery of news.

“Companies from a range of industries will be impacted by intelligent chatbots in a similar way to the rise of mobile devices. Business to consumer use cases for chatbots are being seen in retail, financial services, travel and hospitality and even in utilities, for service-related and transactional conversations,” Craig Nel, mobile & cognitive experience

(MCX) leader at Oracle Middle East, Africa and Turkey, said while speaking at the Chatbot week Africa, organised by Oracle.

“Technologies such as artificial intelligence, natural language processing and machine learning come to the fore in African countries with their many cultures and languages,” Nel said.

“In South Africa we have eleven official languages, but take a country such as Ghana where more than 250 languages and dialects are spoken.

One way to attract new customers in Africa is through intelligent chatbots that better understand and process customers’ needs, desires and requirements, in a language preferred by the user,” he said.

Jobs such as app developer, social media consultant, 3D printing engineer, cloud storage expert, and others which did not exist 10 years ago are new business roles changing the way organisations operate today.

The introduction of 5G and deepened mobile penetration has huge potential for Nigeria as a mobile first nation, especially with its large and young population and vast landmass. Analysts confirm that new opportunities will definitely emerge in the fourth industrial revolution for African businesses to collaborate, innovate and participate win ways that positively impact their economy and the world at large.

What exactly would new technologies like 5G enable for business?

According to technology experts, there are eight attributes required for a network to be truly 5G, which will empower businesses to compete in this era. They are; greater throughput and faster speed, service deployment that update through software rather than hardware – so that network can stay secure and responsive to business needs, mobility, connected devices, energy efficiency, capacity to deliver high data volume, reduce latency, and reliability. These are all fundamental to business environment and the way we do business.

The impact of technology on businesses are huge. About 65 percent of children entering primary school today will be doing new jobs that don’t yet exist. Emerging tech-

nologies will solve problems that aren’t even problems yet.

Artificial intelligence which already exists among us in our everyday lives, and are predicted to take some human jobs. Within the next 15 years, some things AI and robots are expected to do include; shopping, driving cars, cooking, delivering items etc.

With these new technologies, business owners would need to move from depending on traditional employment criteria to hiring people that can do the things that AI cannot easily do. Rather than focus on work experience, educational background and communication skills, employees of the future would be required to have critical thinking skills, emotional intelligence and creativity.

Healthcare, agriculture, transportation, financial services, commerce, telecommunications, media, manufacturing, marketing, aviation, education and virtually all industries are currently experiencing some form of shift in business operations as a result of new technologies. These changes are expected to be more transformational in the near future and it is important for Africa to innovate to solve its unique problems and speed up economic development.

“Innovation and technology are fundamental for Africa to be able to compete in a global framework.

Localisation is also important - innovation needs to be tailored to the specificities of local needs. We need to develop home-grown solutions for Africa.,” Fezoua, president and CEO, GE Africa, said.

Indigenous ID verification company secures series A financing for expansion JUMOKE AKIYODE LAWANSON

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erifyMe Nigeria, an ID verification and KYC technology company has secured a series A financing for an undisclosed amount from Consonance Investment Managers.

The company confirmed the financing and told BusinessDay that the funds will be used to expand strategic partnerships and bring new digital ID verification products to market.

“We are delighted to partner with

Consonance Investment Managers in our mission to build Africa’s KYC infrastructure. Digital services are a key catalyst for Africa’s economic growth and financial inclusion but they can only be unlocked if there’s a mechanism to verify identity at scale.

We strive to transform the digital landscape by providing businesses with KYC-as-a-service tools to verify their client identities,” Esigie Aguele, co-founder/CEO, VerifyMe said.

“Authenticated identity is a critical foundation of digital commerce

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and financial services; it’s the cornerstone of trust which is essential for collaboration in economies. We believe that Tunji, Esigie and the VerifyMe team are doing work that is pivotal to meeting Nigeria’s financial inclusion goals. We are proud to support their vision and journey,” Mobolaji Adeoye, managing partner at Consonance Investment Managers, said.

VerifyMe plans to expand adoption across Nigeria and grow revenue twenty-fold over the next three years.

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A company with a social mission, it is believed that VerifyMe will help unlock financial inclusion and intervention services in rural communities.

Since 2017, VerifyMe has built a KYC infrastructure layer to enable interoperability of KYC data across industries and employers. This gives decision makers the tools to assess customer suitability for financial and other services. VerifyMe partners with major banks and government agencies in Nigeria to provide KYC as a service. With over 10,000

@Businessdayng

domestic employers and 1,000 corporate employers using VerifyMe products today to verify identities, VerifyMe has emerged a leading technology company pioneering innovative, secure and realistic ID solutions in the African market.

Consonance Investment Managers invests in early-stage and growing businesses across Sub-Saharan Africa. Consonance backs entrepreneurs who are building large and profitable enterprises that create systems to enable national wealth creation.

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Tuesday 21 January 2020

BUSINESS DAY

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

9mobile embraces future of work, launches digital customer service assistant ..becomes first telco to deploy AI enabled virtual assistance JUMOKE AKIYODE-LAWANSON

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s predicted, new technologies are displacing some traditional jobs, and not only are we seeing transformation in financial services, commerce and transport, but in many other sectors including telecommunications.

9mobile, Nigeria’s fourth largest telecommunications service provider recently launched ‘Enin’, a personal digital customer assistant on its network. This makes 9mobile, the first Nigerian telco to provide virtual assistance to customers through an Artificial Intelligence-enabled chatbot solution.

Chatbots are becoming more popular, and with its rapid adoption, more human customer service representatives/ advisers will be displaced from jobs.

Ehimare Omoike, acting director, customer care, 9mobile, said ‘Enin’ performs several roles such as airtime purchase, subscription to data plans, presents customers with offers,

bonuses, sales, reminders, notifications, recommendations, subscriptions and customer service information. It can also help to activate or deactivate services, as well as hand a customer over to a live agent,

among other services. “‘Enin’, is currently available on the 9mobile website, and plans are already underway to extend the service to our social media platforms. This service is a significant New Year incentive

L-R: Atta Arome, central operations manager for Sub-Saharan Africa, Uber; Richard Michaels, counselor for economic affairs, United States Embassy (Nigeria); Mimi Omokri, head of business development, Sub-Saharan Africa at Uber; Mayowa Obilade, economic specialist, United States Consulate; Tola Odeyemi, head of public policy for West Africa, Uber; Adeniran Haastrup, counsel for Sub-Saharan Africa, Uber; and Efosa Aiyevbomwan, head of communications for West Africa, Uber.

Cybercloud platform attains VMware cloud service verification …Targets business transformation JUMOKE AKIYODE-LAWANSON

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ybercloud platform, the first indigenous VMware Cloud Service Provider in Sub-Saharan Africa has recently been verified, giving its customers extra assurance that the platform offers cloud technologies and services based on VMware Cloud infrastructure.

VMware is a global leader in cloud infrastructure and digital workspace technology.

Dave Funnell, VMware cloud provider program manager, SubSaharan Africa, who announced this new feat explained that “it means when you see the VMware Cloud Verified logo, you know you can easily access the full set of capabilities of VMware’s Cloud Infrastructure.

Get the ultimate in cloud choice through flexible and interoperable infrastructure, from the data center to the cloud. Support all your apps – from existing to cloud-native to SaaS – across private, public and hybrid clouds using services displaying the VMware Cloud Verified logo.”

Speaking to journalists about what this new development means for business, Laurel Onumonu, the head, Cybercloud business, said that

for our customers as it provides 24-hour quality service to them.

With ‘Enin’, customers not only get their queries resolved promptly, but the icing on the cake is also that the service is not limited by time or physical

featuring the VMware Cloud Verified logo in any marketing campaigns and content signals to customers and prospects that foundational cloud technologies and services are based on VMware cloud infrastructure.

“We have domesticated VMware services locally and organizations can rest assured of their data security, integrity and availability. We are aware of the data sovereignty policy of the federal government, hence we built a VMware Verified Cloud Platform situated in a Tier 3 Certified Data Centre. We are proud to say that Cybercloud offers true first Software Defined Data Center (SDDC) services in Nigeria,” Onumonu said.

Recently, the National Information Technology Development Agency (NITDA) expressed readiness to comply with full implementation of this provision in Nigeria.

This means that sensitive financial and commercial data will no longer be hosted abroad.

This is the void CyberCloud has stepped-in to fill – as a company of forward-thinking individuals, the company has taken the initiative to set up Nigeria’s first true cloud service with features that meet the Nigerian Data Sovereignty stipulation. www.businessday.ng

“Adding the VMware Cloud Verified logo to offerings confirms to customers and prospects that foundational cloud technologies and services are based on VMware cloud infrastructure, including VMware vSphere, VMware vSAN, and VMware NSX,” Onumonu said.

According to her, the VMware Cloud Verified logo represents compatibility (an assurance to customers that CyberCloud services are compatible with clients’ VMware virtualised environments; awareness (the logo is a recognition of our commitment to cloud freedom and choice via the VMware Cloud Infrastructure); opportunity (helps organizations drive revenue by delivering services at a reduced infrastructure cost).

Launched in 2018, Cybercloud is Nigeria’s first true Cloud Service Provider; set up to provide cloud service with the added ease of configuration and management, custom partitioning, and full Information Technology (IT) infrastructure capability. It aims to be the go-to place when the need arises to move from the heavy capital expense-based IT infrastructure model to the cost-friendly subscription-based model.

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location,’’ Omoike explained.

On how to access ‘Enin’, Omoike disclosed that it is a first contact resolution and can be “accessed directly by clicking the chat bubble on the 9mobile website.

Commenting further on the chatbot solution, Omoike stated that superior customer experience is a cornerstone of 9mobile’s operations even as he affirmed the telco’s commitment to doing more for Nigerians in line with its established reputation as the caring network.

“At 9mobile, superior customer experience is a core value that we are deeply committed to at all times. This is why we are continuously innovating to satisfy our customers because they are the reason we are in business. We are delighted to state that we have proceeded from rendering services to providing solutions for Nigerians, and this is a key value for us,” he said.

Omoike added that 9mobile would not relent in boosting superior customer experience and that more innovative solutions were in the offing.

Tech Explainer: What is cloud computing?

JUMOKE AKIYODE-LAWANSON

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loud computing is the on demand delivery of IT resources via the internet with pay as you go pricing. Instead of buying, owning and maintaining physical data centres and servers, you can access technology services such as computing, power, storage and databases on an ‘as needed’ basis from a cloud provider.

Organisations of every type, size and industry are using the cloud for a wide variety of use cases such as; data backup, disaster recovery, email, virtual desktops, software development and testing, big data analytics and customer facing web applications. For example, healthcare companies are using the cloud to develop more personalised treatments for patients, while financial services companies are using the cloud to power real time fraud detection and prevention, and video game makers are using the cloud to deliver online games to millions of players around the world.

With cloud computing, @Businessdayng

your business can become more agile, reduce cost, instantly scale, and deploy globally in minutes. Cloud computing gives you instant access to a broad range of technologies, so you can innovate faster and build nearly anything you can imagine; from infrastructure services such as compute, storage and databases, to internet of things, machine learning, data analytics and much more.

According to the Cloud Africa 2018 report, the use of cloud among medium to large organizations in Africa more than doubled between 2013 and 2018 and has grown even more in the last one year due to the benefits of cloud in offering efficiency and scalability, more than 90 percent of surveyed companies in South Africa, Kenya and Nigeria have plans to increase their spending on cloud computing in the next year.

Examples of cloud service providers in Nigeria include; Rack Centre, MainOne, Velvot Nigeria, Galaxy Backbone, Globacom, Amazon, MTN, IPNX, IBM, Microsoft, Whogohost, and many others.

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property&lifestyle Real estate funds grow AUM to new-high of N46.16bn in 2019 ...ranks 3rd in NAV despite low patronage, industry woes ENDURANCE OKAFOR

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aving the least investment options among the listed asset classes on the Securities and Exchange Commission (SEC), the real estate funds grew their asset under management (AUM) to a new record of N46.16 billion in 2019.

The asset managed by the real estate funds appreciated by 6.04 percent in 2019 to post a high net asset value (NAV) compared to the 2018 record, SEC data analyzed by BusinessDay shows.

T h e f u n d s g re w by N2.63billion from N43.53 billion in December 2018 to N46.16billion as at the week ended December 27, 2019.

The total asset managed by the real estate funds accounted for 4.59 percent of the mutual funds entire market which has a NAV above the N1trillion threshold. The NAV reported by the real estate funds represented the third highest NAV after money market and fixed income funds.

“Real estate investment trust (REITS) is very liquid, and it is very difficult to see people go to floor to buy REITS, as such one hardly sees any trade in any of the REITS,” Paul Uzuma, MD of Halo Nigeria Capital Limited, said.

According to the Lagosbased analyst, people don’t tradewhattheydonotknowand whattheyarenotsureof.Uzuma added that “the real estate funds do not really give adequate financial reporting to update you on what is going on and so activities there are streamlined to may be the issuers.”

Real Estate Fund is an investment vehicle that pools resource together to invest in real estate, thereby allowing individual investors to partake in the benefits of the underlying properties.

“Real Estate Fund is an investment vehicle that can be used to address Nigeria’s housing shortage and encourage economic activity in the real estate sector,” said Ayo Akinwunmi, head of research at FSDH Merchant Bank According to BusinessDay estimates, Nigeria may require, in monetary terms, between N170trillon and N200trillion to bridge the housing gap if each unit is estimated to cost N10million.

For the past 10 years now, Nigeria’s housing deficit has widened to over 17 million units fueled by lack of patient capital for developers to construct affordable housing for the growing low income earners who account for the larger population of Nigeria.

Real estate developers have continually been in search of viable alternative

CHUKA UROKO

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sources to funding projects in a country where cost of funds has made bank credit inaccessible, unaffordable and unattractive to the sector.

Figures by the National Bureau of Statistics (NBS) for the third quarter of 2019 as analyzed by BusinessDay revealed that the property industry was among the least attractive industries to the country’s commercial banks as it got one of the smallest portion of loans in the review quarter.

Banks’ confidence in the sector waned as credit allocation to real it tumbled to the lowest level at 3.62percent since 2015.

Sectoral credit allocation

to real estate shed N121.52 billion year-on-year from N710.20 billion in Q3 2018 to N588.68 billion in the corresponding quarter of 2019.

For industry investors, the low credit to the sector may imply that they would have to concentrate on sourcing for funds outside the shores of the country. The repayment of such funds may come with an interest rate problem as the naira has remained less competitive to the US dollar, for example.

“Finance is the key strategy to everything. The reason the prices of properties are high is because the funding comes at a cost, and all those costs

are buried into cost of construction,” Adekunle Abdul, Managing Director, Metro & Castles Homes said.

A further analysis of the data from SEC revealed that UPDC REIT raked the highest share of the real estate funds with an NAV of N33.99 billion, 72 percent of the entire N46.16 billion. This was also higher than the N31.44 billion reported by the fund in corresponding period of 2018.

Managed by both SFS Capital Nigeria Ltd, Union Homes REITS and Skyle Shelter Fund shared the remaining asset in the real estate funds. They both posted a NAV of N9.79 billion and N2.38 billion respectively.

Construction Kaiser in aggressive push for sustainability, strengthens governance CHUKA UROKO

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or reasons other than growth, Construction Kaiser Limited, a foremost indigenous construction industry, says it is pushing aggressively for sustainability and to institutionalize itself as a business.

The first step it has taken towards achieving this is the setting up of a board of directors aimed to strengthen its corporate governance. The 7-member board has mem-

bership cutting across various sectors of the economy including finance, technical and legal.

“We want this business to be sustainable. We have found out that most companies don’t live beyond first generation. Our aim is to institutionalize the business,” explained Igbuan Okaisobor, the company’s CEO at a dinner to announce the new board in Lagos at the weekend.

There is high incidence of job loss in the construc-

Joint ventures, govt schemes to provide housing for 3,500 families in 2020

tion industry due largely to government indebtedness to contractors. But Okaisobor added that lack of sustainability and weak corporate governance structure are also reasons people lose their jobs.

“We have realized that because companies don’t last, people lose their jobs. We want to change that narrative by taking our seat in that space where indigenous players can have an impact; this is an industry that is 60 percent foreigners and only 20 percent

Igbuan Okaisobor, CEO, Construction Kaiser (3rd right) flanked by other members of the company’s new board of directors. www.businessday.ng

indigenous,” he said.

The star-studded board has two expatriates—one German who was once the managing director of Julius Berger Nigeria, and the other an Italian.

The CEO explained that their inclusion on the board was aimed to achieve better technical expertise, pointing out that the former MD of Julius Berger understands Nigeria and its environment just as he understands business in Nigeria.

More than anything else, Construction Kaiser believes in local content in the space where it plays. According to Okaisobor, the driving vision for establishing his company was for Nigerians to have a say in the industry, noting that, 26 years after, he has an understanding of the things that stop Nigerians from taking a seat in the industry.

One of those impediments, he said, is Nigeria’s educational system which is not good enough for training middle-level manpower.

“We are growing beyond a one-man business to a conglomerate. We need talents and funding at low interest rate to achieve that growth.

We also need government support. These foreigners have the support of their home countries in terms of finance,” he said.

For Construction Kaiser,

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2020 is hopeful with bright outlook. It is also a new era for the company and with the new board and expected stronger corporate governance, it will achieve more.

“We hope to increase our market share and improve on our final product. We have to create jobs for more Nigerians through our foundation,” the CEO assured.

Toyin Olawoye, chairman of the new board, affirmed this in a brief interview with BusinessDay, noting that there were prospects of profitability growth for the company. “They will achieve that very soon.

This is, of course, the target; it is our target,” she said.

Olawoye, who is a director at Multi-stream Energy Limited, noted that though capital requirement was a major concern, Construction Kaiser would be able to attract capital because it has integrity and expertise that are proven, and also good track record.

“My area of expertise is in finance; but it is not about me alone. There are others that cut across technical and legal. We are going to pool resources together to see how much difference we can make. We believe that without enough capital you cannot grow. We are hopeful that the company should be able to attract the right capital that it requires,” she assured. @Businessdayng

arring unintended delays and hitches beyond immediate control, about 3,500 housing units will be delivered this year to provide homes for an equal number of families and home buyers in Lagos.

Given an average of four persons per families, comprising father, mother and two children, it means about 14,000 people will have shelter over their heads this year and will be taken off the state’s crowded housing market where an estimated 3million people are looking for houses to buy.

The housing units will be coming from governmentowned schemes and joint venture projects located in various parts of the state including Sangotedo, Idale in Badagry, Odo Onasa/Ayandelu, Ibeshe, Egan-Igando and Ajara.

From the Lagos Home Ownership Mortgage Scheme (LagosHOMS), Igbogbo Scheme 11b, in Ikorodu Local Government Area, the state is expecting about 360 housing units that will ultimately take an equal number of families off the housing market in the next couple of weeks.

“Reducing the housing deficit and bringing more people on the home ownership ladder through provision of affordable and quality homes are tasks that are germane to building a 21st century economy that the state government is committed to,” said Moruf Akinderu – Fatai, the state Commissioner for Housing.

The commissioner who spoke during an inspection tour of the project, disclosed that the state government was frontally pursuing the goal of completing all the on-going housing schemes to ensure that befitting and decent accommodation were available to the residents of the state.

Wasiu Akewusola, Permanent Secretary (PS), Ministry of Housing, confirmed that over 360 families would soon move into their homes after the commissioning of the estate in a few weeks.

The PS said he was satisfied with the progress of work on the site and encouraged the contractors to keep up with the good job in order to deliver at the targeted date.

The estate, according to him, comprises 30 blocks of buildings with 120 units each of 3-bedrooms, 2-bedrooms and 1-bedroom making a total of 360 units of family homes.

The scheme which commenced in 2012 boasts central sewage treatment plant, water treatment plant, high quality road network, and streetlights.

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Tuesday 21 January 2020

BUSINESS DAY

property&lifestyle How to prevent abandoned building projects

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here is a high influx of people into city centres and urban areas because they seem to offer a promise or, at least, a likelihood of better life and income opportunities. A good case in point is the city of Lagos which is said to attract 86 people per minute. But, what are the implications of such an influx of people for a city?

Since shelter is a primary need of man, this influx of people inevitably results in increased demand and higher competition for available shelter. A new migrant needs a place to rest his weary head at night.

Often, people rely on friends or relatives for temporary accommodation on arriving in an urban area.

Those who have neither relatives nor friends and also lack the wherewithal to pay for some space usually resort to making temporary

homes out of bus stops, bus parks, shop fronts or worst still, abandoned old vehicles.

Some people are bold enough to make temporary homes out of abandoned buildings. Buildings with roofs are better options and for those without roofs, desperate settlers soon create makeshift roofs.

Several estates, through the landlords’ associations, have instituted laws and engaged the services of security operatives to ensure that unregistered and unwanted residents are cordoned out of their jurisdiction. Although, in addition to migrants, miscreants and hoodlums also take up residence in abandoned buildings.

Doubtless, an attempt by the government to regulate the influx of people into urban areas will pose a herculean task. And, while that is not the crux of today’s article, it points us to the fact

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that the increasing number of abandoned building projects is not just an investor’s concern, it is a societal challenge.

Why do we have abandoned buildings and building projects? Apart from the government’s restrictive policies and bureaucracies, different factors could account for abandoned building projects irrespective of whether the project was undertaken by individual investors or corporate entities. Causes of abandoned building projects can be grouped into two major categories – internal and external.

Internal causes can be identified, determined and controlled while the external may be beyond the initial reach of an investor.

An example of an external cause is a change in currency value or a sudden change in government policy.

An internal cause, on the other hand, can include

a lack of proper market research ; product and demand mismatch at the conceptualization stage of the building project; overoptimism; or undermining fluctuating consumer behaviour or needs, where consumers can also be corporate entities or individuals.

The first point of intervention to prevent losses or abandoned building project for an investor is from the conceptualization stage.

The conceptual design plan of a building is where all the mental images are first created and communicated.

A simple question to ask at a concept design plan stage is what I call the 5WH question.

The 5W represents the who, why, what, where and when questions around the project while the H represents the how questions of the project. The 5WH questions trigger a process of critical thinking that helps

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Talking Real Estate

With Oluwakemi Adeyemo an investor finish a project design on paper even before it starts physically.

It is a sure-fire way to identify possible problems and challenges upfront and create options for solving them. It also keeps some parts of a project openended as would be required for continued review and improvements.

The result of extensive research shows that critical thinking at the planning stage of a real estate project determines, to a great extent, the effective implementation of the carefully crafted plan as well as the overall success of the project idea. The 5WH question set is a cheat sheet model for any successful project design as well as the

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sustainability of the defined success.

In a fast-changing world, an investor can prevent a lot of derelict and loss by being open to a deliberate critical thinking process at the ideation stage of a new building project. Existing abandoned projects can also be revived through a similar process.

A curated 5WH set of critical thinking questions is available for download.

Request for a free copy by sending 5WH to info@futureperfectproperties.com Oluwakemi Adeyemo CEO of Futureperfect Limited is a Real Wealth Creation Advisor with extensive experience in real estate wealth creation and investment optimization.

Tuesday 21 January 2020

BUSINESS DAY

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Tuesday 21 January 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 20 January 2020

Top Gainers/Losers as at Monday 20 January 2020 LOSERS

GAINERS Company

Opening

Closing

Change

Company

Opening

Closing

Change

ASI (Points)

TOTAL

N107

N117

10

NESTLE

N1469.9

N1380

-89.9

MTNN

N126.6

N128.3

1.7

UNILEVER

N18.5

N18

-0.5

BUACEMENT

N36

N37

1

NCR

N4.05

N3.65

-0.4

CADBURY

N10

N10.85

0.85

N3.7

N3.52

-0.18

VALUE (N billion)

NASCON

N15

N15.7

0.7

N9.1

N9

-0.1

MARKET CAP (N Trn)

OANDO INTBREW

DEALS (Numbers) VOLUME (Numbers)

29,710.56 5,052.00 266,947,980.00 4.184

… Total, MTNN, BUA Cement, others rally Stories by Iheanyi Nwachukwu

N

BUA Cement advanced from N36 to N37, adding N1 or 2.78percent; Cadbury Nigeria rose from N10 to N10.85, adding 85kobo or 8.50percent. Nascon a l s o ro s e f ro m N 1 5 t o N15.7, adding 70kobo or 4.67percent.

Market watchers expect investors to take profit in

names that have rallied in recent trading sessions, with a possibility of bargain hunting in other value counters.

O n the losers table, Nestle Nigeria stock price dipped most from N1469.9 to N1380, adding N89.9 or 6.12percent. Unilever Nigeria Plc followed after its

share price decreased from N18.5 to N18 , losing 50kobo or 2.70percent.

NCR also made the top decliners league after its share price dropped from N4.05 to N3.65, losing 40kobo or 9.88percent, and Oando Plc which stood lower from N3.7 to N3.52, after losing 18kobo or 4.86percent.

Union Bank set to issue up to N20bn in Series 3 and 4 Commercial Paper ...targets pension and non-pension asset managers, high net-worth investors

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ollowing the successful registration of its N100 billion Commercial Paper (CP) Programme in 2018, Union Bank of Nigeria Plc is set for its Series 3 and 4 CP issuance.

This follows the debut issuance of the Series 1 and 2 offer in the domestic capital markets, which successfully raised N24.3 billion in January 2019.

The 180-day and 268-day

offer for the Series 3 and 4 respectively, opened on January 16, 2020 and is scheduled to close on January 21, 2020, with a target issuance size of N20 billion across both tenors.

Stanbic IBTC Capital Limited and Union Capital Markets Limited are the Dealers on the Commercial Paper Issuance by the Bank. The Commercial Paper will be listed www.businessday.ng

on the FMDQ OTC Securities Exchange platform.

The CP offer is targeted at institutional investors including pension and nonpension asset managers, as well as eligible high net-worth investors.

The new funding is expected to provide the bank with further working capital as it delivers on its promise to be Nigeria’s most trusted and reliable banking partner.

Union Bank is one of Nigeria’s leading financial service institutions, with approximately 5.6 million active customers serviced across 280 branches and cash centres nationwide, an asset base of over N1.8 trillion and total equity in excess of N240 billion as at September 30, 2019.

The Bank has been assigned ratings of A- (Agusto & Co.); A(DataPro); BBB+ (GCR).

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Global market indicators FTSE 100 Index 7,653.58GBP -20.98-0.27% S&P 500 Index 3,329.62USD +12.81+0.39% Generic 1st ‘DM’ Future 29,269.00USD -10.00-0.03%

15.303

Stock market opens new week in green igeria’s stock m a r k e t opened this week on a positive note, driven by gains in equities like Total Nigeria, MTNN, BUA Cement, Cadbury and Nascon.

T h e Ni g e r i a n S t o c k Exchange (NSE) All Share Index (ASI) was gained 0.31percent on Monday Januar y 20, after rising from a preceding high of 29,618.52points to 29,710.56 points.

In 5,052 deals, investors exchanged 266,947,980 units valued at N4.184billion. The value of NSE listed equities increased by N47billion from day open low of N15.256 trillion to N15.303trillion.

The month-to-date (MtD) positive return stood at +10.69percent. Total Nigeria stock price increased from N107 to N117, adding N10 or 9.35percent. MTNN was also upbeat from N126.6 to N128.3, adding N1.7 or 1.34percent.

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Deutsche Boerse AG German Stock Index DAX 13,539.52EUR +13.39+0.10% Nikkei 225 24,083.51JPY +42.25+0.18% Shanghai Stock Exchange Composite Index 3,095.79CNY +20.29+0.66%

SEC electronic offering will reduce unclaimed dividends

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he introduction of electronic offering in the Nigerian capital market has been described as a major achievement that will help solve the problems of unclaimed dividends. To this end, the rules have been developed and espoused to the market.

Mary Uduk, acting Director General of the Securities and Exchange Commission (SEC) in an interview over the weekend in Abuja said the SEC is excited about electronic offering and is in full support hence the need to develop the rules to guide its implementation.

According to her, “We believe that electronic offerings will help solve the problems of unclaimed dividends so it’s something we are backing seriously. Through electronic offerings we will not have the problems of identity as we had in previous listings.

“It has a lot of advantages, it means that people who are not close by during an offering can invest, we are able to get the data we need for regulation, the offering is more efficient and it is cost saving. It is something we are working on; the rules will soon be out for everyone to use.

The Acting DG said when

it becomes operational; an investor in Ghana or South Africa can invest in the Nigerian Capital Market via electronic offering.

“That is the idea but when the exchanges finish putting it together that is what will happen. Ours is to make the rules and regulate, but that’s the idea. We want to open up our market so that more people can invest from different parts of the world.

“We want a deeper, bigger, more attractive market. We think our economy is big enough to have a much bigger market. The capital market makes up less than 10 percent of the GDP of the country. If you look at other countries even South Africa, its over 100 percent of GDP. We believe we have a large room for expansion and that is what we are pursuing,” Uduk stated.

On e-filing, Uduk disclosed that the Commission is working hard to ensure it commences in the not too distant future.

She said, “We are in the process of deploying the software that will help with that. That will make filing more efficient, make it easier for capital market operators to send in returns to us and make the market more transparent”.

United Capital Research

SSA equities market: Lack of reform to spook investors

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ver 2019, equities in global, emerging and frontier markets trended upwards, on the back of the global easing narratives.

However, most equities in the Sub Saharan Region (SSA) region underperformed their emerging market (EM) and frontier market (FM) peers, as foreign portfolio investors (FPIs) piled into high yielding EM debt instruments.

Of the six exchanges under our watch, only the South African and Kenyan exchanges closed 2019 in the positive territory.

The performance in Kenya was buoyed by strong economic growth in half year (H1) 2019 and the possibility for the removal of interest rate caps, that have constrained banking @Businessdayng

sector earnings.

Meanwhile, for South Africa, it was a tale of two halves as the continued re-assurance by the President to commit to reforms, provided investors with some fundamental justifications for buying equities in H1 2019.

However, the continued drag to commit to those reforms spurred some capital reversals in second half (H2) 2019. On the other hand, the benchmark indices in Ghana, Nigeria, BRVM bloc and Mauritius all closed 2019 in the negative territory, largely due to risk-off sentiments by foreign investors and the lack of pro-market reforms.

In 2020, we believe the outlook for EM and FM equities will remain positive, on the back of expected dovish global monetary policies.

Tuesday 21 January 2020

BUSINESS DAY

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POLITICS & POLICY ‘Political instability may crumble Imo economy’ …As APC stages counter rally SABY ELEMBA, Owerri

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he economy of Imo State may be adversely affected and could take many years to be resuscitated if the political instability which is building up now is not arrested; those who spoke to BusinessDay on condition of anonymity said.

The political instability, which faces Imo State, is a result of the sudden change of baton by the nation’s apex court, the Supreme Court.

The Nigerian Supreme Court had on January 14, 2020 passed its judgment which sacked Rt Hon. Emeka Ihedioha of the People’s Democratic Party (PDP) as the governor of Imo State and replaced him with Senator Hope Uzodinma of the All Progressives Congress (APC) as the duly elected governor of Imo State.

The judgment appears to have grounded economic

activities in the state, particularly in Owerri, Imo State capital, and the surrounding towns.

O n Sunday Januar y 19,2020, there was a statewide protest against the judgment. A mammoth crowd took over all the major streets in Owerri, protesting the Supreme Court judgment and demanding the resignation of the Chief Justice of Nigeria, Muhammad Tanko.” The protesters chanted ‘Tanko must go; Tanko must go.” They also carried banners and placards with various inscriptions condemning the judgment, and calling out those they believed must have masterminded the decision by the apex court.

Yesterday, Tuesday, January 20,2020 , members and loyalists of the All Progressives Congress staged a counter protest.

The APC protesters gathered at Hero Square, close to Imo Concorde Hotel. They marched in support of the

ruling of the Supreme Court.

Since the development last week, there has been apprehension in the state which appears to have negatively affected economic activities.

A trader on the busy Douglass Road, who spoke to BusinessDay on condition of anonymity, said: “Since the Supreme Court judgment, businesses have been recording low sales.”

The trader expressed fears that “the political uncertainty now in Imo will ground the economy of the state and the good governance seen in Ihedioha’s government may varnish”.

Speaking also, an Economist and a professor of finance with the Federal University of Technology, Owerri (FUTO) who craved anonymity, said what happened in Imo “has sent Imo backwards, even pushed it up to ten years backwards. Emeka Ihedioha has put Imo in good governance, much efforts he made to rejuvenate the state are now a

Imo guber: Ebonyi PDP gives Supreme Court 24-hour ultimatum to reverse self NKECHI OGINYI

M

embers of the People’s Democratic Party (PDP), Ebonyi State Chapter on Monday staged a peaceful protest against the removal of Emeka Ihedioha of Imo State by the Apex Court.

The protest led by Austin Umahi, national vice chairman of the party, southeast zone and Onyekachi Nwebonyi moved with placards from the party office to federal high court along Enugu-Abakaliki highway to register their protest over the last week’s judgment.

The party however, gave the Supreme Court judges that presided over the judgment 24 hours to reverse themselves, accusing the ruling All Progressives Congress (APC) of influencing the judiciary.

The vice chairman called on the registrar of the federal high court in the state to pass their message to the National Judiciary Council, pointing out that it would be dangerous for the country and democracy if the judiciary fails to get it right at the judiciary.

“Something that is not reversible is death; it is better to call the NJC; it is better to call the Supreme Court judges that passed a perverse judgment to reverse

themselves within 24 hours, failure to do that would mean that democracy has been murdered, and they will never have peace,” the leaders said.

“It is unfortunate that democracy has been murdered; it is unfortunate that under the watch of the judiciary that democracy is murdered. Our understanding is that judiciary is the last hope of the common man, but today it is the lost hope of the common man.

“The judgment of the Supreme Court is perverse and it must be reversed immediately for the oneness of this country; for the furtherance of democracy; they must reverse and reinstate the man elected by the Imolites, that is Rt Hon. Emeka Ihedioha, and not the man who was brought in through the back door.

“We are going to resist it with everything that we have; that judgment can’t stand.”

According to the protesters, “When judiciary is captured, we are finished in this country and from observations, you can see we have a compromised judiciary,; there is no independence again; there is no rule of law in this country and where are we going as a country?

This is more like banana republic,” Umahi stated.

Onyekachi Nwebonyi, PDP chairman in the state, www.businessday.ng

on his part described the judgment as baseless and unfounded. He called on the international community, well-meaning Nigerians to resist the outcome of the Supreme Court judgment.

“As a lawyer, even the layman will agree with me that the court of law can’t admit evidence that comes from unlawful custody. A situation where somebody will sit in the comfort of his bedroom and write a result to represent INEC result, and such result was not tendered by the Independent Electoral Commission, the question is this, who tendered those results at the Supreme Court? Those witnesses that tendered the result, are they the proper witnesses?

“Under APC-led Federal Government, the judiciary has compromised, the judiciary supposed to be the last hope of the common man but in Nigeria today, judiciary is the lost hope of the common man.

“I have never seen this type of baseless judgment, unfounded judgment; even year one university students will agree with me that it is a baseless judgment,” Nwebonyi said.

“I want to use this medium to call on the international community and all-well meaning Nigerians to resist this abomination,” he further said.

waste, it quite unfortunate “.

He said: “The impact of this will drive away foreign investors because the polity has been distorted. That friendly environment is now something else; it is a mirage. It is setting

the hands of clock backwards; if something is not done now, it is unfortunate; there is low economic activity now”.

Meanwhile, while addressing the solidarity rally at the Government House

where APC faithful were in attendance, Governor Hope Uzodinma said the Federal Government should investigate the circumstances surrounding the nationwide protest by PDP.

L-R: Halima Lawal, commissioner for Agriculture; Jesper Kamp, ambassador of Denmark, and Nasir El-Rufai, governor, Kaduna State, at the groundbreaking ceremony of the Damau Milk Farm Project; an initiative to sedentarise nomadic herdsmen, increase milk production in Nigeria and address the security problems arising from farmer-herdsmen clashes.

‘Politicising statues removal in Lagos hasty, abnormal’

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pro-developmental group, Movement for a Better Lagos, has frowned at the alleged politicization of the removal of some statues in the state, describing such criticism as too hasty, abnormal and condemnable.

Recall that statues of the first Premier of the Western Region, Chief Obafemi Awolowo and that of the ace philosophical musician of world repute, the late Fela Anikulapo-Kuti were temporarily removed to allow for expansion of roads at the popular Allen Avenue roundabout.

The group’s Convener, Ekudina Ibrahim in a statement at the weekend, said there was nothing wrong in the step taken by Governor Babajide Olusola Sanwo-Olu since it was for developmen-

tal purposes.

According to him, since the government has not said it would not restore the statues to their original locations after the construction works are completed, criticising the move was in bad faith and with bad blood.

Ibrahim, who asserted that whoever craves for infrastructure development should be prepared for sacrifice, reminded that, gains always follow the pains suffered in the process of achieving development, adding that, by the time Sanwo-Olu is through with his plans for the state, even the critics would clap for him.

The group leader called the attention of the critics to the clear fact that, the government bears no grudge against any of the respected

personalities whose statues were affected; rather, the government holds them in high esteem because of their invaluable contributions to the development of their country and Lagos State in particular during their lifetimes.

Ibrahim wondered why people want to eat their cake and still want to have it, querying that, how they want to experience free flow of traffic without touching some structures in the way of development.

Besides statues, the youth leader pointed out that some other structures like residential buildings, worship edifices, factories property, educational blocks and fences among others are always affected while the government does the needful to compensate affected owners.

‘Amotekun’: We are not aware of any planned protest - Afenifere Iniobong Iwok

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an-Yoruba sociocultural group, Afenifere, has dissociated itself from today’s planned protest rally organised by Yoruba World Congress (YWC) across the Southwest State capitals in solidarity with the Southwest regional security outfit ‘Amoketun’, saying that it was not aware and informed of the rally.

The protest code-named ‘Amotekun Solidarity Walk’ is being organised by YWC; an umbrella body of all Yoruba socio-cultural and self-deter-

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mination groups within and beyond Nigeria.

The group had urged all Yoruba sons and daughters to come out in their millions for the solidarity protest.

The YWC is being led by Yoruba Leader, Emeritus Professor of History and Second Republic Senator, Banji Akintoye and Anthony Kila as secretary-general.

However, the YWC had said it was fully in support of the governors’ decision and would be mobilising support across Southwest to come out and show their solidarity for the security outfit.

But speaking in an in@Businessdayng

terview with BusinessDay, Monday, on the planned protest, Publicity Secretary of Afenifere, Yinka Odumakin said the group was in support of the establishment of the security outfit by the Southwest states governors and had made its position known, but would not take part in Tuesday’s protest because it had no knowledge of it.

“We are not aware, nor informed of the protest rally, so we would not be part of it.

We support ‘Amoketun’ and we have made our position known that our people must be protected,” Odumakin said.

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Tuesday 21 January 2020

BUSINESS DAY

news

NNPC restores product supply on pipeline after explosion

Imo Supreme Court judgment stirs concern about documentary evidence in business contracts

… deplores level of conspiracy between vandals, communities

ISAAC ANYAOGU

Olusola Bello

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he Niger ian Nat i o n a l P e t ro l e u m Corporation(NNPC) says it has restored supply of petroleum products on it System 2B pipeline that experienced fire explosion in Abule-Egba, a Lagos suburb, Sunday, even as it deplored the level of conspiracy among some communities that harbour its pipeline right of way (RoW), which have compromised with vandals to siphon products from the pipelines.

Mele Kyari, group managing director, NNPC, expressed his disappointment with communities living along the corporation’s pipeline RoW, which often compromise with vandals to steal fuel.

He urged the communities living along the pipeline RoW to report activities of vandals in their area so that the incident of vandalism could be reduced to the barest minimum. He stated further that whatever happened to the pipelines would have adverse effect on everybody, as there would always be disruption in fuel supply.

He said having shut down to contain the damaged on Sunday, the corpo-

ration had now been able to restore supply on the line

by Monday, saying, “We are back on stream. Petroleum products are flowing all the way from Atlas Cove to Mosimi all the way to Ilorin.

We enjoin everyone to work with us in sustaining this.”

The corporation needs the support of everybody in the community to expose the bad eggs in their midst, he said, as we are counting on Nigerians to help us resolve this as it is becoming a matter of national security.

He said he had to return back to Lagos Monday after leaving Lagos for Abuja on Sunday because of the pipeline explosion, which resulted in the death of five people with many still being in critical conditions hospitals. He said but more importantly was the fact that the vandals had hacked the corporation pipeline from Atlas Cove through Mosimi to Ilorin.

He said the vandals make insertions into the lines, tap petroleum products and at the end with the disaster that we have seen like this.

Ac c o rd i ng t o Kya r i , this is a daily occurrence and that the corporation is working with security agencies to ensure that it is reduced to the barest minimum.

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upreme Court judgment that sacked Emeka Ihedioha, candidate of the People’s Democratic Party (PDP) relying on a public document, result sheet disowned by the Independent National Electoral Commission (INEC) has some legal concerned about the quality of documentary evidence acceptable for business contracts.

Some legal analysts say lower courts relying on the precedent set by the apex court may now develop fluid interpretations of what constitutes valid documentary evidence with serious implications for doing business in Nigeria.

“The Supreme Court has by implication opened the door to lower quality of documentary evidence to be admissible in

Nigerian courts,” says Emeka Opara, a Lagos-based legal practitioner.

“This seems to be not only contrary to the Nigerian Evidence Act and other laws but runs against the practice in all Commonwealth and other civilised countries,” Opara states.

However, other legal experts counter that view insisting that the result sheets do not become invalid simply because INEC disavowed it especially after the relevant party officials have signed the document.

Wale Ogunade, constitutional lawyer and president of non-profit, Voters Awareness, contends that the document was valid, saying, “The results sheets signed by all the relevant parties to the election cannot be said to be invalid even if INEC choses to disown the

document.”

Justices of the Supreme Court admitted and relied on 366 Nos. Form EC8A, a public document, which contains results in 18 polling units disowned by INEC but which were presented by the petitioner, Hope Uzodinma and his witnesses and gave judgment in favour of the APC candidate on January 14.

Many have taken to the street to protest the decision, one of the first time, a Supreme Court decision will stir such public outrage.

However, Paul Chibuike Ananaba, a senior advocate of Nigeria, says the decision has come to stay. Citing a legal principle in law, he says the Supreme Court is the final arbiter as what the court says is law.

Ananaba argues that since the court ruled that the docu-

ment has become admissible it is deemed valid. If it finds that INEC is wrong to have disallowed the document, then the document becomes valid.

“It behoves on the petitioner to file a cross-appeal querying the admissibility of the document,” Ananaba states.

The Evidence Act presumes the regularity of acts and documents from public offices and the onus is on who asserts the contrary to prove. Opara argues that a mere assertion and production of a document that does not satisfy the Evidence Act should not suffice to shift this onus.

“Their lordships seem to have been pre-occupied with politics and maybe technical law, without adverting their minds to the wider implications,” Opara says.

P&ID scandal: Court adjourns until today trial of British witness STEPHEN ONYEKWELU, with agency report

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n Monday, Justice Okon Aban of the Federal High Court, Abuja, adjourned til today a case filed by the EFCC against Adam Quinn, because a prosecution witness was absent in the case against P&ID Limited.

Process and Industrial Developments Limited (P&ID) is an engineering and project management company founded and l e d b y Mi c h a e l Q u i n n and Brendan Cahill who had over 30 years’ experience in project management and execution in Nigeria.

The News Agency of Nigeria reported that Justice Abang had on December 18, 2019, ordered for the arrest of Quinn over his alleged complicity in the $9.6 billion P&ID scam against Nigeria.

The EFCC had prosecuted one Messrs Nolan and Quinn, both directors of Goidel Resources Limited, a Designated NonFinancial Institution and

ICIL Limited, arraigning them on a 16-count charge but later amended to 32 counts bordering on money laundering.

Quinn’s associate, Nolan was noted to be a signatory to P&ID accounts and had been at Kuje Correctional Centre, Abuja, after being unable to perfect his bail conditions.

The Judge said the arrest of Quinn would assist the Federal Government in the prosecution trial.

Prosecution Counsel, Ekele Iheanacho told the court that the witness had been in court for previous court sittings and was aware of today’s proceedings.

“He is aware of the date and contacted me this morning but I have been calling him to know his whereabouts but he is not responding,” he said.

In view of the prosecution witness absence, the prosecution applied for an adjourned date.

Iheanacho had earlier told the court that Quinn’s name featured in the charges not less than 21 times. www.businessday.ng

L-R: Paul Obazele, cast; Nancy Ameh, cast; Mercy Johnson Okojie, producer, and her husband Odianosen Okojie, during a premier of the Legend of Inikpi by Mercy Johnson Okojie in Lagos.

Pic by Olawale Amoo

Eco: Three known facts about West Africa Monetary Zone and CFA STEPHEN ONYEKWELU

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n January 16, 2020, after an extra-ordinary meeting of ministers of finance and economy and governors of the central banks, member states of the West African Monetary Zone condemned in strong terms what they described as a unilateral decision of French-speaking West African states to replace the CFA franc with a new single currency, Eco. Alasane Outtarra, president of Cote D’Ivoire and chairman of the Authority of Heads of State and Government of the West African Economic and Monetary Union (WAEMU) on December21, 2019, unilaterally renamed the CFA franc as “Eco” by 2020.

The WAEMU consists of Benin Republic, Burkina Faso,

Guinea-Bissau, Côte d’Ivoire, Mali, Niger Republic, Senegal and Togo, all of which are former French colonies except for Guinea-Bissau, which gained independence from Portugal in 1973.

Here are three little facts about the WAMZ and the CFA zone CFA once stood for the C o m mu nau t é f ra n ça i s e d’Afrique, which was later changed to Communauté financière d’Afrique. The name is a colonial legacy and considerable monetary powers still reserved to the Banque de France, the French central bank. The value of the CFA franc was fixed to that of the French franc until 2002, when France gave up its own currency and adopted the euro; the exchange rate since then remains fixed at 656 CFA francs to the euro.

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The West African Monetary Zone is a group of six member states comprising: The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone, established by the Agreement of the West African Monetary Zone (2000).

The WAMZ Agreement made provision for the establishment of the West African Monetary Institute (WAMI), which was set up in 2001 and located in Accra, Ghana.

The WAMI was tasked with undertaking technical preparations for the establishment of a common West African Central Bank (WACB) and the launch of a single currency for the West African Monetary Zone (WAMZ).

Eco is the proposed name for the common currency that the West African Monetary Zone (WAMZ) plans to introduce. The aim is to merge @Businessdayng

Eco with CFA franc and then ultimately create the common currency. This is why the joint communiqué issued by the WAMZ Convergence Council cited earlier (minus Portuguese-speaking Cape Verde), condemned the unilateral WAEMU decision to launch the Eco as a rebrand of the CFA franc.

The four primary convergence criteria needed from each member state for the implementation of the single currency are; a single-digit inflation rate at the end of each year, a fiscal deficit of no more than 4 percent of the gross domestic product (GDP), a central bank deficitfinancing of no more than 10 percent of the previous year’s tax revenues and gross external reserves that can give import cover for a minimum of three months.

Tuesday 21 January 2020

BUSINESS DAY

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Tuesday 21 January 2020

BUSINESS DAY

news Nigeria’s appetite for subsidies shows little...

Continued from page 1

as an alternative to fuel if expanded to the entire country.

CNG can be used in place of PMS (petrol), diesel

fuel and propane/Liquefied Petroleum Gas (LPG). The CNG industry creates local employment opportunities, spurs economic growth, aids domestic manufacturing with cheaper electricity and reduces strain on foreign exchange reserves for US dollars.

However, for developing a country like Nigeria, creating a natural gas market is not an easy undertaking. Investments in gas projects are inherently capital-intensive,requiringlarge increments for each expansion.

This largely explains the truism implicit in the fact that Nigeria’s natural gas reserves place her 9th in the world, yet she is not among the top 20 gas producers in the world.

Despite the proven viability of the Natural Gas Vehicle (NGV) technology as an alternative to gasoline or dieselpowered vehicles as early as the 1930s, the global penetration rate, an estimated 2 percent of total vehicles, still remains low.

“The approach of subsidy for CNG lacks coordination and is without focus,” Charles Akinbobola, an energy analyst at Lagos-based Sofidam Capital, said.

“We need to fix our gas infrastructure, stimulate privatesector involvement and provide a legal framework not subsidy.”

Rather than being obsessed with providing subsidy, other experts said Nigeria must provide other incentives for private investors such as tax holidays, import duty waivers, and proper legal framework for the successful adoption of CNG. CNG has been adopted as a transportation fuel in few countries for various reasons of which economic benefits, environmental concern, energy security, and availability of natural gas resources are the major drivers.

For example, the Supreme Court of India in an effort to control vehicular emissions ordered the conversion of the city bus fleet to CNG and the USA is pursuing alternative energy for energy independence and security.

Argentina offered credit lines to vehicle owners and removed restrictions relating to proximity of refuelling stations to encourage investment and competition, as companies could site their stations in locations considered feasible without any restrictions, a development which has increased its natural gas vehicle population to 1.6 million vehicles.

Also, Pakistan offered custom duty and tax exemptions as major incentives to refuelling station operators, however in scenarios where government place so much on subsidy the result has been less desirable while in New Zealand, the over-reliance on government incentives resulted in the col-

lapse of the market.

In India, GAIL (India) Limited was charged with the implementation of the CNG programme; the company and Bharat Petroleum Corporation and the Delhi Government were responsible for developing CNG in Mumbai and Delhi markets.

This move translated into a rise in CNG-powered cabs, a development bound to increase the profits of small and medium-scale businesses as well as individual cab drivers by at least 30 to 40 percent.

China has the world’s largest Natural Gas Vehicles (NGV) fleet at 6 million, which is approximately 3.7 percent of the country’s total vehicles.

The growth of the NGV market has also been indirectly supported by China’s efforts in developing natural gas infrastructure, such as West to East Gas Pipeline Projects. These pipelines have ensured that provinces that lack natural gas resources are able to access it through this network.

In its 13th Five-Year Plan for Natural Gas Development, China set a target of 10 million natural gas vehicles, doubling its 2016 NGV population and 12,000 refuelling stations for vehicles by 2020.

In Italy, the success of NGV progra§mme also owes itself to the already existing gas pipelines infrastructure; Italy has the third largest natural gas transmission system in Europe. Although Italy imports most of the natural gas from Russia and Algeria, CNG prices are still significantly lower than gasoline and diesel prices. The popularity of NGVs in Italy remains strong.

By 2017, more than 800,000 NGVs were sold in Italy, which made up 80 percent of total NGV sales in Europe.

Apart from pronouncements by public officials at public functions, Nigeria has not demonstrated any seriousness towards the implementation of CNG in the transportation sector, as there are no standards or regulations.

Conversely, there is no specific agency set up to promote the automotive use of CNG in Nigeria.

The Nigeria Gas Company, established in 1988, has the mandate to efficiently gather, treat, transmit and market the country’s Natural Gas and its by-products to the domestic and regional markets.

“We will start very soon to roll out. Already, there is a pilot programme in Benin, which has worked for a long time,” Minister of State for Petroleum Resources Timpre Sylva told State’s News Agency of Nigeria.

The government-owned Nigerian Gas Company Limited (NGC), which is wholly responsible for gas transmission and sales, and a local company entered into a joint venture agreement in 2007 to establish a chain of CNG refilling stations.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Ibrahim Al-Hassan Musa, chairman, board of directors, Nigerian Railway Corporation (NRC); Fidet Okhiria, MD, NRC; Seyi Makinde, governor, Oyo State; Gbemi Saraki, minister of state for transportation, and Rotimi Amaechi, minister of transportation, at the inspection of Lagos-Ibadan Standard Guage Rail in Lagos.

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Amotekun: Face of future Nigeria as regions...

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earlier ordered an end to

the operations of the newly established outfit.

Across Nigeria, there is brazen banditry, including daylight violent robbery, kidnapping for ransom and violent clashes between farmers and herders. Homes and whole communities are invaded – in both day and night, with scores killed in some of the attacks.

Malami had declared in a statement that the “setting up of the paramilitary organisation called “Amotekun” is illegal and runs contrary to the provisions of the Nigerian law.” He said Nigeria’s 1999 (as amended) established the Army, Navy and Airforce, including the Police and other numerous paramilitary organisations for the purpose of the defence of Nigeria.

Malami’s order has evoked responses that show the subdued frustrations of Nigerians, many of whom live in trepidation at home and on highways.

Some lawyers last Thursday rose in defence of the South-West security outfitAmotekun, saying the security unit can’t be stopped unless by the pronouncement of a competent court of law.

The lawyers spoke with BusinessDay, as reactions continue to trail the Malami’s declaration of Amotekun as illegal.

Femi Aborishade, managing partner, Abope Chambers, Ibadan, described the position of Malami as lacking constitutional backing, insisting that governors as chief security officers of their states were constitutional empowered to take measures to protect lives and property of the citizens.

“The Federal Government, and indeed the Attorney General,has no power to declare Amotekun illegal. If they’re contesting the legality of the outfit, they should go to court. Pending that, Amotekun will continue to operate until a court says

otherwise,” Aborishade said.

On the funding of the security outfit, the lawyer said he did not foresee any challenge funding its operations given that governors receive huge sums every month as security vote.

“The security vote of the governors ranges between N150 million and N2 billion monthly, therefore, I don’t see any difficulty funding Amotekun. It is the constitutional duty of the governors to protect lives and property within their states. The Southwest governors have taken the right step,” he said.

Similarly, a Lagos-based lawyer and rights advocate, Ebun Adegboruwa, advised the governors to ignore the Attorney General of the Federation.

“The constitution is explicit on what is expected of the government. Section 14 of the constitution says that the welfare and security of the citizens shall be the primary responsibility of the government.

“Section 11 also says that the government shall take measures to protect lives and property of the citizens. That’s what the Southwest governors have done with the launch of Amotekun. So you see that the statement by the AttorneyGeneral is unconstitutional,” Adegboruwa said.

He further posited that once the security outfit had been launched into operation, the only body that could stop it would be a competent court of law, and not the Federal Government.

“It must be stressed that we’re operating a federation constitution. What this means is that the federating states have rights within the constitution to adopt measures that will guarantee the protection of lives and property within their states.

“More so, the regular police have failed. That we now have the military launching “Operations Crocodile Smiles”, “Python Dance” and moving

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soldiers who are supposed to be in the barracks into villages and towns, is a confirmation that the regular police have failed. That’s why the governors have taken up the gauntlet,” said Adegboruwa.

Despite Malami’s order, demand is rising for such regional outfits, which many Nigerians believe will better serve their interests in the face of a rising wave of insecurity.

The lawyers noted that, rather than the Federal Government trying to stop Operation Amotekun, governors of other regions in the country should emulate the Southwest by coming up with their security outfit to Nigerians living within their states.

Youths in the Southeast agree, and have demanded that governors in the region set up their version of Amotekun.

The youths have urged the governors of the five SouthEastern states to emulate their counterparts in the SouthWest to establish a regional security outfit that would work with the Nigeria Police and other security agencies to provide security in the region.

Goodluck Ibem, president general, Coalition of SouthEast Youth Leaders (COSEYL), a socio-political organisation, who made this call in an interview with BusinessDay in Aba, observed that separate security outfits for each state, which is being proposed by the South-East governors, would not achieve the needed security in the region.

He said governors of the South-East should emulate their South-West counterparts to form their own regional security outfit that would be indigenous.

“The South-East Governors should form a security outfit to protect the people of the region. This security outfit is important because they will be working in synergy to ensure that there is security in the South-East region.

“A regional outfit is important because if an armed robber, a kidnapper or terrorist @Businessdayng

escapes from Abia to Enugu State, what Abia needs to do is to communicate with Enugu, to apprehend the suspect for prosecution.

“We are not saying that this security outfit should work independently, but they would partner with the Police and other security agencies to ensure that there is security in the region.

“The outfit will not detain any suspect; their job will be to arrest and hand over to the police for prosecution,” he said.

He commended Governors of the South-West for establishing Amotekun, noting that it was an indication that they had the interest of their people at heart.

“We commend them for this bold step and we urge Governors of the South-East to emulate their counterparts in the South-West, before it is too late.

“They should form a central security outfit, not separate outfits for each State, as they want to do now. A central body would ensure cohesion and proper coordination,” he observed.

In a bid to improve security of lives and property in the rural areas, Abia State government floated a rural security outfit known as Abia State Community Surveillance Group, (ASCSG).

A total of 7,400 youths, would be engaged and deployed to the 740 autonomous communities in the state to ensure proper security surveillance.

The idea of the rural security outfit was mooted in the wake of the incessant attacks and destructive activities of herdsmen in rural communities in parts of the country.

Already, the government has set up a six-man committee to screen and recruit the youths to be engaged on the programme. Ten able-bodied youths would be selected from each of the 740 autonomous communities in the state.

•Continues online at www.businessday.ng

Tuesday 21 January 2020

BUSINESS DAY

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news

Pipeline fire: How NNPC, security agencies intend to tackle vandalism … as 5 now confirmed dead in Lagos explosion JOSHUA BASSEY

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igerian National Petroleum Corporation (NNPC) and security agencies are forming stronger alliance to check recurring incidences of petroleum pipeline vandalism across the country and consequential losses to the economy.

Aiteo Eastern Exploration and Development Company Limited, operator of the Nembe Creek Trunk Line (NCTL), said in 2019 that Nigeria may have lost over N$126.3 billion in revenue to the criminal act of vandalism of oil pipelines criss-crossing the country, especially in the oil producing Niger Delta region.

Although the NNPC and some International Oil Companies operating in Nigeria are believed to spend an average of N350.4 billion for staff and asset protection annually, the country still records heavy losses to oil theft, a development that contributes to limiting the capacity of the government in funding annual budgets.

But Mele Kyari, group managing director (GMD) of the NNPC, says strengthening collaboration with security agencies has become imperative following the latest pipeline explosion in Abule-Egba area of Lagos State, on Sunday, January 19, in which five people lost their lives, seven houses burnt and 11 trucks laden with 40-foot containers destroyed, as confirmed on Monday by the Lagos State Emergency Management Agency (LASEMA).

The incident was linked to vandalism of NNPC pipeline suspects yet to be arrested. The pipeline has severally been vandalised in the past, with the vandals alleged to always scoop product into tankers to sell to the public. The vandalised pipeline links the Atlas Cove - Mosimi Pipeline, which is part of the Sys-

tem 2B Pipeline.

Kyari, who visited the scene of the incident on Monday in the company of officials of Lagos State, including commissioner for special duties, Wale Ahmed, said the NNPC would be working with security agencies to check repeated rupture of the pipeline.

Among the security outfits he listed include the Nigerian Navy, Civil Defence Corps and Police in tackling the problem, but also sought support of communities to achieve greater success.

“Unfortunately, this incident has happened and we lost five lives confirmed and there are many people who were injured, and that is very pathetic for us.

More importantly, what is happening around the System 2 B Pipeline from Atlas Cove to Mosimi all the way to Ilorin are acts of vandals of all nature along our right of way.

“What they do is that they make insertions into our pipelines, tap petroleum products and at the end it will be disasters we have seen like this. This is happening daily.

“What this portends is danger to all of us. If this incident had happened under a windy condition yesterday, then we would have been talking of thousands of people dying,” the GMD said.

He noted that beyond working with security agencies to curb such incidents, cooperation of all Nigerians, especially those residing close to the pipelines, was required to achieve desired results.

“These activities are happening within communities.

People are aware of what is happening, and if we allow them to continue doing what they are doing, they will kill all of us and everybody along this corridor will be affected. Therefore, we do need the help and cooperation of all members of the community to expose these people when they come.

Logistics is biggest barrier to trade in Africa - Diageo president ENDURANCE OKAFOR, London

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or Africa to attract more investment and spur growth through trade within the continent and overseas, it would have to resolve it logistics challenges, John O’Keeffe, president of Diageo Africa, a British alcoholic beverages company, said at a panel session at the UK-Africa Investment Summit in London, Monday.

According to O’Keeffe, it is easier to export overseas from Africa than it is to ship products to neighbouring countries.

“That has got to change,” he said.

“The barriers are coming down but are coming down slowly. The key problem ranges from logistics challenges to infrastructure challenges,” the president of the company that makes products like Johnnie Walker and Smirnoff said.

He was however optimistic that the implementation of the

African Continental Free Trade Area would provide solutions to many of the trade challenges in the continent.

Acknowledging that Africa is the fastest-growing alcoholconsuming market in the world, O’Keeffe encouraged investors to look into Africa as there were opportunities that exist in the continent.

Nigeria signed the African Continental Free Trade Area agreement in July 2019, several months after the Nigerian leader initially refused to sign the agreement already signed by 52 other African countries.

Industry experts have recognised that the African free trade agreement has the potential to broaden and strengthen the scope for intra-African trade as well as improve the well-being of African people.

“I know the Africa free trade won’t be implemented overnight but the trade agreement will be a catalyst for growth,” O’Keeffe said. www.businessday.ng

Some sympathisers ponder over burnt residential buildings at the scene of the pipeline explosion at Ile Epo, Ekoro Road in Abule Egba of Lagos State.

Pic by David Apara

Supreme Court upholds Ganduje, Bala, Lalong, Tambuwal’s electoral victory Iniobong Iwok, Lagos & Felix Omohomhion, Abuja

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h e Su p re m e C ou r t Monday reaffirmed the electoral victory of five governors across the country in the March 23 gubernatorial elections.

Kano: The Court in the judgment ruled that Kano State Governor Abdullahi Ganduje was duly elected.

In a unanimous judgment read by Justice Sylvester Ngwuta on Monday, the Court held that the challenger, Abba Yusuf of the People’s Democratic Party (PDP) did not show that the Court of Appeal and the Election Tribunal were wrong in their earlier rulings.

The seven-member panel said the appeal had no merit and dismissed it.

The Court also struck out a cross-appeal filed by Ganduje, the candidate of the All Progressives Congress (APC).

The Kaduna Division of the Court of Appeal had on

November 22, 2019, upheld Ganduje’s election, affirming an earlier decision by the tribunal led by Justice Halima Shamaki.

Bauchi: Also yesterday the apex Court affirmed the victory of the Bala Mohammed, saying he was duly elected governor of Bauchi State. The court dismissed the appeal of the APC candidate Mohammed Abubakar.

The seven-member of the apex court, in a unanimous judgment on Monday, dismissed the appeal for lacking in merit. Justice Dattijo Mohammed, who read the lead judgment, dismissed the appeal for lacking in merit.

Sokoto: The nation’s apex Court also dismissed the appeal of the APC and its candidate, Ahmed Aliyu, challenging the victory Aminu Tambuwal of the People’s Democratic Party (PDP) as governor of Sokoto State.

The seven-member panel of the apex Court, in a unani-

mous judgment on Monday, dismissed the appeal for lacking in merit.

Justice Uwani Abba-Aji read the judgment, and held that the appellant (Aliyu) failed to give any credible evidence to prove his petition against the outcome of the governorship election.

The Court further noted that Aliyu produced 12 witnesses before the tribunal, out of which 11 made their statements in Hausa language while the English version was tendered in evidence.

Justice Abba-Aji held that the appellant failed to tender the original version of the statements in evidence.

The court further held that Aliyu also failed to produce the translator to confirm the authenticity or otherwise of the 11 statements.

Plateau: The Court also upheld the re-election of the APC candidate, Simon Lalong, as the governor of Plateau State.

In a unanimous judgment read by Justice Paul Galinje, a

seven-member panel of the court held that the applicant failed to prove that the election was not in substantial compliance with the Electoral Act. The PDP candidate, Jeremiah Useni, had challenged the outcome of the governorship elections held in Plateau State on March 9, 2019. Useni, in his appeal had questioned the election of Lalong on the ground that he was not the duly elected winner of the governorship election.

The senator said that both the election tribunal and the Court of Appeal failed to properly evaluate his case before affirming that Lalong was duly elected in substantial compliance with the Electoral Act. He had sought that the apex Court should set aside the judgment of the two lower Courts.

Meanwhile, out of the governors whose victory at the poll was affirmed, two are from the PDP, while the remaining from the APC.

Over 150 days after exit, Trade Ministry’s Twitter handle refers to Enelamah as minister MICHAEL ANI

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n what can be described as a show of negligence or nonchalance on the path of the Ministry of Industry, Trade and Investment, its official twitter account still carries Okechukwu Enelemah as head of the ministry.

Also, the account portrays Aisha Abubakar as its minister of state, despite almost 150 days since both Enelamah and Abubakar seized to be at the helm of affairs in the ministry after President Muhammadu Buhari in his second four years tenure appointed Adeniyi Adebayo as the new head of the ministry.

There have also been no single tweets since Septem-

ber last year of activities in the ministry from either the new minister or his assistant, making analysts and the investing public worry over whether Adebayo, the new minister of Industry, Trade and Investment has his eyes fixed on the Ministry.

One might ask, do all this matter. Well, they matter because no other ministry should be more outwardfacing than that of industry, trade and investment, said Olu Fasan, a London-based lawyer, political economist and a visiting fellow at the London School of Economics.

“The industry, trade and investment is a ministry that has the whole world as its platform, and if foreign investors, traders and policymak-

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ers want to follow developments on Nigeria’s industrial, trade and investment policies, they might want to see what the minister and/or the ministry is tweeting,” Fasan said in a publication in BusinessDay. In an era where the internet and social media have increasingly become a major tool where the public search and get informations, due to the increasing use of smartphone technology, twitter has been seen as one of the reliable ways people are informed.

Although Adebayo, 60, uses his twitter account in singing his praises and posting activities of the ministry, his account is however not a verified handle. Analysts @Businessdayng

say it can create an avenue for online fraudsters to use a tool to defraud or pass wrong information to the public.

To describe the height of negligence, whenever the minister post trade and investment activities on his twitter account, he tags the ministry, showing that the ministry’s official twitter account is still very well recognised, even though handlers of the ministry, in turn, fail to re-tweet.

“No responsible agency that knows what they are doing, ever joke with their official twitter account as the medium has proven to be one of the most reliable forms of engagement with the public,” a renowned political analyst told BusinessDay.

Tuesday 21 January 2020

FT

BUSINESS DAY

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FINANCIAL TIMES

World Business Newspaper KADHIM SHUBBER

T

he Trump administration embarked on an extensive effort to sway judges in antitrust cases in 2019, with the justice department filing more legal arguments in competition lawsuits where it was not a party over 12 months than the Obama administration did in eight years.

Makan Delrahim, who was appointed by Donald Trump in 2017 to lead the antitrust division, has spearheaded an “amicus programme” under which justice department lawyers are increasingly inserting themselves into antitrust litigation to advise judges how to rule.

The result has been a flurry of legal briefs that have pushed patent holder-friendly positions, undercut lawsuits brought by other enforcement agencies and placed the justice department on the side of Mr Delrahim’s former lobbying client, Qualcomm, the chipmaker.

The antitrust chief has been “especially aggressive” in weighing in on cases where the justice department is not a party, said Jonathan Jacobson, an antitrust partner at Wilson Sonsini Goodrich & Rosati, who called the effort “absolutely the right thing to do”. He said Mr Delrahim had probably “filed more of these briefs per month than anyone in division history”.

In fiscal year 2019 the antitrust division filed 20 briefs in district and appeals court cases in which it was not a party, outstripping by far any year since 1970, the earliest date for which the justice department provides records. The increase in amicus brief activity contrasts with the historically low number of criminal antitrust prosecutions the division brought last year.

We have not been able to please all of the people all of the time. But of course that is fine with us Michael Murray, DoJ antitrust division The drive has drawn fire from Democrats like David Cicilline, the chair of the House antitrust subcommittee, who claimed in a letter in May that the division was “prioritising side projects over its main job”.

He accused Mr Delrahim of running

Trump administration steps up push to sway antitrust cases Justice department seeks to influence competition cases where it is not a party

Judges have received the interest of the justice department in their cases with varying levels of appreciation, irritation and, at times, bemusement © AP

the division “more like an industryfunded think-tank than our nation’s premier antitrust enforcer”.

A justice department spokesman said: “The antitrust division‘s amicus briefs in private litigation has been a highly efficient and a high-impact use of our resources to promote competition.” In a letter responding to Mr Cicilline in August, the division said “the vast majority” of its resources were focused on enforcement activity.

Historically, the division has become involved in cases at the Supreme Court, or when invited by appeals court judges. Mr Delrahim has moved earlier in the litigation process, filing briefs in district courts.

The spike in briefings has reshaped how antitrust lawyers represent corporate clients. Increasingly, persuading the justice department to weigh in on your side is a part of antitrust litigation strategy, accord-

ing to defence lawyers. “This is the sort of thing you want to put on your front burner, whereas it was an afterthought before,” said one.

Mr Delrahim, a patent lawyer by training, has weighed in on patent disputes to advance his view that intellectual property holders owe little duty under antitrust law to provide licences to buyers, at times citing his own speeches to urge restraint by judges.

Along with the states of Louisiana, Ohio and Texas, he has argued in support of a former client, Qualcomm, as it tries to fend off a class-action lawsuit. In a related case, from which Mr Delrahim is recused, the division has gone to war with its sister agency, the Federal Trade Commission, to defend Qualcomm from the commission’s lawsuit.

Officials in other agencies have also felt the division step on their toes as Mr Delrahim has expanded

the amicus programme.

When the city of Oakland sued its football team, the Oakland Raiders, and the National Football League for the Raiders’ planned moved to Las Vegas, Mr Delrahim knocked down part of the city’s argument.

In Washington state, where the Democratic attorney-general has led a crackdown on fast-food chains that bar franchise-holders from poaching workers from within the chain, the antitrust chief defended the practice in a set of classaction lawsuits.

Recently, Mr Delrahim has fought several Democratic-led states that are suing to block TMobile’s takeover of Sprint, a deal he approved with divestitures. A decision on that matter is expected next month.

Michael Kades, director at Equitable Growth, which seeks tougher antitrust enforcement, criticised Mr

Delrahim for acting like “the tsar of all antitrust enforcement”, adding: “They shouldn’t be interfering in someone else’s decision to enforce.”

Officials in the antitrust division have shrugged off the controversy.

“We have not been able to please all of the people all of the time. But of course that is fine with us, because we are not in the business of satisfying a particular constituency,” said Michael Murray, a deputy to Mr Delrahim, in a speech last year.

He noted that beyond the Washington state hiring cases, the division had attacked the use of no-poaching agreements in other contexts, such as a case where two medical schools in North Carolina had agreed not to hire each other’s staff.

The increased activity of the amicus programme served to discourage parties from “making the more extreme versions of their arguments” for fear that the antitrust division would appear and “undermine their credibility”, Mr Murray said.

The justice department spokesman said the division “values its relationships with state enforcers.”

Its arguments advanced “longstanding” positions on the law, he added. “We have advocated for narrower interpretations of antitrust exemptions and immunities.”

Judges have received the interest of the justice department with varying levels of appreciation, irritation and bemusement.

One district judge last year told an antitrust division lawyer it was a “pleasure” to hear their views, while another thought their briefings were “unhelpful”.

In a hearing for the Oakland case, the judge in San Francisco asked one federal attorney whether they had really flown all the way from Washington.

“Wow,” the judge said. “That is dedication.”

China reports sharp rise in cases of Sars-like virus Authorities confirm infections outside of central city of Wuhan for first time TOM HANCOCK AND SUE-LIN WONG

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hina has reported a sharp rise in the number of people infected with a Sars-like virus and confirmed cases outside of the central city of Wuhan for the first time, adding to concerns about the spread of the respiratory disease.

Authorities in Wuhan said another 136 patients with the coronavirus had been identified, bringing the number of confirmed cases in the city to more than 190. Officials in Beijing said two patients had been diagnosed

with the virus, while authorities in Guangdong province, which borders Hong Kong, confirmed one case.

More than 20 patients have been transferred from Wuhan to the southern Chinese city of Shenzhen to receive treatment, according to three people from Shenzhen People’s Third Hospital.

The virus has killed three people and nine remain in critical condition since it was identified earlier this month.

The World Health Organization said in a tweet on Monday that the latest outbreak had most likely started with an animal source but also www.businessday.ng

noted there had been “some limited human-to-human transmission occurring between close contacts”.

Most patients diagnosed with the virus have presented with relatively mild symptoms. Health authorities in Wuhan said on Monday that 25 patients have been released from hospital after recovering from the infection.

The outbreak has evoked memories of the Sars epidemic that killed nearly 800 people in 2003 after originating in China.

Authorities have said the ailment was caused by a coronavirus, the same kind of pathogen involved in the Sars outbreak that Chinese

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officials covered up for months.

A study by the MRC Centre for Global Infectious Disease Analysis at Imperial College London estimated that more than 1,700 people in the city could have been infected with the disease by midJanuary.

The number of cases may have been under-reported because in younger or fitter patients the symptoms might not be serious enough to warrant seeking treatment, according to experts.

South Korean authorities on Monday confirmed the country’s first case of the virus. A 35-year-old woman has been quarantined at a @Businessdayng

local hospital after arriving from China on Sunday, according to health officials.

A patient diagnosed with the virus in Japan last week was released from hospital. Two people from Thailand diagnosed with the disease after travelling from Wuhan this month presented feverlike symptoms without becoming severely ill.

Before this outbreak, six coronaviruses had been identified in humans. Four caused relatively mild cold-like symptoms while the other two, Sars and Middle East respiratory syndrome (Mers), can be fatal.

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Tuesday 21 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Britain to scrap foreign aid for coal mining abroad

PM seeks to burnish green credentials as he sets out post-Brexit stall at UK-Africa summit DAVID PILLING

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he British government will suspend financial support for thermal coal as part of efforts to present itself as a global leader in green technology, Boris Johnson, the prime minister, announced at the inaugural UKAfrica summit.

Climate campaigners described the announcement as a “small first step” but said that only a tiny amount of UK export credit guarantees for energy projects went to coal, with 97 per cent focused on oil and gas.

“Billions are being spent on oil and gas,” said Sarah Wykes, an energy expert at Cafod, the international charity, who called for a complete phase-out of support for fossil fuels. “They need to be looking at how they actively support our renewable industry.

They spend a piddling amount on renewables.”

Declaring Britain “the investment partner of choice” for Africa, Mr Johnson said that his government would no longer back coal mining or coal-fired power stations abroad, including in Africa.

Instead, it would use the financial firepower of the City of London and what he described as Britain’s world-class green technology industry to spearhead innovation and job-creation on the continent.

“Not another penny of UK taxpayers’ money will be directly invested in digging up coal or burning it for electricity,” he said, adding that Britain could not

“trundle over to Africa and line our pockets” by encouraging technology it no longer supported at home.

The UK has not invested in a coal mine since 2002 but has spent tens of millions of pounds on equipment and ancillary services since then.

Cafod estimates, based on official data, that the UK spent £3bn in overseas development aid on energy investments from 20102017, of which £678m was on fossil fuels and £1.03bn on renewables.

It also provided an additional £3bn in export credit guarantees for energy projects in developing countries in the same period. Of the total UK support for energy, 60 per cent was for fossil fuels.

Mr Johnson was addressing delegates, including a dozen or so African heads of state, at the opening of the summit in London, an event intended to set out Britain’s post-Brexit stall. UK officials admit that Britain has been slow to grasp the commercial opportunities in Africa, with other countries, including China, Turkey and India, stealing a march.

Mr Johnson acknowledged the sharpening competition for business in a continent that has eight of the world’s 15 fastest-growing economies, including Ethiopia, a country of 110m people. “We have no divine right to that business,” he said. “This is a competitive world.

You have many suitors.” France, he noted, would also be holding an Africa summit of its own.

As part of what is being presented as the UK’s renewed focus on the continent, CDC Group, the

Glencore weighs 665 job losses at South African smelter Rustenburg facility under pressure from rising electricity tariffs and power cuts HARRY DEMPSEY

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lencore and its joint venture partner Merafe Resources could cut up to 665 jobs at their Rustenburg ferrochrome smelter as it battles rising electricity tariffs and power cuts.

The review the latest example of the risks to South Africa’s mining industry posed by the unreliable and increasingly expensive electricity supply from Eskom, the struggling power monopoly.

The Swiss-based miner and trader said “unsustainable electricity tariffs and interruptions, cross subsidies and real cost inflation” are contributing to higher costs of producing ferrochrome — an ingredient in stainless steel — in South Africa.

In a statement, the joint venture said it had notified employees at its Rustenburg smelter that it was beginning a consultation process to “secure the future of the operation” after it “suffered material financial losses which are expected to continue for the foreseeable future.” It added that “lower-cost competitors overseas” had displaced production at Rustenburg.

A spokesperson for Glencore in South Africa, confirmed that 665 jobs would be part of the review process but said that it is “difficult to pre-empt anything”. The spokesperson declined to specify the volume

of production displaced.

China has become the world’s biggest producer of ferrochrome, while South Africa is the second largest, with an output of 2m tonnes of the feedstock material — over a quarter of global supply — in the first half of 2019, according to Merafe.

This is not the first time that mining companies have been forced to take action because of South Africa’s troubled state electricity utility. When Eskom implemented record rolling power blackouts in December last year, it forced platinum group metals and diamond producers to temporarily shutter operations.

Glencore produced 1.58m tonnes of ferrochrome globally in 2018 and it holds a total smelting capacity of 2.3m tonnes per year in South Africa, of which Rustenburg makes up 430,000 tonnes.

It has four other ferrochrome smelter complexes in the country, which the spokesperson said the company was monitoring, adding that Rustenburg “seems to be the site that is experiencing issues at this stage”.

Analysts at Berenberg said that the restructuring at the Rustenburg smelter has “has the potential to remove tonnes from the market” and lift prices for ferrochrome, which have been unsustainably low for some producers.

UK prime minister Boris Johnson, centre, visits the Pavegen stand, a company that converts footsteps into energy, at the Innovation Zone during the UK-Africa summit in London on Monday © Leon Neal/PA

UK government-owned impact investor, said it would spend an additional £2bn over the next two years as part of a plan to double its African exposure. The body, which was once criticised for investing in projects such as shopping malls and upper-end real estate, has been revamped to concentrate on investments in the poorest countries in Africa and south Asia.

The CDC on Monday announced new “partnerships” worth a total of $400m with several African financial institutions, including a $100m trade finance loan with Absa, the South Africabased bank that last year sepa-

rated from Barclays after its UK parent scaled back its exposure to Africa.

Separately, Alok Sharma, the UK’s secretary of state for international development, said the UK would partner with five African countries — Egypt, Ethiopia, Ghana, Kenya and Uganda — to mobilise private-sector funding for what he described as “quality, environmentally friendly infrastructure projects”. The UK would lead a facility that would develop a pipeline of “investible projects” in low-carbon infrastructure, he said.

Britain’s emphasis on low-carbon investments is not universally

popular in Africa, where officials from Nigeria to Mozambique have proclaimed their countries’ right to exploit fossil fuels in an effort to industrialise and raise their people’s standard of living.

Ms Wykes at Cafod said African countries could industrialise without resorting to dirty power and that the way of bringing power to 600m people currently without access to electricity was through off-grid solutions, including micro-solar installations.

“Tell me an African country that has really reduced poverty on the back of fossil fuel exports,” she said.

European stocks edge lower while oil climbs Pound dips following UK chancellor’s hard Brexit remarks RAY DOUGLAS

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uropean stocks edged lower on Monday after a UK official warned the country would no longer be in the single market or the customs union, while Asian markets were mixed in overnight trade.

US markets are closed today for the Martin Luther King Jr holiday, but investors will brace for a busy week of earnings from Netflix and IBM tomorrow while policymakers at the Bank of Japan and the European Central Bank convene to set interest rates.

The mood in the UK was sanguine following comments by Sajid Javid, the UK chancellor, who quashed any prospect of regulatory alignment with the EU after Brexit in an Financial Times interview.

“We will not be in the single market and we will not be in the customs union,” said Mr Javid.

Sterling fell as much as 0.4 per cent against the dollar to $1.2960 in morning trade, before paring back some loses by lunchtime.

“Political uncertainty could yet return,” said analysts at Rabobank, who added that the chancellor’s remarks “increased the likelihood that the talks between the UK and EU on the future relationship could be difficult. This emphasises the risk that a disorderly Brexit could still occur at the end of the transition phase in

December.”

London’s FTSE 100 index was down 0.3 per cent while the mid-cap FTSE 250 index slid 0.1 per cent.

Elsewhere in Europe, the regionwide Stoxx 600 index dipped 0.1 per cent, retreating from an all-time high hit on Friday. Frankfurt’s Xetra Dax edged up 0.1 per cent while Paris’s CAC 40 slipped 0.3 per cent.

In Asia, Chinese stocks remained resilient following the signing of a preliminary “phase one” deal last week by Beijing and Washington that has eased trade tensions between the rival economies.

CSI 300 index of stocks listed in Shanghai and Shenzhen closed up 0.8 per cent while Japan’s Topix index advanced 0.5 per cent.

Brent crude rose above $65 a

barrel following reports that Libyan oil production bases were shutting down in the face of a military blockade.

Libya’s “oil output is likely to be limited to 72,000 barrels per day, the lowest since August 2011”, said Jim Reid, macro strategist at Deutsche Bank.

Brent crude, the international benchmark, rose 0.8 per cent to $65.39 a barrel while WTI, the US marker, climbed 0.6 per cent to $58.89.

Moves in haven assets such as gold and core government debt were muted. The precious metal rose 0.2 per cent to $1,559 an ounce while the yield on the 10-year UK government bond rose 1 basis point to 0.65 per cent.

Tuesday 21 January 2020

FT

BUSINESS DAY

42

ANALYSIS

Can we ever trust Google with our health data?

The technology company will need to persuade patients to hand over some of their most personal information HANNAH KUCHLER

G

oogle hopes that one day it might be able to save your life.

As the tech giant moves deeper into healthcare, it plans to fight medical misinformation in search results, create tools to be used by thousands of doctors, and improve the accuracy of diagnosis with technologies like computer vision to read X-rays.

Those are just its aims for this year.

Google’s broader health mission was outlined at a conference in San Francisco earlier this month, where its top doctor set out to show why the company may be the most ambitious of the many trying to use technology to transform healthcare.

“We have 10 companies with 1bn users and five with 5bn or some insane numbers,” said David Feinberg. “We would love to be one of those where we can say we saved billions of years of life this year.”

The wiry grey-haired child psychologist, who is the former chief executive of the Geisinger healthcare system in Pennsylvania, was hired last year to sort through Google’s scattershot health projects to find a focus — and, eventually, a business model. One task is to combine artificial intelligence teams working on health at Google Brain and DeepMind with those working on smart devices for health at its Nest division.

But just as Dr Feinberg started work on his first project — a search engine for electronic medical records — a scandal erupted after the Wall Street Journal reported in November that Google engineers had access to medical records held by Ascension, the country’s second-largest healthcare system, as they built new products. As a result, the US government is investigating the partnership. And Dr Feinberg must now work out how to persuade patients to trust Google with their sensitive data.

At the conference, Dr Feinberg protested that he was “super, super proud” of Google’s work with Ascension “despite what they say in the newspaper”. Google has said the data were protected and the partnership was legal and common — hospitals regularly work with third-party technology companies. Ascension said the “groundbreaking work” will help improve care and that Google is not allowed to use the data for marketing or research purposes.

But if Google is going to come anywhere near reaching its ambitious goals in healthcare, it needs to convince health systems like Ascension to give up their patient data and ease patients’ concerns that it might be used for less than clinical purposes.

Robert Wachter, chair of the department of medicine at the University of California, San Francisco, and author of Digital Doctor, a book about how technology is transforming medicine, says Google’s task has become harder as potential partners worry about the public reaction. “Inevitably, anyone who is thinking about doing a partnership with Google, if they weren’t thinking about the optics before this, then they were probably asleep. If they aren’t now, they are definitely asleep,” he says.

Google is well aware of the challenge it faces. “It would be a shame on us if we can’t get this technology into the real world because we don’t act in a humble way, we don’t act in a thoughtful way,” said Dr Feinberg.

After transforming almost every other industry, the world’s largest tech companies now want to fix stretched healthcare systems, an industry worth $8.7tn worldwide. As they hunt for new growth engines, Google, Amazon and Apple are convinced they can make money by cutting costs in the sector. With vast financial resources — last week the stock market value of Google’s parent company Alphabet rose above $1tn for the first time — computing power and banks of AI experts, no one should underestimate their abilities.

Amazon has bought an online pharmacy and entered into a joint venture, Haven, with JPMorgan and Berkshire Hathaway, which aims to create a new kind of health insurance for the companies’ 1m employees. Apple is using its Watch to improve fitness and cardiovascular health. Microsoft is selling cloud services to hospitals and drug companies, while Facebook is offering tools for users to manage screenings.

Under Dr Feinberg, Google is focusing on its major mission — organising the world’s information — and its capabilities in data, AI and sensors.

Dr Feinberg was hired to bridge the gap between healthcare and technology.

Far from a traditional Googler, he was nevertheless known as an innovator. As Geisinger chief executive, he pushed for patients to have their genome sequenced and launched healthy food pharmacies to serve “prescriptions” to patients such as diabetics. He has bolstered Google Health with other industry leaders including Karen DeSalvo, a former national co-ordinator of health information technology, and Robert Califf, former commissioner of the Food and Drug Administration.

Although the company has not been so specific about its eventual plans, its vision is to build a Google Assistant for your health, according to Eric Topol, author of Deep Medicine, a book about AI in healthcare. It could combine electronic health records with data from smartphones, genomes, information from sensors such as glucose monitors and even apps that record eating habits, he says.

Seen through that lens, he says Google’s

recent $2.1bn offer for Fitbit, the activity tracking wearable technology company, is about acquiring “one of the most exquisite data sources for a couple of billion”. He adds: “That’s nothing for Google, a company that seems to print money.”

To access medical records, Google’s Cloud business has partnerships with many providers beyond Ascension, including the Cleveland Clinic in Ohio and the Mayo Clinic in Minnesota, where it is opening an office specifically to serve that health system.

It is also interested in sucking up more consumer health data, beyond what it knows from search and location history.

As well as Fitbit, deals done by its Nest division suggest it sees the smart home as an important door into digital health, helping monitor patients outside of the hospital. In 2017, it bought Senosis Health, which builds smartphone apps that track information such as lung function by using the microphone as a flowmeter, and Knit Health, which makes a smart baby monitor that could also be used to monitor adults’ sleeping patterns.

Andrew Matzkin, a partner at Health Advances, a consulting firm focused on health tech, says both Google and Apple believe they can use new devices to get even closer to you than your smartphone — and detect conditions such as depression or heart rate variability.

There has been a lot of focus on wearables, he says. “But I think just as important and maybe even more important is ambient sensors: bedside devices, under-mattress sensors, sensors integrated into toilet seats.” Google has patented various of what it calls “non-invasive health-monitoring devices”, including a toilet seat sensor to measure heart rate and blood pressure, which some might consider invasive.

It is not yet clear how Dr Feinberg’s work will fit with health projects in other areas of Alphabet, Google’s parent company, which includes Verily, a life sciences division, and Calico, a unit researching ways to slow ageing.

Verily’s work is split between ambitious moonshots — such as robotic surgery or implantable devices — and software, some of which is already on the market. Verily products like Onduo, a joint venture with Sanofi to create a diabetes management platform, might move closer to Google Health.

Yonatan Adiri, an Israeli digital health entrepreneur who leads Healthy.io and worked with Geisinger, says Dr Feinberg’s appointment shows Google coming back down to earth. He says at first Google tried to be “ultra sophisticated”, launching an effort in the US to transform electronic medical records in 2008, and then it experimented with “very bold” and “very Googly” projects like Calico and Verily.

Dr Feinberg is at the heart of Google’s next act. “They will not necessarily discover the new penicillin, but they could make hundreds of millions of dollars a year and scale fast,” he says. “Feinberg is the right man for that job.”

Google searches for healthtech success FitBit could be bought by Google for $2.1bn but the deal faces regulatory hurdles Google Brain and DeepMind are using AI to improve the accuracy of reading X-rays Google Cloud is striking partnership deals with hospitals including the Mayo Clinic, Cleveland Clinic and Ascension Google’s Nest bought smart home startups with products that can help track sleep and lung function Google Search is trying to fight medical misinformation, pushing sites further down the results Google’s biggest advantage in healthcare — its capacity to combine data sources and to learn from them — is also what worries its critics the most.

Christine Lemke, co-founder and president of Evidation, a health measurement platform that provides data analytics to tech and pharma companies, says one of Google’s key advantages is it can use unconventional sources of data to understand health.

“Because of search, they’re already the largest provider of healthcare information and they can leverage that position to incorporate other non-traditional data to drive even more personalised care,” she says. “But the challenge, as we saw with the Ascension story, is one of trust.”

Dr Feinberg recognises that people are wary of Google potentially combining consumer data with medical data — and says it does not. Yet in San Francisco he suggested that mixing different types of data can be medically advantageous. Talking about Continues on page 43

43

Tuesday 21 January 2020

BUSINESS DAY

FT

NATIONAL NEWS

Bank of America aims to ‘double’ its slice of US retail business Chief Brian Moynihan’s comments come amid political scrutiny of largest institutions ROBERT ARMSTRONG AND LAURA NOONAN

B

ank of America can double its consumer market share despite growing fears about the power of the country’s largest institutions, according to Brian Moynihan, chief executive.

“Our market share in consumer is probably 12, 13, 14 per cent, depending on who counts . . . The reality is, you could double that,” Mr Moynihan said in an interview with the Financial Times.

“Other companies that you think might have big consumer markets share — the auto companies, the soft drink companies, the beer companies — they have massively more consumer share [than BofA],” he said.

In beer, AB InBev controlled 41 per cent of the US market in 2018, according to the National Beer Wholesalers Association.

With thousands of banks, the US is far less concentrated than many European countries but the largest lenders have accumulated more power since the 2008 financial crisis, aggravating longstanding fears about their dominance.

When regulators approved a merger between BB&T and

SunTrust last year, the biggest industry deal since the crisis, Democratic senator Sherrod Brown complained that deregulation had “amplified the potential for the biggest banks to threaten our financial system.

Further consolidation by large banks would make matters even worse.”

BofA is already the largest US consumer bank, with $730bn of retail deposits. It is by far BofA’s most profitable unit, with $13bn of net income last year and a return on capital of 35 per cent.

BofA cannot grow its deposit base by buying other banks: a federal law forbids any bank to use acquisitions to attain more than 10 per cent of deposits nationwide. BofA has already passed that threshold: its $1.4tn of total deposits equate to 10.7 per cent of the total, according to data from the Federal Deposit Insurance Corporation, ahead of JPMorgan Chase on 10.2 per cent, which is also increasing its market share.

Mr Moynihan said a doubling of the retail business could be achieved without a commensurate increase in its branch network, noting that the number of branches has fallen over the past decade, from 6,100 to 4,300, while consumer deposits have almost doubled.

There isn’t going to be

Brian Moynihan told the FT that the pieces were in place for BofA to continue taking market share © Bloomberg

enough to offset a US recession in what we could do outside the United States because . . . [the] US is so big Brian Moynihan Asked whether greater concentration in banking was good for customers or might alarm regulators, Mr Moynihan said: “If we do a good job for the customers and clients and we’re fair in our pricing, I think that’s good because . . . the scale that we have enables us to do more for the customers.”

Mr Moynihan said the pieces

were in place for BofA to continue taking market share, with deposits growing above the industry rate, a low risk loan portfolio and a strong balance sheet with billions in excess liquidity.

Mr Moynihan said he would not look overseas for retail growth. It would take years to grow to a market share that would give them material deposits or revenue, he said. BofA’s US interest-bearing deposits grew by almost $50bn over the past year, and to accomplish

similar levels of growth “in a smaller environment would assume [a level of] success that is hard to assume, and why bother?”

He noted that the bank’s wealth management division had exited international markets for lack of profitability.

Nor are the diversification benefits of foreign exposure attractive. “There isn’t going to be enough to offset a US recession in what we could do outside the United States because . . . [the] US is so big,” he said.

locations.

Google denies it has made any connection like this. A spokesperson said: “We believe our healthcare research could help save lives in the future, which is why we take privacy seriously and follow all relevant rules and regulations in our handling of health data.”

Sam Smith, a privacy activist at Med Confidential, says the question is whether consumers are happy with a big company like Google, Facebook or Amazon doing everything. “The answer seems to be no,” he says. “If Google wants to make money by knowing everything about you, hosting health data is probably not worth it.”

But some in the healthcare sector disagree. Unity Stoakes, president of StartUp Health, a digital health accelerator which hosted the event where Dr Feinberg spoke, says Google is integrated “into the fabric of our lives” with search and smartphones. “People trust these companies,” he says.

Google may actually be seen as the best of a bad bunch: in a Rock Health survey earlier this

year, only 11 per cent of consumers said they were willing to share health data with tech companies. But among that 11 per cent, Google was the company they trusted the most.

Even if Google wins people’s trust — or at least their complacency — it will face other struggles in healthcare. Google has failed before: the 2008 attempt to transform electronic medical records stumbled because so much health information was kept on paper. It will shut down projects that do not work. Earlier this year, it paused its work on Google Fiber, the superfast broadband project.

Dr Wachter was on Google’s advisory board in the mid-2000s.

He says that back then, it failed to recognise the complexity of healthcare compared with other sectors. Now, he says they are taking a “much more mature approach”.

“Imagine a world where Google does advanced navigation tools for patients, searching for migraine [symptoms], or the best doctor, the best treatment,” he says. “Google has a major pre-existing advantage.”

However, Google is at its heart a consumer company that has struggled when selling to businesses, falling behind Amazon and Microsoft in cloud computing. Even before the Ascension deal, some potential customers were nervous about partnering Google, because they feared their data were the product. Mr Adiri says smaller partners such as laboratories or imaging companies were concerned that the cloud services Google was trying to sell them looked too good to be true.

“They are nervous that their data is the big value of their business and they would be giving it away,” he says.

For Mr Matzkin, it is not surprising that Google has not figured out how to make money in healthcare because there is no “simple cookie cutter answer”.

But he adds: “One of the biggest advantages companies like Google or Apple have is their ability to take a very long perspective. They have huge ambitions but are willing to view their efforts in this space over a 10-year horizon — and possibly longer.”

Can we ever trust Google...

Continued from page 42 Google’s work to improve the accuracy of mammograms by using medical records and genetic information, he said: “There is incredible power in the ability not only with the data, but combining the different data sets.”

Google escaped the severe backlash over privacy that hit Facebook. But its brand is still associated with building deep and detailed profiles of users.

Already, hospital systems may be wondering whether working with Google is worth the potential negative publicity.

Bill Evans, managing director at Rock Health, a venture capital firm focused on digital health, says he is concerned about the “spillover” to the broader industry. “What we worry about is the potential chilling effect that perceptions of a major brand has on emerging and highly ethical innovators,” he says.

Google had mentioned the deal with Ascension on an earnings call — but many patients whose data were being collectedonly found out about it from the media.

The scandal echoes the controversy when DeepMind, a London-based unit of Google, partnered with a National Health Service trust. The Royal Free trust was reprimanded by the UK information commissioner in 2017 for allowing them access to information on 1.6m patients without explicit permission.

DeepMind last year transferred control of its health division to Google.

“In some ways, after watching DeepMind in the NHS . . . it is completely predictable that a large data-sharing arrangement with a healthcare organisation was going to receive a lot of public scrutiny,” says Dr Wachter.

This dual role of holding consumer and health data is already the subject of a lawsuit against Google and the University of Chicago. The suit claims that Google would be able to reidentify supposedly anonymous healthcare data that it accessed through a research partnership. The plaintiff is concerned that Google could connect the times of appointments from the medical records with the data it holds on people’s smartphone www.businessday.ng

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How Ambrose Ovbiebo has transformed a one-vessel company to an emerging marine logistic force DIPO OLADEHINDE

A

fter years of neglect and policy inconsistency that has stagnated the logistic sector, Ambrose Ovbiebo, the CEO of Tamrose Ventures Limited is creating a name and setting the pace from a one vessel company to a leading offshore marine logistics service provider in the Nigerian oil and gas industry.

Nigeria’s oil and gas sector accounts for almost 90 percent of its foreign exchange earnings.

The country primarily exports crude oil and imports refined petroleum products. However, the transportation processes of both the exported crude oil and the importation of the refined products are largely dominated by major international shipping and maritime companies, a narration Tamrose Ventures Limited under the leadership of Ambrose Ovbiebo is changing.

For more than three decades, Nigerian shipping companies have met a lot of brick walls in their efforts to participate in the nation’s crude oil lifting. In a bid to encourage local ship owners, the Federal Government in 2003 introduced a protectionist legislation aimed at preserving the exclusive right to vessels that are locally built, registered, owned and manned by Nigerians for cabotage trade.

In 2003, Nigeria’s Cabotage Act was passed to summarily make coastal trade the exclusive preserve of indigenous companies. Eventually, the National Content Development Act was also enacted. These were part of deliberate attempts by government to facilitate the deepening of indigenous participation in the marine logistics in particular and the country’s oil and gas industry in general.

Tamrose Ventures Limited (TVL) was incorporated incidentally in the same year the Cabotage Act was passed, initially to operate as a procurement and engineering services provider to the Nigerian Oil and Gas industry. The company entered the market with a strategy based on three pillars; tonnage age, service delivery culture and

Ovbiebo

organizational structure.

For, Ovbiebo the main reason for setting up Tamrose was to change the indigenous service narrative in the oil and gas industry. Today, Tamrose and a few other indigenous companies are ranked among the top percentile of high performers within the marine spread of various IOCs, an exclusive preserve of multi-nationals like Bourbon and Tide Waters in time past.

Tamrose Ventures Limited under the leadership of Ambrose Ovbiebo looked at the age of the indigenous tonnage, which was averaging above 20 years, and decided to buy a brand-new vessel. From just one relatively small vessel in 2010, Tamrose has grown organically to a fleet of 12 vessels (including 2 Platform Supply Vessels) in 2019.

“Of our 12 vessels, eight were added in 2019 alone and all are gainfully employed adding value to our customers’ operations.

With these new additions, we

also had to strengthen our human resources to sustain and even improve on the quality of our services,” Ovbiebo said in an interview with thebusinessyear.

Tamrose Ventures Limited looked at the management structure of some of the existing companies and realized that most business owners were actually running lifestyle-oriented businesses with attendant consequences there after decided to set up a business with proper structures built to last.

“We looked at the caliber of people in the marine space and how they approached service delivery and decided to do things differently. From day one, we decided to be a customer-centric company that puts customers’ interest and expectations above all else, and we walked our talk,” Ovbiebo said.

There is a funding challenge in Nigeria no doubt. However, Tamrose is leveraging on a recent CBN policy on deposit

lending ratio. Recall, the Central Bank of Nigeria raised the Loan to Deposit Ratio of banks to 65 percent, after the September 30 deadline given to the banks to meet its 60 percent directive.

In 2019, with the purchase of eight vessels, Tamrose spent a significant amount of money on assets acquisition. This was made possible by the robust financial support received from its financial partners including Union Bank of Nigeria Plc and the Bank of Industry via the Nigerian Content Development and Monitoring Board (NCDMB) intervention fund focused on enhancing indigenous capacity by granting them, single-digit USD-denominated loans.

For Ovbiebo the vision is clear, Tamrose aspires to be the dominant marine logistics service provider in the Nigerian oil and gas industry. With a vision like that, expansion is second nature to the company.

Over the last four to five years, Tamrose have been extremely cautious about how the company grew, primarily because of the slump in oil prices. In the absence of any political crisis as a result of the 2019 elections, Tamrose projected there would be an upswing in industry activities, which is why it undertook an aggressive fleet expansion drive.

“We have been receiving overtures from foreign-based entities, such as private equity firms and fund managers looking to partner with us. The world believes the opportunities and prospects in Nigeria and Africa are fantastic, we are the new frontiers. The funding challenge can be tackled if indigenous players can get their act together; it is only a matter of time,” Ovbiebo said.

Ambrose Ovbiebo’s career spans over 22 years started in the Nigerian Banking sector where he was closely associated with the Oil & Gas industry having played various roles in the energy portfolio of some of the foremost names in the Nigerian banking sector; rising to become the pioneer bank manager in Port Harcourt for one of these banks.

His stint in the Remedial Department also gave him a deep insight into the industry’s pitfalls and participant’s shortcoming all of which have placed him in a vantage position in steering the affairs of Tamrose Ventures Limited.

Ovbiebo’s priority in 2020 is to set the framework and structures to make Tamrose an institution in the oil and gas sector.

“I have taken a look at our industry historically and cannot find any indigenous company that existed 20 years ago in this space. Therefore, 2020 is about laying the foundation to ensure that in 20, 50, or 100 years from now, Tamrose will not only be here, but will dominate this space,” Ovbiebo said.

“In 2020, we also want to take a step back, look at the environment, and decide what to do next. This industry has great potentials and consequences; a single move can impact a company tremendously one way or the other,” Ovbiebo concluded.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.