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news you can trust I **tuesDAY 21 may 2019 I vol. 15, no 314 I N300

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Scarce MTN shares heighten brokers’ anger

Bubble looms as stock only available on cross deals Shares up N600bn in 3 days Demand floatation of at least 5% of MTN shares MARKETS

IHEANYI NWACHUKWU

t’s the hottest listing to come to the Nigerian Stock Exchange (NSE) in the past three years, but good luck getting a hand on the shares of MTN Nigeria (MTNN), whether you are an insti-

sell (ask) orders leading to a spike in price. Market sources tell BusinessDay that there is increasing anger among many stockbrokers and dealers who are unable to fill orders for their clients, and that the NSE may need Continues on page 34

tutional or retail investor. The scarcity of MTNN shares is largely due to the unusual listing by introduction approach used to bring it to market, which is in turn causing a mismatch between buy (bid) and

NAICOM increases insurers’ capital base to N18bn for composite, N20bn for reinsurers …compliance deadline June 30, 2020 Modestus Anaesoronye

he National Insurance Commission (NAICOM) on Monday increased the minimum paid-up share capital of insurance and reinsurance companies in Nigeria, giving them June 30, 2020 deadline for compliance. NAICOM, the insurance industry regulator, increased the paid-up share capital of life About N1.4bn people lived at or below the global poverty line of $1.90 a day around the world in 2000.

Why Nigeria faces a poverty Tsunami Today that number has shrunk to $600 m but Nigeria has failed to share in this success, with the

Tough To Find

Continues on page 34

poverty count ballooning to 90m.

Inside

Employment among young Nigerians drops for fourth straight year Proportion in full-time employment (L1)

35 30 2010

2011

2012

2013

2014

2015

2016

2017

Category

2015

2018

Debt to GDP (%)

Debt service to Revenue

Transparency Corruption ranking

138

144

Millions

Percent

Number of youths in the labour force (R1)

Foreign Direct Investment (bn)

Unemployment rate(%)

Gross Domestic Product GDP growth(%)

2018

Source: IMF, WORLD BANK, UNCTAD

Source: Bloomberg, NBS Infographic: David Ibemere

Q1 GDP slows to 2.01% on lack of reforms, elections uncertainty P. 2

Tuesday 21 May 2019

BUSINESS DAY

news Dangote named among world’s greatest leaders

L-R: Musa Bala, programmes operations manager, Aliko Dangote Foundation, who represented the chairman, Aliko Dangote Foundation: Usman Durkwa, deputy governor, Borno State; Mohammed Tijani, chairman, Bama Local Government Area; Bulama Modu, former chairman, Bama LGA, presentating some food items to one of the beneficiaries of the 2019 Aliko Dangote Foundation Ramadan food distribution to Internally Displaced Persons (IDPs) in Bama LGA of Borno State, during the flag-off ceremony, yesterday.

…Gates, Bono, other global leaders extol his public spirit SEGUN ADAMS

oremost philanthropist and Africa’s richest man, Aliko Dangote, has been rated 11th of the 50 World’s Greatest leaders for 2019. The rating carried out by the Fortune Magazine, an American multinational business magazine headquartered in New York City, United States, was released recently and focused mainly on the businesses run by the men and how they have used it to impact their society positively. The time-tested magazine, which first edition was published in February 1930, said the world’s greatest leaders both men and women are transforming the world and inspiring others to do so in business, government, philanthropy and the arts. “These thinkers, speakers, and doers make bold choices and take big risks – and move others to do the same,” the magazine said. This is the first time Fortune Magazine is recognising and including Aliko Dangote in the annual ranking. Specifically, Dangote, having popped up in the magazine’s radar, earned nomination after being adjudged as having used business to acquire wealth and is now converting

his wealth into impactful philanthropy through his Aliko Dangote Foundation. The top 10 greatest men and women, according to Fortune, are Bill and Melinda Gates, Jacinda Ardem (Prime Minister, New Zealand), Robert Mueller (special counsel, Department of Justice), Pony Ma (founder and CEO, Tencent), Satya Nadella (CEO, Microsoft), Greta Thunberg (student and climate activist, Sweden), Margrethe Vestager (commissioner for competition, European Union), Anna Nimiriano (editor-in-chief, Juba Monitor), Jose Andres (chef/founder, World Central Kitchen), and Doug Mcmillon and Lisa Woods (CEO; senior director, Strategy & Design for U.S. Benefits, Walmart). The ranking of Dangote as one of the greatest business leaders has attracted comments by eminent persons around the world, who described him as worthy of the nomination going by his business acumen and philanthropic gestures. Bill Gate, global business giant and founder of Bill and Melinda Gates Foundation, extolled the efforts of Dangote in making businesses play roles in provision of sound public health through his vari-

Continues on page 34

FEC extends CBN’s power sector interventions to GenCos

…approves 0.2% import levy to finance AU subscriptions

Tony Ailemen, Abuja

n response to challenges in the power sector, especially in the generation sector, the Federal Executive Council (FEC) on Monday approved the extension of the current Central Bank of Nigeria interventions to the sector. The extension is in furtherance of government’s continued efforts to support the power sector, specifically the generation arm of the sector, according to Zainab Ahmed, minister of Finance. The minister disclosed this on Monday while briefing State House correspondents after the extended Federal Executive Council meeting presided over byVicePresidentYemiOsinbajo. The move is part of government’s palliative measures to sustain power generation with the CBN’s intervention. “This is based on a commitment that we signed into as a country, where we have several guarantees to the generation companies (GenCos) to bridge any gap that they have after the Nigerian Bulk

Electricity Trading Plc (NBET) has settled them,” Ahmed said. “The facility that we got approval for today is to pay the GenCos for any financing shortfall that they have after the bulk trader NBET settles them. So it is a cost on government, it is a loan government will be paying it back to the central bank. The essence is to meet the contract obligations that government signed with the GenCos on the assurance we gave them on off-taking any power that they generate after payment is made from the NBET,” she said. FEC also approved 0.2 percent import levies on some goods to fund Nigeria’s membership subscriptions in the Africa Union (AU). “It approved a rate of 0.2 percentasanewimportlevyonCost, Insurance, and Freight (CIF) that will be charged on imports comingintoNigeriabutwithsomeexceptions. The exceptions include goods originating from outside theterritoryofmembercountries that are coming into the country for consumptions,” Ahmed said.

•Continues online at www.businessday.ng www.businessday.ng

Q1 GDP slows to 2.01% on lack of reforms, elections uncertainty …analysts expect flat growth in Q2 2019

DIPO OLADEHINDE & ENDURANCE OKAFOR

he Nigerian economy expanded at a slower rate in the first quarter of 2019, compared to the fourth quarter (Q4), as a lack of broad-based reforms and election-related uncertainty crimped growth. Gross Domestic Product (GDP) for Q1, 2019 expanded by 2.01 percent, compared to the 2.38 percent hit in Q4, 2019, the National Bureau of Statistics (NBS) said in a report Monday. “Generally, the report was very disappointing because we had a broad-based slowdown which was bigger than expected. The oil sector was weaker than expected thanks to lower production while the nonoil sector was as a result of slower momentum in trade and ICT sector,” said Omobola Omotunde, research analyst at financial services advisory firm Chapel Hill Denham.

Omotunde explained that lack of reforms and election activities which disrupted investments in oil and non-oil sectors led to the sluggish GDP growth rate which was lower than population growth rate. “For Q2, we should expect a low base impact in the oil and gas sector and relative growth in some sectors like manufacturing with elections activities, while telecoms is expected to slow down significantly because of some normalising base effects. Generally, we should expect flat numbers in Q2 2019,” Omotunde told BusinessDay. Analysts at CSL Stockbrokers Limited do not envisage any fundamental change in economic growth pattern without strong reforms to alleviate the structural constraints on the economy (insecurity, insufficient power supply, poor road network, unfavourable economic climate, poor credit access and high rate of interest). “It is hard to see economic

growth accelerating. Hence, we maintain our GDP forecast of c.2.0 percent over 2019,” CSL Stockbrokers Limited said in a note sent to BusinessDay. In addition, despite slowly picking up since the oil price crash in 2014, the Q1, 2019 growth rate is not enough to deal with rising unemployment. The NBS reported last year that unemployment rate hit a near decade-high of 23 percent in the third quarter of 2018 which implies 20.73 million people are unemployed. Theoilsectoroftheeconomy shrank by -2.40 percent in the review period compared with -1.62percentrecordedinQ42018 and a growth of 14.02 percent in Q1 2018, while the non-oil sector grew at a sluggish pace of 2.47 percent as against 2.70 percent achieved in the previous quarter but quickened when compared with 0.76 percent growth recorded in Q1 2018. Oil sector’s contribution to the GDP improved to 9.14 per-

cent from 7.06 percent, while the non-oil contributed 90.86 percent compared with 92.94 percent it added to the nation’s economy in previous quarter. In the first quarter of 2019, average daily oil production stood at 1.96million barrels per day (mbpd), lower than the average daily production of 1.98mbpd recorded in the same quarter of 2018 by -0.02mbpd but higher than the fourth quarter 2018 production volume by 0.05mbpd. The level of oil output during the quarter was the highest recorded over the past one year and the second highest since mid-2017. Similarly, the services and industries sectors decelerated in Q1 2019 to 2.41 percent and 0.04 percent from 2.90 percent and 0.95 percent in Q4 2018, whiletheagriculturesectorgrew faster by 3.17 percent from 2.46 percent in the previous quarter.

•Continues online at www.businessday.ng

Sell pressure expected to keep maize, rice, soybeans prices low till July Temitayo Ayetoto

ell pressure on farmers who need cash to prepare for cultivation in the current wet farming season is expected to keep prices of maize, soybeans and paddy rice low until July. AFEX Commodities Exchange Limited, a trading platform, said in its monthly market report for April that market activity was characterised by a marginal price decline for maize in the domestic markets and soybeans on the Exchange.

COMMODITIES The maize sub-index opened at 174.1. It had a month average performance of 180.0, 2.3 percent higher than March, and closed at the value of 178.2. The sub-index recorded a positive seasonto-date performance on the last trading day of the month closing 43.5 percentage points higher than December index opening, while the year-onyear performance experienced a 21.4 percentage-point increase against April 2018.

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Paddy rice opened at 133.0 and had a monthly average value of 130.6 which was a 0.7 point increase month-month from March to close at 134.0 at the end of the month. The rice index also recorded a positive season-to-date performance on the last trading of the closing day of the month, closing 11.7 percentage points above the sub-index opening at the start of the season while the year-on-year performance experienced an 11.1 percentage points increase against April. For soybeans, the index opened at 206.4 and had a @Businessdayng

monthly average performance of 211.6, marking 1.1 percent below March. It closed with a value of 220.3 and closed 31.7 percentage points above the December opening of the index. Its year-on-year performance was at 49.2 percentage point increase. The price increase for paddy rice and soybean from March was sustained in April while maize average price declined in the same period, the report said.

•Continues online at www.businessday.ng

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NEWS

Tech know-how elevates Nigeria, as Ethiopia, Kenya to understudy Nigeria’s implementation of TSA … Gambia engages Fintech solution providers Jumoke Akiyode-Lawa-

igeria’s increased use oftechnologyandconstant development of software solutions is working in favour of the country. This is as other African countries - the Gambia, Ethiopia and Kenya are currently understudying the successful implementation of Nigeria’s Treasury Single Account (TSA) and are engaging with local payment service providers and

Fintech players to help provide technology expertise in the same area. Following the International Monetary Fund (IMF) recommendation, Momodou-LaminBah, accountant general of the Gambia, and his delegation have been in Nigeria over the last two weeks engaging with industry players, the Central Bank of Nigeria (CBN) and Accountant General of Nigeria, understudying the successandchallengesofNigeria’s

TSA, prior to the implementation of a similar model in the Gambia. Momodou-Lamin-Bah, who spoke to select journalists at the CBN office in Lagos on Monday, said, “The technology is still a challenge in the Gambia for now. We would need to work on the technology, especially payment platform gateway and that is why we are here. We have brought this to the attention of our hosts and we have requested for their support. We have requested that the

accountant general’s department in Nigeria provide some support including technical support to the Gambia so that we can also implement a TSA in a very successful way. “We learnt about the success that Nigeria has registered in this area and we have also reviewed someliteraturebytheInternational Monetary Fund (IMF) which usedNigeria’sexperienceasacase study on their capacity building on PFM. “So, we decided to come and

learn from Nigeria, how they have been successful with their approach and learn how they have been able to deal with challenges faced to know exactly what we should avoid and what we should focusmoreonsothatwewouldbe better prepared to implement our own TSA in the Gambia.” The Accountant General of the Gambia said in the last two weeks, they have learnt about the approach, prioritisation, stakeholderinvolvement,collaboration between institutions and the im-

Weak institutions will continue to hinder economic growth – Rewane Modestus Anaesoronye

EO of Financial Derivatives Company Limited, Bismarck Rewane, has emphasised the imperative of building strong institutions if Nigeria must achieve the desired economic growth. Rewane gave this insight as the keynote speaker at the 2019 Time Management and Productivity/Nigeria’s Employee of the Year Award Summit (TAMS/ NEYA Summit) held in Lagos. The TEMA/NEYA summit is organised yearly by SB Telecoms, a provider of time and attendance management system solutions to organisations. Rewane, who spoke on the theme ‘Charting Nigeria’s Path to Growth,’ said there were three variables necessary for a sustainable economic growth: good leadership, sound policies and strong institutions, the most critical being strong institutions. “Any two combinations of the three will still produce a level of growth. But where institutions are weak, whatever growth is achieved is not sustainable and will eventually come back to zero,” Rewane said. According to Rewane, it is regrettable that Nigeria continues to trumpet its abundant potential due to the richness in human and natural resources, yet little is being done to harness this richness. The country needs to urgently start to work on the famed potential to achieve economic growth, he said, stating that labour productivity in the country is very poor and that if that must be corrected to achieve GDP growth that is commensurate with our size and resources, then the economy must make hard choices. “GDP growth can be achieved if we fix our weak infrastructure. The power sector problem, for instance, continues to be a huge burden with the sector hampered by enormous debt overhang and the inability to attract fresh financing. But this can easily be corrected if the debts are converted to equities,” he said. The financial expert also called for a review or the elimination of the fuel subsidy regime and the restructuring of the exchange rate management to make it more efficient. www.businessday.ng

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portance of technological contributions in terms of infrastructure. TheTSAisapublicaccounting system powered by technology that links various government accounts with the view of ensuring that all revenue receipts and payments are done through a “ConsolidatedRevenueAccount(CRA) at the CBN. This has enabled regular and effective monitoring of government cash resources, helping the federal government gainastrongerholdonitsfinances and reduce fraud ultimately.

Tuesday 21 May 2019

BUSINESS DAY

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BUSINESS DAY

comment Who should make Mr President’s next cabinet? comment is free

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STRATEGY & POLICY

MA JOHNSON

resident Muhammadu Buhari’s swearing in ceremony for his second term in office will take place on 29 May 2019. What’s most important to many Nigerians, and this writer in particular, is how Mr President and those to be appointed ministers are going to “recover” the country from insecurity and sluggish economic growth to the benefit of 200 million people. Today, the country is home to about 90 million poor people who are wasting away in poverty and nearly60 million illiterates. Mr President is permitted by law and he is under obligation to choose ministers, special advisers, senior special assistants, and special assistants to work with him. It’s the quality of those Nigerians that would be appointed as aides and cabinet members that is of interest at this point. Nigerians want to know the track record of those to be appointed by Mr President as cabinet members and aides. Nigerians want to know the vision of Mr President as he leads the country. We are interested in knowing whether those to be appointed as cabinet members and aides are courageous, competent and committed Nigerians. What strategies are they bringing on board to solve challenges facing the country? Importantly, what is the character of those to be appoint-

ed to serve? The questions are endless. Mr President needs a team of leaders, not management team because of numerous challenges facing the country. Leaders take over where managers stop. It’s hoped that Mr President will not take up to six months to form his cabinet as he did in 2015. The nomination of Godwin Emefiele for a second and final term as Governor of Central Bank of Nigeria by Mr President and his confirmation by the National Assembly (NASS) as CBN Governor, has elicited mixed reactions. The appointment of Abike Dabiri-Erewa as the Chairperson of Diaspora Commission is seen by many as a welcome development. With these appointments, one wonders whether Mr President plans to retain all those who are currently serving in his cabinet or he wants to change some of them. So who should make Mr President’s next cabinet? They should be leaders and technocrats in their own right who have knowledge of how government works and what citizens need. We don’t deserve ministers and aides who will be running their parochial agenda in the government. Those cabinet members and heads of parastatals who did not do well in the federal government know themselves. In fact, all ministers of state are just occupying space. One could not point to anyone of them deserving of praise. We have ministers who willingly compromise ethical standards and are favourably disposed to all forms of corruption. The Maina Gate and the former SGF corruption scandal are still fresh in our minds. It’s very appalling to see Nigerians who served under Mr President as ministers thinking they are repository of knowledge but most times they don’t have solutions to teething troubles faced by the citizens. One wonders why the country has not significantly diversified its econ-

omy from oil. Why is the inequality between the rich and the poor increasing? Today, Nigeria has the unpleasant record of being at the bottom of the world’s inequality ladder for the second year running, according to IMF reports. The commitment to reducing inequality between the rich and the poor by Mr President and his ministers hasn’t yielded significant results. The middle class is shrinking in size and capacity, such that we now have the “Matthew Effect” in which “the rich get richer and the poor get poorer.” What is responsible for the high level of insecurity in Nigeria? Many Nigerians argue that insecurity is due to high unemployment? This is not completely true. It’s the rise in inequality among citizens that’s responsible for insecurity in the society. We now have a situation where the dividing line between crime and politics is very thin. Although, the federal government provides meals for primary school children, the number of children roaming the streets across the entire country has increased from 10.5 million to 13.2 million in 2018.Most of our children don’t have access to quality education and healthcare facilities. Some of the public primary and secondary schools are not befitting of a country regarded by its citizens as the “giant of Africa.” Most of our young professionals are leaving the country. Why do we have unemployment figure increasing and inflation still trendy in double digits? Why are we still generating barely 3000MW of electricity after 5 years of privatizing PHCN? Mr President and his team have tried their best. But their best has not improved Nigeria’s economic growth. Most of the challenges we face as a nation aren’t addressed because a few of Mr President’s cabinet members in the last four years have only applied archaic ideas to solve local

‘

... one wonders whether Mr President plans to retain all those who are currently serving in his cabinet or he wants to change some of them

problems. They forget that what two hundred million people need are food, shelter, and clothing among other necessities of life. These challenges which have been with us for many years only show that there is a shortage of leadership in the country. If you disagree, then we must ask ourselves: Why are we having shortage of fuel when the country has abundant crude oil? Why do we have shortage of human capital, food, foreign exchange, housing, quality public schools and hospitals, good roads and sporting facilities among others? What is responsible for all these shortages? It is the shortage of leadership in all areas be it political, administrative, educational institutions, sports, labour, industry, and law enforcement agencies that is responsible for the challenges we face as a country. So as Mr President chooses his ministers and aides who are to work with him, he should consider those with professional competence and knowledge. They must have good character coupled with the ability to take decisions with full responsibility for their actions. No matter how good the intention and sincerity of Mr President, he must not surround himself with those who will only be talking without action. This will deny him of any meaningful legacy by the time he leaves Aso Villa for Daura in 2023. So Mr President must cast a wide net beyond his political party in search of competent, committed and courageous Nigerians, who will work with him to move the nation forward. It’s in our collective interest to be led by able, honest, and dedicated men and women, not by second-rate individuals and politicians. Johnson is an author and a retired naval engineer who has passion for African development and good governance

Free trade takes a step towards reality Thomas Kendra, Thibaud Roujou de Boubée and Claire Dumbill

n 2 April 2019, Gambia became the 22nd country to ratify the African Continental Free Trade Area (AfCFTA) Agreement, which is now poised to enter into force. The AfCFTA Agreement was enacted in 2018 and has been signed by 52 African member states to date. In order to bring the agreement into force, 22 of those states must ratify the treaty and then deposit their instrument of ratification with the AU. Of the 22 ratifying members, 15 have already deposited their instruments, which means the race is on for the remaining seven (Sierra Leone, Senegal, Togo, Egypt, Zimbabwe, Ethiopia and Gambia) to take the final step – 30 days after which, the agreement will finally come into force. AfCFTA is a big step towards the dream of economic unity across Africa and the fact that it has moved towards entry into force in a relatively short time period shows the dynamic of goodwill for such measures across Africa. However, it is just one part of the process. Key changes The AfCFTA Agreement consists of four main sets of rules aimed at enabling the creation of a single continental market for Africa. The first consists of an overarching agreement that sets out the AfCFTA’s institutional struc-

ture. It provides, inter alia, that area will be administered by four bodies, namely: the assembly, which will have the exclusive authority to interpret the AfCFTA Agreement; the council of ministers, which will be responsible for the effective implementation and enforcement of the AfCFTA Agreement; the committee of senior trade officials, which will consist of permanent officials responsible for the monitoring of the AfCFTA); and the secretariat, whose role and responsibilities remain to be defined by the council. Second is a protocol on trade in goods that sets out the party states’ general obligations, with regard to, among other things: the mostfavoured nation principle (which prevents parties from discriminating between each other’s goods); the national treatment principle (which prevents parties from discriminating between domestically-produced and imported goods); the reduction or elimination of import tariffs (which remain to be negotiated); the elimination of quantitative restrictions (such as import prohibitions/restrictions); or trade remedies (i.e. anti-dumping, countervailing and safeguard measures). A protocol on trade in services that sets out the parties obligations has also been established, inter alia, with regard to mutual recognition of domestic standards and requirements, the definition of domestic regulations affecting trade in services, monopolies on exclusive service suppliers or specific commitments (which remain to be negotiated). www.businessday.ng

The fourth set of rules is a protocol on the procedures for the settlement of disputes that provides for a dispute settlement mechanism similar to the World Trade Organization’s (WTO) dispute settlement body. The dispute settlement mechanism consists of a dispute settlement body which will establish the relevant panels and appellate body, adopt panel and appellate body reports and authorise the suspension of concessions and other obligations under the AfCFTA Agreement; dispute settlement panels which will be responsible for dealing with disputes in first instance; and an appellate body which will be responsible for dealing with appeals against panel decisions. In this way, the treaty acts as a basis for the development of free trade across Africa. The authoritative bodies are put in place, general principles are enshrined and there is even the possibility for party states to bring disputes against each other and enforce these rules. This is still the beginning though and, as well as more detailed, specific rules, the state parties will need to discuss how investors themselves are protected. What’s next? Negotiators still need to agree on three key aspects of the AfCFTA Agreement, namely the parties’ market access offers (that is, import tariff commitments) which are expected to be finalised by January 2020 (the parties have already agreed to liberalise 97% of tariff lines accounting for at least 90% of trade within the

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AfCFTA); applicable rules of origin which set out the conditions under which goods can benefit from preferential market access under the AfCFTA Agreement and are expected to be finalised by June 2019; and the parties’ specific commitments in trade in services, setting out the services sectors that the parties are willing to liberalise, which are expected to be finalised by January 2020. As a second step, negotiators will then focus on rules pertaining to intellectual property (IP) rights, competition policy and investment, which they aim to finalise by June 2020. A further area to be dealt with, which has already provoked much discussion, is that of investment protection, including a potential provision for investor-state dispute settlement. This will be addressed in phase II of negotiations. African Union ministers have agreed a deadline for completing these negotiations by June 2020. While this leaves more than a year until the investment community is presented with the final instrument, more information on the terms of the investment protocol is expected soon, notably by means of a terms of reference document, announced for Spring 2019.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Thomas Kendra is a partner, ThibaudRoujou de Boubée an associate and Claire Dumbill a trainee in Hogan Lovells’ international arbitration practice in Paris

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BUSINESS DAY

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How to get a Nigerian passport within one week without paying a bribe The Reformer

JOE ABAH

ntil August 2017, I was the Director-General of the Bureau of Public Service Reforms (BPSR), with the daunting task of reforming Nigeria’s Federal Public Service. As part of that role, I sought to move the focus of Public Service Reforms away from the Public Service unto the public. This was a deliberate tactical approach that sought to change the approach to public service reforms from inputs to outcomes. Problems with the Public Service are often complex and intractable. There are various reasons why Public Service Reforms are difficult in most environments and are particularly difficult in developing countries, such as Nigeria. In countries such as ours, the public service reformer is often dealing with myriad systemic input problems in the organisation he is trying to reform, including lack of electricity, insufficient financial provision, lack of working tools, poor internet access, poor staff motivation and systematic corruption. The combination of these, and any one of them for that matter, is sufficient reason to explain away a lack of improvement in public service delivery. Focusing on the outcome expected, rather than the problems with the inputs, gives the reformer a better chance of driving reforms in dysfunctional environments. The need to deliver the outputs expected forces the system to align the required inputs to achieve the expected outcomes, rather than focusing on the difficult task of trying to solve all the input problems before we can get the improvements in service delivery that the public expects and deserves. We will use the tortious issue of obtaining a Nigerian passport as a demonstration of how it could be done. Many Nigerians go through a painful, dysfunctional and extortionate process when they try to obtain an international

passport. Given its population and the absence of a focus on outcomes by the Comptroller-General, Lagos residents suffer the most. It is virtually impossible to obtain a Nigerian passport in Lagos without “knowing someone” and paying above the official rate of N15,000 for a 32-page passport and N20,000 for a 64-page passport. Even after paying more than double the official price and making obeisance to god-like Immigration officials, applicants are still confronted with the claim that “there are no booklets.” The ComptrollerGeneral of Immigration often makes a categorical, but hollow, assertion that there are sufficient booklets nationwide, but the experience of citizens is clearly contrary to that claim. It is either that the Comptroller-General is being economical with the truth or that his officers are deliberately making things difficult in order to derive corrupt benefits from the dysfunction, and that the Comptroller-General is not interested in doing anything about it. Overcoming this logjam is relatively straightforward. Nigerians can obtain an international passport in a week without needing to know anybody and without paying a kobo more than the official price. In the next few paragraphs, I will outline how this can be done. The first step is for the Presidency to demand from the Immigration Service the service standards for issuing Nigerian passports. The last time, that I am aware of, such service standards were set for passport issuance was under the SERVICOM regime in 2004. At that time, the Immigration Service undertook to provide international passports within one week, but expectedly within 72 hours. Most people, including the Immigration Service, currently appear not to be aware of this service standard. Nobody monitors performance against these standards, and although passport issuance is part of the Ease of Doing Business initiative, the Presidential Enabling Business Environment Council (PEBEC) has achieved little or nothing in this regard. It is important for the Immigration Service to commit to this standard, or revisit the standard and set a more realistic one and make the targets publicly-known, and for PEBEC and the National SERVICOM Office to publicly report the performance of

the Immigration Service against these standards. In order to meet the existing performance standard, or whatever new standard is set, it is necessary to take a number of straightforward actions. First, all payments must be made online. Notionally, this is already the case, but in practice, citizens are often unable to make online payments, forcing them to have personal contact with Immigration officers and their touts, who extract corrupt rents for “helping” people. The payment systems are often unavailable, either due to weaknesses in technical infrastructure or as a result of deliberate sabotage. Indeed, those that “stupidly go and pay online” are made to suffer interminable delays and forced to regret their attempts to do things properly. The Comptroller-General and PEBEC should be monitoring the frequency of “network” downtimes by location and tackling cases where the downtimes are as a result of deliberate sabotage. The good thing about technology is that there is always an audit trail that tells you who has done what to the system, at what time, in which location. They should also be monitoring how quickly applicants that pay in advance online receive their passports. Even when an applicant successfully pays online, another major pinchpoint is the capture process. Nigeria does not really have a passport renewal process. Every passport application is deemed to be a new application requiring fresh biometric capture. This would ordinarily not be a problem, particularly given the sensitive security nature of international passports. The process of being “captured” is, however, another corruption ‘toll gate.’ It should be possible to simply book an appointment for capture online, appear on the appointed date and time and be captured within 15 minutes. Currently, the appointment system tends to give you an appointment in 6 years’ time when the validity of the passport you are applying for is only 5 years! This forces you to seek out an Immigration officer that will “help” you, of course in the expectation of “appreciation.” There does not seem to be any willingness on the part of the Immigration Service to apply the simple technical fix required

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Every Nigerian knows that if you give enough cash to Immigration officials, you can get your passport in less than 6 hours

to make the appointment system work. The Immigration Service knows the number of passport applications that it gets each year. It also knows that Nigeria’s population growth rate is 2.6%. How hard can it be to ensure that we have enough booklets to cover all applicants? I mean really! Unlike National Identity Cards, passports are not issued for free but for a fee. The Federal Government should configure the Treasury Single Account to ensure that the fees generated from passport issuance is used to ensure the availability of passport booklets at all times. If, as a result of exchange rates, the price of the passport is too low, especially as it is currently printed abroad, the Immigration Service should review the price and gradually increase it over time. Passport issuance is not a social service. Having said that, every effort should be made to print passports in country. Every Nigerian knows that if you give enough cash to Immigration officials, you can get your passport in less than 6 hours. We also know that Nigerians like to leave things late, often applying for a passport within just days of needing to travel. Of course, pressure of time on the applicant is a compelling reason why they would pay for “help.” It is easy for the Passport Service to put in place an Emergency Fast Track process that charges four times what the normal rate of passport application is. Those that are in a hurry can pay N60,000-N80,000 per booklet to government, rather than into the private pockets of Immigration officials, and the funds can be reinvested into improving the passport process and even incentivising Immigration officers. Those that are not in a hurry and can wait a week, or whatever the new service target that the Service sets, can pay the normal price and get their passports without begging or bribing anyone. Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Dr Abah is the former Director-General of the Bureau of Public Service Reforms. He is currently the Country Director of DAI, a global development company. The views contained in this article are personal to him and do not represent the views of any employer past or present.

In conversation: Adesola Adeduntan, CEO, First Bank (3)

Rafiq Raji

desola Adeduntan, CEO of one of sub-Saharan Africa’s oldest and largest private sector banking groups, reviews the dominant trends of the sector in Nigeria and the wider West African region and discusses the relationship between the banking industry and the increasing number of telcos which are providing alternative financial services. Interview by Rafiq Raji. How do you think Nigerian banks would respond to telcos’ imminent foray into mobile money?

I would like to note that the imminent foray of telcos [telecommunication companies] into mobile money is being driven by the Central Bank of Nigeria’s focus on deepening the financial services sector by promoting financial inclusion and enhancing access to financial services for the low-income earners and unbanked customer segment. The recently released guidelines for the licensing and regulation of Payment Service Banks by the Central Bank of Nigeria provides the required regulatory platform for the participation of new players (telcos, banking agents, retail chains, postal services providers, existing mobile money operators, FinTechs, and financial holding companies) in the provision of banking services to individuals and small businesses. Of all the potential categories of new entrants or players, the telcos are better positioned to make significant competitive impact in the industry given their existing advantage with respect to investment in technology/digital infrastructure and access to target customer

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information/data. As telcos prepare to join banking industry incumbents in the provision of financial services to individuals and small businesses, the incumbent banks may potentially respond in either of two ways: [1.] Compete: Recall that prior to the release of the guidelines for the licensing and regulation of Payment Service Banks, most Nigerian Banks had already embarked on the rollout of the Agent Banking and Unstructured Supplementary Service Data (USSD) Banking service offerings. The target customer segment, the base of the pyramid segment, of the Agent Banking and USSD Banking offerings is largely the same as the Payment Service Banks’ target customers. As such, most banks will accelerate the rollout of their Agent Banking and USSD Banking offerings, and position to gain competitive advantage over the telcos. The banking industry incumbents will position to gain competitive advantage by becoming more innovative and proactive in creating solu-

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tions that will ensure they can profitably serve the base of the pyramid customer segment. In addition, they will create innovative products and services to ensure they improve overall customer experience while creating “stickiness” with their existing and potential customers. [2.] Collaborate: Incumbent banks may also respond by establishing strategic partnerships with the telcos who may want to play in the banking industry. Incumbent banks have the industry know-how and cash management logistics capabilities; while telcos have superior technology/digital infrastructure and product innovation capabilities. The partnership will seek to harness the existing strengths of both the telcos and the incumbent banks to create a mutually beneficial relationship. • Interview was first published in the first quarter 2019 issue of African Banker magazine “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @DrRafiqRaji)”

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Tuesday 21 May 2019

BUSINESS DAY

EDITORIAL Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri

Challenges of a budding advocate

here was a time in Nigeria that the preference recognised as the ‘ideal’ care er p ath was Medicine, Law or Engineering. However, in recent times, parents are more open to encourage their children on whatever career alleyway they opt for because as time has changed, so also, the prospect of careers not considered financially rewarding or with a greater appeal has changed. For the purpose of this discourse, law is the focus. The legal profession in Nigeria has metamorphosed such that it opens up various opportunities for lawyers who in times past were mostly known for appearances in court. Today, when it comes to signing crucial documents, will preparation, sealing of business deals to mention a few, lawyers are sine qua non. In 2018, students admitted to study Law dropped by 11% to 7,490 from 8,427 in 2017, the second lowest number of admissions after Social Sciences, according to data from the National Bureau of Statistics. The figure shows the numbers admitted to study Law in Nigeria, not the number of

students who applied to study Law, which goes to say that it doesn’t necessarily mean there has been a decline in the quest to be a Lawyer but a decline in the number of those admitted to study Law. It is therefore permissible to conclude from the stated premises that there are students who are still in love with the idea of being lawyers. However, young advocates in the profession are opting for other means of livelihood than practice. Many of them began but after a few years decided to search for ‘greener pastures’. The young lawyers also suffer from clients who would only prefer an experienced lawyer. In Nigeria, you have several young lawyers as event planners, musicians, MCs, actors/actresses to mention a few. Not because they deliberately chose to but because practicing in Nigeria isn’t auspicious. You wonder how a student will go through five years of rigorous study, face the superlative inescapable Law school and end up in another line of work? Discussions with some young lawyers revealed the reasons behind the abrupt curve away from their ‘first love’. First is the issue of salaries. Sadly, they aren’t able to argue for their salary increase as they

have been bamboozled with the “Gain the experience…the expose will help you” catchphrase like they do not have needs that should be met. A few complain of getting paid between N20, 000 –N50,000 monthly and it doesn’t equate to what they deserve after spending 5years in school and another year in Law school only to earn a meagre wage. This may not be the same for other financially buoyant firms but the question is, how many financially buoyant and reputable firms are available in Nigeria today? How many are willing to employ young lawyers? How many can they truly afford to employ beyond a specific number considering the massive integers seeking for job opportunities? Despite existing reforms in litigation, they have also complained of elongated litigation processes in the system while some admit their faith in the legal system as a whole in Nigeria is rickety but they remain hopeful. Quite a few complained of their superiors taking the glory when they win a case. Some who are challenged with getting a firm to work with or an organisation that needs their services, end up setting up in their cars, some at police stations waiting for any-

one who needs their services and some at the court premises whilst having to put up with the disparaging ‘charge and bail’ label. Despite their daunting challenges, some senior lawyers have identified knowledge and proficiency as a hurdle with some budding advocates. Knowledge because, since they are still young in practice, they are most familiar with theory not practice, hence a deterrent factor, limiting their ability to apply their skills efficiently. They are however optimistic that they will mature to become more enlightened with time as the legal practice is not child’s play and consistent practice and hunger for growth will assist to hasten their progression in the career. The Judiciary, Nigerian Bar Association, and the government should think of ways to solve the problem and make law practice a worthwhile experience for young lawyers. Perhaps, a reform of the current structure of the profession, persistent legal tutoring, reviewing law school prospectuses and enhanced benefits for budding lawyers would help. Furthermore, the seniors in the profession need to embrace mentorship of the younger lawyers so they can mature to be reputable advocates for themselves and the nation.

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Bashir Ibrahim Hassan

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Tuesday 21 May 2019

BUSINESS DAY

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Exiting Plato’s cave: Reflections on Nigeria’s predicament

Tunji Olaopa

lfred North Whitehead, the American philosopher, once wrote that all of Western philosophy is but just a footnote to Plato. Outside of its patent exaggeration, we can take this statement to be a compliment to Plato’s humongous influence on the development of the western philosophical tradition. Plato was instrumental to many of the features that makes philosophy a fundamental discipline anywhere today. From epistemology as the theory of knowledge to social and political philosophy, Plato’s imprints are so broad and so deep. Most often than not, contemporary philosophers have found themselves revisiting and revising his philosophical formulations in an attempt to keep understanding complex human societies. Take, as a significant example, his understanding of the Republic as a political community founded on justice. This generates a picture of social harmony that appeals to many political theorists and politicians all across the world. Apart from this, there are so many fundamental philosophical thoughts that came from his fecund mind which have crossed the Greek national and intellectual boundaries to influence the flowering of thoughts in other sociocultural contexts across the globe. One of these is the allegory of the cave. This allegory is perhaps Plato’s most famous thought experiment that is meant to bring alive specific and deep philosophical truths about human beings and their attempts to live a good life. In this

allegory, Plato asks us to imagine a set of human beings locked down in a cave for decades, without any benefits of any other outside-the-cave experience. The cave is a dark and large place where the entire reality is defined by shadows passing in front of a large wall in front of which they are all chained. The shadows are what they named and relate with. However, and unknown to them, the shadows passing on the wall is a manufactured reality. The shadows are made by people behind the chained prisoners who are passing in front of a large fire with various objects in their hands, it is these objects that are the contents of the “reality” of the prisoners. Plato then asks us further to imagine that one of the prisoners is somehow miraculously freed from this prison condition, and managed to escape outside of the dark cave. Upon his escape, several things will become obvious. First, the prisoner sees immediately the source of all the shadows cast on the wall, and the function of the fire as the creator of the shadows. Second, the prisoner will note that reality is not the shadows on the wall; the shadows are mere impressions of the objects being passed in front of the fire. Third, and most fundamental, the prisoner will step out of the cave and be literally blinded by the glare of the sun as the ultimate realization of enlightenment. The prisoner, whom Plato sees as the philosopher, could not make a distinction, based on his enlightenment, between what is real and what is mere appearance. Even a mere layman is able to draw inference from Plato’s allegory, no matter at what level of intellectual sophistication. There is a deep way in which Plato’s cave depict the development condition of an average African country like Nigeria. There are so many diagnoses of the Nigerian and even African predicament in social science literature. I doubt if there is any that has explored the place of ignorance as an epistemic factor in the citizens’ understanding of their collective situation and what to do about it. Plato’s allegory speaks to the role of enlightenment and education in the

understanding of reality and how to transform such a reality for the advancement of one’s well-being. That is the implication of the dark cave. It contained people who have resigned themselves to fate. This is because they have taken it for granted that what they are seeing, and what they have experienced for many decades, could not be different. It is the reality and it is what it is meant to be. What is the implication of somnolent resignation for the project of national development in Nigeria? The answer is a simple one: it facilitates the emergence of citizens who have no interest whatsoever in transforming their collective predicament for the better. It takes little reflection to see the sets of factors that has made this so in a country like Nigeria. We need only take one of such factors—religion. This is the classic context that bears out Karl Marx’s dictum that religion is the opium of the people. We can easily imagine those in Plato’s cave as a set of highly religious people who are satisfied with their lots in life, as written by God. They give birth, and teach their children about contentment and hard work. They go to church and hear sermons about their realities and how that is the best they can ever hope for in a degenerate world modulated by sin. This situation was replicated during the opening moments of capitalism in the 19th century. The proletariat were kept under a serious leash not only by the bourgeoisie but also by the religious leaders and other elites who are in cahoots with one another to keep the workers back bent in misery and their spirit bent in submission. And even though the workers felt their socioeconomic oppression, their minds are kept away from enlightenment by a social structure that was bent on perpetuating their exploitation. The postcolonial situation in Nigeria is one Plato and Karl Marx would have been familiar with, even though it is so far removed from the context they had to deal with. On the one hand, Plato would have immediately discerned the epistemic condition of a people that have resigned

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Democratic governance would remain a mirage if we remain perpetually in the dark cave of ignorance about our own condition

themselves to fate or to God. By moving from Lagos to Maiduguri, and from Sokoto to Sapele, Plato would have seen why our postcolonial reality would not change because Nigerians prefer to resign to going to churches and the mosques to pray and fast than reflect on why postcolonial Nigeria is the way it is and what could be done actively to transform it. Resignation is an epistemic condition that divert attention away from substantive matters of leadership, development, progress, and existence to seek solace in otherworldly concerns. These are the various issues that make postcolonial Nigeria a tough place for anyone to survive. On the other hand, Karl Marx would have seen an elite structure in the economy, politics and society, from the politicians to the clergy, that benefits from the suffering of Nigerians rather than their well-being and empowerment. The escape of the philosopher from the dark cave is both revolutionary and transformatory in equal dimension. When the philosopher saw the sun, he began to put things in proper perspectives. He knew what he had to do to correct the ills of the past and the present. For instance, he knew he had to return to the cave to broadcast the enlightenment. But liberation does not come easy, as the philosopher was soon to realize. By returning into the cave, he became blinded by the gloom and this convinced the others still in the dark that his journey was not so successful. This reinforced their resolve not to ever leave the cave. This situation would be clear to any radical civil organization with the objective of challenging the basis of the exploitation of the people. Two things have often happened to civil society organizations in Africa.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Prof. Tunji Olaopa, retired Federal Permanent Secretary & Professor of Public Administration. tolaopa2003@gmail.com, tolaopa@isgpp.com. ng

Emefiele’s reappointment: Any trigger for the stock market?

UCHE UWALEKE

fter the news of Emefiele’s nomination as the Central Bank Governor for a second term by President Muhammadu Buhari filtered out in the afternoon of Thursday 9th May 2019, the equities market plunged with the Nigerian Stock Exchange benchmark index shedding 0.24 per cent to close at 28,896.25 points. Market breadth, one indicator of investors’ sentiments, was negative recording only eight gainers as against nineteen losers at the end of trading session. The following day was no different as the equities market also posted a loss with the NSE AllShare Index depreciating by 0.17 per cent to close at 28,847.81 points. Could this string of losses, which trailed the announcement, be a reflection of investors’ displeasure with Emefiele’s reappointment? It would be wrong to think so. This is because the evidence from intraday trading on that fateful Thursday points to the fact that the equities market was already on a downward journey even before the news was made public consistent with a negative trajectory since that week began. Only the previous day, a bigger loss of 0.45 per cent had been recorded. The bearish sentiment was evident across virtually all sectors throughout the week. In fact, both the NSE All-Share Index and market

capitalization have been trending downwards since the start of this year with Year-to-Date return now down by more than 8 per cent. So, it had nothing to do with the news of the CBN Governor’s reappointment. To be sure, if there is one thing Godwin Emefiele’s appointment has guaranteed, it is monetary policy consistency which is positive for the stock market. Under his leadership, the CBN has maintained stability in the foreign exchange market especially after the introduction of the investors and exporters window in April 2017, effectively managed the country’s external reserves including through the policy on 43 items as well as subdued inflationary pressure to a large extent with core inflation rate now single digit. The various intervention schemes by the apex bank in the real sector, prominent among which is the Anchor Borrower programme, has also contributed immensely to the growth of the non-oil sector. Indeed, regarding the economy’s return to a positive growth path in 2017 following five consecutive quarters of negative growth in GDP, the CBN played a key role and has since then remained the ‘major game in town’. It bears repeating that if the stock market has not responded appreciably to these economic fundamentals especially in the last one year, it is more to do with legacy headwinds including the impact of the progressive monetary policy normalization in some advanced economies especially in the United States leading to higher yields and capital outflows from frontier and emerging markets, appreciation of the US dollar against the currencies of most advanced and emerging market economies, global portfolio rebalancing from equities to fixed income securities and the negative effect of the trade war between the US and China. Other factors included the slowdown in Chinese economy,

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uncertainties which surrounded BREXIT negotiations as well as volatility in crude oil prices. On the domestic scene, the stock market contended with the rebalancing of portfolios from the equities to the fixed income market due to higher market yields, sustained profit taking activities of foreign investors arising from election-related uncertainties, panic selling behavior of domestic investors as well as the delay in the passage of the 2019 Appropriation Bill. Further, the bottom lines of many companies continue to be impacted by difficult operating environment arising from inadequate physical infrastructure especially power. The deposit money banks suffer similar fate which has made it difficult for many of them to channel credit to the real sector. As admitted by Emefiele, ‘interest rates reflect not just the cost of capital but also the cost of doing business from the perspective of the lender. Given that most banks have to individually provide security, power and other infrastructure, it is not surprising that some of these costs are passed on to customers in the form of high interest rates’. Against the backdrop of favourable crude oil prices given current developments in the oil futures market which indicate that oil prices will remain considerably above the federal government’s 2019 budget benchmark of US$60 per barrel, the trend of declining long term yields in the US and the likelihood that capital flows may be redirected to frontier and emerging economies, Emefiele’s reappointment bodes well for the Nigerian stock market. This is because investors have reasonable assurance of continued stability in the foreign exchange market, moderation in inflation rate, increased tempo in CBN special interventions in growth-enhancing sectors especially agriculture and non-agricultural SMEs as well as steady

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growth in GDP which the CBN projection has put at 2.74 per cent in 2019. Another good news is that the monetary authority has signaled its readiness to spur economic growth through an accommodative policy stance. In its Monetary Policy Communique of March 2019, the CBN Governor was quoted to have said that ‘’in its consideration of the best monetary policy option, the Committee felt that given the relative stability in the key macroeconomic variables, there is the need to signal a new direction that is pro-growth’’. This ‘new direction’ will surely lift animal spirits in the stock market. As an aside, it is not for nothing that Mr. Godwin Emefiele, was elected as chairman of the West Africa Monetary Zone (WAMZ) sometime last year to champion the attainment of the ECOWAS single currency objective by 2020. His reappointment for another five-year term provides a good opportunity to pursue this objective. If he actualizes this with the cooperation of colleagues from member countries working towards the convergence criteria, the Nigeria’s stock market could prove to be the hub of capital markets within the ECOWAS sub region. All said, despite the poor performance of the Nigerian stock market since the year began, its outlook is bright on the strength of relative macroeconomic stability already achieved by the government with the support of the Central Bank. One can safely bet that the NSE index direction will be northwards from the beginning of the third quarter of this year especially after a new cabinet is put in place and Emefiele’s nomination for second term gets confirmed by the Senate. Uche Uwaleke of Nasarawa State University Keffi is Nigeria’s first Professor of Capital Market and the President of the Association of Capital Market Academics of Nigeria

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Tuesday 21 May 2019

BUSINESS DAY

Media business The moral question in brand ambassadorship Stories by Daniel Obi Media Business Editor

brand ambassador is usually an individual engaged by an organization to represent it or its product typically in a positive way. The idea is to drive brand awareness, deepen relationship with brand fans and promote sales. Over time, engagement of brand ambassadors has become a strong marketing approach in the mix of advertising and other promotional methods. This is on the understanding, as stated by Milton Souza and Silvia Quintanilha Millward Brown, Brazil in their study, that celebrities can help brands stand out in the presently cluttered universe of products and advertising. In their study, entitled ‘Does fame always lead to fortune? Using celebrities in advertising’ the researchers also noted that celebrities can help shape and communicate a brand’s image, values and personality. Brand ambassadors “can also help build brand attributes and even create aspirational appeal. As well as promoting established brands, celebrities are used to promulgate new brand images or introduce new ones”. While the trend of the engagement of brand ambassadors to draw

attention has caught up with organisations, however there appears to be misalignment in the appointment of many brand ambassadors. Ordinarily, brand ambassadors supposed to be individuals, either role models or influencers who use the products they are promoting or have experienced such life or they are professionals in that field or were made through such life. This actual representation becomes significant and underscored because under social influence, consumers are expected to adopt the attitude advocated by the communicator. Therefore, there should be a moral question in an event where, for instance a sports icon who built his or her life through playing football is now used to promote betting business as if his/her life was made through betting, or a lady who have not experienced dandruff be used to advertise anti-dandruff cream. More so, can a brand ambassador who doesn’t have a particular car be employed to promote such car or non-beer drinker engaged to advertise beer product and so on? Naturally, it is ideal to use a brand ambassador to create appeal and attention, but there must be proper alignment. Customarily, brand ambassadors are expected to use their popularity to support good reputation of such brands but can they answer clients’ relevant and technical questions on the brands they are representing? This is part of the require-

ment of brand ambassadorship and not necessarily the TV show-off or the contract cheque. Some organisations appear to be more focused in using the popularity of brand ambassadors to drive awareness and attention than answering the moral question of seemingly falsity in marketing. Assessing this issue, Ekine Akonte, a PR expert based in Lagos agreed that brand ambassadors are expected to ignite the consumer make to make moves of favourable disposition to brands they represent.

“However, the question is that some products are using influencers based on the reputation of the influencer that was built that is completely different from the product. For instance, betting brands in Africa are using sports men and women that made name, as the content has no reference to the skill of the influencers as a sport man or woman. What this means is that the influencers are trading their reputation for that brand’s value which promotes quick gains against the brand ambassadors value of hard work and professionalism”.

APCON restructures management

he Advertising Practitioners Council of Nigeria, APCON, has undertaken a reorganisation with the redeployment of key officials of the Council, while 41 of its personnel nationwide were recently elevated alongside the APCON boss to their

next grade level. This follows approval by the Minister of Information, Lai Mohammed. The Acting Registrar/CEO, Mrs Ijedi Iyoha, said in a statement that APCON Management had deemed it expedient to effect the changes so that offices and responsibilities can

be properly realigned for optimal service delivery as well as help to position the Council for the challenges ahead. Under the new arrangement, the erstwhile Assistant Director, Registration, Career Matters and Corporate License Directorate, Martha Onyebuchi, now a Deputy Director, has been deployed to the South Eastern Region to pilot the affairs there, while Joe- Eugene Onuorah, former Assistant Director, Operations takes over from her as Deputy Director, Registration, Career Matters and Corporate License Directorate. In the same vein, Ralph Anyacho, former Assistant Director in charge of Corporate Planning, Research and Strategy becomes Deputy Director and head

of the Northern Region, while Susan Agbo, now heads Corporate Planning, Research and Strategy Directorate. The promotions released recently by the Council were, however, targeted more towards middle and lower management cadre In her words, the APCON boss said that the criteria for promotions in APCON are based on performance management. “We look at your appraisal for the years you have spent, and the period within which you are due for promotion/ recommendation from your head of department, and then if the vacancy exists for you to go to the next level, as well as budgetary provision for that position you are going to be upgraded to”.

FastCredit, LaCasera, Medallion win big in Africa Finance Award 2019

espite the challenging macroeconomic environment faced by Nigerian corporate organisations in the post recession era, some Nigerian financial institutions and fast moving consumer goods (FMCGs) companies outshine peers from other African countries at the Africa Finance Award 2019 held recently in Lagos. FastCredit, LaCasera, Medallion,

PAC Capital, LinkPoint and Africa Mortgage Bank won big, winning the gold award categories. Cammil Chineme, the chairman award organising committee said in a statement, Africa Finance award is to celebrate professional prowess of distinguished brands and the uncommon professionalism, dynamism and courage of business leaders in the industry. www.businessday.ng

“Today’s event is geared towards encouraging greater creativity and more importantly applauding effective marketing strategy and tools that deliver results,” said Chineme. Emeka Iloelunachi, the MD of Fast Credit said Fast credit has played a pioneer role in advancing consumer credit in the Nigerian economy in the last five years. “Our direction today is not about lending but that we want

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to be known as a leading financial technology company in the market. “Consumer lending sub-sector and the micro lending sub-sector is evolving and growing, as long as the business and the economy continue to grow; the industry will continue to grow, however behooves to say that only creative and innovative players will survive in the long run,” said Iloelunachi. @Businessdayng

Citing betting business as example, Akonte further said that while it is agreed that influencers are a good part of marketing initiative, there is a strong need to review the rationale behind the use of sporting icons and other characters as influencers of betting as it does only create awareness for the brand without necessarily showing both brands as having same value propositions”. Similarly, in their study, Milton Souza and Silvia Quintanilha of Millward Brown further said all knowledge proves that one of the most important aspects when using celebrities is the link that person has with the brand, product and/ or message that will be communicated. They buttressed their point by quoting an article from the Journal of Advertising Research written by Roobina Ohanian, which says “for celebrities to be truly effective, they need to have direct connections with their endorsed products and who are perceived to be experts by target respondents.” The ‘right fit celebrity’ can enhance communication and can give credibility to the brand. They further said that when the celebrity and the brand share the same values, the benefits are maximized both for the brand and the celebrity. Akonte further said that influencers are best used to demonstrate a value in a product when there are correlations such as Sensodyne toothpaste and dentists.

9mobile Northern promo ends as undergraduate wins brand new Hyundai

student of the Modibbo Adama University of Technology, Yola, Adamawa State, Abdul Majid Iliyasu Gita, recently won a brandnew Hyundai at the grand finale of 9mobile’s Northern promo, according to a statement. Receiving his prize at 9mobile’s Experience Centre at the Ado Bayero Shopping Mall, Kano, Gita, who hails from Bauchi State, said that 9mobile has changed his life with the brand-new car. Presenting the prize to the star winner, Head, Regional Sales, 9mobile, Babangida Mukkadas said the telco embarked on the significant journey of rewarding its loyal customers to secure their socio-economic advancement with the promo. He said the raffle draw was done electronically to ensure objectivity in the emergence of winners, thereby giving room for healthy competition among 9mobile’s customers.

Tuesday 21 May 2019

BUSINESS DAY

Branding Nigerian brands display strength in competitive consumer retail sector with innovation The Nigerian retail market is fast growing with food and consumer goods categories alone projected to hit a $40 billion value between 2008 and 2020. This report looks at how indigenous brands are competing in the sector dominated by multinational brands.

s far as humble beginnings go, FoodCo Nigeria Limited, a diversified consumer goods company with interests in retail, fast food, entertainment and manufacturing, located in Ibadan, certainly fits the bill. Back in 1981, when Iyabo, Matriarch of the late Adegbenga Sun-Basorun Family, opened a small fresh food and vegetable store in Bodija market, located in the heart of the West-Africa’s largest city, chances were, she didn’t reckon she was actually planting a legacy in Ibadan. 38 years later and that legacy is redefining the indigenous consumer goods and retail landscape in South-West Nigeria. Over the years the brand’s growth has continued to astound industry watchers and analysts. With 9 stores spread across the length and breadth of Ibadan, the company is widely acknowledged as an integral part of the Ibadan formal retail landscape. Today, FoodCo operates the largest supermarket chain in Oyo State and second largest in south-west Nigeria, outside Lagos. It is also ranked in the Top-10 supermarket brands in Nigeria according to a listing by National Consumer Brands. The brand’s growth is especially interesting when viewed against the backdrop of the presence of multinational competition like Shoprite, Gamer, Spar and the likes. Add that to the emergence of other local players like Addide, Prince Ebeano, Best Choice and others who are springing up by the minute. For the company however, innovation is the name of the game and the brand continues to leverage on this factor to position itself as niche leader. According to Ade SunBasorun, Executive Director, FoodCo Nigeria Limited, the brand has had to adapt to the changing needs of the Nigerian market over the years. He said: “The Nigerian market is a

very sophisticated and demanding one and for any brand to survive, it needs to redefine itself to adapt to the changing realities of the market. We started out as a fresh food’s store and over the years we made the transition into Ibadan’s favourite supermarket chain tending to the needs of three generation of families. Today, we are a one-stop shop where you can not only shop for your household needs, but also enjoy fantastic meals at our restaurants and also enjoy the premium experience of our entertainment centers”. But the brand continues to position itself to reap the opportunities in the retail sector. The Nigerian retail market is currently the largest in Africa, spurred on by an emerging middle-class household. According to the New York based management consulting firm,Mckinsey, the food and consumer goods categories alone is projected to hit a $40 billion value between 2008 and 2020. As an economic bloc, retail contributes about 16 per cent of the national Gross Domestic Product (GDP) even if majority of the players within the

category are open market stalls and kiosks that constitute most of Nigeria’s informal economy. A paltry five per cent make up the formal retail space. This in itself presents promising opportunities for the formal retail sector when compared against low levels of penetration, increasing urbanization and the entry of more women into employment. According to Sun-Basorun, these opportunities, if well harnessed, can create a significant percentage of jobs in addition to feeding industries like manufacturing and farming. “For the industry to maximise its potential in Nigeria, there a number of structural issues that must be addressed. The first is around human capital, in terms of being able to have the right quantum and caliber of people who are not only excited about the industry but who can also could see their future in the industry and make commitments to it. “The second one is around expertise. Given that the industry is nascent within the country, some of the specialized capabilities needed around merchandising, supply chain

and even architectural and interior designs as well as constructions are all still limited. Frankly, these would be hard to solve. However, if we are going to grow as an industry and as a country, we are going to have to be able to learn from others and bring that knowledge back here so we have the expertise we require not just to scale the way other countries have but to scale differently.” “Given that the year is 2019 and with all the technology available, we should be asking ourselves how we can create retailers of the future instead of just creating retailers that were created twenty, thirty years ago when a number of other countries scaled their retail industries,” he added. To address the skills challenge, FoodCo recently launched a fellowship to build capacity for leadership for the industry. The FoodCo Fellowship program recruits interested MBA and Masters students and takes them through real-life professional and business training so they are workready by the time they finish their studies. As part of the training, fellows are set up in teams where they are expected to solve daily operational issues including team building, leading others, analyzing problems, communicating solutions and progress in both related and non-related fields. Seven fellows are currently in-training for the first batch of the program. Speaking on his experiences, Temilola Akinremi, one of the beneficiaries, says: “The FoodCo Fellowship program is unique in the sense that it immerses fellows in the day-to-day experiences of organisational leadership. We attend meetings, are involved in decision making and are also rewarded for initiative. In my previous experiences within other organisations, students are essentially made to shadow employees or assigned to menial

tasks that do not require creativity or problem-solving skills.” For Precious Aiyejina: “The FoodCo Fellowship doesn’t seem like a regular internship. Other fellows and I were given managerial positions with important tasks to handle which is a great responsibility and helped us gain practical managerial experience.” Sun-Basorun explains that the program had become imperative in order to train a specialised workforce that will drive the expected growth within the consumer goods category, particularly, to help it maximize its potentials. He notes that: “As modernization and a population shift from rural to urban centres continue to stimulate growth in the Nigerian consumer goods/retail sector, the Fellowship program aims at preparing a complementary workforce with the requisite skills and disposition to harness the vast opportunities within the sector and transform it into a significant economic bloc.” Seun Aderibigbe, business head in the Westville branch of the organisation, says that the Fellowship aims at making the consumer goods retail space attractive to top talent with the energy, knowledge and creativity to usher in the next level of growth for the industry. According to her, school visits are strategically planned to carry both the authorities and students along and to promote an atmosphere of mutual trust where all parties can objectively assess each other. Consequently, students who get onboarded into the program already see potential for a career there and do not merely join to fulfill credit requirements for their degrees. A proudly Nigeria brand, FoodCo has been at the forefront of driving growth in the Nigerian consumer goods retail sector through innovative, homegrown, strategies.

NB spends about N180m in previous editions of Maltina Teacher competition … Flags off 5th edition Daniel Obi

igerian Breweries has so far spend about N180 million in the last four editions of its Maltina Teacher-of-the-Year competition, a CSR intervention project on Nigeria’s education sector. The company which recorded a turnover of N324 billion in 2018 financial year had last week also flagged off the 2019 edition of the Teacher-of-the-Year competition which began in 2015. The winner in each of the last four years of the competition received N1m, a trophy and another N1 million

every year for the next five years. The winners also got block of classrooms estimated at N25m each built at the school where he or she teaches. Also in the last four years, each first runner-up received N1 million and a trophy, while the second runner-up got N750,000 and a trophy. In addition, each state champion, including the winner and the first and the second runners-up received N500, 000. The state champions are also sponsored to Lagos for the grand finale of the competition which holds every October. The winning prizes remain the same for 2019 edition. This year, the company has added ‘Thatoneteacher’ award. This segment allows individuals including www.businessday.ng

students to nominate teachers they know that have made impact. They are expected to post this on social media and receive likes. The teachers that received highest likes are rewarded.

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Entry for the 2019 award opened on May 16 and closes on July 12, this year. In 2018, about 641 applications were received under the competition. This figure is expected to increase as awareness increases coupled with addition of ‘Thatoneteacher’ award. Speaking on the 2019 edition, the new Corporate Affairs director of NB, Sade Morgan said the programme executed under the Felix Ohiwerei Education Trust Fund foundation of the company is part of winning with Nigeria. Under the foundation, the company has constructed 417 blocks in various schools, recognised 95 teachers and impacted some tertiary institutions. She said the idea of Maltina Teach@Businessdayng

er award initiative was to recognise and celebrate teachers who rarely get the recognition they deserve in spite of the crucial role they play in shaping the quality of education and the society. Also speaking, Lami Ahmadu of Federal Ministry of Education commended NB for embarking on an incentive that will stimulate teaching profession. She noted that no development can be achieved without teachers. Similarly, Mike Eneh, the secretary of NUT underlined education as the focal point for any nation to move to the next level. He appealed to other corporate organisations to emulate NB.

Tuesday 21 May 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

Banking

Big banks rake N21.6bn from foreign exchange trading in Q1 ISRAEL ODUBOLA

igerian tier-one lenders collectively realized N21.6 billion as proceeds from foreign exchange trading in the first three months of 2019, data from the companies’ financials showed. This represents 88 percent appreciation over N11.5 billion earned in the previous comparable period, with Nigeria’s top lender by assets, Access Bank, accounting for nearly threetenth of the proceeds in the review quarter. Access Bank realized N6.2 billion from foreign exchange trading in the first quarter of the year; a strong rebound over N6.8 billion losses a year prior, trailed by United Bank for Africa with N6.1 billion, Zenith Bank (N3.3bn), GTB (N3bn) and First Bank (N2bn). According to Olayinka Olohunlana, a Lagos-based financial analyst, the 88 percent significant growth in big banks’ proceeds from foreign exchange trading is largely attributable to the relative exchange rate stability witnessed in the economy so far. “The rate of the naira to dollar has been moderately stable since the year started on various market windows, hovering around N360 per dollar, and

Source: Companies’ financials even demonstrated resilience during the general election period.” Olohunlana said. Speaking further, “The stability of the naira against the vehicle currency, the dollar, is a critical macro-index taken into cognizance by foreign investors before making investment decision. When the rate is stable, investors’ confidence heightens,

uncertainties wane and foreign exchange trading booms.” Of the five banks, only Access Bank recorded substantial improvement in proceeds from foreign exchange transactions. First Bank saw its foreign exchange gains dip some 37 percent from N4.6 billion in similar period of 2018. That of GTB, UBA and Zenith shed 15 percent, 9 percent

and 4 percent respectively from N3.5 billion, N6.7 billion and N3.5 billion a year earlier. Analysis of the cumulative first-quarter foreign exchange trading income of tier-one lenders revealed they realized N32.5 billion in 2015. This figure plunged 73 percent to N8.8 billion in 2016 as the economy was heading towards its first

economic downturn in 25 years due to sharp decline in oil prices which incited pressure on foreign exchange. With the inclusion of seven mid-tier lenders – Fidelity Bank (N2.25bn), Union (N344m), FCMB (N98mn), Stanbic (N587mn), Wema Bank (N15.5m) and Sterling (-N28mn), the twelve lenders jointly realized N25.2 billion from foreign exchange trading, with the tier-one lenders accounting for 61 percent. Incorporating EcoBank’s N28.7 billion proceeds into the analysis, the cumulative gains from foreign exchange trading in first quarter of 2019 accelerates to N53.9 billion, implying that the Pan-African lender has 53 percent share in the total figure. However, this is unsurprising given the fact the lender has presence in 40 African nations, transacting businesses in various countries’ currencies. Foreign exchange trading income/losses occurs when banks offer services in a foreign currency. The value of the foreign currency, when converted to the domestic currency of the local banks, varies depending on the prevailing exchange rate. If the value of the domestic currency increases after conversion, it signifies foreign exchange gain or income, and vice-versa.

Telecom

MTN secures 7-year N200bn facility in service delivery push

TN Nigeria communications Plc has signed a 7-year N200 billion syndicate loan facility with seven Nigerian banks to finance emerging business opportunities while aiding capital expenditure and working capital, to better service delivery to customers. This N200 billion medium-term facility represents the eight syndicated loan agreement by the telecom giant in Nigeria since inception in 2001. The medium term facility has a 2-year moratorium period, implying the borrower will begin repayment after the third year, and a repayment plan period of 7 years. The participating institutions comprise the five tier-one lenders, First Bank, Zenith Bank, Guaranty Trust Bank, United Bank for Africa and Access Bank, as well as First City Monument Bank

and Fidelity Bank, with Citibank as coordinator and Quantum Zenith as facility agent. According to the telecom firm, the loan facility is in line with the company’s plan to raise domestic debt, indicating that it will most likely use debt financing to enlarge operations, thus lowering the likelihood of retail investors in having a slice of the company’s shares in their portfolio. Giving his remarks, Ferdi Moolman, Chief Executive Officer, stated that the deal reflects MTN’s commitment to Nigeria, and the partnership between the wireless service provider and financial institutions would help deepen technological advancement in Nigeria. “This facility expands our existing successful domestic debt programme which we are using to fund increased

network capacity, and the expansion of both the voice and data services on our network to customers in new areas, with new next generation services.” He added that the agreement portrays the commitment of both parties to spur economic growth in Africa’s largest economy. Eight months ago, that the telecom firm secured a 7-year N200 syndicated facility from a consortium of 12 lenders comprising Fidelity Bank, Rand Merchant Bank, Standard Chartered Bank, FSDH Merchant Bank, Unity Bank, CitiBank, Union Bank and EcoBank among others, to widen presence in Nigeria’s rural communities and improve fibre infrastructure. MTN Nigeria was officially enlisted on the Lagos bourse last Thursday, with over 20 billion shares at N90, and helped the market end its

8-day losing streak. The shares rallied 20 percent to N108.90 after Friday’s trading, elevating its market value by N42 billion to N2.2 trillion. The company is the second most-capitalized company on the local

bourse after Dangote Cement (N3trn). MTN Nigeria Communication is part of the MTN Group, a multinational telecommunications group with presence in 22 countries across Africa, Europe and

Middle East. The telecom firm offers wireless telecommunication services such as roaming, internet device financing, data management, SIM registration and other related services.

L-R: George Khoury, business development manager, International Lottery and Gaming Limited; Mike Ogor, marketing director; Angela Duru, team lead, customer service, and Manolis Lambrakis, managing director, International Lottery and Gaming Limited, at the launch of Bettabet.ng, a gaming platform in Lagos.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

Tuesday 21 May 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

ENERGY

Sahara Energy, Brooge Petroleum to build up 250,000 bpd refinery in Fujairah IHEANYI NWACHUKWU

ahara Energy Resources DMCC Dubai and Brooge Petroleum and Gas Investment Co (BPGIC) and have signed a partnership agreement to set up an oil refinery capable of producing bunker fuel with a capacity of up to 250,000 barrel per day (bpd) in the Emirate of Fujairah. Sahara Energy and BPGIC said the facility will be one of the first of its kind in the Middle East and North Africa to comply with the new regulations of the International Maritime Organisation (IMO) 2020 by capping sulfur content in shipping fuels. The first phase of the planned refinery is expected to be completed by Q1 2020. Mohammed Sanusi Barkindo, Secretary General of OPEC, attended the signing ceremony in Abu Dhabi and said the deal

“evolved through the drive of the UAE’s leadership in promoting and supporting such private initiatives and expediting the diversification of their economies.” He underlined the “unique role of the private sector as a critical engine for economic vision and strategies.” Commenting on the signing, Nicolaas Paardenkooper, BPGIC CEO, said, “The new facility will contribute to bolstering the growing status of the Emirate of Fujairah in the Oil & Gas industry and help meet the growing demand for shipping fuel that complies with the new international laws on capping sulfur content in shipping fuels, as most of current shipping fuel contains up to 3.5 percent sulphur.” New regulations of IMO will require ships to use fuels with sulphur content below 0.5 percent beginning in 2020. “It falls in line with the company’s expansion strategy

and its growing contribution to the development of the Oil & Gas industry in the UAE by injecting more investments into this essential sector,” he noted. Executive Director, Sahara Group, Wale Ajibade, said the Refinery Unit would from its location in Fujairah make Sahara Energy DMCC a major supplier of IMO 2020 compliant products in the UAE as well as in African, Asian and European Markets. “Sahara Energy DMCC is delighted to be part of this landmark leap into the future of clean energy. We are constantly seeking opportunities to expand our operations and develop the sector in line with global best practices. Bringing energy to life is the passion that drives us at Sahara and we are committed to ensuring that our energy is accessible, clean and ultimately reliable for promoting sustainable development globally,” he said.

L-R: Chiagozie Nwizu, president, Nigeria Association of Franchise Business Members; Funmi Iyayi, chief executive, Lagos Chamber of Commerce International Arbitration Center LACIAC; Asamah Kadiri, partner, Jackson Etti and Edu, and Omoware Akinropo, senior advisor, Trade Policy and Business Enabling Environment, Nigeria Competitive Project, at the awareness and education for businesses on alternative dispute resolution (ARD), workshop in Lagos. Pic by Olawale Amoo

BANKING

CIBN confers Tony Okpanachi, five others, fellow MICHAEL ANI

he Chartered Institute of Bankers of Nigeria (CIBN) has conferred a fellowship status on Tony Okpanachi, Managing Director of the Development Bank of Nigeria. Okpanachi was given this honorary fellowship awards alongside other five distinguished bankers in recognition of their contributions to the Banking Industry and the nation’s economy. The award was the first ever extraordinary Investiture of the Institute held outside the regular CIBN Investiture series. A seasoned banker of over 29 years’ experience, Okpanachi was appointed the pioneer

Managing Director/CEO of Development Bank of Nigeria Plc (DBN) in January 2017. Before his appointment as MD/CEO of DBN, he was the Deputy Managing Director of Ecobank Nigeria. Prior to that, he was the Managing Director, EcoBank Kenya and Cluster Managing Director for East Africa (comprising Kenya, Uganda, Tanzania, Burundi, Rwanda, South Sudan and Ethiopia). He was also at various times Managing Director of Ecobank Malawi and Regional Coordinator for Lagos and South West of Ecobank Nigeria. ‘I am delighted to be recognized by the professional association that I have been a member of close to three decades”, Okpanachi said while commenting on the recogni-

tion. “To me, this award is a call for more commitment to both the banking profession and the Nigerian economy at large.” The event was held at the Federal Palace Hotel, Victoria Island, Lagos on Thursday, May 16, 2019 and was graced by dignitaries such as the former Head of State, General Yakubu Gowon who was the Chairman of the occasion and the Founder and Chairman, Dangote Group of Companies, Alhaji Aluko Dangote who was the Special Guest of Honour. Other guests include management of banks and other financial institutions, regulatory Agencies, Captains of Industry, Diplomats, Government Functionaries and other stakeholders.

L-R: Kieran Godden, COO, THT; Toyin Deinde, head, sales and distribution, THT; Sakeenat Bakare, executive director, business development and support services, Stanbic IBTC Insurance Brokers; Nick Zaranyika, CEO, THT; Andrew Nevin, chief economist PwC; Lola Obilana, executive director, business development and services, Stanbic IBTC Asset Management Limited, and Gboyega Adebukunola, CFO, Africoat, at Total Health Trust (THT) Business Forum in Lagos recently

ICT

CWG sees growth opportunities in emergence of Tier 3, 4 financial institutions MODESTUS ANAESORONYE

WG, one of the largest system integrators, services and software development company in Sub -Sahara Africa, says the recent emergence of Tier 3 and 4 financial institutions provide a huge growth opportunity for service providers in the technology infrastructure space. “We see the drive from most organizations to use technology to drive business process optimization, promote better operational efficiency and to create platforms for new revenue streams, says Adewale Adeyipo, acting group managing director/CEO of CWG Plc. Adeyipo noted that all these have created a lot of opportunities for IT companies like CWG, having implemented and currently supporting, including customization support for over eleven commercials banks in Nigeria and West Africa. “We are talking about over

60 percent of all banking transactions in Nigeria. A company that controls over 30 percent of the ATM install base in Nigeria, delivering IT infrastructure managed services to the three largest telecommunication companies in Nigeria.” The CEO said the Company will continue to grow and improve its competency framework on services leveraging the existing customer base to scale-up to other sectors and verticals. “Today, we have over 200 resources supporting the major telecommunication companies in Nigeria and other operations in Africa. We have over 100 skilled resources (level 2- 4) in Nigeria responsible for support and customization on Finacle core, treasury, managed services, end-user, and specific audience targeted training, resource augmentation, data migration, and 3rd party integration, Adeyipo stated. He said from 2018, CWG has www.businessday.ng

focused on helping organizations to embrace change by moving away from large scale, inflexible project deployment to more agile systems that meet the demands of today’s fastmoving business environments. “We have created an ecosystem of partners and solution providers that would provide the required expertise for every IT deployments/ optimization exercise. With a renewed focus on business and technical architecture, we partnered with Gartner (a leading research and advisory company) in January 2019 for strategy alignment, people, process and best practices.” He said today, the Company is positioned to provide services on end-to-end governance frameworks, network, and IT systems, and develop digital transformation strategies that may include new cloud, operations/ DevOps, Security/ Risk management and Business efficiency solution

R-L: Rashidat Abiodun Adu, chairman, Iru, Victoria Island LCDA; Rashidat Omolola Esasen, chairman , Lagos Mainland Local Government; Oluremi Tinubu . senator representing Lagos Central Senatorial District, presenting the key of the Tricycle to Adejoke Adekunle , one of the beneficiaries, at the Youth Empowerment Skills Acquisition Scheme (YESAS), in Lagos Central Senatorial District, Ikoyi Lagos. Pic by Pius Okeosisi

L-R: Ibrahim Dankwabo, governor, Gombe State; Tony Okpanachi, MD/CEO, Development Bank of Nigeria/CIBN fellowship awardee, and Yakubu Gowon, chairman of the occasion at the CIBN extraordinary Fellowship Investiture in Lagos

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Tuesday 21 May 2019

BUSINESS DAY

Hiring right and what self-reflection has to do with it (2) STEP 4: FORMULATE A VALUE PROPOSITION FRAME YOUR PICTURE kay, so we know we might have demoralized you in the last article by forcing you to look at all the flaws in your company. Sorry o! It’s time to show you why that exercise was necessary. Though auditing your company may have revealed that there are things in your business that need improvement, it probably also illuminated some strengths in your business that would make it a worthwhile place for an employee to work at. We needed you to figure out those strengths, because, without them, successful hiring is almost impossible. To get something (employee), you have to give something (rewards). Well, for people to know that you have rewards to give, you have to tell them. To have something to tell them, you have to figure out what the rewards you will be giving are. Then, to tell them well, you have to figure out the best way to describe and explain your particular rewards. This is your Employee Value Proposition (EVP): how you present and differentiate yourself to prospective employees. An EVP is necessary because every prospective employee, no matter how noble their rationale for working in a particular field or position is, is asking one simple question: “What’s In It For Me?” (WIIFM) They need to know what you are promising to supply in

MisAN REWANE Misan Rewane is co-founder and CEO of WAVE, an organization focused on rewiring the education-to-employment system to create a level playing field for every African youth to access the skills and opportunity to become what they imagine.

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order to meet their demands. SOMETHING IN COMMON It works the same way in relationships. Imagine you are entering the dating world and ‘trying your luck’ with a few prospects. You want each of them to choose you as their partner. Now, after you present your best self for the first impression, you have to connect with this prospective partner in some tangible way. Your natural instinct is to figure out what the person values and try to find some common ground, abi? Then to demonstrate that you can participate in those things that they like, or provide those thing that they need. So, gentlemen, let’s say you’re chasing a slay queen (not to peddle in stereotypes, but abi you know the system). You might emphasize your money, because you perceive her interest in you to be largely financial. Let’s say you want to date an Electrical Engineering PhD. You might emphasize your academic interests because you think she values intellectual stimulation. Similarly, ladies, let’s say you are interested in a fun-loving “party boy”. You might emphasize your carefree side because you perceive the most important thing to him to be having a good time. Let’s say you have been introduced to an international businessman. You might emphasize your worldliness because you assume he wants someone who can have easy discussions with his well-travelled colleagues. Either way, in whatever situation, what you are doing is assessing

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the person’s motivations, so you can present yourself in a way that resonates with their desires. Not ‘packaging’ o, like lying or creating fake Instagram posts, but just by honestly proving to them that the things that motivate them are things you intend to deliver. EVERYBODY GET NEEDS Potential jobseekers are driven almost entirely by their motivations. It doesn’t give them all the power in the recruitment process, and it shouldn’t make you distrustful of them. Truth is, you are driven by motivations too: motivations to find someone who can fulfill the list of tasks you have decided need to be completed in order to drive your organisation forward. You see, the Employee Value Proposition is the mix of tangible rewards like money and intangible rewards like self-fulfillment, that people get in exchange for working for you. Most of the people in the job market are driven by one, or some, combination of these 13 motivators: 1. Financial gain: will the position provide them with the opportunity for financial rewards? 2. Intellectual challenge: will the position will give them mental stimulation and improve their skill set? 3. Autonomy: does the position offer freedom and independence within reasonable boundaries? 4. Lifestyle: will the position allow them time to pursue other priorities like time with family, leisure, etc. 5. Security: can they count on @Businessdayng

the job for things like a predictable salary, benefits, and future employment 6. Affiliation: will the position offer a setting with enjoyable colleagues they feel connected to? 7. Altruism: will they be in a position where they can feel like they are helping people? 8. Variety: will the job not be repetitive, will they have a mix of activities so they don’t get bored? 9. Positioning: will accepting the position offer them experience and access to people and opportunities that can position them well for their next career move? 10. Power and influence: does the position offer them the opportunity to be an influential decisionmaker? 11. Prestige: does the organisation/company/business command a great deal of prestige and will they be proud to tell people they work there? 12. Managing people: will they be in a position where they can direct others? 13. Recognition: will their individual accomplishments be recognized with praise from peers and superiors? You appeal to one or some of these motivators and attract top talent if you frame the job as a benefit. Regardless of the scarcity or abundance of your resources, you can have success in the recruitment process if you clearly show prospective employees what is in it for them if they join you on your journey.

Tuesday 21 May 2019

BUSINESS DAY

Overseas students choose UK business schools despite Brexit Resilience attributed to decline in value of pound after 2016 referendum

he percentage of overseas students making Br itain their first choice for business school has increased since the EU referendum, suggesting that fears about Brexit damaging the sector were overblown. The share of scores from the standardised MBA entrance exam sent to UK institutions also increased slightly since the poll, according to figures compiled by the Graduate Management Admission Council (GMAC), the exam’s administrator. The resilience of the British market is attributed to declines in the value of the pound after the vote to leave the EU, which has made tuition fees in Britain relatively cheap for international students, particularly for people who would otherwise apply to US business schools. Some 54 per cent of test takers surveyed by GMAC last December said Brexit had made no impact on the attractiveness of Britain as a place to study, up from 46 per cent in December 2016. Moreover, 71 per cent of UK business schools included in the study reported a year-on-year increase in applications. The British education system also continues to be well respected among overseas applicants, and Britain has maintained its reputation among MBA students as a great place to launch an international career. However, 51 per cent of nonBritish Europeans questioned in the GMAC survey said that Brexit had made them less likely to choose the UK as a study destination. Their main concern was that when Britain leaves the EU, it could restrict or complicate the student visa process and have a negative effect on the postgraduate job prospects of international

candidates. The business school market in Britain contrasts with that of the US. For the past five years most MBA providers have suffered declines in the number of applications, which fell by 6.6 per cent in 2018. Schools in Britain and the US have closed full-time MBA courses in the past year owing to falling demand. H o w e v e r, s o m e B r i t i s h schools have countered the decline by rebadging their part-time MBA courses as workplace training schemes, which can be funded through the government’s apprenticeship levy. Growth in MBA markets in Europe and Asia have so far offset US declines. Global business school applications fell just 0.02 per cent in 2018, according to GMAC’s research. “The level of interest we’re seeing from international candidates in UK business schools www.businessday.ng

is a major factor in the overall global stability,” said Sangeet Chowfla, GMAC president and chief executive. Recommended business book The remix: How to lead and

A music remix takes the best elements of an old classic and adds something that appeals to a younger generation. It is this sort of combination, writes Pollak, that allows a multigenerational team to work together

‘

The resilience of the British market is attributed to declines in the value of the pound after the vote to leave the EU, which has made tuition fees in Britain relatively cheap for international students, particularly for people who would otherwise apply to US business schools succeed in the multigenerational workplace, by Lindsey Pollak

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more effectively. Businesses face the task of appealing to baby boomers and millenni@Businessdayng

als, and all those in-between, which can be a complicated balancing act. To think about how an organisation can adapt its multigenerational workforce, Pollack suggests asking three key questions : What are we doing because “it’s always been done that way” that we need to stop because it no longer works? What are we doing because “it’s always been done that way” that we should continue and add to because it still works? What do we need to start doing in entirely new ways to succeed in the future? In addition she sets eight essential rules to “build multigenerational muscle” — whether you are a small team, a large global organisation or just yourself. These include putting a stop to generation shaming, assuming the best intentions and being more transparent. The one certainty is that no one will survive an ever-changing business landscape if they are inflexible.

Tuesday 21 May 2019

BUSINESS DAY

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Why Nigerian, African varsities must think research collaboration KELECHI EWUZIE

s Nigeria and indeed African universities strive to compete among their global peers, a called has gone out for them to seriously look in the direction of research collaboration. Vice President, Federal Republic of Nigeria, Yemi Osinbajo and John Dramani Mahama, former president of Ghana only recently advocated for strong research collaboration between African Universities as centers of excellence to unravel solution to regional challenges. They called for strategic focus on Science, Technology and innovation to help bridge the gap noticed in African countries, adding this can be the catalysts for the development of Africa. Osinbajo while delivering the 23rd convocation lecture of Lagos State University, (LASU) last week said that centres of excellence must be an apex of educational system and also build research collaboration. Speaking on the Topic, “Africa Centres of Excellence in African Universities: A Veritable Catalyst for Nation Building and Development”, Osinbajo said Nigerians need to work towards converting the country to the greatest Centre for innovation and creativity in the world. He expressed the Federal Government’s commitment to collaborate with University saying education is the most important force to global change. The Vice President further opined that through improvement in learning and quality education, Nigerians could be lifted from abject poverty. He emphasised the need for the nation to place more premium on girls education, adding that education is the most powerful force of global change and also to promote economic growth. On his part, John Dramani Mahama, former Ghanaian President in his address as the chairman of the convocation lecture urged African universities to move away from the colonial system of education and focus on science and technology. Mahama said universities must provide vi-

L-R:Yemi Osinbajo, vice president, Federal Republic of Nigeria; Akinwunmi Ambode, Governor of Lagos State and visitor to the University and John Dramani Mahama, former president of Ghana at the 23rd convocation ceremony, Lagos State University, Ojo, Lagos

sionary leadership, have academic autonomy saying Political institutions must avoid interference with the running of academic institutions. Speaking on how African universities can set the tone as African centres of excellence, Mahama, however said to achieve this they must be adequately funded. He stated that African universities must collaborate with each other saying they should have multiple campuses for different specialisations in different countries. Mahama further said African universities could help bridge the gap created in African countries by focusing on science, technology and innovation which could be the catalysts for the development of Africa. Osinbajo in his lecture stated that the UNESCO Global Education Monitoring Report and the Education Commission’s Learning Generation Report provides important evidence on the

Greensprings’ Oguntoye bags 2019 Inspirational Teacher of the Year Award KELECHI EWUZIE

anre Oguntoye, a Chemistry teacher at Greensprings School Lekki, for his truly innovative approach to teaching students has emerged worthy winner of the 2019 Inspirational Teacher of the Year Award (INSEA). Oguntoye for winning the coveted award received a cheque of ₦850,000. The journey to receiving this award started in February when he was nominated. After the screening of all nominated candidates and portfolio presentation of the successful candidates, he was declared winner by the panel of judges. In attendance at the annual Inspirational Educator Awards held at Landmark Event Center, Victoria Island, Lagos, were the thought leaders in the Nigerian private education sector. Expressing his gratitude for winning the award, Oguntoye said he is very happy that teachers are now getting recognised and appreciated for the good job they do. “For me, I see the award as a reward that will bring out more

work. The reward of hard work is more work, and I am determined to keep doing my best and keep helping my students to be more successful in their academics,” he said. Lai Koiki, executive director, Greensprings School, who was also in attendance at the award event said she was not surprised that Lanre Oguntoye won this award. According to her, “Like every other teacher in our school, he has always served as an inspiration to our students and helped them to achieve top academic performance, he truly deserves the award”. The Inspirational Educator Awards (INSEA) is organised by Meadow Hall Foundation (MHF) – the non-profit arm of Meadow Hall Group. The award is in two categories – The Inspirational School Leader of the Year category and the Inspirational Teacher of the Year category. To be a winner in the latter category, nominees must be truly innovative in teaching their students, and they must also be role models for their colleagues. Above all, the nominees’ innovative teaching practices must have translated to the academic success of their students.

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impact of education on individual’s earnings and economic growth According to him, “A recent study found that Education reduces poverty and 171 million people could be lifted out of extreme poverty if all children left school with basic reading skills. “That’s equivalent to a 12 percent drop in the world total”. “Absolute poverty could be reduced by 30 percent from learning improvements outlined by the Education Commission. That Education increases individual earnings Education increases earnings by roughly 10 percent per each additional year of schooling. “For each $1 invested in an additional year of schooling earnings increase by $5 in lowincome countries and $2.5 in lower-middle income countries. “That Education reduces economic inequalities if workers from poor and rich backgrounds

received the same education, disparity between the two in working poverty could decrease by 39 percent. “That Education promotes economic growth Educational attainment explains about half of the difference in growth rates between East Asia and Sub-Saharan Africa between 1965 and 2010. “In 2050, GDP per capita in low-income countries would be almost 70 percent lower than it would be if all children were learning. Increasing tertiary attainment by one year on average would increase sub-Saharan Africa’s long-term GDP by 16 percent”, he said. According to the Vice President, on the average, girls are smarter than boys and any nation that does not educate girls lock itself up. Osinbajo restated that government was committed to bring back children that were out of school, saying all hands must be on deck to redesigning Nigerian education curriculum.

Educationist advocates moral discipline in children to curb drug abuse, cultism REMI FEYISIPO

n educationist, Fola Akinayajo has advised parents to give their children and wards moral discipline which will serve as strong foundation to fight against the temptation of peer pressure that may lead to drug abuse or cultism Akinayajo, proprietor of Maddox International School, Aparadija in Ogun state observe teaching of morals by parents and guardians coupled with the effort of teachers at school will aid students become responsible citizens in the society. While blaming the moral decadence in the society on the failure of parents to properly bring up their children, leaving such responsibility solely to the teachers, the educationist opines that most parents expect school teachers to instil morals in their children According to him, “Charity begins at home, parents have a lot to do in the life of their children, they should be taught manners and how to respect their elders, as re-

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quired in our African culture, this is because parents are expected to be the best teachers, as everything starts under their supervision right from home. Akinayajo further warned Nigerian youths against indulging in anti-social vices such as cyber-crime, cultism and drugs, adding that engaging in such acts may destroy the beautiful future ahead of them. “Those who take drugs were prone to being lured into crime. Don’t make friends with drug addicts and cultists”. “Those who commit crimes are liable to punishment. Don’t indulge yourself in drug abuse because you could be lured into crime. Run away from those who take drugs”, he said. He said a drug addict would suffer from mental imbalance and would never be able to hold on to its own. The Maddox school proprietor however pointed out that rather than pursuing materialism and being indolent about their future, the youths should be hungry for knowledge and be occupied with profitable ventures that would help to be the best.

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Tuesday 21 May 2019

BUSINESS DAY

EDUCATION ‘Our IB diploma programme positions students for A-list varsities globally’ Stories by KELECHI EWUZIE

he Principal International Baccalaureate (IB) Diploma Programme of Greensprings School, Jennifer Sunkanmi-Qazzeem has reaffirmed that the programme is the surest way for students not only to secure admission into top universities and colleges around the world but also a guaranteed path to securing meaningful scholarships. Sunkanmi-Qazzeem while expressing satisfaction with the performance of students who gained admission into universities in USA, UK, Canada said “It is a common saying among our IB students that being accepted into universities and colleges is a given; the main goal is to be accepted into top universities and colleges with substantial scholarships”. According to her, “Therefore, the acceptance of these students into the A-list schools is a testament of what the programme can achieve adding that that the students were dedicated to their studies, so she is happy their efforts have paid off. Barney Wilson, deputy director of Education at Greensprings School, on his part asserted that “Without any doubt, Greensprings School grooms students to become extra-ready for college and university. Over the years, many of our alumni have proceeded to top tertiary institutions across the world and graduated with good grades.” “For this reason, I believe these newly accepted students will be able to face the

L-R: Patrick Udochi, Fareedah Kassim, and Odianosen Okojie, some of the IB Diploma students of Greensprings School accepted into foreign universities, colleges and also got scholarships.

academic challenges in the tertiary institutions and pass out in flying colours,” he said. In total, over one hundred universities have accepted the cohort of twenty-two students with an average acceptance rate of five universities per student. A total of $1.3million scholarships have been awarded to the students, too. Among the students that have benefited include; Fareedah Kassim, who received a scholarship worth $120,000 from Illinois

Institute of Technology; Odianosen Okojie received $100,000 from Colorado Boulder, and Patrick Udochi received a full tuition from Georgia State University. The top tertiary institutions in the United States of America (USA), United Kingdom (UK ) and Canada that the students got acceptance into include University of California Riverside; University of Toronto, University of Manchester, University of Waterloo, Georgia Institute of Technology, Kings College

London, University of Alberta, University of British Columbia, University of Warwick, University of Leeds, among others. The Greensprings IB Diploma programme is a two-year sixth-form programme designed to prepare secondary school students for life in tertiary institutions. The students admitted into the programme are expected to have a minimum of 5 credits in their O’ Levels (GCSEs, IGCSEs or WASSCE) including English and Mathematics.

Nigerian teachers jostle for N6.5m Maltina Teacher of the Year award

Dufil prima set to empower heroic IIDA children with scholarships

s part of its continuous effort to push its corporate investment in youths across the country to ensure a bright future for Nigeria, Dufil Prima Foods plc through The Indomie Independence Day Awards (IIDA) – is set to reward and empower deserving children this year. The award is geared towards the recognition of children who have against all odds, exhibited extraordinary acts of bravery and determination in the face of danger and societal challenges. Girish Sharma, chief operating officer, Dufil Prima Foods Plc, while speaking at a press conference to kick-start the 12th edition of search exercise for the next set of heroes, said the declaration heralds the commencement of the field search and call for entry for the prestigious award for deserving Nigerian children. Sharma said that the major objective of the award is to extol the exemplary accomplishments of children who have against all odds exhibited extraordinary acts of bravery, by identifying, recognizing and celebrating them publicly, adding that Indomie is ready to invest more in the initiative as it is also one of the ways to invest in the Nigerian child. According to him, “We strongly believe in this initiative. This is one of the ways we sow into the future of Nigeria because when you support the Nigerian child, you are invariably investing in the future of the country.” “Indomie Independence Day Award for Heroes of Nigeria has so far recorded huge successes in the last 11 editions producing a total of 39 winners whom were rewarded with scholarship prizes worth several millions of naira. This

ublic and Private secondary school teachers in Nigeria whose teaching dexterity is adjudged to be the best stand the chance to go home with 6.5 million naira prize money as Nigerian Breweries Plc. announce the opening of entries for the 2019 Maltina Teacher of the Year. Sade Morgan, corporate affairs director, Nigerian Breweries Plc will speaking at the flag off ceremony of the competition in Lagos said this year’s edition is the fifth edition of the programme, adding that this is one of the initiatives through which the Nigerian Breweries contributes to the development of education in Nigeria in line with its corporate philosophy of ‘Winning with Nigeria’. Morgan said that Maltina Teacher of the Year is an offshoot of the Nigerian BreweriesFelix Ohiwerei Education Trust fund. The trust fund, which was established by Nigerian Breweries in 1994 to facilitate its active contribution to the development of the education sector in Nigeria, is in line with the United Nations Sustainable Development Goal (SDG) No.4. She noted that the 2019 edition of the initiative is symbolic because not only is this the fifth edition, but also because the company has added a new twist to the project with the introduction of the consumer engagement online contest tagged ‘That one teacher’. Announcing the prizes for the 2019 Maltina Teacher of the Year, Morgan disclosed that the winner will receive a total cash prize of N6.5 million and capacity training abroad while a block of classrooms will be built at the school

where he or she teaches. She added that the first runner-up and the second runner-up for the competition will get a cash prize of N1m and N750, 000 cash prize respectively while state champion, will receive a cash reward of N500, 000 each. Lami Amodu, director, Basic & Secondary Education, Federal Ministry of Education, said that the Federal Government acknowledges the role of Nigerian Breweries Plc. in celebrating the impact and contributions of teachers through this initiative, noting that this would serve as an encouragement for them to aspire to greater height. On his part, the Secretary General, Nigeria Union of Teachers (NUT), Mike Ene commended Nigerian Breweries Plc for bringing teachers all across the country to limelight. He further pledged the support of the union and charged teachers nationwide to participate and ensure they enter for this commendable initiative. Anselm Izuagie, president, All Nigeria Confederation of Principals of Secondary Schools (ANCOPSS) in his remarks lauded management of Nigerian Breweries Plc for creating a platform that not only celebrates teachers but also provides reward for their efforts. Morgan further said that entries for the 2019 Maltina Teacher of the Year opens on Friday, May 16, 2019 and closes on July 12, 2019. According to her, interested teachers are advised to download application forms from the Maltina website or pick up a form at their States Ministry of Education, Nigerian Union of Teachers office nationwide.

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has impacted the lives of the awardees positively and we intend to scale further this edition.” Tope Ashiwaju, Group Public Relations & Events Manager, Dufil Prima Foods Plc said that the last 11 editions of the awards have been tremendous as they attracted commendations to the brand and the company by well-meaning individuals, captains of industries and corporate organizations. “We are therefore encouraged to intensify our efforts towards a better and more impactful event.” Commenting on the award categories, Ashiwaju revealed that the award is divided into three categories: Physical, Social and Intellectual bravery categories. According to him, “The physical bravery category will acknowledge kids who at great personal risk, saved lives or by their actions prevent extensive damage to property or others; social bravery category will celebrate kids who work against social evils such as child marriage, illiteracy and environmental concerns in a sustained manner; while the intellectual bravery category will recognize children with innate ability that have performed remarkably despite physical, mental, emotional or financial limitations.” “As a national event, the award is expected to draw participants from all the six geo-political zones in the country in October.” IIDA is a national award event which commends the exemplary accomplishments of children who have shown courage and determination in situations that ordinarily would bring fear. The award also encourages excellence, rewards merit and stirs in other children the act of bravery.

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Tuesday 21 May 2019

BUSINESS DAY

BDTECH

In association with

E-mail: jumoke.akiyode@businessdayonline.com

Microsoft taps talent, innovation opportunities in Africa …Invests $100million in development centres in Nigeria, Kenya Stories by Jumoke Akiyode Lawanson

aving recognised a sizeable talent pool, great deal of innovation and creativity in Africa’s teeming youth population, Microsoft has taken a bold step to invest $100 million in building an African Development Centre (ADC) in Lagos Nigeria and Nairobi Kenya, in order to create an opportunity for developers in the continent to get involved in developing at foundational level, technology for global consumption. With six other development centres in India, Europe and United States of America, the African Development Centre with two sites, is Microsoft’s seventh. According to the company; the best local software developers and engineers in the African region will be hired and trained to develop cutting edge technology solutions, working with Artificial Intelligence (AI), Internet of Things (IoT), developing robots, virtual reality and future technologies. Speaking at the launch of the ADC in Lagos on Friday 17 May, Michael Fortin, corporate vice president, Microsoft, said; “The ADC has been a dream and vision but today it’s a reality. One of the things that drew us to this region is the immense talent. We’ve been engaging with universi-

L-R: Stuart Symington, United States Ambassador to Nigeria; Akin Banuso, country manager, Microsoft Nigeria, Ghana & Cameroon; Alex Kipman, technical felow, AI & mixed reality, Microsoft; Babajide Sanwo-Olu, Lagos State Governor-elect and Phil Spencer, executive vice president, gaming, Microsoft, at the Microsoft Africa Development Center (ADC) Launch in Lagos on Friday May 17 2019.

ties and talking to our customers in the region and it has been very clear to us that there is a sizeable talent pool, a great deal of innovation and creativity in the region and we can be successful as a company by working closely with those engineers and we can be more successful in the continent of Africa by having a presence here and listening and learning intensely as opposed to being remote. So we look forward to the future in a big way.’ “We are going to hire 100 software engineers before the end of 2019. That is our first year goal and 500 by

the end of 3 years; a total of $100 million investment from Microsoft for the development centres,” he said. According to him, these engineers will be building with Microsoft, products that reach everyone of its customers across the globe. “We also expect that the local business communities here will be providing direct feedback to these engineers about how we can improve our products for the local region, and we will take that into account, not just on the products that they are working on, but also all across Microsoft, for all the products

and services that we provide,” Fortin added. To support the development of the required skills, Microsoft says it is also partnering with local universities to create a modern intelligent edge and cloud curriculum, unique to Africa. Graduates from top Nigerian engineering universities will have access to the ADC to build relevant and meaningful careers in data science, AI, mixed reality, application development and more. Kayode Alese, professor of Computer Science, Federal University of Technology, Akure (FUTA) says,

“For more than 20 years I have taught computer science to enthusiastic African students, but still Africa has been referred to as the last technology frontier. The fact Microsoft has taken the giant step of setting up its first development centre in Nigeria is a testament to the huge talent base that exists in our academic institutions. It is a great time to be a Nigerian.” “We have already started our work in Nigeria around our mixed reality offering and I am very much looking forward to the kind of innovation that will come from the ADC,” says Alex Kipman, technical fellow at Microsoft and the lead in establishing the first engineering team in Lagos. “I am looking to learn, understand, and work hard so that we can grow together organically.” Speaking to journalists at the launch, Kipman said; “My perspective is that innovation and disruption can come from anywhere. People don’t have to leave their families and cultures behind in Africa in order to get the opportunity to create leading edge technology that will define the future of computing.” Akin Banuso, Microsoft’s country manager for Nigeria, Ghana and Cameroon said; “The thing that really excites me about the ADC is the potential of our youth to actually participate in world class technology development. That our people will be involved in developing products that will be consumed globally is exciting for me.”

#AFFDisrupt2019: How technology disruptions are changing banking dynamics

vidently, the future of banking is now; as innovations such as artificial intelligence (AI), blockchain, machine learning and other technologically advanced tools are changing banking dynamics world over. A Futurist, Author, and Chief Executive Officer, Moven, United Kingdom, Brett King, he reiterated that technology is moving much faster than before, stressing that in such an environment of rapid change, “you either disrupt or get

disrupted.” King while speaking at the Africa Fintech Foundry (AFF2019) Disrupt Conference, organised by Access Bank, stated that is the world continuously advances at the rate of current technological advancement, there will be more robots than human beings in he next five to six years. In the financial services sector, the futurist hailed Nigeria for leapfrogging in technology adoption saying that Nigeria probably has more modern payment systems

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than the United States. However, he warned that, “disruption is central to the survivability of the banks and other sectors,” stressing that “with technology like machine learning, artificial intelligence opening more bank branches will become unfashionable” “We are in era where cars have more information than the human driver; this is the big disruption”. “AI in the future will be able to notify you of an intending scam and who wants to scam you. Disruptions are no respecter of per-

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sons or industries. For instance, China is 10 years ahead of the USA. With AI technology the Chinese government can recognize its 1.4billion population with CCTV cameras.” Giving his opening speech on the future of intelligent banking; Herbert Wigwe, MD/CEO of Access Bank, stressed on how technology is demystifying services and products. He said that this is more about data and its transferability, noting that being an intelligent bank is no

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longer an option, but a necessity. “There was a time when payments could only be made through Cheques. Now, through technology, transactions worth billions can be made in seconds. That is how much the world has changed.” “This is more about data and its transferability. The payment system like all other system is benefiting from it. There has been a massive improvement in collection, processing and transferability of data. That is the improvement worth celebrating,” Wigwe said.

Tuesday 21 May 2019

BUSINESS DAY

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

Economic benefits abound in creating forecourt of the future using technology Stories by JUMOKE AKIYODE-LAWANSON

he petroleum retail industry has evolved over the past three decades - in terms of structure, layout, ownership and technologies. Globally, the industry is already driven by technology, the use of selfservice alternatives, feedback systems and many other innovations. Players in this industry that have taken this change and incorporated technology into their business model are at the forefront of some of the world’s biggest growth opportunities. In Nigeria, the sector is evolving – and rapidly showing steady growth in the incorporation of innovative technology to advance the streamlining of products and services. At the moment, the traditional forecourt model is ripe for disruption as petroleum retailers are well placed to leverage digital disruption to develop and enhance their offerings. There is a need for processes to be made more streamlined through the integration of new processes and systems. From mechanical DU, tank gauges, to electronic and integrated point of sale (POS) and back office system (BOS) – it has increasingly become important for stakeholders to optimize their site formats and operations in order to deliver differentiated offerings and customer experience. Within the next five to

ten years, we will see the best-in-class petroleum retailers seize new opportunities by enabling futureready adaptive forecourts to achieve seamless customer experience. Moving past merely servicing vehicles, service stations will have the opportunity to cater for multiple customers and vehicle needs beyond energy. Stakeholders in the industry will develop roadmaps to make their services more attractive, from the use of technology to drive operations, to the development of clean energy zones and relaxation centers. The frontiers available in fuel retail are endless so long as the stakeholders can embrace the possibilities. One company leading

the charge for a technology driven retail industry is ENYO Retail and Supply. The innovative fuel retail brand has already designed and deployed a number of technology driven initiatives for the oil and gas industry including the introduction of Diesel2Door; a streamlined digitally driven convenient way to order and pay for quality diesel at competitive rates to consumer doorstep in less than 48hours. The brand also drives the development of human capacity for mechanics across the country – training mechanics with the skills needed to correctly diagnose and repair the most technologically advanced automobiles

through “MechTech” – one of the company’s flagship initiative. Technology continues to drive the development of industries globally, revamping economies, presenting opportunities, creating alternative payment infrastructure and revolutionizing lives. According to the global statistics and behavioral science index, there is already growing evidence that children learn important science, technology, engineering, and math (STEM) skills from everyday play and early learning activities. By building forts, solving puzzles or stacking blocks - children develop the technicalities of data collection, strategy devel-

opment and problem solving, from even the minutest activities. These activities, when facilitated well, aren’t only laying a foundation for future STEM learning; they’re allowing kids to actually be technology incubators, scientists and innovation builders. It is thereby important for children to learn about technology from a young age. STEM needs to be where the children are - in school, after-school; during holidays, and in local communities. STEM has to be introduced at a young age when the children are still the most curious. Children need STEM mentors and role models to look up to. They need more education about STEM degrees

Babatunde Omotoba, ntel’s new CEO and Damian Udeh, general manager corporate affairs, ntel, during a courtesy visit to Sunday Dare, executive commissioner – stakeholder management, Nigerian Communications Commission (NCC) recently.

and related jobs so they can look forward to bright futures in technology and innovation development. Taking up the challenge to help up-skill children and promote human capacity development across several age categories in Nigeria, ENYO and the Co Creation Hub, Nigeria’s first open living lab and preincubation company partnered to launch the “STEM cafe” at all ENYO service stations across the nation. The STEM cafe is a learning center designed to introduce children between the ages 5-18 to Science, Technology, Engineering and Mathematics in a fun and engaging way - by providing a conducive learning environment for parents who require a drop-off centre for their children after school hours. The STEM Café is centered around a learning package focusing on STEM education with the aim of empowering young people with skills to set them up for success. Delivered via flexible payment packages, the STEM café provides various learning resources such as coding challenges, digital labs, computer games and robotic kits to educate participants on various STEM concepts. Enyo Retail and Supply continues to set the technology trend in the oil and gas industry with the launch of the STEM Cafe - incorporating innovative technology and cutting edge initiatives as a truly modern company well interested in the well-being and future of their community.

Seamfix promotes effective digital data collection for economic development

eamfix, provider of identity management solutions is advocating for improved digital data gathering and analysis to help improve planning and in turn boost Nigeria’s economy. The company which developed BioRgistra, the software solution that helps capture biometric data, recently organised a program in collaboration with ACT Foundation, a non-profit organisation that supports local, national and regional

non-profit organisations working to address challenges across Africa. The event was organised to raise awareness on the importance of digital data collection and analysis for identity management and for business and economic development. Speaking at the event held at the Landmark Towers in Lagos recently, Chibuzor Onwurah, executive director, Seamfix, said; how can we plan and improve our economy if www.businessday.ng

we don’t have data? Numbers don’t lie, so the more we can gather numbers and analyse it for progress through data driven solutions, the better for us as a nation.” According to him; Beyond identity, Nigeria has a lot of data that flow around in manual forms that need to be digitized. “Our focus is to provide the necessary tools that will enable organisations find it easy to digitize useful data. Our technology

solution, BioRegistra is what is used in Nigeria today to carry out SIM card registration for telecommunications operators, it is used to capture biometrics for drivers’ licence and our solution has been adopted by the University of Nigeria Nsukka (UNN) for their online portal for transcript application. We have decided to engage more sectors, like the nongovernment organisations (NGOs) to let them know how they can do more with

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BioRegistra,” Onwurah said. Sighting Nigeria’s unique problems of low internet penetration, mobility, Seamfix says its solutions are environment friendly, as its solutions are offline enabled, and can work on mobile phones to capture data on the move. Chimezie Emeluwu, managing director, Seamfix says that as a KYC company, Seamfix has built an e-KYC platform that will @Businessdayng

allow both the capture and verification of information. “Data rights and data protection is very important. Our platform is very GDPR compliant to ensure that the rights of everybody is protected,” Onwurah said. With over 100 staff across Nigeria, Seamfix isa technologically advanced, 100 percent indigenous solution provider with focus on biometrics, data science, digitisation and automation.

Tuesday 21 May 2019

BUSINESS DAY

INSIGHT Economic Recovery and Growth Plan: What has Nigeria achieved?

n economic plan can be defined as a scheme designed to achieve economic objectives within a specified period of time. Nigeria has witnessed several economic development plans including Operation Feed the Nation, Seven Point Agenda, Transformation Agenda amongst others. The most recent economic framework launched by the Federal government is its threeyear Economic Recovery  and Growth Plan (ERGP). The objective of the blueprint which was launched in 2017 is to guide Nigeria’s exit from recession in the short term as well set out a plan for sustained growth and development in the medium to long term. The federal government identified the need to achieve transformational growth by improving both public and private sector efficiency. The plan outlined three broad objectives and strategies to achieve its targets: Restoring growth: At the core of the ERGP framework is the federal government’s plan to achieve macroeconomic stability and economic diversification. The average real gross domestic product (GDP) forecast for the three-year period (20172020) was estimated at 4.62%. By 2020, the goal was to achieve a transformational growth rate of 7% driven by fiscal stimulus and increased growth in nonoil sectors such as agriculture, manufacturing and services. Alignment of monetary, fiscal and trade policies, privatization of selected public enterprises/ assets and fiscal consolidation through cost cutting measures such as rationalization of overheads and recurrent expenditure were some of the strategies set out by the federal government to achieve its growth target. Investing in the Nigerian people: The federal government realized that economic growth is only beneficial if it creates opportunities for the vulnerable within the society. It is for this reason the ERGP identified job creation, the empowerment of Nigerian youth and the improvement of human capital as critical milestones of the plan. 3. Building a globally competitive economy: To effectively boost Nigeria’s economic growth, the ERGP aimed to tackle challenges of the business environment and improve the competitiveness of Nigerian businesses. To achieve this the federal government planned to invest in infrastructure, improve the business environment and promote technology-driven

growth. To achieve these objectives, the ERGP was built on the efforts of previous plans including the Sustainable Development Goals, the National Industrial Revolution Plan, and the Nigeria Integrated Infrastructure Master Plan among others. However, the framework differs

only 0.82% in 2017 and 1.9% in 2018. The inability to meet the targets in the first two years of the framework threatens the federal government’s ability to meet its growth targets of 4.5% in 2019 and 7% in 2020. Output constraints, such as herdsmen conflicts, flooding, and high in-

unemployment increased from 26.58% in 2017 to 29.72% in 2018. In addition, two years after the inception of the framework, Nigeria has overtaken India as the poorest country in the world with 87 million citizens living below the poverty line of $1.90 per day.

Table 1: ERGP’s 2020 Projections

4Ministry of Budget & National Planning. 2017. “Economic Recovery & Growth Plan (2017-2020),” Federal Republic of Nigeria. https://yourbudgit.com/wp-content/uploads/2017/03/Economic-Recovery-Growth-Plan-2017-2020.pdf 5OPEC, NBS, DMO, EIU from other plans in its intended synergy between the private and public sectors. The execution strategy was built on a collaborative effort between the government and enterprises in various sectors including agriculture, power, manufacturing and services sectors. Less than one year to go: What has Nigeria achieved? The 2020 deadline for the ERGP framework is less than 12 months away. It is imperative to do an assessment of the framework. Which of the objectives have been successfully implemented? Which targets have not been met and what can be done to achieve them? From the table above, we see that the government is yet to achieve some of its set objectives in the ERGP. For instance the transformational growth rate and a single digit inflation rate objectives are yet to materialize. However, the successful launch of certain programmes and initiatives such as the Anchor Borrowers Programme and the Presidential Enabling Business Environment Council is worthy of commendations. Further analysis shows the following. Firstly, the objective to restore growth does not appear to have materialized. According to the ERGP blueprint, economic growth in 2017 and 2018 should have been 2.19% and 4.80% respectively. However, in reality Nigeria’s economy grew

terest rates, have stunted growth at a sub-optimal level of 1.9%, below the population growth rate of 2.6%. The achievements of ERGP’s second objective of investing in the Nigerian people through strategies such as social inclusion, job creation and youth empowerment has been mixed. Social intervention programs, such as Trader Moni and N-Power, have been launched in a bid to empower Nigerian youth and alleviate poverty. However, unemployment increased from 20.4% in 2017 to 23.1% in 2018. Youth

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The aim of the government, through this initiative, is to elevate the economy to top 100 in the World Bank’s Doing Business Report by 2020

Thirdly, the objective of building a globally competitive economy has achieved some fair progress within the first two years of the plan. While Nigeria’s ease of doing business rank dropped one place from 145 in 2017 to 146 in 2018, the launch of the Presidential Enabling Business Environment Council (PEBEC) has impacted positively on the Nigerian business environment. PEBEC has successfully launched business initiatives, such as starting a business, registering property, getting electricity, getting credit and paying taxes. The aim of the government, through this initiative, is to elevate the economy to top 100 in the World Bank’s Doing Business Report by 2020. Nigeria is currently 46 places away from this target. The way forward- the 2020 deadline looms With less than one year to go, the targets set in the ERGP are looking more and more unachievable by the day. It has become highly unlikely that a 7% growth rate (from 1.9% in 2018) will be achieved. Nor does a single-digit inflation rate (from its current level of 11.37%) nor an unemployment rate of 11.23% (from 23.1%) seem likely in less than 12 months. Even if the right tools and policies are deployed, the time frame is unrealistic. We suggest a review of the time frame for achieving the set targets of the ERGP. An extension of the framework would allow

the federal government more time to execute and implement the right policy tools to meeting its objectives. A medium to long-term period (e.g. 5-10 years) would also encourage policy continuation of administrations. Policies established by a ruling administration are often known to be discontinued by the next administration. An extension of the period and policy continuation should be complemented by tough gamechanging decisions by the government to achieve transformational growth in the near to long term. One such choice is to provide incentives for both domestic and international investment to achieve a growth rate of 7% or higher. Currently, Nigeria’s gross fixed investment accounts for only 14% ($66.3 billion) of GDP. Increased investment would have a multiplier effect on consumption and aggregate demand. A second way to achieve the set targets of the ERGP is through increased state cooperation. States across the Fed- eration can emulate the example set by the federal government by formulating laid out objectives and strategies to achieve improved growth and development. For instance, Kaduna state has launched its Infrastructure Master Plan, which is expected to run between 20182050. The 32-year framework is aimed at restoring the state to its former glory as the business and industrial hub of the nation through infrastructure development. If all states work towards the common goal of accelerated growth, the targets of the ERGP could be achieved within the new time frame. The federal government should also consider setting up a monitoring and evaluation committee for the ERGP initiative. The function of the committee would be to perform regular and thorough observations of the targets and the progress of each stakeholder in achieving said objectives and to report the results. Conclusion While the ERGP objectives appear challenging, if deliberately implemented and measured, the benefits to the economy will be substantial. For a long-term impact on the Nigerian economy, the efforts and policies to achieving the set objectives in the framework must outlive the Buhari administration. Commitment by both federal and state governments is also necessary to achieving a transformational growth rate. Prepared by analysts at Financial Derivatives Company.

Tuesday 21 May 2019

BUSINESS DAY

INTERVIEW ‘No pipeline ever built in Nigeria measured up to size or capacity of OB3’ EMEKA OKWUOSA is the Managing Director of Oilserv. In this interview with FRANK UZUEGBUNAM on the sideline of the 2019 Offshore Technology Conference (OTC) in Houston, US, Okwuosa talks about his company’s gamechanging role in Obiafu-Obrikom-Oben (OB3) pipeline project, Ajaokuta-Abuja-Kaduna-Kano (AKK) gas pipeline, indigenous companies’ participation in deep-water amongst other issues. Excerpts: Can you give an overview of Nigeria’s oil and gas industry? igeria’s oil and gas industry has come a long way and it has continued to be relevant. It has also continued to drive the economy of Nigeria, but not quite as much as we expected in terms of integration into the Nigerian economy as far as GDP contribution to the economy is concerned. There are many structured manners that can be put in place to achieve that. What is important is that available opportunities in services, whether it is in deep offshore or land or swamps, less than 20 per cent of that is touched today in terms of value. The opportunities are huge. OB3 pipeline project is a game changer and Oilserv is playing a key role in its delivery. How soon are we getting to the project delivery? Let’s put OB3 in proper perspective - no pipeline has been built in Nigeria of that size or capacity. You may recollect that in the 1970s, 80s, and 90s, we had the likes of Wilbros and others but there was no Nigerian player in the pipeline industry. Look at our all pipeline infrastructure today, nowhere has 48-inch pipeline been built. It is not only the pipeline, we have the gas treatment plant (GTP) at Oben which is part of our scope. This is a GTP that is handling two billion standard cubic feet of gas per day (2bscuf/d). This has never existed anywhere in Africa. When we talk about OB3, it is not just about building a pipeline. There are two lots in our own section. We are building LOT-B that will take the gas from mid-point all the way to Oben plant plus the Oben plant itself. We finished our pipeline three years ago, but the treatment plant took a longer time because the location was changed from Oben North to the GTP location and it took us two years to go through re-engineering it and getting the approval. But the story is clear the pipeline and the GTP are going through pre-commissioning now on our own section. By September, our own lot would have been done, and I can only speak for Oilserv. With the completion of your own lot, will it be operational without the other party completing its own section? To some extent, no. But it depends on how the owner of the pipeline wants to use it. The technicality is that we have a pipeline going to GTP Oben but we have a 36-inch line we built from Oben GTP to ELPS which is Oben Norh that is by-directional pipeline, which means you can take gas from the GTP in Oben into ELPS or take from ELPS into GTP. The answer is ‘Yes’ and ‘No”. Yes, you can take gas from ELPS into Oben into Ajaokuta when we commission it. But the other section cannot be completed except LotA finishes to be able to evacuate gas all the way from Obiafor into Oben. What would you consider as some of the inhibiting factors to the movement of indigenous companies into deepwater terrain? We are already operating in that terrain

Emeka Okwuosa

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Why is there no such collaboration at the moment? It is the Nigerian factor. Everyone wants to do things in his own way and it is not the way to go. If you go to houses with 20 flats, instead of providing one source of energy and everyone connects to it, you will see everybody with his own generator. It is a Nigerian factor. It is about understanding that the way to create value requires working together and not as an individual and we are going to get there.

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Nigerians are in drilling, pipelines, flow-risers. We are doing a lot but it is very competitive and capital intensive and we have to slowly build it up as soon as we can because we have proven capacity but we need to do more because there is so much out there

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in reality. When you say deepwater operation, you look at it from two different points of views. Are you looking at exploration and production (E&P) which is ownership or are you looking at services? I will talk from services point of view. Nigerians have been participating in services in Bonga, Akpo, Usan. All these projects had Nigerians’ input. There are two key issues with participation in deep-water arena. It is about technology and capital. Both will take time normally to scale up. Nigerians are participating but we are only scratching the surface. There is still more opportunity for participation. Now, how do we increase that? We need to assemble capacity and integrate that capacity by working together in order to have synergy and be able to deal with bigger scope. But we are in the integration of FPSO (Floating, Production, Storage and Offloading) which is the issue of topsides. Nigerians are in drilling, pipelines, flowrisers. We are doing a lot but it is very competitive and capital intensive and we have to slowly build it up as soon as we can because we have proven capacity but we need to do more because there is so much out there. So, how then do we ensure collaboration among the indigenous players? We have been adding value but not at the level we desire. The way we can achieve more is by collaborating and synergizing between entities like PETAN and all PETAN members so that we handle bigger scope and compete with international service providers.

How much of technology are you incorporating in your operations? Many years ago, you could not find any Nigerian company doing horizontal directional drilling. You would have had to go abroad for people to come and do it. We have deployed that. We have been able to cross rivers with 48-inch pipeline which would mean drilling and opening the line to 64-inches which is a major challenge because it collapses a lot. We are encouraging technology a lot. There have been talks about roles of robots in deep-water operation. Do you think that is possible in Nigeria? Anything is possible but what we should be asking ourselves is, how do we put that side by side with the Nigerian initiative and benefits? If you take robotics totally the way you have seen it by displacing human capital, what happens to our economy? I won’t say it is not in our own interest to deploy that, and I won’t say you can stop that. You cannot stop a moving train. You would have to realise that overtime, that may become the norm but what can you do? You start to train people because somebody has to manage that process. You will create a different skill set to drive that but you cannot completely take out the human interface. At what stage is the AKK project? The Ajaokuta-Abuja-Kaduna-Kano (AKK) Gas Pipeline is a very unique project, not only because of what it would achieve, which is to be able to move gas to northern part of Nigeria and create availability of energy to drive industries and create job opportunities. Remember, northern Nigeria does not have energy; unemployment continues, security problem continues and eventually, everybody will suffer. AKK is significant because it is the first time a project of that magnitude is being done as EPC and finance. It is not like other previous projects where NNPC and other IOCs award you a project and pay for it and you go ahead and execute and collect your money. In the case of AKK, we are providing the money. This is not a kind of money you raise in Nigeria; the total value of the project for the two lots comes to $2.8billion. You have to go and raise that capital outside and for you to raise it, you need security. That security instrument is a process and part of it requires the federal government coming in. For instance, if you are backing up the financing with the tariff you will rise from that pipeline, do not forget that most of that tariff for example will be in naira. A financier who is overseas does not know what you are talking about in naira. So you have to provide an instrument of convertibility and that has to come from the CBN guarantee which entails that every collection in naira will be immediately converted to dollars. That is a typical instrument and these things take time to get through the government agencies. So, we are going through that process and we are almost there. We have almost finalised the security and we have also started with the engineering. As we speak, the AKK has started, that is the point I am making.

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Tuesday 21 May 2019

BUSINESS DAY

FEATURE

A Jinx Broken: Emefiele proved his mettle

hen the news broke on Thursday 9th May, 2019 that President Muhammadu Buhari had renominated Mr. Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN) for a fresh term of five years, both local and international financial space breathed a sigh of relief. The news unexpectedly came when speculations were rife in some section of the media that the President had looked elsewhere for the job. For the health of the economy, it was good news, but to the financial speculators and text book economists who had been angling for a change, was a bad news. I published an article in March 2019 asking ‘Would President Buhari Break The Jinx On Emefiele’? The media at the time was awashed with the news that the President had ordered Godwin Emefiele to turn his disengagement letter. The news unsettled the financial world and while the international community held its breath, relief came when the Federal Government debunked the fake news. The sponsors of the fake news displayed crass ignorance in bureaucratic procedure. Ordinarily, for a tenured appointment as the CBN governor, it is a constitutional demand that when your tenure is drawing to a close you turn in your letter, and if the authority is pleased with your performance, you may be lucky to get a return appointment. This probably was the case with Godwin Emefiele. In that article I adduced reasons why Emefiele should be reconsidered for another term and when considering the hallmark of responsibility of a central bank governor, Emefiele has performed well. Though he started on a rocky note when he assumed office as the economy was practically on its knees coupled with the uncertainties of the then upcoming 2015 general elections. The global collapse of commodity prices in 2014/2016 and crash in crude oil prices as low as $27/pb did not help matters. Locally and internationally, currency speculators were on rampage attacking the economy, he was unperturbed but focused on his mission. His steeled nature may have endeared him to the President. Though Emefiele may not be an economist as his detractors eyeing his post would say, his seeming ‘crude’ and determined stance when he yanked off 41 items from the official forex window which was severely criticized eventually helped to bridge the gap in importation and increased local production of the items. The suspended items have been increased to 43 with a promise to suspend more if the need arises in the future. He achieved this by retooling some of the Bank’s intervention windows like the Agriculture Credit Guarantee Scheme (ACGS), the N220billion Micro, Small and Medium Enterprises Development

Fund (MSMEDF), Small and Medium Enterprises Credit Guarantee Scheme (SMESCGS). He opened the Investors and Exporters’ Window and Real Sector Support Facility (PSSF) to make forex available for their critical needs. The master stroke intervention policy, the Anchor Borrowers’ Programme (ABP), which is in sync with the current regime’s economic diversification programme has not only boosted rice production in Nigeria, but has created jobs and have about 925, 000 rice farmers benefitting from the initiative as at December 2018 and ultimately crashed importation of foreign rice into the country. His policies as he promised on assumption of office was to run a people- focused central bank aimed at breathing life into the economy and make it strong to arrest the hydra-headed high unemployment rate and widespread poverty. He intervened with N213billion in power sector, the Nigeria Electricity Market Stabilization Facility for the purpose of settling outstanding debts in the Nigeria Electricity Supply Industry (NESI), for power to be available to drive the industrial sector. That Emefiele gave his all to the job, his commitment and undiluted loyalty, to the present regime despite the fact that he was not appointed by President Buhari was sterling and policies he initiated have endeared him to the President. His wide campaign on financial inclusion was to increase access to financial services to the rural but economically active poor denied access or the un-served segment to reduce poverty scourge. The perennial www.businessday.ng

bane of MSMEs in the country is access to credit and reluctance of deposit money banks to extend credits to them. Previous programmes aimed at providing finances to these poor economic agents had been fraught with glitches, but with his determination and unwavering efforts he was able to rally the Bankers’ Committee, the umbrella body of commercial banks’ chief executives, NIRSAL and Nigeria Postal Services (NIPOST) to float a National Microfinance Bank to provide cheap and sustainable credit to MSMEs at a single digit of 5 percent interest rate. Achievements of the CBN governor are visible, thus, the decision of the President to give him another term was not misplaced. And for the President not to have yielded to pressures to appoint another person was an appreciation of Emefiele’s performance. More so that, no CBN governor since the dawn of current democratic regime in the country has had the privilege of a second term. The President broke the jinx with Emefiele with re-appointment. This is an applause for his reformatory monetary policy and zeal that has reinforced investors’ confidence in the economy. It will no doubt further encourage more foreign direct investment (FDI) into the country. With his team at the CBN, he was able to bring stability to the foreign exchange market in the last three years, even when some highly placed people in government and the Bretton Woods Institutions called for the devaluation of the Naira at the height of the economic recession, Emefiele stood his ground, and nobody gave him a chance if he was

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sure of what he was doing. He gave a time lime when he expects the economy to exit recession and only sought the support of every Nigerian. He was right and precise. Unbothered that his tenure was running out he rallied round managers of deposit money banks on a mission to return the economy to its glorious days by supporting Micro, Small and Medium Enterprises (MSME) whose bane had been access to sustainable credit to set aside 5 percent of their annual profit to fund MSMEs under Agric-business Small and Medium Enterprises Investment Scheme (AGSMIES), and ultimately support the federal government’s efforts at promoting agriculture and other non-oil products. Though divergent views have greeted his re-nomination, some applauding the President for the privilege and others gave hard knocks, but if truth must be told Godwin Emefiele has proved his mettle given the prevailing circumstances. The President should also be commended for re-nominating Emefiele, being his first appointment after his re-election. Therefore, Emefiele’s reappointment is a call to duty and to do more. The President should not see his action as politically expedient but one for macroeconomic growth and stability. President Buhari should therefore complement this gesture when constituting his next cabinet with people who will work in synergy with the monetary authority to drive his vision, grow the economy and better the lives of Nigerians which is purely a fiscal challenge. Oyetunji Ademola writes from Ibadan.

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Tuesday 21 May 2019

BUSINESS DAY

Investments

ENERGY INTELLIGENCE OIL

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POWER

LNG spot market eludes Nigeria as Chinese buyers ask for more STEPHEN ONYEKWELU

he U.S.-China trade war is forcing Chinese liquefied natural gas buyers to rush for new suppliers but Nigeria may not benefit because it lacks ability to play in the LNG spot market as the country holds long term contracts. China had responded to the United States of America by announcing May 13 that it will raise the duty on imports of U.S. LNG to 25 percent from the previous level of 10 percent in retaliation to the U.S. increasing its tariffs on $200-billion worth of Chinese goods. This is making LNG buyers in China gasp for new sources of supply and suppliers. “U.S. LNG export to China is already seriously affected by the 10 percent tariffs in effect from last year, and we expect it to continue to be so as long as the tariff is imposed”, Per Magnus Nysveen, Rystad Energy head of analysis said. Rystad Energy forecasts show that Chinese LNG demand will reach 95 metric tonnes per annum (mtpa) in 2025, up from 53 mtpa in 2018. This would make China the world’s largest LNG importer. The U.S., on the other hand, is the fastestgrowing LNG exporter thanks to strong Asian and Chinese demand. U.S. export volumes are expected to

nearly quadruple over the coming years, reaching 84 metric tonnes per annum (mtpa) by 2025 based on currently sanctioned projects. But Nigeria has little spare capacity to play in the LNG spot market and cannot take advantage of the window opened up by the U.S.-China trade war. Most of Nigeria’s LNG cargoes are on long-term contracts of up to 20 years in some cases. “Except Chinese LNG buyers get in on Train 7, which awaits final investment decision later this year,

there is no chance that Nigeria’s LNG cargo will find its way to China. LNG projects are usually fully booked before they take off. Nigeria has very little spare capacity for the spot market”, said Victor Eromosele, former chief financial officer at Nigeria LNG Ltd. Increased China tariffs will create additional headwinds for U.S. LNG projects that are currently awaiting final investment decisions (FIDs). If LNG prices continue to linger around their current low

level for an extended period of time, some of the more expensive LNG projects could struggle to offer competitive terms to buyers—and this could result in FID deferrals. Most of these projects need to secure long-term contracts in order to get financing for their development. China is expected to be one of the biggest contributors in sponsoring new LNG projects over the coming years, and there will be reluctance to sign new deals with US projects as long as this trade

war persists. Texas-based Cheniere Energy and China Petroleum and Chemical Corp (Sinopec) agreed late last year on a 20-year deal that would supply 2 mtpa of LNG to China starting in 2023. This deal could have been signed once the trade tensions were resolved, but due to the heightened tensions, this has not happened. Sinopec, a late comer to China’s LNG scene compared to domestic rivals China National Offshore Oil Corp (CNOOC) and PetroChina, has said it wants to more-than double its receiving capacity over the next six years to around 41 million tonnes annually, by building three new terminals along China’s east coast and expanding existing facilities. China’s growing energy thirst, particularly Beinjing’s drive to replace dirtier coal with LNG as source of fuel poses problems not only in the mid-term but in the long-term. China’s growing hydrocarbon demand, including its insatiable natural gas and LNG demand will see more Chinese funds transferred to oil and gas players, a predicament the U.S. found itself in after 1970 when oil production in the country peaked, then started heading south, just as consumption was gathering steam from an unprecedented amount of drivers and automobiles on the road.

Even with rehabilitation, refineries lose N133.9bn in 13 months DIPO OLADEHINDE

s uncertainty continues to surround their proposed rehabilitation, the Nigeria’s refineries have extended their losses, recording an operating deficit of N133.9 billion from January 2018 to January 2019. According to data compiled from Nigeria National Petroleum Commission (NNPC) within a thirteen month period, the three refineries incurred a combine operating deficit of N133.9 billion. A breakdown showed in January 2018, the three refineries incurred an operating deficit of N13.5 billion, while in February and March a total operating deficit of N18 billion and N11.8 Billion was incurred respectively. However, in April the three refineries recorded an operating surplus of N6.3 billion while in the month May June and July the refineries returned back to deficits of N20 billion, N14.5 billion and N10.4 billion respectively. In August, September and October the refineries maintained an operating deficit of N10.7billion, N6.9billion and N9.3billion respectively which turned worse in November, December and January 2019 of N9.3 billion, N9.5 billion,

N17.3 billion and N8.3 billion. The operating deficits of the refineries have left stakeholders querying the rationale behind the decision of the state oil corporation to commence first phase of rehabilitation works on 210,000 barrels per day (bpd) Port Harcourt Refinery which would be followed by Warri and Kaduna refineries in line with government’s effort to attain local sufficiency in refined petroleum products. Stakeholders said none of the four refineries with 445,000 capacity can reach utmost capacity of 90 per cent even if they are revamped or rehabilitated under the current government as they expressed doubt if the government can mobilize enough resources to carry out the necessary rehabilitation works. Babajide Soyede, a former general manager of Warri Refinery told BusinessDay that selling the refineries is the best option, adding that fundamentally refineries are potentially profitable if they are upgraded and handled professionally. “The refineries can be upgraded. It is the size of refinery that is most important and unless all the units are upgraded we cannot have 90 per cent optimization from these four refineries,” he said. He said if they are rehabilitated they could effectively refine www.businessday.ng

350,000 barrels and anything above this would be fuel oil. “The problem is not that the refineries are old or obsolete; the oldest refinery in Nigeria is younger than the oldest refinery in Europe, the problem is who is managing them?” Ademola Henry team leader at the Facility for Oil Sector Transformation (FOSTER) asked. Although the team leader at the Facility for Oil Sector Transformation (FOSTER) admitted that the upcoming Dangote refinery might make it difficult for government refineries in local market however it will make it more attractive for private investors to run if the industry is deregulated. “If the efficiency ratios of Nige-

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ria refineries are strong why can’t Nigeria supply petrol to Ghana, Togo, Benin or Niger republic?” Henry, team leader at FOSTER asked. He noted that refineries are not only meant for refining petrol alone but at least eight other petroleum products including diesel which will have a positive multiplier effect on Nigeria economy if the sector is deregulated. Previous governments have made spirited efforts to revamp the refineries but they failed because of corruption and lack of political will. It was only former president Olusegun Obasanjo that attempted to revitalize the refineries by sell@Businessdayng

ing them to Aliko Dangote, who lead a consortium of investors which had paid $750m for two refineries, as the Federal Government was finding it difficult managing the facilities as at that time however the sale was unfortunately overturned by late president Shehu Musa Yar Adua . Since that time it has fuel importation all year round with the refineries barely working above 20 per cent. In spite of promises by successive governments to improve the performance of the refineries and commit significant resources to their rehabilitation, the four refineries continue to operate at zero percent capacity utilization, as data from NNPC 2019 monthly bulletin showed. The NNPC has four major refineries, two in Port Harcourt, Rivers State, which combine to form the Port Harcourt Refining Company (PHRC) with a combined installed capacity of 210,000 barrels per stream day (bpsd); the Kaduna Refining and Petrochemical Company Limited (KRPC) with an installed capacity of 110,000 bpsd; and the Warri Refining and Petrochemical Company Limited (WRPC) with an installed capacity of 125,000 bpsd. All the refineries have a combined installed capacity of 445,000 barrels per day.

Tuesday 21 May 2019

BUSINESS DAY

ENERGY INTELLIGENCE

Lekoil explains reason for dropping legal action against FG over $3bn DIPO OLADEHINDE

fter series of legal battle, oil exploration and production company Lekoil Limited has decided to drop legal actions against Ministry of Petroleum Resources over government’s failure to grant consent to its (LEKOIL’ s) investment in Oil Prospecting Lease (OPL) 310, offshore Nigeria, following acquisition of interests previously held by Afren Plc in the oil block. OPL 310 is an offshore license which includes the potentially large Ogo oil discovery, which is located in shallow water offshore Lagos. With estimated production volumes of 120,000 boepd, at today’s oil price, the Ogo field alone stands to generate over $3 billion in annual revenues. According to information from Lekoil, the company received a letter from Ministry of petroleum resources on May 14 stating it would not consider re-awarding the company the license, which

expired on 10 February, unless a suit filed against the Minister of Petroleum Resources was withdrawn. “Ownership of OPL 310 has accordingly reverted to the Government in line with Petroleum Act,” Letter from ministry of petroleum to Lekoil said. The letter further warned that failure by Lekoil and others to withdraw the suit within thirty

(30) days of the Letter which was dated 8 May 2019, but received by Lekoil on 13 May 2019 excludes any consideration of re-award to Optimum Petroleum Development Limited, Lekoil and their affiliates or subsidiaries. “The company has decided to withdraw legal action. The company will also continue engagements with the regulator and Optimum

Petroleum Development Company Limited, the operator of OPL 310, to conclude agreements and resolve all outstanding issues. Further updates will be provided as and when necessary,” Lekoil said. How it all started? In February 2013, Mayfair Assets and Trust Limited, a subsidiary of Lekoil, farmed into Afren Investments Oil and Gas Nigeria Limited’s (AIOGNL) interest in OPL 310 for a 17.14 percent participating interest and 30 percent economic interest. Ministerial Consent was granted for the interest on June 9, 2017. Afren, the parent company of Afren Oil & Gas that held interests in the OPL 310 license, was put into administration and its assets put up for sale on July 31, 2015. Lekoil agreed with the administrator of Afren to acquire the shares of AIOGNL, which held a 22.86 percent participating interest in OPL 310 on December 1, 2015. This interest was also subject to Ministerial Consent from the Minister for Petroleum Resources.

The acquisition meant that Lekoil would hold a consolidated participating interest of 40 percent and an economic interest of 70 percent in OPL310 and would become the technical and financial partner of Optimum Petroleum Development Company, the operator and local partner in OPL310 which retained a 60 percent participating interest. An application for the transfer of the 22.86 percent interest was duly made by Afren Nigeria in January 2016. In March 2016, Lekoil was notified by the Ministry of Petroleum Resources that the necessary due diligence exercise would be conducted that month. The due diligence exercise did not take place and has not been rescheduled by the Department of Petroleum Resources since then. As a result, Lekoil applied to the Federal High Court last year for a declaration that was expected to expedite the consent process, and preserve the unexpired tenure in the license. It is expected that a hearing will be held on Thursday, November 29.

Fuel subsidies defy green trend amid rising climate alarm

ven as warnings of climate catastrophe and calls for greener economies grow ever louder, the world is still spending hundreds of billions of dollars every year to subsidise the fossil fuels that are causing the planet to overheat. With mankind’s plan to avert runaway global warming this century badly off course, scrutiny is mounting over how the taxpayer funding that companies receive to burn oil, gas and coal at heavy discounts is costing the planet in other ways. Subsidies can come in the form of tax breaks, rebates, financial incentives or even overseas aid and can keep consumer prices artificially low. They are also hard to accurately calculate, say experts. But there is a growing consensus among economists that statebacked support for dirty energy is becoming increasingly hard to justify -- both in financial and environmental terms. In particular, the cost of renewable energy has plummeted in recent years. The International Renewable Energy Agency (IRENA) says that the cost of generating power from onshore wind has fallen 23 percent since 2010, while solar electricity has tumbled 73 percent. “Subsidies tend to stay in the

system and they can become very costly as the cost of new technologies falls,” Simon Buckle, head of the Climate Change, Biodiversity and Water Division at the Organisation for Economic Cooperation and Development (OECD), told AFP. “Cost reductions like this were not envisageable even 10 years ago. They have transformed the situation and many renewables are now cost competitive in different locations with coal.” Yet subsidies for fossil fuels remain stubbornly high globally. An OECD working paper last year found a direct impact from spending on oil and gas on green energy investment, concluding “fossil fuel subsidies significantly reduce” the use of renewables. The International Energy Agency (IEA) this week found that 2018 www.businessday.ng

actually saw an increase in money going into new upstream oil and gas projects, while investment in renewable power of all kinds dipped two percent. - ‘Not viable’? A recent OECD report on subsidies estimated that nations were providing around $370 billion (330 billion euros) in “support measures for fossil fuels”. This is “an order of magnitude (ten times higher) than global finance flows for biodiversity conservation and sustainable use,” it concluded. Using a different methodology factoring in the social and economic costs of air pollution, health risks, and the effects of climate change associated with fossil fuel use, the International Monetary Fund (IMF) released a working

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paper this month with some eyecatching figures. It estimated that in 2015 global pre- and post-tax energy subsidies stood at $5.2 trillion -- or 6.3 percent of global GDP. The paper said China contributed the most to continued fossil fuel use, with the equivalent of $1.4 trillion in support of coal, oil and gas. The United States was second with $649 billion. The European Union’s support for fossil fuels cost $289 billion, it said. The report estimated that if fossil fuel prices were “fully efficient” -that is, subsidy-free -- in 2015, “global CO2 emissions would have been 28 percent lower (and) fossil fuel air pollution deaths 46 percent lower.” Dylan Tanner, executive director of pro-transparency monitor InfluenceMap, said that if the costs of healthcare, welfare and working hours lost were considered in the costing of fossil fuel subsidies, “these type of activities would be completely driven out of the market.” He said many companies generating energy from coal -- the fuel that receives the most state funding -- “are not valued as viable concerns” without continued financial support. - ‘Market distorting’ In 2017 the V20 group of nations @Businessdayng

most vulnerable to the effects of climate change issued a call for G20 countries to phase out “market distorting” fossil fuel subsides by 2020. Two years earlier, 195 nations signed up to the Paris climate agreement, which enjoined them to limit global temperature rises to well below 2 Celsius (3.6 Fahrenheit) -- something climate scientists say would require a rapid drawdown in oil, gas and coal consumption. Part of the problem, according to Tanner, is that governments tend to be vague about what constitutes an energy subsidy. “The debate would be: ‘this isn’t a subsidy, this is support to a developing country which has asked for energy infrastructure assistance’,” he said. “But part of that is a subsidy for coal technology which hasn’t sold a single unit on the open market without a government-backed loan.” While Buckle said fossil fuel subsidies need to be phased out far quicker than is happening now, he stressed that ending finance for oil and gas projects alone would not be enough. “If you look at air pollution, the costs for that are huge,” he said. “Dealing with air pollution is not just an issue of fossil fuel support and putting a price on emissions... We are talking about structural changes to our economies.”

Tuesday 21 May 2019

BUSINESS DAY

OFFGRID BUSINESS

Insight

PayGo is transforming access to electricity for East Africans, Nigeria can learn STEPHEN ONYEKWELU

ayGo, a solar home systems technology backed by an innovative financing mechanism to help customers’ self-finance access to clear solar power has made significant inroads into East Africa and Nigeria can learn from what they are doing right. Azuri Technologies-owned PayGo solar homes systems is a commercial provider of electricity to rural off-grid communities, without having endusers pay high upfront fees, but instead pay small, regular amounts via mobile phone technology. This is why Azuri’s entry into the Nigerian market in 2017 with its PayGo Solar Home Systems was cheered. With the widest reach of any provider in Sub Saharan Africa, Azuri is leveraging solar and mobile technology to allow users in 11 different countries to access power on a payas-you-go basis. The Nigerian Government has an ambitious Renewable Energy Policy which aims to increase energy production from renewable energy sources from 13 percent of total electricity generation in 2015 to 23 percent in 2025 and 36 percent in 2030. Part of this plan is the goal to increase the percentage contribution of solar energy to the total energy mix.

“Nigeria needs to quicken adoption of off-grip solutions. To achieve the we need to allow an effective distribution of solar equipment and solar home systems, SHS, like in East Africa, which facilitated complete adoption of the PayGo systems while in Nigeria adoption is still low” Ubah Benson, chief energising officer, CEO at Solarify said during a Tweet Chat under the aegis of #GridlessAfrica, an advocacy group. One of the challenges the industry faces in Nigeria is the question of warranty claims for SHS when the system goes bad from poor installation and improper usage, “the end-user usually denies voiding the warranty terms and condition” Benson added. Despite success stories in East Africa, renewable energy has yet to be widely adopted in Nigeria as an alternative power solution. Off-grid communities in Nigeria have relied on kerosene lanterns or candles for their energy needs, with many unable to purchase solar power systems outright owing to the high costs. Solar Home Systems offer an affordable and environmentally friendly option. According to the United Nations’ Climate Change (UNCC) agency, tens of thousands of units have been distributed in 11 countries across SubSaharan Africa; in Tanzania, Kenya, Ethiopia, Uganda, Sierra Leone, Malawi, Zimbabwe, South Africa, Rwanda, Togo, and Ghana

Collaborating to power Nigeria: M. K. Balaji, Off Grid Sector Lead, Power Africa Nigeria; Bamidele Faparusi, Ekiti State Commissioner of Infrastructure & Public Utilities; Ifunanya Nwandu-Dozie, SHS Lead, Rural Electrification Agency/ World Bank Nigeria Electrification Project; Dr. Wiebe Boer, CEO, All On; Olalere Odusote, Energy Lead, Lagos State Transition Team; Dozie Okpalaobieri, Senior Energy Advisor, African Development Bank at the quarterly Nigerian off grid energy sector donor/ investor coordination meeting, held in Lagos

Hundreds of thousands of people have benefitted from the clean energy that Azuri solar home systems provide. Azuri calculates that 28.5 million hours of clean light and 9.5 million hours of mobile phone charging have been provided, resulting in 3,504 tonnes of carbon dioxide, CO2 emissions avoided to date. Azuri’s PayGo Solar Home systems

have the capacity to power four LED bulbs providing up to 8 hours of lighting, a radio and a USB port with charging cables for mobile phones. Customers pay the monthly top-up rate via mobile money for 36 months after which time the unit can be unlocked and the customer owns the unit. In a move to upsell its services, Azuri then provides these customers with

options to upgrade to a larger system. Solar projects in Africa are picking up momentum. Social impact investors, many of which are backed by United States-based or European funds, have focused on this area especially in trying to get electricity to remote rural areas which are unlikely to be connected to a traditional electricity grid anytime soon.

Market

800 gigawatts of solar expected to be added across globe by 2023

uropean solar trade body SolarPower Europe expects the global solar industry will add nearly 800 gigawatts of new solar over the next five years, bringing the planet’s total solar capacity to 1.3 terrawatts in 2023. SolarPower Europe published its Global Market Outlook 20192023 at Intersolar Europe Tuesday, revealing its near-term and longterm predictions for solar capacity additions. After 102.4GW was added in 2018, according to the group, in 2019 about 128GW of new solar PV capacity will be added according to its Medium Scenario – translating to growth of around 25%. This, in turn, will increase the globe’s cumulative solar PV capacity to 645 GW. Looking further afield, SolarPower Europe expects the terawatt mark to be passed in 2022, and its 5-year Global Market Outlook expects nearly 800 GW of new solar capacity to be brought online by the end of 2023, raising total

capacity to 1.3 TW. “2018 was a unique year for the entire global solar industry, as we exceeded the magic installation mark of 100 GW per year for the first time, which led the solar power sector to grow to over 500 GW or 0.5 TW,” said Christian Westermeier, President of SolarPower Europe. “Last year, we again saw strong cost improvements with solar becoming the lowest-cost power generation source in more and

more regions. At the same time, new applications have quickly progressed, such as floating solar, while corporate renewable Power Purchase Agreements have reached a double-digit GW-level, and a market for merchant solar has emerged in several countries.” SolarPower Europe’s figures for 2018 clash with those of market analysts, though no two figures for 2018 have been found to be the same. The International Renewable

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

Energy Agency claimed that only 94 GW was installed in 2018, while Wood Mackenzie believes installations for 2018 only reached 97.3. On the other hand, Bloomberg New Energy Finance reported 107 GW of capacity installed in 2018. A total of 102.4 GW, however, seems to not only fit the evidence, but is as satisfactory middleground as we are likely to expect for 2018. The main reason for 2018’s slowdown, however, is not up for debate, and is laid entirely at the feet of policy movements made in China to effectively halt installations halfway through the year. By the end of the year, China still installed 44.4 GW – down 16% on 2017’s figure but well up on some of the doomsaying projects from halfway through the year. Contributing to the lacklustre growth in 2018, according to SolarPower Europe, was stagnant growth in the United States and shrinking markets in India and Japan. However, in 2018 11 coun-

tries installed over 1 GW of solar – bringing the total number of GW-scale countries up from the previous year’s 9, and on its way to 16 in 2019, according to SolarPower Europe. “Global solar demand continued to grow last year, as new emerging markets have embraced solar’s attractive business case – a clean, versatile and low-cost power generation source,” said Walburga Hemetsberger, CEO of SolarPower Europe. “This market diversification means interest in solar is rising at a rapid pace.” “In Europe, we have entered a new era of solar growth and with the recently concluded Clean Energy Package, we have a new framework for solar that will see our technology thrive even more in the coming years. We now look to EU member states to put ambitious solar targets in place and ensure robust implementation guidelines in their 2030 National Energy and Climate Plans (NECPs).”

Feedback: 07037817378, 08137433034, 08135447789

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

Tuesday 21 May 2019

BUSINESS DAY

property&lifestyle Housing

Why new capital seeks investment, living space in The Seattle Residences Stories By CHUKA UROKO

n a crowded, oligopolistic and slow-moving market where everybody seems to be doing virtually the same thing, what keep both the market and product suppliers going are product differentiation and efficiency of service delivery. The Seattle Residences is one of the latest iconic products in the Nigerian property market today. It was not lost on its developers and promoters that the market into which they introduced their product in December 2018 was not only crowded, but also slowmoving, reflecting the state of the economy. A $32million project funded by Triton Universal Global Concepts Limited, a private real estate investment company, The Seattle Residences comes as upscale luxury serviced apartments offering luxury waterfront living experience with panoramic views of the Lagoon. It is often said that, in real estate, location is everything. But for The Seattle Residences and its developers, a piece of luxury such as this looks beyond this cliché, which is why today, every new capital in the market for investment or residential purposes seeks a space or slice of its breathtaking offerings. Located in the heart of Lagos, in the serene enclave

of Walter Carrington Street, Victoria Island, Seattle Residences offers fully furnished 3 and 4-bedroom apartments that are perfect blend of modern architecture, indulgent home comfort, state-of-theart appliances and breathtaking vistas. Comfort and convenience are major considerations for a luxury-loving home buyer. But a savvy investor takes it further. He considers return on his investment too. On this score, The Seattle Residences does not disappoint such investor. “The project aims to achieve a yield of 12 percent, some 200 basis points above the average prime mixed-use development yield as at Q4 2018. In deciding the appropriate mix for the project, the developers balanced the risk between long term and shortterm tenancy, and the expectation on its total return is commensurate with the property’s current risk profile,” Bidemi Fadayomi, Head of Asset Development at Triton Universal Global Concepts, said. To achieve these ambitious targets, he explained, the development had to differentiate itself in the ‘luxury’ property market. “Location was critical. But it was not enough to be situated in the high-end locations of Ikoyi or Victoria Island. Security and serenity of the immediate vicinity could not be compromised,” he noted, pointing out that Walter Car-

rington Crescent, otherwise known as Diplomats Row, home to various consulates and High Commissions, was an inspired choice. “This is, easily, the most secure street in Lagos, if not the country”, he noted. The location of the waterfront plot itself means that The Seattle Residences enjoys an uninterrupted vista of the Lagos Lagoon on one side and the leafy, well appointed diplomatic buildings on the

street facing side. Besides the usual facilities and services such as power, water, lift etc which are given in otherlocations,TheSeattleResidences boasts a concierge, spa, bistro and houseboat service. For people who love exercises, the small but perfectly formed gym with views of the water traffic of the Lagos Lagoon is inspiration to both body and mind.Thereisalsoaboxinggym and yoga classes on offer. TheSeattleResidencesoffers

twomainapartmentsconfiguration that include 3-bedroom and 4-bedroom plus a serviced 3-bedroom hotel apartment for short-stay services. The 3-bedroom are elegant apartments with open and light filled living area, dining room, fully fitted top of the line kitchen, three luxury ensuite bedrooms and a breathtaking terrace overlooking the Lagos skyline which gives option to have it furnished or unfurnished.

Interior Decor

Old Mutual, Afreal seal pact on Newhomes solution for developers, homebuyers

etermined to simplify property acquisition in Nigeria, Old Mutual General Insurance Company Nigeria Limited, a subsidiary of pan-African Insurance Company, has entered into a strategic partnership with Afreal Limited to launch an innovative property solution known as Newhomes.ng.

With the partnership, Old Mutual through the newhomes.ng platform will provide premium home insurance package to existing and potential property owners. The insurance benefits include building fire and peril, household goods and personal belonging, burglary, fire insurance, alternative accommodation cost in event of home loss,

personal accident cover and personal liability cover. Newhomes.ng is a digital property platform that seamlessly connects home buyers to mortgage lenders and real estate developers, by showcasing a robust list of verified properties for buyers to choose from. The online platform also aggregates available mortgage lenders for property in ques-

L-R: Brian Hammond, Director, Afreal Limited; Idris Etti, COO, Newhomes.ng; Alero Ladipo, Executive Head, Marketing, Old Mutual Nigeria; Chris Ogbechie, chairman, Afreal Limited; Maurice Okoli, Managing Director, Afreal Limited, and Jeff Duru, Managing Director, Old Mutual Nigeria, at a press briefing to announce the partnership between Old Mutual Nigeria and Newhomes.ng in Lagos recently www.businessday.ng

tion, and streamlines the process of mortgage application, thus making acquisition of real estate properties stress-free. “Newhomes is a technologically superior search engine that is segmented by name, location, property type, bedroom numbers, budget range and status for real-time accessibility to information. A simple search by name, location or budget will pull similar information from boththehouseandservicedplots property pages for the searchers viewing,” explained Idris Etti, executive director at Afreal Limited Newhomes platform, he said, comes with home finance tool created to make for ease of mortgage acquisition. It comes with affordability checker, which profiles and verifies a prospective applicant to ensure eligibility and affordability of a mortgage on the property indicated. “Criteria to determine eligibility include property value, loan amount, monthly income anddateofbirthoftheapplicant. Itpromptlynotifiestheapplicant of mortgage eligibility status. It also matches an applicant

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to credible mortgage lenders on the database, available to meet the home finance needs of such applicant and also informs the applicant of the expected monthlyrepayment,loantenure & interest rate,” he added. Etti disclosed that over 50 developers have signed-up to the platform while over 400 properties were already listed prior to the product launch, adding that the aim was to distribute new properties built by reputable developers while providing the necessary home finance and insurance needed to own a new home. Chris Ogbechie, chairman, Afreal Limited, who spoke at the product launch in Lagos recently, described the solution, as a new approach to purchasing ones’ dream home in Nigeria. “It is wonderful to see that Newhomes.ng has generated a lotofinterestandwillcontinueto generatemuchmoreinweeksto come by attracting guests from Lagos and other parts of the countrybecausetechnologywill enable the solution to spread all over the world,” Ogbechie said. @Businessdayng

School of Estate embraces technology, takes classes to online platform

he foremost School of Estate, which specialises in teaching people the nitty-gritty of real estate business, has opened its online classes to the general public, the school authorities have announced. Akin Olawore, the school’s director of studies, disclosed this tojournalistsattheinauguration of the online platform in Lagos lastweek,adding thatthe school hadbeeninexistencesinceearly 1990s, offering offline physical classroom courses in real estate to students. But in order to accommodate the growing number of students, especially those who cannot make it to the school’s main campus at Onigbongbo, Maryland, Lagos, the school has to embrace technology by taking the courses online in order to accommodate everyone, everywhere. “With the online classroom, the school can now conveniently take care of all our students wherever they may be around the world,” Olawore said. Debo Adejana, CEO, School of Estate, said the motivation to go online resulted from the fact that the knowledge the school impacts on people is relevant anywhere in the world, not just for the people in Lagos. “We are going online now because we realise that the knowledge we share is something that can be distributed everywhere, beyond the shores of Nigeria, let alone within Lagos State,” Adejana said. This means that all real estate enthusiasts now have the opportunity to learn at their convenience and can choose where to learn, when to learn and at affordable rate. “The reach of the school cuts across everyone in every profession, not just those in building professions,” Stephen Ajayi James, facilitator, School of Estate, clarified. While doing all these, according to Adejana, the school takes cognisance of the quality of education dished out to students online. The system is synchronised such that what is taught offline and online are quality-based. “We also take cognizance of quality to ensure that what we offer offline is also as good as what we offer online. So, when you take courses online, it is as good as taking them offline,” Adejana assured. But online platform has more to offer. One of the advantages of taking courses online is that students have the liberty to study at their convenient time and can go over the topics for better clarifications. “The advantage is that you control the lecturer. You can pause,doafewthingsandcome back, which improves better assimilation,” Adejana said

Tuesday 21 May 2019

BUSINESS DAY

property&lifestyle Office Space

Commercial office developers pre-recession plans coming to life now on better FX Endurance Okafor

he plans by real estate developers to construct office properties which were initially thrown under the carpet are beginning to see the light of day owing to stable exchange rate, and exit from recession, industry players have said. Nigeria’s macro economy experienced significant impulses over the last few years. The Gross Domestic Product (GDP) of Africa’s most population nation nosedived into the worst recession in 25 years. Affected by the plunge in crude oil prices, decline in oil production,andthereductionin non-oil exports, Nigeria’s economy entered its worst phase in 2016 and as such resulted to the scarcity of foreign exchange. The real estate sector, among others, was hit the most during the contraction period when naira-dollar exchange rate reached its peaks in the history of the country’s existence. “Any new project that you see now is not fresh development that people are executing as a result of high demand; rathertheyareprojectsthathave been on hold”,Dolapo Omidire, Founder of Estate Intel, a real estate research firm, noted. “The new project you are seeing now is a result of past years of planning just that they

are beginning to execute the projects and it is not as a result of resurgence of large commercial activities, Omidire said. A recent survey by BusinessDay revealed that almost 80 percent of the materials used by real estate developers in constructing properties are sourced from outside the country, which is why most developers were unable to carry on with their projects when the naira weakened against the dollar. Omidire’s views were shared by Olurogba Orimalade, Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State Branch, who said that the commercial offices that are being developed now were conceptualised 3-4 years ago but are now been almost completed while others are done already. “Unfortunately, around the period those developers planned to execute their projects, there was recession and the real estate development was the last thing anyone would want to think of during and immediately after the economic contraction,” Orimalade said. Real estate developers are in search of viable alternative sources to funding real estate 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 2018 as analysed 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 portions of loan in the review quarter. Real estate sector only attracted N710.2 billion credits from banks in Q3 2018 as against the N744.56 billion and N784.2 billion it got in Q2 and Q1 in 2018 respectively. “If exchange rate is increasing, it will automatically impact on the end users of the real estate products, as they will incur all the cost because the key components to even build a two or three bed room apartment are imported,” Orimalade said. He added that most of the developers who already embarked on the various projects could not back out half way even when they were negatively impacted by the high exchange rate. “Some of them took loans, even dollar denominated loans.” Unlike other sectors of the economy, Nigeria real estate plunged further into recession in Q4 2018. After showing signs of rebound for two consecutive quarters through to Q3 2018, Nigeria’s property mar-

Famfa Oil Towers: An up-coming office building

ket turned southward, falling deeper into contraction mode. The figures released by the National Bureau of Statistics (NBS) show that in real terms the sector contracted by 3.85 percent in Q4 (year-on-year), which is 2.07 percent points

better than the -5.92 percent recorded for the fourth quarter of 2017. Although on quarteron-quarter comparison, the contraction reported for the review quarter was lower by -1.17 percent points relative to

the -2.68 percent for Q3 2018. This is despite the fact that Nigeria’s GDP grew by 2.38percent in real terms (year-on-year) in Q4 2018. An increase of 0.27percent points when compared to the fourth quarter of 2017.

Scientists find solution to climate change issues How LiSEC glass technology enhances buildings exterior beauty, façade in $100, 000 Nigeria Prize for Science Interior Decor

CHUKA UROKO

Temitayo Ayetoto

s the expansion in the construction of office space projects continues to fuel demand for exquisite furnishing materials, international glass processing companies like LiSEC are finding more reasons to expand their frontiers in Nigeria. The firm which is the brain behind Nestoil Towers (corporate headquarters) iconic exterior in Victoria Island, Lagos sees the gradually growing market for specialised kind of construction glasses too important to be overlooked. Gulping approximately 10, 000 square metres of insulating glass with solar control e-coating, Nestoil’s curvy glass plastering project is one of the solutions it is creating from a flat glass machine industry that can comprehensively plan and develop large projects. Apart from Nestoil Towers, LiSEC is proud of other projects like Private Villa in Lagos, built with bullet-resistant insulating glass; Rose of Sharon Tower, furnished with 3, 000 square metres of glass solar control low e-coating, and the National Institute for Legislative Studies in Abuja.

Floran Batik, LiSEC head of sales, explained that the firm’s entry into Nigeria was encouraged by project managers who needed insulation glass finishing that was not readily available locally. “One of our partners whom we have worked with continued to refer us and from there we have had more projects to handle. We are confident about the opportunities here,” Batik told BusinessDay at an Austrian Embassy-led exhibition in Lagos. 50-year-old LiSEC with over £230 million turnover in 2017 uses the integration of production management software and machinery control that allows top operation and optimisation. Glass insulation has come to stay in luxury construction www.businessday.ng

projects, especial in commercial and private office spaces. Many of the skyscrapers in highbrow Ikoyi, Victoria Island and Lekki do not finish up without a touch of glass. The obsession for glass is not just has not been for mere structural beauty, it has also been motivated by considerations such as heat Insulation, sound insulation, protection against injury, solar control and burglar resistance. LiSEC’s Eurotherm insulating glass, for instance, is a thermal insulation glass made with a component that is highly heat-insulating ultrathin stainless coating; it has an inert gas-filled space separating the sheets as well as an optimum distance between the glass sheets to ensure maximum heat insulation.

he negative impact of climate change in Nigeria as reflected in erosions, droughts and desertification plaguing some parts of the country has continued to worry and agitate the minds of individuals, corporate bodies and environmental activists. This concern was demonstrated recently by the Nigeria LNG Limited (NLNG) which hassponsoredTheNigeriaPrize for Science, encouraging scientists to find lasting solution to these environmental menace. This year’s edition of The Nigeria Price, the 15th in the series, has 29 scientists contesting to find the needed solution and the science prize, first awarded in 2004, comes with a cash prize of $100, 000. Details of the 2019 prize contest were revealed recently at the handover of the 2019 entries to the Advisory Board of the prize, signifying the beginning of the judging process that will culminate in the announcement of a winner. “The business of scientific innovation and research is not an easy task anywhere in the world. In Nigeria, it is even more difficult because of the paucity

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of research funds and the resulting increasing lack of interest,” said Andy Odeh, NLNG’s Corporate Communications and Public Affairs Manager, while handing over the entries to the Advisory Board, chaired by Alfred Akpoveta Susu. Odeh assured that Nigeria LNG would continue, through the Nigeria Prize for Science, to find excellence even if it is to be found “in the darkest corner” as NLNG was committed to changing the narrative of the nation through scientific prowess, through which many nations have excelled.

He noted that, although climate change remained a myth to so many people, its impact could be seen on environment and agriculture. “We have all seen the growing rate of desertification in the northern part of our country, he said, adding, “climate change is real and that is why NLNG believes that solutions to this threat can be engendered through a competition such as The Nigeria Prize for Science. The prize is another opportunity for NLNG to contribute to the development of the country.

L-R: Deborah Ajakaiye, chairperson, Panel of Judges; Andy Odeh, NLNG manager for Corporate Communications, and Alfred Akpoveta Susu, chairman, Advisory Board of $100, 000 Nigeria Prize for Science, handing over 2019 entries of the prize on Climate Change: Erosion, Droughts and Desertification to the chairperson in Lagos recently. @Businessdayng

Tuesday 21 May 2019

BUSINESS DAY

Markets + Finance

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

Union Bank’s ROE hits four year high as asset quality improves BALA AUGIE

nion Bank Plc, a Nigerian tier 2 money bank, has utilized the resources of its owners in generating higher profit amid a challenging macroeconomic environment as asset quality continues to improve. The stellar performance means the lender will soon reward shareholders from distributable profit, and it’s been investing in the latest technology with a view to boosting earnings to ward off the effect of a low yield environment. With a 42 percent increase in active debit cards compared to the corresponding period of last year, Union Bank has beamed its search light on customer penetration through digital products and channels. Its user count is up 128 percent to 1.5 million as at March 2019, while total online users surged by 133 percent to 630k with new users up 51 percent to 96k in the period under review. Total Point of Sales (POS) volume is up 41 percent to 3.5 million with the value up by 33 percent from N17.7 billion to N24 billion in the first quarter of 2019. Union Banks’ total transaction volume accelerated to 20.8 million while the total transaction value is up 4 percent to N187 billion. Notwithstanding the macroeconomic backdrop, Union Bank’s return on eq-

Emeka Emuwa, MD Union Bank Plc

uity (ROE) increased to 9.30 percent in March 2019 from 6.0 percent the previous year; the growth in ROE is the highest in four years, see charts. Non-interest income was up 38 percent to N 10.81 billion in the period under review from N7.79 billion as at March 2108; thanks to increased loan growth, increase in customer transactions, and significant recoveries. The uptick in noninterest income helped compensate for a 5 percent drop in gross earnings to N37.7 billion from N39.50 percent in the first quarter of 2018 due to loan book resolutions from the previous year. Union Bank was not the only lender whose revenue fell in the first quarter, as Nigerian Banks saw a reduction at the top lines since the

start of 2018 when short term government securities began to nose dive. The first quarter earnings results of the largest lenders in Africa’s largest economy showed cumulative gross earnings grow by a mere 3.75 percent to N1.16 trillion as at March 2019, while combined net profit margin remained flat at 18.15 percent. Amid the challenges undermining the growth of operators in the industry, Union Bank has remained profitable, posting a profit before tax of N5.43 billion in the period under review, representing a 1 percent jump from N5.40 billion recorded the previous year. The Nigerin lender’s cost optimization strategy paid off as the increases in total operating expenses were lower

than April’s inflation figure. Union Bank’s total operating expenses were up a mere 4.15 percent to N18.50 billion in the period under review from N17.90 billion the previous year. With the commencement of our Long-term Efficiency Acceleration Programme (LEAP), the lender expects to record savings on the expense line in 2019. Union Bank has an excellent risk management strategy as asset quality continues to improve, thanks to aggressive loan recoveries and a slight improvement in macroeconomic activities. Non Performing Loans (NPLs) ratio fell to 7 percent in March 2019 from 8.81 percent as at December 2018. In absolute figures it reduced by 2.33 percent to N37.60 billion in the period under review from N38.50 billion as at December 2018. A breakdown of NPLs per sector shows exposure to construction, education, finance and insurance, human health and social work, manufacturing, which made up for to 57.7 percent of total NPLs as at December 2018 now make up for 18.30 percent as at March 2019. While other lenders in the counrty have refused to turn on the tap of lending to the economy, Union Bank has been extending credit to Small and Medium Scale Enterprises (SMEs) and the real sector. For instance, loans and advances were up 4.12 percent to N448.24 billion as at March 2019. The Bank said it would continue to reduce its exposure in its foreign currency book as it look to mitigate any future foreign exchange risks. Portfolio diversification by sector shows loans to oil and gas make up 36.90 percent of total loans as at the first quarter of 2019; Manufacturing, 14.20 percent; General Commerce, 9.70 percent; Power and Energy, 7.50percent; 9Construstion, 7.20 percent; Retail Segment, 6.90 percent, Information and Communication, 6.40 percent; Agriculture, 4.30 percent, and others 6.70 percent.

Union Bank launched Series 1 and 2 debt notes under the N100 billion Commercial Paper issuance programme. It also raised N23 billion from the domestic capital market across tenors ranging from 90 to 180 days. The lender launched its TechVentures in January to support tech-based businesses in various life cycle stages, providing them with funding and advisory services. Union Bank remains well capitalized with a Capital Adequacy Ratio (CAR) of 16.5 percent, which provides room to grow quality risk assets as the economy recovers. “The Group’s resilience in a challenged environment is demonstrated in these first quarter numbers. While Gross Earnings declined by 5% to ₦37.7 billion from ₦39.5 billion in Q1 2018 due to loan book resolutions from the previous year, our Non-Interest Income grew by 39% from ₦7.8 billion to ₦10.8 billion driven by recoveries, credit-related fees and dividends from invest-

BD MARKETS + FINANCE Analysts: BALA AUGIE www.businessday.ng

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@Businessdayng

ments,” said Joe Mbulu, Chief Financial Officer of Union Bank Plc. About 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 longstanding and most respected financial institutions. The Bank has a net work of over 300 Sales and Service Centers across Nigeria. Following recapitalization in 2012 from new investors and a new Executive Management team,UnionBank has under gone an award winning 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 UnionKorrect, UnionGoal and Union Betta.

Tuesday 21 May 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 20 May 2019

Top Gainers/Losers as at Monday 20 May 2019 LOSERS

GAINERS Company

Opening

Closing

Change

N108.9

N119.75

10.85

DANGCEM

N176

N178

GUINNESS

N49.05

N50.5

1.45

DANGFLOUR

N16.15

N16.35

0.2

N2.2

N2.36

0.16

MTNN

NEM

Company

ASI (Points)

Opening

Closing

Change

N28.35

N25.55

-2.8

ACCESS

N6.45

N6.1

-0.35

WAPCO

N10.5

N10.2

-0.3

ETRANZACT

N2.64

N2.38

-0.26

VALUE (N billion)

N6.8

-0.2

MARKET CAP (N Trn)

UBN

DEALS (Numbers) VOLUME (Numbers)

29,373.40 4,644.00 214,420,669.00 7.932

Global market indicators FTSE 100 Index 7,310.88GBP -37.74-0.51% S&P 500 Index 2,847.75USD -11.78-0.41% Generic 1st ‘DM’ Future 25,708.00USD -72.00-0.28%

12.937

Deutsche Boerse AG German Stock Index DAX 12,041.29EUR -197.65-1.61% Nikkei 225 21,301.73JPY +51.64+0.24% Shanghai Stock Exchange Composite Index 2,870.60CNY -11.69-0.41%

Market gains N220bn on the back of MTN Nigeria stocks Stories by Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) All Share Index (ASI) opened this week on a positive note posting its third session of gains since the listing of MTN Nigeria Communications Plc. The NSE ASI increased by 1.74percent to 29,373.40 points from 28,871.93 points recorded the preceding trading day. The value of listed stocks also increased from N12.716trillion to N12.937trillion despite that only 16 stocks gained as against 20 losers. The record gains moderated the equities market negative returns year-to-date (ytd) to

-6.54percent. MTN Nigeria recorded the highest price increase from N108.9 to N119.75, adding N10.85

or 9.96percent. Dangote Cement Plc was up from N176 to N178, adding N2 or 1.14percent. Guinness Nigeria Plc was also

up from N49.05 to N50.5, adding N1.45 or 2.96percent. “MTN Nigeria remains the main source

WASRA guidelines on cross border issuance ready- Uduk

he West African Securities Regulatory Authorities (WASRA) has drawn up draft guidelines on cross border issuance of fixed incomes and a Mutual Recognition Agreement for the region. These were some of the high points of the meeting of the body held in Sydney, Australia on the sidelines of the 44th conference/meeting of the International Organisation of Securities Commissions (IOSCO). Acting Director General Securities and Exchange Commission (SEC) Mary Uduk said members discussed these and others extensively at the meeting with the aim of giving a final approval in their next Executive

Council meeting. “Recall that WASRA had also consented to the convergence of existing rules of capital market regulatory agencies within the region in a bid to ensure that cross-border listing is carried out with little or no hitches. “This is expected to allow foreign companies carry out their businesses and assist in deepening capital markets within the West African sub-region. The SEC DG disclosed that the body is working towards building the relationship between WASRA and ECOWAS Commission; working on the integrated supervision model needed for the establishment of crossborder transaction and www.businessday.ng

issuers; the monitoring framework and recommendation of appropriate risk management framework for the supervision in the region (issuance of cross border). Uduk therefore commended WASRA members for their determination to build a strong and competitive regional market that would rank at par with the markets of other regions of the world, and more importantly, in the areas of transparency, disclosure, efficiency, accountability and investor protection. Uduk also disclosed that the Africa and Middle East Regional Committee, AMERC met during the meeting and deliberated on the findings of a report on Listings as a challenge

in the region; and members agreed to engage consultants to implement the recommendations of the report. “The Growth and Emerging Market Committee (GEMC) also deliberated on its work carried out on Sustainable Financing. This is an area considered by the GEMC to be critical and urges the capital market regulators to engage the industry largely to promote sustainable financing in the region. “The aim of these meetings was to foster the growth of capital markets in the region through integration and deepening of the markets by sharing information and experiences from different jurisdictions” she added.

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of respite for the market and thus, we expect another session of gains on Tuesday in the absence of conflicting market dy-

namics”, said Vetiva equity research analysts in their May 20 note. Afrinvest analysts had expected to see increased investors’ appetite for the MTN Nigeria stock particularly in the early days of the week and bargain hunting in fundamentally sound stocks for short term gains. They maintained a bullish outlook for the market in the near-term. In 4,644 deals, stock investors exchanged 214,420,669 units valued at N7.932billion. Forte Oil Plc stocks price recorded the largest value decline, from N28.35 to N25.55, losing N2.8 or 9.88percent; followed by Access Bank Plc which declined from N6.45 to N6.1, losing 35kobo or 5.43percent. Lafarge Africa Plc was also on the decline table from N10.5 to N10.2, losing 30kobo or 2.86percent.

NSE wins outstanding invaluable company award for CSR

he Nigerian Stock Exchange (NSE) has received a “Rotary Outstanding Invaluable Company Award” from Rotary International District 9110, Nigeria, one of the 535 Districts that make up Rotary International worldwide and it comprises over 100 Rotary Clubs with over 3000 professional men and women as members. In a notification letter signed by its District Governor, Kola Sodipo Rotary said the award was bestowed on NSE based on its “impactful Corporate Social Responsibility projects in the areas of Education, Health, Economic and Youth Empowerment, and Environment, amongst others, which Rotary considers invaluable in the service to humanity. The award was presented @Businessdayng

to the NSE at the 2019 edition of the Rotary Friendship Night/Governor’s Magazine Launch/Awards which hosted the Consular General of Germany in Nigeria, Dr Stefan Traumann, as the guest speaker. Commenting on the award, Olumide Orojimi, Head of Corporate Communications, NSE, expressed his appreciation to Rotary for the recognition and noted that the Exchange is committed to strengthening its engagements and deepening its impact through social interventions across Nigeria. “NSE is changing the education outcomes of children in the North-East through the donation of Maisandari Alamderi Model Nursery and Primary School in Borno State.

Tuesday 21 May 2019

BUSINESS DAY

news Scarce MTN shares heighten brokers’... Continued from page 1

to intervene to tame what

couldbeshapinguptobeamassive bubble in MTNN shares. “The NSE may at this point need to force MTN Nigeria to make available at least 5 percent of its shares as free float to stop this ugly trend,” one market source said. The stock of the telco is up N600 billion since its listing. Chapel Hill Denham acted as a joint financial adviser with Stanbic IBTC Capital in the historic listing. In 61 deals on Monday, stock dealers exchanged 61 million units of MTN Nigeria shares valued at N6.1 billion. Here are various comments by other capital market operators who spoke to BusinessDay largely on condition of anonymity because of the sensitivity of the matter. “Most likely, about or more than 90 percent of these crosses are being done by one house Stanbic IBTC Capital. It is not a great way to deepen the market. Let us call a spade by its name...it is price manipulation,” said a source. Another broker said, “Increasing price through cross deals does not look like a market-driven activity. It is at best financial engineering.”

Off-market, negotiated cross deals, means that the deals were not subjected to the dynamics of price discovery for the particular period, implying that the deals were previously negotiated and only sealed through the transfer portal of the Exchange. “Going by current rule of the market, what is the legality or otherwise of increasing stock price via cross deal transactions? We need the NSE to say something here. Pending when we get a response from NSE, my understanding of the trading rule guiding cross deal is that the daily price change must be withinthe10percentmaximum per day,” a third source said. The NSE on Thursday, May 16, listed by introduction on its Premium Board 20.35 billion ordinary shares of MTN Nigeria Communications plc at N90 per share. It closed trading on Monday at N119.75 per share, equivalent to gains of 33.3 percent or N30 since Thursday. “If they meet the volume to justify the price change, then everything is okay,” another broker simply said. “However, the implication is that they can drive the price to any level, sell at the price they need to meet all obligations and leave the market to

carry the can of a sour offer or be responsible enough to stop at a reasonable point and make the stocks available in reasonable portions to keep a high market rate that will not distort the actual price of the stock and will be sustainable,” the broker said. “Maybe the rule should have stated that the maximum price change of a stock on introduction should trade via a minimum number of houses (maybe 10 or 20 percent of the houses in the market), so as to ensure that there is a broad market base,” she further said. BusinessDayhadaheadofthe listing exclusively revealed that a record upfront demand for the shares of MTN Nigeria Communications plc resulted in a queue by potential investors, noting that it would only cause the price to maintainupwardtrajectoryinthe near-to-medium term. “N150 per share is today’s going rate for MTN Nigeria in off-market deals,” said another Lagos-based fund manager speaking anonymously to BusinessDay. Heconfirmedthatpeopleare now negotiating MTNN share prices on two days limit up. “I have been on phone all morning scrambling, trying to get exposure for my clients and fund,” our source said. A N150 stock price would value MTNN at N3.052 trillion, slightly higher than Dangote

Cement which closed trading at N3.033 trillion on Monday. Another fund manager told BusinessDay that there was huge unmet demand from indexers cut out by the idea to do the listing by introduction. Indexers own index funds or mutual funds with a portfolio constructed to match or track the components of a financial market index, such as the NSE 30 Index or broad All Share Index. “If you don’t have MTNN you will under-perform the benchmark. So you have to buy it,” he added. Still on the scarce MTN shares, an angered broker said, “I think the key question is if our clients (particularly retail) who have been so excited about the planned listing of MTN benefitted so far? I have N50 million plus to purchase MTN for my clients and I can’t get it (imagine the huge potential income). Also, how do we think this event would further affect client’s perception of our market? “Especially seeing the daily trade on MTN shares and its prices appreciation, and you’re trying to explain that the trades are crosses and that is the reason you can’t get them and with these crosses comes daily 10 percent upwards price gain,” he said. “Honestly these issues need be addressed so we don’t

further worsen the negative market sentiment we’re making efforts to improve. I don’t think the listing presently has benefitted the brokers and retail clients. It’s obvious those who have benefitted currently. My advice is for the appropriate authority to take note…because sincerely the comments even from clients regarding the MTN listing aren’t palatable,” the broker said. Another fund manager source told BusinessDay that demand is also rising from offshore funds worried that the MSCI index would add MTNN, meaning they would have to have exposure just to track the index. On Customs street, however, anger remains. “Can anyone tell me what ‘listing by introduction’ is and prove to me that what MTN did on May 16, 2019 was listing by introduction? Which house got a unit on the day of listing and even up till now aside from Stanbic IBTC that crossed the entire 5.5 million traded that day amongst its clients? The issue is, why was it not available to the market on the day of listing? Have the rules changed? Dangote Cement also listed by introduction even when they got a waiver, it was not like this. Shares were allotted and made available for trading on listing day. Same for NASCON,” another broker with pending

NAICOM increases insurers’ capital base... Continued from page 1

companies from N2 billion to N8 billion, general business from N3 billion to N10 billion, composite business from N5 billion to N18 billion, and reinsurance companies from N10 billion to N20 billion, according to a circular issued on Monday and signed by Pius Agbola, director, policy and regulation directorate onbehalf of the Commissioner for Insurance. According to the Commission, the minimum paid-up share capital requirement would take effect from the commencement date of the circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies would be required to fully comply not later than June 30, 2020. “In the exercise of the powers conferred on the Commission by the enabling laws, the minimum paid-up share capital requirement of insurance and reinsurance companies in Nigeria is hereby reviewed,” the circular read. It said the new directive would apply to insurance and reinsurance companies other

than Takaful operators and micro insurance companies. “The provision in respect of requirement of the statutory deposits as stipulated in Part III, section10 of the Insurance Act 2003 shall apply on the effective date of commencement of the circular,” the circular said. Agbola urged all insurance and reinsurance companies to comply with the circular. This is the second attempt by NAICOM to increase the capital requirement of insurance companies in the last one year, having introduced Tier-Based Minimum Solvency Capital (TBMC) in August 2018 before it was suspended and eventually withdrawn. This was following resistance by some segments of the market and shareholder groups who felt it was not going to be favourable to their business and went to court and stopped the process before it was eventually withdrawn by NAICOM. This exercise now will be the first statutory recapitalisation exercise that will be embarked on by the industry after the last one held between 2005 and 2007.

Dangote named among world’s... Continued from page 2

ous interventions in health care issues, especially in the fight against malnutrition and routine polio. “Aliko Dangote, through his leadership at the Aliko Dangote Foundation, is a key partner in the polio eradication effort, strengthening rou-

tine immunisation and fighting malnutrition in Nigeria and across Africa,” said Gates, who himself was ranked along with Dangote. “Aliko bridges the gap between private business and public health in a unique way and our shared belief that Nigeria will thrive when every Nigerian is able to www.businessday.ng

orders of over N80 million for MTNN shares said. “I think the stockbrokers to the listing should have advised the major shareholder, MTN International Limited, to make available enough shares on the day of listing to guarantee liquidity of the stock in the market,” he said. Sources tell BusinessDay that ensuring that 200m to 500m shares were available for trading over the course of the first six months would have solved the problem and would not have reduced MTNN controlling interest in any significant way. “The regulators could as a matter of urgency sit down with the financial advisors and the major shareholders and urgently come up with a solution to provide adequate liquidity for the shares in the market. This could be achieved through suasion,” according to another broker. Ferdi Moolman, CEO of MTN Nigeria, in response to questions raised on shortage of supply of the listed stock during the Facts behind the Listing presentation at the Exchange, said the listing was the first step towards creating liquidity around the stock. “We are committed to finding equilibrium between demand and supply to arrive at a proper valuation for the stock on the NSE,” he said. L-R: Adeniyi Duale, managing partner, Duale, Ovia and Alex-Adedipe (DOA) Law Firm; Uzoma Dozie, former chief executive officer, Diamond Bank; Soibi Ovia, partner, DOA Law Firm, and Adeleke AlexAdedipe, partner, DOA Law Firm, at the 2nd DOA annual business series, with the theme ‘Investment in Nigeria’s Telecommunication Media and Technology Market’ in Lagos, yesterday. Pic by Olawale Amoo

Under the cancelled TBMC, tier-3 companies were those that fall within existing paid-up capitals of N2 billion for life business, N3 billion for non-life business, and N5 billion for composite business. Companies in this category were to be limited to underwrite only risks in life business in individual life, health insurance, miscellaneous insurances, while for non-life they were limited to

underwrite risks in fire, motor, general accident, engineering (only classes covered by compulsory insurance), agriculture and miscellaneous insurances. Tier-2 companies were to be those whose paid-up capital has increased by 50 percent above the existing minimum capital. For life business, their paid-up capital were to be N3 billion and they were to

underwrite all tier-3 risks and Group Life Assurance (GLA), while for non-life, their paidup capital base would be N4.5 billion and they would underwrite all tier-3 risks, engineering (all inclusive), marine, bonds credit guarantee and suretyship insurances. Tier-1 companies were those whose paid-up capital was increased by 200 percent, above the existing minimum requirement. Life companies

in this category were to have capital of N6 billion and underwrite all tier-2 risks and annuity. For non-life business, the paid-up capital would be N9 billion, and they would underwrite all tier-2 risks and oil & gas (oil related projects, exploration & production), and aviation insurances. Composite companies in tier-3 were to maintain N5 billion, tier-2 N7.5 billion, and tier-1 were to have N15 billion.

thrive drives our partnership.” Renowned activist and cofounder of ONE, Paul David Hewson, popularly called Mr. Bono, said he was not surprised at Dangote’s feat globally, saying his vision is as big as the African continent. Bono, a global campaigner on taking action to end extreme poverty especially in Africa, said Dangote “has a vision just the size of his

continent, but with humility of somebody who has just started his first job”. “It’s no surprise to me that Fortune would recognise his leadership because we have seen first-hand, through his service on ONE’s Board, the benefits of his wise counsel and grace,” he said. “Aliko remains understated but very potent and Africa’s most successful and deco-

rated entrepreneur. He is a global financial and managerial behemoth,” said Bismark Rewane, economist and CEO of Lagos-based Financial Derivatives Company. Dangote as the Africa’s richest – worth $16.4 billion, according to Bloomberg – and the four publicly traded companies under the umbrella of his Dangote Industries now account for about a third of

the value of the Nigerian Stock Exchange. That wealth is based on a big bet on Nigeria’s economic independence: Dangote’s peers give him credit for helping the country become self-sufficient in the sectors in which his companies compete (cement, agriculture and mining).

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Tuesday 21 May 2019

BUSINESS DAY

news Nigeria’s private sector rises to humanitarian challenges in North-East …as Oando, Access, NESG, Zenith, 10 others champion fundraising

Iheanyi Nwachukwu

he private sector and the country at large are gradually awakening to one of the world’s worst humanitarian crisis in Northern Nigeria brought about by Boko Haram insurgents. The severity of the humanitarian crisis and growing need for humanitarian assistance led to the creation of the Nigerian Humanitarian Fund (NHF) by the United Nations in 2017. The body to date has raised $83 million in contributions and pledges, thanks to the generous support of donor countries - Sweden, Germany, the Netherlands, Denmark, Belgium, Norway, Ireland, Switzerland, the Republic of Korea, Iceland, Canada, Spain, Luxembourg, the Arab Gulf Programme for Development, Malta, Azerbaijan and Sri Lanka. The NHF provides an opportunity for donor countries to pool their contributions to deliver a stronger collective response based on the realisation that Nigeria cannot fight this battle alone. To amplify humanitarian assistance, the UN NHF-PSI initiative was launched in November 2018 at the Oando Wings Event Space. The NHF-PSI is a groundbreaking global initiative and a first for the UN, that will see the private sector join donor countries in pooling donations and resources together

to create a more collaborative and effective response to the ongoing humanitarian crisis in North-East Nigeria. The NHF-PSI is made up of 14 leading private sector companies in different sectors of the economy. Setting the pace for the oil and gas industry is indigenous leader, Oando plc, whose group chief executive serves as the Secretary of the Steering Group of NHF-PSI as well as Seplat Petroleum. In the banking sector, Zenith Bank, Ecobank, First Bank and Access Bank have keyed into the project with the chairman of Zenith Bank, Jim Ovia, serving as co-chair of the steering group. In the FMCG sector you have the likes of Nestle and Unilever. Also included is the Nigeria Economic Summit Group (NESG) whose past chairman Kyari Bukar is also a co-chair of the steering group, and Templars Law, who have all elected to ‘Invest in Humanity’ as NHFPSI founder donors and act as advocates proactively raising awareness of the plight of Nigerians in the North-east. The NHF-PSI is founded on the premise that Nigeria’s private sector not only cares profoundly for its nation’s most vulnerable, but also possesses the vision, resources and natural problem-solving ability to reduce it on an unprecedented scale if harnessed into collective action.

Stakeholders at NAFBM forum highlight why businesses should adopt ADR

n view of the fact that a franchise business model can be used for a wide range of businesses, it is usually advised to involve sector/industry experts in the resolution of conflicts arising from the franchise arrangements. Where the issue is of a technicalnature,anexpertisbestfittedto resolve the conflict and produce a binding decision. However, the widely accepted proposition that it is more beneficial for parties to resolve their differences by negotiated agreement rather than contentious proceedings is one of the underlying principles for the adoption of Alternative Dispute Resolution (ADR) mechanisms. These are suggested in a Whitepaper presented at a day ADR Awareness and Education for Businesses organised by Nigeria Association of Franchise Business Members (NAFMB) at Lagos Chamber of Commerce and Industries (LCCI), recently. Speaking on the Whitepaper, the partner, Jackson Etti & Edu and keynote speaker, Asamah Kadiri, advised current and budding business owners to elicit the services of professionals to regularise their entities and contracts, especially in franchise business sphere. According to Kadiri, the ongoing relationship between the franchisor and franchisee gives rise to dispute on the basis of shared interest thus; there is need for conflict management. To manage the conflict, Kadiri said, “ADR offer several advan-

tagesfortheresolutionoffranchising disputes”, adding that “The experiences of parties using the ADR processes have revealed the fact that parties tend to arrive at settlementsthataremorecreative, satisfactory and lasting than those imposed by the court.” To the senior advisor, Trade Policy and Business Enabling Environment, Nigeria Competitive Project (NICOP) SEDIN-GIZ, Omoware Akinropo, passion for business is one thing, but what is most important is to have the knowledge of the kind of business one is venturing into. “You need to understand the basics of entrepreneurship. Mistake some people make is to say ‘I inherited this business from my father or mother. Therefore, entrepreneurshiprunsinourfamily’. Knowledge doesn’t run that way; the technicalities of business have to be learnt. And that is why fora like this are very important to appreciate different means to handle conflicts and resolve them,” Akinropo said. The association president, Chiagozie Nwizu, reiterated the rationale for the Forum thus, “NAFBM is the same thing that obtains in other countries like the United States (Int’l Franchise Association), UK (British Franchise Association) and South Africa (Franchise Association of South Africa); these organizations play critical role in helping to educate, create the right standard, provide member-support and become likethego-toplaceforanyonethat is interested in the industry. www.businessday.ng

L-R: Babajide Sanwo-Olu, Lagos State governor-elect, his wife Ibijoke; James Olusola Odedeji, archbishop of Bishop Vining Memorial Church Cathedral, and his wife Lydia Olukemi Odedeji, during a thanksgiving service to mark the 2nd session of the 7th synod of the Diocese of Lagos West, at the Bishop Vining Memorial Church Cathedral Ikeja GRA, Lagos.

NNPC explains statutory replacements in top management cadre HARRISON EDEH, Abuja

…says no staff was sacked

May 1 and July 31 this year to include Aniya Francis Umaru, general manager, Chad Basin, who is from the north-eastern part of the country and retired on May 6; Adewale Solomon Ladenegan, managing director, KRPC, who hails from the south-west and retired on May 13; and Musa Sulyman Gimba, group general manager, NNPC Leadership Academy, who also is from the north-east and retired on May 14. Others include Umma Ayuba Musa, general manager, HR & Admin Services, Duke Oil, from north-west and retired on May 19; Emmanuel-Ate Mariagoretti Ndidi, general manager, support services, NGC, from the southsouth region who retires on May 30; Tsavnande Thaddeaus Atighir, executive director, operations, from the north-central; Okor Ovieghara, general manager, upstream/TA to GMD, who hails from the south-south region; Ba-

igerian National Petroleum Corporation (NNPC) has explained the recent staff movements in the corporation, saying it was normal replacement and backfill exercise to bridge the gap occasioned by impending retirement of some management staff of the corporation, among others. Ndu Ughamadu, NNPC Group general manager, group public affairs division, explained that the exercise involved statutory retirement of 11 of the corporation’s senior management staff as well as redeployment of 19 others, saying such replacements were always effected before the final exit of the concerned staff. Ughamadu in a statement said that in all, 30 senior staff were affected by both the statutory retirements and redeployment. He gave the list of staff on statutory retirement between

African Alliance records 78% increase in Q1 gross premium

anaging director of African Alliance Insurance plc, Funmi Omo, has disclosed that the company recorded a 78 percent increase in gross premium in first quarter (Q1), 2019, compared with same period in 2018. Omo said this ahead of the company’s release of its audited financial statements and in response to confirmation on the company’s 2019 target goals. “African Alliance Insurance has grown strategically in the past year. In the same Q1, we paid claims worth N1.8 billion as against N1.5 billion in the same period last year. We are in a strong financial position, and our recent investments and decisions back this,” she said. To further demonstrate its commitment towards financial inclusion and its brand promise to protect the future of every Nigerian, the company recently embarked on a nationwide Takaful campaign aimed at spreading kindness nationwide. The campaign is a call to spread kindness and work together towards achieving life’s goals. In response to the campaign, one of its customers commented:

“Your Takaful services have been excellent. Your account managers remained impressive in relationship management, and most importantly, payment of claims have been prompt. Hence, the reason I have been able to refer more people to get your Takaful Plan over the years”. The company recently embarked on its first rebranding campaign since its 58-year existence. The rebranding was the first in the company’s history, led by Funmi Omo, its managing director, in a bid to refresh the brand and align its internal digital transformation to its outward, youthful look and feel. The new logo boasts of two solid shades of blue and diamond shape. “Life is precious to every one of us. There is no other country in the world where people are resilient and determined to make the most out of life. Our new diamond logo demonstrates how special our customers are to us,” she said. She said the company’s focus on digital transformation would not only boost internal process efficiency but take the conversations to the customers on the digital channels for better customer experience.

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rau Mohammed Kabir, managing director, NGMC, who is from the north-western region; Dawaki Salihi Abubakar, general manager NLNG, LIMS, from the northwest; Ibrahim Aminu Bagudu, executive director, ETSD, NPDC, who is from the north-west, and Yusuf Shimingah Matashi, managing director, NPDC, who hails from the north-western region and retires on July 17. Ughamadu also named the following to be among the 19 staff that were redeployed: Anas Mustapha Mohammed, Usman Faruk, Ali Muhammed Sarki, Osarolube Ezekiel, Ihya Aondoaver Mson, Isah Abubakar Lapal, Umar Hamza Ado, Garba Adamu Kaita, Ossai Uche, Usman Umar, Ehizoje Tunde Ighodaro, Ahmed Mohammed Abdulkabir and Lere Isa Aliyu. Others are Richard-Obioha Maryrose Nkemegina, Dikko Ahmed, Ibrahim Sarafa Ayobami, Usman Yusuf,

Sambo Mansur Sadiq and Buggu Louis Tizhe. The NNPC spokesman said it was usual for the corporation to obtain necessary approvals on replacements of retiring staff ahead of schedule, saying this was the case with the recent exercise that takes effect as at when the retiring staff depart at various times within the period. He stated that the exercise was effected to ensure uninterrupted operations of the corporation in achieving its mandate, adding that extant corporate guidelines were strictly followed in the process. He advised members of the public to disregard the insinuation that some staff of the corporation were relieved of their duties, saying the deployments were expected and aimed at sustaining the system. The NNPC spokesperson urged staff of the corporation not to be distracted with the report.

Boeing reports ‘clear and steady progress’ on returning 737 MAX to safe operations MIKE OCHONMA & IFEOMA OKEKE

lobal aviation company, Boeing, says it had concluded the development of updated software for its 737 MAX single-aisle airliner type as well as the associated simulator testing and engineering flight test. The updated software is for the 737 MAX’s Manoeuvring Characteristics Augmentation System (MCAS). The MCAS has been implicated in two 737 MAX crashes in just five months that killed a total of 346 people. Boeing reported that it has, to date, flown the 737 MAX with the updated MCAS software on 207 flights totalling more than 360 hours. The US aerospace and defence group added that, it was providing further information to the US Federal Aviation Administration (FAA), which the regulator has requested. This includes information on the interaction between pilots and the flight controls and displays in various flight scenarios. Once this has been done, Boeing will cooperate with the FAA to schedule the certification test flight and present its documentation for @Businessdayng

final certification. “With safety as our clear priority, we have completed all of the engineering test flights for the software update and are preparing for the final certification flight,” affirmed Boeing chairman, president/CEO, Dennis Muilenburg. “We’re committed to providing the FAA and global regulators all the information they need, and to getting it right.” The group has also created improved educational and training materials that are now being evaluated by the FAA and regulators in other countries, as well as by customer airlines. These are to support the return to service and subsequent operations of the 737 MAX. Part of this is a number of regional conferences being held around the globe. “We’re making clear and steady progress and are confident that the 737 MAX with the updated MCAS software will be one of the safest airplanes ever to fly,” he assured. “The accidents have only intensified our commitment to our values, including safety, quality and integrity, because we know lives depend on what we do,” Dennis Muilenburg stated.

Tuesday 21 May 2019

BUSINESS DAY

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Tuesday 21 May 2019

BUSINESS DAY

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Tuesday 21 May 2019

BUSINESS DAY

GDPREPORT Growth in Nigeria agriculture sector highest in 4 quarters DAVID IBIDAPO

he drive of the Buhari administration towards the Nigerian agricultural sector in its bid to diversify the economy has so far seen the sector improve in growth and contribution to the nation’s Gross Domestic Product (GDP). In Q1 2019, the agriculture sector recorded its highest growth year-on-year in the last 4 quarters at 3.17 percent. Sequel to the slowdown witnessed quarter on quarter (Q/Q) in the GDP, growth in the sector however improved both year-on-year and quarter-on-quarter, which saw the sector listed amongst the major drivers of the non-oil sector which contributed 90.86 percent of the nation’s real GDP. As shown in the Q1 2019 GDP report released by the National Bureau of Statistic (NBS), the sector recorded a growth of 3.17 percent in real terms which is 0.17 percent points higher than Q1 2018 and 0.72 percentage points higher than Q4 2018 growth rates, respectively. Meanwhile the sector grew by 22.58 percent year-on-year in nominal terms in Q1 2019, showing an increase of 16.78 percentage points from the same quarter of 2018. Compared to the preceding quarter, the nominal GDP growth rate was about 4% points higher.

As revealed in the Nigeria’s Q1 2019 GDP report, contribution of the sector to real GDP which stood at 21.91 percent outperformed other Q1 contributions since 2016 to depict steady improvement in activities within the sector. Also, analysis revealed that average contribution of the sector to real GDP in the last three years has shown an improvement in the sector’s contribution. In 2018, average contribution stood at 24.98 percent compared to 24.53 percent, 24.31 percent in 2017 and 2016 respectively. BusinessDay analysis however revealed that the sector’s contribu-

tion to the GDP has in the last three years improved while growth has seen a downward trend in the period under review. While contribution to GDP has improved, average growth rate in the sector has slowed in the last three years by 1.91 percentage points from an average growth rate of 4.05 percent in 2016, to an average growth of 2.14 percent in 2018. Stakeholders in the industry have however identified some fundamental issues as major factors impeding growth in the sector. Among them is the huge infrastructure gap, which affects the ability of farmers to store and process their

Public administration, finance & insurance top worst-performing sectors in Q1 ISRAEL ODUBOLA

ublic administration, having contracted some 14 percent in the first three months of 2019, emerged the worst-performing sector in Africa’s largest economy, according to data released by Abuja-based National Bureau of Statistics. The sector, which is basically state-controlled, maintained its negative growth trajectory to record its biggest slump since previous five quarters. According to Noah Ojewoye, a Lagos-based political economist, the consistent downturn in the public sector signposts government’s inefficiencies and lack of will to spur performance. “I am not surprised the public administration sector is still in recession. Gross inefficiencies to ably allocate resources, manage funds and redistribute income, financial recklessness and corruption are literally killing the sector day by day,” Ojewoye said in a telephone interview. The financial & insurance sector trailed public administration as the second worst-performer in the first three months of 2019, having contracted some -9.6 percentage points, quarter-onquarter, to 7.6 percent, buoyed a sharp 9.2 percent downturn in financial institutions sub-sector.

Although the insurance subsector grew 2.58 percent in the review quarter, growth however slowed some 3.5 percentage points compared with 6.12 percent in the previous quarter. Interestingly, growth in the financial & insurance sector mirrors the growth direction of the financial institutions subsectors. For instance, when the financial institutions sub-sector slumped 5.67 percent in third quarter of 2018, the financial & insurance sector dipped 4.87 percent, similar pattern in the previous quarter, with both recording their biggest downturn in five past quarters. Among the biggest worries of financial institutions especially deposit money banks is the lowinterest rate environment, which partly affected their interest income on investment assets, a vital source of revenue for them. The year-to-date performance of banking and insurance sectors affirms the underperformance of the financial & insurance sector. Nigeria listedlenders have so far returned 12 percent losses to investors since the year started, and insurance stocks down by 7 percent. With negative 0.16 percent growth, human health & social services sector emerged the third-worst performer in the rewww.businessday.ng

Construction sector shows renewed growth, as ICT sector tanks

view quarter. The sector has consistently witnessed downturn in eight past quarters. Of the 19 sectors covered in the report, only three sectors including public administration, financial & insurance and human health & social services witnessed a downturn. Education sector advanced 0.18 percent in the review quarter, however growth slowed -0.17 percentage points quarter-onquarter, and 26 percentage points quarter-on-quarter, taking the fourth worst-performer spot. Manufacturing sector emerged the fifth worst-performer with 0.81 percent expansion. Growth slowed substantially in the manufacturing sector in the review quarter attributable to decrepit infrastructures, tough operating environment and unfavourable economic conditions. The sector contracted 1.54 percent quarter-on-quarter compared with 2.35 percent in the quarter before, and 259 basis points cut yearon-year. The tangible declaration was triggered by 49.6 percent dip in oil refining sub-sector. Of the 14 sub-sectors in the manufacturing sector, Motor Vehicles & assembly, with 13 percent appreciation, grew most in the sector trailed by plastic & rubber products (4.36%), cement (2.86%) and non-metallic (3.67%).

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produce. Also, logistic issues were raised due to the bad state of the Nigerian roads which also affects the ease with which farmers convey their produce from their farms and stores to the market. According to experts, Nigeria can only realise its export potentials and diversify its revenue through agriculture when bulky agro commodities can be easily transported at cheaper rates to help reduce production cost thereby enabling it compete favourably at the international market. “Infrastructure impacts export competitiveness. If we do not do

anything about our infrastructural gaps we would not get anywhere economically,” said Madu Obiora, former chairman, export group, Lagos Chamber of Commerce and Industry (LCCI). “The roads are bad; it takes me two to three days to transport my yam produce from Benue (located in middle belt, of Nigeria) to Lagos (located in Southwest). I lost more than 300 tubers of yam on my last trip to Mile Twelve market in Lagos because the trailer got spoilt on the road and my yam produce was stolen since the trailer slept on the road for a night,” Godwin Apak a yam farmer in Benue state told BusinessDay. These issues however reflected in consecutive three quarters of decline in GDP of the agriculture sector at constant prices since Q3 2018. While GDP growth improved 3.17 percent y/y, q/q the sector GDP value declined by 28 percent to N3.5 trillion from N4.9 trillion in Q4 2018. The agriculture subsector report shows that crop production remains the major driver of the sector. This is evident as it accounted for 85 percent of agriculture GDP. Quarter-on-quarter, growth stood at -25.27 percent. Agriculture contributed 19.11 percent to nominal GDP during the quarter, higher than the recorded contribution in the first quarter of 2018 but lower than recorded in the fourth quarter.

OLUFIKAYO OWOEYE

nfrastructure is a strategic economic growth driver for any country; it serves as the foundation for public development. Governments around the world budget huge amounts for capital expenditure, largely because this expenditure trickles down to every segment of the economy. This is so because it affects most human endeavour in various fields of life such as production, construction, technology, and procurements. In an emerging market such as Nigeria, the construction sector plays a very crucial role and governments at various levels have continued to restate their commitments toward bridging the infrastructural gap bedevilling the nation. In Q1 2019 figures released by the NBS, the Construction sector grew by 66.99% in nominal terms (year-on-year) an increase of 58.02% points compared to the rate recorded in the same quarter of 2018. This was also higher when compared to the rate recorded in the preceding quarter. On a quarter-on-quarter basis, nominal growth was recorded at 10.62%. Construction contributed 6.17% to nominal GDP in the first quarter of 2019, higher

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than the 4.13% contribution a year earlier, and the 5.03% contributed in the fourth quarter of 2018. It also accounted for 4.09% of real GDP in the first quarter of 2019, higher than its contribution of 4.04% in the same quarter of 2018, and the 3.48% contribution recorded in the preceding quarter. The sector witnessed slower growth compared to its performance in previous quarters. In nominal terms, the sector grew by 11.45% (year-on-year) and quarter-on-quarter growth rate recorded in the current quarter was -6.41%. The Information and Communications sector contributed 10.61% to nominal GDP in Q1 2019, slightly lower than the rate of 10.65% recorded in the same quarter of 2018 but higher than the 10.23% it contributed in the preceding quarter. The sector in the first quarter of 2019 recorded a growth rate of 9.48% in real terms, year-on-year, representing an increase of 7.90% points. Quarter-on-quarter, the sector exhibited a growth of -7.29% in real terms. In terms of contribution to real GDP, the sector contributed 13.33% in Q1 2019, higher than in the same quarter of the previous year in which it accounted for 12.42% and in the preceding quarter, in which it represented 12.40%

Tuesday 21 May 2019

BUSINESS DAY

GDPREPORT Nigeria’s real estate sector reports first growth in 3 years …exits recession with 0.93 growth in Q1 2019 ENDURANCE OKAFOR

fter contracting for 12 consecutive quarters, Nigerian real estate sector exited recession in Q1 2019, data by the National Bureau of Statistics (NBS) Monday show. In real terms, the GDP growth for the real estate sector stood at 0.93 percent. This is the first positive growth reported for the property industry since Q1 2016 when the state funded bureau started collating the data. According to Olurogba Orimalade, Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) Lagos State Branch, the growth reported for the review quarter is as a result of adjustment in the property

market. “The property market has come to its reality, and as such there is a lot of adjustments; in terms of rentals and even sales as stakeholders in the industry are now giving more flexible terms, knowing the hardship in the economy. So those past three years were years of readjustment,” Orimalade said. He added that the readjustment wasn’t so successful before now because of factors like high cost of finance and scarcity of the US dollar as these were among other challenges that impacted negatively on the sector. Analysis of the quarterly report revealed that the 2019 first three months’ growth rate is 10.33 percentage points higher than the growth reported in the comparable period of 2018, when

Real estate growth rate

the sector recorded the worst contraction at -9.40 percent. “A lot of real estate players have counted their losses and are now taking into consideration what the market really demands and not building just because they have the money to develop. Rather, they are going in line with what is demanded

and are strategically providing products to meet those needs,” an industry expert said on the condition of anonymity. On quarter-on-quarter comparison, the 0.93 percent reported for the first three months of 2019 is 4.78 percentage points higher than the Q4 figures of -3.85 percent.

“Yes, the Q1 figure is a good development but in reality, a lot of negative stories went under the bridge for the sector to be where it is. There are a lot of financial institutions, AMCON for instance, the biggest real estate holder, stomached a lot till today and a lot of those debts have been written off,” Orimalade told BusinessDay. Analysis of the sector’s performance in the last three years revealed that the growth rate at 0.93 percent reported for the Nigeria property industry is higher than both the Q1 growth rate for 2017 and 2016. The figure for the review quarter is 5.89 percentage points higher than the Q1 2016 growth rate of -4.69 percent and also better than the Q1 2017 growth rate of -3.10 by 4.03 percentage points.

NBS data affirms the struggling state of Nigeria’s manufacturing companies MICHAEL ANI & GBEMI FAMINU

hen analysts said manufacturing companies in Africa’s most populous economy are struggling, most people took it as a grain of salt however, data from Nigerian statistical agency have corroborated that fact. Growth in the manufacturing sector stood at 0.81 per cent year 0n year, the lowest growth in two quarters as most countries still struggle to cope with the high operating environment that has eroded their margin. “The decline is not a surprise given the election activities which came up in Q1 2019”, said Gbolahan Ologunro, Equity research analyst at Lagos-based CSL Stockbrokers. “Activities in the manufacturing sector is affected by stability, therefore, the postponement of the election disrupted the business environment and the manufacturing sector as well.”’ “The decline is also consistent with the CBN’s PMI result released in January which also showed a decline in the activities of the manufacturing sector” he added. According to Ologunro, manufacturers and investors are still waiting on the policy direction of the government before making decisions and embarking on business activities”. The Central bank in its last Monetary Policy Meeting (MPC), surprising cut the

benchmark interest rate 50 basis points from a position it has held since November 2015 at 14 per cent to 13.5 per cent. The move by the apex bank was to signal a soft landing that is aimed at boosting the slow pace of economic growth by encouraging banks to loan to the real sector economy. After the cut in the MPR, the inflation which measures the rate at which prices of goods and services are sold increased at a faster pace year on year to 11.37 per cent April compared to the 11.25 per cent increase in the previous month. Analysts say they expect the monetary policy committee to adopt a “wait and see” approach in fixing the interest rate in its meeting scheduled to hold today. Data from the National Bureau of statistic showed that despite the increased growth in the GDP year on year to 2.01 per cent in Q1 2019, the growth slowed by 37 basis point from 2.38 per cent in Q4 2018 on slower growth in both the non-oil and oil sector. The manufacturing sector which gave the GDP a boost in the previous quarter suffered setbacks in q1 2019 as it dropped sharply to 0.81 per cent from the 2.35 per cent achieved in Q4 2018. This setback is a result of the unhealthy business environment manufacturers operate and further buttresses the 2019 World Bank Doing Business report which put Nigeria on the 146th position out of 190 countries. www.businessday.ng

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A further analysis of the Q1 2019 report by the nation’s bureau revealed that the real estate contributed 5.58 percent to overall real GDP in the review quarter. The recorded contribution in Q1 was however lower than contribution recorded in the preceding, as well as the corresponding, quarters of 2018. In the review quarter, Nigeria’s economic growth slowed by 0.37 percentage points and grew by 2.01 percent compared to the 2.38 percent it reported in the previous quarter. The fall in GDP growth rate came after the oil sector, the country’s biggest foreignexchange earner, contracted. Gross domestic product in Africa’s largest oil producer expanded by 2.01 percent in the three months through March from a year earlier.

Tuesday 21 May 2019

BUSINESS DAY

NEWS

Panic in Delta community as fire guts Trans Forcados pipeline Francis Sadhere, Warri, & DIPO OLADEHINDE, Lagos

here is palpable fear within the Chamomi creeks in Yeye community, Burutu Local Government Area of Delta State as the Trans Forcados pipeline was on Sunday evening gutted by fire. The Trans-Forcados pipeline, which transports about 200,000 to 240,000 barrels of crude per day, is the major trunk line in the Forcados Pipeline System. It is also the second largest network in the Niger Delta after the Bonny Oil Pipeline System. The part of the pipeline in question is said to be operated by Heritage Energy Operational Services Limited. Chairman of Yeye community, Phillip Fianka, disclosed this in a text message to newsmen on Monday in Warri, noting that the incident occurred at the wee hours of Monday. According to Fianka, “Happening now, there is a severe fire outbreak in Trans Forcados Pipeline (TFP) Chanomi Axis Yeye Community.” Also, Evans Etimigba, Chartered Peace Reconciliator in the Niger Delta region who also spoke with BusinessDay, said the cause

of the fire had not been ascertained. Etimigba said there was fear among the residents that the fire might probably spread to other parts of the community and called for quick intervention of the relevant government agencies to curtail the inferno. But confirming the incident, Sylvester Okoh, general manager, community relations, Heritage Energy Operational Services Limited, said, “At about 11:00pm on May 19, 2019, a fire incident was reported at the crude oil spill site along the Trans Forcados pipeline around Yeye Community. “It was gathered that the fire occurred due to excessive heat from a pumping machine which was being used to transfer crude oil from the spill site into a barge. “The fire was reported to have destroyed some equipment at the scene. The houseboat and gunboats were safely relocated from the scene of the fire incident,” Okoh said. A similar event occurred in Oju-Imole, Ilaje Local Government of Ondo State on April 25, 2019, when a seven-day blaze at Oju-Imole Field operated by

Chevron at Okorigho ravaged the community. According to the residents, despite bringing the inferno to the attention of Chevron, the operator of the oil field, the blaze continued consuming a large expanse of land and destroyed marine/wildlife while constituting heavy pollution without intervention from the authorities or Chevron. Nigerian National Petroleum Corporation (NNPC) said last year that over $800 million (N244.8bn) had been lost to breaches in the Trans Forcados Pipeline, one of the nation’s key export routes, this year. The corporation disclosed this in a statement while clarifying the award of oil infrastructure surveillance contract to Ocean Marine Solutions for the protection of the 87-kilometre TFP. Early this month, Reuters quoted industry and local sources as saying loadings of Nigeria’s Forcados crude oil, one of the nation’s largest export grades, was delayed by at least 10 days after a leak on the main pipeline. Flows through the key Trans Forcados pipeline were temporarily reduced while the leak was being repaired last week, one of the sources familiar with the matter said.

Alexander Humboldt Fellows call for re-greening Northern Nigeria to curb resource wars

lexander Humboldt Fellows in Nigeria have called on the Federal, State and Local governments to embark on re-greening Northern Nigeria, revisiting the issue of the political, social and economic formations of the country and prioritising education as the best way to address and solve Nigeria’s problems of growing resource conflicts. They worried about the growing incidence of “resource wars” over the control and management of natural resources across the country. The Humboldt Fellows stated in their six-point communiqué that Nigeria required “political will by the government for effective and efficient management of Nigeria’s resources for the interest of Nigeria” while the challenge of climate change “can be contained only through intensive research that will produce technological know-how and facilities to re-green our societies.” The scholars noted, “The urgent need for government to commission renowned researchers to study the local philosophies, cultures, and folkways of all ethnic groups in Nigeria with the view to enhancing inter-group relations. Most of the crises arise from the general ignorance of our diversity.” They called for “an established system of constitutional review to create the opportunity for the different communities to be guaranteed their

rights of nationhood and aspirations for self-determination.” They said it would ensure “sustainable security in the spirit of implementing human security needs as the most appropriate means of guaranteeing peace, security and prosperity for Nigerians within the existing legal framework.” The Humboldt Kollegg dwelt on the theme of “Nigeria’s Resource Wars.” Egodi Uchendu, professor and director of Professor B.I.C. Ijomah Centre for Policy Studies, UNN, convened the conference. Uchendu stated that the Humboldt Kolleg, as part of the commemoration of its 250th anniversary, addressed the issue of resource wars in Nigeria in answer to the question of what Alexander Humboldt would have tackled were he alive today. Drawing on that research framework, the scholars at the five-day gathering interrogated the questions of Why are Nigerians at loggerheads with each other over our natural resources? How can we better manage and regulate the use of our resources to minimise conflicts? Are these conflicts, indeed, resourcerelated or are they engineered by other factors? Papers presented included “Resources, Geopolitical Rivalries, Ethnic Instrumentalisations and Conflictuality between Southern Libya, Niger and Nigeria from Ot-

toman to Colonial Times” by PD. Dr Nora Lafi of Leibniz-Zentrum Moderner Orient, Berlin, Germany. Prof. Sati U. Fwatshak, University of Jos spoke on “Herder-Farmer Conflicts in Plateau State: Colonial Origins and Current Trends,” while Major-Gen Ishola Williams (Rtd) did a “Diagnosis of Deadly Politrickal Violence, not Resource Wars; Federalist Structure based on Subsidiarity as Prescription.” Asst. Commissioner of Police, Dr Abraham Nabhon Thomas spoke on “Policing Conflict Areas: Contents, Context and Operational Strategies”. Professor S. O. Onyegegbu of the University of Nigeria chaired the 15-personCommuniqueCommittee with Chukwuemeka Agbo of the University of Texas at Austin, USA and Patrick C. Okpalaekeof the University of Uyo as secretaries. The Humboldt Kolleg drew scholars from within and outside Nigeria. Participants included His Excellency, the Ambassador of the Federal Republic of Germany in Nigeria, Dr Bernhard S. Schlagheck; the Representative of the Vice Chancellor, Bowen University, Iwo, Osun State, Dr A. A. Aderibigbe; Major General Isola Williams (Retd) of PANAFSTRAG, Lagos; and Prof. Dr Dmitri van den Bersselaar, the Director of African Studies at the University of Leipzig, Germany, who was the Keynote speaker.

Nigeria missing as SA, Ghana top African Power, Energy, Water Industry awards MIKE OCHONMA

L-R: Oyinkansola Alabi, founder, Emotions City; Leke Alder, principal consultant, Alder Consulting, and Godman Akinlabi, senior pastor, Elevation Church, at a press conference on the Alder Church Report 2019 in Lagos, yesterday.

AirPeace, passenger at loggerheads over airline’s action to deplane him IFEOMA OKEKE

irPeace, Nigeria’s carrier, and Christopher Aniagbaoso, a passenger who was supposed to be on-board the Lagos-Owerri flight on May 12, have been at loggerheads over the decision of the airline to de-board him. While Aniagbaoso alleged that he was de-boarded from the aircraft over his inability to speak English, the airline refuted the claim insisting that the passenger was told to leave the aircraft in order to guarantee the safety of its crew and customers. The airline also alleged that all through his interaction with its ground staff, Aniagbaoso communicated in fluent English, adding that his claim of not being able to communicate in English at the point of the safety briefing was, therefore, only

meant to disrupt and delay the flight. Speaking in Igbo to the press in Lagos Monday, Aniagbaoso said he was at the airport on the said day but missed his flight after receiving a call that took almost 30 minutes. He said he went on to ask if there was another available flight and he was told to pay N7,200 for the next flight at 2pm same day, as he was being attended to by a lady who spoke in Igbo and was allotted a seat by the emergency exit. He said before take-off, he was instructed on how to use the emergency exit but told the hostess that he didn’t understood English. She called a colleague who was Igbo but he said she couldn’t understood what was being said. He said he later got help from a fellow passenger who explained the instructions that were being given but www.businessday.ng

was surprised when he was asked to leave his seat by the hostess on order from the pilot. He alleged that he further requested for another flight for which he was asked to pay N3,000 as noshow fee to which he objected to, stating that he had no faults as to why he couldn’t go with the aircraft. According to Aniagbaoso, after several arguments, he agreed to pay but was told by the manager that he wouldn’t be allowed to use the airline henceforth. However, in a statement issued by Chris Iwarah, AirPeace corporate communications manager, he said, “Christopher Aniagbaoso had missed his morning Lagos-Owerri flight on May 12, 2019. He later showed up for the afternoon flight in good time and was issued an overwing exit seat on request.

“After boarding, he was approached by a crew member for the normal safety briefing for passengers in the over-wing exit seats, but he suddenly claimed he could not understand English. Other passengers around him offered to translate to him, but he insisted that the crew must brief him in Igbo. “When all efforts to have Aniagbaoso cooperate with the crew failed, the crew advised him to change his seat as the flight was already running late. He declined the advice to change his seat. The captain of the flight, who was eventually briefed on the development, also did everything to secure Aniagbaoso’s cooperation to no avail. At this point, our crewmembers were left with no other alternative than to advise Aniagbaoso to disembark to enable the flight depart.

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South African leader in renewable energy, a former influential Ethiopian government minister, the Ghana Grid Company and a range of renewable energy projects were among the winners at the annual African Power, Energy and Water Industry Awards announced in Cape Town, South Africa, recently. The awards ceremony honours the leading utilities, projects and people in the water and energy industries on the continent and forms part of the African Utility Week and PowerGEN Africa conference and exhibition. BioTherm Energy CEO Jasandra Nyker won the Outstanding Contribution Award: Power. The South African businesswoman has grown BioTherm Energy from having 4mw of secured power purchase agreements (PPAs) to more than 450mw of secured PPAs. “It has been eight years since we started building BioTherm Energy into a renewable energy investment and development platform. I dedicate this award to my team because it is very much a team effort. We’ve built an amazing business and we have expanded into the rest of Africa,” Nyker said. BioTherm Energy has built a pan-African business by winning projects in Zambia, Burkina Faso, Côte d’Iviore and Ghana, and has also secured large-scale projects with some of the leading global mining companies. Meanwhile, the Kathu Solar Thermal Power Plant, a @Businessdayng

100mw concentrated solar power project based in the Northern Cape, won the GridTied Renewable Energy Project of larger than 10mw. “What is very unique about this type of project is firstly the clean technology,” Siyabonga Mbanjwa, Southern African MD for SENER, one of the construction partners on the project, said. “It also offers production during peak periods. We are using molten salts as a storage mechanism and that allows us to continue to produce electricity even when the sun has set,” he said during the awards evening. He said he was also very proud of the close ties developed with the community. Further, the Lifetime Achievement Award was won by Wondimu Tekle Sigo, former state minister in Ethiopia’s Ministry of Water, Irrigation and Energy, who served in the position for seven years. He is well respected for the design and construction of various infrastructure projects, including the expansion of a rural electrification programme for more than 6,000 towns and villages in the region. Among his many achievements, he upgraded the electric distribution systems of eight cities, including Addis Ababa. The former minister said he was fortunate to have been involved in many interesting projects in his career, in both water and energy “especially the 6 000 MW Grand Ethiopian Renaissance Dam hydropower project, which is under construction on the Blue Nile”.

Tuesday 21 May 2019

BUSINESS DAY

news

Creative Hub: Edo woos investors to film, TV village … rallies patent, proprietary medicine dealers for improved healthcare

s part of plans to open up the state to opportunities and attract investment from Nigeria’s booming creative industry, Edo State governor will on May 23, host stakeholders and investors in the industry, in the build-up to the commencement of the state’s Creative Hub, an expansive film village dedicated to the entertainment and film industry and allied sectors. The stakeholders meeting, to hold in Government House, Benin City, is organised by the state’s skill development agency, EdoJobs and the Edo State Investment Promotion Office in partnership with the Market Development in the Niger Delta (MADE II) and Trace TV. Senior special assistant to the state governor on Skills Development and Job Creation, Ukinebo Dare, said, “The meeting is an avenue for industry players and investors drawn from the state, across the country and the Diaspora to learn about the numerous opportunities in the state, specifically at the Edo Creative Hub.” Dare, who is also head, EdoJobs, said: “We are excited to

have this stakeholders meeting as it will expose industry practitioners as well as investors to the opportunities in the state. The hub will cater for the needs of filmmakers, producers, directors, musicians, animators, music artists, and many others, who need a location fitted with state-of-the-art facilities to work at relatively low cost. “The Hub is expansive and can be remodelled to whatever setting required for production. It also has a boarding facility and is located less than 30-minutes’ drive from the Airport.” She said the facility would come in compartments and investors will get the opportunity to take up different lots to develop studios or any other structure for use in the creative industry. According to Kelvin Uwaibi, senior special assistant to the governor on Investment Promotion, said the facility is an investors delight and that prospective investors would get the opportunity to learn of the numerous opportunities at the Hub from the governor and also visit the site during the upcoming meeting.

Discos need $10bn investment to boost electricity supply in 5 years - report HARRISON EDEH, Abuja

igeria’s 11 electricity distribution companies (Discos) will require about $10 billion in investment involving new investors, to deliver quality electricity services over a five-year period, according to estimates quoted by a study. At a conference organised by the French Agency for Development (AFD) on the Nigeria power sector’s challenges in Abuja on Monday, AFD said it commissioned the in-depth study with the support of the European Union (EU) on the Nigerian Electricity Supply Industry (NESI) challenges so as to contribute to the design of a way forward for the sector. The study carried out by a consultancy firm, AFMercados under a technical assistance programme, said, “According to the best estimates, the 11 Discos operating in Nigeria would need more than $10 billion in 5 years, innovative financing solutions must be devised, possibly involving new players.” In a presentation, Jose Guerra, team leader of Capacity Building and Technical Assistance Programme (CaBTAP), AFMercados, said the aim of this study was also to contribute to empowering decision makers in making the right decisions in the Nigeria power sector, with reliable information. AFD said along with other development institutions involved in supporting the power sector in Nigeria, they had witnessed the

stall of investments in the sector since it was privatised. This has led to the build-up of a major bottleneck, constraining more access to electricity for the public and the economy, driving up the costs for users who can only resort to diesel powered generation, AFD said. The failed attempts at financing Discos led the Federal Government and its development partners to think out ways of breaking the vicious cycle, starting from an initial infrastructure gap and leading to today’s severe liquidity crisis with a revenue shortfall that is over $3 billion. The report traced causes of the shortfall to the lack of a cost reflective tariff, customer dissatisfaction and a lack of performance in the power sector in general, which has led to a shutdown of access to finance. In conducting the study, AFD said Mercados worked closely with stakeholders in the sector and the Discos since mid2017 following the guidelines of the Performance Improvement Plans (PIP) released by the Nigerian Electricity Regulatory Commission (NERC). The study shed light on key actions to be taken to solve the liquidity crisis in the sector such as in the areas of segmenting the electricity market into manageable urban areas, rural areas, and potential Eligible Customers. The other segmentations are informal settlements in urban areas and peri-urban areas, and the difficult to manage rural areas. www.businessday.ng

L-R: Kyari Bukar, past chairman, Nigerian Economic Summit Group (NESG); Edem Wosornu, head of office, United Nations Office for the Coordination of Humanitarian Affairs (OCHA), Nigeria; Herbert Wigwe, GMD, Access Bank; Kashim Shettima, governor, Borno State, and Adewale Tinubu, group chief executive, Oando plc, during a private sector visit to IDP camps in Borno State under the umbrella of the United Nations Nigeria Humanitarian Fund-Private Sector (NHF PSI)

Housing remains on priority list in Nigeria over low supply, weak demand CHUKA UROKO

or most adult Nigerians and households, housing tops their priority list. But it is a dream that is hardly realised for reasons of inadequate supply by developers and weak, ineffective demand by seekers. Nigeria has very scary housing statistics. An official (conservative) estimate of housing deficit in the country is put at 17 million units. The country’s total housing stock is about 13 million units for about 200 million population. Of the 13 million housing units, 95 percent have no formal mortgage. Chudi Ubosi, an estate surveyor and valuer, says houses in this class are “dead assets” because they are unbankable. This means they cannot be used as collateral to secure bank loans. Besides a low homeownership level which is a little above 10 percent as against Singapore’s 65 percent, UK’s 72 percent and over 80 percent in the US, a report compiled by Pison Housing Company says about 80 percent of the Nigerian population lives in rented accommodation, spending 50 percent of their income on house rent.

The poor housing situation in the country has been made worse by the 2016-2017 economic recession which hit the sector harder than any other. Long after the larger economy exited recession in Q2 2017, real estate remains in recession, recording -3.8 percent growth year-on-year in Q4 2018 and -4.7 percent for full year 2018, according to figures from the National Bureau of Statistics (NBS). All the housing problems in Nigeria revolve around finance. A recent Reuters report notes that “housing finance remains in its infancy” here and this accounts for the low mortgage/ GDP ratio of 0.6 percent that compares unfavourably with South Africa’s 31 percent. Though government has competing claims for its limited budgetary funds, experts expect that, given its social and developmental role, government should be filling the vacuum within the housing industry or creating the enabling environment for private sector operators to do so. The Federal Mortgage Bank of Nigeria (FMBN) is government’s main housing financing institution but has been hamstrung by capital constraints.

Over the past few years, the apex mortgage bank has issued over 3,500 mortgages, expanded the national housing fund (NHF) to non-government employees, and launched rent-to-own and other products. Expectation is that the bank will do more when the plan to recapitalise it to the tune of N500 billion materialises. The NHF facility is granted at 4 percent interest rate to accredited primary mortgage banks (PMBs) for on-lending at 6 percent to NHF contributors over a maximum tenor of 30 years, but this has not had impressive showing. This partly accounts for why mortgage loans to the private sector by PMBs stood at N169.5 billion in December 2018, according to the CBN’s latest statistical bulletin. The Reuters’ report notes that data on loan defaulters were not provided, pointing out that given the volatility of the labour market, it would not be a surprise if non-performing loans were significant. The Nigeria Mortgage Refinance Company (NMRC) is government’s latest intervention in the housing sector. Established in 2013 to provide liquidity to the mortgage market and enhance the maturity structure of the

industry’s loans, the company in December 2018 disclosed that it had refinanced mortgage loans totalling N18 billion. This should encourage mortgage lenders to boost housing loans, but it has not. PMB operators acknowledge that the N18 billion which was used to refinance an estimated 1,045 loans presented by the PMBs has not created the anticipated impact, citing high interest rate and unaffordable property prices in the market. Analysts take this further. They see some structural issues that need to be realigned in order to make the refinancing by the NMRC very effective and create the desired impact. “There are three levels of financing that need to be adequately catered for before we get to the refinancing right,” said Femi Akintunde, CEO, Alpha Mead Group. Akintunde listed those levels as developer finance that will create stock of mortgage-able houses, equity finance to improve affordability by buyers or off-takers, and mortgage finance to enable mortgage banks to create long-term mortgages to support the equity finance by buyers.

CNN International Commercial appoints Phil Nelson COO TEMITAYO AYETOTO

NN International Commercial (CNNIC) has appointed Phil Nelson as chief operating officer (COO) to lead CNN’s operational and international growth initiatives outside of advertising sales. As COO, Nelson will oversee CNNIC’s Business Development and Strategy, Finance, Strategic Planning and International Sales Operations as well as its Content Sales and Licensing. This includes managing and growing CNN’s relationships with over 300 digital, broadcast and Out of Home content partners – from local CNN branded channels to airlines and hotels that carry CNN content live and

on-demand. Previously, Nelson was managing director, Turner North Asia and South East Asia Pacific. In this role, he has overseen all aspects of Turner’s business in these regions including distribution of CNN International and taking a key role in establishing local partners CNN Indonesia and CNN Philippines. Nelson has also held other business development and strategic planning roles at Turner since he joined in 2010, and has significant digital experience from his time at AOL, culminating in him being managing director for AOL Asia. In addition, Nelson holds an MBA from Harvard University and, prior entering the corporate sector, was

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a commander in the US Navy. Nelson will be part of the CNNIC senior management team, reporting directly into Rani Raad, president of CNNIC, and work closely with a wide range of divisions across CNN and WarnerMedia. Nelson will continue to be based in Singapore in the near-term and his team is spread across the globe, particularly in key CNNIC hubs of Hong Kong, Singapore, London and Miami. “The CNNIC business has continually evolved since it was created back in 2013 to optimise the revenue, brand and commercial partnerships across our dynamic offering of CNN content and products,” said Rani Raad. “I am delighted that Phil joins us as we enter the next chapter of @Businessdayng

our business in a role that brings together all the operational, strategic and non-advertising sales revenue under one leadership. Phil has a first-rate track record at Turner and will bring a unique skillset of business acumen, creative thinking and forensic focus.” “After many successful and exciting years at Turner Asia, I am very pleased that my next move is within the WarnerMedia family to a brand as remarkable as CNN,” said Phil Nelson. “CNNIC has done a great job in innovating and adapting its business to stay ahead of the competition during a period of unprecedented change in the news and media industry. I am looking forward to contributing to this success in the years to come.”

Tuesday 21 May 2019

BUSINESS DAY

POLITICS & POLICY

INEC obeys court orders, withdraws 25 certificates-of-return …Table can still turn if appeal reverses rulings tomorrow - Okoye

Regis Anukwuoji, Enugu

he Independent National Electoral Commission (INEC) has withdrawn 25 certificates-of-return issued to some candidates that won the 2019 general election in compliance with court orders. Festus Okoye, chairman of Information and Voter Education Committee (IVEC), made the disclosure yesterday in Enugu at a ‘Forum on Media Coverage of 2019 General Elections.’ According to Okoye 20 of the 25 certificates-of-return were withdrawn from All Progressives Congress (APC) members to other APC members; while two from People’s Democratic Party (PDP) members were

withdrawn and issued to other PDP members. He further said that the other three were withdrawn from APC and PDP; and given to other political parties. He said: “Before we left INEC national headquarters on Friday; the commission has withdrawn 25 certificatesof-return from the first owners to their new owners following court orders to do that.” Okoye, however, said that those whose certificate-ofreturns were withdrawn could still reclaim them if they appeal the court ruling that ruled against them. “INEC is not an adjudicatory body, but always obeys court rulings. If by tomorrow the appeal reverses the ruling of the lower court, INEC will comply accordingly. So we are still waiting for more rulings. It is a continuous

process,” he said. Commending the media, Okoye, said the Commission was impressed by the level of openness and robust engagement before, during and after the election, adding that the media had become critical stakeholders for the success of future elections. The Chairman of IVEC noted that the media had become the first-line of reach of the masses as well as platform for explanation of INEC political and electoral decisions. He urged the media and its practitioners to dig deep into the Electoral Act to ensure that the import of the recent amended sections are made known to the public. “The media should also centre on the aspect of using Alternative Dispute Resolution (ADR) to resolve electoral issues especially at the

Festus Okoye

party levels instead of going to the court,” he advised. In his remarks, Chris Isiguzo, president of the Nigeria Union of Journalists (NUJ), said that the media and its practitioners enjoyed a vast and robust relationship with INEC before, during and after the elections. Isiguzo said that INEC performed creditably given the resources and length of co-operation from other stakeholders involved in the electoral processes. “However, we are here to evaluate the entire process and see where we can strengthen our engagement and better the electoral system. We would be open and say it as it; so that the electoral and democratic processes can be better even as we go into off season elections,” he said.

Agbakoba goes to court to stop funds allocation to LGs

Godfatherism comment: Salvador replies El-Rufail

lisa Agbakoba, a senior advocate of Nigeria (SAN), has filed a suit at the Federal High Court to stop allocation of public funds to unelected and unaccountable Local Government Councils, running into trillions of naira. A statement signed by him, a copy of which was made available to BusinessDay, said the “The basis of the case is that Section 7(1) of the 1999 Constitution guarantees a system of democratically elected government councils. But Local Government Councils in Nigeria are never elected and are unconstitutional.” According to him, “Allocation of public funds to them

…Says ‘attack on Tinubu would not be condoned’

is a violation of the Constitution, as there is collusion with state governments in the use of trillions of naira of public funds.” Agbakoba’s case raises concern that unelected persons have unimpeded access to huge monthly allocations that are actually intended for democratically elected Local Government Councils, as guaranteed by Section 7 of the Constitution. He noted that Nigeria operates democratically elected governments at all levels, insisting that “The current situation where most of the 774 Local Governments are unelected is not only unconstitutional but meant no development at the Local Governments”.

Agbakoba also noted that corruption is widespread in Nigeria because unelected persons that are not accountable to the electorate have received trillions of naira of public funds. Although the Federal High Court denied the case, it appears that Agbakoba’s concerns has found support with guidelines recently issued by the Nigerian Finance Intelligence Unit (NFIU), which directs state governors and local governments to follow the Constitution regarding disbursement of Local Government funds. Obviously, the new NFIU’s guidelines, like Agbakoba’s case, will uphold accountability of Public Funds at Local Government Level.

PDP refutes Akpabio’s expulsion claim ANIEFIOK UDONQUAK, Uyo

he People’s Democratic Party (PDP) in Akwa Ibom State has refuted claims by Godswill Akpabio, former Senate Minority leader that he was expelled from the party which caused his defection to another party. The party said there was no record showing the existence of such a punitive move undertaken against the senator by his ward or chapter executive council Ini Ememobong, publicity secretary of the party, said in Uyo, the state capital, that

Akpabio’s claim was false and without any basis. The party said the former Senate Minority Leader would have been brave enough to have prepared himself to face the natural consequences of his actions and not to engage in a doublespeak. “The Akwa Ibom State chapter of the People’s Democratic Party has read a news item flowing from the judgment of a Federal High Court sitting in Abuja, presided over by Justice Abang wherein the trial judge held that Senator Akpabio led evidence to show that he was expelled from the www.businessday.ng

People’s Democratic Party and therefore, was justified in law in ‘moving’ to the APC. “We make bold to state that at no time was Akpabio suspended or expelled from the party. Akpabio had announced to the world on August 8, 2018 that he was defecting from the PDP to the APC in pursuit of national interest and to stem the tide of defections at the National Assembly,” he stated. He alleged that the then Chapter chairman of the party in Essien Udim Local Government Area where Akpabio hails from had forged the expulsion letter.

Iniobong Iwok

oshood Salvador, a chieftain of the All Progressives Congress (APC) in Lagos State, has said that attack on Bola Ahmed Tinubu, national leader of the party, would not be condoned. Salvador was reacting to a comment recently credited to Governor Nasir El-Rufai of Kaduna State El-Rufai, where he talked about how to retire godfathers and how to end godfatherism in Lagos in particular; a statement observers said was targeted at Tinubu. Reacting to the comment, Salvador urged El-Rufai to concentrate his effort on solving the alleged numerous socio-economic challenges confronting the people of Kaduna state, rather than making inciting comments. El-Rufai had at a forum organised by the Bridge Club recently in Lagos, prescribed steps to curbing godfatherism in politics. He was quoted as saying that he had retired four political godfathers in Kaduna State, and also suggested ways to retire godfathers in Lagos State politics.

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Moshood Salvador

Tinubu and influential figure in politics of Southern Nigeria, is also a former governor of Lagos State between 1999-2007. He led a coalition of opposition parties which gave birth to the APC in 2015, and took power from the then ruling People’s Democratic Party (PDP). But Salvador speaking to journalists on the side-lines of the annual Ramadan Lecture he organised at his residence in Lagos, described Tinubu as a gift not only to the South-West, but the entire nation. Salvador, a former chairman of the PDP in the state, said there was no way anyone could divorce the exponential growth the state has recorded since 1999 from the vision of Tinubu. He said Tinubu had con@Businessdayng

tributed immensely to the development of Lagos State particularly, and the progress of its residents. “It is important to let the Governor of Kaduna State know that it is wrong for him to come to Lagos and start talking about godfatherism. We do not have any problem with leaders in Lagos and El-Rufai should mind his business rather than coming here to tell us what is not. “We hear of serious issues in Kaduna; the issue of unpaid salaries, the issue of killings and attacks on innocent people. El-Rufai has not addressed all these and he is talking about a state that is working. “We would not condone unnecessary attacks on our leaders. Asiwaju Bola Tinubu has done extremely well for the nation and the state in particularly,” he said. According to him, “He laid the foundation for the growth of the state’s IGR from N400million in 1999 to the billions that it is today. “There is no way we can talk about a modern Lagos without mentioning Tinubu. He is a gift to the Yoruba race, second only to Awolowo. We respect him a lot and would not condone attacks on him.”

Tuesday 21 May 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Google suspends Huawei from Android services

Restriction forces Chinese tech giant to use basic version of operating system LOUISE LUCAS AND NIC FILDES

oogle has dealt a blow to Huawei’s fastgrowing consumer smartphone business by suspending the delivery of key software and technical services to the Chinese company, according to two people familiar with the situation. Huawei, which overtook Apple to become the world’s number two smartphone maker in the second quarter of last year, according to Gartner, relies on Google’s Android operating system for its phones — of which it shipped more than 200m last year. Google’s move means Huawei would only have access to the basic, publicly available version of Android. The suspension, first reported by Reuters, comes after Washington last week added Huawei to a list of 44 Chinese entities subject to US export controls because they pose a “significant risk” to US national security. Adding Huawei to the so-called entity list — which means US groups will be required to secure a licence from the US government before selling any parts or components to the Shenzhen-based company — was the latest salvo from the Trump administration. The US has long fretted that Huawei posed a threat to national security. The repercussions from the move by Washington hit technology stocks in Europe on Monday amid reports that the world’s biggest chipmakers, including Qualcomm, Broadcom, Intel and

Infineon, were planning to stop supplying Huawei. The Stoxx index tracking Europe’s tech sector was on course for its biggest single-session decline since February. It fell 2.4 per cent, outrunning a decline of 0.3 per cent for the wider Stoxx 600. Peter Garnry, head of equity strategy, at Saxo Bank, said Google’s move was “effectively the starting signal of a technology Cold War”, adding: “What we are witnessing is a potential reconfiguration of global trade…” “US companies with significant revenue exposure to Greater China (both the mainland and Hong Kong) are the ones facing the most downside risk from any further escalation of the trade war.” Google said on Monday: “We are complying with the order and reviewing the implications” but added that Google Play and the security protections from Google Play Protect would continue to function on existing Huawei devices. Huawei said that, as one of Android’s key global partners, it had worked closely with Google’s open-source platform to develop an ecosystem that has benefited users and the industry. “Huawei will continue to provide security updates and aftersales services to all existing Huawei and Honor smartphone and tablet products covering those that have been sold or still in stock globally,” it said. In a research note to clients, Citi analysts said the potential software ban “could paralyse Huawei’s smartphone and equipment business”.

Ford to cut 10% of global salaried workforce Carmaker to lay off 7,000 workers in effort to save $600m been focused on its struggling interPETER WELLS

ord announced plans to eliminate 7,000 jobs, or about 10 per cent of its global workforce, as part of its ongoing $11bn effort to restructure its business. The move is expected to result in about $600m in annual savings for the company, chief executive Jim Hackett said in a letter to employees on Monday. Of those job cuts, 2,300 will be in the US, Mr Hackett said, adding that the group will have reduced its management structure by almost one-fifth at the end of the process. “Ford is a family company and saying goodbye to colleagues is difficult and emotional,” he wrote in a memo to staff. The company is shedding costs and attempting to stem losses outside of the US in order to position the business to push into new areas such as electric cars, where it currently lags behind competitors. Mr Hackett said the redesign of the business will include reducing the entire company to nine layers of management, down from 14 before the process started. So far, much of Ford’s efforts have

national operations in Europe, South America and China. Mr Hackett said a company-wide effort to revamp the business included 1,000 staff and came up with more than 5,000 initiatives or changes within the organisation. Ford is not alone in cutting costs. General Motors last year announced plans to shed seven plants and lay off thousands of workers to refocus its product line-up on the sport utility vehicles increasingly demanded by carbuyers. Ford initiated similar moves last year, killing off all but two of its traditional passenger car vehicles in the US. Although solid demand in the US for its trucks helped Ford report a stronger first-quarter profit than Wall Street expected, the Michigan-based carmaker has struggled recently to offset weakness in global markets. Earlier this year the company enacted a turnround strategy that included thousands of job cuts in its struggling European unit, the removal of dozens of western executives from its business in China, and plans to exit its heavy truck business in South America. www.businessday.ng

Richard Windsor, an independent analyst, said losing the Google ecosystem “is very likely to cost Huawei all of its smartphone shipments outside China” — which, according to data consultancies including Counterpoint Research, is roughly half its total. Huawei does not break out its smartphones business but it said last year that the consumer business contributed 48 per cent of company revenue. In the US, Huawei is also seen as a lightning rod for broader concerns, including theft of intellectual property and China’s rising tech prowess. It has become entangled in the US-China trade war with the effective ban coming just days after US President Donald

Trump raised tariffs on Chinese imports to 25 per cent and Beijing retaliated in kind. While the Android operating system is open source and publicly available, Huawei will no longer be able to access proprietary apps and services from Google, according to one of the people familiar with the move. Huawei, which uses Microsoft’s Windows on its laptops and tablets, has sought to develop its own operating systems. In an interview with Germany’s Die Welt, and subsequently confirmed by Huawei, Richard Yu, chief executive of the consumer division, said the company would “be prepared” in the event of any blacklisting. “That’s our plan B. But of course

we prefer to work with the ecosystems of Google and Microsoft,” he told the German publication in March. Microsoft declined to comment on the matter on Monday. Other device makers have similarly sought to develop their own operating systems, but few have made much headway. Alibaba, which runs China’s biggest ecommerce platforms, tried to build “China’s Android” but ended up locking horns with Google over just how different its Aliyun OS was from Android. Its successor, AliOS, is based on Android. Similarly, Samsung has failed to gain much traction for its Linuxbased Tizen operating system.

Goldman moves beyond Big Four by selecting Mazars as auditor Reforms forced US bank to find new firm to vet its European arm MADISON MARRIAGE AND STEPHEN MORRIS

oldman Sachs has selected Mazars to audit its European operation, marking the first time the US bank has gone beyond a “Big Four” accounting firm to vet its books. The decision is a coup for Mazars, the UK’s eighth-largest auditor by revenues, which has struggled to break into Britain’s prestigious FTSE 350 audit market. Goldman was forced to look beyond PwC — which has audited the bank for almost a century — after becoming ensnared by tough new European audit rules that came into force in 2016. The rules — which aimed to break the stranglehold of the Big Four over the listed audit market and to improve audit quality — also apply to US and Asian companies that are considered “public interest entities” in Europe. “It is a step forward,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business. “Mazars has the opportunity to dispel the myth that

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only the Big Four are capable of auditing the largest, most complex companies.” Mazars will become the European auditor for Goldman Sachs International, which encompasses the bank’s London and Frankfurt businesses, from 2021. Goldman will retain PwC as its group auditor. Goldman’s move comes after concern over the dominance of PwC, EY, KPMG and Deloitte prompted Britain’s competition regulator to call last month for legislation to force the firms to split their operations by separating their audit businesses from their consultancy arms. The Competition and Markets Authority also recommended that UK-listed companies should be required to use two audit firms to check their accounts, with one being from outside the big four. Goldman paid PwC $63.1m in audit fees in 2018, according to a company filing. Mazars is expected to earn up to $5m from the European audit contract. Goldman was unwilling to @Businessdayng

consider another Big Four firm because they all provide consulting services to the bank. Grant Thornton — until recently the UK’s fifth-largest accounting firm — was last year considered the frontrunner to take on Goldman’s European audit but pulled out of the race following a series of controversies involving its leadership and audit work. That narrowed the competition down to Mazars and BDO, which leapfrogged Grant Thornton to become the UK’s fifth-largest accounting firm last year. Goldman declined to comment on why it selected Mazars over BDO. Mazars declined to comment. Several audit firms raised concerns with the Bank of England last year about whether Goldman would essentially retain PwC to do the bulk of its European audit while outsourcing a fraction of the work to a smaller auditor. Britain’s accounting watchdog wrote to the biggest audit firms in January warning them that this approach would not be tolerated.

44 BUSINESS DAY

Tuesday 21 May 2019

NATIONAL NEWS

Amazon wins domain name dispute with Latin American governments Provisional decision against Amazonian countries now goes out to public comment CAMILLA HODGSON

mazon has provisionally won the right to the “.amazon” domain name, following a years-long dispute with eight Latin American governments. After a seven-year argument, the international body that monitors internet addresses sided with the tech giant against the Amazon Cooperation Treaty Organisation, a coalition of Latin American governments that had argued the name referred to their geographic region and should belong to them. The decision is pending a 30 day public comment period. The Internet Corporation for Assigned Names and Numbers (Icann) said it had found Amazon’s most recent compromise terms acceptable, in light of the fact that the two parties had been unable to reach a “mutually acceptable solution”. In the terms, proposed in April, Amazon promised not to include in domain names words with “a primary and well-recognised significance to the culture and heritage of the Amazonia region”. The company said it would block

the use of up to 1,500 such sensitive names. Additions to the list of terms, which would be overseen by a joint advisory committee, would be allowed for up to two years. It said it would also provide up to nine domain names for ACTO member states to use for “noncommercial purposes” and to “highlight the region’s culture and heritage through sites we host”. However, ACTO member states would not have the right to veto specific names, since that would give them “authority over global naming decisions for Amazon’s new, not-yet-launched products and services,” Amazon said. In April, the Brazilian Ministry of Foreign Affairs said the proposal “does not address important concerns” raised by ACTO. Amazon first requested the use of the domain name in 2012, when Icann began expanding its list of generic top-level domains and allowing companies to apply for new, personalised extensions. The Amazonian countries objected, and were told by the arbitrator they must reach an agreement with the retailer.

Credit quality declines at big US business lenders Sudden rise in non-performing loans comes despite low rates and strong growth ROBERT ARMSTRONG

he quality of big US banks’ commercial lending portfolios is deteriorating for the first time in nearly three years, leaving investors to wonder whether there is worse to come should the ebullient economy slow. Non-performing loans at the 10 largest commercial lenders rose 20 per cent, or $1.6bn, in the first quarter, according to an analysis by the Financial Times. That reversed a steady improvement in credit quality dating back to 2016, when a wave of borrowers fell into default after oil prices crashed. The level of sour loans remains historically low relative to banks’ balance sheets. JPMorgan Chase’s $1.9bn of commercial non-performing loans, for example, is part of a $442bn portfolio. But the sudden increase in problem credit is raising concerns, given low interest rates and strong economic growth. “What does it look like when the economy actually slows?” asks Brian Foran, a bank analyst at Autonomous Research. “It is a notable enough change [in credit quality] that people have taken notice.” Unlike the energy crunch a few years ago, there is not a single industry coming under pressure. “There hasn’t been a clear theme,” said Mr Foran. “Some banks have mentioned lingering energy problems, and a couple of niche categories like fast casual restaurants and rural hospitals.” Commercial lending has grown rapidly since the crisis. US banks have $2.3tn in commercial loans, according to the Federal Reserve, almost double the level of 2011 and easily outpacing the growth in overall bank lending. Loans categorised as “criticised” — a broad regulatory category that captures loans that are

or are threatening to become impaired — rose 8 per cent in the first quarter at the 20 regional banks Mr Foran covers, the first quarterly increase he has seen in three years. The increase in criticised loans at the big banks was 5 per cent. It is not certain how much the industry figures have been affected by the January bankruptcy filing of PG&E, the California utility facing liabilities associated with its role in the state’s wildfires. Among large banks, Bank of America, JPMorgan Chase and Wells Fargo were all listed as lenders on the utility’s $3bn credit facility, according to S&P global intelligence. Speaking at an industry conference on Tuesday, the chief financial officer of M&T Bank, which has a $23bn commercial portfolio, said that while its delinquency rates remained at multiyear lows, the bank is seeing “management shortfalls” at some companies: “Taking on too much leverage to do a deal that they weren’t capable of pulling off, not managing expenses properly, in some cases not having the right controls in place and getting themselves in trouble.” One reason corporate borrowers are feeling the strain now is the withdrawal of liquidity by the Federal Reserve. As the central bank turns from pushing money into the system by buying bonds to absorbing it by selling them, loans become harder to refinance or roll over. In April, according to Fed data, total commercial credit at banks did not grow from the month before for the first time since the end of 2017. “Liquidity has been the driver of asset prices for the past decade and will be the cause of deflation of asset prices in the coming years,” said Charles Peabody of Portales Partners. “Corporations, particularly small and middle market businesses, have been living day-to-day based on their access to liquidity.” www.businessday.ng

Zuma bids to throw out arms deal charges in South African court Trial seen as a test on the country’s ability to tackle graft JOSEPH COTTERILL

acob Zuma has made a bid to throw out longstanding charges of corruption relating to a suspect 1990s arms deal. Lawyers for South Africa’s former president, who was forced out of office and replaced by Cyril Ramaphosa last year, argued before the Pietermaritzburg high court on Monday to stop the allegations going to trial. Prosecutors revived the oncedormant case against Mr Zuma after he lost a power struggle with Mr Ramaphosa for control of the ruling African National Congress. Mr Ramaphosa, a trade unionist turned tycoon, led the ANC to victory in national elections this month, but with its lowest majority since the party first gained power a quarter of a century ago. Voter frustration with a decade of misrule under Mr Zuma, including graft and economic stagnation, led to the smaller majority. Mr Ramaphosa has pledged to root out corruption in the ANC and many see the prosecution against his predecessor as a litmus test. Allies of Mr Zuma still hold

powerful positions in the party and have clashed with Mr Ramaphosa’s backers. On Monday the court set a date for the trial to begin in October, pending a judgment on Mr Zuma’s application to halt the case. Mr Zuma’s lawyer told the court that Mr Zuma was being subjected to “mob justice” by the prosecution. “This case is an intersection of law and politics,” he said. The former president has called the charges “politically motivated.” He has always denied the claims that he took bribes in a 1999 arms deal that involved BAE Systems, Sweden’s Saab and Thales, the French group. The deal led to the first big graft scandal to shake the ANC after it took power in 1994. The case against Mr Zuma groups 783 counts of corruption, fraud, money-laundering and other charges. Mr Zuma first faced the charges in 2005. But when he became president in 2009, prosecutors said the charges were politically motivated and dropped them. South Africa’s highest court overturned that decision in 2017.

Opposition parties and civil society groups have long accused Mr Zuma of trying to bog down the case, and of using powers of appointment when he was state president to delay it further. Last year Mr Ramaphosa replaced Mr Zuma’s pick for head of the national prosecuting authority, which analysts said was part of a process of rebuilding hollowed-out institutions. Last week Mr Ramaphosa also appointed a veteran lawyer to head a unit in the national prosecuting authority dedicated to pursuing high-level corruption in the state. The unit will have a mandate to investigate separate allegations that private interests in effect took over government institutions under Mr Zuma, a scandal termed “state capture”. As Mr Zuma entered the courtroom on Monday, his supporters were notably few in number compared with previous appearances where backers held rallies outside the courthouse. Thales, Mr Zuma’s co-accused in the arms deal prosecution, has argued that it cannot obtain a fair trial in the case.

Venezuela’s opposition hires debt guru Lee Buchheit Guaidó’s appointment of restructuring veteran suggests tough approach to creditors COLBY SMITH AND ROBIN WIGGLESWORTH

enezuela’s opposition government has hired veteran sovereign debt lawyer Lee Buchheit to help restructure the country’s $150bn debt burden, indicating it could take a tough approach against investors that have snapped up defaulted Venezuelan bonds. The stricken Latin American country has largely been in default since 2017. A restructuring has, in practice, been precluded by US government sanctions that prohibit trading in the securities of Venezuela and PDVSA, the national oil company that makes up a big chunk of the state’s indebtedness. The opposition government has held discreet talks in Oslo, Norway, with the incumbent government led by President Nicolás Maduro. The outcome is uncertain, but Mr Buchheit’s hiring probably augurs a sweeping attempt to tackle Venezuela’s debts should interim president Juan Guaidó manage to take control

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of the country. “Lee is an amazingly creative thinker,” Ricardo Hausmann, an economic adviser to Mr Guaidó, said in an interview with the FT. “It will require a lot of creative thinking to find the solution to many of the challenges that we will face ahead.” Mr Buchheit advocated using US presidential executive orders to facilitate a quick, deep and broadbased restructuring, rather than a more painstaking attempt tailored for each different type of creditor. Venezuela owes money to a vast pool of creditors, including those who hold unpaid bonds, promissory notes, arbitration awards and other claims. An executive order that ringfences Venezuelan assets on US soil from seizure by creditors would be “extraordinarily helpful”, Mr Buchheit told the FT. “Because you have such a diverse group of claimants, the chances for inter-creditor rivalry are unusually high,” Mr Buchheit said. “The bondholders sit there and watch arbitration holders like [Canadian gold miner] Crystallex and they wonder whether arbitration holders @Businessdayng

are stealing a march on them.” Crystallex, which is backed by hedge fund Tenor Capital, has sued Venezuela over the nationalisation of a gold-mining project in 2011. Since then, it has wrested hundreds of millions from Venezuela as part of the $1.4bn arbitration award it won three years ago. But, Mr Buchheit argued: “If you had a preservation of assets, it would remove that anxiety so you wouldn’t have creditors feeling like they would have to rush to the courthouse to preserve their place in the queue.” The former Cleary Gottlieb partner, who is working for Venezuela’s opposition government on a pro bono basis, is the most prominent lawyer in the field of government debt restructuring, having represented nearly every country that has suffered a financial calamity over the past three decades. They include Mexico and the Philippines in the 1980s, Russia and Ecuador in the 1990s, Iraq and Uruguay in the 2000s, and most recently Greece, where he in 2012 engineered that country’s record-breaking €200bn debt restructuring.

Tuesday 21 May 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Indian stocks see strongest rally for 3 years on BJP exit poll lead Equities and rupee gain on prospect of policy continuity and further reforms SIDDARTH SHRIKANTH AND SIMON MUNDY

ndian stocks recorded their strongest one-day rally in more than three years on Monday after exit polls pointed to a win for the ruling Bharatiya Janata party-led coalition. The BSE Sensex closed 3.75 per cent higher, with industrial and financial sector stocks notching the biggest gains, as markets bet that the election result would bring political continuity and business-friendly reforms. The Indian rupee strengthened 1.1 per cent to Rs69.53 against the dollar, rebounding slightly from a period of weakness since April amid rising oil prices. Exit polls released on Sunday night after the seventh and final phase of voting in the world’s largest democracy indicated that the incumbent BJP and its allies would secure a parliamentary majority. Indian exit polls have a mixed record in predicting electoral results but the country’s informal betting market, another closely watched indicator, predicted a similar outcome on Friday. “The outperformance of Indian markets and the currency since February . . . reflects increased investor confidence of the incumbent staying in power,” said Prakash Sakpal, economist at ING. However, the polls were divided on whether the BJP would be able to secure a majority on its own, as it did in 2014, or whether it would have to rely on the support of smaller regional parties to form the next government. Analysts say a coalition would be likely to act as a check on the impulsive instincts of Prime Minister Narendra Modi, who rattled businesses and consumers with an overnight “demonetisation” exercise three years ago. The removal of large-denomination banknotes, intended to target the underground economy, instead caused chaos across India’s cash-driven society.

The “presence of coalition partners will help to prevent the sort of disruptive and poorly considered policymaking that was seen on occasion during the BJP’s previous term”, according to the Economist Intelligence Unit. The official results are expected from India’s Election Commission on Thursday. The single biggest gain on Monday morning was an 8.3 per cent share price rise for Adani Ports, a key business in the corporate empire of Gautam Adani, a Gujarat-based businessman who developed a strong relationship with Mr Modi during the latter’s decade as the state’s chief minister. Strong gains were seen also for financial stocks including Indiabulls Housing Finance, which gained 16 per cent. Indiabulls is one of the nonbank lenders most affected by a recent squeeze in India’s short-term corporate debt market. Mr Modi’s government has urged the central bank to take stronger action to boost liquidity. Industrial groups including UltraTech Cement and automotive groups Maruti Suzuki and Mahindra & Mahindra also rose by more than 4.5 per cent. India’s stock market had already risen since late February, when a confrontation with Pakistan prompted an upsurge in nationalistic sentiment. This was seen as boosting Mr Modi’s chances of victory and reducing the likelihood of extended political uncertainty after the election. Beyond a preference for continuity, investors have been encouraged by some of the reforms undertaken during Mr Modi’s tenure — notably the introduction of a new national tax system and a bankruptcy code seen as a big boost to corporate governance. For many, this has outweighed negative factors such as the unpopular banknote demonetisation, concerns about the pace of job creation and the stressed balance sheets of state-owned banks.

Glencore appoints new temporary head of cobalt trading HENRY SANDERSON

lencore has appointed a new temporary head of its cobalt trading business, a department that has become a growing focus for investors due to the metal’s use in electric cars. The Switzerland-based company has appointed David Brocas to temporarily replace Franck Schulders, who has gone on sabbatical, according to a person familiar with the company. Mr Brocas reports to Nico Paraskevas, who was appointed head of copper last year. Cobalt trading has become a more important part of Glencore’s business, due to rising demand for cobalt in lithium-ion batteries in electric cars.

But the company has been stung by falling prices for cobalt and operational difficulties at its main Katanga mine in the Democratic Republic of Congo. Prices for cobalt have dropped by over 60 per cent over the past year due to a rapid increase in supply. Last year one of Glencore’s biggest clients, Chinese battery materials company GEM Co, stopped its contracted purchases of cobalt from Glencore due to falling prices. Glencore owns two large copper and cobalt mines in the DRC. In December Glencore appointed Peter Freyberg to a newly created role as head of industrial mining to better oversee the company’s mining assets. www.businessday.ng

Narendra Modi’s Bharatiya Janata party-led coalition holds the lead in India’s election, according to exit polls released on Sunday evening, but the official vote tally will only be released on Thursday © Reuters

Chipmakers eye worst month since 2008 on Huawei ban, trade jitters PETER WELLS

he sell-off in chipmakers is going from bad to worse. Semiconductor stocks are facing their biggest monthly drop since the financial crisis as the Trump administration’s crackdown on Chinese technology group Huawei and the continued trade spat between Washington and Beijing heap pressure on the sector. All 30 members of the Philadelphia semiconductor index, which tracks companies that design, distribute and manufacture semiconductors, were in the red on Monday, dragging the index 3.1 per cent lower this morning and leaving it down by 13 per cent so far this month. That puts the gauge, which trades under the ticker Sox, on track for its worst month since November 2008, when it shed 17.2 per cent. The month before

that, it dropped 22 per cent. The drop follows an 11.5 per cent gain in April that took the Sox to a record high and was its largest monthly advance since October 2011. The latest fall began in late April as concerns over slowing growth in China and waning demand for smartphones put the brakes on the sector’s stellar run. It accelerated in May after US-China trade tensions unexpectedly flared up once again. US President Donald Trump offered the sector little respite after he issued last week an executive order that would effectively ban Huawei from sourcing components from the US that are crucial for its production. Earlier today, Google suspended the delivery of its Android software and technical services to Huawei. German chipmaker Infineon was also reported to have suspended

shipments, weighing heavily on European peers. That unease spilled over into US rivals, with the likes of Cree and Qualcomm both down more than 5 per cent. Broadcom and Xilinx were each down more than 4.5 per cent. So far this month, Skyworks Solutions, Monolithic Power Systems, ON Semiconductor and Microchip Technology are the worst performers in the Sox, down more than 20 per cent. Silicon Motion Technology, up 1.9 per cent, is the only stock in the black this May. The Sox is down 14.5 per cent from its April 24 peak of 1,589.02. The index managed to reclaim record highs in March as a handful of chipmakers became more positive on their outlooks and as the diminished likelihood of higher US interest rates encouraged investors to pile back in to high-growth sectors.

Morningstar deals fresh blow to Neil Woodford with fund downgrade Rating agency cites ‘persistent redemptions, underperformance, and stock-specific issues’ OWEN WALKER

eil Woodford’s flagship fund has been downgraded by influential rating agency Morningstar, in a further blow to one of Britain’s best-known portfolio managers. The Woodford Equity Income fund has been hit by heavy redemption requests, as investors have headed for the exit gates in response to underperformance. It has also been forced to try ever more creative ways to reduce the unlisted part of its portfolio to meet liquidity rules. The fund has shrunk from a high of £10.2bn in 2017 to £4.4bn.

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Morningstar, which gives ratings to investment funds and is well followed by retail investors, downgraded Equity Income from bronze to neutral. It is the second lowest rating the company gives, below gold, silver and bronze, but above negative. “Persistent redemptions, underperformance, and stockspecific issues, combined with the manager’s relentless willingness to push the portfolio to its liquidity limit, have resulted in portfolio positioning that we consider extreme,” said Peter Brunt, associate director of equity strategies and manager research at Morningstar. @Businessdayng

“Contrarian investing comes with a degree of risk, and issues can be expected from time to time. However, the nature of some of the stock specific problems and their respective position sizes, combined with the extreme portfolio positioning, give us cause for concern.” Morningstar last downgraded the fund from silver to bronze a year ago when it had £6bn in assets. Mr Brunt added: “While we acknowledge that there may be unrealised value in the portfolio, the aforementioned have led to a lower level of conviction in the strategy’s ability to consistently outperform over the long term.”

Tuesday 21 May 2019

BUSINESS DAY

ANALYSIS

Trump tax reform typo creates costly headache for US retailers Error in drafting of law forces owners to wait 39 years to deduct refurbishment costs ALISTAIR GRAY

S retailers and restaurants say they are shelving hundreds of millions of dollars worth of refurbishment work, from lighting refits to paint jobs, because a mistake in the Trump tax reforms has pushed up the upfront costs. An apparent typo in the tax law that was rushed through Congress has yet to be fixed 18 months after it was introduced. The changes were supposed to allow businesses to deduct the cost of such work from their tax bills the year it was carried out, but the error means they now need to wait 39 years for full tax relief on store renovations. Several congressman and senators acknowledge the problem has arisen because of an “inadvertent drafting error”. Organisations including the National Retail Federation, National Grocers Association and National Restaurant Association are pushing lawmakers to adopt legislation to rectify the problem. Several senators and congressmen are supporting the cause but it is unclear when the error will be fixed. Bob Jones, president of retailer American Sale, which operates nine stores in the Chicago area that sell swimming pools, hot tubs and trampolines, said he was putting off flooring replacements as a result. “From a competitive standpoint, these are projects that we’re going to have to get done,” he said. “In the old days consumers had to go to stores to buy products, but retail today is really

about having an experience that’s worth visiting.” The tax change had a “substantial” impact that made it hard to justify going ahead with the work, he said. His accountant told him he would only be able to deduct 2.5 per cent of the cost, which runs into several tens of thousands of dollars, in the first year. The refurbishment glitch has complicated the effects of what has otherwise been a tax bonanza for retailers. The reforms signed into law by President Donald Trump reduce the corporate tax rate from 35 per cent to 21 per cent. The cut is worth more than $170bn in savings for the sector over a decade, according to a Wharton business school estimate. But for stores and restaurants wanting to remodel, the hastily drafted changes have caused an unexpected cash-flow headache. Trey Kraus, owner of Carltons, a clothing store based in Rehoboth Beach, Delaware, had been planning to undertake the first renovation to the building, a converted film theatre, since 1986. “I’m chomping at the bit to do it — this was going to be the year,” he said. But while larger retailers may be able to withstand the cash-flow implications of the tax change it “makes it impossible” for him. Mr Jones added: “It’s been frustrating, because everybody understands this is a simple error. You would think that if everyone agrees if it’s just a technical issue, it would just get fixed. But we’re talking about Washington.”

Why Goldman Sachs should buy Deutsche Bank

US group wants growth in transaction banking and a German deal could help achieve that PATRICK JENKINS

eutsche Bank has long liked to see itself as Europe’s answer to Goldman Sachs. But what if Deutsche were Goldman’s answer to Europe? Deutsche has been under increased scrutiny of late, as it has struggled with a share price slump, higher funding costs and a succession of scandals. Despite widespread support for chief executive Christian Sewing and his efforts to boost performance, there is understandable scepticism that this bank — which made a 1.3 per cent return on tangible equity in the first quarter, a tenth the level of US rivals — can find its own way out of trouble. Hence the decision in March to enter into merger talks with Commerzbank. To little purpose ultimately — besides the opportunity to cut costs by slashing jobs in the groups’ domestic retail banking operations, it turned out there was no convincing rationale for a deal. Happily Mr Sewing ended talks last month. Attention has now focused on alternative suitors for Commerzbank — might UniCredit or ING come in to buy Germany’s second-biggest bank? But Deutsche’s fate is that much more important. For global regulators, it is a systemically important bank. For Europe it is an economically important lender and investment bank. Its fixedincome franchise, for all the challenges posed by tougher post-crisis regulation and a brand stained by scandal, remains in the global top five. Mr Sewing is doing a noble job trying to trim here and bolster there. But the truth is that if Deutsche cannot make good returns in this environment of booming markets and decent economic growth, what hope does it

have in a downturn? For a business that is subscale in many areas, with a business mix still geared to pre-2008 heydays and an inability to invest sufficiently in the vital IT upgrades that its top rivals are making, the industrial logic in favour of M&A is compelling. One of those competitors is Goldman Sachs. Like Deutsche it has long been a strong player in fixed-income markets, but has spent recent years trying to build out other activities to offset the lower returns in that core area. Its Marcus unit has taken it into the consumer finance space for the first time. Last week it made its biggest acquisition in 20 years, buying wealth manager United Capital for $750m. Goldman’s other stated growth area is the prosaic business of corporate cash management and other forms of so-called transaction banking. This might seem like a humbling prospect for the masters of the universe that control Goldman. But it may also be very sensible: one thing Goldman excels at is whizz-bang technology. And of all the subsections of banking that could do with a tech upgrade, transaction banking must be among the most in need. But how much more powerful would that operation be — and how much faster would it achieve its ambitions — if it made a big acquisition in transaction banking, as it has in wealth management, and bought market share? Which is where Deutsche — a top five transaction bank — could come in. There could be appeal, too, in consolidating the two groups’ fixed income operations. Currently ranked fourth and fifth in the world, according to Bloomberg data, they would together rival global leader JPMorgan Chase. In Europe in particular they would be a dominant force. www.businessday.ng

The abandoned farms behind the global coffee craze

Amid record crops and rising prices for consumers, some growers are unable to cover their costs EMIKO TERAZONO, JUDE WEBBER AND ANDRES SCHIPANI

“A

lot of farms are being abandoned,” says Sonia Vásquez, an organic coffee grower on the slopes of San José, south-west Honduras. “A lot of people are migrating — many can no longer make ends meet.” Over the past six years Ms Vásquez, 46, has seen her crop devastated by disease — a coffee tree fungus that has ravaged parts of Latin America. Now her business has been wrecked by tumbling global prices — the value of her crop has shrunk by almost a third over the past year, falling well below break even. Yet this should be a boom time for growers like Ms Vásquez based in the “coffee belt”, the region over the equator between the Tropics of Cancer and Capricorn. Consumers are drinking more — from drip coffees to vanilla lattes to cold brews — than ever before, but Ms Vásquez and other farmers from Peru to Papua New Guinea and Ethiopia to Ecuador are struggling. Prices of arabica beans — 60 per cent of the market — have fallen to a near 14year low of around 90 cents a pound on the Intercontinental Exchange. The value of the global coffee industry has almost doubled in the past decade to $90bn, according to Euromonitor. Despite fears that climate change could reduce supply in the medium to long term, a combination of better than expected harvests with more efficient producers and currency markets has conspired to keep wholesale prices low. Both Brazil and Honduras last year reported record coffee output, while Colombia has been producing its highest levels since the 1990s. But demand has not kept pace and there is a massive oversupply in the market. “This has surpassed an economic crisis. People are moving away [from the farms]. They are absolutely heartbroken,” says Roberto Vélez, chief executive of the National Federation of Coffee Growers of Colombia. “Consumers don’t know what is really going on.” Affected farmers in Guatemala and Honduras have been joining the migrant caravans to the US, while some in Peru and Colombia are turning to coca, the source of cocaine, say traders. And while in the short term there may be plenty of beans, the exodus from coffee growing, especially that of the higher grade product, has fuelled worries among buyers about the sustainability of future supplies. “If the situation continues, I’m not sure where we are going to be in five years’ time,” says Matt McDonald, procurement manager at Cafédirect, a UK coffee importer whose main suppliers include Peruvian co-operatives. “It’s a det-

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rimental cycle because [the growers] cannot afford enough fertiliser, the quality reduces, the yield reduces. And it gets worse each year.” Some multinationals are already acting to secure supplies by providing farmers and co-operatives with technical support and tree saplings. In September Starbucks committed $20m to smallholder farmers in El Salvador, Guatemala, Mexico and Nicaragua. Nestlé, the world’s largest coffee buyer which invests about SFr68m ($67m) a year on technical support programmes for farmers, acknowledges that the price situation is unsustainable. But it adds that addressing the issue of farmers’ income is beyond the scope of any one company, and that it is “engaging with the International Coffee Organization” to try and find some solutions. Coffee is largely divided into robusta, the hardy lower quality bean which is turned into instant coffee or blended into espressos to add a bitter kick, and arabica, the smooth mild tasting higher quality bean. Arabica is graded from high — the beans grown at altitude which are wet processed — to lesser quality, farmed at lower altitudes and dried in the sun. At the root of the price problem is the increased production of lowgrade arabica coffee, say traders, which is dragging the whole market lower. “There is too much commodity grade coffee,” says Stephen Hurst at Mercanta, a UK-based trader focused on the speciality end of the market. This flood of beans has driven the arabica futures price — traded on the ICE and known as the New York “C” — lower. Coffee is bought and sold using the New York price as a reference, with higher grades traded with an added premium and lower grades priced at a discount. The current benchmark has meant that even with an added premium, many producers are not able to break even. The New York C has averaged about $1.20 a pound over the past three years. But over the same period the cost of producing, processing and transporting the beans has, for some growers, been more than $1.50 a pound. This has led producers to seek a new way to price their coffee and bypass the New York C as a benchmark for the industry. Some are dealing directly with growers or co-operatives to negotiate a price based on their costs and profits. Mr Vélez says Colombian growers are desperate to untangle themselves from the New York market, because it does not reflect the true value of the highgrade coffees produced across Latin America. He adds: “Why do I have to be tied to a market which doesn’t work?” Opponents argue the situation has been made worse by the rise @Businessdayng

of digital trading, where algorithms — some of them programmed to act on forecasts of Brazilian output — execute trades in anticipation of the market rising or falling, exacerbating price volatility. Like many agricultural commodities, the coffee market is prone to “boom and bust” cycles where high prices trigger the planting of more trees and better management, resulting in improved production. In the case of coffee, the cycles are accentuated as it is not an annual crop and once a tree is planted it will continue producing although yields and quality tend to drop. But when the trees first mature — up to four years after planting — the new output can weigh on prices. And those lower prices can then lead to poorer quality beans and less output. In this environment Brazil has come to dominate the market. Not only is it the largest producer and exporter of coffee, accounting for 28 per cent of the world’s coffee trade last year, its farmers can grow their beans at low cost, with a break-even point of below 90 cents per pound. For many of its growers, harvesting is mechanised, with mass production allowing beans to be processed in much simpler ways compared with those in Central America and Colombia. The country produced a record 62m 60kg bags last year, while a weak currency offered local producers and exporters higher returns on beans sold overseas. And although output is predicted to take a breather this year, it could produce another large surplus in 2020. “Other producers may see falls in production,” says Carlos Mera, senior analyst at Rabobank. “But it’s unlikely to be enough to compensate for the likely increase in Brazil.” Yet even for low-cost farmers in Brazil, current prices are starting to hit profits. José Marcos Magalhães, president of Minasul, a large coffee co-operative in Varginha in the south of Minas Gerais which exports to 17 countries, says many of its 8,000 members are smallholders whose margins are being squeezed. “If this price range continues, there will be unemployment,” he says. Lúcio de Araújo Días, commercial head at Cooxupé, Brazil’s regional co-operative and its largest coffee exporter, is adamant about what is to blame for the relentless drop in prices: financial speculation. Over the past five to six years, these financial players have taken their cue from the largest producer and exporter, Brazil, and since 2017 have held record “short” positions, betting on a fall in prices, at a time when non-Brazilian producers are already struggling to cover their costs. “The global financial market is selling coffee thinking it can go on forever,” says Mr Araújo Días. “The funds are selling endlessly, every day they sell.”

Tuesday 21 May 2019

BUSINESS DAY

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Ferdi Moolman: The CEO who painted Lagos Bourse Y’hello MICHAEL ANI & DIPO OLADEHINDE

ne of the most talked-about personalities in Nigeria and even across the globe in the past one week is Ferdi Moolman, Chief Executive Officer (CEO) of Nigeria’s biggest non-oil foreign direct investment, MTN Nigeria. Moolman rose to the position of CEO on December 1, 2015 after the telecommunication giant made several appointments to review its operating structure with a view to strengthening operational oversight, leadership, governance and regulatory compliance across its 22 country operations in Africa and the Middle East. Until his appointment as CEO, Moolman was the Chief Operating Officer (COO) at MTN Iran cell but was later brought into the Nigerian unit of the firm as the Chief Financial Officer. Since clinching the position of CEO, Moolman alongside his team, has taken the company to new heights. His appointment as CEO came after the company was slammed a $5.2 billion fine by the Telecommunication’s regulatory body, the Nigerian Communications Commission (NCC) for failing to meet a deadline to disconnect unregistered users from its network. The fine was however reduced to about $1billion after several talks and negotiation between both parties. Under his watch, the company became the second most capitalized—after Dangote cement—on the floor of the Nigerian stock exchange after successfully moving from being a private company to become a publicly listed company. The company also joined the league of several other companies to receive the Payment Service Banking Licence (PSB) of the Central Bank of Nigeria. The licence will enable the Telcom giant to facilitate transactions in remittance services, micro-savings and withdrawal services in a technology-driven environment to further deepen financial inclusion in the country and get the 36.5 percent or 35 million of the populace that are currently unbanked, according to data from Efina index. Currently, the South Africa-based telecom company offers mobile money services in 14 of the 22 markets where it operates and hopes to do the same when the PSB finally commences. MTN has continued to show strong resilience by rolling out several products that have made it dominated the Nigerian oligopolistic telecommunication market ahead of its two main competitors, Globacom and Airtel. BusinessDay in this article takes a critical look at MTN Nigeria to analyse the growth of this firm under the leadership of Moolman. MTN Listing on the NSE MTN Group agreed to list the Nigerian unit shares as part of a June 2016 agreement to pay $1 billion fine for missing a deadline to disconnect unregistered subscribers amid a security crackdown. The telecommunications firm had

Ferdi Moolman, CEO, MTN Nigeria

earlier plan to raise about $500 million in an Initial Public Offering (IPO) from the sale of shares of its Nigerian business, according to Bloomberg sources. This primary listing by the firm was supposed to commence in the first quarter of 2018. The Initial public offering by the firm eventually came to a halt after it was accused by the CBN of illegally repatriating about $8.1 billion as dividend to its shareholders. MTN had denied any wrong doing. While still resolving the issues of a tussle between the firm and the apex bank, Nigeria’s Attorney General, Abubakar Malami, slammed the South African telcoms firm with a $2 billion back taxes on its capital equipment imported into the country. MTN also denied any wrongdoing and dragged both the CBN and the Attorney to court. It however settled the matter of illegal capital repatriation with a $53 million out of court payment while that of the Attorney General is still ongoing in court.

These combined issues halted the firms’ plan to become the first to break the four-year IPO drought on the Nigerian Stock Exchange. Meanwhile, MTN has completed the IPO of its Ghanaian unit. Fast forward to April 2019, MTN Nigeria announced its conversion from a private company to a public company. The conversion to a public company is a legal requirement and a preparatory process for its listing in the NSE. While still in the preparatory stage, Moolman stated that the listing on NSE would enable new class of investors (particularly Nigerians) to explore investment opportunities in the company. “MTN’s intended listing on the NSE would create a new telecom asset class for investors and provide a wider group of Nigerians with a chance to participate in the MTN investment opportunity. “It was a re-affirmation of the company’s long-term commitment to expanding investment opportunities for Nigerians, in addition to providing everyday services to them.” MTN Nigeria finally crossed the

milestone on Thursday last week, listing about 20.35 billion of its shares. On the first day of trading, MTN share price gained some N9.00 to close at N99 per share, having traded 5.5 million shares worth N545.59 million in 15 deals, as investors scramble for its shares. With a market cap of N2.437 trillion at the close of trading yesterday, MTN Nigeria is now the second biggest company listed on the NSE, overtaking the likes of Nestle, Nigeria Breweries and GTB. Its share price closed N119.75 Analysts bet that the listing by introduction of the firm would not only reverse the bearish trend that has been experienced in the market, but would trigger the listing of other telecommunications firms. Nigeria is one of MTN Group’s largest markets in the world. Therefore, the listing on the NSE is part of the company’s strategy to spur growth and further improve its market dominance. The CEO stated further: “Nigeria is one of the largest markets within MTN’s portfolio and central to the company’s growth strategy. The upcoming listing is a key milestone for the MTN group and is part of its commitment to localisation in the markets in which it operates.” MTN Nigeria’s revenue crosses N1 trillion In 2018, MTN Nigeria became the first ever firm to cross the one trillion naira mark, in terms of revenue. This was despite the $53 million out of court payment it made to the Central bank to settle a fine on illegal repatriation of capital dividend. Revenue of the firm rose by 17.1 percent year on year from N887 billion in 2017 to N1.03 trillion in 2018. This increase in revenue was on the back of an increase in revenue from data subscribers as the firm added nearly six million new subscribers in the period. Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) was a total of N453.1bn, which indicates 43.6 percent margins expansion in EBITDA margins without CBN’s resolution amount. In terms of data subscribers, MTN Nigeria has been maintaining a distant top position among other telecoms operators. In 2018, MTN Nigeria added 4.5 million active data customers during the year, delivering data revenue growth of 39.3 percent and expanding to 18.7 million. So far in 2019, the company has maintained its lead by controlling 41% of the total market share. The company rolled out 519 2G sites, 2342 3G sites, and 1338 4G sites last year. Great possibility abounds for MTN Nigeria as the group in its annual report has also forecast double-digit growth in Nigeria in the medium term. “we have revised our medium-term (three to five years) guidance on service revenue growth from upper-single-digit in constant currency terms to doubledigit growth, driven by double-digit growth from MTN Nigeria and midsingle-digit growth from MTN South Africa,” the group said.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.