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McKinsey says Africa is world’s next big growth market ... with $5.6trn in projected consumer, business spending by 2025 BUNMI BAILEY

new book by McKinsey suggests that Africa is poised for economic acceleration, akin to the Asian boom. While other geographies are seeing incremental growth, global companies that get in early and join the African champions shaping the right strategies, can sustain double-digit profit growth over the next few decades, according to McKinsey. In Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market (Harvard Business Review Press, November 20, 2018) Acha Leke, Mutsa Chironga, and Georges Desvaux detail the research that McKinsey & Company has done

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Corruption has got worse since I left office – Jonathan F

JAMES KWEN, Abuja

ormer president Goodluck Jonathan has said that corruption has gotten worse since he left office in 2015. Jonathan, whose administration was painted as one of the most corrupt in the country’s history, argued in his book, released yesterday that cor-

ruption in Nigeria has actually gotten worse, citing the country’s ranking on Transparency International’s (TI) corruption perception index. “It is important to note that despite the many sensational stories, dramatic arrests, seizures and accusations, many of them false, since I left office, the fact remains that Nigeria has not made any improvement on

TI Corruption Perception Index since 2014,” Jonathan said. “In fact, the 2017 corruption perception index released in 2018 by TI placed Nigeria as number 148, a retrogression in which the nation went 12 places backward. In other words, Nigeria is more corrupt in 2017 than it was when I handed over to the Buhari administration in 2015. Some people may be misled

with smoke and mirrors but the TI Corruption Perception Index relies on unsentimental facts and figures,” Jonathan wrote in his book, ‘My Transition Hours’ launched yesterday in Abuja. Jonathan, in his book, listed some of the things he did to tackle corruption in the country while he was president. He said that his administraContinues on page 34

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Inside FG appears handicapped with Apapa gridlock as tanker drivers defy law, order P. 2 Why Nigeria is broken and what it will take to fix it P. 34-35

President Muhammadu Buhari (4th r). L-R: Imam Abdulkadir, general manager, LADOL, Abuja; Amy Jadesimi, managing director, LADOL; Ibrahim Aliyu, executive director, LADOL; Oladipupo Jadesimi, chairman, LADOL; Boss Mustapha, SGF; Okechukwu Enalamah, minister of trade and investment, and Ibe Kachikwu, minister of state for petroleum resources, during a courtesy visit of LADOL’s chairman and management staff to the President in Abuja.

2 BUSINESS DAY NEWS

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Wednesday 21 November 2018

20 insurance firms pay N77bn claims to Nigerians in Q3 BALA AUGIE

igerian listed insurers are paying more claims due to exposure to the oil and gas sector which should help bolster confidence in insurers by customers. Of the N77.16 billion claims expenses incurred by 20 insurers in the third quarter (Q3) of 2018, life business made up N33.23 billion (42.85 percent) while non-life segment was equivalent to N42.15 billion (61.26 percent). The year on year percent increase in claims expenses for the firms is 18.15 percent, according to data compiled by BusinessDay. A further break down of the figure shows combined Life business was up by 14.27 percent in September 2018 while non-life- which comprise of Marine, Motor and Accident, bond, and Oil and gas- was up 23.05 percent in the period under review. “Claims in the market are going up while top lines have been growing by a single digit. There are exposure to the oil and gas. In the last five years, Total’s Egina FSPO has total payment with underwriters to a tune of $95 million dollars. We have to put the claims in a reserve hence bloating our claims and underwriting reserves,” said Jide Orimolade, managing director and CEO of Law Union and Rock Insurance. Linkage Assurance Plc’s claims to the oil and gas, which is 67.69 percent of total non-life Business total obligation, surged by 460.25 percent to N1.32 billion in September 2018 from N235.64 million as at September 2017.

Consolidated Hallmark Insurance’s claims to oil and gas sector surged by 146.05 to N419.09 million in the period under review as against N170.30 million the previous year. Aiico Insurance’s claims to Life Business, which is half of total figure for the 20 firms, increased by 16.33 percent to N15.95 billion in September 2018 from N13.15 billion the previous year. AXA Mansard’s total claims expenses to Non-Life Business surged by 307.44 percent to N3.83 billion in September 2018 from N940.89 million the previous year. Experts say it is difficult to further jerk up premium rates in a country where disposable income are under pressure, adding that huge claims were paid during the recessionary period as a lot of people were forced to apply for settlement. “Insurers used to record huge investment income in past but overtime the yields have been seen falling. So, there is no cushion to reduce the high rates of claims and expenses,” said Moronfola Monsuru - Actuarial Analyst at Wapic Insurance. With only 1 percent of a population of 180 million with any form of insurance cover, experts are of the view that opportunities abound in the market as a growing young population that crave for consumption means individuals and businesses will need insurance against unexpected losses. “We can’t stop the claims no matter the risk management measure. Standardized rates will help insurers. If we apply standard rates it will help the industry,” said Orimolade.

FG appears handicapped with Apapa gridlock as tanker drivers defy law, order AMAKA ANAGOR-EWUZIE

he persistent traffic menace on the access roads into Apapa metropolis has indicated that the President Muhammadu Buhari-led administration has become handicapped as it has failed to find lasting solution to the overwhelming gridlock for more than three years into the administration. Apapa gridlock has also defied several solutions as motorists, commuters and port users find it difficult on a daily basis to have access into Apapa metropolis, which houses Nigeria’s major economic gateways, Apapa and Tin-Can Island Ports. On the other hand, the security officials including Nigerian Army, Police, Civil Defense, Nigerian Ports Authority (NPA) security and the Nigerian Navy, seem to have exhausted all their traffic management strategies as the chaotic state of the road moves from bad to worse. BusinessDay understands that there has been massive breakdown of law and order by drivers of oil tankers, container carrying trucks and other articulated vehicles that have businesses to do in the ports as well as the oil jetties. A visit to the Ijora-Wharf road, which is now the main access road in and out of Apapa, following the breakdown of Apapa-Oshodi Expressway, shows that motorists spent over four to five hours to have access into the port city, which originally

was a journey of about 30 minutes, following the breakdown of the rule of maintaining single lane. Rather than maintain single lane for other motorists to have access into Apapa, most drivers of articulated vehicles now disobey the rule of queuing on one lane. They occupy in some cases two lanes and three lanes in several cases making it difficult for other vehicles to pass, despite the presence of security personnel, whose responsibility is to control traffic. “The man-hour loss on Apapa road due to the bad traffic situation has increased. As we speak, commuters were left with the option of either making use of one-way or spending over four to five hours on the road, just to have access into Apapa,” Tony Anakebe, managing director of Gold-Link Investment Limited, a clearing and forwarding company based in Apapa, said. Anakebe, blamed the gridlock on poor management of traffic on roads leading to Apapa. Anakebe projected that the situation will continue as the port industry reaches its peak period in preparation to high volume of business that characterises Christmas and New Year celebration. He added that the demurrage and storage charges importers and manufacturers pay to shipping companies and terminal operators for thedelayontheroadhasalsoincreased.

•Continues online at www.businessdayonline.com

R-L: Nike Akande, PEARL Awards board member; Tayo Orekoya, president/CEO, PEARL Awards Nigeria; Oscar Onyenma, CEO, Nigerian Stock Exchange; Faruk Umar, PEARL Awards board member, and Toyin Sanni, PEARL Awards board member, during a courtesy visit to the NSE by the PEARL Awards board of governors in Lagos.

Ahead MPC meeting:

Analysts see retention of MPR, worry over non-performing loans

... warn lending rates could spike if MPR increased ENDURANCE OKAFOR & BUNMI BAILEY

ithpressuremounting on Nigeria’s foreign reserve and an uptick in the country’s inflation rate, economists polled in a BusinessDay survey said it would be best for the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to retain its monetary policy rate at 14 percent. The economists opined that MPC should retain the rate to curb high level of non-performing loans, high lending rates in order to prevent slower economic growth. The MPC, which has the statutory duty to manage the central bank’s interest and exchange rate policies, is scheduled to hold its meeting from today, Wednesday through to Thursday, 21st and 22nd November, 2018, according to a statement on the CBN’s website. Johnson Chukwu, CEO, Cowry

Asset Management Limited said that the economy is currently experiencing a slowdown and that raising the interest rate now “will lead to higher levels of non-performing loans and also a further slowdown of economic activities.’’ Warning that this could possibly lead to a recession, he noted that: ``I don’t think the CBN will increase its rate just because we have seen an uptick in inflation.’’ Nigeria recorded a five-quarter recession following a slump in global oil prices and a decline in the country’s oil output, but exited in Q2 2017. Chukwu said that in the monetary authorities also cannot afford to reduce the rate now simply because there has been a deflationary trend. “We know that a lot of funds are being injected into the economy as a result of the on-going political activities, so the most likely thing that the central bank would do in the next couple of months is to maintain rates.” Ayodeji Ebo, MD of Afrinvest Securities Limited, expressed

a similar opinion, pointing out that “raising the MPR will be unhealthy for the real sector as lending rates will follow similar direction and reducing the MPR may not translate into increased lending due to the weak credit transmission in Nigeria.” Meanwhile, since the last MPC meeting in September, where it retained the MPR at 14 percent to fight inflation, dollar inflow through the Investors and Exporters window (I&E) has fallen by 42 percent through to October. Over the same period, the external reserves maintained their downward trend, losing another $2.639 billion. Ebo therefore expects MPC to retain major policy rates at current levels to “maintain the fragile balance between the downside risks to capital outflows, price level and economic growth.’’

•Continues online at www.businessdayonline.com

As Boko Haram attacks surge concerns mount over 2019 elections HARRISON EDEH, Abuja

surge in Boko Haram attacks is raising concerns in security cycles about the conduct of the 2019 elections in the Northeast. In the last two months, Boko Haram has attacked different military positions and communities in and around Borno state, which has been the hotbed of attacks by the group since 2007. In the latest attack, Boko Haram allegedly overran a Nigerian Army battalion in Borno State on Sunday, killing the unit’s commander and dozens of soldiers, according to a report by Premium Times, published November 20, citing military sources. A large cache of arms, ammunition and military equipment were carted away by Boko Haram fighters during the attack on 157 Task Force

Battalion in Metele, Abadam Local Government Area, at about 6:00 p.m., a setback for government forces trying to push terrorists further out of Nigeria’s North-eastern flank. There were fears for the fate of the troops from the base, which was raided only a month ago, as military sources said the Nigerian Army was making frantic efforts to contain the traumatic effect of the attack on the larger counterinsurgency operation. Bodies of fallen troops were still being recovered and evacuated from the scene as of Tuesday morning, PREMIUM TIMES learnt. But dozens of soldiers from the battalion have already been confirmed killed, amongst them their commander. Military sources were unable to tell the number of Boko Haram casualties. Military sources said the fallen commander was a lieutenant colonel, who had overseen the unit for a

long time. He once allegedly refused to mobilise troops for an operation, citing unavailability of serviceable hardware, but faced threats of being court-martialled, sources said. PREMIUM TIMES said it has decided to withhold the identity of the officer as it was not immediately clear his family had been informed of his death. It was not immediately learnt how many soldiers were manning the base during the attack, which was linked to Islamic State in West Africa (ISWA). Other media reports claim that as many as 42 soldiers may have been killed in the attack. ISWA has long targeted military bases, and has intensified its assaults in recent months on military formations across the volatile northeast. A day before on November 17,

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Wednesday 21 November 2018

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BUSINESS DAY

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Wednesday 21 November 2018

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BUSINESS DAY

6 BUSINESS DAY NEWS

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NIRSAL launches 140 hectares of maize farm to boost grains sufficiency IDRIS UMAR MOMOH, Benin

… also begins Fam-Smart model in Edo

s part of Federal Government deliberate policy to boost food sufficiency and reduce cost of food importation, the Nigeria IncentiveBased Risk Sharing System for Agricultural Lending (NIRSAL) plc has launched a 140-hectare maize farm in Edo State. The 140-hectare maize farm located at Ossiomo Industrial Park, Ologbo in Ikpoba Okha Local Government Area of the state, was launched under the NIRSAL Farm Aggregation Model for Smallholder Agriculture Based on Technology (FAM-SMART). The Edo State governor, Godwin Obaseki, launched the project. In his address, Aliyu Abdulhameed, managing

director/CEO of NIRSAL, said the FAM-SMART model was targeted at smallholder farmers in rural communities. Abdulhameed, who said similar project had already been launched at Obafemi Awolowo Uinversity, Ile-Ife, Osun State, for students, noted that the launched was second in the Southern agro-ecological zone of the country. While noting that it is a technologically driven agriculture and agribusiness with high yields and financial returns, and with least drudgery, he said it was the bedrock of the nation’s food security, and its national security imperative. He said the model would be instrumental to the transformation of Nigeria’s agroeconomic landscape and ex-

ploitation of its agribusiness potentials for food security, job creation and economic growth. He explained that since its inception of the $500 million, NIRSAL had facilitated the sum of N85.6 billion finance and investment from commercial banks and private equity for agribusinesses across the value chain. The NIRSAL boss disclosed that over 700,000 farmers were trained on good agronomic practices and financial education while 500,000 smallholder farmers were also provided with high quality agricultural inputs and affordable finance under the three farming seasons from 2017 to 2018. He also disclosed that the agricultural financial agency had concluded plan with OCP Africa, one of the big-

gest fertilizer companies in Africa, to be involved in the agricultural revolution, while Letshego Microfinance Bank had made an initial commitment of N2 billion to support the project across the country in this year’s dry season as well as Jaiz Bank. Abdulhameed, who further posited that plans were underway to roll out 16,000 geo-cooperatives across the country in the immediate to medium term, observed that with only 1000 FAMSMART geo- cooperatives, the gross output of 1,250,00 million metric tons of grain equivalent with a gross revenue of N125 billion would be produced in the country by smallholder famers. He said with the 16,000 cooperatives about N2 trillion gross revenue would be expected from the farmers. L-R: Rotimi Morohunfola, head commercial bank, Ecobank Nigeria; Ade Abatan, school support services, State Universal Basic Education Board (SUBEB); Patrick Akinwuntan, managing director, Ecobank; Sherefat Abike Rabiu, head teacher, Modupe Cole Memorial Child Care and Treatment Home, and some students, and Unwana Esang, Ecobank Result Delivery Office, during a visit of Ecobank team to Modupe Cole Memorial Child Care and Treatment Home being part of activities to mark 2018 Ecobank Day in Lagos.

Dreamworks offers discounts with Beta November promo

he next holiday promises to be a merry and jolly one. To give customers an exciting experience, Dreamworks, a retailer and distributor of IT products like laptops, phones, life-style gadgets, accessories and a wide range of office, home electronics as well as kitchen appliances, is having a special November sales themed – Beta November. Beta November guarantees memorable and worthwhile products from credible manufacturers like HP, Dell, Samsung, Binatone, Infinix, Nokia, Budi, X Touch and many more at discounts like never before. Dreamworks will give away exciting gifts such as games, kitchen and home appliances, and many more amazing freebies on social media. According to Franklin Okere, the business manager, “Customers tell us they love getting extra low prices so they can save on their Christmas

and holiday shopping. “This year, we have lots of great deals on various products, making it even easier to find perfect gifts with our Beta November sales. Our sales and giveaways will serve as a unique opportunity to reward families and loyal customers who have patronised the Dreamworks brand.” Dreamworks’ chain of retail stores called DWPremium Stores are located in Lennox Mall Lekki and D’Podium International Centre Ikeja, with other DW Stores in Surulere, Ikeja and a branch office in Abuja. Customers can also shop online for deals, best in class service, access to original products, favourable return policy and an unbeatable one year warranty. Connect on social media for other special discounts and rewards for loyal customers. Going the extra mile is what we do best at Dreamworks.

2019: Okowa’s aide calls on Nigerian youths to avoid political thuggery FRANCIS SADHERE, Warri

ecretary general, Advisory Council on NonIndigenes to Governor Ifeanyi Okowa, Zuberu Tajudeen, has called on Nigerian youths to avoid being used as political thugs in the forthcoming general election. Tajudeen made this call on Tuesday while speaking with BusinessDay on the significant of Id el Maulud celebration in Warri. Tajudeen, who is also the Etsu Nupe of Warri and its environs, urged Nigerians to use the moment to do the right things and also love one another. He advised politicians to learn to accept defeat in the interest of peace, noting, “Power belongs to the Almighty God.” “Parents should advise their children that election is not a do-or-die affairs, youth should avoid being used by politicians, whoever God wants to rule will definitely rule. “The candidates should

also learn to accept defeat because power comes from the Almighty God. Whoever God has chosen to be there must be there. Let us not kill ourselves for one another,” he advised. He also urged the Federal Government to improve on the security apparatus of the country to engender peace and unity. He commended the Nigerian Army, 3 Battalion, Effurun, Delta State and the Nigeria Police, Warri Area Command, for curtailing the activities of the cultists terrorising them in recent times. “We have been sleeping well in the past few days because of the intervention of security operatives in conjunction with the local vigilantes in our area,” he said. Tajudeen, who explained that Id el Maulud was celebrated annually to commemorate the birth of Prophet Muhammed, noted that Nigeria needed peace to have a successful elections in 2019.

Wednesday 21 November 2018

Explainer:

Difference between mobile money, payment service banking licences JUMOKE AKIYODE-LAWANSON

any seem happy about the idea that telecommunication operators, Fintech companies and other smaller organisations, interested in playing in the financial services space, will finally be allowed to independently operate in Nigeria. For a long time, there was debate on whether Nigeria was ready for telco-led mobile money. However, ongoing push for financial inclusion in the country recently led to the formulation of a draft policy guideline by the Central Bank of Nigeria (CBN) for the operation of payment services by non-banks in the country. As part of the requirements to operate, a number of telecom service providers have gone ahead to form subsidiary companies and apply for operational license to run this agent banking service. Agent banking is the provision of financial services to customers by a third party (agent) on behalf of a licensed deposit taking financial institution and/or mobile money operator (principal). The real difference between mobile money and payment service banking (PSB) Unlike Mpesa operated by Safaricom in Kenya, telcos in Nigeria will only be allowed to help open savings accounts, transfer funds and deal will bill payments. The CBN guidelines does not permit the subsidiary companies to perform

other financial services such as granting loans or payment advances, insurance and pension products. A lot have asked, ‘if telcos can borrow credit to subscribers, when then will the CBN not permit them to grant micro-loans?’ Olusola Teniola, President, Association of Telecommunication Companies of Nigeria (ATCON) told BusinessDay that although what CBN is allowing is not what the telecoms operators really wanted, it is a step in the right direction and is open to further review. As it stands, telcos will follow the guidelines and provide payment services and then in future, they may be allowed to grant loans and do more services. The PSB is largely a Digital Bank capable of receiving and transferring cash between individuals and small businesses and also maintains savings accounts. It will be largely technology driven as it will be based in rural areas with a main office, but with various coordinating centres to coordinate the activities of its banking agents. The PSB will have the ability to issue electronic wallets, debit and pre-funded cards, and electronically make payments/remit cash between banks for services rendered, as it will be connected or utilize a corresponding bank which is connected to NIBBS. Mobile network operators in Nigeria have always clamoured for a level playing field to perform financial services which is the next growth area for telcos.

Agbakoba lists solutions to nation’s economic problem ZEBULON AGOMUO

senior advocate of Nigeria, Olisa Agbakoba, and cochair of National Intervention Movement (NIM), says Nigeria needed a “New Deal” to take her away from the current “crisis of the old order,” suggesting that this could be done through the convocation of a special joint sitting of the National Assembly in 2019. Agbakoba said the speech to be presented at the joint session must dwell on political devolution (restructuring), a new anti-corruption framework, financial services sector, economic governance, infrastructure, legal/justice sector, social security, national industrial reform, agricultural reform, a new housing/mortgage policy and legal framework, healthcare, among others. The chairman of the People Trust Party, one of the largest and newly registered parties, who spoke with journalists in Lagos on

the State of the Nation, also noted that “diagnosis of the economic problem is, malignant metabolic economic syndrome, complicated by inflation, high interest rates, unemployment, weak infrastructure, oil price shock and no growth economy.” The chairman of the 3rd Force Political Parties emphasised that for government to arrest the ugly trend, it must ‘reverse antiausterity and tight money as G-20 nations all now agree; use all policy tools and embrace Fiscal stimulus; adopt Keynesian economic model of massive government spending on public works; reduce raging inflation at 17 percent in medium term; reduce MPR (monetary policy rate) to single digit – 10percent - Quantitative Easing; vigorously Implement budgets and reflate the economy; spend our way out of recession, among several other methods. … Read full interview this Sunday in BDSUNDAY

Wednesday 21 November 2018

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NEWS Delta communal crisis: NGO calls on women involvement in peace building FRANCIS SADHERE, Warri

o put an end to the age-long communal crisis that has been raging between the people of Aladja and Ogbe-Ijoh communities in Delta State, a non-governmental organisation, Development Initiative for Community Impact (DICI), has called on women to be involved in peace building processes. The women in the warring communities of Aladja and Ogbe-Ijoh were on Tuesday brought together by DICI to begin a peace talk to end the 23 years boundary dispute between both neighbourhoods. The women were gathered at an event tagged “Speak! 2018, Women Peace Forum: Interaction for Reconciliation” organised by the DICI in Warri. While calling for tolerance among the populace, they urged the government not to withdraw the Joint

Task Force (JTF) in the area while the peace negotiation goes on. Rachael Misan-Ruppee, the convener and programme coordinator, DICI, said the discussion was restricted to the women because they were good at peace building processes. “The world is a global village but we have never been further divided than we are right now. Women have the power of peace building, when they are involved in peace process it is faster. “DICI took the initiative to organise this program and bring women from Aladja and Ogbe-Ijoh communities to a roundtable interaction to end the protracted 23 years conflict. “I believed that the conflict has been lingering because women are not involved in the peace process, with this initiative, I am confident that the problem will be resolved in no distant time. “The women sat, eat,

sang hugged one another and came up with an action plan on what to do in the next event, that means the peace process between both communities have began,” she said. Misan-Ruppee said there was no alternative to peace hence the NGO decided to bring the two communities to a roundtable dialogue. Grace Egberike from Ogbe-Ijoh community thanked the NGO for initiating such a laudable peace process, saying, “Both communities should leave with each other peacefully, we are going back to inform other women to be part of the subsequent meeting of the peace building.” Also, Tisheneh Annah from Aladja community thanked the organisers, noting that with the involvement of the women, peace would soon returned to the volatile communities, as “both communities should try and tolerate each other, stop fighting and embrace dialogue to solve their differences.”

Edo SDGs assure of quality education, construct school in Obarenren community

do State Sustainable Development Goals (SDGs) Office has assured of promoting quality education in the state and has commenced construction of a block of six classrooms at Obarenren Community in Ovia North East Local Government Area of the state. Speaking at an interactive session with leaders and members of the community, the state focal person for SDGs, Ifueko Alufohai, said the initiative was geared towards meeting Goal 4 of the SDGs, which focuses on promoting quality education. Alufohai said the school building project would also include provision of staff room, six toilet facilities, a playground and perimeter fence.

She noted that community engagement became necessary to sensitise members of the community on the need to key into the project and take ownership. “The focus for this year’s SDGs’ activities is on Primary Healthcare and Primary Education. We were able to speak with the state governor and he has given approval for this project,” she said. The focal person explained: “We decided to sensitise members of the community to enable them know what we are doing, why we are doing what we are doing. We want them to also know that it is their project.” She commended the community for sustaining the water project provided by the office of the SDGs over eight years ago and the

harmonious relationship between the SDGs Office, community and the contractor handling the school project. She added that the school project would be delivered before the end of the year as teachers would be deployed to teach in the school through the Edo State Universal Basic Education Board. The Spokesperson for the community, Omorodion Izevbuwa, commended the state government as well as the office of the SDGs for brining development closer to people in the community. Izevbuwa said the community would do its bit to protect the school from vandals and called on the state government to deploy guards who will provide round-theclock security for the school.

APC did not promise change in 4 years - Fashola JOSHUA BASSEY

inister of power, works and housing, Babatunde Fashola, says the All Progressives Congress (APC) government-led Federal Government did not promise that it would transform Nigeria in four years. Fashola said this Tuesday in Lagos, at the flag off of mobilisation of 5,000 political foot soldiers for President Muhammadu Buhari and Vice President Yemi Osibanjo re-election, saying the President in his quest to turn the fortunes of the country around and bring change in

different sectors never attached four-year time frame to it. The 5,000 political foot soldiers are expected to comb all the wards in Lagos State and deliver at least 4.5 million votes for Buhari in the February 2019 presidential election. Buhari flagged off his re-election campaign on Sunday with theme “The Next Level.” Fashola said the APC had remained focused from outset and made tremendous impacts in different sub-sectors of the nation’s economy, despite the challenges and economic woes caused by wanton mismanagement of

the nation’s resources by previous administrations. He explained that the Buhari-led government had laid the foundation for economic growth of Nigeria, judiciously utilised its first term in office by achieving more with less resources and had re-strategised to take the country to the next level. According to Fashola, the country has recorded rapid infrastructural development across the country under President Buhari, saying, “We did not promise to change Nigeria in four years. We have done very well all the sectors including education.

BUSINESS DAY

8 BUSINESS DAY NEWS NAICOM targets compulsory policies in new State Insurance Producer licence MODESTUS ANAESORONYE

nsurance regulator, the National Insurance Commission (NAICOM), has released the guidelines for State Insurance Producer licensing (SIP) and operations, with focus on exploring the different compulsory insurances. NAICOM in a guidelines issued on Monday, said, “The National Insurance Commission pursuant to the powers conferred on it by the provisions of Section 49(1) of National Insurance Commission Act 1997 hereby issue the following guidelines for licensing and operations of an Insurance agency to be known as State Insurance Producer. “The State Insurance Producer shall enter into a memorandum of understanding; as may be approved by the Commission; with approved insurance companies established in its jurisdiction for the purpose of placement and management of insurance business”. According to the Commission, a SIP shall maintain a separate insurance unit or department for proper monitoring of the activities of the agency with the Insurance Officer reporting directly to the CEO of the licensed agency.

As contained in the guidelines, the key responsibilities of SIP include “enforcement of compulsory classes of Insurance within the state’s jurisdiction by ensuring compliance and exercising on defaulters the power to penalise them according to the state laws.’’ Mohammed Kari, commissioner for Insurance/CEO of NAICOM, said SIP was a fresh alternative channel for insurance distribution newly developed by the commission and to become effective on January 1, 2019. The SIP, according to Kari, is developed to ensure effective distribution of compulsory insurances, thereby deepening insurance penetration in the country. He believes that the SIP will increase market penetration by 300 percent in two years, if effectively executed. Once licensed, the commission said the SIP would enter into a memorandum of understanding (MoU) with NAICOM and the approved insurance companies. “A licence issued under this guideline shall entitle the holder to act as a State Insurance Producer for the appropriate state government and shall be renewable once every two years by the Commission,” he said.

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Wednesday 21 November 2018

FG targets 30% in renewable Nigeria leads in global malaria burden energy mix by 2030 - Fashola CALEB OJEWALE

n a bid to diversify its energy sources and optimise other assets for power production, Nigeria is targeting 30 percent of its energy needs from renewables by 2030. Babatunde Fashola, minister of works, power and housing, made the assertion in a keynote address at the 2018 pre-conference workshop of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos on Monday. Fashola said that the current component of grid power consists mainly of gasfired power (85%) and hydropower (15%), there was the need to produce an energy mix that targets a 30 per cent component of renewable energy out of the gross energy produced by 2030. “Let me be clear and unequivocal by saying upfront that our commitment as a nation and government to pursue renewable and low carbon energy at low cost is clear, firm and unshaking. “But this is not all. It is a commitment driven by necessity, contract and policy,” he said. The minister said that government had also matched its intent with

actions such as signing 14 solar power purchase agreement (PPAs) with 14 developers with the potential to deliver over 1,000MW of solar power. “In addition to the necessity to diversify our energy sources from gas and provide some energy security, we are also driven to pursue renewable energy by contract,” he said. He said that Africa must intensify efforts at improving transmission grid for renewable energy to be effectively developed on the continent. The minister said Nigeria as a committed member of the United Nations, African Union and ECOWAS, had adopted several international treaties and policies, which promote the use of renewable energy. This, he said, was in line with the national vision to provide incremental power, and then steady and uninterrupted power. The minister said that the Federal Government recently approved an integrated energy mix targets under Electricity Vision 30:30:30, which targets generation of 30GW in 2030, with 30 percent from renewable energy sources.

igeria is making less progress in eradicating the malaria scourge, as a new report by the World Health Organisation (WHO) shows the country taking the lead in a rather negative health index. According to the 2018 World Malaria report released yesterday, five countries accounted for nearly half of all malaria cases worldwide, with Nigeria accounting for 25 percent of this, followed by the DR Congo with 11 percent, Mozambique 5 percent, India 4 percent, and Uganda 4 percent. Fifteen countries in subSaharan Africa and India carried almost 80 percent of the global malaria burden. The 10 highest burden countries in Africa reported increases in cases of malaria in 2017 compared with 2016. Of these, Nigeria, Madagascar and the Democratic Republic of the Congo had the highest estimated increases, all greater than half a million cases. In contrast, India reported 3 million fewer cases in the same period, a 24 percent decrease

compared with 2016. WHO in a press statement after releasing the report, noted that reductions in malaria cases have stalled after several years of decline globally. To get the reduction in malaria deaths and disease back on track, WHO and partners are joining a new countryled response, to scale up prevention and treatment, and increased investment, to protect vulnerable people from the deadly disease. For the second consecutive year, the annual report produced by WHO reveals an increase in numbers of people affected by malaria. In 2017, there were an estimated 219 million cases of malaria, compared to 217 million the year before. But in the years prior, the number of people contracting malaria globally had been steadily falling, from 239 million in 2010 to 214 million in 2015. “Nobody should die from malaria. But the world faces a new reality: as progress stagnates, we are at risk of squandering years of toil, investment and success in reducing the number of people suffering from the disease,” said Tedros Adhanom Ghebreyesus, WHO director-general.

Wednesday 21 November 2018

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comment Small Business handbook

Emeka Osuji Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

he Catholic Church of Divine Mercy in Lekki Phase One recently organized a free entrepreneurship workshop for youths in Lagos, as part of its 2018 annual Unusual Praise event, coming up in December. Many young people took part and competed for prices in Business Plan preparation and such critical business skills. This is commendable, and part of the growing effort of the private sector, and not-for-profit organizations, to chip in to the resolution of the current employment crisis in Nigeria. Whatever the reasons may be, the fact is that more and more young Nigerians are choosing to do their own thing – work for themselves, make their own money and generally boss themselves. Self-employment is becoming very attractive among the youth, even in the face of hitherto very attractive opportunities in such sectors as banking and energy. Granted that the declining economic fortunes of both country and people may be playing a part, many young people are now showing more interest in selfemployment than before. Of course, many are unwilling entrepreneurs who would have preferred a decent job in the corporate world or the civil service but found themselves on the margins of the economy. Still, many more are deliberately seeking to find niches, around which they start an idea and grow it in value. This trend, which is ris-

Wednesday 21 November 2018

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Promoting youth entrepreneurship spirit as poverty reduction strategy ing and holds great development potential for the country, could not have been possible without the equally rising wave of entrepreneurship training and mentoring opportunities coming up more frequently. Many private individuals and entities, especially the not-for-profits, are doing a great job in providing these opportunities, mostly for free. Nigeria is a great country by many standards. Despite all the challenges thrown in its way, it has held its own in the comity nations in certain areas. But it is not unusual to see those who say that Nigeria is a great country being mocked and derided for holding that view in the face of seemingly overwhelming evidence of failure. They are often accused of living in what their critics call “fools’ paradise”, not abreast with what other great countries have achieved. Some of the critics go to the extent of asking for a listing of the achievements of Nigeria that make it great; and quite frankly, in many cases, such evidence is not commonplace. However, what nobody can deny is that Nigeria is big and the people are entrepreneurial. Still, critics insist that Nigeria has not added value to its citizens since independence. After over 50 years of independence, they charge, Nigeria remains a smorgasbord of mutually antagonistic ethnic islands, separated by widening mucky waters of rivalry, hate and disunity, which some of her leaders deliberately engineer through nepotism and divisive conducts. The waters have sadly widened over the last few years and continues to do so. It is time to begin to work on a Nigeria that works for all; not a few. Nigeria, has not won any conflict with its neighbours; instead it has shown signs of fear or weakness, when confronted by seemingly weaker neighbours. Indeed, rather

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It will be necessary for the state government to take note of [the] growing number of idle youths and join the private organizations in the state to provide them with a sense of belonging, before something terrible happens

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than show its might, as some global and regional powers do, even by annexing territories, Nigeria sometimes rather easily allows chunks of its territory to slip into the hands of other more territorially ambitious elements. Like a joke, Nigeria ceded some parts of its own territory and even citizens in Bakasi to an ostensibly weaker neighbour, Cameroun. Today, there are more internally displaced people in Nigeria than many nations at war. A rag tag insurgent group called Boko Haram is holding its own against us, overrunning security posts and hiding in our forests. These dislocations have had negative impact on the youth. There is a growing menace of idle youths on the streets of Lagos today. Many parts of Lekki Phase One have been occupied by young boys who sit idly on the kerbs day and night without any visible job. They claim to be security

guards but they outnumber the houses on the streets they sit. Some of them attempted to kill a legal practitioner in Lekki last month but failed and are now with the police. It will be necessary for the state government to take note of this growing number of idle youths and join the private organizations in the state to provide them with a sense of belonging, before something terrible happens. Although the country has had seemingly intractable challenges with governance, the potentials for the greatness of Sub-Saharan Africa still lies on how Nigeria figures its way out of its perennial leadership challenges. We can begin with a few statistics that show us as a country that is capable of greatness and leadership on the world stage. God began to sow the seed of Nigeria’s greatness when he assigned to live in it, a people who find it very easy to be happy. This has reflected in the lifestyles of the people. We are a happy people by any standard – our dressing (rich and colourful), our cars, mostly big and expensive, and our ambitions, very big. Jokes apart, happiness is a proper and indeed major index of social progress of any human community. Nigeria had once been ranked number one in world happiness by the Economist, several years ago. Things have got harder for the citizens, over time but according to the World Happiness Report for 2016, Nigeria is still considered the happiest country in West Africa, and the 5th in Africa, after Algeria, Libya, Morocco and Tunisia. We can make things better for our people. The Nigeria Labour Congress has had a bad outing in the minimum wage saga. It has been reduced to its barebones by this controversy, which has portrayed it as a selfish union that does not seem to understand the real issues confronting the nation. There are actu-

ally, so many more important reasons why labour should have downed tools since 1999 than minimum wage, but it failed to act. To plan a national shutdown because about one per cent of the population is angry over its income does not appear quite noble. I can tell labour for free, ten things over which a national shutdown is appropriate and overdue. The world has an index of market power known as Market Potential Index. Nigeria was ranked the highest in West Africa and 5th in Africa for Market potential in the 2016 report. This report also indicated that Nigeria has the largest market size in Africa. The Market Potential Index provides valuable information for firms interested in international trade. With the world fully globalized, it is no longer an option for a country to positively manage its international trade opportunities. It is compelled. The index helps international companies that plan to expand their markets to other countries to find direction. This ranking provides an opportunity for Nigeria to become a destination of choice for countries looking to expand in Africa to consider choosing Nigeria due to its enormous market potential. This measure not only considers the size of the market, it also takes account of its growth rate. A fast growing market like Nigeria holds a latent power. There is also the Global Talent Index (GTI). The GTI report for 2015 ranked Nigeria as the 4th in Africa for talent attraction, development, and retention. Nigerian youth have proven that they have talents. From Nollywood to our pidgin English music explosion. We must give all the necessary support to our youth so as to reduce tomorrow’s army of the poor.

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The important role of medical equipment in saving mums and babies

BUKOLA BOLARINWA Bolarinwa, a lawyer and health advocate, is the founder of Haima Health Initiative and president, Sickle Cell Aid Foundation (SCAF).

pregnant woman is rushed into a hospital where talented surgeons, anaesthesiologists, obstetricians and nurses work tirelessly to save both mother and child. The mother is delivered of a beautiful baby boy, three months premature. After six weeks in the hospital, most of which is spent in an incubator, the baby is finally able to go home with his overjoyed mother and father. As the family leaves, they make sure to thank the doctors, the nurses, cleaners, receptionist and everyone whom they came in contact with during what was one of the most difficult times in their lives, but one

that, thankfully, had a happy ending. No one ever stops to thank the incubators that keep the baby safe as it develops, or the anaesthesia machines that enable the doctors to operate on the mother, or the MRI machines whose detailed images help doctors identify internal ailments, or the many other critical life-saving machines that play a role in saving precious lives. When everything goes well, no one stops to imagine what would happen if these machines were not working, if there was no incubator to keep the baby safe while it developed its under-formed internal organs. No one stops to imagine the unimaginable, until the imaginable does happen. The reality is that no matter how skilled and experienced a doctor or nurse is, there is a limit to what they can do with just their skills and passion. In the absence of the vital life-saving equipment required for effective diagnosis, testing and treatment, these talented doctors and nurses simply cannot save lives. According to the National Demographics and Health Survey (NDHS,

2013), Nigeria loses as many as 576 women per 100,000 childbirths and 37 new-born deaths per 1,000 live births, placing the country among the worst ratios for both maternal and newborn deaths globally. Worse still, it is estimated that about 90 percent of these deaths are preventable with essential interventions (availability of professional care/vital devices) reaching women and newborns on time. Many of these interventions are impossible without properly functioning medical equipment and, unfortunately, most of the medical equipment in Nigerian hospitals no longer function efficiently and, in most cases, no longer function at all. This means that many mums and babies who would have otherwise lived are sent to an avoidable early grave. When we consider the critical importance of machines in saving lives, and the costs of acquiring these machines in the first place, it becomes clear that the acquisition of equipment through either donations, lease or loans, purchase or any other means cannot be done in isolation but must be complemented with the availability of a skilled technical workforce that has the

ability to use these machines properly and to keep them humming for years to come. If this is not the case, new machines soon graduate to decorative pieces of furniture lining the corridors of hospitals instead of performing the life-saving duties they were meant to perform. This is why Coca-Cola, through its Safe Birth Initiative (SBI) which is donating critical life-saving medical equipment to hospitals across Nigeria, teamed up with Engineering World Health to deliver intensive training programmes to technicians from the beneficiary hospitals to ensure that the machines perform their fundamental raison d’être – saving lives – for many years to come. SBI is focused on supporting doctors and nurses to achieve successful birth outcomes by strengthening the capacity of target public hospitals in three critical areas. These three areas are: the procurement of vital maternal and neonatal medical equipment and supplies to enable safe deliveries and post-delivery emergency cares; training biomedical engineering technicians to improve equipment maintenance and uptime; and reac-

tivating a large stock of abandoned medical equipment wasting away in public hospitals. The programme recently celebrated the graduation of the first set of biomedical engineering technicians who had undergone the intensive twoweek capacity training, focused on improving equipment maintenance and uptime, at the School of Biomedical Engineering, Lagos University Teaching Hospital. The technicians came from 10 leading medical institutions across the country, comprising university hospitals, federal medical centres and general hospitals. SBI was conceived by Coca-Cola in early 2017. It was fully developed and is being implemented in collaboration with the Federal Ministry of Health (FMH), the Office of the Senior Special Assistant to the President on Sustainable Development Goals (OSSAP/ SDGs), and Medshare International Inc (Medshare). The initiative has been extended to Ivory Coast and exploratory discussions are ongoing in some other countries in the West Africa sub-region, including Senegal.

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comment Character Matters with Daps

Dapo Akande Graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

ill this day, I remember so vividly how I felt each seemingly endless night, as we soldiered through this gruelling experience. “What am I doing here? What I would do to be back at school, on my bed and snuggled up under the duvet? Never will I complain about my school bed or school food again.” “What and how did we eat?” I hear you ask. Mostly specially dried up food army style; add water and heat it up and before long it transforms into something akin to real food. Each person prepared his meal by himself using a camping stove. With not even the slightest pang of shame, I recall getting half way up a very steep and jagged hill in freezing cold weather, with a very heavy ruck sack on my back and insisting I wasn’t going to take another step. Abi what is it?? Me! Black man! Hill! Or was it mountain? All the same to me. You know the type where you need to use both hand and feet to climb. I was petrified!! This was so far removed from my idea of fun. Regardless of

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Education revealed (iv) the number of years I spent in the UK and the incontrovertible fact that those were indeed my formative years, other than the colour of my skin which I saw everyday, there was something else which always reminded me that I wasn’t white; I could never quite understand some of the crazy things a typical oyinbo person called fun. If an activity is found to be devoid of any element of danger, it didn’t excite them. Mountain climbing. Kayaking. Bungee jumping. Kilode? “What sort of thing is that?” When you’re not cursed from the village to be pursuing danger “every time”. The camping trip was never meant to be just fun however. It had a very cogent and specific purpose. Those torturous few days taught me several important lessons of which the cardinal was this; I learned new things about myself. I discovered I could do things I didn’t realise I had the ability to do. Also, contrary to my expectations I could withstand adverse circumstances and because they didn’t kill me they actually made me stronger. Equally crucial though, I learned that to make it, just as it is in life, you can’t go it alone. The formidable strength available to be harnessed when you work as a team cannot be overemphasised as the potpourri of disparate talents is what got each and everyone of us through. To survive, glory seeking by any individual simply wasn’t on the cards. Those who say London is the most cosmopolitan city in the world are most probably right. Though

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A world apart in attitude to governments who blame their failures on past administrations; whose mess we elected them to come and correct

’ you’ll find most British public schools in the serene countryside rather than in cities where they typically enjoy the use of acres upon acres of land, you will find them to be populated by citizens of almost every nation on this planet. You’re just as likely to share a dormitory with a Middle Eastern Prince, the son of a Thai business tycoon or a Greek shipping magnate as you are with a wealthy British farmer’s son or aristocrat. And yes, before I forget, the plethora of Nigerians certainly can’t be left out. As an aside. Whenever I attended an inter school or county athletics meeting, as those of us about to race gathered, I would nervously look around. As soon I

sighted an oyinbo, I would almost involuntarily let out a sigh of relief. “Thank God. At least I won’t come last” I would say to myself. Anyway, there was the odd American too. Perhaps the father was lured by the deeply cultured appeal of the British public school system where traditions have been sustained by generation after generation for literally hundreds of years. Several schools are well over a thousand years old. The value inherent in tradition is not measured by its pleasantness but by its character moulding nature. The “Churchillian” stiff upper lip and a stern refusal to give up even when the odds are overwhelmingly stacked against you, just as they were when Churchill was prime minister during the 2nd World War. Not one to perpetually look for others to blame for his failures but accepts them, learns from them and moves on. Our politicians should please take note. The spirit of magnanimity in victory and immutable dignity even in defeat drilled into you in preparation for the future leadership role expected of you, wherever you find yourself in society, demonstrates the unmistakable allure of that system. Prefects were seldom picked among what we call the “efficos”. The simple reason is this, an “effico” lacking in other appealing qualities is less likely to command the respect of others like a school sports hero who may have even been known for a little rascality in the past. The sports hero understands the importance of team spirit. He appreciates the fact that we’re not all of the same

strength, just like in a team. To hone his skills to a state of near perfection he has come to appreciate the patient demands of sacrifice and discipline. He knows in order to get the best of his subordinates, some level of camaraderie is needed to boost morale. So leadership is not all about shouting and merely dishing out instructions. Having learned on the pitch that you win some, you lose some, his even temperament allows him to encourage the younger ones and to temper mercy with justice when they err. No one is perfect. When faced with an uphill task which appears intractable, he’s able to draw strength from his experience on the pitch which taught him to employ a different tactic to defeat a stubborn foe. A world apart in attitude to governments who blame their failures on past administrations; whose mess we elected them to come and correct. And though there’s still a tendency for this boy to be naughty at times, which often goes with the territory and his age, he nevertheless commands the respect of both pupils and even Masters. He has learned where to draw the line; when fun must stop and serious business takes over. He respects authority and this should come as no surprise as he has discovered over the years the importance obeying authority figures such as referees and umpires on the sports pitch. Even his nuances are to be expected but these can be eased out when burdened with responsibilities.

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Leadership, structural complexity and cannabis economy

GLENN UBOHMHE UBOHMHE, a financial/tax consultant and an ex-banker

n the immortal words of Theodore Roosevelt, the 26th President of the United States of America, “the stream will not permanently rise higher than the main source and the main source of national power and national greatness is found in the average citizenship of a nation. Therefore, it behoves us to do our best to see that the standard of the average citizen is kept high and the average cannot be kept high unless the standard of the leaders is very much higher”. The statement rings true, and without a shred of doubt, embodies the first order differentiating factor why nations fail or succeed. This is true for corporate entities as it is for sovereigns. Daron Acemoglu and James Robinson did argue elegantly, in their book titled “Why Nations Fail”, on the role of inclusive institutions in bringing about sustainable growth. Implicit in the “institution theory” by Acemoglu and Robinson lies the central role of leadership because, in the final analysis, both inclusive and extractive institutions are direct

consequences of leadership – this much is axiomatic in the Latin truism that says nemo dat quod non habet (you simply cannot give what you don’t have). Leadership is about ideas (bold ideas, I must say), ability to make difficult choices for the common good, penetrating vision, strategic acuity with execution capacity, developmental mindset and a global worldview. Sadly, our sense of achievement in this part of the world has been thoroughly subverted to the extent that production of a few bags of rice that cannot feed internal refuges in an IDP camp is touted as rice revolution and every conceivable project as ridiculous as 10-feet water borehole (of course, usually executed at colossal costs that can fund several space missions in other countries), is commissioned with so much fanfare and worn as a badge of honour for (re)election. In saner climes where quality of ideas matter, by now the queue behind new breed of presidential aspirants in Nigeria like Moghalu, Obadiah Mailafia, Oby Ezekwesili, Fela Durotoye, Omoyele Sowore should be the farthest. And where are the likes of Sanusi Lamido and Charles Soludo? Where quality of ideas matter, shaku-shaku dance steps at campaign rallies will never pass as a proxy for robust policy debates - even Omoluabi is in shakushaku dance rehearsal mode, I heard. As usual, as the campaign season begins, the two major po-

litical parties will again serenade us with wild gyrations and incoherent vituperations targeted at opponents (dead or alive) with little or no focus on policy issues in scenes reminiscent of rancorous wresting contests in ancient Rome. We can do better than this. That there is a crying need for root and branch reform of the Nigerian economy is abundantly clear with over 70 million trapped in grinding poverty. Therefore, the minimum we expect from current and aspiring political leaders are concrete steps on how to resuscitate the comatose economy, bridge the huge level of infrastructure gap, rescue the educational system from total collapse, reverse the cyclical fiscal deterioration and avoid fiscal expansions that have little or no bearing with the state of infrastructure and social-economic well-being. Pray, how can any serious country lay claim to economic transformation when it expends over one hundred percent of public revenue on recurrent expenditure and total allocation by MDAs for newspapers in the annual ritual called budget rivals the entire revenue from sale of newspapers by local media organisations (does this make sense to you? I leave it for you to figure out). Let’s be clear, this is not to suggest that political leaders must be world-renowned economic experts. However, such a person must be sufficiently equipped with the knowledge of the workings of a modern economy, understands the primacy of structural

transformation and the use of appropriate policy choices to cultivate and promote the kind of complexity that creates a virile economy, guarantees long term sustainability with a view to inclusive prosperity. In sum, the capacity to conceptualize the future economy, where key developmental indicators in Nigeria are consistent with what obtains in other prosperous nations, is a sine qua non. In this age, no serious country dwells in the triumphalism of exportation of a few tubers of yam as a mark of economic diversification, assuming such claim is even true. Today’s knowledge economy does not lend itself to the tokenism of commodity-to-commodity diversification. Lifting millions of youths from the poverty trap requires much more than simply focusing on low value products. Agriculture in critical in providing food sufficiency and security. Indeed, an economy that cannot substantially feed itself has little capacity for external competitiveness but to compete on a global scale and to provide the kind of jobs that will push unemployment rate to lower digit region requires a much more complex economy. The sort of rapid economic growth and steep reduction in unemployment witnessed in developed and emerging economies has consistently followed a discernable path and that is the path of structural economic complexity. Economic transformation is driv-

en by policies and policies must bear relevance to the existential realities of an economy. The quest for structural transformation and economic growth requires new perspectives etched in the understanding that our economy needs growth models that underpin the peculiarities of our environment and national interest as Professor Kingsley Moghalu rightly concludes in his book “Emerging Africa: How the Global Economy’s Last Frontier Can Prosper and Matter”. Crucially, we sometimes need to interrogate and dispel age long economic orthodoxies or where necessary, reframe it. This again brings into focus the near fixation on Mundell-Fleming as the reference model and proximate policy tool for exchange rate management and macroeconomic stability in Nigeria by some economic experts, intellectuals and opinion merchants each time there is fiscal crisis in Nigeria always as a result of oil price slump. For the uninitiated, the classical Mundell-Fleming model suggests that weak domestic currency encourages investment and spurs export and therefore brings about macroeconomic stability. It is true that the model has some validity, albeit with major drawbacks, one of which is its lack of general applicability. Note: The rest of this article continues in the online edition of Business Day @ https://businessdayonline.com

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Frank Aigbogun editor Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

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Wednesday 21 November 2018

Getting implementation right: Assessing the payment service banking guidelines

n recognition of the fact that efforts towards improving access to financial services have not had the desired impact, the Central Bank of Nigeria (CBN) has decided to adopt a new approach that holds significant potential. Payment Service Banking, if executed and managed successfully, could be the key drivers in helping Nigeria achieve its national financial inclusion strategy goal of 80% inclusion by 2020. Essentially, the payment service banking license enables nonbanks across the country to obtain a license to operate in the financial sector. These organisations — which can include telecommunications companies, retail chains, postal and courier service companies, mobile money operators, and financial technology organisations — will provide remittance services, micro-savings and withdrawal services. The guidelines, as published by the CBN — in an exposure draft on October 5, and a formalised publication on November 2 — enable these organisations to leverage technology to reach rural communities. The acquisition of a PSB license is based on the organisation’s ability and willingness to pay an application fee of N500,000 as well as a non-refundable licensing fee of N2 million, and to have a minimum capital requirement of N5 billion. The financial requirement eliminates a vast amount of organisations, but will likely drive increased partnerships and collaboration to enable smaller organisations to participate. Organisations seeking to ob-

tain the PSB license will also be required to operate in rural and unbanked areas, with a minimum of 25% of their total touch-points located in these areas; and can deploy ATMs and Point-of-Sale devices; can operate through banking agents; roll-out their own agent networks; and set up consumer use electronic and technology-driven platforms to reach the unbanked. The release of the guidelines is an important step, but being clear that they will deliver on their objectives is now equally, if not more, important. The successful implementation of payment service banking is dependent on three critical factors — how well it serves the purpose of including the unbanked and underserved customers into the financial system; how widely the model is adopted by eligible organisations; and how effectively PSBs are enabled to grow and expand, and to serve the purpose for which they were designed. We asked a range of stakeholders to indicate what they think might be the most contentious content of the guidelines, and three particular areas were clearly of most concern. Firstly, the guidelines propose a structure wherein the name of a PSB shall not include any word that links it to its parent company. This could prove problematic for licenseholders in drawing in already-skeptical excluded individuals. Financial services are about trust, and most often, familiarity with the name of an organisation and its various associations breed a significant level of trust with end-users and potential customers. The names of organisations carry years of legacy and history, and important association developments amongst their existing and target au-

diences. These excluded low-income earners have a high-sensitivity to financial services, and this lessened level of trust could stifle adoption or worse, destroy the potential for takeoff. The cost of working to establish a new name in the minds of desired audiences could equally result in organisation’s eligible for the license opting-out. Based on this, it’s important to understand the rationale and intention behind the requirement, and so assess whether the benefits of its inclusion, outweigh the impact that it might have on roll out. Another issue presents itself in the potential sustainability of the PSBs, given their limited revenue options. One of the conditions presented in the guidelines prevents payment service banks from granting loans or payment advances to customers. However, this clause defeats the mission to truly include the unbanked and underserved customers, as providing them with access to financial services goes beyond account opening, but rather includes all services which will empower them to take advantage of the benefits of our national financial systems. This certainly includes micro-loans. By excluding this from the service offerings of PSBs entirely, the attractiveness of the license for eligible players is significantly reduced, and the likely patronage of their services by customers are also reduced. The fact is, any effort to reduce financial inclusion needs to be truly holistic in order to be successful. While the clause limits both the direct and indirect provision of loans, an indirect means should be considered: PSBs working in partnership with licensed financial institutions could

significantly strengthen efforts at making a real impact. The third condition which could limit the effectiveness of PSBs is the requirement that they maintain a minimum of 75% of their deposit liability in CBN securities, T-bills and other short-term federal government debt instruments. While the need to effectively manage and ensure the security of customer’s deposits is paramount, this must not be to the detriment of the PSBs. Having PSBs invest the greater percentage of their deposit liability in low-yield investments could significantly limit their profitability, and in so doing, their continued growth. Investment requirements for micro-finance banks are capped at 10%, and this has proven successful; the same model should be applied to PSBs — investments capped at 25%, with all excess placed with deposit money banks, as proposed in a later clause within the guidelines. This approach is yet to be tried and tested, and certainly there will likely be a number of hiccups before it is perfected, however, a review of these conditions in particular may be critical to enhancing the success of the PSB model. The guarantee that this approach does not go the way of Microfinance banking, Agent Banking, Tiered Know-Your-Customer Requirements and Mobile Money Operation (MMO), is the ability for the CBN to pay close consideration to conditions like these which may limit the full potential for organisations to play these new roles as effectively as possible. It is in all our interests, but most importantly, in the interest of the end users (the poorest in our society) for this to work.

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ECA partners Omidyar Network to establish digital identities in Africa

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BANKING

First Bank upgraded to BUY as stock nears 52-week low LOLADE AKINMURELE

agos-based investment bank, Chapel Hill Denham has upgraded its rating on tier-one lender, First Bank Holdings of Nigeria, to a BUY after revising its 12-month target price to N10.53. First Bank stocks gained 2.01 percent Monday to N7.60 per share, outperforming the banking industry which was down 0.46 percent, according to Bloomberg data. That implies an upside potential of 38.55 percent at its current market price of N7.60 which is closer to the bank’s 52-week low of N6.80, than it is to a high of N15.16. St o c k s a re h ow e v e r down 13.5 percent since the start of the year, while the broader index is down by more than 15 percent as political tensions and rising interest rates in the US, which have led to foreign capital flight, hammers stocks. “We note that the share price has declined by 37 percent since we main-

tained our HOLD rating on the stock on 08 May 2018 and see the current price as an attractive re-entry point,” Aderonke Akinsola, a research analyst at Chapel Hill Denham said. First bank’s price to book ratio is 0.4 times, which means investors are pricing the bank at N0.4 for each N1 in shareholders’ equity. That compares to the banking industry average of 1.6 percent, with Guaranty Trust Bank and Stanbic IBTC leading the way with over 2 percent each. The bank’s interest income dropped 5.3 percent to N337 billion in the first nine months of 2018, from N356 billion in 2017. G ro s s e a r n i n g s d e clined by 2.4 percent YoY to N430.8 billion. Likewise, after tax profit shrank, albeit moderately, by 1.9% to N44.9 billion on the back of a weaker net interest margin The bank charged 21.9 percent less impairment in the nine months through September 2018 compared to the figure in 2017. Analysts expect the lender’s asset quality to

improve and NPL to reduce to 18 percent by year-end, with management revising its guidance to 17-18% from “less than or equal to” 15%, due to the expected impact of FX translation. Although management’s 6-7 percent Cost

of Risk guidance suggests higher credit losses in Q42018, this may be conservative on less than expected loan growth given weak macro recovery. The drop in gross loans as at 9M-18 can be attributed to the soft macro envi-

ronment, high interest rate as well as the bank’s weak lending appetite due to the need to book quality loans. We now forecast the NPL ratio at 18.0% (15% previously) with management revising its guidance to 17-18% from “less than

or equal to” 15%, due to the expected impact of FX translation. The upstream oil and gas sector remains a major concern, accounting for 54.7% of FBN’s NPLs as at 9M-18 amid sustained recovery efforts.

INVESTOR

Chinese investor plans $10m investment in Nigeria’s palm oil mills ODINAKA ANUDU

hinese machine maker Zhengzhou QI’E Grain and Oil Machinery Co Limited is planning to pump $10 million into small-scale palm oil mills in five states in Nigeria. Zhengzhou has already approached the Oil Palm Growers Association of Nigeria (OPGAN) for partnership that will see the former provide funds and machines to the latter. Igwe Hilary-Uche, president of OPGAN, told BusinessDay exclusively that the company wants to provide hi-tech machineries to smallscale millers, provide funds and enter an off-taker agreement with them. “ They are planning to invest something around $10 million and wants to export palm oil from here,” Uche said. He pointed out that the company plans to redefine palm oil business in Nigeria. Five states have b e en

picked for a pilot project : Anambra, Imo, Akwa Ibom, Cross River and Ogun. “They want to make oil relevant in Nigeria. Nigeria suffers because we don’t know the use of oil palm,” Uche said. Letters have been sent to state governors of these five states to provide land for smallholder farmers for this purpose, BusinessDay learnt. Nigeria produces 900,000 metric tonnes (MT) to 1.3 million MT of palm oil, with national demand standing at 2.1 million MT. Large and established firms such as PZ Wilmar, Okomu and Presco cultivate about 400,000 hectares of land, while smallholders farm above 900,000, according to Henry Olatujoye, national president, National PalmProduce Association of Nigeria (NIPPAN). Small-scale palm oil millers are currently struggling to get fresh fruit bunches (FFBs), otherwise known as oil palm fruits, in many states such as Imo. Irregular supply of FFBs, which are raw materials for the mills, is slowing

production and reducing output. In contrast, in Akwa Ibom State, particularly in Okim-Ejijor village, Ikom Local Government Area, oil palm plantation owners have a lot of FFBs but no buyers,

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prompting many of them to sell off their palm trees for less than N20, 000. More so, many small-scale millers are still stuck in crude machines despite being responsible for 90 percent of

Seplat stocks trading on LSE slide to November low

output in the country. They are willing to buy motorised or mechanised tools and own their own plantations to guarantee regular supply of FFBs but are hindered by poor funding and absence of

Oil prices are also at a near November-low

132 130 128 126 124 122 120 118 116 114

Source: LSE

Source: Bloomberg

formal finance scheme. They claim that the Central Bank of Nigeria (CBN) promised to fund palm oil as part of its Anchor Borrowers Scheme but is reluctant because palm oil has a gestation period of five to seven years. In terms of production volume, Nigeria is the fifth largest palm oil producer today, behind Indonesia with 36 million MT, Malaysia with 21 million MT, Thailand with 2.2 million MT and Colombia with 1.3 million MT, data from the global oil palm industry shows. Data from the National Bureau of Statistics (NBS) show that Nigeria imported a total of N7 billion worth of CPO in the second quarter of 2017, with Indonesia accounting for 76 percent of the total import within the period. Nigeria imported about 552,000 metric tons of crudepalm oil in 2016, according to data from Solidaridad Network. Currently, 80 percent of demand is met by smallholder farmers.

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Business Event

RETAIL

Paga partners Orange Mall to bring global shopping to Nigerians ENDURANCE OKAFOR

aga, the leading mobile money company in Nigeria announced that it has signed on as the exclusive payment partner to Orange Mall, an e-commerce solution making global shopping from over 250 international retailers available for easy purchase and shipment to Nigeria. “Paga’s partnership with Mall for Africa, to provide our payment services on Orange Mall, underscores our overarching commitment to making life possible for Nigerians,” said Folakemi Falodun, General Manager, Online & Mobile at Paga said. “With Orange Mall, we are making it possible for our customers to shop globally and pay locally, increasing the utility of their Paga Wallets. One of the

most important parts of this is that through this partnership, we can guarantee better pricing and painless payments for all Orange Mall customers.” The announcement comes on the heels of the company announcing that they had hit 10 million unique users, raised another $10 million in a series B2 funding round, and had clear intentions to expand their business portfolio by partnering with relevant institutions to create financial ease for the local and global markets. The launch of their P2P money transfer app introduced the easiest way to send and receive money in Nigeria, and this partnership further solidifies Paga’s stance to provide their customers with easy access and use of their money. Orange Mall will be supported by Mall for Africa to handle

operations, customer care, and logistics, while Paga will process all payments made through its secure wallet which customers can link to their linked bank cards and accounts, or fund their wallets directly with cash. Meanwhile, Paga is a mobile payment company that was founded in 2009 by Tayo Oviosu. It has gone on to become the largest and most successful mobile money company in Nigeria, by building an ecosystem to enable people to digitally send and receive money and creating simple financial access for everyone. The company is at the forefront of financial inclusion in Nigeria as it has processed over 62 million transactions worth approximately over $4 billion, and is profitable; growing at 110 percent compounded annual growth rate (2016-2018).

Fahad Obaid AlTaffag, ambassador of the United Arab Emirates to the Federal Republic of Nigeria (l), with Olukayode Pitan, managing director, Bank of Industry (BoI), during the UAE ambassador visit to BoI head office in Lagos.

ECA partners Omidyar Network to establish digital identities in Africa HOPE MOSES-ASHIKE

he Economic Commission for Africa (ECA) and the Omidyar Network are collaborating to establish legal digital identities in Africa. The partnership will go towards ECA’s support to the African Union Commission Digital Identity Platform for Africa. The support by Omidyar Network will also be instrumental in the establishment of a centre of excellence on digital Identity and data privacy and building the capacity of senior officials in this regard. While some African Countries are making progress in developing Digital ID systems, Africa has yet to

fully harness the benefits of digital ID. Similarly, country experiences have shown, there are risks to the pursuit of digital ID programs including vendorlock in and data security breaches. These issues would be addressed as part of the partnership with Omidyar Network. The partnership announcement takes place amidst growing optimism and a considerable footprint. Digital Identity will facilitate the participation of Africans in the digital economy, which is expected to grow in Africa to over US$ 300 billion by 2025. “An estimated 500 million people in Africa have no official ID, and in many ways, the lack of robust identification, which is underpinned by

a poor Civil Registration and Vital Statistics system on the Continent has contributed to marginalization and exclusion of many,” Vera Songwe, ECA’s executive secretary, said on Monday at a high-level breakfast event, themed: Digital ID for the 2030 agenda and agenda 2063, which discussed opportunities, risks and lessons for Digital Identity in the African market. The opportunities are immense. Songwe has often made the case for Digital ID for Africa, stating that technology-enabled business platforms that create value by facilitating exchanges via business to business (B2b) platforms could represent $10 trillion in socio-economic value creation between 2016 to 2025 globally.

L-R:Babatunde Durosinmi-Etti, commissioner for environment, Lagos State; Dayanand Sriram, general manager, RB West Africa; Aliza Leferink, marketing director, RB West Africa, and Abiodun Bamgboye, permanent secretary, Lagos State ministry of environment, at the 2018 World Toilet Day event organised by Lagos State Government in partnership with RB in Lagos.

Award

LSF|PR bags African Excellence Awards for Campaign of the Year IFEOMA OKEKE

eading PR agency, LSF|PR has been announced as the winner of the ‘Campaign & Idea of the Year’ award category for the African Excellence Awards 2018. The African Excellence Awards is aimed at honouring the most outstanding achievements of communications professionals in their field, recognising the best in the African PR and communications community. This year, the African Excellence Awards recognised fifteen categories of achievers across the various countries in Africa; Nominated alongside other renowned PR agencies, LSF|PR received its award in recognition of the outstanding work on the innovative ‘Find your beautiful’

campaign for Darling under Godrej Nigeria. Joining the league of global agencies such as Edelman, WE communications, Clockwork media and many more who are also award recipients this year, Bidemi Zakariyau, founder & current CEO of LSF|PR said “We’re honoured to be recognised as an agency that makes a lasting impression with our communications strategies. This achievement validates the progress our company has made and the heights our passionate team are willing to conquer daily through inspired creative thinking and thoughtful planning. “It’s a testament to all the brilliant and committed people—both the wonderful innovative team at LSF|PR and the many dedicated and discerning

clients and partners—whom we have been privileged to work with over the last few years”. In addition to winning this award, earlier this year LSF|PR was a recipient of a certificate of excellence by the SABRE Awards — the world’s biggest PR awards programme, dedicated to benchmarking the best PR work across the globe. This recognition was for their ‘Through your life campaign” for Philips. This campaign created and executed by LSF|PR was used acrossAfrica by Philips last year. LSF|PR is a full service public relations firm with core competencies in corporate communications, consumer and lifestyle brands. The agency represents some of best local and world leading brands in the corporate, consumer, technology, oil and gas and lifestyle sector.

L-R: Benson Ahanonu, area sales manager, Life Continental Lager Beer, NB Plc; Ojugo Chinyere, Progress Booster Grant beneficiary, and Chidi Egwu, brand manager, Life Continental Lager Beer, NB Plc, at the presentation of cheque to the beneficiaries of Life Progress Booster 2018 in Orlu, Imo State.

MEDIA

JCDecaux partners Grace Lake in first foray to Nigeria DANIEL OBI

CDecaux S.A., an outdoor advertising company that operates globally, has entered the Nigerian market in partnership with Grace Lake Partners, an indigenous investment and advisory firm based in Lagos, Nigeria, with a philosophy of creating shared value. The arrival of JCDecaux in the outdoor advertising market of Nigeria is expected to increase the market’s value estimated at €115 million, (about N47.8 billion); offering brands an unprecedented

digital communications platform to grow their audience. JCDecaux will operate in the outdoor advertising industry in Nigeria through an exclusive partnership and licensee agreement between JCDecaux and Horizon Outdoor Advertising Limited, a wholly Nigerian owned subsidiary of Grace Lake Partners, GLP (Horizon is Advertising Practitioners Council of Nigeria “APCON” certified and a member of the prestigious Outdoor Advertising Association of Nigeria “OAAN”), the company said.

The partnership (“JCDecaux Grace Lake”) has commenced work installing four city-wide public service programmes, all at no cost to the citizens of Lagos. The programmes cover the installation, operation and maintenance of: Traffic Information System (“LATIS”): a network of 94 sq.m. digital traffic arches designed by Marc Aurèle providing real-time traffic information to commuters at strategic driving decision points across Lagos – currently installed at Oworonshoki and Fadeyi.

L-R: Nnanke Harry Willie, publisher/editor-in-chief, BrandPower Magazine, Olaitan Osunbunmi, brand manager, Biscuits Category OK Foods Limited and Olubunmi Oke, chief executive officer Ladybird Limited, during Brandpower golden icon award to PureBliss biscuits for being the best market penetration biscuits brand.

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2019: APC members will finance, campaign, vote for Atiku - NUP chair The National Chairman of the National Unity Party (NUP) Perry Opara, reveals that as the 2019 campaigns kick off, Nigerians from all works of life including members of the All Progressives Congress (APC) are poised to finance, campaign and vote for former Vice President, and Presidential candidate of the People’s Democratic Party (PDP) Atiku Abubakar. In this interview with INNOCENT ODOH, Opara, who is also the Acting Chairman of the Strategy and Planning Committee of the Coalition of the United Political Parties (CUPP), says Atiku will surely emerge as the consensus candidate of the coalition, which he says will defeat the ruling All Progressives Congress (APC) in the presidential election. Excerpts: There seems to be some prevarication on the over 40-member CUPP on how to pick the consensus candidate. We have not seen a streamlined process. So why has it been difficult to streamline the process? am not a member of the Steering Committee of the CUPP but I am acting as chairman of Strategy and Planning Committee of the CUPP. CUPP is still intact nothing has gone wrong in CUPP but we have gone beyond that. Some political parties who are particularly for Atiku Abubakar, some of them are members of the CUPP some are non-members of the CUPP. But we have a united factor, Atiku Presidency 2019. This is what binds us together. Yes, you are right the CUPP since inauguration on July 9 has had only one general assembly meeting on the October 16 and some members are not too happy about that and nothing seems to be happening. But that is not an issue, we are still members of the CUPP. But within the CUPP and outside the CUPP, there are core supporters of Atiku of which we are the core supporters of the Atiku, wherever Atiku goes we go. We are not going for any other person in CUPP irrespective of any temptation. We have already made up our mind that Atiku is the man we are going to support and no going back. But what we are working now is no longer how to support Atiku, we have gone past that. What we are working on is to make sure Atiku wins election in the next two and half months. Like I said in a couple of days we are going to announce the political strategy and planning committee which will work with the PDP and participate in all campaigns and also participate in structuring the agenda and the process that will put Atiku Abubakar as the President of the country. So, our particular projection is that Atiku Abubalkar should form the Government of National Unity. This Government of National Unity is the only thing that can unite Nigeria now because Nigeria is more divided than ever. So, it is the proposal of political Parties for Atiku Abubakar (PAB) that we must encourage our principal Atiku Abubakar to form government of National Unity to bring Muslims, Christians, religious leaders everybody no matter your tribe, no matter your political persuasion including APC members. Some APC members are going to

Opara

them. That is the kind of economy that we want Atiku Abubakar to bring in and we have no any aorta of doubts in our minds that Atiku is going to win hands down. You seem to have foreclosed the chances of other candidates from emerging as consensus candidate in CUPP, is that not too direct a position to take? Yes, I don’t want any other person. I am a member of the CUPP,

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Nigerians are going to revolt with their thumb. They are not going to carry stone or weapon. The weapons they are going to carry are their right thumbs

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vote for Atiku Abubakar and some APC members are supporting our cause and that is what we are doing and we call it United Nigeria for Atiku and we are uniting everybody. It is not about one political party, one particular tribe or one religion. It does not matter whether you come from Kaura Namoda or Oshogbo or Ogbomosho, what is important is who is a unifier. The roads in Lagos are being plied by people from Adamawa and other places. The roads in Maiduguri are being plied by people from Imo and Niger Delta. So, once the road is built, is built for everybody that is the kind of thing we are thinking about. We want Atiku that can develop parts of Nigeria so that urban migration will reduce. So that people can stay in their home land and do some of these things. If there is electricity, pipe borne waters, good infrastructure, road network what are you coming to do in the city, spending humongous amount of money paying rents? You stay in your home and do your thing. A welder can now stay in front of his house without getting a shop, tap current from his bedroom and do his work. A vulcaniser does not need ten miles away to look for vehicles from of his house, he can start his business and cars will come there with flat tyres and he will pump

I am a key stakeholder in CUPP. I have analyzed it and looked at the credentials and capacity of other candidate, there is no other person in CUPP as presidential candidate that can beat Atiku Abubakar. It is only Atiku Abubakar that can defeat Buhari, who else can do that in CUPP? There is no other person in CUPP as presidential candidate that can get one million votes, no other persons and we want to win the election. We don’t want people to share our votes, we want to win the election and the only way to win is let all of us join hands together with Atiku so that he can defeat Buhari. You said that some members of the ruling party are also supporting Atiku why must that happen? Because Atiku is a unifier, I told you that the APC members are going to vote for Atiku, the major chieftains of the APC are going to finance, campaign and work for Atiku’s success. You need to know who this Atiku is. In the National Assembly, Atiku touched more than half of the members of the National Assembly directly or indirectly over the years. Some Speakers, some Presidents of the Senate all passed through Atiku. He has touched them positively one way or the other. Mention the established state governors in this country more than fifty percent of them have benefited directly or indirectly from Atiku. So a large percentage of APC chieftains are going to work for Atiku Abubakar. …To the detriment of their own party and presidential candidate? Have you forgotten how Atiku helped the current government financially to win? Have you forgotten how Atiku helped serving governors to win their ticket? Have you forgotten how Atiku nominated serving ministers? Atiku is a movement and as God gives power, Atiku’s time to be president has never come until now. God has never destined Atiku to be president of Nigeria until when hardship has reached its crescendo, until when killing has reached its crescendo, until when divisiveness has reached its crescendo and this is the time for Atiku to come and unify Nigeria and once he gets this right, God will bless him and Nigeria will be a prosperous nation once again. Do you really believe that Atiku will beat Buhari judging by incumbency factor? Buhari does not have incum-

bency factor anymore because his party is already in shambles. I have said this before, you know I don’t attack Buhari as a person; he is a man of integrity. Muhammadu Buhari is more popular than APC. APC needs Buhari more than Buhari needs APC. What will happen is that the same way Buhari won CPC in some areas is what will happen. APC has dwindled. APC under Oshiomhole will lose this election and we can bet on that. They will lose because even some members of the National Working Committee, some members of the State Executive Council of the party are going to vote for Atiku Abubakar. Some of them are suffering and there is greater suffering in this country. Most of these people are dying and smiling. There is hunger in the land there is insecurity in the land. Nigerians will revolt with their thumbs on the second week of February 2019. You will see what will happen, it will be like a Tsunami. Atiku went to Dubai, check the number of people using their money to buy ticket to go and be part of the meeting. Everybody is investing. Go to the streets and hear what is happening even when Atiku went to return his form there was pandemonium. Even APC members accompanied him to the PDP headquarters to return his form. So the power of incumbency has gone. And to Professor Mahmud Yakubu, I give him 80%. He has been able to plug the loophole where people falsify results and rig it. But he has to be upright for 2019, otherwise Nigerians will revolt heavily. I want to use this opportunity to call on the international community, the US government, the Turkish Government, Russian Government, Commonwealth, ECOWAS, I want to invite all international communities involved in election and good governance to put searchlight on Nigeria, monitor all moves, monitor everything that concerns this election because if they fail to do that Nigeria will be like Somalia. We cannot afford to suffer again for another four years, we have suffered so much. Nigerians are going to revolt with their thumb. They are not going to carry stone or weapon. The weapons they are going to carry are their right thumbs. We are going to vote a government that is insensitive out of power and people are going to do that, people have vowed to do that.

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Politics & Policy ANALYSIS

Key takeaways from US Embassy workshop on election reporting OWEDE AGBAJILEKE, Abuja

n its pursuit towards deepening Nigeria’s democracy, the United States Embassy in Abuja, organised a two-day practical and virtual training workshops for journalists. Participants at the event included political reporters, editors as well as copy/subeditors drawn from multiple media platforms: print, broadcast, online and mobile media organisations. The event also featured virtual training by Gary Kebbel, Professor of Journalism from the United States; Aliyu Mustapha, Managing Editor, Hausa Service of Voice of America (VOA); international broadcaster Peter Clottey, joined by viewing parties of journalists at American Spaces in Kano, Bauchi, Ibadan and Calabar. The programme also gave participants opportunity to share challenges encountered in previous elections they covered while the trainers offered their perspectives on how to resolve them. Also, there was review of samples of recent/ past election reports. Coming three months to the 2019 General Elections, participants were unanimous that the workshop couldn’t have come at a better time, as it afforded them opportunity to hone their skills on elections reporting. Award-winning journalist and Editor-in-Chief of Premium Times, Musikilu Mojeed, handled various practical classes on political reporting, assisted by Festus Okoye, National Commissioner and

Chairman, Information and Voter Education at the Independent National Electoral Commission (INEC); and Aduku Idachaba, a Professor of Mass Communication and Director of Broadcasting at National Broadcasting Commission (NBC). One of the notable takeaways is the need for participants to use voters-voice reporting in election reports. As aptly captured by Mojeed in his lecture titled: ‘Reporting Campaigns with Voters-Voice Approach’, this method is a departure from the one-sided report often used by political reporters when covering campaigns. This approach, according to the award-winning journalist, highlights the concern of voters by getting the voices of ordinary voters alongside the politician involved. Although most participants disagreed that this may be impossible to achieve as they shared their experiences of how they were denied campaign trips by politicians, Mojeed emphasised the need for media houses to sponsor campaign trips for their reporters in order to get objective reports. However, in the absence of this, participants were asked to file in two stories: one involving a ‘one-sided’ report in favour of the politician who sponsored the campaign and the other involving voters-voice reporting few days later. He also taught participants how to use way back machine and Firefox to recall materials that have been altered in websites as well as download website pages from the Internet. In the same token, he taught participants how to use the Corporate Affairs Commission

US Ambassador to Nigeria, Symington

(CAC) Public Search engine on its website to confirm list of registered companies, with emphasis on contractors involved in procuring sensitive and non-sensitive materials for INEC for the 2019 election. The guest speaker stressed the need for political reporters to desist from defamation, derivative reporting, fake news, malicious reporting and nonconflict sensitive reporting. He called on political reporters to be abreast with resources like Political Parties Finance Manual/Political Finance Handbook, Political Parties Code of Conduct, Election Timetable, INEC website in addition to developments in Senate and House Committees on INEC, Situation Room, Budget Office, Bureau of Public Procurement with emphasis on election-related purchases as well as salaries of public office holders on the website of Revenue Mobilisation Allocation and Fiscal Commission (RMAFC). Similarly, Mojeed kicked

against the trend of media houses giving awards to politicians or journalists writing columns on the beat they cover. This, he argued, will negatively influence the neutrality of such media houses or reporters. In his presentation, Okoye informed participants on what the Commission is doing to ensure free, fair and transparent elections. According to the legal practitioner, the new Smart Card Reader would be used not only for voters accreditation but also for transmission of election results from the Polling Unit to the Collation Centres. He explained that while accredited media organisations and observers are allowed into Polling Units, Collation Centres and Distribution Centres, it is not permissible to attempt to record how a voter is voting or has voted on Election Day. This, he said, contravenes the secrecy of the open-secret ballot system currently under operation in the country.

Citing Sections 63, 69 and 70 of the Electoral Act, 2010 (as amended), he said while a Presiding Officer has the power to announce an election result in a Polling Unit, only a Returning Officer has the exclusive right of declaring the winner in an election. “The media are allowed or permitted to record and use the votes scores by each political party as pasted in the Publication of Result Poster EC60(E). “The media and accredited observers are not allowed or permitted to make a declaration or announce results of an election as that is legally reserved for the Returning Officer who makes a declaration and a return. “By section 123(4) of the Electoral Act, 2010(as amended) any person who announces or publishes an election result knowing same to be false or which is at variance with the signed certificate of return commits an offence and is liable on conviction to 36 months’ imprisonment,” he said. While clarifying that there will be simultaneous accreditation and voting in the 2019 election, Okoye pointed out that for administrative purposes, the Commission would carve out Voting Points from Polling Units with over 750 voters. Also, speaking on NBC Guidelines for Elections Coverage, another guest speaker and Director of Broadcasting at the National Broadcasting Commission (NBC), Aduku Idachaba, stressed the need for broadcast stations to adhere strictly to NBC Guidelines by making deliberate efforts to

give equal spaces to all parties and candidates. The virtual trainers: Kebbel, Mustapha and Clottey called on media houses to continue to highlight instances of hate speech. However, they admitted that while projection is good in advanced countries, the development is unhealthy in developing country as it could incite the people. “Stay away from projections. The environment in Nigeria is very volatile. Projections are very dangerous (in developing countries). Stay neutral,” Clottey cautioned. In his remarks, the United States Ambassador to Nigeria, Stuart Symington, said the whole world is looking up to Nigeria for credible exercise. The February 16 and March 2, 2019 General Election will be the sixth quadrennial polls since the end of military rule in 1999. According to Symington: “Nigeria is very important. Nigeria is a beacon of hope not only in West Africa but in Africa and the whole world. What happens to Nigeria will affect West Africa, Africa and the whole world”. The US diplomat stressed the need for media houses to remain agenda setters rather than allow politicians determine the narrative. In its determination to ensure that the event is not a one-off programme, the Embassy assured that it would open a chat room which would involve all participants (including journalists, INEC, NBC, US Embassy officials and virtual trainers) for further brainstorming and sharing of story ideas, especially for reporters.

ANALYSIS

2019 Ondo Central Senatorial: A contest to behold as Mimiko joins race YOMI AYELESO, Akure

t is no longer news that the former governor of Ondo State and Presidential candidate of the Zenith Labour Party (ZLP) Olusegun Mimiko has dropped his quest to contest for the president in the 2019 election. Mimiko, who had emerged and had his name earlier published by the Independent National Electoral Commission (INEC) as the presidential candidate of the party would now be on the ballot in next year’s election as a senatorial candidate. The former governor will be replacing, Gboye Adegbenro in the list earlier released by the electoral body. Adegbenro, appointed by Mimiko as a commissioner for works for seven years in the state is a

close ally of the ex-governor. Mimiko announced his withdrawal from the race on Thursday last week while meeting with the party faithful from the 18 Local Government Areas of Ondo state and some national leaders of the party, in his country home Ondo town. The former governor who briefed the meeting on developments in the polity said; “ I have been inundated with calls from across the state and country on my presidential aspiration and rumours of a senatorial bid, got overwhelming calls to jettison the presidential race as it has been narrowed to a race between Atiku and Buhari. “I took the decision in the ultimate interest of our party, the Zenith Labour Party, Ondo state and the country.” Adegbenro ,on his party

said he believed in the candidacy of his boss to deliver victory for the Party in the senatorial contest. While announcing his withdrawal, he promised to work for the former govenor’s victory at the poll. “It has become imperative that I bring to a close my aspiration to represent Ondo Central Senatorial District at

Mimiko

the Senate of the Federal Republic of Nigeria at this critical juncture. “Having consulted far and wide with my family, business associates, followers and constituents, it has become important to bow out before the full race commences in the interest of our great party, the Zenith Labour Party and our

dear state. “More than the above, I am convinced that the candidacy of our leader, the former governor of Ondo State, Olusegun Mimiko, will better serve the interest of the district now and the overall goal of the south west. Dr “I am eternally grateful to my constituents, followers and party leaders who have been with us all through the processes that culminated into taking this decision and renew my commitment and unalloyed dedication to the Zenith Labour Party. “I remain a firm believer and supporter of my brother and leader, Dr Olusegun Mimiko, who invited me into partisan politics and who has always provided selfless leadership,” he said. No doubt as the campaign

for the 2019 elections officially began on Sunday, November 18, many political analysts observed that the entry of Mimiko into the Ondo central senatorial district contest will alter the political calculations in the district. The senatorial district with six local government areas of Akure South, Akure North, Ifedore, Idanre ,Ondo East and Ondo West will throw up a contest that will be cynosure of all eyes in the state considering the caliber of individuals to be paraded by the political parties. The ruling All Progressives Congress (APC) will be going into the contest with Tayo Alasoadura, who is seeking to return to the red chamber for a second term. From Continues on page 19

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Politics & Policy

2019: Why I chose Umma Getso as running mate –Moghalu Innocent Odoh, Abuja

he Presidential candidate of the Young Progressive Party (YPP) Kingsley Moghalu has said that his choice of 37-yearold business entrepreneur, Umma Getso, as his running mate in the 2019 general election, was predicated on her commitment to a better future for the youth and the progress of the nation. The Kingsley Moghalu Campaign Organisation disclosed this in a statement on Sunday, stressing that the former deputy governor of the Central Bank of Nigeria (CBN) is confident that his choice of the Kano-state born entrepreneur is also a testament to his strong commitment to give key roles to women in nation building. “My choice of Umma Getso is in recognition of her talent, leadership ability, and a passionate commitment to a better future for the youth of Nigeria,” Moghalu said. “It also is consistent with my strong commitment to women as full partners in

nation-building. I restate my target of 50:50 gender parity in the composition of my cabinet as President of Nigeria in 2019. “The old guard and the establishment are well aware that the game is over for them. They know that their time is up. Getso and I have come to disrupt the old way of do-

ing things while ushering a new, more productive and creative method of governance,” Moghalu said in the statement. The 37-yearold Umma is the daughter of Giwa Getso, who was a Senator in 1983 on the platform of the then ruling National Party of Nigeria (NPN) in the Second Republic.

ormer President, Chief Olusegun Obasanjo, during the weekend, said he is an incurable optimist about Nigeria, stressing that Nigeria can be made to progress in spite of differences among the people. He however, noted that Nigeria can only progress when all its citizens have a sense of security, unity and belonging. Obasanjo spoke in Asaba

at a meeting with the Executive members of the Delta state Traditional Council led by its chairman, Obi Efizomor II, Obi Of Owa. Obasanjo said that “ I am an incurable optimist about this country, Nigeria is not a perfect country but it can be made to make progress, move at a pace that will be advantageous to all of us, no matter our tribe, position gender and race”. “We can have a country that is at peace with itself, where unity is enthroned,

a country where every one will be their brothers’ keeper, where performance will be obvious in the governance and running of the affairs of our people, a country where everyone will have a sense of belonging.” Obasanjo also commended Governor Ifeanyi Okowa for bringing peace, unity, development and cooperation among Deltans, urging the traditional council to continue to be pillar of support to the governor in his developmental strides.

Team Lead (Strategy & Organization); Silas Momoh - Deputy Team Lead (Information & Communication);Lady Osafanmwen Idehen - Deputy Team Lead (Empowerment & Welfare); Ekpen Ogbeide-Nosabota - Deputy Team Lead (Documentation & Special Duties) and Momoh Ibrahim - Deputy Team Lead (Diversity & Integration) Hon Ojeikere reiterated that Dr Ese Owie in constituting the Campaign Team kept to his promise of representing the collective interests and aspirations of ethnic nationalities in Edo South. He stated that the diverse membership of the Team is also reflective of the cosmopolitan nature of the Senatorial District as the nerve centre of the Old Midwestern Region. Assuring the Party’s teeming supporters of victory at the Polls, he enjoined them to vigilantly protect their votes and sensitize all and sundry on the importance of performing their civic duties. In his view, electing Dr Owie as Senator in 2019 is the only means of guaranteeing sustainable and impact driven development in Edo South. The formal inauguration of the Team shall take place during the week at the ‘“Team Impact ‘19” Campaign Office in Benin City. Further appointments shall be announced as events unfold.

R-L: Delta State Governor, Senator Ifeanyi Okowa, former President, Chief Olusegun Obasanjo, the Chairman, Delta State Traditional rulers Council, HRM. DR Emmanuel Efezomor II, Obi of Owa Kingdom, and the 2nd Vice Chairman, HRM. the Pere of Akugbene-Mein Kingdom, Pere Luke Kalanama viii, shortly after the former President’s meeting with the State Traditional rulers Council in Asaba

2019 Ondo Central Senatorial: A contest ... Continued from page 18

head of the official commencement of campaigns for the 2019 Presidential and National Assembly Elections, the Candidate of the Action Democratic Party (ADP) for Edo South Senatorial District, Dr Ese Owie, has unveiled his Campaign Structure christened “Team Impact ‘19”. Speaking to Newsmen in Benin City at the weekend, the ADP State Publicity Secretary Hon Christopher Ojeikere named veteran political strategist and educationist, Hon. Izedonmwen 0shodin as Team Lead of the campaign. Hon Oshodin played key roles in both the 2nd and 3rd Republics of the Federation and at the dawn of the Nation’s current Democratic epoch was a major stakeholder in the stabilisation of citizen’s led governance. A grassroots mobilizer and consensus builder he brings on-board over three decades of hands-on, practical experience in political process re-engineering. In driving the efficiency and effectiveness of the Campaign, Oshodin shall be supported by Five Deputy Team Leads that shall superintend the following Sub-Teams: Stephen Orubor, Esq - Deputy

Francis Sadhere, Warri

Umma Getso

NASS Polls - Edo South ADP Senatorial candidate, Owie constitutes campaign team Innocent Odoh, Abuja

Why I am incurable optimist about Nigeria - Obasanjo

Akure North council area, Alasoadura was a former commissioner for finance in the state. Alasoadura, who is the chairman Senate committee on Petroleum (Upstream) will be enjoying the support of the state governor, Oluwarotimi Akeredolu, who is believed to be aggrieved with outcomes of the party’s primaries in the state and that of the Muhammadu Buhari led federal government. With the Presidential, Senatorial and House of Representatives election coming up the same day in February next year, many have observed that Alasoadura would have his fate determined by what becomes of the presidential candidate of his party. If President Buhari will be rejected at the poll next year, Alasoadura will not be left out in the rejection as it was believed that he rode to the Senate on Buhari’s fortune in the 2015 general election. In the six local council areas, his strongest zone is the Akure North where he hails from and part of Akure South. Also, with many aggrieved aspirants and members following the crisis that marred the primaries of the party in the state, the APC might be going to the election with a divided house which might constitute a serious threat to Alasoadura’s chances at the poll. The candidate of the Peo-

ple’s Democratic Party (PDP), Ayo Akinyelure was also on the ballot in the 2015 contest where he lost to the serving senator, Alasoadura. Akinyelure popularly referred to as ‘All Over’ from Idanre local government area will be contesting again after a rancour free primaries where he defeated a former deputy Governor in the state, Omolade Oluwateru. Akinyelure, believed to have a solid home support in his local government and Akure South ,which has the highest number of voters , many voters said his coming back would be worthwhile having contributed and impacted people’s lives during his term between 2011 and 2015 at the upper chamber of the national assembly. Akinyelure will enjoy support of all leaders of the party in the zone and he has a chance of being elected at the poll, considering the acceptance of the repositioned PDP and its Presidential candidate , Atiku Abubakar. The entrance of Mimiko into the central senatorial contest has undoubtedly opened up the race for a serious battle in 2019. Mimiko ,who is the longest serving Governor of the state since its creation having served from 2009 to 2017 has in recent elections held grip of his two local government areas in his area, that is, Ondo East and West.

For his giant contributions in the state and especially in his home, the former Governor still enjoyed retinue of supports from people, which has resulted in votes over the years. His penetrating appeal to voters gave him and his party then (PDP) to win the majority of seats at the state house of assembly after suffering defeats at the presidential and national assembly elections. For just two weeks, Mimiko engaged electorates in many ways across the state and won twenty-one(21) of the Twentysix(26) assembly seat. With six local government areas in the district to conquer, observers say, the former governor should not be seen as a push over. In the last 2016 governorship election in the state, Mimiko delivered the two local government areas to the candidate of the PDP, Eyitayo Jegede, which were the only council areas won by then candidate of the party, courtesy of Mimiko. With second highest votes to Akure council areas, the two council areas is believed to be in the hands of Mimiko even before any poll in recent time. However, in Akure local government area where the candidate of the PDP in the 2016 governorship poll hails from, the people of the area believed after the election that Mimiko traded off their son at the election for him to

have a soft landing with the government of the APC at the federal level. People were said to have been angry with the former Governor with events that played out ahead of the election won by the current governor, Oluwarotimi Akeredolu of the APC. He might not have the expected votes from these council areas as people will see this as a means of revenge against him for what they said he did to their son from becoming governor in 2016. None of the three leading candidates come from Ifedore local government area which might be a battle ground for all the political parties. If the words of Adegbenro ,the former senatorial candidate of ZLP who Mimiko replaced is anything to go by, Mimiko might have the day in this local government. Adegbenro, a young and vibrant grassroots, politician has promised to ensure the victory of his boss at the poll, especially in the local government. As the campaign for the 2019 Presidential and National Assembly elections officially begin, the Ondo central senatorial contest is a contest to behold by all political observers. As it stands now, whoever of the trio of Alasoadura, Akinyelure and Mimiko that can garner the bulk of votes and supports from his area might be elected come February 16, 2019.

BUSINESS DAY

Wednesday 21 November 2018

BUSINESS DAY

Wednesday 21 November 2018

Leadership

Shaping people into a team

Building a culture of transparency in health care Gary S. Kaplan

n health care today, the conversation around transparency centers on the consumer. The consumer is empowered to ask for treatment options and costs, potential treatment risks, realistic outcomes and much more. Health care providers must respond with as much information as possible to ensure appropriate care is delivered, quality and safety are top of mind, and patients and their care team can make thoughtful care decisions. I believe it is impossible to have complete transparency with patients without first developing a strong culture of internal transparency — among all team members, at all levels, on all issues — throughout the health care organization itself. When team members are open and honest with each other, without fear, it leads to mutual trust, collaboration and sharing of best practices across disciplines. Patients are the ultimate beneficiaries. “Shining a Light: Safer Health Care Through Transparency,” a 2015 report by the National Patient Safety Foundation’s Lucian Leape Institute, states that “if transparency were a medication, it would be a blockbuster, with billions of dollars in sales and accolades the world over.” The report defines transparency as the free, uninhibited flow of information that is open to the scrutiny of others. BARRIERS TO INTERNAL TRANSPARENCY: A culture of internal transparency does not come about overnight. There can be many barriers, some of which can be quite complex. For example, employees may be reluctant to report safety issues or errors for fear of being reprimanded by their managers or shunned by their colleagues. The Lucian Leape Institute report states that “from the quality and safety perspective, transparency is foundational for learning from mistakes and for creating a supportive environment for

patients and health care workers.” At Virginia Mason Medical Center in Seattle, for example, every employee is considered a safety inspector regardless of job or title. All our team members are expected and encouraged to file a patient-safety alert whenever he or she sees anything that poses an immediate or potential safety risk. This level of internal transparency is necessary because leaders and team members cannot correct problems unless they know they exist. Internal transparency is hindered when lessons learned aren’t shared freely across the enterprise. While many organizations have routine team huddles, it is critical to prioritize multidisciplinary huddles and encourage clinicians to break through silos by sharing information with their colleagues in other specialties and departments. Providers are often hesitant to disclose mistakes to their patients, even though a 2006 study in the Journal of General Internal Medicine concluded that full disclosure is associated with a lower likelihood of changing physicians, higher satisfaction and greater trust. LEADERS MUST CREATE A NO-BLAME CULTURE: The most

effective way to build a culture of transparency begins with those in leadership positions. The leadership team must develop an atmosphere in which balanced accountability and continuous improvement is everyone’s shared duty. Leaders must lead by example. A 2013 article in The Ochsner Journal, “Just Culture: A Foundation for Balanced Accountability and Patient Safety,” concluded that “a fair and just culture improves patient safety by empowering employees to proactively monitor the workplace and participate in safety efforts in the work environment.” A NEW PARADIGM: When something isn’t working in health care, it can take a long time to change, but providers can reach their own unique breakthrough moment that serves as the catalyst for long-term transformation. At Virginia Mason we began nearly 20 years ago to create a culture in which our team members could believe zero-defect care is possible. We recognized that to achieve such a transformation, a paradigm shift was needed. Our management approach at the time was not nimble enough to keep up with the changing health care environment: We needed to eliminate wasteful elements

from patient care, and we wanted to empower our employees to be stewards of patient safety, regardless of their job title. To find an innovative way forward, we looked beyond our own industry. In 2002 we implemented the Virginia Mason Production System, a management method that employs basic principles of the Toyota Production System for eliminating waste (i.e., anything that lacks value from the patient’s perspective), improving quality and safety and controlling cost. This change did not happen easily. There were doubters and naysayers, as well as open-minded enthusiasts. Some team members adopted a wait-and-see attitude. A few decided to leave our organization. There was a mix of optimism and a feeling of loss as it became clear that doing things as we’d always done them was no longer good enough. By openly sharing information in employee forums and during one-on-one conversations over several months, we worked to help our team members understand that change was necessary for the future of the organization. We developed compacts with our physicians, board members and leaders at all levels that clarified organizational expectations and

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

what, in turn, they could expect from the organization. Our leaders — including department directors and managers — are required to practice VMPS methods and teach them to their teams. Completing a course in VMPS basics is an important part of the onboarding process for newly hired employees. The result is a safer environment for patients and staff. I believe all of us in health care have a moral imperative to make health care better and more affordable. Safety is the foundation of quality. In 2004, one of our patients, Mary McClinton, died because of an avoidable error while she was in our care. That mistake shook us to our core as an organization. It also served as an inspiration to create an environment that is safe for every patient and team member, and to be open with our patients, staff and the community about our work to continually improve safety. To honor Mrs. McClinton’s legacy, we created an annual award that recognizes a team that improves quality and safety through innovation. Their projects are shared broadly across the Virginia Mason organization so everyone understands how patients and caregivers will benefit from the award-winning initiatives. Members of Mrs. McClinton’s family attend the award ceremony that is named for her. In the United States, we have more information than ever about how to provide appropriate, highquality care and keep patients safe. Transparency with internal and external stakeholders is essential for quality, safety, accountability and informed decision making. As the Lucian Leape Institute report explains, transparency between clinicians and patients, among clinicians and health care organizations, and between health care organizations and the public produces safer care, better outcomes and more trust among all the involved parties.

Gary S. Kaplan is chairman and CEO of Virginia Mason Health System in Seattle.

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Cold chain technology seen as solution to malnutrition, postharvest losses Stories by Josephine Okojie

he adoption of cold chain technology is being seen as a solution to Nigeria’s high malnutrition rate and $9 billion annual postharvest losses of farm produce. Stakeholders in the cold chain subsector say that fresh fruits and vegetables in Nigeria lose their nutritional value due to the poor conditions in which they are stored and transported from the farms to the markets. The stakeholders also noted that the country loses about 50 percent of agricultural produced as a result of low adoption of cold chain technologies in storing and transportation of the produce. “Food and medicines are critical requirements by the Nigerian consumers and cold chain is important to deliver them, ensure their quality is maintained and make them available for a longer period of time, while significantly reducing postharvest loss,” Augustine Okoruwa, interim chairman, Organsation for Technological Advancement of Cold Chain in West Africa (OTACCWA) said at the 1st West Africa Cold Chain Summit &Exhibition held in Lagos recently. “Cold Chain helps improve the health care of Nigerians by ensuring the consumption of nutritional foods in the country, as it ensures that consumers get the food in the right conditions while reducing postharvest losses. When people consume nutritional food, it helps address the

L-R: Alexander Isong, , executive secretary, OTACCWA; Haruna Mohammed, chairman-perishable section, Mile 12 market; Andrew Fiati; Jane Omojokun, founder, Nugata Consults Limited; Augustine Okoruwa, interim chairman, OTACCWA; Ahmed Omah, executive director, IOPN and John Akagbue during the first West Africa Cold Chain Summit and Exhibition held in Lagos recently.

malnutrition problem,” Okoruwa said. Okoruwa, who is also the senior project manager of the Postharvest Loss Alliance for Nutrition (PLAN) Nigeria called for the development of cold chain infrastructure, while noting that the subsector remains the missing link in the country’s strategic agricultural programme. “Nigeria has to improve on cold chain infrastructure, especially on power supply, to drive the adoption of cold chain,” he said.

He observed that the adoption of cold chain technology for storage and transportation of agricultural and pharmaceutical produce across the country would help to minimise losses, save cost and ensure the efficacy of vaccines. Similarly, Alexander Isong, executive secretary, OTACCWA, said that the shortfall of cold chain facilities in the country has made traders and farmers transport a lot of pharmaceuticals and food produce

in open trucks, adding that this has continued to reduce their efficacy and nutritional value, as well as creating wastages. “Cold Chain technology helps to improve the health of the people, create jobs and positively impact on the overall economy of the country. Fruits and vegetables commence losing their nutritional value as soon as they starts decaying,” Isong said. He explained that the essence of the summit and exhibition was to sensitise,

grow and bring players together in the industry to solve the cold chain deficiency in the country. He urged the Federal Government to reduce the number of security checks on the roads for cold chain trucks to improve produce delivery time. He also called for provision of cheap funds for players across the value chain. In the same vain, Tunde Okoya, chairman, Local Organising Committee, West Africa Cold Chain Summit and Exhibition 2018 said “when cold chain works effectively, it creates economic wealth through the reduction of postharvest losses and farmers’ income are improved, thereby impacting positively on their livelihood.” He noted that the provision of key infrastructure would reduce the cost drivers for operators and facilitate the adoption of the cold chain in the country. Speaking on the Federal Government’s efforts to drive the adoption of these technologies, Owolabi Olusegun, director, irrigation agriculture and crop development, Federal Ministry of Agriculture and Rural Development, who was representing Audu Ogbeh, Minister of Agriculture, said the government is providing thousands of Returnable Plastic Crates (RPCs) to distribute to various markets of fruits and vegetables across the country. “The government is also establishing cold storage units and encouraging private investors to invest in renewable solar powered cold storage facilities across some major cities in the country,” Olusegun said.

Nigeria’s cocoa price rises 21% as floods threaten to cut production

scramble for quality cocoa beans has pushed up prices of the commodity in Nigeria as floods ravage farmlands in major producing states, farmers say. The prices of cocoa, Nigeria’s flagship export produce, have surged by 21 percent in the last three weeks, with traders anticipating a further price increase in coming weeks. “There is scarcity of cocoa now and the prices have gone up. This is as a result of the continuous rainfalls that

have caused flooding and affected production,” Zacheaus Egbewusi, chief executive officer, Agri-commodity Inspection Limited told BusinessDay. “Farmers do not have adequate sunlight to dry their beans and this has resulted to the scarcity of cocoa. Three weeks ago, the price was N580,000 per ton but now it has increased to N700,000 because of the scarcity,” Egbewusi says. He further observed that farmers were finding it difficult to maintain the

quality of their cocoa beans, as machine drying facilities which are scarce to find in most rural areas, reduces the flavour of the beans. The International Cocoa Organisation (ICCO) has estimated Nigeria’s production to reach 240,000 metric tons in the 2017-2018 output. But industry players say there will likely be a 7 percent decline in production capacity in 2017-2018 output when the numbers for the season are released. The Cocoa Association of Nigeria thinks that cocoa output might cause a decline in the country’s position in the global comity of cocoa producing states, attributing it to poor weather conditions. “The heavy rainfalls this year, have cut down our 2017-2018 production by seven percent,” Sayina Rima, national president, Cocoa Association of Nigeria (CAN) and chairman of the 10 year Cocoa Committee said. “High humidity led to the outbreak

of black pod disease this year and the floods have made it difficult for farmers to sun dry their cocoa beans properly. The combination of these factors has led to a decline in our production when compared to that of last season,” Rima said. He notes that the development has led to the surge in prices as exporters find it difficult to get sufficient quantities for export. Nigeria currently ranks joint fifth with neighbouring Cameroon with 210, 000 metric tons in the 2016-2017 season, according to data from ICCO. Farmers across the country’s main producing states are also very sure that Nigeria’s production will decline at the end of the 2017/2018 season. “The floods have been terrible for cocoa farmers. By this time last year, I had produced three tons of beans for sale but this year’s main crop I am yet to even get a ton of dried cocoa beans,” Ademola Akinmulure, a cocoa farmer in Omioliyan village in Ondo State, said in a telephone response to questions.

“My cocoa pods got spoilt on the farm because I could not harvest on time. I did not make anything from this year’s cocoa farming. I am not happy with the situation and hope next year’s main crop would be better,” Akinmulure said. Nigeria has two cocoa harvests which includes the smaller midcrop from April to June, and the main crop from October to December. The main crop normally accounts for about 70 percent of Nigeria’s cocoa output while the midcrop accounts for the remaining 30 percent. “This year, Nigeria’s unit production per hectare of existing farms will decline because the weather conditions have not been really good. Compared to last year, our production will decline,” said Robo Adhuze, chief operating officer, Centre for Cocoa Development Initiative. At the international market, a metric ton of cocoa was sold at $2,186 as at the time of writing.

Wednesday 21 November 2018

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Urbanisation lowers child stunting, creates obesity in women, IFPRI report says Josephine Okojie

he International Food Policy Research (IFPRI) says that urbanisation is changing the landscape of health and nutrition in Africa and Nigeria in particular, as it lowers the rate of stunting among children and creates higher rates of obesity in women. The report ‘Urbanisation and Child Nutrition Outcomes’ examined the nighttime light intensity in Nigeria as a proxy for urbanisation and found higher light intensity tended to match with lower rates of stunting among children and higher rates of obesity among women. “Rather than being a binary phenomenon, urbanisation involves a continuum of rural-to-urban transformation at various stages and paces. Different places along this continuum appear to have different impacts on health and wellbeing, and those impacts can vary widely for distinct groups of people,” said Mulubrhan Amare, associate research fellow at IFPRI says in a statement made available to BusinessDay. Over the last two decades, African nations have experienced their highest-

ever rate of urban growth, on the back of growing economies. In Nigeria, urban population is estimated at 40 percent and it is expected to reach 65 percent by 2020. Rapid urbanisation, however, is changing the country’s demographic and nutritional landscapes. Urban expansion is accompanied

by economic, infrastructural, and technological developments in cities and has a strong relationship with child stunting, the research says. According to the report, while urbanisation seems to have positive impacts on reducing under-nutrition, it also appears to create a susceptibility to over-nutrition which creates obesity

in women. The report states that the relationship between nighttime light intensity and body weight appears to be directly proportional, with body weight growing with higher levels of light intensity. The report findings show that doubling the average level of night light intensity results in a 10 percent increase

in the probability of overweight women. “Urbanisation commonly involves a transition in lifestyle, as people shift into more sedentary livelihoods involving limited physical activities, which in turn may lead to unhealthy weight gain and hence related cardiovascular diseases,” says Amare. The report notes that with better infrastructure and technology, urban households tend to have better access to markets and a higher quality as well as quantity of diets. Moreover, by updating infrastructure and technology, thereby reducing transportation and transaction costs, households have better access to markets and increase the quality as well as quantity of diets, the report says. The report finds that in Nigeria from 2008 to 2013, the rates of women’s overweight and obesity increased by 24 percent and 40 percent, respectively. During the same period, the average nighttime light intensity increased 23 percent, and across the two periods, child stunting in Nigeria dropped from 42 percent to 36 percent. “Our study shows expansion of towns can be more effective in reducing poverty levels than the expansion of mega cities,” says Todd Benson, Senior Research Fellow.

Kogi ADP urges farmers to boost production for Cassava City Initiative Investing in cucumber, watermelon to tap into the export potential of smooth operation of businesses production is profitable Victoria Nnakiaike, Lokoja

he Kogi State Agricultural Development Project (ADP) has urged farmers in the state to boost production of cassava for the Cassava City initiative. Representing Oyisi Okatahi, managing director of ADP, Itodo said during the Cassava City Day event held at the Confluence Stadium in Lokoja, recently with the theme ‘Explore the Treasure of Cassava Crop’ that farmers in state have to shift from the use of inorganic fertilisers to organic,

the crop. He also disclosed that cassava is in high demand both within and outside the country. Also speaking, Asiwaju Haruna Idris, commissioner for finance, said that boosting cassava production in the state is a gradual process. Sp e a k i ng o n s e c u r i t y , t h e commissioner said that security is key, adding that the government is doing everything to ensure the protection of lives and properties. He also disclosed that Governor Yahaya Bello has created an enabling environment for the

in the state, adding that Kogi is no longer depending on the Federal Government for allocation. He however, said that government must do its best to ensure that there is security in the state and ensure farmers have access to cheap finance, while working with the Central Bank of Nigeria (CBN) to achieve that. “If our agreement with NNPC will work out, we will generate the two million jobs we are agitating for. The appeal now is to work together to achieve the project purpose of diversifying the economy of the state,” he said.

Iyke Okoroafor, technical manager, Dizengoff Communications Technology; Brent Cary, regional sales manager, Genetec; Uganna Ikechi, country manager, Abloy Solutions; Antti Ritvonen, CE and country manager, Dizengoff Nigeria; Liam Wilson, sales engineer, Genetec and Nicolai Peter Christensen, key account manager, Danimex; During a smart security solutions Forum held in Lagos recently.

Josephine Okojie

n spite of the present challenges in the Nigerian economy, opportunities still abound locally in key sectors such as the agriculture and manufacturing. Cucumber and watermelon production in Nigeria are some of those opportunities that still need to be explored. Nigeria has comparative advantage in the production of vegetables with huge demand locally and internationally. Apart from huge demand for consumption, cucumber serves as by product for the cosmetics industry in the production of facial toners, body lotion and other beauty products. It can be grown across the 36 states of the federation including the Federal Capital Territory. It takes an average of three months to grow cucumber and watermelon. More water is required to grow cucumber than watermelon and both vegetables can be grown everywhere. National demand for vegetables is put at 5.13 million metric tonnes, according to data obtained from the Federal Ministry of Agriculture and Rural Development Tips for one hectare The soil must be tested to know the soil condition. Cucumber does not grow well with soil areas that are highly acidic. There are additives that neutralise PH value in a soil. The next step is to get quality seeds. “Seeds are very important in

cucumber production because of climate change it is good to look out for varieties that can produce in both drought and wet season,” Afioluwa Mogaji, CEO, X-Ray Consulting Limited told BusinessDay. Varieties such as Murano, Darina and Pickings can produce in both dry and wet season. An average of 700kg of NPK and urea are needed per hectare to achieve optimum yield. Also, the market timing should be well understood and the peak period for cucumber is September when the demand is very high and prices are very attractive. According to Mogaji who is popularly called AfricanFarmer cucumber requires less water application during the vegetative stage and more water during the fruiting stage. He stated that Watermelon production and water application is the reverse of cucumber.

BUSINESS DAY

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Wednesday 21 November 2018

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Consolidated Hallmark to meet shareholders next week for capital approvals

A.M. Best sees insurers lose passport-rights over Brexit Stories by Modestus Anaesoronye

.M. Best rating agency says is closely monitoring the responses of U.K. insurers to the planned withdrawal of the United Kingdom from the European Union, with a particular focus on those insurers that currently utilise the European Economic Area (EEA) passporting system to conduct cross-

border business throughout the EEA. When the United Kingdom withdraws from the EU, and at the end of any transition period, passporting rights that currently exist between the United Kingdom and the EEA are expected to cease. In a briefing, A.M. Best states once passporting rights are lost, U.K.-domiciled insurers will no longer be able to issue insurance contracts in the EEA. It is also possible that, in the absence of a political solution, they will

not be able to service existing EEA contracts by settling and paying claims. In the event of a “no-deal” Brexit, this could come into effect as early as 29 March 2019. Catherine Thomas, senior director, analytics, said: “Many companies have chosen to establish new EU subsidiaries. Meanwhile, small insurers that do not have the resources to create additional companies have formed relationships with local carriers that will be able to front business for them.

Mutual Benefits reaffirms commitment to sports development

utual Benefits Assurance Plc says it’s committed to youth empowerment through sports, with its continued sponsorship of the Mutual Benefits National Badminton Championship, now in its second edition Akin Ogunbiyi, group managing director of the Company said at the final of the competition in Lagos that, this is a platform through which Mutual Benefits gives back to the society by nurturing the

game of Badminton. “Youth empowerment through the development of sports has been a key focus of Mutual Benefits CSR activities. Our commitment is driven by the need to provide an avenue through which gifted youths can develop their talents, receive mentorship and ultimately do the nation proud at international competitions”. Biyi Mobolaji, executive director, Operations, Mutual Benefits Assurance Plc said embarking on this Corporate Social Respon-

sibility shows that the company is not only interested in making profit from its businesses, but also ready to impact on its environment and area of operation. Mobolaji said, while our presence on this sponsorship has created some awareness about relationship of insurance industry to its host community, it has awakened the consciousness of many people on understanding what insurance can do in their lives and businesses.

ing capital of the company and adequately position it as a leading player in the underwriting of big ticket insurance transactions, having successfully raised N500 (five hundred million Naira) through the Rights Issue to existing shareholders of 1,000,000,000 units that was 108% subscribed during the last quarter of 2017 but concluded in the first quarter of 2018. Eddie Efekoha, managing director of the company who is also the current president of the Chartered Insurance Institute of Nigeria, is optimistic of a very successful outing at the meeting as shareholders of the company have often been delighted with the regular dividend payments over the years. Out of ten financial years that the Company has been quoted on the NSE, it has paid out dividends seven times amounting to a total of N1.22 billion. Also, the deployment of capital raised during the Rights Issue is impacting positively in results as noticeable in the impressive performance during the Nine Months Ended 30th September 2018. Profit After Tax rose significantly to N356 million from the N209 million recorded during the corresponding period of 2017 while Gross Premium Income rose to N5.4billion from the previous N4.5bilion.

NEM sees productivity increasing with healthy workforce

nderwriting firm, NEM Insurance Plc, over the weekend held the second edition of its staff fitness walk, stating that keeping healthy is of priority to the company, as healthy works force will translate to increased productivity. The initiative, which the Company said will have a multiplier effect on productivity said is targeted that ensuring that staff who could not take advantage of its in-house gym to keep fit, have alternative avenue to exercise their body. The walk second in the series have commenced earlier in the year commenced with aerobics

from its head office on Ikorodu road to Maryland, back to the office. Tope Smart, group managing director of the Company who led the walk with over 300 participants, said beyond ensuring that we build physical and mental health for better productivity, “we are also creating awareness about insurance.”. He stated that with the walk today, a lot of attention has been attracted, and this helps to build the consciousness about insurance services on the mind of people within the community and passersby. “We are very proud of our industry and we will continue to promote it, Tope Smart said.”

2015

Tope Smart, group managing director/CEO, NEM Insurance Plc (far right and other members of his staff and management, during the NEM Insurance fitness walk 2018 season two in Lagos at the weekend.

rrangements have been concluded by Consolidated Hallmark Insurance (CHI Plc) to hold its Extraordinary General Meeting (EGM) on 28thNovember 2018, where it will seek the approval of shareholders to increase authorised share capital as well as private placements. The EGM which is scheduled to take place Lagos is to seek the formal approval of shareholders for the increase in authorised shares of the company from the current 10,000,000,000 (ten billion) units of 50 Kobo par value per share to 15,000,000,000 (fifteen billion) through the creation of an additional 5,000,000,000 (five billion) units. The Share Capital of the company will thus be increased from N5, 000,000,000 to N7, 500,000,000. Shareholders will also at the meeting formally give their approval for additional capital raise through private placement of 1,130,000,000 (one billion, one hundred and thirty million) units at the price of 65 (sixty-five) Kobo per share. This private placement will bring in an additional N734.5 million to the coffers of the company. It is next in the series of proactive efforts of the Board and Management to boost the work-

Wednesday 21 November 2018

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Pension Today

BUSINESS DAY

In Association with

What it takes to set your retirement goals right

should also seek to monitor closely the performance and activities of their PFAs, and other financial advisors. Workers must be aware that the choice of a PFA is a serious decision that should be made after serious consideration. Many workers have chosen PFAs based on subjective reasons, and many others have simply followed the “band-wagon”, without proper enquiry. A proper enquiry into the PFA’s experience and track record in investment management, financial resources, quality of ownership and management as well as quality and transparency of customer service and reporting should be made before a choice is made. The law guiding the contributory pension scheme allows workers to switch PFAs at least once in a year without any reason, meaning that people who may have made sub-optimal decisions regarding the

choice of PFA can easily and conveniently change to another PFA. But this is subject to opening of the Pension transfer window by the industry regulator, the National Pension Commission (PenCom), which expected soon. Another issue in planning your retirement while you work revolves around changing jobs and redundancy. For the upwardly mobile worker, changing employers under the CPS poses no challenges at all. The RSA is portable, and all that will change is that your old employer would stop contributing, and your new employer will be informed of your account details, and will continue contributing on your behalf. Taking an early retirement is also something that a lot of young workers consider today. People in very high energy professions like banking suffer burn outs and fatigue after years of working, and wish to retire

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

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An RSA holder who disengages or is disengaged from employment before the age of 50 years and is unable to secure another employment within four months of such disengagement is entitled to 25 percent of the RSA balance

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oung people before now will rather not think of retirement planning at the beginning of their workingcareer. So, most people start planning for their retirement late, leaving issues about their old age care until the last few years of their working life.And because it was considered not important at that early stage, a lot of time was wasted and this largely affected planning time and goals targetin the short and longer term. This brought sufferings to a lot of the retirees in the past, as they never thought retirement was something to bother about early in life. So, the coming of the Contributor y Pension Scheme following the Pension Reform Act 2004 as amended in 2014 has redirected the focus of young employees who have become more conscious with planning for their retirement through the compulsory contributions with their employers. Here, experts at StanbicIBTC Pensions advise that retirement planning should start while you w o rk . U n d e r t h e C P S, workers can actively participate in decisions regarding their retirement. From the choice of Pension Fund Administrator (“PFA”), to additional voluntary contributions and well planned withdrawal modes, workers can plan and ensure a safe and secure retirement. Other issues such as owning a home, taking life insurance policies, writing a Will, and setting aside towards your health care in retirement are issues that young workers should be concerned with. Workers planning towards their retirement

early or so to settle for a less demanding personal or family business. Decisions like this are becoming increasingly popular. People should plan adequately towards an early retirement, and where they want to run a private family business, should thoroughly research it, so that it doesn’t become another high-stress activity like their previous employment was. The Act also makes provisions for the following two scenarios: An RSA holder who disengages or is disengaged from employment before the age of 50 years and is unable to secure another employment within four months of such disengagement is entitled to 25 percent of the RSA balance in order to cushion the burden of not being in employment. Such an individual, after obtaining another job, can continue with the RSA. If there is no further employment, the individual will

have to wait until he/she is 50 years of age before being allowed to access the remaining RSA balance. On the other hand, an RSA Holder who has willingly retired before the age of 50 years will not be allowed to access the RSA balance until they attain the age of 50 years, except such an individual is employed in the private sector, where the policies of that particular company allows for a retirement age of earlier than 50 years. In this case, the RSA Holder will be considered a normal retiree and will also be allowed to access the RSA Balance based on any option he/she chooses. Another issue that comes to mind regarding retirement planning while you work, is death-in-service, as well as death during retirement. The Act also provides that where a contributor dies during employment, the balance in his RSA will be transferred to his known beneficiary as named in a Will, his/her spouse or children, his named next of kin, or the administrator of his/her estate as determined by the probate registry. The same provision also applies to retirees who have started receiving retirement benefits through a programmed withdrawal, and die. This provision of the Act makes it uniquely different from the administration of retirement benefits under the old public service scheme, where pension payments cease and are not made to a retiree’s beneficiaries at their death. The Act also provides that employers provide a compulsory life insurance cover for each employee for up to a minimum of three times the employee’s total emoluments. The proceeds of the life insurance will also be paid to the employee’s beneficiaries, at death.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

BUSINESS DAY

C002D5556

Wednesday 21 November 2018

E-mail: insurancetoday@businessdayonline.com

Nothing stops regulator from forbidding a company doing business it has no capital for - NAICOM Mohammed Kari, commissioner for Insurance in this interview with select journalists spoke glowingly his mind on the suspended Tier-Based recapitalization for insurance companies. Modestus Anaesoronye was there: Excerpt. On the Tier-Based capitalisation, NAICOM recently issued a circular to operators to maintain status-quo. How are the operators aligning to that directive? hen we met with the industry chief executives in Abeokuta during the Chartered Insurance Institute of Nigeria, CIIN, professional forum, they wanted clearance on where they stand, vis a vis what business they can or cannot do. However, as advised by our legal people, they said the issue is subjudice, that we should not discuss it. So l told them that it is subjudice, but each company should interpret it the way it deem fit but whatever happens after the court case, then we will take a position. But after, we realized that the confusion was getting too much. A lot of companies were not sure of what to do, despite the court order many were playing safe and respecting the Tier Based Minimum Solvency Capital, TBMSC, guideline. We appreciated that because they did not want to go against the law. So a lot of them were playing cautious and were refusing business in the field they did not qualify to write and some were not even sure what to do. So we thought we should provide little clarification, and that was why we issueed that secular that since the policy has been stopped by the court of law, operators can continue operating as if it did not exist. So we clarified that and business continued as usual. So at the end of the whole process, then we can take our position. However, we still have not been served any notice. All we hear is just the exparte motion that stopped us from going further with the TBMSC. I do not know whose interest that is serving, but l cannot speculate on the intention until l am served. So until we get a notice of action, l wouldn’t know the ground. As a regulator, you can’t join issues of regulation with everybody. It is not in the interest of the industry or operators for you to be talking publicly on the issues you regulate on daily basis. The TBMSC is just a document with a name but we have always been doing that before now. As operators submit their reinsurance arrangement at end of the year, we tell them that, ‘your capital does not justify your doing this business, so, you are restricted from doing

Mohammed Kari, Commissioner for Insurance

this, they loved this and we have already had three regulatory bodies in Africa who have come in to under-study this policy because they loved this and they are thinking of introducing it in their market. So it is wrong to say that stakeholders in the Nigerian insurance industry are kicking against it. Secondly, we didn’t ask

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We could have done it but we didn’t think it was the best approach given the condition of the capital market now, and the operators who have not been really living to their expectations

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this business.’ We have always be doing it and it is within our regulatory powers to protect the shareholders, the stakeholders, as well as consumers to ensure that companies only operate in areas where they have the wherewithal. Our opinion is discretionary and we apply it as we deem fit at the time. But what we did with the TBMSC was to make it a public guideline so that companies can work towards developing themselves. The argument is that NAICOM should have given operators time to align with the TBMSC, why didn’t the regulator consider that initially? What is the benefit for an insured that has an asset to protect to go and insure with someone that is incapable of insuring him? No consumer would do that. No consumer would insure with somebody whom he knows cannot pay his claim and we have a duty to protect the consumers. It is our duty to ensure that only capable companies operate in capable areas. It is the duty of the consumer to investigate who he is insuring with, to ensure that he is properly protected. And if he decides not to exercise that duty and his right, that is his problem. So, no consumer has complained to me about the TBMSC, rather they are actually being appreciative. No reinsurer has complained either. No insurance community around the world have complained about

anybody to recapitalize. The consumer is supreme in our responsibility of protecting stakeholders and the essence of regulation is to protect the consumers principally, and the shareholders. When we did letter of categorization and advised insurance companies, some of them were able to see the need for them to do so. A lot of them declared where they what to be and operate. An operator can be in any tier, it all depends on your model of operation. For example, the two biggest players in the industry do more than 75 percent of their businesses in tier three. You can survive in any tier you find yourself but if you don’t appreciate that tier, then upgrade. It is just fair on the consumer for you to upgrade to a tier you aspire to be. Law or no law, nothing says I cannot forbid a company from doing a business which he doesn’t have the finances for. We have been doing it and will continue to do it. Law or no law, policy or no policy, it is an inherent duty of a regulator to do that. When CBN ruled about capital, they did that because they taught that is the best way they can develop their regulated entities. What we have done is the best way we can develop our regulated entities, we can’t afford otherwise. To do otherwise is to say we don’t want to help them. The capital market is not as buoyant and our operators have not been paying dividend, so who will come and put money in them. The result of what we are seeing now is like saying that they don’t want to be helped. It cannot continue like this, we are the weakest link in the Nigerian economy. Now we are going to be less capitalized than mortgage guarantee banks because they are N6 billion. We are going be to less capitalized than microfinance banks who are now N5 billion. When you segregate the licenses of insurance companies into life and non life, it is N2 billion and N3 billion, an insurance company that insures the oil and aviation sector has capital less than microfinance banks? We should wake up. Some operators argue that capital is not important, do you agree with that? When some of my operators say that, tell them that I have been in this industry for forty years. I have seen all of these things in the history of insurance. If capital has no function, how come banks bought over insurance companies that used to be owned by insurance compa-

nies? Insurance anywhere in the world is the mobiliser of funds and is the provider of security. You cannot provide security if you don’t have capital. How can you approach a microfinance bank of N5 billion and tell them you want to give them protection, they will ask you what is your capital. The claim you pay and the liability you hold is a function of your financial ability. Are we the only insurance industry in the world? Check any jurisdiction in the world, insurance companies are more capitalized than banks. Insurance companies own virtually all the financial sector in the world. Insurance companies fund infrastructure because they have long term funds in their life businesses. Insurance operators argue that they don’t need capital, if they don’t need capital, why are they the weakest link in the financial sector. You know why they say that? They say that because they see insurance as a personal business. Do you know how many of them can’t pay claims? Some of them can’t even pay salary. Some insurance companies are so dilapidated that no client will be comfortable inside them. These are the things you need capital for. Some of them don’t have technology; these are the things you need capital for. Some of them cannot employ qualified personnel because they cannot afford the salary, which is what you need capital for. Some of them cannot convince a reasonable client that they can protect him. Section 9(4) of the Insurance Act 2003 states that the regulator could increase capital from time to time; it is just a matter of circular. We could have done it but we didn’t think it was the best approach given the condition of the capital market now, and the operators who have not been really living to their expectations. Today if any of the telecoms company will do a private placement, people will buy it quoted or not quoted. That is confidence because they pay dividend and their services are visible. Ours are quoted yet nobody wants to invest in them because they know dividends are not being paid for a long time. Even when there are no dividends, they would have been happy to have shares that appreciate because they can always sell in the market and make profit. So operators asking for two years, five years, or fifteen years, will still not change. But that is our industry and we are servants of the industry.

BUSINESS DAY

Wednesday 21 November 2018

Shipping

Logistics

Maritime e-Commerce

Maersk, MSC, others plan new container shipping association to drive digitalisation Stories by Uzoamaka Anagor-Ewuzie

.P. Moller Maersk together with CMA CGM, Hapag-Lloyd, MSC and Ocean Network Express are in discussion to create an association that is targeted at paving the way for digitalisation, standardisation and interoperability in container shipping industry. Currently, IT executives from the five companies are discussing the possibility of creating common information technology standards which will be available and free of charge for all stakeholders. Though the shipping industry already has multiple organisations and associations, according to projections, members of the new group identified a need for a neutral and non-profit body for ocean carriers.

André Simha, CIO of MSC and spokesperson of the group, says that it’s in the customers’ and all stakeholders’ interest, if container shipping companies operate with a common set of information technology standards. “We are striving for less red tape and better transparency. The timing is right, as emerging technologies create new customer friendly opportunities. Together, we gain traction in delivering technological breakthroughs and services to our customers, compared to working in our own closed silos”, he adds. The association, he said, has no intent of developing any digital platform, but aims to ensure interoperability through standardisation, and will not discuss any commercial or operational matters. “Digital is vital for A.P. Moller – Maersk in delivering on our strategy to become an integrated container lo-

gistics company that offers simple, end-to-end services with seamless customer experience. This will enable all parties to concentrate on value adding differentiation as we move the container shipping industry towards further digitalisation”, says Adam Banks, chief technology & information officer, A.P. Moller – Maersk. Rajesh Krishnamurthy, executive vice president IT & Transformations, CMA CGM is always looking for best practices and standards to support the innovation and digital strategy of the company and this will enable us to work together on setting the standards for digitalisation. “Hapag-Lloyd welcomes the creation of this association as we firmly believe that the challenges of the future can only be tackled with a common approach. While we remain competitors in the markets,” says Martin Gnass, managing director Informa-

tion Technology, Hapag-Llyod. Noriaki Yamaga, managing director, Corporate & Innovation, Ocean Network Express said that the company sees a wave of innovation technology development in shipping

and logistics industry over the recent years which can bring good opportunity to the whole industry for digital transformation. “At the same time, we are a bit cautious about adopt-

ing new technology by individual company since there is no common standard in the market which may be ending up with re-integrating work among all stakeholders in the supply chain,” he said.

Iyalode Alaba Lawson, national president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) with Hassan Bello, executive secretary Nigerian Shippers’ Council (NSC), during the courtesy visit of members of NACCIMA to the council recently.

LADOL Free Zone to diversify into agriculture, general manufacturing Dockworkers salary raises 93.3% high in 12-year of port concession

…Sees equality as key to sustainable partnership

he Lagos Deep Offshore Logistics Base (LADOL) is perfecting arrangement to diversify its client base by bringing investors from the agricultural sector, as well as others specialising in general manufacturing, Amy Jadesimi, managing director of LADOL has said. “We want to attract the brightest companies and people into LADOL to partner, engineer and manufacture new industrial solutions for the world’s fastest growing markets, particularly countries in Africa,” Jadesimi said.

To bring innovation into the Nigerian market, she said that LADOL is investing in creating an environment where a wide range of local entrepreneurs, engineers and innovators can design solutions in-country for Nigeria. Speaking at the just concluded P4G 2018 Summit in Copenhagen, Denmark, where she was one of the speakers on a high-level panel, Jadesimi said that LADOL is also partnering with Systemic through P4G to develop Special Economic Zone (SEZ) in Ethiopia and Kenya, which is aimed at

industrialising Africa. Jadesimi, who identified respect and equality as key to successful and sustainable partnerships in any business environment, particularly in high growth low income markets, said that nations need equitable partnerships between local and international companies and between private and public sector. She however urged P4G to support a universally accepted rating and benchmarking system that will enable investors to include sustainability in credit rating analysis as a vital criterion.

Amy Jadesimi (1r), MD LADOL at the P4G conference in Copenhagen. Speaking on Cities as Hotbeds for Innovation and Growth. Other panelist from (L-R): Andrew Steer, moderator/ president and CEO of World Resources Institute; Mike Sonko, governor of Nairobi TBC; Frank Rijsberman, director general of GGGi, and Chen Hongbo, executive vice president of Tsinghua Holdings.

“Sustainability equals profitability, therefore highly sustainable companies should get funding. Even if sustainable companies do not meet the popular but highly restrictive and negative yielding definitions of bankability, this new benchmark would ensure that the right companies get funding and that their investors benefit from higher returns. Private indigenous companies in high growth / low income countries are suitable investment vehicles,” she added. She further observed that: “Investors are tired of having to invest in negative yielding assets and we know that sustainability equals profitability - so this type of benchmarking will grow the markets.” Jadesimi however reiterated her commitment to regional collaboration in African: “I believe in a strong united free market, where African countries collaborate to build their local markets by sharing ideas, people, resources and markets. Strong Governments in African and indigenous private companies will be in a position to form equitable international partnerships, based on an alignment of incentives, mutual respect and shared longterm vision.”

eaport terminal operators have increased dockworkers salaries by 93.3 percent in the 12 years of port concession from N10, 000 in 2006 to N150, 000 per month. Adewale Adeyanju, president-general of the Maritime Workers Union (MWUN), said last Wednesday that private terminal operators have substantially increased the wages earned by dockworkers, compared to their earnings pre-concession era. Speaking with newsmen in Lagos, Adeyanju said dockworkers now enjoy better working conditions, compared to what obtained in the preconcession era. According to him, “Before concession, they were just using us. Nobody could talk about what his take home pay was. Sometimes, some people got between N10,000 and N20,000 per month but today, it has improved tremendously to between N100, 000 and N150, 000.” Adeyanju, who lauded terminal operators for increasing the wages of dockworkers in spite of the low volume of import in the country, appealed to the Federal Government to urgently fix the dilapidated port access roads, which he said had been adversely affecting

port operations and the nation’s economy. “The roads to the seaports have contributed to most of the problems that our members are facing today. Because of the bad roads, some of the vessels that are supposed to come to the port are sometimes diverted to neighbouring countries,” he said. Adeyanju, said that some dockworkers were paid by tonnage, others by permanent employment, while some were on unit payment, pointing out that those on payment by tonnage needed to handle higher tonnage to get better payment, but the bad roads had been affecting their performance. The union leader however appealed to the terminal operators to urgently sign the Collective Bargaining Agreement (CBA), which will review the retirement benefit for dockworkers. “We are not being rigid in negotiations in order to accommodate both the employer and the employee. We are not demanding much because we feel all of us are working together. If the economy improves, the lives of the workers will also improve. He said that dockworkers’ retirement benefits should be paid by the operators and not the stevedoring contractors.

BUSINESS DAY

Wednesday 21 November 2018

In Association with

CBN’s interest rate decision tomorrow will drive activities in banking sector Hope Moses-Ashike

he banking and finance sector activities are likely to be driven by the decision of the Central Bank of Nigeria (CBN) at the end of its Monetary Policy Committee (MPC) meeting tomorrow Thursday. The CBN kept its policy stance unchanged at 14 perecent at its last meeting in September. The MPC also retained the Cash Reserve Ratio (CRR) at 22.5 percent, Liquidity Ratio at 30.0 per cent; and Asymmetric corridor at +200 and -500 basis points around the Monetary Policy Rate (MPR), in consideration of week growth, inflationary pressure, election spending, among other factors. Prior to the November meeting which started today, analysts in the financial

services sector have shared their expectations from the meeting. “We see tightening this week, most likely in the form of a rate increase. The NBS reports for August and September do show a subdued pick-up in inflation. We understand that CBN staff forecasts point to further modest (although unspecified) rises in the months ahead”, analysts at FBNQuest Capital said. The analysts based their expectation of tightening principally on the desire of the CBN/MPC to keep foreign portfolio investors (FPIs) invested in Nigeria. While the depletion of reserves will be stemmed by the FGN’s latest Eurobond issue, the recent fall of the oil price below US$70/b for Bonny Light may influence some members of the MPC. In September MPC meeting, six out of 10 members

Access Bank celebrates a decade of sustainable banking

frica’s leading financial institution, Access Bank Plc. recently celebrated 10 years of promoting sustainable banking with a week-long event held across the several branches within and outside Nigeria between Monday 5 November till Friday, 9 November, 2018. The event, tagged ‘Journey to a Sustainable Future’, was geared towards reiterating the bank’s commitment to sustainable banking. Speaking at the flag-off ceremony, Herbert Wigwe, chief executive officer, described the celebration as an opportunity to appreciate the results recorded so far while still setting the pace for better achievements in the coming years. “The business of banking for us, goes beyond

keeping money. We are very interested in people and the planet and we are committed to these. I am happy at the progress we have made with this since we began 10 years ago and I am very sure we will do even better in the coming years. I believe we have the most skilled, disciplined and ethical people in the industry and I can make bold to say that it is our collective effort as a team that has gotten us this far in our journey to becoming the world most respected African Bank, he said.” Corroborating the statement, Omobolanle VictorLaniyan, head of Sustainability, Access Bank, added that over ten years, the bank has initiated several ideas that have demonstrated its commitment at promoting sustainability.

voted for tightening. The majority, however, was split equally between a rate hike and a rise in the banks’ cash reserves requirement (CRR) ratio. Supporters of the second argued that it was more “potent” in confronting excessive monetary growth than the first course of action. “A repeat is possible this week. More likely in our view, however, is a majority for a 50bps hike. A number of members may well shift from no change on “wait-andsee” grounds in September to tightening through a rate hike”, the analysts said. Afrinvest Securities Limited, expects the committee to deliberate on the decline in oil prices, further rate hikes in the US, the prospective increase in minimum wage to N30,000/month, higher inflation rates, continued portfolio outflows and increasing political uncertainty ahead of the 2019

Godwin Emefiele. CBN, governor

general elections. “Although the committee has become increasingly disposed to tightening rates in its last two meetings, we believe the committee will retain the benchmark rate at 14.0 percent to minimise the downside risks to growth and inflation”, Afrinvest analysts said. In his personal statement at the September MPC meeting, Edward Lametek, deputy governor of CBN, said, “the financial system has come under increased pressure in recent months owing to a combination of adverse external and domestic conditions, manifesting in divestments in the equities market and rising NPLs. Further tightening of the monetary policy stance may not be helpful at this time to the system. In the banking subsector especially, it could lead to asset re-pricing, increased operating cost and higher risk to asset quality”.

Heritage Bank advocates innovation agriculture

eritage Bank Limited has called for innovation in the agricultural sector in order to maximise the sector’s contributions to the nation’s Gross Domestic Product (GDP). Ifie Sekibo, managing director/CEO made this call while speaking to a group of investors stressing that innovation is necessary to tackle the challenges to productivity in the agricultural sector. Speaking on the challenges and potentials of Ni-

geria’s agricultural sector, he said: “Statistically, we are about 198 million people as nation though we believe we are about 210 million, GDP growth 1.5 percent, before recession, we are doing about 6 percent and we are at 11.28 percent inflation but still hoping it comes down. Agriculture is 22.86 percent, Industry 23.18percent and services at 53.97 percent. Essentially, we will say our economy is driven by services. “Nigeria has a very large market, plenty labour force,

plenty of waterways because almost every part of Nigeria has waterways and enough land to feed ourselves and nearly half the world because we truly have a land fertile for Agriculture and we have only utilized 40 percent of which we waste about 70 percent of the lands. “For rice, Nigeria should be producing about 6.3 metric tonnes and one begin to wonder why we are poor as a nation if we have such opportunities. Instead we are doing about 2.3 metric tonnes and

you can see the gap of about 4 million metric tonnes that we could have produced but we are importing. “That is a negative for our economy. A lot of other gaps in the Agricultural sector shows that indeed we have a lot of room for investments. You will realize that every state of this federation and every Geo-political zones has a lot to offer, the North-West, North-East is a hub for agriculture only if we do the right thing and maximize the opportunities.

Ecobank supports orphanages in Lagos, Abuja, others

cobank Nigeria’s employees and management have again displayed their social conscience, care and commitment to their local communities by giving up their free time in aid of orphanages in Lagos, Ibadan, Enugu and Abuja to mark the Ecobank

Day 2018. Activities, on Ecobank’s ‘Support for Orphanages in Africa’ Day resulted in giving out of food and household items to the selected orphanages. The staff also spent good time with the children of the Homes. Ecobank Day is a com-

munity action day in a year, set aside by Ecobank Group during which its staff across Africa are encouraged to serve the communities in which the Group operates. It is simultaneously marked in 33 African countries where the bank has presence. This year’s event, the 6th

in the series with the theme “Supporting Young Lives it’s your day to make a difference” had an internal initiative where the bank’s employees were encouraged to turn their attentions from just servicing customer needs towards their local community.

Wednesday 21 November 2018

C002D5556

BUSINESS DAY

Toyota’s new Corolla sales eye 150 countries Page 30

Abuja auto feaks savour Eclipse Cross SUV attributes Stories by MIKE OCHONMA

he 19th edition of the Abuja Motorfair have come and gone, but no doubts, the residents of the Federal Capital Territory, Abuja must have had a real and very solid feel of the all-new Mitsubishi’s compact SUV, the Eclipse Cross. It would recalled that, the Eclipse Cross was first unveiled to the Nigerian motoring journalists in Lagos before Massilia Motors, sole distributor of Mitsubishi Motors in Nigeria and a subsidiary of CFAO group took the exciting compact SUV to the Abuja motorfair described by industry watchers as the biggest annual assemblage of different kinds of automobiles in the country. Shortly after the opening ceremony, Aliyu Jelani, director general, National Automotive Design and Development Council (NADDC), who represented vice president Yemi Osinbajo, as special guset, at the occasion paid a visit to the Mitsubishi Motors stand. The renowned world class auto designer was taken on a tour of the vehicle with Kunle Jaiyesimi, deputy managing director of Massilia Motors and CFAO Motors.

Visitors to the exhibition ground also commended the Eclipse Cross over what they described as a confirmation of the global automakers push and serious move to take over the compact SUV market where it already has two other strong models such as the ASX and Outlander. For the Nigerian domestic market, the Eclipse Cross for is equipped with 2.0 litre CVT petrol engine. It also boasts of other

performance enhancement features like super-all wheel control, adaptive cruise control, lane departure warning, blind spot warning, active stability control and hill start assist. Other exciting features include reverse (video) camera for ease of mobility and comfort, keyless operation system, electric parking brake with brake auto hold, rain sensor, auto headlights, colour LCD multiinformation display, display

audio and USB port. With a design like no other in the Nigerian market right now, the Eclipse Cross is no doubt a class benchmark in its segment. For instance, the Head up Display (HuD) conveys information in full color above the dashboard for easy viewing, in addition to the rear seat with nine-step reclining and 200mm sliding adjustment that can be slid all the way back for class-leading leg room.

Mitsubishi Eclipse Cross goes to the Fashion Week

ward winning Mitsubishi Eclipse Cross Sports Utility Vehicle (SUV), recently launched into the Nigerian market by Massilia Motors, made waves with its latest feature at the just concluded 2018 Heineken Lagos Fashion Week. the dealership is the sole distributor of Mitsubishi Motors in Nigeria and a joint venture consolidated with the CFAO group. The comapct SUV, which was also on display at Japanese pavilion of the last just concluded Lagos International Trade Fair,

which held recently, was a beauty to behold at the well-attended fashion show which held at the sprawling business district of Victoria Island, Lagos. The innovation this year was the Virtual Reality booth set up by Mitsubishi Motors where Guests took virtual tours of the new Eclipse Cross thanks to ultramodern VR glasses. In addition, free wifi was also provided by the brand at the venue to guests via a messenger scan code. Participants at the fashion show also physically felt and

R-L: Funmi Abiola, marketing manager, Massilia Motors (sole distributors of Mitsubishi vehicles in Nigeria) and Sisiano, celebrated designer, promoting the All new Mitsubishi Eclipse Cross at the recently cocluded 2018 Heineken Lagos Fashion Week held in Victoria Island, Lagos.

interacted with the trend setting features of the car positioned by the side of the runway tent. To celebrate the arrival of the SUV, Massilia Motors teamed up with one of fashion’s most celebrated designers, Sisiano, to create a collection called the ‘Eclipse’ inspired by the beauty of the brand new SUV. The main tent went dark and grew quiet as the screens lit up with the Mitsubishi Motors video on the fusion of fashion Continues on page 30

FRSC boss, NADDC DG to attend 2018 NAJA Awards

liyu Jelani, the director-general of the National Automotive Design and Development Council (NADDC) and Boboyemi Oyeyemi, Corps Marshall of the Federal Road Safety Commission (FRSC), have been invited as special guests to deliver keynote addresses at 2018 Nigerian Auto Journalists Association (NAJA) Awards slated for December 13, as stakeholders in the Nigerian auto industry once again gather at Eko Hotels, Victoria Island, Lagos to see how the automotive market performed in the outgoing year. According to Moses Ebosele, the Chairman of the Organising Committee, the 2018 NAJA Awards will not only recognize and rewards excellence in the Nigerian auto industry in the last one year, but will also provide avenue for critical stakeholders in the sector to rub minds on the way forward for sector. While Boboyemi Oyeyemi, Corps Marshall of the Federal Road Safety Commission (FRSC) is expected to provide background information and statistics on the activities of the FRSC in maintaining sanity on Nigerian roads, Jelani Aliyu, the National Automotive Design and Development Council (NADDC) as head of government agency saddle with the responsibility of supervising the Nigeria auto industry, will be giving insights on the local automobile industry. Also giving an insight into what to expect at this year’s NAJA Awards, Chairman of NAJA, Mike Ochonma, said this year’s edition will showcase the best in the country’s automotive industry. “The NAJA Awards over the years has been recognized as the authentic bastion when it comes to recognizing the best players in the Nigerian automotive industry. I can assure you, the 2018 edition will not be less as our professionals are already compiling votes in all categories of the Awards, “ he said. The Nigeria Auto Journalists Award is the local version of the traditional global automotive industry award conducted by the motoring journalists in different countries and regional markets of the world to recognise the achievements of industry operators in different categories and across segments and vehicle categories. Most importantly, the Car-of-TheYear (COTY) which is the high points of the event, is a very competitive segment bestow on automobile model seen to have to dominated the Nigerian roads in the last one year.

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Toyota’s new Corolla sales eye 150 countries … With more than 46 million sold in 52 years

Wednesday 21 November 2018

Mitsubishi Eclipse Cross goes... Continued from page 29

Stories by MIKE OCHONMA mikeochonma@gmail.com

and the new compact SUV. The Eclipse Cross flashed into view and the breath-taking car with its cutting edge features were prominently displayed to the rapt audience. The Eclipse collection was widely applauded by the audience. At the end of the show, in sign of collaboration, Funmi Abiola, marketing manager of Massilia Motors and Sisiano walked down the runway to

oyota has lifted the lid on its new Corolla sedan range at China’s Guangzhou International Automobile Exhibition in China, with plans by the Japanese automaker to sale the new sedan model in more than 150 countries from 2019. The Corolla is Toyota’s all-time best-selling car nameplate, with more than 46 million vehicles sold worldwide (including derivative models) since the first generation was released in Japan in 1966. With each new generation, Corolla has evolved. New advanced features and functions have been introduced to suit the needs of the time, all the while inheriting its core DNA of reliability and usability from the very first generation, the brand claims. Based on the Toyota New Global Architecture (TNGA) initiative to structurally transform vehicle development (to contain cost), the new Corolla platform has been unified globally within the present 12th generation model. “The new platform offers improved performance characterised by smooth driving, ride comfort, quietness, and safety, Konishi adds. “The Corolla delivers a joyful driving experience to customers in a wide range

of countries and regions, backed by a total of one million kilometres of test driving across five continents.” The new Corolla’s interior design is based on a ‘Sensuous Minimalism’ concept (a design that is simple yet sensuously appealing, according to Toyota), aptly incorporating a sleek new digital instrument panel in the hybrid. In certain markets, the new Corolla sedan models will offer optimal connected functions and services to deliver safety and security as well as comfort and convenience, by connecting people and cars, and cars and society. In some markets, the new models come standard with an onboard Data Communication Module

(DCM), an integral component of Toyota Connected. Connected services will be introduced across all grades, providing ‘just-in-time’ services and offering security and peace of mind to customers 24/7, the automotive firm says. Other examples of connectivity potential in the new Corolla include Apple CarPlay and Amazon Alexa compatibility in the United States, and services in Europe that allow the car to be connected to an operator in emergency situations and the dispatch of rescue vehicles based on the car’s location. No confirmation yet on when the new model will be imported into Nigeria. Offering a lower centre of gravity, sportier exterior, and sleek

interior design, the new Corolla sedan is said to bring enhanced driving and performance improvements to the nameplate. There are also plans to introduce a hybrid version of the Corolla sedan in more than 90 countries and regions. According to Yoshiki Konishi, chief engineer of the new Corolla models, “We have tried to design new models that are eye-catching, and fun to both ride in and drive. By enhancing not just the fun factors that are unique to cars, but adding connectivity functions to create new value, we wanted to make this new model a car that enriches mobility for customers around the world’’. Thomas Pelletier, MD, Massilia Motors Limited

Tata mulls calibrated investment plans for JLR

ata Motors has announced a turnaround plan for Jaguar Land Rover, which has been hit hard by trade tensions between China and the United States, low demand for diesel cars in Europe and worries over Brexit. Under “Project Charge” Tata Motors said it plans to cut costs and improve cash flows at Jaguar Land Rover by 2.5 billion pounds ($3.2 billion) over 18 months. JLR said new vehicles such as the recently launched Jaguar IPace full-electric crossover and the upcoming new Land Rover Defender will help with moves to offer a hybrid or electric version of all its models by 2020. Ralf Speth, Jaguar Land Rover chief executive officer said that together with the company’s ongoing product offensive and calibrated investment plans, these efforts will lay the foundations for long-term sustainable growth. JLR has trimmed its pre-tax profit expectations for the current fiscal year ending March 31, 2019 and expects to break even, Speth said, versus an earlier target of profit growth. As part of the turnaround

plan, its focus will be on cash saving “quick wins” such as reducing non-product investments and speeding up asset sales, Tata Motors said in an investor presentation. In the near term, it will improve efficiency in areas including purchasing and material cost, manufacturing and logistics and people and will focus on strategic and non-core asset sales. Meanwhile, JLR has already reduced the number

of production days at its UK plants in Castle Bromwich and Solihull. JLR said in the presentation that it has saved 300 million pounds since it initiated the turnaround plan six weeks ago and is working on 500 ideas for the future. Tata Motors made a loss of 10.49 billion rupees ($141.9 million) for the July-September quarter, compared with a profit of 24.83 billion rupees in the

year-ago period. It also reported a loss of 101 million pounds during the quarter and its margin on earnings before interest, tax, depreciation and amortisation (EBITDA) fell 130 basis points to 9.9 percent. Retail sales of its Jaguar sedans and Land Rover SUVs fell 13 percent to about 130,000 units, hurt particularly by tariff changes in China and escalating trade tensions.

greet the crowd. Lagos Fashion Week was four days of celebrating the very best of fashion design across Africa, with designers from Ghana all the way through to Cote d’Ivoire as well as Nigeria, coming together to showcase the huge creative strides of the industry. The SUV marks the dawn of Mitsubishi Motors’ new design advancements with every detail crafted for confidence-inspiring driving. The exterior’s sharp, sculpted lines give it a strong stance, while the newly developed, premium red diamond paint radiates vibrant colour. Being an intelligent vehicle, the human connectivity features of the Eclipse Cross such as Bluetooth, AM/FM/ CD Touchscreen Audio system + MP3, Hands-free phone kit etc. are well pronounced. With Head Up Display (HUD), information is conveyed above the dashboard for easy viewing. Coming into the Nigerian market with the GLS CVT Gearbox 4WD (2.0 litre engine), some other features of the Eclipse Cross include Rear seat adjustment, USB port, display audio, colour LCD multi-information display, auto headlights, rain sensor, electric parking brake with wrake auto hold, keyless operation system (KoS) cruise control, tailgate window etc.

BUSINESS DAY

Wednesday 21 November 2018

CITYFile

Fire destroys market in Aba GODFREY OFURUM, Aba

his is not the best of times for timber and building material dealers in Nkwo-Ngwa, Ndiegoro, in Aba South local government area of Abia State, as fire has destroyed their goods and shops worth millions of Naira. About 150 shops were destroyed in the inferno, which started at about 8.00pm last Saturday. Okechukwu Lawrence, chairman of the market, attributed the fire to a power surge from a generating set, as the market is not connected to the national grid. Okechukwu explained that all efforts made by the task-force of the market and later the fire service to initially curtail the fire was frustrated, by some hoodlums, who capitalised on the fire incident to loot shops. The hoodlums according to the market chairman also attempted to cart away borehole sumo from the market. “When I got the information I contacted members of the market task-force and with the help of some residents, we tried to stop the fire, using water from our borehole, but we couldn’t achieve much before the arrival of the fire service. He lamented that the hoodlums took advantage of the situation to break into shops and looted wares, including rice and other food items. He explained that furniture and building materials worth millions of naira were lost in the inferno and accused the Aro-Boys (a cult group) that operate in the area of preventing officials of the fire department from accessing the scene on time. “They went into the other areas of the market where there is no fire to loot peoples’ shops. Aside the Aro-Boys, the bad state of Obohia and Ozumba roads that lead to the market was another big challenge.

Police arraign 8 suspected cultists in Lagos

ight suspected cultists were on Monday arraigned by the Lagos State police command before an Ogudu Magistrate Court, accused of terrorising members of the public. The suspects include Olarigbe Olanrewaju, 22; Moses Ademola, 23; Evans Ezikiel, 20; Taiwo Oluwasegun, 19; Ganiyu Bashiru, 21; Wasiu Balogun, 29; Sundau Omete, 24; and Tunde James, 20. They were alleged to have deployed dangerous weapons in a manner to cause breach of peace in the Oke-Iranle area of Ajah, in Lagos. They are facing a three-count charge of conspiracy, membership of an unlawful society and unlawful display of arms in the public. The accused, however, pleaded not guilty to the charges and were granted bail in the sum of N50, 000 each by the magistrate, E. Kubeinje. The magistrate in her ruling ordered the accused to produce two sureties each in like sum. In addition, the sureties should show evidence of tax payments, to the Lagos State Government. The police prosecutor, Lucky Ihiehie, told the court that the accused committed the offences on Nov. 8 at Oke-Iranle area of Ajah, in Lagos, at about 11:00 p.m. He said that the eight accused, conspired with themselves as members of Eiye Confraternity and engaged themselves in a fight with another group of unknown boys with dangerous weapons. “Some members of the public also sustained serious injuries while some properties were destroyed. They were arrested by a team of police men, led by the Divisional Police Officer (DPO), Langbasa Division, Ajah and transferred to the Anti- Cultism Unit, State CID, Yaba on Nov. 9’’ Ihiehie said. The prosecutor said the offences contravened Sections 42 (a), 51 and 411 of the Criminal Law of Lagos State, 2015, (Revised). The case was adjourned until Dec. 18 for mention. (NAN)

L-R: Donald Ezih, northern regional manager/solar energy business manager; Nojeem Waheed, head, finance & procurement; Ifeyinwa Ekweozoh, general manager; Akintunde Oluwaseun, business development team leader; and Victoria Etiefe, customer relations manager, all of BassComm Nigeria Limited, during a media briefing to mark 25th anniversary of BassComm, in Lagos, on Monday.

Police moves to stop ponzi scheme in Abia …as over 1,000 victims defrauded in Aba GODFREY OFURUM & UDOKA AGWU, Umuahia he police in Abia State have constituted an investigative panel to examine the activities of some individuals and groups allegedly defrauding unsuspecting members of the public, Chris Ezike, the state’s Commissioner of Police (CP) has said. Ezike during a visit to Aba, the commercial hub of Abia State, said the panel is headed by an Assistant Commissioner of Police (ACP) and made up of intelligence operatives, investigators and financial intelligence experts. The experts, who have since relocated to Aba, according to him, are to take over all cases reported by victims at any police station in Abia State, arrest suspects, recover all exhibits and ensure that justice is served. He assured victims of the suspected large scale fraud that the police have the capacity and integrity to investigate the matter and ensure diligent prosecution thereafter. Ezike advised members of the public in their own interest to avoid patronising unauthorised and unscrupulous groups promising them quick and fat

returns on investment. He observed that the activities of the wonder bank scam have led to the defrauding of over 1,000 people in Abia, especially Aba. The Abia CP, who took over the state a week ago, he was Aba to evaluate the work of the panel so far, assuring that the mysteries of the wonder bank scam would be unravelled. He explained that the preliminary report from the panel was worrisome, as the number of victims defrauded is high. He advised the victims to meet with the panel and get documented, so as to establish which of the illegal organisations defrauded them. The CP also warned against extortion of the already defrauded people, by any police officer and urged the residents to ignore any policeman, who may demand bribe in order to help them get their stolen money back. “I’m here to evaluate the work of the panel I set up to evaluate and aggregate the reports the police have received about large scale fraud going on in the state, especially in Aba. “Several organisations, groups have come out masquerading as coopera-

tive societies, empowerment units, women groups, church empowerment programmes and they’ve been making people pay huge sums of money with hope that in weeks the interest will double and many gullible people have fallen prey to this suspected scam. “When I set up the panel, we were thinking that about 1,000 persons have been defrauded, but the report I’m getting from the panel is even more worrisome and I think that number is even minimal”. He revealed that 10 suspects have been arrested and currently in police custody, awaiting final investigation, before they would be taken to court. “I wish to use this opportunity to alert the people particularly Aba and its environs to be wary of illegal financial institutions and empowerment units they patronise. There’s no free launch anywhere in the world. This is money doubling and it constitutes a crime.” The CP listed the crimes already established in the money doubling wonder bank case to include forgery, conspiracy, fraud, obtaining under false pretence, illegal operation of financial institutions and stealing.

C’ River community laments erosion devastation, appeals for help MIKE ABANG, Calabar esidents of Nyahasang, a community in Calabar, Cross River State, under the threatened of erosion, have cried out for help after a church and several houses have been destroyed by gully erosion. Ntoe Edim Ekong, the clan head of the community lamented during a town hall meeting when a group, Sustainable Citizens Participation in Niger Delta, visited the area that the Assemblies of God

Church and many buildings have caved under swept gully erosion sites, and unless efforts are made to stem the tide, the community would be non-existent in a few years. “Our community which is one of the most highly populated in Calabar Municipality has been affected by many disasters and a lot of people have lost their lives from causes like fire outbreaks, gully erosion, and flooding. If nothing is done soon, the entire place will be swept away by gullies which are threatening our land every day”.

He said political office holders hardly remember the community after being voted into office and called on the state government and non-governmental agencies to come to their aid. The director, Green Vision for Community Development Initiative, Okon Enemi who led the team said sustainable citizen participation programme in the Niger Delta was aimed at raising awareness of the people to participate in enhancing good governance by demanding for accountability from those elected.

BUSINESS DAY

Wednesday 21 November 2018

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LegalPerspectives

With

BUSINESS DAY

Odunayo Oyasiji

Doctrine of mistake in law of contract

onsensus ad idem (meeting of minds) is an important part of contract. This means that parties to a contract agreed on the same thing as at the time they entered into the contract. Therefore, when it seems that the minds of the parties do not meet or agree on the same thing or there is an erroneous assumption that they agreed on the same thing then the issue of mistake will arise. However, before this doctrine can be relied upon to void a contract the mistake must be one that is fundamental in a way that it goes to the root of the contract. In the case of Bell & anor vs. Lever Brothers Ltd All ER 51, Lord Atkin noted that “If mistake operates so as to negate or in some cases, nullify consent”. Mistakes have been classified by different authors. The classification we will rely on is the one that classifies mistake into three i.e. mutual mistake, unilateral mistake and common mistake. The foregoing will be discussed one after the other. Mutual mistake refers to a situation in which the two parties to a contract make the error. The error referred to here must be in respect of different things i.e. the errors of the parties are not with regards to the same thing. Mr A‘s error can be with regards to timing while Mr B’s error can be with regards to delivery. In this situation the contract will be void for mutual mistake. On the issue of unilateral mistake, only one party is affected by the mistake. The other party must be aware of the mistake and must be exploiting it to his own advan-

tage. This kind of mistake usually bothers on mistake of identity and the terms of the contract. It will render the contract void. Common mistake on the other hand refers to when both parties to the contract are mistaken about the same thing. An example of such situation is where A buys a property from B unknown to both parties that the property had been demolished at the time of the contract. In the case of Galloway vs Galloway [1956] AC 299 both parties entered into marriage settlement contract and they later discovered that their marriage was void and never even existed in the eyes of the law. The court held that since no marriage was in existence then

there cannot be issue of marriage settlement contract. Also, in the case of Abraham vs Chief Amodu Tijani Oluwa 1921-the defendant attached a writ of fifa to a land that he thought was a property of his judgement debtor. The plaintiff wasn’t certain of his title and on this basis bought the land from the defendant. He later confirmed that the land actually belonged to him and then proceeded to sue the defendant for a refund of the money he paid for the land that was really his. The court held that the sale was void due to the mistake as to title. There are some other issues that must be taken care of when relying on the doctrine of mistake. These issues are –

1. Objective test- before the court can make a determination that there was a mistake the court must apply an objective test. The test bothers on what a reasonable man would think the parties contracted about. This test will guide the court in the decision to take. 2. Issue of inducement- the mistake must be responsible for inducing or bringing the contract into existence. A reasonable man must be able to identify the mistake as the reason for entering into the contract i.e. the contract wouldn’t have come alive if the mistake was not present. 3. The mistake must come before the contract- The mistake must come or be in place before the formation of the contract. If it

only came after the contract was in place then it will not in any way affect the contract. 4. Mistake of facts and mistake of law- Mistake as to the fact can operate to avoid a contract but that of law will not void the contract. This is no longer the situation in the United Kingdom. For example, if you pay money to someone under a contract that you believe to be legal and it turns out that the law has rendered it illegal then you cannot sue to recover the money under mistake. This is based on the principle of ignorantia Juris non excusat (ignorance of the law is not an excuse). In UK on the other hand, it has been held that such money is recoverable.

exploited to gain an unfair advantage. Two categories of undue influence were identified in the case of Bank of Credit & Commerce International v Abooby (1990). The categories are actual undue influence and presumed undue influence. An actual undue influence deal with acts such as persistent pestering of a person (when he has actually refused consent) until such a person agrees. Presumed undue influence has two parts, the represents a situation where there

is no need for evidence once a relationship which in law gives rise to a presumption of undue influence exists. Examples of such relationship are parent and child, doctor and patient, lawyer and client. The second type is where evidence is needed. It must be established that a person placed his trust and confidence in another person. To dispel the claim of undue influence the accused party needs to show that the person entered into the contract by his or her free will and that the person is aware of the risks that are involved.

Duress and undue influence in contract

uress and undue influence refers to a situation where a party is coerced, forced, threatened or compelled to enter into a contract which they do not want or where it is obvious that the terms of the contract are not favourable to them. Under this condition, the contract will be seen not to be valid. Duress can take different forms, it can be in form of threat of violence, threat of unlawful restraint, threat to property and economic duress. On threat of violence, the case of Barton v Armstrong

(1976) provides an example of such situation. In the case, the plaintiff threatened to kill the defendant if he refuses to sell his interest/shares in the company where they both are the major shareholders. Concerning threat of unlawful restraint, Cummings V Ince (1847) is a good example. An old woman was threatened with not ever leaving a mental asylum as her committal order will not be lifted if she does not sign over all her properties. The case of The Siboen and the Sibotre (1976) takes care of threat to property. It was

held that threat like burning of house or damaging expensive paintings is a form of duress. Also, the threat by workers against a ship while demanding a change in circumstances was found to be economic duress in the case of Universe Tankships of Monravia v ITWF (1982). Undue influence on the other hand deals with where pressure was used but the pressure didn’t amount to duress. It usually takes the form of a situation where there is relationship between two parties and same was

34 BUSINESS DAY NEWS Corruption has got worse since I left... Continued from page 1

tion “supported the institutional development of secure

systems and mechanisms, to curb corruption in public service and plug revenue leakages.” “My administration spearheaded the development of the Treasury Single Account (TSA), the Integrated Personnel and Payroll Information System (IPPIS) and the Bank Verification Number (BVN).” In an apparent dig at the President Buhari administration, which has often painted the Jonathan government as corrupt, Jonathan said that: “No administration can either be entirely bad or perfect. Good governance is a process. Rather than media hype or arresting and parading suspected offenders.” In the book, Jonathan also offered explanation on his controversial statement that “Stealing is not Corruption,” arguing that the statement has been taken out of context. Jonathan has also explained the rational that made him make the now

famousphonecallinwhich heconceded defeat to President Muhammadu Buhari even before the final results of the 2015 elections was announced. “When I say severally that ‘my political ambition is not worth the blood of any Nigerian’, I really meant it. This phrase instinctively became a creed and my philosophy on power. It became a principle embedded in my core from when I became Governor of Bayelsa State in 2005 and more evidently during my Bayelsa gubernatorial campaign between 2006 and 2007. It has remained with me and has been the bedrock of my political career and the foundation of the celebrated ‘phone call’ to my opponent in the 2015 general elections,” Jonathan wrote his book. Jonathan, in his book, also said that the PDP governors who decamped to the APC ahead of the 2015 elections were driven by ‘blind ambition.’ “Some Governors wanted to be Vice President whilst others strived to be President. If I contested, none could realize his ambition. This

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muffled implosion would fully manifest in the build up to 2015, with each ship-jumper calculating how much he or she would take from the PDP or the most opportune moment to cause maximum damage and based on that, plot their exit.” “Their opposition to my reelection was principally driven by personal ambition. They therefore played up the issue of where I come from and the faith I profess to fuel their burning ambitions. My performance mattered quite little, if it mattered at all,” Jonathan wrote in his book, which is expected to create a lot of talking appoints ahead of the 2019 elections. Jonathan has also disclosed in his new book that it was Niger Delta militants that demanded the release and pardoning of Diepreye Alamieyeseigha, a former governor of Bayelsa state in 2007 as a precondition for peace in the Niger Delta. Jonathan disclosed that when he and late President Musa Yar Adua were sworn in on May 29, 2007, they were confronted with two main challenges.

L-R: Sonnie Ayere, chairman, Mortgage Warehouse Funding Limited; Ime Okon, senior special assistant to the president on infrastructure; Bola Onadele. Koko, managing director/chief executive officer, FMDQ OTC Securities Exchange, and Tunde Reis, president/founder, First World Communities, at the Series II Housing Roundtable themed, Unlocking the Potentials of the Nigerian Housing Finance through the Nigerian Debt Capital Markets, hosted at the Exchange Place by FMDQ, International Finance Corporation and Family Home Funds in Lagos.

McKinsey says Africa is world’s next big... Continued from page 1

and share insights into Africa’s

future growth prospects. Leke and Desvaux, both Senior McKinsey Partners and Chironga, an executive at Nedbank, one of South Africa’s largest banking groups, say: “With over 400 African companies earning annual revenues of $1 billion or more, we can identify what works. The highly successful businesses are often African companies, but many are entrepreneurialfirmswithWestern,Indian,or Chinesefounders.Themostconsistently profitable businesses demonstrate a higher tolerance for risk, are eager to adapt their products, production and distribution for African consumers, and commit to investing and building their businesses for the long-term.” The conclusions they draw are distilled from 3,000 McKinsey client engagements, in-depth proprietary research and interviews with 40 of Africa’s most prominent business and development leaders. The authors reveal how companies can better understand the African market and seize the opportunities for building profitable, sustainable businesses. Africa has a fast-growing, rapidly urbanizing population with big unmet needs. To McKinsey, this means there is

a trillion-dollar opportunity to industrialize Africa, to meet rising domestic demand and create a bridge-head in global export markets. In addition, there has been a big push by governments and the private sector to close infrastructure gaps. Thereisacontinuedresourceabundance in agriculture, mining, and oil and gas, with innovation and investment in these sectors unlocking new production on the continent. The rapid adoption of mobile and digital technologies could leapfrog Africa past many obstacles to growth, the book says. The book examines several examples of African businesses that have translated opportunities into enduring business value. For instance, it shows how Nigerian conglomerate, Dangote Industries, industrialised to serve regional markets through import substitution and improved margins through vertical integration. South African retail giant, Shoprite, adapted its supply chain and distribution centres for local logistics. SABMiller created products for regional tastes and invested heavily in multiple markets and skills transfer. Technology driven start-up, Kenya’s M-Kopa, is providing mobile money financed off-grid solar energy kits. The authors also study global companies which

have succeeded in Africa for decades, like Coca-Cola, GE, and Total. Leke, Chironga and Desvaux believe that building a successful business in Africa requires a longterm approach and four essential practices: Mapping an Africa strategy, innovating business models, building resilience for the long term, and unleashing talent. Leke says: “At the heart of these four imperatives is a commitment to doing well by doing good. We have had the privilege of meeting and working with many remarkable business leaders from around the world. What has struck us time and again is how many ofthem are driven bya deeper purpose. They look closely at Africa’s high levels of poverty; its gaps in infrastructure, educationandhealthcare,anditsgovernance problems. But they don’t just see barriers to business – they see human issues they feel responsible for solving. They show us that contributing to the social and economic development of the countries within which their thriving businesses operate creates value for both shareholders and stakeholders.” Aliko Dangote, President and Chief Executive, Dangote Industries Limited said : “This is a must-read for any global businessleaderlookingforopportunities todeliveroutsizereturnstostakeholders while also meeting Africa’s huge unmet demands for goods and services.”

One was the rising activities of Boko Haram and the second was militancy in the Niger Delta, which was leading to a sharp fall in revenues to the federation account. “The Federation distributable accrual was dwindling drastically when we took over due to the crisis in the region and President Yar’Adua, in seeking urgent solutions to increase the revenues of the Federation, offered amnesty to the militants.” “One of their demands was that Alamieseigha be released from detention and pardoned by President Yar’Adua. He accepted their terms and mandated me to ensure that my former boss accepted a plea bargain and call the militants to order. President Yar’Adua promised to grant Alamieseigha state pardon if all parties were brought on board to the negotiation table to restore peace in the region” “I immediately carried out his instructions. Unfortunately, he passed on before completely fulfilling his promise. When I became President, I granted late Alamieseigha a state pardon, in fulfilment of late President Yar’Adua’s earlier commitment. Unfortunately this was frowned upon by some of my strongest critics.” Jonathan served as deputy governor of Bayelsa State to Alamieseigha. Jonathan became governor after Alamiseigha was impeached in December 2005 over allegations of corruption in 2005. He had been arrested in UK in November of 2005 over money laundering charges but managed to jump bail and travel to Nigeria. In July 2007, after two years in detention, Alamieseigha pleaded guilty to charges of corruption and money laundering brought against him by the EFCC and sentenced to two years in prison. Alamieseigha died in October 2015 at the age of 62. There was a mild drama when Adams Oshiomhole, the All Progressives Congress, APC National Chairman arrived Transcorp Hilton, Abuja for the Jonathan book launch. Jonathan had some good words

Wednesday 21 November 2018

for Oshiomhole in his book as being one of the few governors who did not betray him during the 2011 fuel subsidy crisis. Jonathan wrote in his book that many of the governors and civil society groups that had initially backed the decision eventually turned against him when many Nigerians decided to protest against the decision to do away with subsidies. But the arrival of Oshiomhole in company of former Senate Minority Leader, Godswill Akpabio elicited mixed feelings among supporters of the People’s Democratic Party, PDP, who crowded venue of the event as most of them showed excitement with shouts of Oshiomhole! Osho Baba!!, while some were visibly amazed with his presence. Some of them were seen in groups wondering how Oshiomhole will see eyeball to eyeball and sit side by side with his known political enemies particularly Bukola Saraki, Yakubu Dogara, Governor Samuel Ortom, and Atiku Abubakar whom he has been castigating. But Oshiomhole was given a warm welcome and exchanged pleasantries with his perceived political enemies at the high table. Also, the crowd that gathered in front of Congress Hall of Transcorp was thrown into wild jubilation following the arrival of former President Olusegun Obasanjo for the book launch. Obasanjo who arrived two hours into the event was given a rousing welcome with the thunderous shouts of Baba! Baba!, Obj! Obj!, while he acknowledged the cheers with hilarious laughter and waving. Meanwhile, John Mahama, former President of Ghana hailed Jonathan for his role in fostering unity, peace, progress and strengthening democratic rule in Africa. Mahama who spoke at the launch of the book: ‘My Transition Hours’ written by Jonathan said, “Goodluck Jonathan is a good man. When the history of democracy in Africa is written his name will be etched in gold”.

As Boko Haram attacks surge concerns... Continued from page 2

Boko Haram terrorists attacked the base of Sector 2 troops in Mainok, Kaga Local Government Area, killing at least one soldier and leaving several others wounded. Military sources believed the Shekau faction of the group was responsible for the attack, which saw insurgents cart away a large quantity of arms and ammunition. It was only on October 8 that Boko Haram militants raided the same base of 157 Battalion in Metele, killing at least 18 soldiers and wounding eight others, PREMIUM TIMES reported. At least 157 soldiers were feared missing during the attack, and their whereabouts had not been conclusively resolved by military brass over a month later, sources said. Military authorities announced the attack, but heavily downplayed its magnitude. President Muhammadu Buhari and the Nigerian military leaders have claimed they are winning the war on terror, but analysts say recent attacks are bolstering rather than dampening the insurgency. “When you consider the frequency of these attacks since July, it is difficult to say that our military has the upper hand,” said security analyst Chris Ngwodo. Ngwodo said a possible failure on the part of the military leaders to appropriately fortify bases might be responsible for the audacious scope of the attacks. “These bases are not sufficiently fortified to withstand insurgents’ attacks,” the analyst said. “That they are

doing this regularly and getting away with it shows there is no adequate security in place even at the bases.” “Every resource must be made available to fortify where soldiers are manning, even though many of them are forward operating bases,” Ngwodo added. “Intelligence capabilities must be also be strengthened to anticipate things like this because the huge movement it takes for terrorists to carry out such attacks should have been detected.” Hundreds of Nigerian troops have been killed and even more missing since Boko Haram resumed its latest campaign in July, fuelling concerns amongst military leaders, and prompting an emergency reshuffling of commanders. Worried about the rising cases of missing soldiers in Boko Haram attacks, the chief of Army Staff, Tukur Buratai, issued a warning to troops on the battlefront against fleeing from insurgents in August, threatening errant personnel with a tough prosecution. The Defence Headquarters announced last week it had taken new delivery of military equipment, boasting of a tough time ahead for insurgents. The military has said it recorded tremendous gains in its counterinsurgency operations over the past three years, especially after managing to confine the insurgents to the fringes of Nigerian territories. This was against the previous years when the deadly Boko Haram terrorists held vast Nigerian lands across its North-east stronghold, occasionally spilling into North-west and Northcentral geopolitical zones.

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Wednesday 21 November 2018

Road to 2019

Why Nigeria is Broken and how to fix it

Buhari targets 120,000km broadband penetration Tony Ailemen, Abuja

resident Muhammmadu Buhari has promised massive infrastructure expansion in his second tenure, including expanding broadband network to 120,000km of fibre network across Nigeria. Buhari said this while unveiling his second term agenda at the Presidential Villa on Sunday. He promised action packed second term, saying that the first tenure was used to lay solid foundation. The president, who identified broadband as Critical Infrastructure, said his administration had addressed the challenges of uniform Right of Way charges, adding that “Next Level is to move broadband coverage to 120,000 km of fibre network across Nigeria.” “After partnering with Google for free Internet access in key locations, next level will prioritise access to Internet for education, primary health care, markets, business clusters.” Buhari also promised a minimum of 1,000 MW new generation infrastructure and “incremental power capacity per annum on the

Grid; while distribution will rise to 7,000 MW under the projected distribution expansion programme.” “Next level moves from 16 markets such as Sura, Ariaria to lighting up 300 markets and clusters with clean, uninterrupted off-grid power” The president said nine universities have been listed to benefit from the new electrification

projects. The new agricultural policy under next level will see the ‘Tradermoni’ take current number of 2.3 million traders, farmers, artisans to 10 million Nigerians under the new Scheme. President Buhari said his administration is also planning soft loans to support business ideas across different business value

chains, under the ‘Debt and Equity Support for Young Entrepreneurs’. “We will embark on profiling and tailored advisory services for entrepreneurs technology enabled, online banking account opening as well as credit rating done with technology” he said Under the skills and capacity building support programme, President Buhari said his administration will help with capacity development where needed. In the area of health services, the president disclosed that his administration will exempt the poorest 40 percent from payments, while strengthening the co-payments method to share the cost between individuals, the private sector and government. He disclosed that the government was promoting one percent of Consolidated Revenue Fund for the health sector. “In compliance with National Health Act, we achieved this in 2018 building the backbone for primary healthcare centres” he said. But as the president’s performance in the last four years continued to elicit reactions ahead of the

2019 general elections, a frontline media practitioner, Kareem Afegbua, has criticised the Buhari plan as being bereft of good ideas. Afegbua dismissed Buhari’s three and half years in office as a “retrogression for Nigeria” According to him, “Next level to where. We need strong intellectual introspection, “Someone who campaigned on the basis of change, should rather be talking about consolidation. But what we have seen over the years is rising levels of unemployment, poverty and insecurity. So, l asks you, next level to where?” Similarly, frontline politician and elder statesman, Tanko Yankasai, also described President Buhari as “incapable of doing better than he has done so far”. Speaking on the release of the President’s campaign flag off and release of his campaign agenda on Sunday, Yankasai called on Nigerians to ignore the government’s propaganda “Nigerians should ignore every statement coming from them, they are just propaganda “he said

Atiku eyes $9.3bn FDI, offers tax incentives to investors MICHEAL ANI & ENDURANCE OKAFOR

tiku Abubakar, former Nigerian vice president and presidential aspirant of the People’s Democratic Party (PDP), says his administration will increase Foreign Direct Investment (FDI) inflows into Nigeria to $9.3 billion annually, vowing to offer tax incentives to investors. The $9.3 billion signifies 2.5 percent of Nigeria’s Gross Domestic Product (GDP). Abubakar, 71, made this claim while delivering his manifesto entitled ‘The Atiku Plan’ on Monday. The former VP said his plan is to get Nigeria working again, adding that over the last 18 months, he has worked with the best experts the country has to offer to come up with policies and plans, which when implemented, will create jobs, reduce maternal mortality, increase investment and tackle the country’s failing infrastructure. He pledged to deliver on various plans and policies—not promises— that will get the country working again, if elected president in the February 2019 election. “It is one thing to make promises, but another to get these promises ful-

filled. I am not in the game of making glandulous promises, but rather I believe in policies, Atiku said. “I believe in setting goals and coming out with realistic plans, policies in achieving such goals”. Nigeria’s FDI was less than $1 billion in 2017. The FDI slumped by 29 percent to N379.84 billion in the first half of 2018 from N532.63 billion in the corresponding period of 2017 owing to the closure of two global lenders according to CBN 2018 half year data.

Atiku, a Muslim and former DG of custom, said his administration will work towards achieving the lowest corporate income tax rate in Africa that will help increase inflows of Foreign Direct investment(FDI) to a minimum. “In order for us to attract FDI, we will introduce policy reforms including strengthening the credit guarantee initiatives of Infra-Credit by substantially increasing its capital base, guaranteeing a level playing field,

full repatriation, non-expropriation and easier land titling, ensuring that the granting of /qualification for tax incentives is automatic, according to predetermined, uniform, and clear criteria, streamlining the multiplicity of, often discretionary, incentives for investment and simplifying the associated complex legislative and regulatory framework,” he stated. Nigerians will, on February 2019, head for the poll where they will have to vote in their preferred choice for the presidential, governorship and legislative positions. While a total of 79 political parties have been registered by the Independent national Electoral Commission (INEC), technocrats and political analysts say the elections will be a close contest between the candidate of the ruling All Progressives Congress (APC) in which President Muhammadu Buhari seeks re-election and that of the candidate of the opposition PDP. Nigeria’s president Buhari in his manifesto document entitled ‘Next Level’, launched on Sunday, had hitched on his anti-corruption agenda, to win him a second term bid, a strategy he put forth in his first four years in office. Africa’s largest economy entered a

lengthy recession, owing to a collapse in global oil prices and restiveness in the Niger Delta region that greeted the 75-year old president in his first year in office. In this new document, Buhari said he is targeting ‘over 15 million new jobs’ by expanding a nationwide vocational skills programme and improving access to credit for entrepreneurs and artisans. Atiku has promised that, if elected, President he will be pro-active in attracting investments and supporting the 50 million small and medium scale enterprises across Nigeria for the purpose of doubling the size of the Nigeria’s Gross Domestic Product to $900 billion by 2025. He noted that his administration will also help create jobs by innovating flagship programmes such as the National Open Apprenticeship Programme to enhance the capacity of Master-Craftsmen and women to train 1,000,000 new apprentices every year. “I have succeeded in running my private enterprises which now employ about 50,000 Nigerians because I believed in policies and I have the discipline to stay with until they become reality”, Atiku said

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BUSINESS DAY

Road to 2019

Why Nigeria is Broken and how to fix it Atiku plans to decongest Lagos ports, facilitate inland dry ports …Importers see Atiku’s vision as realistic

AMAKA ANAGOR-EWUZIE

pparently moved by the plight of commuters, motorists and port users, who come to Apapa metropolis on daily basis for business, Atiku Abubakar, the presidential candidate of the People’s Democratic Party (PDP), has assured Nigerians that efforts would be made by his administration to decongest the roads leading to the two major seaports in Lagos, Apapa and Tin-Can Island Ports, if voted into power. This was part of the content of the Atiku’s policy document entitled, ‘Get Nigeria Working Again’, which was launched on social media platforms on Monday. Atiku’s plans have become crucial at a time importers and their agents are paying dearly on demurrage to shipping companies and rent to terminal operators for the failure in the system, largely caused by dilapidated and congested port access roads as well as over dependent on Lagos ports. According to the document, Atiku’s administration hopes to improve efficiency

operations in the existing port and accelerate the development of alternative container ports especially inland dry ports. Atiku stated that his administration will define timelines for completion of concessions granted from inland and dry port development. He said that, if voted into power, his administration will seek Public Private Partnerships (PPP) and community efforts toward the development of transport infrastructure. “Partner with states and local governments to develop and rehabilitate the connecting road networks “We shall target the rehabilitation and development of up to 5,000 killometers of roads across the nation by 2025. Develop and rehabilitate the connecting road networks across the geo-political zones. Bulk of the transport activity is along three corridors, and traffic volumes are expected to double within the next 20 years: Lagos to Kano (Western Corridor); Port Harcourt to Kaduna (Eastern corridor) and Lagos to Cross River (West – East Corridor),” Atiku promised. Atiku further vowed to use alternative means of

transportation by developing a new National Transport Policy that will addresses issues relevant to promoting inter-modalism including institutional fragmentation, intermodal regulation, intermodal connectors and measuring transport system performance. “ We w i l l e n c o u r a g e transportation development around the nation’s agricultural and industrial clusters, enhance linkages to agricultural zones and develop agricultural collection and distribution hubs in Jebba, Lafia, Makurdi, Lokoja, Pategi/Baro, Shendam and Jalingo,” he assured. Atiku further said that he will develop the Lagos – Abuja rail network on the standard gauge system to revive Nigeria’s rail system. Commenting on this, Emma Nwabunwanne, a Lagos based importer, who commended the plans to decongest Lagos ports, said that port users would be relieved if Atiku’s administration will deliver on the promise. Apart from developing inland ports, Nwabunwanne urged Atiku to ensure that other seaports in the Eastern

part of the country become fully utilised. He however noted that there was need to effectively revive the rail lines by concessioning the rail system for effective use. “The environment around Apapa port city is no longer conducive for seamless port operation. The man-hour lost on the roads leading Lagos ports by port users, container carrying trucks and operators, has been quiet disheartening,” said Jonathan Nicole, president, Shippers Association of Lagos State. Listing the operational challenges facing Eastern ports, Nicole urged Atiku to deal with issues around insecurity on the water channels, widening infrastructural gap and the shallow drought of the water channels leading to some of the ports in the East, which limits bigger vessels with higher capacity from berthing in those ports. Statistics has shown that despite the nearness of Eastern ports to markets in the North and the East, importers in these locations have continued to make ports in Lagos their preferred destination for taking delivery of their consignments.

Atiku to handover funding of schools, varsities to LG, state govts KELECHI EWUZIE

tiku Abubakar, the presidential candidate of the People’s Democratic Party (PDP), has promised to transfer the responsibility for funding and control of public primary education to local governments, if he is elected as president in the 2019 election Abubakar also promised that senior secondary and tertiary education, provided through universities, polytechnics, monotechnics, and Colleges of Education (CoEs) will be under the jurisdiction of state governments. In his manifesto entitled, ‘The Atiku Plan’, the former vice president stated that under the proposed arrangements, the state governments will assume responsibility for all the federal unity schools and Federal Ministry of Education-owned and funded universities, polytechnics, technical colleges, and the colleges of education located in their respective areas. This is one of the key points in the policy document released by the PDP standard-bearer, which details a timeline in which he intends to deliver on his campaign promises. Atiku observes that the current division of responsibility between the state and federal government and a multiplicity of institutions is chaotic and often unclear with overlapping functions. He promised that the central government shall function as a regulator and shall remain responsible for policy design and harmonisation. According to the policy statement, Atiku opines that as a regulator, the central government will: Set certifications of quality; define standards for vocational, technical and other education, and monitor compliance with the standards.

He further said the central government will collaborate w ith the states to prioritise science and technical education, including ICT and related IT- based programmes, in order to support the country’s grow th into the 21st Century. The PDP presidential candidate said, if elected, he will ensure federal government work with the states to carry out far reaching reforms of the system with a view to developing a knowledge-driven economy: that is, one in which the generation and exploitation of knowledge would play a predominant part in the creation of wealth. Isaac Adeyemi, former vice chancellor, Bells University of Science and Technology Otta, Ogun State, told BusinessDay that the solutions to the socio-political and economic problems in Nigeria lie in quality and sustainable education. Ade yemi obs er ves that quality and sustainable education has the potential to create employment, improve wellness, and create a wellinformed or politicallyinformed citizenry. He appealed to Atiku to also declare a state of emergency in the education sector and implement these developmental plans that will address and remedy the problem of access and quality within a specified period, if elected. Florence Obi, former deputy vice chancellor, University of Calabar, says the plan by Atiku Abubakar to hand over levels of education to the local and state governments, if handled properly, is a move that would increase capital development to aid teaching and learning, adding that the Nigerian education system is not up to the level it should be.

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Tax Issues

Wednesday 21 November 2018

FIRS directive on display of VAT registration certificates…matters arising IHEANYI NWACHUKWU

he Federal Inland Revenue Service (FIRS), on October 22 notified the general public that it has commenced issuance of valueadded tax (VAT) certificates to all new and existing taxpayers registered for VAT purposes. FIRS also directed VAT collectors to display their VAT certificates at their business premises and implored taxpayers to report VAT collectors who fail to comply with this directive to the agency. “The FIRS had prior to 2017 issued VAT certificates to taxpayers registered for VAT as at then. The FIRS, however, discontinued this practice upon implementation of the integrated tax registration system, whereby taxpayers are issued a tax identification number (TIN) which ser ves as evidence of registration for all types of tax collectible by the FIRS,” according to Wole Obayomi, Partner and Head, Tax, Regulatory and People Ser vices at KPMG in Nigeria. In the recent note to its clients, KPMG said, “We under-

stand that the reintroduction of the VAT certificate by the FIRS is with a view to identifying delinquent taxpayers who have either failed to register for VAT or who, being registered, have failed to remit the VAT collected to the FIRS. It is, however, uncertain the extent to which the FIRS’ directive can achieve the desired objective, given that a mere display of VAT certificate d o e s n o t n e c e ssa r i ly i mp ly compliance with remittance of VAT. Equally, failure to obtain

and display a VAT certificate is not a conclusive proof that a taxpayer has failed to register for VAT.” “ T h e F I R S m a y , h o w e ver, adopt more effective approaches to monitoring VAT compliance and achieving its objectives stated above. One approach is for the FIRS to maximize the functionality of its existing online TIN verification portal through which taxpayers (customers) can verify the tax registration status of their

vendors before doing business with them. “The FIRS could also compare the data of entities registered with the Corporate Affairs Commission (and other government parastatals) vis-à-vis its tax database to identify entities operating without TINs (that is those not registered for taxes). The FIRS may subsequently assess the VAT compliance of registered taxpayers via statutory tax audits or other similar exercises,” KPMG noted further.

“Based on the VAT Act, a taxable person is required to comply with obligations with respect to VAT, some of which have been summarised below: Registration with FIRS for VAT purposes. “While taxpayers obtain tax identification number (TIN) upon registration with Corp o rat e A f f a i r s C o m m i s s i o n (C AC), they are required to validate their registration with FIRS, for VAT filing purposes; charge VAT at 5percent on all taxable supplies; remit VAT collected from customers to FIRS, through designated banks; file VAT returns with FIRS not later than the 21st day of the month following the month of transaction”, Deloitte tax experts noted in their October 29 note. “While the public display of VAT certificates or evidence of VAT registration is not a requirement under the VAT Act, it is not clear what will happen to taxpayers who fail to display the certificates at their premises given that failure to do so does not constitute an offence under the VAT Act. This notwithstanding, we encourage taxpayers to obtain their VAT certificates from FIRS and keep them safe for easy retrieval upon request”, Deloitte noted.

CITN says professionalism is key to new members’ success …Identifies Govt initiatives to increase Nigeria’s tax-to-GDP ratio

he Chartered Institute of Taxation of Nigeria (CITN) has asked its newly inducted members to be at the forefront of professionalism in their conducts at all times. Cyril Ikemefuna Ede, 13th President and Chairman of Council, CITN noted this last week at the 39th induction ceremony of the Chartered Institute of Taxation of Nigeria held in Lagos. He noted further that the new members’ adherence to professionalism will no doubt accord CITN its rightful recognition and place among professional Institutes in Nigeria. “Your membership of this profession re quires regular validation through training organised by the Institute from time to time. I urge you to avail yourselves of the opportunity to update yourselves on developments in the profession. “We will benefit from your active involvement in all Institute’s activities as this is one of the ways you can contribute

your quota to the growth and development of the Institute,” Ede told the new members. “It is important to bring to your remembrance the need for strict adherenc e to the code of conduct for members. Upon your being admitted… having sworn on the oath of allegiance, you are expected to conduct your affairs bearing in mind that there are penalties for misconduct. “I am confident that you will not bring your names and that of the Institute to dishonour. Furthermore, the Institute has in place a mechanism for monitoring members in practice towards ensuring strict adherence to professional ethics and standards. This is intended to ensure that members in practice conform to best practices, standards, decorum and integrity in their relationship with clients, government and indeed all stakeholders in the tax system,” CITN president noted. In his remark on some policy

Cyril Ikemefuna Ede,13th President and Chairman of Council, CITN

initiatives for the Tax System, Ede said the abysmal level of Nigeria’s tax collection effort measured against the nation’s Gross Domestic Product (GDP) “is no longer news, when compared with other jurisdictions.” CITN e qually note d the concerted efforts being made by the Government and stakeholders to increase revenue from tax in line with the size

of GDP. The efforts, CITN president noted include the recently concluded Voluntary Assets and Income Declaration Scheme; the Voluntary Offshore Assets Regularisation Scheme; initiatives geare d towards making Nigeria’s tax laws conform with best practices and ensuring that tax evaders have no loopholes to exploit

our tax laws; and profiling of companies for joint tax audit by the Federal Inland Revenue Service and States Internal Revenue Service. “Recently, the Chairman of the Federal Inland Revenue Service stressed the need to grow Value Added Tax (VAT), including dealing with emergent issues with regards to the digital economy,” Ede said.

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Six out of 10 world’s fastest-growing nation brands in Africa - report BUNMI BAILEY

ix out of the 10 fastest-growing nation brands in the world are in Africa, according to a recent

report. The countries with these brands are Democratic Republic Congo, Ethiopia and Egypt, Ghana, Kenya, Tanzania, according to the report by United Kingdom-based Brand Finance, the world’s leading branded business valuation and strategy consultancy. These countries recorded annual growth rates of between 28 percent and 38 percent, Brand Finance said in its 2018 Nation Brands report. The other four countries among the top 10 growing brands are Cyprus, Slovenia,

… Nigeria, South Africa lag on brand growth

Germany, and Estonia, with brand value growth rates between 27 percent and 39 percen. Both Nigeria and South Africa, Africa’s leading economies by size, emerged lagers on the growth performance, with rates of 6 percent and 7 percent, respectively. Countries such as United States of America, China, Germany, United Kingdom and Japan were the top five nation brands by size, this year. Brand Finance said they measured the strength and value of the nation brands of 100 leading countries using a method based on the royalty relief mechanism. BusinessDay analysis of the report shows that the brand value of South Africa, the most industrialised na-

tion in Africa, fell by 7 percent to $207 billion in 2018 from $222 billion in 2017, and Nigeria, Africa’s biggest economy, grew marginally by 6 percent to $203 billion this year from $191 billion in 2017. Globally, Nigeria ranked 50, dropping by three positions from 47 position in 2017. Babatunde Odumeru, MD, Brand Finance Nigeria, expressed dismay that Nigeria emerged Africa’s second most valuable brand, just a shot behind South Africa. He noted that Nigeria’s brand value grew marginally at six percent, while brands such as Ghana, Kenya, Tanzania, DR Congo, Ethiopia and Egypt recorded an average growth rate of 34 percent. “If we are ever going to compete effectively in the

future with these countries for investors, exports, tourism and talent, we’ll need to do more in improving our nation brand management,” Odumeru said in a statement, made available to BusinessDay. Analysts believe that Nigeria does not have strategies to stimulate brand growth. “You may have a good brand but it may not really translate to growth, it strategies that will stimulate growth are not in place and that is the problem in Nigeria,” Ayo Akinwunmi, head of Research, FSDH Merchant Bank, told BusinessDay. He added that Nigeria had extremely weak infrastructure, which was a growth enabler, and policies that scare away investors.

L-R: Garba EL-Suleiman, group executive, customer development, Dangote Flour mills plc; Funmi Bolarinwa, group marketing executive, Dangote Flour Mills; Halima Dangote, executive director, commercial, Dangote Flour Mills; Mojisola, Dangote flour Mills, head of sales south division; Amudalat Lawal, president, Oyo State Canteen Worker Union, and Adebiyi Rukayat, director, Blue House Foods Canteen, at the unveiling of Dangote Semolina/Whole Wheat meal, in Ibadan, Oyo State.

Obaseki unveils multi-skills centre with 150 youth to be trained in pilot phase

overnor Godwin Obaseki of Edo State has urged youth to take advantage of the growing number of skills acquisition centres across the state to groom their skills for entrepreneurship and paid employment. Obaseki, who was represented by his special adviser on political and community matters, Osaro Idah, said this while unveiling a multi-skill acquisition centre at Ukpato Ward in Orhionmwon Local Government Area of the state. He said the state government would host 150 youth in the first phase of training, who would be trained in various skill areas, adding that the establishment of the centre at Ukpato and other towns across the state was a demonstration of his promise to create jobs. He urged Edo people and

residents to remain confident in his administration, urging parents to encourage their children to acquire useful skills, so they could be useful to themselves and the society. “We have fulfilled a number of our promises; you can see the enthusiasm of the people here today. We want to urge the people to keep faith in our government. We encourage parents to tell their children to partake of the training. “This is the second skills centre we are unveiling. We were at Uhunmwode earlier to inaugurate the agric cluster. Both schools have been oversubscribed, we are already thinking of expansion,” Obaseki said. The senior special assistant to the governor on job creation and skill development, Ukinebo Dare, said the opening of the centre was

in line with the job creation drive of the state government. She noted that the centre had several training components such as welding and fabrication, accessories and bead making, fashion design, among others, and would provide gainful employment opportunities for the trainees. She noted, “We are happy this has come to reality today. The governor has said that we should create jobs and develop skills in each community in every local government in the state. What we have done here is to build a skill acquisition centre that has so many traits. The young people are going to be making unique items and many of the things that are going to be made here will be exported.” According to Dare, the first batch of 150 trainees will commence training immediately with many youths com-

ing in to register to be trained here. “The persons who will be trained here are going to be working here and will earn money that will be useful to them and their families.” Chairman, Orhionmwon Local Government Area, Sylvester Okoro, said the centre would engage youth and discourage them from falling prey to human traffickers, noting, “EdoJobs in my local government will create jobs and reduce the trend of illegal migration.” The centre was set up by the Edo State government through the EdoJobs initiative and the Ministry of Arts, Culture, Tourism and Diaspora Affairs. Other partners on the project include a nongovernment organisation operated by Bemigho Momoh, while Marcus Igbinovia, an indigene of the community, donated the building.

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BUSINESS DAY

‘Organisations must invest in robust cybersecurity to stay competitive’ KELECHI EWUZIE

n light of the increase in cyber attacks on websites and information technology (IT) infrastructure of governmental organisations, banks and other public financial institutions, industry stakeholders advocate for organisations to focus attention on strategic investment in cybersecurity infrastructure to stem the tide and stay competitive. Experts in their various summations at a special Information Value Chain forum organised by Digital Jewels in Lagos with the theme: Cybersecurity, Data Privacy and the Role of Standards, say the growing global trend in cyber threats has made it pivotal for organisations to create awareness about cybersecurity, adding that in cybersecurity, people are the organisation’s weakest link. They point out that with the increasing incidents of cyber attacks it has become necessary that organisations maintain the highest level of security in infrastructure, people and processes to ensure their information assets are safe at any point in time. Richard Merrygold, principal consultant, Intelligent Storm Solutions Limited, UK, states in his presentation that in the last four to five years there has been a continuous increase in the number of organisations considering cyber security insurance as a backend measure to protect themselves from the underlying costs arising from any breach, particularly with regard to the enforcement of the Global Data Protection Regulations

CHANGE OF NAME

I, formerly known and addressed as Miss Gege Ireoluwa Elizabeth now wish to be known and addressed as Mrs Ejiofor Ireoluwa Elizabeth. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Adebiyi Latifat Adebukola now wish to be known and addressed as Adefeso Latifat Adebukola. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Iyoha Osa Noghomwan-iyeke now wish to be known and addressed as Iyoha Felix Osa-Noghomwaniyeke. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Ugonna Chibuzo Iheuwa now wish to be known and addressed as Mrs Ugonna Chibuzo Ogoke. All former documents remain valid. General Public please take note.

in the European Union. Merrygold says the GDPR requires organisations to be honest, transparent and fair when processing information relating to individuals. They must be clear upfront with whatever information they want to collect and why they want to use it, as they can no longer hide behind the ambiguous privacy notices to violate individuals’ personal data. Speaking at the event, Adedoyin Odunfa, MD/ CEO, Digital Jewels, who doubles as the moderator, explains that the forum was organised in commemoration of the Cyber Security Month and the World Standards day to draw attention to actions that organisations and government agencies can take to structure a safer environment for data security for their workforce and to effectively boost their bottom-line with their online presence. Odunfa says there is the need to take seriously the preservation of important data for organisations, whether it be in private or public sectors, stressing that with the right action plans and investment strategies put in place, organisations and managers of government agencies will be better informed on the intelligent ways to deploy cybersecurity resources to achieve their set goals.

CHANGE OF NAME

I, formerly known and addressed as Moses Monique Uyoh now wish to be known and addressed as Moses Tafari Omaro. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Victoria Ugochi Atoyebi now wish to be known and addressed as Victoria Ugochi Layi-Jacob. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Deji Olaniyi Atoyebi now wish to be known and addressed as Deji Atoyebi Layi-Jacob. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ngerem Chiduma Onyinyechi now wish to be known and addressed as Anyamele Onyinyechi Stella. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Mrs Eyitemi Georgina Obaide now wish to be known and addressed as Miss Eyitemi Georgina Edward Sido. All former documents remain valid. General Public please take note.

38 BUSINESS DAY NEWS Corruption has got worse since I left... Continued from page 1

tion “supported the institutional development of secure

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McKinsey says Africa is world’s next big... Continued from page 1

and share insights into Africa’s

Wednesday 21 November 2018

As Boko Haram attacks surge concerns... Continued from page 2

PrivateEquity & fundraising People & Perspectives 39

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Wednesday 21 November 2018

Companies&Market

‘Cleaner, greener, and leaner strategies Venture Capitalists face drive energy M&A activity’ SARAH SHAW is a partner at Hogan Lovells. In an interview with Frank Uzuegbunam, Shaw talks about daunting challenges in Africa

how shale, renewables and private equity are transforming deals in the energy landscape. Excerpts:

hat do you see as the main M&A drivers in the energy

sector? While fundamental factors such as expansion and consolidation continue to play a role, there are a number of more intriguing drivers emerging for M&A in the energy sector. First, big oil is moving into clean energy and new technologies including electric vehicles and battery storage. For example, last year, BP entered into a strategic partnership with Lightsource, Europe’s largest solar development company, in which it has committed to invest $200m. And in June, it announced that it was buying Chargemaster, the UK’s largest electric vehicle charging network. Another oil major, Total, has recently announced that it is planning to ramp up the amount it invests in renewables. The second key trend is the emergence of private equity (PE) and other financial buyers in the sector, both in traditional oil and gas and renewable energy. Are PE firms just dipping their toe in the water or are they really diving in? They are serious and they have made some significant investments. The North Sea has seen record levels of M&A activities in the last few years driven largely by the influx of PE money. For example, Chrysaor bought a $3.8bn North Sea portfolio from Shell following its merger with BG (and then increased its portfolio through the acquisition of Spirit earlier this year); Siccar Point, backed by Blackstone, bought $1bn North Sea assets from OMV; and Neptune, owned by the Carlyle Group and CVC Capital, has been aggressively building up its upstream portfolio including acquisitions this year in Norway and the UK. As the majors continue to pursue their divestment programs, additional mature assets are becoming available creating further M&A opportunities for this new category of oil and gas firm. PE players are also active in the power and renewable energy sectors, both in mature and, increasingly, emerging markets. Interestingly, Blackstone announced recently that it is launching a new $1bn energy fund, Zarou, with a geographical focus on Africa and the Middle East.

Modestus Anaesoronye

Sarah Shaw

Are we seeing a move towards more shale deals? Shale deals this quarter were dominated by one mega deal, with BP buying BHP’s US shale assets for $10.5 billion. This was a transformational deal both for the sector and for BP, being the biggest acquisition the major has made in nearly two decades. However, it remains to be seen whether this will be a catalyst for further M&A activity in the US shale sector. Total, for example, has since ruled out a move into US shale. Across the pond, the development of the UK shale industry has been plagued by political and regulatory challenges as well as fierce public opposition. The UK’s leading shale company, Cuadrilla, has recently been given the go ahead to resume fracking for the first time since 2011, and other companies are expected to follow suit. This could spark a revival of M&A interest in the sector. However, some investors may be wary and choose to wait to see if political obstacles can be overcome and whether shale gas can be produced in commercial quantities in the UK such that it can viably compete with imports from the global market. What other interesting deals have you seen recently? In addition to those already mentioned, there is currently quite a bit of activity in the North Sea. For example, Chevron is selling a stake in the Rosebank oilfield to Norway’s Equinor and, following its ac-

quisition of Maersk earlier this year, Total is now looking to sell a $1.5bn package of North Sea assets. It will be interesting to see which buyers emerge for Total’s assets – the PE funds are likely to be among those interested. What are the major dealmaking challenges in the sector at the moment? With oil prices at their highest level in nearly four years, and also relatively stable, conditions in the sector are generally ripe for M&A. The challenges are less energy-specific and rather relevant to all sectors including the rise of protectionism as well as geopolitical uncertainty caused by factors such as the prospect of trade tensions between the US and China and the possibility of a hard Brexit. However, the M&A market is continuing to be surprisingly robust despite these challenges. In Q3, deal value is up, volume is down in the energy sector. Is this trend likely to continue? The Q3 numbers are largely due to two mega deals – the BP shale gas acquisition already mentioned and the $13bn takeover of pipeline company APA Group by a Hong Kong consortium. The rise of the mega deal is something we have observed across all sectors this year. The current high levels of corporate cash and the low cost of financing, coupled with high and relatively stable oil prices, could continue to drive large-scale M&A, even given the on-going

enture Capitalists in Africa face unique constraints bothering on scale, capital and exit opportunities, experts at the 2018 Africa Early Stage Investor Summit organized by VC4A in Cape Town on Tuesday said. They said that collaboration is required to build a thriving industry. “Investors must be activists in attracting more capital and resources into African markets, especially from larger corporates, growth equity investors and development finance institutions (DFIs). More collaboration is needed in designing instruments and financing structures tailored to African ventures.” According to consensus reached by the over 300 active and aspiring investors representing Africa’s early stage investing ecosystem, Human capital and diverse teams will be a key to success. “In the coming decade, Africa will hold the majority of the global youth population, bringing a wealth of opportunity and innovation. Yet accessing strong talent and building diverse teams remains a stark challenge for most ventures. Investors want to see more female and locally-led organizations with thoughtful human capital strategies.” Celebrating its fifth year, the summit attracted the highest ever number of early stage African investors from 35 different countries, and more specifically 25 African nations representing 110+ investor organizations to share expertise, experiences, and fostering collaborations to bolster the ecosystem of capital provision for African entrepreneurs. As Keet van Zyl from Knife Capital expressed during the opening panel discussion, “It is easy to invest money in Africa right

now, but it is hard to make money in investing here. The key is to be exit centric - we only invest in entrepreneurs who are focusing on building sustainable businesses that can exit.” Ben White, CEO of VC4A says, “This conversation succinctly captures the challenges venture capital faces in Africa and why we need to keep working to strengthen and support the entire African venture ecosystem.” Babajide Sodipo, regional trade adviser with the African Union (AU), announced a new partnership between the AU and ABAN formalizing their joint ambition in supporting entrepreneurs and SME’s across the continent. According to David van Dijk, ABAN executive director: “It’s great to see so many connections being made. More importantly we are excited by the level of engagement. Now is the time to take an active role and to be part of the next great African success story. We invite all actors and stakeholders to join the conversation.” One key announcement at the Summit came from Nikunj Jinsi from IFC Venture Capital: the World Bank Group has launched L’Afrique Excelle, a post seed stage acceleration program and showcase of the best startups from Francophone Africa. The program, following the first XL Africa cohort, will target and select high growth business in order to provide much needed support to the region’s nascent ecosystem. “With the conversations around the current lack of resources availed to Francophone Africa, and the importance of publicprivate partnerships, having frequently surfaced in the Summit sessions, this news was highly welcomed and appreciated by all in attendance,” says White.

Wednesday 21 November 2018

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BUSINESS DAY

A2 BUSINESS DAY Financial Inclusion

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Wednesday 21 November 2018

& INNOVATION Benchmarking Nigeria’s mobile money regulatory regime Supported by:

Olayinka David-West and Ibukun Taiwo

Mobile Money Regulatory Index, we can revisit these benchmark markets to see how our ecosystem stacks against these other markets especially along the six enablers. Authorisation Refers to the extent of control the central regulator exerts over the operations of mobile money providers. The CBN has regulatory oversight over mobile money and often releases guidelines and frameworks to inform mobile money deployments across the country. Since 2011, telcos have been barred from leading mobile money deployments. In the other

benchmark countries (except Bangladesh), telcos are licensed to provide mobile money. This is most likely why Bangladesh and Nigeria are the lowest performers in this section. Consumer protection Consumer protection seeks to level the playing field between providers of financial services and consumers of their products and services. By default, the field is tipped in the providers’ favour, which could lead to excessively high interest rates, a dearth of understanding about financial options and insufficient avenues for redress. The CBN’s consumer protection efforts

Nigeria ranks the lowest, ‘among all five benchmark countries with 65.65 points. Ghana is the best performer on the index, with 85.81 points, and Kenya, the second-best performer

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o b i l e money may be at an all-time high, with over a billion transactions currently being processed each day and more than 650 million accounts opened worldwide, but experts say the innovation is yet to reach its full potential as there’s still room to grow. A lot of room. Indeed, mobile money’s potential is being limited in several regions due to the absence of an enabling regulatory environment. Indeed, continuous assessment of a country’s regulatory regime, to determine how much it enables or inhibits mobile money growth is an important aspect of pushing the financial inclusion agenda. That’s why the recent launch of the GSMA Mobile Money Regulatory Index is a very welcome development. The GSMA Mobile Money Regulatory Index is an assessment of the effectiveness of regulatory frameworks in creating an enabling environment for a country’s mobile money operations. This was achieved by examining the regulatory frameworks of more than eighty countries across six broad enablers namely: (a) authorisation; (b) consumer protection, (c) transaction limits, (d) know-your-customer (KYC); (e) agent networks; and (f ) investment and infrastructure environment. We began this year with a series of articles exploring what we called the Nigerian Mobile Money Model. In a bid to determine what a successful mobile money regime would require from us in Nigeria, we benchmarked our mobile money ecosystem against four other ecosystems from Kenya, Ghana, India and Bangladesh, (countries where mobile money deployments range from super successful to moderately successful). With the release of the

seem to be recognised as reflected by Nigeria’s top ranking, on par with Ghana and Kenya (100 points) while outperforming India and Bangladesh (85 and 72.5 points respectively). Transaction limits Refers to the threshold of funds a mobile money account can send or receive within a specified period. In September 2017, the CBN raised the transaction limit on mobile money wallets to 50,000 (for tier-1 accounts), 200,000 (for tier-2) and 5 million (for tier-3). These tiers are delineated based on fulfilled KYC requirements. This tiered system elevates our ranking on the index, making us the highest performers amidst the other four benchmark markets with 72.8 points. India and Bangladesh are runnersup, with (71.66 and 70.73 respectively). Know-your-customer (KYC) Based on anti-money laundering regulations, financial service providers are required to verify the identity of their clients and assess potential risks of illegal intentions for the business relationship. Again, Nigeria comes out tops with 80 points, at par with only India, and outranking Ghana, Kenya and Bangladesh. It is likely that the CBN’s 3-tiered KYC re-

gime had a role to play in the high score since it enabled citizens to access financial services, in spite of their limited ability to fulfil KYC requirements. Likewise, India’s Aadhar program, which aims to identify every India citizen and resident, had the same effect. Agent networks Agents are the fundamental pillars of mobile money distribution, acting as the bridge into a cashlite society which many governments and central banks envision. Nigeria and India perform poorly here, bringing up the rear with 58.33 points and 61.67 points respectively. It is expected that the launch of SANEF (which aims to create 500,000 agents within the next two years) and the ALTON proposal (to add about 100,000 new agents), would have significant influence on Nigeria’s ranking on the index as this could potentially improve mobile money performance across the country. Investment and infrastructure environment Fintech is reportedly Nigeria’s fastest growing segment within the technology startup scene. Nigeria’s potential is still huge, based on a large unbanked population and also high mobile phone penetration. However, the stance of the

central regulator influences investor appetite. Other factors determining the health of the investment environment include the taxing regime, interoperability, and ID verification infrastructure which all play into the Overall score Nigeria ranks the lowest, among all five benchmark countries with 65.65 points. Ghana is the best performer on the index, with 85.81 points, and Kenya, the second-best performer. Ghana’s high position is not surprising given its recent reforms and impressive progress within the last two years. In conclusion The Mobile Money Regulatory Index is an assessment and a decisionaiding tool, to help identify strengths and weaknesses of a country’s mobile money regime. Presently, the index suggests Nigeria is making the right decisions in the areas of consumer protection, KYC and with regards to transaction limits. However, there’s still a lot of work to do with regards to infrastructure and development, mobile money authorisation and agent networks. Dr Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services, an initiative of the Lagos Business School

Wednesday 21 November 2018

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Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

Missing truth on agent Banking Business-Case in Nigeria Jacqueline Jumah

gent banking is increasingly popular in many developing countries, from Brazil to Kenya and many other emerging markets. Agent banking has increased the use of transactional financial services among financially excluded adults. In Nigeria, the Central Bank of Nigeria (CBN) introduced agent banking guidelines in 2013 to contribute towards achieving the objectives of the National Financial Inclusion Strategy and According to the EFInA 2016 Financial Access Survey, only 38.3 percent of the adult population in the country has access to formal financial services. This is characterised as having access to deposit money banks, microfinance banks, mobile money, insurance and/or pensions. Since 2013, and increasingly through 2017, leading banks have embarked on a revolution in agent banking. These deposit money banks believe agent banking would enable them to reach more customers with increased profitability through better efficiency and cost-reduction. In the case of agents, the revolution is expected to ensure financial remuneration, increased customer traffic to pre-existing businesses of the agents, and improved community status through bank brand affiliation. For custom-

ers, the expected benefits are convenience and cheaper transaction costs. While this understanding of bankers is indeed appropriate – they often fail to consider critical elements of agent banking. Some of these misunderstandings are as follows: Lack of Appreciation that Agent Banking is an Evolution Agent banking plays an important part in the evolution of digital financial services. It is a critical step in the movement towards userinitiated transactions. Agent banking requires strategies that appreciate the element of time, therefore, the objectives and benefits need to be split into the short-run and medium-term. In the short-run, agent banking should mainly be perceived as an additional channel for the provision of products and services beyond the existing branch channels. Existing banks currently have only transactional relationships with customers from the bottom of the pyramid and not true banking relationships. This is partly attributed to existing products not being fashioned for the lowerincome segments. Having a network of agents does not guarantee the attraction of customers. It calls for developing products that target customers consider useful. These are products that can address their daily money management pain-points. The network cannot be expected to be the main driver for

customer acquisition without considering the prevailing challenges around the creation of Biometric Verification Number (BVN), which constrain the ability of the banks to on-board new customers. Until these challenges are resolved, banks would need to migrate their existing lower value transactions from branches to agents to reinforce the business-case of agents. In the medium-term, the case for agent banking is about providing value-added services. This involves the development of products that enable customers to easily associate and build relationships with a bank through increased transactions, which is necessary for market penetration. As an objective of

financial inclusion, the focus should be on making financial services relevant to the unbanked on a daily basis. This would call for two critical steps. The first step is to build low cost ‘bridges’ to cash, that is, in the form of a ubiquitous, well-supported agent network. This would allow Nigerians to easily convert cash into electronic value (e-value). The second step is to make the e-value directly useful for customers, to encourage them to maintain their money in this form. Banks should, therefore, identify compelling use-cases and tap into relevant opportunities that exist in Nigeria. Distended Expectations on Agent Banking Profitability Agent banking is fundamentally not about the banks

making huge direct profits through a low-cost channel. It is about what the additional channels can do to change the business model over time, shifting the banks’ customers from using more expensive channels like branches, service centres and ATMs. The channel itself may not generate significant profits. It can, however, facilitate additional business for the bank, as well as additional deposits. Some institutions with exaggerated expectations intend to deploy huge agent networks at the start. This poses a challenge to adequately managing and supporting agents and/or eroding the expected benefits to agents. With this understanding, the institutions will not engage in ‘spray and pray’ agent acquisition strategies but progressively and strategically grow their networks region by region. Fear of Co-opetition Co-opetition is the ability of players to cooperate with each other for the benefit of each business while remaining competitors. It calls for close partnerships that leverage the comparative advantages of the partners. There is a fear of these partnerships by leading banks, which could slow down the prospects of agent banking. For instance, the various agent banking operations, network deployment, and product development are struggling. This is because of their nature of high-involvement, yet there is minimal individual bandwidth within the banks to

effectively run the operations. This is coupled with ignorance of the fact that agent banking requires focus. Strategic partnerships within shared agent networks and close tieups with the FinTech players could transform the agent banking business-case in Nigeria. It would allow partners to play their roles on the basis of their core strength. FinTechs have been seen to even attract the more traditional banking customers with services tailored to their needs, while banks struggle to innovate. This is despite existing gaps in technology development and understanding in the market. Conclusion For agent banking to prosper in Nigeria there needs to be a deeper understanding of the true business-case. A better understanding of the business-case calls for top executive/management alignment, a paradigm shift in organisational culture and structure, and specific customer segment orientation and differentiation. The actual business-case needs to be clearly articulated to all stakeholders to ensure meaningful partnerships that would make things work. The uncomfortable truth that patience should be a virtue with this engagement is inevitable. It is for the banks to find a way to convince and address the no surulere mentality, meaning ‘no to patience’ for this business model to be effectively implemented, especially for the bank teams and agents.

more than 27 commercial banks, 60 nonbank financial institutions (NBFIs), 138 rural and community banks, 503 licensed MFIs and hundreds of licensed individual susu collectors in the country. Ghana’s efforts are certainly laudable, but there are still strides to be made. There is no indication of any particular initiatives driven towards addressing the problem of insufficient funds, and a potential rise in the number of passive accounts. In addition, the full range of financial services aren’t being adopted by the country’s newly included citizens — the Ghanaian mobile money market is still almost entirely about cash-in/cashout transactions, remittances and airtime top-ups. Only 7 percent of active mobile money account holders save through their mobile money accounts, and only 0.5 percent has taken a loan. They also have the highest number of unregistered mobile money users, with two-thirds of ac-

tive account owners/users making predominantly cash transactions or using other people’s accounts. Nevertheless, Nigeria’s success in its efforts to establish a completely financiallyinclusive society will be greatly helped by its ability to learn from these identified problem areas for improvement. More importantly, there are critical lessons for Nigeria to learn in order to emulate the winning approaches — continuously enhancing and tailoring our financial inclusion strategy to the evolving needs of various segments of the population; leveraging on mobile and digital technology to address the challenges of including hard-to-reach individuals in the financial system; and certainly, making a greater effort to combine cross-industry expertise and resources — all for the ultimate gain of the citizen.

Financial Inclusion: Lessons from Ghana Usoro Usoro

or nearly three decades, the Ghanaian economy has been steadily growing, as a result of an increasingly competitive business environment and decreasing poverty levels. The country’s GDP is expected to expand by 6.8 percent in 2018 and 6.2 percent in 2019, and its credit rating was recently upgraded from ‘B-’ to ‘B’ due to improved monetary policy effectiveness and banking sector stability. In correlation with this growth, Ghana’s state of financial inclusion has been improving; between 2011 and 2017, the percentage of Ghanaian adults with access to formal financial services increased from 29 percent to 58 percent. Despite this remarkable growth, there are still seven million unbanked Ghanaians, with the most significant deterrents being the ease of ac-

cess to financial services, insufficient funds and high costs associated with managing an account. Through a variety of methods and initiatives, Ghana has attempted to, and in some cases, succeeded, in addressing these factors. The problem of accessibility for Ghana’s rural population (45.6% of the general population) has been eased through a predominantly non-bank formal financial services approach. Mobile money has been one of the most critical drivers of financial inclusion in Ghana — 81 percent of the population living in extreme poverty (below $2.50 per day) have mobile money accounts. By 2017, over 11 million Ghanaians (38% of the total population) had active mobile money accounts; and they now record a volume of $82 million monthly mobile money transactions with 151,000 Mobile Money agents. It is now regarded as one of the most successful and fastest

growing mobile money markets in sub-Saharan Africa. The high-cost factor was addressed in May 2018, with the country’s first Mobile Money Interoperability System. Launched in May 2018 by the Bank of Ghana (BoG), this is a single system through which all mobile network providers can operate, in order for consumers to easily transfer funds from one mobile money wallet to another. Thus, costs are reduced, as customers no longer require the services of third party payment providers to initiate transfers across networks. In 2009, Ghana launched a national strategy for financial literacy and consumer education in the microfinance sector, with the ultimate goal of establishing behavioural changes in consumers and service providers. This was followed by the development of a more holistic financial inclusion strategy, designed to harness the benefits of digital developments by creating a nationally inclusive

digital payments ecosystem. Ghana’s foundational focus on building literacy and their ability to leverage the resources at their disposal in alignment with the unique characteristics and needs of their unbanked population is evidently a core aspect of their strategy, and one that has exponentially enhanced their potential for continued success. Another critical success factor is Ghana’s harnessing of potential of partnerships in catering to the financial service needs of the banked and unbanked. As the Global Lead of the Inclusive Markets Team of the Consultative Group to Assist the Poor (CGAP) – Stephen Rasmussen – said: “It’s not that banks are going to solve the problems by themselves or mobile money or fintechs, it’s rather going to be partnerships across that [do]…” Digital Financial Service (DFS) providers (banks, telecommunications companies and fintechs), work in partnership with

Usoro Usoro is the General Manager of Mobile Financial Services at MTN Nigeria

BUSINESS DAY

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Wednesday 21 November 2018

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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.’

Why Ecobank offers zero fees on international transfers with Rapidtransfer App BALA AUGIE

he average cost of transferring money across sub-Saharan Africa is higher than anywhere else in the world, discouraging many people from sending money home to loved ones. The average cost of sending $200 is 9.4% for subSaharan Africa, compared to the average of 7.1 % in the first quarter of 2018, according to World Bank report. It is in light of the above challenges that Ecobank Nigeria,the leading Pan African lender, introduced zero fees for all transfers done into Nigeria on its newly launched Rapidtransfer app, aimed at reducing costs and delivering service expeditiously. This app will be a game changer for the market, dramatically reducing the cost to between 0 to 3% of the remittance amount depending on which delivery option is chosen. Patrick Akinwutan, managing director of the bank said the lender is poised to ensure Nigerians in the diaspora get the best in class remittance service. “We want to make it easy for Nigerians living abroad

to send money to their loved ones at home instantly. Transfers on the Rapidtransfer app are at zero fees from now till 31st January, 2019,” said Akinwutan. With the app, users can easily and instantly send money to any bank in Nigeria while receivers also have the option of picking up cash at any Ecobank branch. The exchange rates are very attractive and the service is open to Ecobank and nonEcobank customers. Diaspora remittances have been increasing in recent times as more people living abroad are sending money home to love ones. According to the World Bank, Nigerians wired $22 billion home in 2017, the highest in the Sub-Saharan region and the fifth highest in the world. The bank estimates that officially recorded remittances to low- and middleincome countries reached $466 billion in 2017, an increase of 8.5 percent over $429 billion in 2016. They are expected to increase by about four percent this year. Interestingly, the federal government has started a business development initiative aimed at attracting about $35 billion annual remittances from Nigerians in Diaspora for direct investments in Nigeria.

Ade Ayeyemi, group chief executive officer of Ecobank Transnational Incorporated

Commenting on the launch, Ade Ayeyemi, Group CEO of Ecobank said: “Historically the cost of sending cross-border remittances in Africa has been far too high. Similarly, the process to send funds has long been inefficient and burdensome, with customers forced to physically go to an agent, and yet still have little or no clarity as to when the money will reach the recipient. The Rapidtransfer app remittance solution is a quick,

easy and reliable digital solution that removes all of these issues. Ayeyemi went on to state that the app further demonstrates Ecobank’s commitment to enhance the economic development and financial integration of the continent. “We know that remittance flows into and across Africa from migrants working away from home has an enormously beneficial impact in powering Africa’s domestic economies.

BD MARKETS + FINANCE Analysts: BALA AUGIE

By reducing the costs to send the money, Rapidtransfer ultimately enables the beneficiary to receive more of the funds originally sent to them, which in turn will have a multiplier effect on national economies by boosting demand and driving business growth.” Interesting features of the app include easy navigation and multi-lingual capabilities. The Rapidtransfer app is available in English, French, Spanish and Portuguese languages. Users can choose how and when funds are delivered to the intended beneficiary, with transparent foreign exchange rates prior to each transaction. However, the international Sustainable Development Goal aims to reduce the average transaction cost of remittances to less than 3 percent of the remittance amount by 2030. A substantial proportion of migrants financially support their dependents back home and the potential size of this remittance market is illustrated by the

The importance of the inflow of remittances into many African countries cannot be underestimated. Remittances play a hugely important part of many national economies and their inflows represent 27% and 21% of Liberia and The Gambia’s Gross Domestic Product (GDP) respectively. Western Union and Ecobank have developed an exciting new service called Account Based Money Transfer (ABMT). This innovative transfer service allows you to receive your Western Union money transfer through your Ecobank account. You can visit any Ecobank branch (ATM) or use Ecobank online to move money to your bank account. Nigeria is in need of Diaspora remittances to shore up its external reserves as foreign portfolio investment has been ebbing. Foreign portfolio investments in the stock market have declined by about 65 per cent as political risks and tough macroeconomic outlook continued to mod-

United Nations’ estimate that the number of international migrants, including refugees, was 258 million in 2017. Money transfers from migrant workers and others to all countries worldwide were US$613 billion in 2017 and those into Sub-Saharan Africa grew by US$4 billion to US$38 billion in 2017.

erate investors’ appetite for equities. Latest report on foreign portfolio investments (FPI) showed that transactions by foreign investors dropped by N66.24 billion or 64.68 per cent to N36.17 billion in July 2018 compared with N102.41 billion recorded in June 2018.

BUSINESS DAY

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Wednesday 21 November 2018

FINANCIAL TIMES Tech sell-off spreads to markets in Asia and Europe

Fed governor clinches key global financial regulation job

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Page A7

World Business Newspaper

France calls for Carlos Ghosn to stand down as Renault chief Executives at French carmaker show ‘full support’ despite Tokyo arrest on fraud charges David Keohane, Leo Lewis and Kana Inagaki

he turmoil in the global automotive industry over the arrest of Renault chief executive Carlos Ghosn deepened on Tuesday with France’s finance minster calling for interim management to take over the reins of the carmaker from its fallen boss. Even as Renault’s management expressed “full support” for their chief executive, Bruno Le Maire said Mr Ghosn was no longer able to head the French carmaker following his arrest on accusations of misconduct at the company’s Japanese alliance partner Nissan. He said he would ask for interim management to be put in place immediately at Renault. The French state owns 15 per cent of the carmaker. Mr Ghosn was arrested following an internal investigation at Nissan that uncovered what the Japanese automaker called numerous “significant acts of misconduct”, including misleading investors about the size of his salary and misusing company assets for personal gain. Mr Ghosn, one of the most powerful figures in the auto industry, is chairman of Nissan, Renault and Mitsubishi as part of a three-way alliance between the companies built by the executive.

Renault’s board will meet on Tuesday evening to decide whether to remove Mr Ghosn. Ahead of the meeting, Renault’s most senior executives offered “full support” for Mr Ghosn. In a note sent to employees late on Monday, Renault’s chief operating officer Thierry Bolloré, said the alliance with Nissan and Mitsubishi was an “industrial gem that must be protected and nurtured”. He wrote: “We are of course closely monitoring the situation, and as you will understand it is not our place to comment at this stage. On your behalf, we would like to state here our full support for our chairman and CEO.” Shares in Nissan fell on Tuesday, the first trading day in Japan since the allegations were made public, sliding 5.5 per cent and pulling down the broader Japanese market. Mitsubishi Motors was down 6.9 per cent. Renault shares were down 2.7 per cent in European trading. In a note to clients on Tuesday morning, Deutsche Bank analysts said they believed there was a “high likelihood” that Mr Ghosn would lose his leadership roles at all three alliance partners. Mr Le Maire emphasised that the French government has “not asked for the formal departure of Mr Ghosn from the board of directors”, saying Paris has thus far seen “no proof” of wrongdoing. Mr Le Maire said Mr Bolloré, who also acts as Mr Ghosn’s deputy, was

Japanese newspapers report the arrest of Mr Ghosn on their front pages

one candidate who could take the reins of Renault. Mr Bolloré earlier this year took on much of the operational responsibility of Renault. “We have today a deputy CEO, Mr Thierry Bolloré, who is of great quality. We will see what the board decides, but we need to put in place as quickly as possible an interim leadership,” said Mr Le Maire. Deutsche Bank noted that Mr Ghosn had ceded much of the dayto-day operations at Nissan, Renault and Mitsubishi: “We believe there are highly reputable managers who can run the company, we are not con-

cerned about the health of operations.” Mr Ghosn, who was credited with rescuing the Japanese carmaker from the brink of bankruptcy, is expected to be removed as Nissan chairman at a board meeting on Thursday. Nissan has not disclosed the location of Mr Ghosn, who was arrested on Monday after landing at Tokyo’s Haneda airport in a private jet. The Japanese group said its internal investigation, which followed a whistleblower complaint, found Mr Ghosn understated his salary for several years, which would be a violation of Japan’s Financial Instruments and

Exchange Act. According to the Tokyo Prosecutor’s Office, Mr Ghosn made nearly ¥10bn ($88.7m) over five years through March 2015, but reported only half of that. If found guilty he could face up to 10 years in prison, a fine of up to ¥10m, or both. Japanese media on Tuesday cited unnamed people close to the investigation as saying Mr Ghosn had used a string of company-owned residences in Brazil, the Netherlands and elsewhere, located in places that had little or nothing to do with Nissan’s business.

Pressure builds on regulators over crypto irregularities

The rise of ‘quantamental’ investing: where man and machine meet

Push for more oversight following $15bn crash in bitcoin and trading platform problems

Robin Wigglesworth

Don Weinland, Emma Dunkley and Federica Cocco

ressure is building on regulators to increase their oversight of cryptocurrencies following a $15bn crash in bitcoin and irregularities at one of the world’s largest virtual trading platforms. Cryptocurrencies suffered another battering in the markets on Tuesday. Bitcoin, the most actively traded digital currency, fell more than 10 per cent to a low of $4,237, its weakest level since October 2017, according to Refinitiv. That followed steeper moves earlier in the week among its closest peers. Ethereum, the third-largest cryptocurrency by market capitalisation, has fallen 14 per cent in the past 24 hours to $140. Overall, bitcoin is down 66 per cent since the beginning of the year, while the market capitalisation of the broader asset class has fallen by about three-quarters in the same period. A recent incident at Hong Kongbased OKEx has increased uncer-

tainty around cryptocurrencies, and prompted questions on how the Securities and Futures Commission can respond to trading problems in the cryptocurrencies market. Central banks and securities watchdogs around the world are contemplating how to rein in the industry, where billions of dollars worth of digital currencies are traded daily without official oversight. Hong Kong’s SFC said this month that it could soon allow some cryptocurrency exchanges to apply for licences — a major step that would bring some aspects of virtual asset trading under its jurisdiction. The regulator said that it “notes with concern the growing investor interest in gaining exposure to virtual assets via funds and unlicensed trading platform operators in Hong Kong”. Focus on regulation has shifted to Hong Kong following an incident that rocked traders and caused estimated losses of $400m. A change in the protocols used Continues on page A7

Asset managers adopt new approach in era defined by automation, algorithms and big data

s soon as the financial crisis started to recede, Jordi Visser knew something had to change. Algorithms were starting to rule markets, and hedge funds like the one he managed were confronting a tougher era. So Mr Visser, chief investment officer of Weiss Multi-Strategy Advisors, started to rethink how the $1.7bn hedge fund could survive in a less hospitable environment. The solution was to evolve and meld man and machine. “We are competing against computers these days, so we had to become more efficient,” Mr Visser said. Mr Visser and Weiss are not the only ones making some adjustments— with varying degrees of gusto — to a new investing era defined more by automation, algorithms and big data. Analysts have dubbed marrying quantitative and fundamental investing “quantamental”, an admittedly ugly phrase, but one that many think will define the future of the asset management industry. These initiatives are proliferating across the investing world, from small boutiques to sprawl-

ing asset management empires. In January, JPMorgan’s $1.7tn investment arm set up a new data lab in its “intelligent digital solutions” division to try to improve its portfolio managers, rather than replace them entirely with algorithms. “It augments existing expertise. We don’t just …try to come up with strategies out of thin air,” said Ravit Mandell, JPMorgan Asset Management’s chief data scientist. “There’s stuff that happens in the human brain that is so hard to replicate.” The 18-strong unit focuses on everything from automating and improving humdrum tasks such as pitch books and digital tools for customers, to more high-end demands such as product creation and improving JPMorgan’s investing prowess. The data unit has already used a form of artificial intelligence known as a neural network to analyse years of corporate earnings call transcripts to identify which words are particularly sensitive for markets, or might augur trouble. That frequent uses of “great” and “congratulations” are generally good for a stock price, and talk of debt covenants and inventory overhangs are bad, might be obvi-

ous to any human fund manager, but they can only listen to or read a limited number of transcripts. A machine can scour thousands. JPMorgan Asset Management’s data scientists are creating an alert system that will ping its portfolio managers whenever transcripts are particularly positive or negative, and voice analytics that mean they can even detect worrying signals in someone’s intonation. Some investment groups are starting to use technology to spot well-known behavioural biases. For example, Essentia Analytics crunches individual trading data and looks for common foibles, such as fund managers’ tendency to over-trade when on a losing streak, or hang on to poor investments for too long to avoid crystallising losses. When that happens, fund managers get sent an automated but personalised email signed “your future self ” reminding them to be aware of these pitfalls. “A computer can remind you to follow your own process,” said Clare Flynn Levy, Essentia’s founder. “It’s like a little light on your car dashboard flickering to remind you you’re running out of oil.”

Wednesday 21 November 2018

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BUSINESS DAY

NATIONAL NEWS

Pressure builds on regulators over crypto irregularities...

Trump’s trade hawk prepares to swoop on Beijing

Continued from page A6

Formidable negotiator Robert Lighthizer could make or break chance of US-China deal

by the currency bitcoin cash last week led to confusion in the market and in turn helped wipe $15bn from the market capitalisation of the original bitcoin. In the midst of the volatility, traders say OKEx changed the rules of the underlying settlement index, leading to trades suddenly being settled against entirely different indices. “A comparable scenario would be Chicago Mercantile Exchange announcing that the S&P 500 EMini Futures contracts will settle and deliver tomorrow, but against the Shanghai Composite Index instead of the S&P 500, in the midst of trading,” according to Amber AI, a cryptocurrency hedge fund. Amber estimates traders took up to $400m in losses. OKEx also forced earlier than expected settlement of bitcoin cash contracts and eventually blocked orders from all traders using the platform. “There were instances where participants could not buy at market prices even when prices were moving lower,” said one trader. OKEx said its system was overloaded during the change and apologised. But at least one cryptocurrency fund has made a complaint against the exchange to the SFC, according to people familiar with the matter. It is unclear how, or if, the SFC will respond to such complaints. The SFC regulates securities trading but cannot make enforcements in the market for bitcoin and other cryptocurrencies. “There has been a lot of uncertainty in crypto markets in the past week,” said Henri Arslanian, chairman of the FinTech Association of Hong Kong. He said the bitcoin cash situation had been “messy, public and has divided key figures of the crypto community”. The SFC has declined to comment on the OKEx case but published a framework for regulating virtual asset exchanges earlier this month. Under that, the SFC would allow exchanges that trade securities-like tokens to apply for licences, moving them out of the grey area that most exchanges trade in. However, exchanges that trade bitcoin and other non-securities virtual assets are not included in the SFC’s proposal. “SFC is improving its engagement with digital assets — but there’s a fair few aspects in the framework that may discourage exchanges from applying for SFC supervision without further discussions,” Hoi Tak Leung, counsel at Ashurt in Hong Kong, said in a note. In the US, two companies that raised money in 2017 through cryptocurrency sales were forced by regulators last week to return funds to investors after failing to register their initial coin offerings as securities. The Security and Exchange Commission’s settlement with Paragon Coin and CarrierEQ has raised concerns that other companies could be forced to do the same.

James Politi

Fed governor clinches key global financial regulation job Trump nominee Randy Quarles to head Financial Stability Board after US-Europe deal Claire Jones, Caroline Binham and Sam Fleming

he US and Europe are expected to take turns at the helm of one of the most important institutions in global financial regulation following intense wrangling over the post. Randal Quarles, a governor of the US Federal Reserve, is expected to become chair of the Financial Stability Board for a three-year term beginning next month. The FSB nominating committee will recommend that following his three years in charge, Klaas Knot, the head of the Dutch central bank, will take on the role of chair. In the meantime, Mr Knot will serve as the Basel-based FSB’s vice-chair. The FSB’s plenary will then have to agree to the recommendation. A person familiar with the discussions said the position is expected to be announced on Monday ahead of G20 meetings of finance ministers and world leaders in Argentina later in the

week. Mark Carney, the governor of the Bank of England, is set to step down as FSB chair on December 1. Two people familiar with the discussions said that some European countries were uneasy about the deregulatory agenda of the Trump administration, which appointed Mr Quarles as a Federal Reserve governor. Some in Europe fear a scaling back of international forums such as the FSB and the Basel Committee for Banking Supervision, which sets banking rules worldwide. Announcing a chair and vicechair simultaneously is not unknown, however. Mr Carney’s original FSB nomination was also announced with a vicechair, in the shape of Philipp Hildebrand, then the head of the Swiss central bank. But Mr Hildebrand had to step down from both roles a year later after a scandal sparked by his wife entering into currency trades three weeks before the central bank intervened to cap the Swiss

franc. Mr Quarles advocated the appointment of Mr Knot as his vice-chair during the discussions. “This is a great outcome for Europe,” said Melvyn Krauss, a senior fellow at the Hoover Institution at Stanford University. “It locks in US engagement in international financial regulation without giving the Americans carte blanche to deregulate.” The FSB makes recommendations to the G20 nations on financial rules and regulations and played an outsize role in creating the wave of new rules in the decade since the financial crisis. That has piqued some American politicians, who may respond better to having a compatriot lead the board. Mr Carney — who took over from Mario Draghi, the president of the European Central Bank, in 2011 — extended his six-year stint by one year. He has overseen post-crisis reforms that aim to end taxpayer bailouts of too-big-to-fail banks.

US futures exchange weighs launch of Brazil soyabean contracts CME Group considers move as Sino-US trade spat unsettles oilseed prices Joe Rennison , Florida and Gregory

ME Group, the largest futures exchange operator, is considering launching new contracts on Brazilian soyabeans as US-China trade tensions unsettle prices for the oilseed, its chief executive said. Beijing hit US-grown soyabeans with a 25 percentage-point tariff increase in retaliation for duties on its goods imposed by the Trump administration. Brazil’s farmers have benefited as China seeks alternative supplies. The shifts have pushed up the price of Brazilian soyabeans, with cargoes at the port of Paranaguá selling for $384 a tonne compared with $336 a tonne at the US Gulf of Mexico, according to Reuters. While US farmers and merchants can manage soyabean price risks using CME’s Chicagobased futures contracts, no similar market exists in Brazil. A soyabean

futures contract listed on the B3 exchange in Brazil has zero volume. Farmers typically make advance sales to a handful of international grain trading houses. “There is really nowhere to get the liquidity in Brazil on a futures market or even a forward swap in agribusiness to lay off,” Terry Duffy, CME chief executive, said in an interview. He said that Charles Carey, a CME board member, was “leading an effort to see how we can cooperate on a derivatives product between a Brazilian exchange and the CME”. He declined to identify the exchange. CME already has a strategic partnership with B3 that includes the cross-listing of certain products, said a CME spokesperson. The cross-listing includes CME’s “mini-sized” soyabean futures contract. The Chicago Board of Trade, a futures exchange acquired by

CME in 2007, tried such a contract before but decided not to pursue it, Mr Duffy said. One obstacle to creating a successful contract is that deals for international exports of soyabeans are done with a handful of trading houses. Such companies do not necessarily benefit from more transparent prices. “For this to get the necessary traction I firmly believe the trading houses will need to be behind it,” said Pedro Dejneka, managing director of MD Commodities, an agricultural adviser with offices in Brazil and the US. In July S&P Global Platts, the commodities information service, began publishing daily price assessments for soyabeans at the Brazilian ports of Paranaguá and Santos, as well as soyabeans delivered in northern China. CME already lists some cash-settled futures contracts based on S&P price indices.

hen Robert Lighthizer, America’s top trade official, took a recent chance to engage with Donald Trump’s conservative base, the issue that animated him most wasn’t the deal clinched just days before to revamp North America’s trade rules. It was China. Giving a rare interview to Laura Ingraham, a rightwing talk radio host in October, the US trade representative said the country was the “elephant in the room” that was “stealing our technology”. The tariffs imposed by the Trump administration on more than $200bn of Chinese imports the previous month were already producing “strong” results. “If we can’t protect our innovation, we lose our edge,” the steely 71-yearold Ohio native told listeners in his guttural voice. As Mr Trump, the US president, prepares to meet his Chinese counterpart Xi Jinping on the sidelines of the G20 summit in Argentina at the end of November, Mr Lighthizer is the enigmatic and indispensable senior official who could make or break the chances of a deal between Beijing and Washington. Mr Lighthizer seldom speaks in public and travels little, maintaining a low profile for a USTR. But amid the confusion of economic policymaking in the Trump administration, where it is never clear who is closest to Mr Trump’s thinking, Mr Lighthizer appears to have the president’s ear, which has given him a certain mystique in the administration and beyond. Any agreement that produces a ceasefire in the trade war consuming the US and China will have to pass muster with him — and he is likely to set a high bar. “He sees China as an existential threat along the lines of the way he viewed Japan in the 1980s,” said one investor. “His focus is on trying to disrupt China’s technological rise rather than on doing a deal that’s best for the US economy.” A senior business lobbyist closely following the talks added: “He’s made it very clear that dialogue with China hasn’t worked over the years. He’s going to be very sceptical of any commitments or future promises he’s going to see. And if he’s not going to get a good deal he’ll be content keeping the tariffs on.” Mr Lighthizer hails from the protectionist, economic nationalist wing of the Republican party that was crowded out by free-traders for most of his career but is in the ascendant in the Trump era. Over decades spent working in law and government, he became persuaded that the US needed to be much more aggressive in trade negotiations. In the early 1980s under President Ronald Reagan, when Japan was seen as the greatest economic threat, he worked as deputy USTR to negotiate an agreement by which Tokyo reined in its sales to the US through voluntary export restraints. He then plunged into a threedecade career in the Washington office of Skadden Arps, the law firm, where as a Porsche-driving corporate lawyer he represented US Steel, the Pittsburghbased metal manufacturing company, in a string of cases challenging unfair Chinese trade practices. This experience forged his image of Beijing as a ruthless, dangerous economic predator, observers say.

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Apple’s slide spreads to European tech stocks

Wall Street futures point to further falls as doubts grow over sector’s prospects

Camilla Hodgson, Peter Wells and Nicole Bullock

uropean technology stocks joined a global sell-off for the sector on growing investor angst over the industry’s prospects, raising further doubts on the decade-long bull run for global stocks. A combination of worries over demand for Apple’s signature iPhone and signs that chipmakers could be drawn into the next round of the trade dispute between China and the US left the sector looking exposed. Futures trade pointed to sustained selling in New York, with further losses of more than 1 per cent for the tech-heavy Nasdaq Composite, even after a slide of more than 3 per cent on Monday. Apple was down a further 1.5 per cent in premarket trade, on track for its worst month since September 2008. Goldman Sachs cut its price target on Apple’s stock to $182, down from $209, citing “severe Chinese demand weakness in late summer and a stronger dollar”. Semiconductor stocks were unsettled by antitrust accusations from Chinese authorities against major chipmakers, adding to the sense of unease towards the sector.

By the end of Monday, all of the so-called Faang stocks — the fast-growing tech groups Facebook, Apple, Amazon, Netflix and Google’s parent company Alphabet — were in a bear market, meaning they had fallen at least 20 per cent from their peak. After a stunning rally that saw the market value of Amazon and Apple surpass the $1tn mark earlier this year, investors have been exiting a trade that was widely seen as one of the most crowded on Wall Street. “The most high-valued assets tend to be the most sensitive to fears of a global macro regime change and the fear is that the US tech-led rally is looking long in the tooth,” said Koon Chow, strategist at UBP. “Growing cynicism about the talks between Presidents Trump and Xi are contributing to the tech rout inasmuch as intellectual property and innovation is the most thorny dispute between US and China.” Apple closed down 4 per cent overnight on reports it had cut production orders for all three new phones rolled out in September. Its suppliers were hit worldwide. Chipmaker ASM was down over 3 per cent in Amsterdam, while ST Micro fell by over 2 per cent. Japan Display was down more than 10 per cent.

China-exposed stocks and techs lead equities sell-off Apple and its suppliers hit, Nasdaq expected to lose its gains for 2018 Michael Hunter and Alice Woodhouse

lobal technology stocks were falling further as the sector’s sharp Wall Street selloff spread, while concern over the trajectory of trade relations between the US and China also hit sentiment. Fading hopes for a breakthrough between the world’s two biggest economies at the G20 summit at the end of the month set an uneasy tone, leaving metals miners, industrial stocks and carmakers taking a knock. Apple shares were down a further 2.6 per cent in pre-market trade after they led the sell-off with a 4 per cent decline overnight. Worries over disappointing iPhone sales and fears that chipmakers would get caught up in the US-China trade war should it intensify set a fraught tone for the bellwether company and its sector. Its suppliers looked exposed across the world. Chipmaker ASM dropped 1.5 per cent, while ST Micro fell 2.7 per cent. Overall, Europe’s Stoxx tech index lost 1 per cent, taking it to its lowest level since February 2017, the worst decline over a quarter since 2011. According to Wall Street futures, the Nasdaq will fall a further 1.8 per cent in opening trade, even after its drop of more than 3 per cent overnight. That would be enough to wipe out its gains for the calendar year. The falls also came after Chinese investigators said they had “ massive evidence” of anti-competitive behaviour by SK Hynix, Samsung Electronics and US-based Micron Technology — the world’s top three makers of computer memory chips. Micron declined 6.7 per cent in New York on Monday. Analysts said the inclusion of the US chipmaker in Beijing’s probe could be part of a Chinese negotiating tactic in the

trade dispute. Losses gathered pace in Europe as the trading day developed. Frankfurt’s Xetra Dax 30 fell 0.9 per cent, with shares in BASF, the international chemical company, down 2.5 per cent. London’s FTSE 100 lost 0.6 per cent, with shares in copper producer Antofagasta down almost 4 per cent. In Japan the Topix index lost 0.9 per cent, with the technology sector down 2.2 per cent. Japan Display, one of the main makers of iPhone liquid crystal display screens, fell 7.7 per cent. SK Hynix was down 3.3 per cent and Samsung Electronics shed 2 per cent, helping to pull Seoul’s Kospi Composite down 0.9 per cent. In Hong Kong the Hang Seng index fell 1.8 per cent, On the mainland, China’s CSI 300 was down 1.9 per cent. FT subscribers can click here to receive daily commentary on global trade from Mike Mackenzie in his Market Forces column. Forex and fixed income The dollar index ticked up 0.1 per cent, pausing a recent fall after comments from Federal Reserve officials suggesting that US interest rates were nearing “neutral”. The yield on the 10-year US Treasury was down 1 basis point at 3.0519 per cent amid modest overall demand for the debt. The pound rose 0.2 per cent to $1.28689, with Brexit politics continuing to dominate the UK currency, which was also 0.1 per cent stronger against the euro, with £0.8904 required for a unit of the shared currency. Japan’s yen, which can rise in times of turbulence, strengthened by 0.2 per cent to ¥112.34 per dollar, while the euro fell 0.4 per cent to at $1.1410.

Worries over demand for Apple’s signature iPhone have sent its shares lower

Tech sell-off spreads to markets in Asia and Europe Wall Street futures point to continued drops in equities as doubts grow over sector Camilla Hodgson, Peter Wells and Nicole Bullock

uropean technology stocks joined a global sell-off in the sector as growing investor angst over the industry’s prospects raised questions about whether the decade-long bull run for equities was beginning to reverse. A combination of worries over demand for Apple’s signature iPhone and signs that chipmakers could be drawn into the next round of the trade dispute between China and the US have fuelled investor concerns. The pre-market futures trading pointed to renewed selling in New York, with further losses of 1.8 per cent for the tech-heavy Nasdaq Composite, enough to wipe out its gains for 2018 after a slide of more than 3 per cent on Monday. Apple was down another 1.5 per cent in pre-market trade, putting it on track for its worst month in ten years.

Goldman Sachs cut its price target on Apple’s stock to $182, down from $209, citing “severe Chinese demand weakness in late summer and a stronger dollar”. Semiconductor stocks were unsettled by antitrust accusations from Chinese authorities against major chipmakers, helping spread the sell-off from the so-called Faang stocks — the fast-growing technology groups Facebook, Apple, Amazon, Netflix and Google’s parent company Alphabet. By the end of Monday, all of the Faangs were in a bear market territory, meaning they had fallen at least 20 per cent from their peak. After a stunning rally that saw the market value of Amazon and Apple surpass the $1tn mark earlier this year, investors have been leaving a trade that was widely seen as one of the most crowded on Wall Street. “The most high-valued assets tend to be the most sensitive to fears of a global macro regime change

and the fear is that the US tech-led rally is looking long in the tooth,” said Koon Chow, strategist at UBP. “Growing cynicism about the talks between Presidents Trump and Xi are contributing to the tech rout inasmuch as intellectual property and innovation is the most thorny dispute between US and China.” Apple closed down 4 per cent on Monday following reports it had cut production orders for all three new iPhones rolled out in September. Its suppliers were hit worldwide on Tuesday. Chipmaker ASM was down over 3 per cent in Amsterdam, while ST Micro fell over 2 per cent. Japan Display was down more than 10 per cent. The Europe-wide Stoxx 600 tech index touched its lowest point since February 2017, down by about 2 per cent. The gauge has tumbled more than 15 per cent over the fourth quarter of the year, the worst such fall for more than seven years.

Target shares hit by falling margins, sales miss Disappointing results come ahead of crucial holiday shopping season Pan Kwan Yuk

ramp up in investments helped keep the tills ringing at Target during the latest quarter, but this has come at the expense of profit margins which suffered a surprise drop, spooking investors who sent the shares sharply lower ahead of the market open. The Minneapolis-based retailer saw its shares slump by as much as 12 per cent in pre-market trading, as the margin squeeze, along with a miss in headline sales raised questions over whether the company can keep up its turnround momentum as it heads into the crucial holiday shopping season. Best known for its cheap-chic offerings and stylish designer collaborations, Target — or Tar-zhay as its devotees call it — has been slashing prices on household staples and ramping up investments in its delivery and fulfilment centres in order to better compete against rival Amazon’s Pantry and Walmart’s Jet.com. But while the company’s “highlow” strategy of building up higher margin in-house brands, while staying aggressive on prices for basic everyday goods, has helped

drive a turnround in sales, it is bruising margins. For the three months to October 28, sales came in at $17.59bn as shoppers snapped up everything from toys to pressure cookers and pieces from the company’s home decor collaboration with Fixer Upper star Joanna Gaines. While that represents a solid 5.7 per cent rise compared to the prior year period, it fell short of analysts’ lofty expectations for $17.72bn. Within this, like-for-like sales rose 5.1 per cent, a hair below the 5.2 per cent that the market had forecast and a slowdown from the 6.5 per cent recorded during the second quarter. But investors appeared most spooked by the unexpected drop in gross margin, which fell 90 basis points to 28.7 per cent during the quarter from the year ago period and contributed to the miss in adjusted earnings. Target said the decline reflected price cuts, higher wages and spending on its online business and supply chains — investments which it hoped would set it up to better compete against Amazon and Walmart. While net earnings jumped by more than 30 per cent to $622m, that was largely down to lower cor-

porate taxes. Stripping this out, adjusted diluted earnings was $1.09 a share, below estimate of $1.12. Hopes had been high for Target going into Tuesday amid a strengthening US economy and robust consumer spending. Stoking those expectations were results last week from retailers Walmart, Macy’s and Home Depot, which all lifted their outlook for the full year. Target on Tuesday reiterated its full-year adjusted earnings guidance of $5.30 to $5.50 per share, which it raised three months ago. But in a sign that the retailer will be facing stiff competition in the battle for holiday spending, it said it expects fourth quarter comparable sales growth of around 5 per cent, which would represent another slight slowdown from the pace recorded in the prior two quarters. “We are encouraged the company reiterated full-year guidance; however we believe market expectations in this environment are high and stock is likely to see weakness,” said analysts at Cowen. Shares in Target have fallen 14 per cent since they hit a record high of $90.39 earlier in September. The stock was down another 10 per cent in pre-market trading.

BUSINESS DAY

Opinion

FRANKLIN NNAEMEKA NGWU Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum.

s expected, former vice president, Atiku Abubarkar, the Presidential candidate of Peoples Democratic Party launched his campaign with a 61-page economic development plan overview titled Atiku’s plan for Nigeria! Going through the plan, it covered many sectors of our economy with a focus on human capital development, job creation, poverty eradication and infrastructure development. It promises to achieve many things by 2025- a GDP of $900 billion, increase manufacturing output from 9% to 30% of the GDP, higher electricity generation of 20,000 MW, FDI inflow of about 2.5% of GDP, increased infrastructure stock of 50% of GDP by 2025 and 70% by 2030. In addition, 3 million jobs will be created every year, Nigeria will have the lowest corporate tax in Africa, African Free Trade Continental Agreement (AfCFTA) will be signed, NNPC will be partially privatized and Nigeria will be restructured, fantastic! While there is no doubt on the

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NEWS YOU CAN TRUST I WEDNESDAY 21 NOVEMBER 2018

Atiku’s plan: Promising, but! (1) good contents of the plan or the possible positive impact it will have if effectively executed, I am concerned that the plan is lacking detail in terms of how it will be achieved. Also, there is need for clarification in certain critical areas that are central to the success or failure of the plan. I will explain the first six clarifications required in this piece. First, in comparison with other development plans and even the APC’s, it is difficult to see the innovation, freshness or what is spectacular of the Atiku’s plan. For instance, the key factors upon which the plan should be anchored were weakly addressed. These include rule of law, regulatory quality and government effectiveness. While these key factors might sound simple just as they were mentioned in the plan, a deep understanding of their meaning and impacts in creating an inclusive and sustainable development and growth of any country reveals that they are the fulcrum upon which every other thing depends. They are responsible for our high levels of corruption and poverty, limited infrastructural development, insecurity, weak governance and human capital development, high unemployment/underemployment, limited flow of FDI and calls for restructuring. Since proper measurement of the key factors started in 1996, Nigeria has consistently performed woefully. In a performance range from positive

(+2.5) the highest to negative (-2.5) the lowest, Nigeria has an average of -0.88 for regulatory quality, -1.18 for rule of law and -1.02 for government effectiveness. Given their prime connection to all our socio-economic and political problems, I think they deserve a detailed and convincing explanation as to how they will be improved to ‘unravel the Nigeria Paradox’. Second, going through both the 61 pages and the more detailed 186 pages plans, there is an embedded confusion as to the contents of the plan and the promise to restructure the country. It seems that the plan is saying that we will restructure on one hand but on the other hand, let us plan the economy as if we are not going to restructure. A more affirmative clarification is needed. If we are going to restructure as the plan states, it means that the plan need to be reworked and structured to convincingly show that it is a plan for an economy to be restructured. If issues such as minerals and mines, internal security (police, law and order), railways, communication, transport, housing, agriculture and others will be devolved to the concurrent list and states/local governments allocated such tasks, the plan should clearly reflect such arrangement and the way it will work. It also need to clarify how the focus of the central government on defense and national security, monetary policy and customs,

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While there is no doubt on the good contents of the plan or the possible positive impact it will have if effectively executed, I am concerned that the plan is lacking detail in terms of how it will be achieved

international affairs and foreign policy will fit with the tasks of the states/local government in the concurrent list to ensure cohesion, macroeconomic, social and political stability. Three, recalling that only about 10% of the privatized companies can be said to be successful, the plan to partially privatize NNPC will require further explanation and clarification. While there is no doubt that NNPC has many challenges, a fundamental question is whether a partial privatization will solve the problem. Based on research and facts, the NNPC challenges will not disappear as long as the government maintains significant ownership.

If the main reason for the planned partial privatization of the NNPC is to enhance efficiency and accountability, a further question is to identify all the options to achieve that and if partial privatization is the best. Fourth, a key area of the plan that seriously requires deep thinking and review is the planned funding of the plan. For instance, while about $35 billion is stated as the estimated annual infrastructure investments needed, the plan to fund projects through more borrowing (loans and bond) and Public-private partnerships (PPP) is not very encouraging and convincing. It gives the impression that a repeat of the excessive borrowing to achieve some development targets as it is the case with the present PMB government is likely. If corporate tax will be reduced, will income tax be increased to offset the impact of reduced corporate tax vis-à-vis highly needed government revenue? Moreover, the reason why many foreign firms are not coming to Nigeria is not due to high corporate tax. It is because of issues of rule of law, regulatory quality and government effectiveness. While borrowing and use of PPP will be helpful, it is imperative to urgently in one to two years diversify the economy to exploit our numerous but untapped opportunities to create an export oriented economy. Fifth, while the promise to

increase our manufacturing capacity from 9% to 30% of the GDP by 2025 is commendable, it is not clear how this will be achieved. As this seems to be main opportunity to address many of our challenges such as unemployment, foreign exchange, government revenue and infrastructural development, it is expected that the plan should clearly indicate the focus sectors in the short, medium and long term. It is important that we appreciate that while the global economy is presently in and further planning for fourth industrial revolution, it is not clear if Nigeria is in or has started first industrial revolution! Sixth, the plan to create 3 million jobs annually while also very commendable requires further clarification. It is highly related to the fifth point on manufacturing and industrialization. As over 40 million Nigerians remain unemployed or underemployed, it is an area that requires good detail as to the sectors through which the jobs will be created and how they will be created. This will enhance the hope of Nigerian youths and convince them of the workability of the plan. I commend Atiku Abubakar for his efforts but implore him to appreciate that our challenges are too many, our situation too precarious to be resolved with the plan as it is. It requires more hard work and deep thinking to develop a more robust and detailed plan that will help us to ‘unravel the Nigeria Paradox’

New minimum wage will spur capital market growth

UCHE UWALEKE Uche Uwaleke is a Professor of Capital market and the Chair of Banking and Finance Department at the Nasarawa State University Keffi

t a time that politics is dominating national discourse, the current agitation by organized labour for a new national minimum wage seems to, once again, draw attention to the economy. Many state governors claim they do not have the capacity to implement a new wage floor of N30,000 for employees. But labour leaders disagree taking the view that it is more about willingness to implement, requiring cutting costs a n d p r i o r i t i z i ng sp e n d i ng, than ability to pay. The fact that real wages have dropped drastically in Nigeria since the current N18,000 minimum wage came into force in 2011 is not in contention. As evidence, the average inflation rate in Nigeria was 16.5 per cent in 2017 compared to 10.8 per cent in 2011 according to the National Bureau of Statistics. Also, the naira/dollar exchange rate which feeds into the rate

of inflation, thereby impacting purchasing power, has moved from about N162 to N360 over the same period. Certainly, the current minimum wage has not kept pace with trends in the cost of living and the erosion in purchasing power has created a situation where a lot of low-paid workers live in abject poverty. One major criticism of a minimum wage hike is that it would result in demand-pull inflation and complicate monetary policy. On this score, the evidence is scanty. When the National Assembly amended the National Minimum Wage Act in February 2011, increasing the minimum wage from N7,500 to N18,000, average inflation rate actually dropped from 13.7 per cent in 2010 to 10.8 per cent in 2011 and further down to 9 per cent in 2016. It was not until 2016 that inflation spiked to 15.7 per cent on the back of an increase in both the pump price of fuel and electricity tariff. What is clear from quarterly reports of the National Bureau of Statistics is that inflation in Nigeria is more from cost-push than demandpull factors. It goes without saying therefore that the cost of energy and transport are among the greatest inflation drivers in Nigeria today not least because these cost elements directly or indirectly impact the prices of commodities due to the tendency for other sectors of the economy (even with no link to petrol) to take advantage of any increase in transport costs. This fact is corroborated by

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A sunny side to the new minimum wage that is often overlooked is its potential for impacting positively on the capital market and financial markets in general. This is due to the fact that not all the increase in income will be consumed

various communiques issued by the Monetary Policy Committee of the CBN which have not failed to note the ‘structural factors driving the sustained pressure on consumer prices, such as the high cost of power, energy and transport factors’. In this regard, the key to bringing about a low inflation environment is fix ing infrastructural bottlenecks to reduce the cost of doing business in the country. A sunny side to the new minimum wage that is often overlooked is its potential for impacting positively on the capital market and financial markets in general. This is due to the fact that not all the increase in income will be consumed. Much as con-

sumption, a positive function of the absolute level of current income, is bound to increase, John Keynes, a famous Economist, in his “general theory” published in 1936, points out that consumption expenditure does not have a proportional relationship with income. Consumption actually increases by less than the increase in income implying that the average propensity to consume falls as income increases. It has been established in empirical literature that marginal propensity to consume varies between zero and one. The implication is that any increase in income is partly consumed and partly saved. The import of this is that a part of the increase in minimum wage is likely to be saved. A lot of workers who have borrowed from their cooperative societies will be put in a better position to liquidate such debts. Many others are bound to increase their monthly savings contribution. Such savings will likely flow into financial markets especially the capital market where uptake in government savings bonds, pension funds, mutual funds, assets of cooperative societies and all manner of collective investment schemes are expected to receive a boost. Expectedly, Nigeria’s pension assets under the Contributory Pension Scheme which is currently in excess of N8 trillion will grow from increased contributions bearing in mind that a majority of low-paid workers in Nigeria are below 49 years. According to the NBS “Pension

Asset and Membership Data (Q2 2018) report, participants within the ages of 30 to 39 had the highest percentage composition closely followed by participants within the age bracket of 40-49 while those above 65 years had the least percentage composition. The new minimum wage will also support the implementation of micro-pension scheme by PenCom which is expected to accommodate more contributors. Furthermore, the new miminum wage holds a lot of promise for financial inclusion in Nigeria. The National Financial Inclusion Strategy was introduced in 2012 with the goal of reducing the number of Nigerians without access to financial services from 46.3 per cent to 20 per cent by 2020. The new minimum wage increases the chances of the financially excluded to participate in the financial system. Through financial empowerment, it presents a huge opportunity to improve access to and use of smartphones/devices, which is a platform for improving financial services. Just like in the United States where studies have found a strong positive correlation between rising wages and equities prices, a higher wage floor in Nigeria is bound to have a salutary effect on stock prices in Nigeria. This is because with a rise in income, households have more money to spend. This growth in consumption could increase corporate sales and corporate earnings, especially if costs remain stable, potentially leading to an in-

crease in stock market activity. Overall, the new minimum wage is positive for financial markets and the capital market in particular. It does appear to be the missing piece of the post-recession growth trajector y. The growth in GDP is still weak due in part to weak aggregate demand and therefore one way to stimulate the economy should be by implementing the new minimum wage. Given the continuous decline in economic activities evidenced by sliding GDP growth rates and relatively low inflation rate, the economy can absorb the new minimum wage without any significant knock-on effect on price levels and employment. In view of the nature of t h e c u r re nt f i s c a l f e d e ra l ism in Nigeria which places the federal government at a dominant position with respect to revenue allocation, (under the current revenue allocation formula, the federal government receives the lion’s share of 52.68 per cent leaving the 36 states and 774 local government councils to share 26.72 per cent and 20.60 per cent respectively), the federal government should explore ways of assisting s u b - nat i o na l g ov e r n m e nt s to implement the new wage floor. In return, the federal government should demand from State Governments concrete plans aimed at imp r o v i n g S t a t e s’ I n t e r n a l l y Generated Revenue as well as enthroning transparency and accountability in the management of their finances.

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