BusinessDay 21 Oct 2019 by BusinessDay

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Inside L-R: Olufunke Aiyepola, MD/CEO, UTL Trust Management Services Limited; Bola Ashiru, principal, Middle East and Africa, MasterCard; Lanre Fabunmi, MD/CEO, AIICO Capital; Ike Onyia, MD/CEO, FBN Quest Asset Management; Aliyu Abdulhameed, MD/CEO, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL); UK Eke, GMD, FBN Holdings plc; Frank Aigbogun, publisher/CEO, BusinessDay Media; Sonnie Ayere, chairman/CEO, DLM Group; Godwin Ehigiamusoe, MD/ CEO, LAPO Microfinance Bank; Haruna Jalo-Waziri, MD/CEO, CSCS plc; Segun Akintemi, CEO, Page; Nkem Oni-Egboma, MD, Zenith Pensions Custodians Limited, and Funmi Ekundayo, MD/CEO, STL Trustees, at the 7th BusinessDay Banks’ and Other Financial Institutions awards in Lagos, at the weekend. Pic by Pius Okeosisi

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Nigeria’s refineries post N90.97bn deficit in 7 months DIPO OLADEHINDE

espite producing nothing, Nigeria’s four governmentowned refineries have been nothing but a drainpipe on Africa’s biggest economy, running at an operating

despite zero production deficit of N90.07 billion in the first seven months of 2019. After years of neglect, Nigeria’s refineries with a combined capacity of 446,000 barrels per day (bpd) have not operated beyond a

quarter of their installed capacity, mainly due to attacks on pipelines carrying crude to the plants as well as technical problems. They are the Kaduna refinery with installed capacity of 110,000

bpd, two plants located in Port Harcourt with an installed capacity of 210,000 bpd, and the Warri refinery with an installed capacity of 125,000 bpd. Latest data from Nigeria National Petroleum Corporation (NNPC) show the country’s ailing refineries had an operating deficit of N90.97

billion between January 2019 and July 2019, an amount higher than capital spending allocation in the 2020 budget to the Ministry of Education (N48 billion) and the Ministry of Health of (N46 billion). Niyi Awodeyi, CEO at Subterra

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Monday 21 October 2019

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news Edo, Delta, Ekiti, Ondo seek 40% equity stake in Benin DisCo

vice delivery to the people,” he said. Efforts to get Sunday our states in the Oduntan, executive director, franchise area of the Benin Electricity Association of Nigerian ElecDistribution Com- tricity Distributors (ANED), pany (BEDC) are in talks an umbrella body for all to acquire the Federal Gov- 11 DisCos including Benin ernment’s 40 percent stake DisCo, to comment on the in the privatised company matter proved abortive. Chuks Nwani, an energy on concerns of inefficient lawyer, said the initiative was service provision and poor investment in the assets of good and partnership with the DisCos was great. He, the company. The Nigerian Electric- however, urged the goverity Regulatory Commission nors to spend on investment (NERC) confirmed to Busi- into power infrastructure if nessDay that discussions they buy the equity stake. “I like the courage of the are ongoing between the governors, but they must be governors of the four states comprising Edo, Delta, Ekiti prepared to invest in power and Ondo, BEDC officials infrastructure and ensure and the commission for that people pay for appropossible acquisition of 40 priate pricing of power, and percent equity stake in the properly metered, to drive cost-efficiency,” Nwani said. company. Speaking to BusinessDay James Momoh, NERC on the sidelines of the justchairman, who confirmed this development, said the concluded 25th Nigerian commission would support Economic Summit in Abuja, any move to improve power Kayode Fayemi, governor of infrastructure which would Ekiti State and chairman of lead to improved power sup- Nigerian Governors’ Forum, said the decision of the govply to consumers. “It is a good to have the ernors to acquire the Federal tripartite arrangement. Our Government’s stake in the job is to supervise and that electricity distribution comdiscussion is ongoing,” Mo- pany was due to the fact that the current operators are not moh told BusinessDay. “The last time we were investing in upgrading the in Benin, we had the DisCo, assets of the company. Fayemi opined that the the civil society and the state governors’ representatives. Federal Government should The focus is to forge a comContinues on page 53 mon front and improve ser-

HARRISON EDEH, Abuja

L-R: Niyi Adebayo, minister of industry, trade and investment; Kennedy Uzoka, GMD/CEO, United Bank for Africa (UBA) plc; Mrs Jamodu; Kola Jamodu, the celebrant and former director, UBA plc; Tony Elumelu, chairman, UBA plc; Dayo Keshi, wife of vice chairman, UBA plc; Tolu Odebiyi, senator, and Uchechukwu Ogah, minister of state for mines and steel development, during the dinner party in honour of Jamodu who recently retired from the board of the bank, in Abuja.

Morocco’s Saham exits Unitrust amid insurance industry recapitalisation …as firm commences rights issue to boost capital …in merger talks with private insurer Modestus Anaesoronye

a ha m G rou p, a pan-African company with origin in Morocco which held a 40 percent equity stake in Nigeria’s Unitrust Insurance Company Limited, has exited. The company is exiting at a time the Nigerian partner, Unitrust, is raising capital to comply with local regulation, which requires companies to increase their paid-up share capital to about 300 percent. The National Insurance Commission (NAICOM) had asked underwriting companies in the industry, effective May 20, 2019, to increase their paid-up share capital from N2 billion to N8 billion for life companies, from N3 billion to N10 billion for gen-

BusinessDay findings show that Unitrust, owned by a small number of shareholders, is embarking on a rights issue any moment. The rights issue is expected to boost the insurer’s paidup share capital before its long-term plan to consolidate a merger in the course of the ongoing recapitalisation exercise. The source also told BusinessDay that Unitrust was already discussing with another private insurer for a merger deal as due diligence was said to have started already. Under the initial partnership, Saham Unitrust Insurance Nigeria Limited’s group gross written premium (GWP) rose by 27 percent to N3.168 billion at the end of December 2018

MARKETS eral business, from N5 billion to N18 billion for composite business, and from N10 billion to N20 billion for reinsurance companies. The commission gave June 30, 2020 as deadline. A high level industry source who preferred to remain anonymous told BusinessDay that Saham had attempted selling its stake to Salam of South Africa but failed following resistance of other local shareholders, who believed it was a breach of process as they should have right of first refusal. But Saham has, however, exited, selling its shares to the other existing shareholders, led by Theophilus Danjuma, a retired Nigerian army general.

from N2.486 billion at the end of December 2017. Th e i n c rea s e i n t h e group’s level of activity was mainly as a result of strategic partnership and increase in market drive, which also impacted the bottom line as well as return on investment to shareholders. Its profit before tax stood at N806.18 million at the end of 2018 from N818.04 million at the end of 2017, while its profit after tax rose to N759.96 million from N427.68 million. The group’s underwriting profit stood at N220.25 million in the period under review from N303.79 million in the corresponding period of 2017. Its gross earnings rose to N4.53 billion at the

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Zenith, FBNH, UBA, others win big in 2019 BusinessDay BAFI Awards SEGUN ADAMS

enith Bank, First Bank of Nigeria Holdings, United Bank for Africa (UBA) and other financial institutions were at the weekend honoured at the BusinessDay Banks & Other Financial Institutions Award (BAFI) for pushing the frontiers in the delivery of banking and financial services in Nigeria. Organised by BusinessDay Media Limited, the Banks & Other Financial Institutions Award (BAFI) brings together super-achieving deposit, merchant, investment,

class risk management structure, excellent customer service, consistent delivery of value to shareholders and robust liquidity. “We dedicate the award to our esteemed customers and we are optimistic that we would sustain the performance,” said Nkem Oni-Egboma, MD, Zenith Pensions Custodian Ltd. Kennedy Uzoka, group managing director/CEO, United Bank for Africa (UBA) plc, was also awarded BAFI 2019 Bank CEO of the Year for his visionary leadership un-

Speaking on the subject of women in financial services, Aigbogun reiterated BusinessDay’s support for women and advocated that more women be allowed to attain senior positions in the industry. He also charged finalists and industry players to keep improving transparency in financial reporting, investing in social and environment causes, and nurturing cultures of information access through robust investor relations programmes. At the award ceremony, Zenith emerged Bank of the Year for its banking leadership, growth capacity, world-

microfinance banks and other financial institutions to celebrate their contributions, as well as that of individuals in the industry, to Nigeria’s economy. The 7th BAFI, “the awards that matter to those who matter in financial services”, comes amid intensified efforts by players in the financial services industry to extend credit across all slices of the Nigerian customer pyramid, and innovations seen in previously complacent areas, Frank Aigbogun, publisher/ CEO, BusinessDay Media, said in his welcome address at the event.

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Nigeria in talks with UK government on ‘jollof bonds’ for infrastructure financing ...secures first tranche of $3bn facility from World Bank April 2020 HOPE MOSES-ASHIKE & ONYINYE NWACHUKWU, in Washington DC

igerian government is holding talks with the United Kingdom for support on the issuance of ‘jollof bonds’ for financing of infrastructure in the country. This comes as government hopes to secure the first tranche of a $3 billion facility from the World Bank, amounting to $750 million, in April 2020. The proposed World Bank borrowing comes amid concerns of ballooning debt profile for a country which also budgets trillions of naira to subsidise consumption annually. Zainab Ahmed, finance minister, said government had specially named the instrument ‘jollof bonds’ but it would be issued offshore but denominated in the local currency. “The importance of such a bond is that it protects the country, the issuer, from exchange rate exposure,” she explained. She was speaking at a press briefing on the outcome of various bilateral meetings held at the annual meetings @Businessdayng

of the International Monetary Fund (IMF) and the World Bank in Washington, DC. “We are contemplating such a bond, some countries call their own sala bonds,” Ahmed noted but did not disclose the amount being contemplated. She said it is another instrument to raise financing for the national budget. “In the past we have issued euro bonds which have done well but we are considering this option because it could be cheap and even if it is not, it will be more cost effective because we are protected from exchange rate differential risk,” she said. Ahmed disclosed that proposals have been made to the Nigerian government not just by the UK government but also by Deutsche Bank and now the World Bank. “One of the bilateral meetings was with the United Kingdom minister of state for international development. We also participated in the UK investment summit to explore further areas of corporation,” she said.

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news Insufficient policy adjustment, huge infrastructure gap, others behind Nigeria’s fragile growth - IMF Onyinye Nwachukwu & Hope Ashike in Washington

igeria’s fragile economic growth expected to stay subdued - at least in the medium term - is fuelled by insufficient policy adjustment, a large infrastructure gap, low private investment as well as banking sector vulnerabilities, the International Monetary Fund (IMF) warmed at the weekend. The IMF says Nigeria’s growth in 2019 will come

in at 2.3 percent, but could advance to 2.5 percent in 2020 as both oil and non-oil sectors ramp up. Mediumterm growth is projected at slightly higher than 2.5 percent, implying no progress in per capita growth. Economic activity in the region’s three largest economies, Nigeria - an oil exporter; South Africa - a non-oil, resource-intensive country, and Ethiopia, a nonresource-intensive coun-

... laments challenging external environment affecting SSA prospects try, illustrates the bifurcated growth paths in the region, the Fund notes. “Sluggish growth in Nigeria and South Africa - which is projected to remain subdued, increasing only mildly from 0.7 percent in 2019 to 1.1 percent in 2020 - is likely to limit positive spillovers to their trading partners, especially remittances, financial sector activity, and import demand,” the fund states in its Regional Economic Outlook report

launched at the ongoing annual meetings it is hosting with the World Bank. Growth in sub-Saharan Africa (SSA) is projected to remain at 3.2 percent in 2019 and rise to 3.6 percent in 2020. The expected recovery, however, is at a slower pace than previously envisaged for about two-thirds of the countries in the region, partly due to a challenging external environment. Growth in the region has

been revised down, partly due to a challenging global environment. According to the fund, “Rising trade and geopolitical tensions have increased uncertainty, resulting in weak global economic activity and a significant decline in trade volumes. “The slowdown of key trading partners is also impacting SSA, with growth revised down for about two-thirds of countries in the region.” Growth is projected to re-

Experts chart path to digital skills growth in Nigeria David Ibemere

igeria’s digital skill talent gap is causing the country to lose out as companies are finding it increasingly difficult to find the right candidates with the digital skills to fill its vacancies. This gap, according to digital experts who gathered at an industry event entitled Accelerating Talents for Industry organised by Digify Africa and supported by Facebook in Lagos at the weekend, believe can only be bridged, if Nigerians begin to show more interest in up levelling their digital skills, which goes beyond just checking and posting events on social networking sites. Taking turns to explain the gaps and how technology is disrupting brand communication while highlighting government‘s role in closing the digital divide, the experts were also in consensus opinion that to bridge digital skills gap in Nigeria, there was need for every citizen to understand the rudiments behind being computer literate. One of the speakers, Yemi Orimolade, regional Philanthropies Marcom coordinator, Microsoft MEA, said with the fourth revolution being in place people would need to upscale, learn new skills and relearn to become more relevant with the future of work or jobs in the new industrial revolution. Orimolade said basic computer literacy was the first step in closing the huge digital skills gap in the industry, saying, “We need to go back to the basics and make digital education available across board.” Also speaking, Lanre Osibona, special assistant to the President of Nigeria on Information Technology, however noted that it would take the collaboration of both private and government intervention for Nigeria to take the lead in the developmental drive to bring ICT to the fore in the formal and informal sectors of the country. While praising the effort made so far by Digify Africa in training and preparing graduate for digital workplace, he accepted that there was more work to be done to prepare Nigerians for the fourth revolution.

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main strong in non-resourceintensive countries, averaging about 6 percent. As a result, 24 countries, home to about 500 million people, will see their per capita income rise faster than the rest of the world. In contrast, growth in resource-intensive countries, including Nigeria, is expected to move in slow gear of about 2½ percent. Hence, 21 countries are projected to have per capita growth lower than the world average.

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Again, hard times for travellers as Julius Berger ICAN reporting committee to boost FG’s NSIP agenda diverts traffic on Lagos-Ibadan road from October 21 KELECHI EWUZIE an influential Committee that corporate reporting.” will promote and support the JOSHUA BASSEY

ravellers on LagosIbadan Expressway are in for an extended journey time, as Julius Berger discloses of yet another diversion of traffic on the expressway. The Federal Road Safety Corps (FRSC), which confirmed this on Friday, said it was to enable the contractor extend the ongoing rehabilitation of the road from Magboro to the section where The Punch Media House was located, starting from Monday, October 21, 2019 to January 31, 2020. The ongoing rehabilitation this time, unless professionally managed, will heavily impact on travellers as the festive pe-

riod draws closer. Clement Oladele, Ogun State sector commander of FRSC, who confirmed the planned traffic diversion, said the rehabilitation work would cause a temporary diversion of Lagos bound traffic to the Sagamu bound carriageway from Magboro to Punch. “This temporary diversion of traffic will transfer Lagos bound traffic to the same carriageway conveying traffic outward Lagos. This means that both traffic inward and outward Lagos will be accommodated on the same section of the expressway within the 1.3 kilometres stretch of the road from Magboro to Punch in Ogun State,” Oladele said. The partial closure of the

Lagos end of the express road for ongoing rehabilitation work stretching over 600 metres from Ojodu Berger to Kara Bridge has left millions of travellers in pains since September 2, as they continue to spend hours in traffic. The sector commander advised motorists to take note of the development and plan their trips by allowing more time to their travelling time, because of the construction work that would narrow the carriageway that might impair traffic. “Motorists are also enjoined to observe lane discipline and avoid driving against traffic, as violators risk impoundment of their vehicles and liable to payment of N50,000 traffic fine,” he said.

NASD sees blockchain technology, cryptocurrencies as future of securities trading MICHAEL ANI

round the world, the use of blockchain technology and cryptocurrencies is growing and transforming businesses. Proponents say it is the technology that will revolutionise the financial services, pointing to its abilitytofunctionwithoutacentral authority and also store data in a tamper-proof way. Given its flexibility, security and distributed nature, it has become the base technology for a vast array of business applications from healthcare, real estates to finance or the law. But more importantly, it is its prominent usage in reshaping the way securities are being traded. Through the use of blockchaintechnology,theWorldBank floatedthefirstconventionalbond where it raised a total of $108 million (AUD160m). Thefinanceinstrumentwhich the Bank called the ‘Kangaroo’ bond, was issued using its blockchain Offered New Debt Instrument (bond-i for short after Sydney’s Bondi Beach) which helped reduce debt paperwork. With the technology, banks couldoverseeinvestorbidsinrealtime, settle investments instantly and make the price-discovery process more transparent. The World Bank claims that this will help make it easier to raise funds for impoverished peoples. Europe is also following the World Bank’s lead with several financial instrument issuance through the use of blockchain technology. Similarly, the United Arab Emirates (UAE) is planning on completing half of its government transactions using blockchain by 2021. In spite of the growing buzz of blockchain technology, awarenessoftheusageofthetechnology has been low, driven by financial regulators raising red flags. In a recent stakeholders forum, organised by NASD OTC Securities Exchange — a trading network that facilitates secondary market trading of all securities of publicly listed companies primarily in Nigeria but with a focus on the West African region — in Lagos, the importance of blockchain

technologyandcryptocurrencies, was the centre of discourse. The forum was aimed at educating stakeholders from different industries on the usefulness of blockchain technology in deepening the operations of companies in the unlisted securities market in Nigeria. AccordingtoNASD,thefuture of securities trading lies in blockchain technology and cryptocurrencies, the faster Nigeria starts adapting the better. “As technology evolves, the capital market community must alsomovealongwiththetimes.As a forward-thinking and responsible trading platform, NASD is committed to delivering a transparent, secure and convenient service,” Bola Ajomale, Managing Director and CEO, NASD Plc said. “There’s so much we can do. Imagine where small businesses can raise funds and transact abroad using bitcoins.” At the forum, the leadership of the securities trading platform pointed out several benefits, the usage of blockchain technology and cryptocurrencies to include raising capital with ease; creation

of a database for identity information where collectors and regulatorsholdnodes;andsecuritization where assets are converted to security token to achieve fungibility. Enitan Pascal Odogun, ACIS, said the use of the technology means less time consumed in trading on the securities platform. He said the decentralized system makes it possible for an individualtohavetotalownership andcontrolofcryptoassets,which is used as a crypto wallet that has a public and private key. He noted that although the use of blockchain technology comes with several limitations in terms of its scalability, consumer protection, transparency, perception, and standardization, there are however proposed solutions to tackle such limitations. Thesesolutions,heexplained, include changes in consensus mechanisms that would help in addressing scalability challenges; embedded supervision to address consumer’s protection and transparency, and awareness that would help in providing accessibility of information to address negative perception.

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nstitute of Chartered Accountants of Nigeria (ICAN) says the establishment of the Nigeria Integrated Reporting Committee (NIRCO) will complement the efforts of the Federal Government to align GDP growth with Sustainable Development Agenda, as envisaged by the National Social Investment Programme (NSIP). ICAN also says by adopting Integrated Reporting, companies will align their Financial and Sustainability Reporting to enhance decision making by investors and business executives. Nnamdi Okwuadigbo, president, ICAN, says with this development, Nigeria has joined other visionary countries that can see the future of corporate reporting. While speaking during the inauguration of the Committee, Okwuadigbo notes, “The establishment of NIRCO Championed by ICAN will serve as an influential Committee that will promote and support the adoption of Integrated Reporting in Nigeria and West Africa.” According to Okwuadigbo, “Integrated Reporting has been recognised by International Federation of Accountants, the World Bank, International Monetary Fund and other multilateral agencies as the future of

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Patrick Kabuya, World Bank representative while speaking during the inauguration, notes, “Integrated Reporting will be a paradigm shift of thinking by boards and management on their business models, strategy and operations to mindfully incorporate the three dimensions of sustainable development: people, planet and profit, considering all capitals in longterm value creation.” On his part, Godstime Iwenekhai, head of listings regulation at the Nigerian Stock Exchange, says, “We believe that with the birth of the NIRCO companies listing on the Exchange will be encouraged to embrace the initiative and thereby add value to investors and other stakeholders. We will work with the committee to ensure that companies listed on the Exchange embrace this initiative.” Innocent Okwuosa, chairman of NIRC, an ICAN Council member, is of the opinion that one of the strategic visions of PAFA/AIRC has been achieved and Nigeria will be better for it. The formation of NIRCO can be traced to PAFA who, working with the World Bank decided to establish and operate the Africa Integrated Reporting Committee (AIRC), whose purpose is to serve as

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adoption of IR in Africa. AIRC is comprised of influential policy-makers from countries that have Stock Exchanges in Africa and based on their desire to attract more investment). PAFA shall extend invitations to the target member countries via the respective country PAO. The initial countries are: Iheanyi Anyahara, deputy director, Strategy and Research Financial Reporting Council of Nigeria (FRCN), states that initiative such as this will result in better and more comprehensive corporate reports, with improved accountability, sustainability and governance. NIRCO membership is multi-sectoral and comprises representatives from the FRCN, Securities and Exchange Commission (SEC), The Nigerian Stock Exchange (NSE), Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), National Pension Commission (PenCom), National Insurance Commission (NAICOM), Corporate Affairs Commission (CAC), KPMG, Deloitte, Ernst & Young, PricewaterhouseCoopers, Dangote Industries Limited and the Private Sector Advisory Group on SDGs.

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Two funerals and grief for the Tinubu family

BASHORUN J.K RANDLE

t was a great shock to learn of the demise of Alhaji Karim Ayinla Babalola Olowu (aka “KAB”), OON a titan in our nation’s sporting history. He died on the 14th of August 2019 at the ripe old age of ninetyfive years and he is survived by children, grandchildren and great grandchildren. He was a devout moslem and the “Olori Ebi” (the head) of the Tinubu family of Lagos. However, “KAB” was much more than that – an epitome of humility, contentment, trustworthiness, family values and generosity of spirit. I doubt whether anyone can recall him ever being angry or agitated. Ironically, he was a strict disciplinarian especially with himself. Olowu attended CMS Grammar school in Lagos before proceeding to study Physical Education at Loughborough College, Leicester, England on federal government scholarship from 1952 to 1955. As an athlete, he represented Nigeria in many international competitions which earned him a trove of trophies and laurels. He was both a sprinter and long jumper and he represented Nigeria at the British Empire Games in Auckland, New Zealand in 1950. Two years later, he participated in the Summer Olympic Games in Helsinki, Finland. According to CNN, he won silver medals in both the long jump and the 4 X 110 yards relay race at the 1954 British Empire and Commonwealth Games held in Vancouver, British Columbia, Canada. His performance was exceptional and he was rightly idolised as the first Nigerian athlete to win two medals at the Commonwealth Games. It was indeed a rare feat. Drug cheats were entirely unknown then. As the Games Master at King’s College, he was in charge of physical education and he never compromised the very high standards he set for himself and those who were under his care.

Beyond that, considering that this was during the colonial period when there were only a handful of Nigerians amongst the British tutors, he held his own – but in a very dignified way. He was widely respected by all and sundry in the school (teachers, parents, students, junior staff etc.) and beyond, in the larger community of Lagos (and indeed Nigeria). Although, he was not an old boy of King’s College, he endeared himself to King’s College Old Boys (KCOBs) by his dedication and devotion to grooming athletes who did our nation proud by comporting themselves as true sportsmen – win or lose. He was eager to instil in them the lesson that character and sportsmanship were as important as sporting prowess as evidenced by speed, throwing ability, or jumping (be it height or distance) on the sports field. As fate would have it, my father late J.K. Randle (an old boy of King’s College) was the Chief-de-Mission of the Nigerian team to the Olympic Games held in Melbourne in 1956. Olowu was the Captain of the team which included A.K. Amu who was then a student at King’s College. The 10 athletes on the trip were captain and 100m and long jump athlete, K.A.B. Olowu; R.A. Oluwo, a pole vault athlete; J.O. Chigbolu, V.O. Gabriel, E.A. Ajado, 100m and 4x100m relay; T.A. Erinle, T. Obi, A.K. Amu, P. Esiri and former Attorney-General of the Cameroons, P.B. Enigo. The Cameroon was part of Nigeria then. The accompanying officials, all deceased, were J.K. Randle, (Chef-DeMission), Chief A.A. Ordia (coach), J.A. Enyeazu (assistant coach) and Arthur Cooper, Nigerian Attaché, Melbourne. Sadly, my father died on 17th December 1956 at the age of 47 shortly after he returned from Melbourne. Olowu kept a watchful eye on me while I was a student at King’s College and he was an enthusiastic supporter of the annual Olympic Games Dinner which I hosted in honour of Olympians for several decades. He was also an ardent supporter of the Dr. J.K. Randle (1928) Annual Swimming Competition which I have been sponsoring for over five decades. By the time he died, he was the last surviving 1956 Olympian. However, what was most remarkable is that at the time he captained the Nigerian team in 1956, he was over thirty-two-years-old – an age when most athletes would have

given up active participation. Indeed, he soldiered on for several more years. In 1966, he became the first Nigerian to officiate at the Commonwealth Games in Kingston, Jamaica. As the Chief Starter at the 1973 All-Africa Games held in Lagos, he carried a loaded pistol which he would fire with tremendous calm and dignity after loudly announcing to the athletes participating in sprints and long-distance running: “On your marks; get ready; Go!!” The noise was deafening. This was followed in 1976 with his appointment as the Team Manager of the Nigerian team to the Summer Olympic Games in Montreal, Canada. He capped it in 1992 with the spectacle of him being shown on television all over the world as the first Nigerian Olympic torch-bearer. After several years at King’s College, Oluwo joined the Nigerian Prison Service and he was in charge of Kirikiri Prison, Apapa, Lagos. Subsequently, he was transferred to Agodi Prison, Ibadan. Fate played a powerful role in the life of an old boy of King’s College, Major Juventus C. Ojukwu who was detained in Agodi Prison on account of his role in Nigeria’s first coup d’état on 15 January, 1966, while serving in Kaduna. It was Olowu who ensured the safety and reasonable comfort of Juventus Ojukwu who was my classmate at King’s College and course mate of now Muhammadu Buhari, President and Commander-in-Chief of the Armed Forces of Nigeria. Fortunately, J.C. Ojukwu later became a politician and member of the House of Representatives. He is still alive and is better placed to provide testimony regarding the assistance rendered to him by the inimitable Olowu who set up the sports complex at the Kirikiri as well as the Prisons Athletics Club which produced many outstanding athletics for our nation. While the Tinubu family was still grieving and mourning the loss of their patriarch, Alhaji Rafiu Babatunde Tinubu died on September 4, 2019 twenty-one days after the demise of his uncle. He was aged 75 years. While Olowu was the first grandson of Madam Tinubu and Saka Tinubu, Rafiu was their great grandson (and nephew of KAB). Rafiu was popularly known as RAB. Rafiu attended St. Peters School, Faji while I attended Lagos Government School Okesuna. However, in

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May the souls of K.A.B Olowu and Rafiu Tinubu rest in peace in the bosom of the Almighty

1956, he along with Peju Smith (the older brother of Alhaji Musliu Smith, the former Inspector-General of Police) and I attended special lessons at Campbell Street, Lagos conducted by Alhaji Muhammad Bisiriyu Olatunji Onisarotu (an old boy of King’s College) in preparation for the entrance examination to King’s College. Rafiu proceeded to Ahmaddiya College, Agege while Peju Attended CMS Grammar School. I was admitted into King’s College in 1957, two weeks after my father died. Peju retired as a dentist several years ago and Rafiu joined the Lagos State Civil Service from where he retired as the Head of Service. It would be remiss of me not to mention that Alhaji Onisarotu was a middle level officer at the Ministry of Finance. He was responsible for paying all the expenses in connection with the visit of Her Majesty Queen Elizabeth II accompanied by her husband the Duke of Edinburgh, Prince Philip to Nigeria in 1956. It was a huge sum but “being a good King’s College Boy”, three weeks after the end of the royal visit, Onisarotu accounted for every penny of the money voted for the visit and returned the balance to the treasury. What was also remarkable was that Onisarotu, a devout moslem, had no qualms whatever living as a tenant in the house of Mr. & Mrs. Fernandez (who were staunch Catholics) at Campbell Street, Lagos. They were the parents of the business mogul Ambassador Deinde Fernandez. Incidentally, their daughter married a moslem, Alhaji Alade Odunewu. Perhaps I should add that our respective families’ association (J.K. Randle, Smith and Tinubu) go back over a hundred years as we lived in the same part of Lagos. I vividly recall that when my father was campaigning for political office in 1951 (under the aegis of the Action Group), he was warmly welcomed by the Tinubu family of Kakawa Street which was part of “H Ward”. They assured him that there was no need for him to campaign as they were fully behind him.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Financial inclusion: Finally, a game-changing device

ver the past 10 years there’s been ardent attempts to tackle the malaise of financial exclusion which has affected tens of millions of Nigerians. The adverse effect of exclusion on the country’s productivity, commerce and GDP is an obvious one. According to CBN 2016 figures, 56.3 million of Nigeria’s 96.4 million adults were financially included in the economy. However, according to SANEF’s 2018 figures, there are still over 30 million adult Nigeria’s outside the financial community. Most of these are women and in rural areas. What is worrying is that this figure has not moved significantly since March 2018, indicating a plateau. It is evident that if the objective of full inclusion by 2020 is to

be realised a dynamic intervention must occur in the course of the coming months prior 2020. Could that intervention come in the shape of new Technology? If technology can play a significant part then it is worthwhile attending the CEO briefing at which the founders of “Raven” unveil how this simple device and system will revolutionise the inclusion space. The collaboration between Mvoula, a Nigerian Private Equity Firm headed by Adeola Adetunji, former CEO of Coca-Cola West Africa and Waxed, a South African payment solutions Company run by Anthony Stewart and Alon Fowler began in 2017. The objective was to tackle the challenges of financial exclusion in the African www.businessday.ng

continent. We are introducing the device and system here in Nigeria. Adetunji is an accomplished entrepreneur with ownership interests in companies in South Africa, Cameroun, Nigeria and Republic of Congo. He is also a non-executive director on the board of the Central Bank of Nigeria and sits on the global advisory board of the University of Pittsburgh, Pennsylvania. His partners Stewart and Fowler have been involved in innovation in the financial services sector for over 20 years. Coming up with the Raven device has become a defining moment for the partners and they are delighted to launch in Nigeria’s most populous country on the 22nd of October, in the presence of 50

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ANTHONY STEWART

leading stakeholder companies with the highest interest in resolving this challenge in Nigeria.

Stewart is the managing director and CEO at Waxd

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Monday 21 October 2019

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Banks are bleeding…but are they a buy?

PATRICK ATUANYA

uaranty Trust Bank (GTB), Nigeria’s largest lender by market capitalisation kicked off the third quarter (Q3) earnings season for banks when it released results last week. The banks net income rose 3.4 percent to N147 billion, driven by a marginal rise in net interest income +1 percent to N172.9 billion, a 2.8 percent increase in non-interest income to N101.8 billion and a 2.2 percent decline in total operating expense to N99.6 billion. Return on Equity (ROE), came in at 33 percent, while cost to income ratio dropped further to 36.85 percent. The bank is the most efficient lender in the country, with average cost to income ratio for the rest of the universe of banks hovering near the 50 percent mark and above. However the stock has returned -22 percent in the past year and closed trading at N26.3 a share on Friday. The NSE banking index has returned -19.9 percent by comparison. GT Bank traded as high as N49 a share in January 2018, meaning it is down some 46 percent in almost 2 years, meanwhile earnings are up in that time period. It goes without saying that GTB

is among the best in class in the Middle East and Africa (MEA), region where very few banks are throwing out ROEs of 30 percent plus, which begs the question about what is ailing the banks and are they a buy at these depressed levels? GTB had for a long time traded at a wide range between N20 (bottom) and N30 (top), and traders/ investors had hoped that once it broke out of the range (move above N30 per share), which it did sometime in May 2017, the former top or resistance level would become support, alas that was not to be as its shares have fallen below the N30 mark. Beyond the technical analysis, there are fundamental reasons why banks are selling off. First a rash of regulatory pronouncements by the Central Bank of Nigeria (CBN) has made investors skittish about their prospects. On Wednesday July 3, the CBN issued a notice to all banks in a circular with reference number BSD/ DIR/GEN/MDD/01/045, signed by Ahmad Abdullahi, director, banking operations, directing them to maintain a minimum Loan to Deposit Ratio (LDR) of 60 percent by September 30, 2019. It said the ratio “shall be subject to quarterly review.” The apex bank warned that failure to meet the stipulated minimum LDR by the specified date “shall result in a levy of additional Cash Reserve Requirement (CRR) equal to 50 percent of the lending shortfall of the target LDR.” The CBN subsequently debited a levy of about N500 billion from accounts of Banks that failed to

meet the 60 percent minimum LDR on the 26th of September of which GT bank was debited a total of N25.1billion. However sources suggest that the CBN refunded N200billion, to banks, whose LDR position improved between the 26th (debit date) and the 30th (deadline date). The CBN has also subsequently jerked up the minimum LDR ratio Banks are to maintain to 65 percent. Another Circular was released barely a week later on July 10th by the CBN, limiting the amount of excess cash Banks can park with it and earn interest on. In the circular FMD/DIR/CON/ OGC/12/019 to all banks and discounts houses titled ‘Guidelines on Accessing the CBN Standing Deposit Facility (SDF)’, signed by Angela Sere-Ejembi, director, financial markets department, the CBN said the remunerable daily placement by banks shall not exceed N2 billion. The SDF is basically a liquidity mop-up mechanism which the CBN uses without necessarily issuing government securities. Prior to November 2014, banks could deposit as much liquidity at their disposal with CBN and be remunerated (paid interest) for same. The CBN capped the minimum remunerated deposit through the window at N7.5 billion in November 2014, however banks could keep excess cash with the CBN earning zero percent as they wished. With the new framework, the allowable daily deposit through the SDF that will now be paid interest on by the CBN is now capped at N2 billion at the applicable Monetary

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Beyond the technical analysis, there are fundamental reasons why banks are selling off. First a rash of regulatory pronouncements by the Central Bank of Nigeria (CBN) has made investors skittish about their prospects

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

Why we need to stop focusing on the recurrent versus capital portions of the budget

ne of the first things analysts in Nigeria look for when trying to understand our public budgets are the shares of recurrent and capital expenditure. The thinking typically simplifies things by arguing that a higher share to capital expenditure is good whereas a higher share going to recurrent expenditure is bad. For example, a state that has a capital to recurrent expenditure ratio of 70 to 30 is typically lauded in the press as having a good budget, whereas a state that spends 80 percent of its budget on recurrent items is considered as having a not so good budget. But is it really that simple? Should we be judging budgets based on this simplistic narrative? To answer this, it is useful to go into more detail on what is in these broad categories. First, recurrent expenditure. The first part of recurrent expenditure that typically riles analysts up is personnel costs. “We are spending too much on salaries of civil servants who don’t do anything”, is a line you typically hear. But is it that simple? What if the salaries are for health care professionals? Or for teachers? Or for police? You typically cannot argue that a society

does not need police or soldiers. Of course, they do. Spending on education and health is also technically an investment in human capital which most economists consider to be good for the economy. So, should we really complain so much if a higher fraction of spending goes to security services or investment in education and health? Looking at the federal government’s 2020 budget proposal for instance. Almost 80 percent of personnel costs go towards security agencies, education, and health. Does anyone really want the federal government to spend less on security? Or to invest less in education and health? There are questions around the efficiency of that spending for sure but even if the federal government became more efficient, can anyone argue that we should be spending less on those things? Then there is the debt servicing part of recurrent expenditure. This is a bit trickier. On the one hand the larger the share of the budget that goes into servicing debt, the smaller the share that can be spent on everything else. On the other hand, if you raised new debt for important infrastructure projects in the previous budget then that would increase your debt servicing www.businessday.ng

going forward. Is it really bad to finance infrastructure with debt? The question for debt servicing is therefore really about what new debt is used for and how sustainable the debt picture is. A debt servicing to revenue ratio of 60 percent is obviously unsustainable. Still once you have debt it must be serviced. It is not negotiable. Finally, there is the capital expenditure section of the budget. We typically think of this as spending on infrastructure and that is mostly true. However, it is not the only thing that officially goes into the capital expenditure component of budgets. Spending on new four-wheel drives for senior civil servants technically counts as capital expenditure. So, does spending on computers, fancy office buildings, and furniture. Digging deeper into the capital expenditure component of the average federal government agency for instance shows that the majority of capital expenditure goes to office buildings, furniture, computers, and other tangibles. If you dig deeper it becomes clear that not all capital expenditure counts as infrastructure spending and therefore not all of it is what can describe as good spending.

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Policy Rate (13.5% today) minus 500 basis points, equivalent to 8.5 percent. These measures by the CBN limit the banks interest earning capacity by limiting funds which they can use to purchase high yielding Government and CBN securities. Another major issue facing the banks is the rise of competition such as Fintechs and mobile money providers. It is a threat facing banks globally but which Nigerian lenders have failed to tackle until now. Most young people who are often tech savvy would rather bank on their phones than visit a physical branch. If the Fintechs and mobile money providers succeed in pushing more Nigerians to use their platforms then that would obviously eat into banks profitability and by extension their valuations in the market. In a sense the need for the CBN to have to force the banks to lend shows the static and non-innovative state of the sector. So are the banks a buy? Best in class names like GTB probably are a buy at these levels, but for multiple expansion to happen for financials, banks need to innovate and provide solutions for Nigerians. If not they risk becoming mere afterthoughts which provide a safe place to deposit money or people use to receive salaries, after which they move funds to their preferred Fintech platforms for investments and other solutions.

ECONOMIST

NONSO OBIKILI

What does this all mean? It means we need to spend less time justifying budgets based on the simplistic recurrent versus capital expenditure dichotomy. We need to focus on new metrics that properly describe how much is spent on things we consider important. How much are we actually spending on infrastructure relative to the size of the budget? How much are we investing in human capital from an education and health spending perspective, and how efficient is this spending? What exactly are we using new debt for and is the debt position sustainable? These are the kinds of questions we should be asking about our public budgets and the metrics we should be focusing on. Nonso Obikili is chief economist at Business Day.

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20 BUSINESS DAY

Monday 21 October 2019

EDITORIAL PUBLISHER/CEO

Frank Aigbogun EDITOR Patrick Atuanya DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

Unproductive, unsafe and expensive: petrol tankers on our roads

wo fire accidents in succession in Onitsha last week confirm transporting petrol by road in Nigeria is unproductive, risky and costly. The loss of lives, and destruction of property could have been avoided. The fires are a telling symptom of a problem: overreliance on roads for the transport of everything from people to petrol to every corner of the country. Roads across the country, in different conditions from good to poor, account for 90 percent of passenger and freight traffic. Like any overburdened resource, these roads are under immense strain. Especially because Nigerian cities are expanding while investment in roads, much less rail, is lagging. Air travel, which has its own horror stories, has attracted more investment, but accounts for a small proportion of traffic in Nigeria. Besides it is concentrated in Lagos, Abuja and Port Harcourt, with Lagos en-

joying the lion’s share of traffic. Onitsha, a trading city and home to arguably the largest market in the world, is located along one of the busiest trade routes in Nigeria. With an estimated 8 million residents, Onitsha is 47th largest urban area in the world, and the second largest city in Nigeria, according to the 2019 Demographia Urban Areas Report. Its population density is more than twice that of Toronto. These population estimates which are based satellite imagery make it one of the new urban areas in the world with a population above 5 million. As Nigerian cities expand (Demographia lists 25 of them) demand for commodities such as petrol will increase as well. Transporting thousands of litres of petrol with tankers which must negotiate already congested roads of these densely populated cities is risky. From the clogged ports of Apapa to the farthest parts of the country, its unproductive to rely on trucks for moving petrol. It’s abnormal. Tankers ideally are used to move petrol

across short distances; the best practice is to use pipelines and trains to deliver the bulk of refined petroleum. It is expensive too. Every year our under-utilised refineries guzzle billions of naira in overheads that can be used to build cheaper alternatives like new rail networks, expand current ones or construct pipelines to transport the finished products from the Dangote refinery when it is completed. The fires in Onitsha, and many others waiting to happen, make a solid and urgent case for the Petroleum Industry Bill. A more competitive oil sector will see players come up with innovative technologies to deliver petrol, diesel, aviation fuel and kerosene to their customers cheaply and quickly. Nigeria isn’t new to the gains that can be derived if its population, especially the density of its growing cities, is harnessed through networks that improve connectivity. Thanks to the reform of the telecoms sector Nigerians are interconnected, sending voice, text and video

messages at the click of a button. Our dysfunctional and fragmented transport system remains an obstacle to productivity. The US is an excellent example of how a network of infrastructure can transform a country. In the 1970s, the US experienced a dramatic improvement in the standard of living and productivity due to a network of roads, electricity grids, telephones and sewages. To a large extent, railways rewrote the economic history of the US. Thousands of kilometres of steel with trains running on them, carried goods from farms to factories which were miles apart, connected the hinterland to ports and docks such that every product made in the US could easily be transported anywhere within and outside the country. However, an efficient government, incentives such as land grants for railway investors, a robust financial system, a developed agriculture sector and human capital were critical to the rail revolution.

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Buhari’s government fails the competence test with routine budget failures GLOBAL PERSPECTIVES

OLU FASAN

resident Muhammadu Buhari unusually started his budget speech this year with an apology. Presenting his 2020 budget on 8 October, he told members of the National Assembly: “I will start by asking you to pardon my voice”, adding: “As you can hear, I have a cold as a result of working hard to meet your deadline!” But the president gave the wrong kind of apology. Instead of apologising for his voice, he should have started by apologising for the failure of the preceding 2019 budget and then for presenting a 2020 budget that, by all independent assessments, seems headed in the same boringly predictable direction of unachieved targets, poor implementation and, thus, budget failure. Truth is, since the first in 2016, each of President Buhari’s budgets has never done what it says. Although each budget always carried a catchy phrase or strapline, it’s all empty words. The 2016 Budget was named “Budget of Change”, but what change did it bring? Zilch! The 2017 Budget was titled “Budget of Recovery and Growth”, but with the economy growing at 0.82% in 2017, that budget could hardly be said to have lived up to its name. What about the 2018 Budget? Well, it was called “Budget of Consolidation”, but it led to no fiscal consolidation but instead increased debts. The 2019 Budget went by the name “Budget of Continuity”. Well, to the extent that it signalled the continuity of Buhari’s administration’s anti-growth policies, that was rhetorically true. But in terms of its substantive promises, the budget was a failure. Now, we have the 2020 Budget, dubbed “Budget of Sustaining Growth and Job Creation”! The truth is that President Buhari’s budgets routinely overpromise and underdeliver. For instance, when presenting his 2016 Budget, which

he described as “a historic milestone for us as a nation”, Buhari said, “I know many people will say “I have heard this before” but added: “Our actions will speak for us”. Yet, it was a failed promise! The then Senate President, Bukola Saraki, said at the time that “the Senate is tired of having budget documents that, at the end of the day, when it comes to implementation, don’t mean anything”. That, sadly, was what happened with the 2017, 2018 and 2019 budgets! Take the 2019 Budget. Even President Buhari himself couldn’t deny that it was a failure. In his 2020 Budget speech, he acknowledged that, as at June this year, the revenue performance was only 58 percent of the target set for the 2019 budget, with oil revenues falling below target by 49 percent, while non-oil revenues, such as receipts from VAT, also dropped below expectations. It’s no wonder that, with such precipitous decline in revenues, the presidency recently queried the chairman of the Federal Inland Revenue Service, Tunde Fowler, ordering him to explain the “significant variances between the budgeted tax collection and the actual collection”. Indeed, the government now seems determined to pursue aggressive tax collection, with Buhari warning in his Independence Day speech that, “severe consequences will attend failure to achieve agreed revenue targets”. But tax collections are easier when business activities are buoyant, and the economy is growing robustly. Yet, the 2020 Budget in unlikely to incentivise such dynamism and growth. This is partly because the problem with the 2019 Budget, where recurrent expenditure was prioritised over capital expenditure, will continue. For instance, as the 2019 Budget was hit by significant revenue shortfalls, it was capital expenditure that bore the brunt while, as the president said, recurrent expenditure items “have been implemented substantially”. In other words, staff salaries and overhead costs gobbled up much of the little money available, while capital projects, which potentially benefit the economy more, suffered from “delay in capital releases”. Of course, such delay is perennial. As one minister once said, “The time it takes for

budgetary allocations to translate into physical projects is too long.” Hardly any economy can perform well in those circumstances. But the 2020 Budget is even worse. First, it is based on an estimated federal government revenue of N8.155 trillion, which is 7 percent higher than the 2019 estimate of N7.594 trillion. If the government failed to meet the 2019 Budget’s revenue target by over 40 percent, how does it expect to meet the much higher 2020 revenue target? Interestingly, the government expects N3.7 trillion (up to 46 percent) to come from other revenues and another N1.81trillion from non-oil tax revenues, which leaves N2.64 trillion (about 32 percent) coming from oil revenues. But how would the government generate the non-oil and other revenues? Surely, that depends, as I said earlier, on buoyant economic activities and increased economic growth. Well, the president estimates that the economy would grow by 2.93 percent in 2020 from the current 2 percent, and that the growth would be driven largely by non-oil output, “as economic diversification accelerates, and the enabling business environment improves”. Now, a key rule of budgeting is to avoid “optimism bias”, but this is pie-in-thesky economics, not least because the budget is based on unrealistic estimates, not helped by the lack of incentives to make them realistic. Of course, in an ideal world, moving from a growth rate of 2 percent to 2.93 percent within a year is not extraordinary, but the Nigerian economy is so sluggish that it needs a shot in the arm to achieve that. But here is a budget of N10.33 trillion, of which only N2.14 trillion (about 20 percent) goes to capital expenditure, while the rest are spent on recurrent expenditure (N4.88 trillion) and debt servicing (N2.45 trillion). The 2020 Budget has a deficit of N2.18 trillion, which would be financed through more borrowings. So, again, spending on staff salaries, overhead costs and serving Nigeria’s burgeoning debt, now estimated to be about N25.7 trillion, according to the Debt Management Office, DMO, have stifled this country’s ability to invest in basic infrastructure and human capital development, both critical to economic growth. It says a lot about Nigeria’s priori-

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The 2020 Budget is even worse. First, it is based on an estimated federal government revenue of N8.155 trillion, which is 7 percent higher than the 2019 estimate of N7.594 trillion. If the government failed to meet the 2019 Budget’s revenue target by over 40 percent, how does it expect to meet the much higher 2020 revenue target?

ties – doesn’t it? – when only N48bn in a budget of N10.33 trillion is allocated to education and N46 billion to health, and that’s despite the government planning to increase the VAT rate from 5 percent to 7.5 percent and saying that the extra revenues would be spent on education and heath! As for investment in basic infrastructure, it is, at N2.46 trillion, 23 percent lower than the 2019 budget provision. The government says it would use tax credits to induce private sector investment in infrastructure projects, such as roads. But apart from tax credits not being a transparent and efficient way of boosting private investment in infrastructure, the truth is that Nigeria lacks the hospitable environment for attracting significant private capital and investment. Last week, I expressed scepticism about President Buhari’s call on members of his newly constituted Economic Advisory Council to come up with “homegrown solutions” to Nigeria’s economic problems. Of course, the term “homegrown” usually means that the proposed solutions were developed without outside pressure but doesn’t mean they should ignore universal economic principles. For instance, at the heart of Ethiopia’s “Homegrown Economic Reform Agenda are business focus, market reforms, privatisation and liberalisation. It’s not surprising that investment accounts for about 38 percent of Ethiopia’s GDP, which is growing at over 7 percent. I have always argued, and strongly believe, that Nigeria needs a robust market economy system to achieve any meaningful growth and progress. But the 2020 Budget, despite being called “Budget of Sustaining Growth and Job Creation”, lacks both the institutional and policy underpinnings of a successful market economy. What’s more, like its predecessors, the budget is also likely to suffer from unrealistic projections and poor delivery. All of which, the roots of budget failures, underscore the Buhari government’s acute lack of technical competence! Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Dear Nigeria, some suggestions to dealing with some of your economic Dear Nigeria, 1. If you construct high-quality (pot-hole free) and long-lasting roads, the vehicles plying the roads will last longer on the roads than they would otherwise. Consequently, this will crimp the demand for spares parts to fix the faulty vehicles. Since the spare parts are foreign, your balance of payment will begin improving and your currency, the naira may start getting stronger. If you succeed in achieving this, you would have contained the import-driven inflation resulting from the depreciation of the naira. 2. I think more than 70 percent of your domestic gasoline demand is for

transportation and power generation. If the power supply problem is addressed, the use of household and factory generators for powering homes and industries will begin to shrink as these normally rip holes in your external reserves. This will result in the following potential ripple effects: importation of generators and petrol will begin to decline so that more forex is saved and at the same time, these will ease the pressure on the existing refineries to meet the rising demand for petrol in the country. Eventually, this will grow your external reserves and thereby making an available foreign exchange for financing infrastructure and the importation of capital goods for your

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manufacturing sector. Note: A developing economy like yours is in desperate need of the physical capital in order to raise labour productivity and lower the average cost of production. 3. If your rail system is fully built and efficiently functional, the development will scrunch the market for use of private and commercial vehicles. As a result, the number of road crashes will be minimised as many travellers will switch to the use of the trains. And if there are fewer accidents, there will undoubtedly be a fewer number of cars needing replacement of parts following the crashes. You can now see the additional benefits on your balance of payment.

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ZUHUMNAN DAPEL

4. The above three things will gulp a lot of money if you must achieve them. Please do not pretend to have the technology to deliver on these. Other nations do. You can buy the technology from these nations using the proceeds from the crude oil that God has blessed you with. You already have the money. Please send it, that thy people, yes, thy sons and daughters, may break free from the past: from persistent misery as you unleash their potentials.

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22 BUSINESS DAY

Monday 21 October 2019 In Association With

Beyond the summit

A Balkan betrayal Foggy outlook

The proposed Brexit agreement is quite different to anything advertised at the referendum in 2016

hurting growth

S WE WENT to p re s s o n O c t o ber 17th Britain’s pr ime minister, Boris Johnson, and Jean-Claude Juncker, president of the European Commission, announced that a Brexit deal had been reached. Any agreement made in Brussels would still have to be approved by Britain’s cantankerous House of Commons, which threw out the deal that was struck late last year and may scupper any future one, too. Nonetheless, the new—and welcome—willingness of both sides to compromise suggests that, whatever happens in the next few days, the odds of a chaotic no-deal exit have lengthened considerably. That is a relief for all parties, and particularly Britain, which stood to suffer the most from crashing out. Yet it is hardly time to celebrate. The outlines of a draft deal that were being circulated as the European summit began were pretty grim for Britain. Excitement at the prospect of at last “getting Brexit done”, as Mr Johnson puts it, should not obscure the fact that his proposed deal would be bad for the economy, bad for the union, and bear little relation to what voters narrowly backed in a referendum more than three years ago. The deal that seems to be taking shape is economically worse for Britain than the one negotiated by Theresa May last year. It would remove the unpopular “Irish backstop” arrangement by taking Britain out of the EU’s

The IMF downgrades its forecasts for the global economy. Again

the twists and turns Any deal struck between Britain and the EU should be put to voters How of the trade war are

customs union altogether, and scrapping a promise to maintain regulatory alignment with the bloc. That would erect barriers to trade with what is by far Britain’s biggest partner. Unless things were to change dramatically during the short transition period, within ten years Mr Johnson’s deal would have reduced Britain’s total trade by about 13%, making people roughly 6%, or £2,000 ($2,560) a year, poorer than they would otherwise have been, one estimate finds. That is almost a third more than the hit that would have been delivered by Mrs May’s deal. Mr Johnson’s deal would also, in effect, establish a customs border between mainland Britain and Northern Ireland. Not only would this make life harder for businesses in the region, one of the poorest in the United Kingdom. It would also risk inflaming sectarian tensions, just as a border between north and south

would have done. The Good Friday peace agreement of 1998 rested on the idea that the Northern Irish could feel equally part of Britain or Ireland, or both. Building a customs barrier in the Irish Sea would rattle that agreement. Nor is that the only part of the union that is coming loose. Since the Brexit referendum, support for independence has been growing in Scotland, where polls now put it at 50% and rising. The ruling Scottish National Party believes that a second independence referendum will be given the green light within two years (see article). An earlier one, in 2014, was an uncomfortably close-run thing. Brexit, which Scots voted strongly against, could well tip the next vote the other way. Meanwhile, even in Wales, long the most contented member of the union, independence has crept back on the agenda. One recent poll found that 40% of the Welsh would gladly

leave Britain, if it means they could stay in the EU after Brexit. It may be that English voters are itching so badly to break free of Europe that they see all this as a reasonable price. Three years of wretched talks have made everyone keen to get the whole thing over with. Perhaps a majority are willing to forgo a couple of thousand pounds a year, and a nation or two. But there is a grave risk that voters are no longer up for this. Mr Johnson’s proposed deal carries a much heavier economic and constitutional cost than any plan advertised when they were asked for their opinion back in 2016. Most polls suggest a majority have since cooled on the idea of Brexit and, given the choice, would now vote to remain. It is good news that a deal has been struck. But it would be no triumph of democracy if it were pushed through without first being put to a confirmatory popular vote.

FTER WELCOMING the St Louis Blues, a championshipwinning ice-hockey team, to the White House on October 15th, President Donald Trump fondly recalled a recent triumph of his own: last week’s tentative trade deal with China. Simply put, America will impose no further punitive tariffs on Chinese imports if China promises to buy American farm goods worth billions of dollars. How many billions? “It’s very big numbers,” Mr Trump emphasised. “I said, ‘Ask for 70.… ’ My people said, ‘All right, make it 20.’ I said, ‘No, make it 50.’” Will this carefully calibrated amount ever materialise? China does not want to pay over the odds or deprive other, friendlier suppliers of its custom. It also wants America to go beyond promising no new

tariffs and to start removing existing ones. The deal may unravel before it is written down, let alone signed by the two countries’ leaders next month at the Asia-Pacific Economic Co-operation forum in Santiago. That unpredictability is a problem. Not just higher tariffs but “prolonged trade-policy uncertainty” are damaging the world economy, said Gita Gopinath, the IMF’s chief economist, this week as the fund again cut its forecast for global growth. “Manufacturing firms have become more cautious about longrange spending and have held back on equipment and machinery purchases,” the fund notes. The fog of trade war is depressing investment spending. And because machinery, equipment and other capital goods are often imported, weak investment spending is further hurting trade. The IMF now expects the Continues on page 23

Monday 21 October 2019

BUSINESS DAY

In Association With

Not so green

Greta Thunberg accuses rich countries of “creative carbon accounting” When it comes to measuring national emissions, she has a point

T IS 5AM, and New Covent Garden Market is in full swing. On its swarming 57-acre site in Battersea wholesalers are flogging fruit, vegetables and flowers to London’s greengrocers and restaurateurs. Costa Rican pineapples are stacked next to Kenyan passion fruits and Peruvian asparagus. Rows of Danish conifers sit by buckets of Dutch roses. Fresh produce shipped from all around the world is for sale. But what is a boon to chefs—and apologetic spouses—has become a mind-bending problem for politicians and regulators. Under mounting public pressure they are busy setting targets to limit their carbon emissions. At least 60 countries and over 100 cities have promised to get to “net zero”. The trouble is that few account fully for the emissions created by products that are consumed within their borders but produced outside them. Take, for example, a bunch of those Dutch roses. Britain’s “netzero” target for its carbon impact includes only domestic emissions— the lorry trip carrying them on British soil, and so on. These carbondioxide emissions are trivial in comparison to the 30kg or so from heating greenhouses in the Netherlands and flying the roses to Britain. Through a production lens, Britain looks relatively virtuous. Through a consumption lens, it does not. Flowers are just one tiny part of the equation. Across the rich world the overall measurement gap is huge, particularly for service-oriented economies. Britain consumes about 40% more carbon emissions than it produces; the European Union as a whole, 19%. In America the difference comes in at 8%, according to the Global Carbon Project (GCP), a network of scientists. As for big cities, the gap between the two gauges of their carbon trail is bigger still, at about three-fifths, using the average figure for 79 cities reviewed by an international group of researchers. The problem even extends to individual buildings, which owners sometimes declare to be “carbon-neutral” while ignoring the concrete and steel used to build them. Inevitably, since productionbased measures make rich countries look good (they also flatter small states that do little manufacturing), most have picked this methodology for their carbon targets. None of the 19 countries in the Carbon Neutrality Coalition have net-zero targets that explicitly aim to reduce consumption (carbon footprints are considered in another part of France’s legislation). Likewise New York’s net-zero target is production-based—helpful, since it is a state without much heavy industry. It is for this reason, among others, that Greta Thunberg, a teenage climate activist, told Britain’s Parliament in April that its climate goals amounted to little more than “creative carbon accounting”. The gap between national consumption and production measures comes from the emissions that are embedded in cross-border trade.

Such emissions make up a quarter of the global total. Scientists began to pay more attention to them as China became a manufacturing powerhouse following its entry into the World Trade Organisation in 2001. Its factories were powered by coal, the fossil fuel that emits the most carbon per unit of energy. By 2009 China had become the world’s largest carbon emitter (see chart). Its exports alone now account for about 5% of the world’s fossilfuel emissions. Most of this relates to goods that are ultimately consumed in the developed world: two-thirds of China’s emissions exports go to members of the OECD, a rich-country club. India and Russia are sizeable carbon exporters, too. (Saudi Arabia is not a big emissions exporter because both production and consumption statistics book the emissions from oil in the country where it is burned rather than extracted.) Cutting trade-related emissions is a daunting task. Cross-border supply chains are often complex, and making goods closer to home may not actually improve matters. The problem can be split into three parts: what is imported, where it comes from and how it travels. The imports that embed the highest carbon emissions are mostly industrial materials (iron, steel and chemicals) and consumer goods (cars, electronics and textiles). According to the Global Trade Analysis Project, a database maintained by Purdue University, these six products account for about 30% of trade-related emissions. But the CO2 released by the same item produced in two different countries can differ hugely, depending on how energy-efficient production is and how the countries make their electricity. Purdue’s data show that cars and car parts exported by China are responsible for nine times more CO2 per dollar than those exported by Germany. Mathieu Poitrat Rachmaninoff, an analyst at Newton Investment Management, notes that on average about half of the lifetime emissions from an electric

vehicle come from making the battery. A medium-sized battery made in renewables-rich Sweden emits around 350kg of CO2. For coalreliant Poland, that figure is over eight tonnes. To cut emissions, it is therefore necessary to look closely at products’ provenance. Sometimes the conclusions are counter-intuitive, as the tomatoes in New Covent Garden Market demonstrate. British tomatoes are grown in heated glasshouses and thus require three times more energy than sun-blessed Spanish ones. Even accounting for transport, local tomatoes are responsible for more emissions. Mike Berners-Lee of Lancaster University points out that a British apple bought in June has typically been in chilled storage for nine months. Keeping it cool for that long emits about as much carbon as shipping an apple from New Zealand. Modes of transport also matter. Around 87% of the world’s freight, measured in tonne-kilometres (a tonne transported one kilometre), goes by sea. Shipping accounts for about 2% of fossil-fuel emissions. But as a means of transport it is carbon-efficient. Producing a tonne of steel in China takes about two tonnes of CO2. Shipping that steel to New York adds only 322kg. Planes account for just 0.1% of the world’s tonne-kilometres of international freight, but an outsize share of all emissions. According to figures from the British government, the carbon emissions caused by transporting a given weight by air are about 70 times greater than if it had been shipped. That means sectors reliant on timely delivery, such as fast fashion, are particularly environmentally unfriendly. Just as governments and scientists are grappling with how to assess trade-related emissions, the world’s network of cross-border commerce has been disrupted by America’s trade war with China. In the first half of 2019, global trade volumes rose by 1% compared with the prior year, the slowest rate since 2012. But even if trade flows were to fall, it does not fol-

low that global emissions would drop, points out Glen Peters of the Centre for International Climate Research in Norway. Moreover, China produces lots of carbon-saving technology. It is home to eight of the world’s ten biggest manufacturers of solar panels, and is pumping money into batteries and electric vehicles. An intensifying economic conflict between America and China could mean the flow of Chinese technology and know-how across borders dries up, hampering mitigation efforts elsewhere. The trade war could cause multinational firms to shift production away from China. But that might not reduce emissions much, if activity is relocated to other countries that are keen to fuel their export-led growth with coal. Already emissions exports are growing fastest in Bangladesh, India, Indonesia and Vietnam, says Dabo Guan of the University of East Anglia. None of these countries is emitting as much carbon per person as China did when its exports took off, mainly because they burn less coal. But all are attracting labour- and resource-intensive industries such as plastics and electronics, which are leaving China in search of lower wages and less stringent environmental standards. In the long run the only answer is for all economies, including manufacturing-heavy ones, to shift towards cleaner sources of energy. Trade deals could be used to encourage exporting countries to cut emissions, says Sam Lowe of the Centre for European Reform, a think-tank in London. The EU is considering a carbon “borderadjustment” tax—higher tariffs on goods from countries that do not meet the EU’s environmental standards. America’s trade deals already allow for penalties on countries that fail to meet their commitments under the Paris climate agreement of 2015—though President Donald Trump shows little interest in using them. The trade deal struck in June between the EU and Mercosur, a South American trade bloc, could be blocked by EU member countries, or MEPs, unless Brazil does more to protect the Amazon rainforest.

How the twists and turns of the trade war are... Continued from page 22

world economy to expand by just 3% this year, compared with 3.6% last year. That would be the slowest rate in the decade since the global financial crisis. Both America and the euro zone are expected to grow more slowly this year than the fund had envisaged in July, before trade tensions escalated. India’s prospects have dimmed sharply: it is forecast to grow by 6.1% rather than the 7% expected only months ago. And in 2020 China is now projected to expand by less than 6% for the first time in 30 years. The fund has, unsurprisingly, slashed its forecast for Hong Kong. The city is now expected to grow by only 0.3%, compared with the 2.7% foreseen in April, before its economic prospects vanished in a cloud of tear-gas. The unrest could also jeopardise the fragile trade truce between America and China. On October 15th the House of Representatives passed a measure enjoining America to assess Hong Kong’s autonomy annually and sanction officials who violate it. China reacted angrily to what it describes as meddling in its affairs. The IMF’s economists have valiantly tried to quantify the damage to the world economy from the trade war if Mr Trump’s putative deal falls apart. The direct impact is surprisingly modest. The tariffs already in place and in the pipeline could reduce America’s GDP by just over 0.2% next year, compared with a world in which the trade war had never started (see chart). More harmful are indirect effects: weaker business confidence, productivity and risk-appetite on financial markets. These bring the damage to almost 0.6% of America’s GDP in 2020. The damage to China would be almost 2% of its GDP. These are small percentages— but of vast economies. If the IMF is right, an unresolved trade war could cost America roughly $125bn of forgone output next year alone. The cost to China could exceed $300bn (at market exchange rates). Big numbers indeed.

24 BUSINESS DAY

Monday 21 October 2019 In Association With

A new hope

The election of Kais Saied gives Tunisians something to cheer The awkward law professor wants to shake things up

T HAS BEEN a difficult eight years since Tunisia toppled its dictator and embraced democracy in 2011. The economy remains stagnant, corruption is still endemic, terrorism is a problem and politicians have disappointed. But the election of Kais Saied (pictured) as president on October 13th has brought a new sense of hope. After it became clear that Mr Saied had won, thousands of Tunisians gathered in the capital, many chanting the same slogans from eight years earlier. Mr Saied himself hailed his victory as a “new revolution”. What that revolution will look like is hard to say. In both style and substance, Mr Saied defies easy political labels. The 61-year-old retired law professor was an awkward campaigner, delivering stiff speeches in formal Arabic. He says homosexuality is “an illness and foreign plot” and opposes equal inheritance for men and women. He also calls for radical changes to the democratic system. He has no political party, yet he won the backing of secular and left-wing groups, as well as Ennahda, a moderate Islamist party, which came top in the parliamentary election on

October 6th. Mr Saied trounced Nabil Karoui, a fiery businessman who ran a populist campaign aimed at the poor. That two political outsiders made it to the final round, over many more familiar

faces, was a rebuke of the political elite. But many voters considered Mr Karoui, who is facing corruption charges, an opportunist. Mr Saied, by contrast, was seen as a monastic figure who will root out corruption

and take on the establishment. He spent little on his campaign, yet he won 73% of the vote, including 90% of 18- to 25-year-olds, according to Sigma Conseil, a pollster. Nearly a third of his supporters did not vote

in the parliamentary election. The president-elect’s boldest proposal would do away with such elections. Instead, he says, Tunisians should elect local councillors, based on their character, not their ideology. These officials would pick regional representatives who would in turn choose members of a national assembly. “Power must belong to people directly,” says Mr Saied of his indirect-voting plan. Many like the idea of giving more power to local communities. But Mr Saied would need to convince two-thirds of parliament to alter the constitution. That is unlikely. The parliamentary election produced a divided legislature, with some 20 parties represented. Ennahda won 52 of the 219 seats (down from 69 in 2014). Mr Karoui’s new party, Qalb Tounes, came second with 38. Nidaa Tounes (NT), the former ruling party, was nearly wiped out. Beset by infighting, many of its leading members started new parties. It was also hit by the death of its founder, Beji Caid Essebsi, Tunisia’s first democratically elected president, in July. As a result, NT won just three seats, down from 86 in 2014.

Lexington

The unravelling of Rudy Giuliani No one member of Donald Trump’s coterie has fallen further than “America’s mayor”

AD LEXINGTON’S 2007 incarnation been informed that the next Republican president would be a pro-gay, pro-choice, thrice-wed New Yorker, the name of Donald Trump would not have leaped to his august mind. Rudy Giuliani led the Republican primary by a big margin throughout that year. There were, to be sure, doubts about whether the former New York mayor was too socially liberal for small-town conservatives. He had once shared a house with two gay people and a Shih Tzu and, what was worse, acted in a comic skit alongside Mr Trump, that symbol of louche metropolitanism. Moreover America was not given to electing “abrasive” New Yorkers, Lexington cautioned then. But, like many others, he suspected Mr Giuliani’s dynamism and the broad support he enjoyed for his calm leadership after 9/11 and record of crime-fighting could compensate for such handicaps. It has been pretty much downhill ever since for Mr Giuliani—culminating this week in what appears to be the worst crisis of his increasingly scandal-plagued career. In his role as the president’s old mucker and personal lawyer, he is alleged to have run a parallel foreign policy in Ukraine for the main purpose of spreading bogus allegations against Joe Biden, Mr Trump’s most feared Democratic rival. He is also reported to be under investigation—by a federal agency

he once led—for breaking lobbying laws, apparently related to the same plot. Two of his business associates in Ukraine are under arrest. How much legal trouble he faces is unclear—though his decision to defy a congressional subpoena related to the Ukraine plot, for which Mr Trump is likely to be impeached, seems unlikely to help. Politically, he is already busted. His defiant—at times almost unhinged—support for Mr Trump over the past three years has made him loathed in his old New York base and, because no one loves a dissembling lawyer, won him few friends outside it. And much good has it done him. Asked whether Mr Giuliani was still his lawyer, the president said he didn’t know. Perhaps not even Mr Trump’s previous personal lawyer, who is serving a three-year jail

sentence, has lost more from his association with the president than the once admired Mr Giuliani stands to. Where did he go so badly awry? One answer—popular in New York—is that his mayoral successes were significant but exaggerated, and weighed by character flaws that have worsened over time. New York’s drop in crime during his tenure turns out to have been much less to do with the changes to policing he oversaw than was once assumed. Moreover those reforms had many authors— including his African-American predecessor, David Dinkins, whom Mr Giuliani defeated in a campaign remembered for his racist dogwhistling (the contest was dubbed the “Race race”). Mr Giuliani’s social liberalism, mandatory in New York, now looks less central to his politics than his willingness to play the race

card to win power and to bend the rules to keep it. He even tried that after 9/11—which he sought unsuccessfully to use as an excuse to extend his second term. On both crime-fighting and 9/11, it is argued, Mr Giuliani was essentially in the right place at the right time. Another (not necessarily contradictory) answer is that he was in the right place at the wrong time. In other words, before Barack Obama’s presidency and the reactionary backlash it triggered on the right, Republican voters were not yet ready for the blend of pugnacity and quiet bigotry Mr Giuliani offered. Or else why did they object to his residual New York liberalism but, a decade later, give Mr Trump’s a pass? Mr Giuliani once said that “the anti-immigrant movement in America is one of our most serious political problems.” In 2007 he ran much more on his record than demagoguery. But the fact that he could have done otherwise had he chosen to, his subsequent performance suggests, is itself an indicator of the nativist change that has swept the brash New Yorkers’ party. And no one appreciated that change better than Mr Giuliani. Grasping hold of Mr Trump’s coat-tails, he made a political return brimming with resentful craziness. He implied that Mr Obama hated America, that Hillary Clinton was grossly corrupt and told Americans they had one last chance to save

themselves: “There’s no next election! This is it!” When Mr Trump’s lawyers later struggled to defend the president against Robert Mueller’s obstruction probe, Mr Trump knew just where to turn. Mr Giuliani has been ubiquitous on cable TV ever since, generally defending the indefensible. Though sometimes hazy on the details of Mr Trump’s scandals, he has compensated by lambasting the president’s enemies, exaggerating the powers of his office and, when all else fails, spouting nonsense.

Monday 21 October 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

OIL & GAS

United Capital Q3 profit grows marginally on weak earnings

OLUWASEGUN OLAKOYENIKAN

nited Capital Plc recorded marginal growth in after-tax profit for the three months ended September 30, 2019, largely driven by weaker earnings in spite of the impairment allowance the company received in the period. The decline in earnings is attributable to lower yield environment in government securities. Net income of the investment company rose 2 percent to N1.09 billion between July and September this year compared with N1.07 billion profit realised in the comparative period of 2018. However, the marginal increase for the quarter could not raise the company’s aggregate profit for the first nine months of this year above what it earned as profit in the same period last year. United Capital recorded a profit after tax of N2.76 billion between January and September 2019, representing a 10 percent decline when compared with N3.08 billion recorded in the same period of 2018. This is the company’s worst performance in three years.

Revenue fell 10.8 percent in the first three quarters of this year to N5.32 billion from N5.96 billion in the corresponding period of 2018, while net operating income declined by 11.5 percent to N4.29 billion from N4.84 billion. A breakdown of United Capital’s earnings shows the company re ceive d N1.21 billion as investment income from securities in the nine-month period, implying it received N555

billion lower than N1.76 billion for the same period a year earlier. “We are taking salient steps to mitigate this,” the company said in a note that accompanied the financial statement released on the Nigerian Stock Exchange (NSE) on Friday. Although income from fixed deposit grew by more one-third to N1.2 billion from N893 million, it was not enough to offset the

impact of the shortfall. This caused the aggregate investment income to fall by some 9 percent to N2.41 billion. Fees and commission income was not left out as financial advisory fees and other charges which form the components of the income line came in lower at N1.38 billion in the review period compared with N1.48 billion recorded in the first nine months of last year.

“Revenue from other line items are showing signs of improvement save for revenue from investment income which is made up of income from fixed income and investment securities, given the persistent decline in interest rate this year,” United Capital said. Fu r t h e r m o re, w h i l e United Capital spent less than it spent last year on contribution plans, it expended N1.11 billion to

pay salaries and provide other welfare packages for its workforce. That is more than 13 percent higher than N980 million spent as personnel cost between January and September 2018. Despite the increase in personnel cost, the company’s total expense reduced to N2.03 billion, representing a 12 percent decline from N2.29 billion total expenditure recorded a year earlier. United Capital assured it would continue to push its cost-efficiency strategy. It further said the costefficiency strategy also helped the company record an increased in profit before tax margin which settled at 62 percent as against 61 percent recorded in the comparative period last year, even as earnings per basic share dropped to 46 kobo from 51 kobo. The company it has continued to inject innovative financial products in the retail space to cater for the need of every Nigerian domestically and internationally, this according to the firm is evident in its newly unveiled “Nigeria Diaspora Trust”. The company’s shares fell by 2.86 percent to N2.04 after the close of business on the floor of the Lagos bourse.

OIL & GAS

Eunisell provides business solutions for marginal oilfield owners DIPO OLADEHINDE

eading chemical solutions and oil and gas production engineering solutions group, Eunisell has announced an extended range of comprehensive solutions for Nigeria’s marginal oil field owners. Marginal fields are oil fields that have been discovered by major international oil companies (IOCs) in Nigeria in the course of exploring larger acreages and which fields have not been developed for more than 10 years. Eunisell, the company with the extensive technical re-

sources and equipment with facilities in Lagos and Port Harcourt announced that the new products and services include well testing, enhanced well testing, data services, well blowback solutions, multiphase flow, well clean up and early production facilities. Others are offshore production units, enhanced production solutions, facilities upgrade, and repairs, operations management, sand management solutions produced water solutions, drill stem testing, electronic memory gauge services, and pumping services. Speaking on why the extension became neces-

sary, Chika Ikenga, Eunisell’s Group Managing Director, stated that field owners are vital to economic growth, and must be provided with every opportunity to operate efficiently and effectively. “Through experience, we often find that skill gaps exist spanning financial, technical skills and resources - crucial facets to an operation being viable and profitable. Eunisell closes the gap with a unique range of business solutions and we have just announced an extension to the services we offer,” Ikenga said. He further stated the company’s fast track production facilities help owners achieve

first oil in record time. An investor’s guide to Marginal Oil field acquisition says Nigeria has an estimated 2.3 billion barrels of crude oil reserves in over 183 fields classified as marginal however despite these potentials, Marginal field still contributes miserly to Nigeria’s total production. According to data from NNPC, out of May 2019 total Production of 60.00million representing an average daily production of 1.94million barrels, Production Joint Ventures (JVs) and Production Sharing Contracts (PSC) contributed about 28.99 percent of 17.4 million bar-

rels and of 45.40 percent of 27.2 million barrels respectively. While Alternative Funding (AF), Nigeria Petroleum Development Commission (NPDC) and

marginal fields operators accounted for 10.77percent of 6.5 million barrels, 8.12 percent of 4.8million barrels and 6.71percent of 4 million barrels respectively.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh

26 BUSINESS DAY

Monday 21 October 2019

COMPANIES&MARKETS Business Event BANKING

Microfinance banks float company to boost operations, deepen financial inclusion SEYI JOHN SALAU

he microfinance banking sector of the economy is set to witness a major boost as operators in the industry have floated a company, known as Microfinance Development Company Limited (MDCL) to address the problem of lack of wholesale funds for sector. The MDCL is an initiative of the National Association of Microfinance Banks (NAMB) aimed at creating an institutional platform that can access borrowed and special intervention funds for the microfinance sector, and thus leverage the performance, impact and sustainability of the unit microfinance banks. Speaking on the development, the President of NAMB, who is the Chairman

of MDCL, Mr. Rogers Nwoke said the microfinance subsector was built to survive on wholesale funding to be provided by the Central Bank of Nigeria (CBN), noting that but for nine years, the sector operated without the needed whole funding to support its lending and refinancing activities. “Nine years later, the N220 billion Micro Small and Medium Enterprises Development Fund (MSMEDF) was launched and disbursed. Five years after, the microfinance sub-sector is yet to feel the impact of the fund as less than 10 per cent of the banks had access to this fund. The MSMEDF obviously was not the planned fund for the development of the microfinance sub-sector. As a private sector, industry led initiative, the company MDCL is focused at addressing the funding gaps of the subsector. With an autho-

rised share capital of million and ownership structure that spans the entire strata of microfinance banks in Nigeria, the company is ready to commence operations,” he said. Nwoke, who is also the Managing Director of Hasal Microfinance Bank, explained that there is difficulty in convincing prospective investors and lenders to inject fund into financial services institutions in Nigeria, adding that even some deposit money banks (DMBs), including those listed on the Nigerian Stock Exchange, are experiencing this difficulty, and there is the general market perception that MfBs are more risky than the DMBs, putting MfBs in a more difficult position to attract funds from sources other than their shareholders. Continues online @www. businessday.ng

L-R: Ayo Olojede, group head emerging business , Access Bank Plc, Empiphany Azinge, chairman of the occassion,/ Judge Commonwealth Aribitra Tribunal, Tunde Adekola, senior education specialist, Africa regional department, World Bank; Jacqueline Yemi Odiadi, co-convener, management consultancy conference; Benson Uwheru, partner/business sdvisory, E Y and Rita Nwalupue, deputy director, Centre for Management Development at the management consultancy conference themed ‘The Evolving Economy: The role of Management Consulting practice in Public and Private sector’ in Lagos . Pic by Pius Okeosisi

COMPANY RELEASE

C&I Leasing seeks reduction in unemployment, launches online recruitment portal – getajobng

&I Leasing Plc (C&I Leasing), foremost leasing and ancillary services conglomerate, is set to launch an end to end online recruitment platform designed to match talented candidates on the job market with innovative companies looking to grow their staff. The portal, www.getajobng.com (GetAJobNG) will be launched at an exclusive official ceremony on Wednesday, October 16, 2019 at Four Points by Sheraton, Victoria Island, Lagos. The launch, themed: “Tal-

ent is Not Enough,” is the first in a two-phased event and will witness a gathering of thought leaders, subject matter experts and leading recruitment and human resource operations professionals from across the country. Amina Oyagbola, a seasoned human resources and management consultant will give a keynote presentation that speaks to challenges many organizations and job seekers face in the recruitment process. Commenting on the unique advantage GetAJobNG brings to the market, Andrew

Otike-Odibi, managing director and chief executive officer, C&I Leasing Plc, said the company has vast experience as a service provider in the Nigerian labor market for almost three decades and will leverage on technology to meet the needs of both recruiters and job seekers. “Our big Idea is to become Africa’s leading specialized talent marketplace, connecting companies to the best talent available. We cater to both large and small organizations,” he said. Continues online @www. businessday.ng

L-R: Natalie Kolbe, partner, Actis; Omomene Odike, CEO, U-Connect Human Resources; Dave Uduanu, MD, Sigma Pensions; Yvonne Chioke, business strategy manager, Vlisco Nigeria Limited, and Melanie Hawken, founder/CEO, Lioness of Africa, at the Lioness lean in Lagos sponsored by Sigma Pensions, yesterday. Pic by Olawale Amoo

ICT

Avanti partners e.Stream to improve broadband penetration across Nigeria MODESTUS ANAESORONYE

.Stream Networks Limited, a large enterprise internet service provider in Nigeria and Avanti Communications Group plc (Avanti), a leading provider of satellite data communications services in Europe, the Middle East and Africa (EMEA) have signed an agreement to jointly improve broadband penetration across Nigeria by providing the latest Ka-band satellite broadband services to end user-consumers and enterprises located in rural and remote areas of the country. Under this arrangement, e.Stream Networks will leverage Avanti’snewestsatellite,HYLAS4, whichwaslaunchedinApril2018 but began operations in July 2018

would see broadband connectivity through 64 fixed spot beams andfoursteerablebeamsthatadd capacity in existing coverage or enable reach to new areas. David Bestwick, chief technology officer at Avanti said ‘It is the biggest and most powerful communication satellite that Orbital has ever built’. This partnership would enable eStream Networks deliver highly flexible, fast and secure broadband services with 100 percent in-country coverage, internet services can now be quickly deployed across areas where fixed infrastructure is not available. Avanti’s fully operational Nigerian Gateway will provide secure, high-quality data connectivity for e.Stream customers whether they are small

businesses, large enterprise or government departments. LibbyBarr,chiefOperatingofficeratAvanti,said“Wearedelighted tobepartneringwithe.Streamand look forward to building a strong relationship,enablingtherolloutof satellitebroadbandservicesacross Nigeria.” Muyiwa Ogungboye, chief executive officer of e.Stream Networks Limited added ‘Our partnership with Avanti will open up new frontiers that will revolutionize the use of broadband services toHomes,SMEsandEnterprises. DeliveryofhighspeedandaffordableInternetandVoiceservicesto remoteunderservedmarketswill receive a major boost with the Ka band solution. Continues online @www. businessday.ng

www.businessday.ng

L-R: Uche Onyeagocha, secretary to the State Government, Imo State; Dennis Okoro, director, MTN Foundation; Nze Meekam Mgbenwelu, commissioner for Technology Development, Imo State; Reginald Okeya, director, MTN Foundation, and Reginald Ihebuzor, commissioner, Budget & Economic Planning, Imo State, at the ICT & Business Skills Training organised by MTN Foundation in Owerri

L-R: Jude Idimogu, member, Lagos State House of Assembly, Oshodi-Isolo Federal Constituency 2; Popoola Ajayi, member, board of trustees, Lagos State Employment Trust Fund (LSETF); Teju Abisoye, acting executive secretary, Lagos State Employment Trust Fund (LSETF); Shamsudeen Abiodun Olaleye, chairman, Isolo Local Council Development Area (LCDA), and Olufunmi Dawodu, member, Board of Trustees, LSETF, at the LSETF W-Initiative Grassroot Stakeholder’s Engagement in Isolo LG in Lagos.

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Monday 21 October 2019

BUSINESS DAY

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28 BUSINESS DAY

Monday 21 October 2019

BUSINESS DAY

PAUL ADEDOYIN ODUNAIYA

CEOINTERVIEW

MD/CEO of Wemy Industries Limited

Interview with Private Sector Leaders

‘Localisation path to growth, wealth retention in Nigeria’ The lack of incentives and support to local manufacturing industries in Nigeria has led to the sudden closure of many of these industries, but a handful of them are still weathering the storm to grow the economy. PAUL ADEDOYIN ODUNAIYA, managing director/CEO of Wemy Industries Limited, manufacturers and distributors of hygiene products and owners of the Dr. Brown’s and Nightingale range of products within the Fast-Moving Consumer Goods (FMCG) market, is optimistic that long-term benefits exist in local wealth retention through the power of localisation where there is a very strong political will. He spoke with MIKE OCHONMA. Excerpts:

hat is your position on the strong competition between the local manufacturers and their foreign counterparts in Nigeria? We underestimate the power of localisation. Nigeria and Nigerians just want foreign companies to come here. But the problem with it is that for the foreign companies, they will employ you, but most of the profit and benefits will be repatriated to their economy. That means their resources stay here temporarily and move back to where it originated from. This is why the government wants foreign companies to be listed on the Stock Exchange, so that we can get more Nigerian shareholders to be on their boards, thereby retaining the wealth in our country. I travelled to China a year ago and I had to study to see how successful the country is. One of the powers of China even as powerful and large as they are is that they retain the wealth of their country. Today, for anyone to take money out of China is very difficult because they invest back. For instance, if there is an American coffee shop in China, you have a Chinese version of that coffee shop there. So, if you want to buy the American one, it is there, and if you prefer the local version, you can get it. So somehow, that money stays there. From my perspective, that is part of what is making our exchange rate unstable. The CBN always has to intervene because these foreign businesses come here, invest money into the system and take the more money out of the system in the long run. In a situation where a foreign company invests a million dollars in Nigeria and at the end realizes five million dollars, our economy will suffer for it. The earlier our government woke up, the better. There has to be localisation, and that is the only way wealth can continue to stay here. From Wemy Industries perspective, we want to backward-integrate. We want to develop our business. This is the way we will contribute our own quota to the economy, so that more wealth will be created and retained. This way, the cost of what we produce will be affordable to the masses and more jobs will be created. What steps or measures do you want government to take in that regard? We want to use our platform to educate government and stakeholders that wealth retention and localisation are critical for our development. That’s why I am excited more about the ECO than the African Free Trade Agreement, because the ECO will strengthen our currency and enforce localisation. Government should be wary of people always praying to let international companies come. It is great, but the danger is that the knowledge base still stays with them; the wealth still stays with them, but when it is going out, they are taking more of our wealth out and that is how they are stealing wealth out of this continent. What we need is the indigenisation of wealth. I went to Cote d’Ivoire to open a base there only to find out that all the super-

you are aware of that bank, it collapsed. So when the entire savings of the company collapsed, we were in the wilderness for about five years. There were some other issues related with other Nigerian banks which I don’t want to mention. They also stole our money and so that crippled the company. Maybe out of our 40 years of existence today, we had 14 years of being in the ‘wilderness’ before coming back to normal. In terms of training and developing our people, we are very much into that. Wemy Industries is a different breed of family business. I didn’t want to join the business because we were raised to be very independent; we don’t depend on anybody, we depend on ourselves. So we try to train within limited resources, our distributors who do distribution for us. There are more women entrepreneurs in our line of business than any other business because it is about maternity care: pads, diapers and wipes. You don’t need to train them too much and they are actually the best sellers of the product, so we see ourselves really empowering people. So people have worked as sales manager with us for a number of years, some of them have even become distributors for us, while others have left the job and started their own businesses. This business is the kind of business that you will have to learn. You can easily set up with a small amount of money; buy the products, sell, make profit and then re-stock. As you said, I agree with training but being a distributor, you’ve got buyers, you don’t need too much, but to run a manufacturing operation and distribute, there’s a lot of technicalities and educational skills involved. You have to go to university, I would say. A lot of the skills needed in manufacturing are financial planning, management and many more.

markets and major shops there are all owned by the French, the Lebanese and the Indians. When a distributor saw me, she was so happy. She asked if our company is into manufacturing in Nigeria and I said yes! She was so happy and said she was so proud of me because colonisation is still happening in another form but I don’t want to delve into that. According to the woman, before she engages any company, she first sees an agent, and either the agent is a Lebanese or an Indian or a French national. We are waking up obviously all the time, but we need to wake up a lot more. Well, actually for the international firm, it is good for them to come; but it is not necessarily the solution for our country. We need a Nigerian-owned business to run these companies and develop the culture, so that wealth can be retained in Africa. How big is the diaper market in Nigeria? I would say the market of diaper business in Nigeria is in the region of an estimated N280 billion in Nigeria. But even though I need to get my facts right, I still think it could be around that region because its potential market base which is in West Africa and the sub-Saharan Africa has the highest birth rate in the world. Niger Republic has the highest birth rate on earth, and Nigeria ranks among the first 10 countries in the world with the highest birth rate. In some parts of the country, we have six to seven children per family. So the diaper business is attractive in this part of the world. The only down side is, not a down side though, but it is an opportunity, that the purchasing power of our people is low. So it means you need to produce at scale, at volume, so that the cost and the price are so low so that our people can afford it. That means you need a colossal amount of capital and backward integration to make things affordable for them. But we don’t need to keep importing the diapers into the country. I think certain things we should just ban and I know it’s a bit unfashionable. For example, the likes of Rwanda made policies that might not be to the liking of the international community, but to the liking of their people. So Nigeria needs to take those kinds of decisions. We already have companies that can make diapers in Nigeria; I think we should just put a ban on imported diapers. Because it is in our nature and culture to want to look for loopholes, I believe it is best to place a ban it in order to encourage the companies develop. Maybe within three years, we can lock the borders for a time. We can then re-open them, by which time the local industries would have become more developed. We need to become a bit firmer and aggressive about our development and I think most African countries probably need to do that. The diaper market is huge and that is why other diaper brands have come to Nigeria. That means in terms of resources, West Africa and sub-Saharan Africa have the highest resources and this is why the opportunity exists. www.businessday.ng

What is your impression on competitors and personal overview of the hygiene industry? We (the Dr. Browns brand) are among the major players in the diaper world, but we still have small share of the market. You know, the recession affected us greatly from 2016 to 2018. They said Nigeria has come out of recession, but there are individual businesses still in recession. For Wemy Industries, 2019 is the first time we are coming out of that recession. So our market share shrank to nothing, but is back to maybe 2 percent or 3 percent. Molfix holds the largest share of the market now. We are not number one, but we used to be number two to Procter & Gamble some years ago. So we are just getting back to our feet and we have to go back to recalibrate our production processes, to start doing what we know how to do best and see the best possible ways to meet the demands of the market. Do you think the poverty level among families and young couples and lack of awareness or illiteracy have affected the diaper market in Nigeria?

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No. This is because if you think about it, diaper is a necessity just like the mobile phone we use today. You know nobody wants to be caught washing cloth nappies but diaper is convenient and disposable. So that is not in any way affecting the diaper market. I think that what affects the diaper market is disposable income, the better the economy, the better the business. But it’s a necessity. For sanitary pad, whether you like it or not, women will menstruate once a month. At one point or another, a child will be given birth to, so we have such necessity products like the Nightingale Underpad which is needed during delivery. So these are essentials, these are chores of nature; these are natural things that will always happen, so you always need them. We also have the adult diapers for the patients and the elderly. Men and women use this, so it’s in constant use. The only thing that affects the diaper market in Nigeria is disposable income and pricing. But as I said, if we do the right thing as a country, restrict imports, grow the economy, retain the wealth, then the disposable income of our people will increase. But as long as you just let the so-called unfettered foreign direct investments, which is good, without thinking through the implication, our wealth will continue to diminish.

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Of course, there will be some refreshment of knowledge and things like that, but I think overall, people need to consider the implications of some kind of wealth like foreign direct investments because at the end of the day, what we want is an environment whereby we can operate successfully and the wealth of our people is increasing generally. But the environment we are in is decreasing the wealth of our people which is hitting companies’ margins and growth. So as I said, the way to retain our wealth is to buy local, not send your hard-earned money abroad. Anything that sends your hard- earned money out of this country is reducing your wealth because you are investing your money out there. As the economy gets tougher by the day, there is an urgent need for management to begin to recalibrate their operational processes. So where is the place of training and marketing of your products after over 40 years that the company was set up despite strong competitors and the influx of foreign products including other factors? I think the reason why we have not been larger than where we are is because we faced some crisis in the past which I have not mentioned. There was a situation whereby the savings of the company was with a bank called BCCI. If

What are those legacies left by your father, the founder, which the present top management that you head will like to sustain? The legacy I can see is the relationships established for many years with international suppliers, legal suppliers and friends who are in the industry. Those are legacies because during the crisis, we found some of these foreign suppliers who had no stake in this business providing us credit just like that without asking for any collateral and they kept on just supporting. Some of them we owed them money and yet, they keep encouraging us ; sometimes they would tell us “okay, just manage when you get money, pay it back”. So these long relationships that span between 20-30 years, have kept us in the business. They trust us enough to know that, no matter what we owe them, we will pay. The relationship that has been established on trust and integrity for many years is now bearing fruit in the time of crisis, you know, so they help us carry the burden a bit. If we didn’t have all these relationships during that period of crisis, I don’t how we would have managed to survive. www.businessday.ng

Not that everything was rosy, but the good relationships helped. Gestures like “okay take, pay me later anyhow”; “okay just keep on pushing I know you are trying”, really helped us. That you can’t buy! There are some things you can’t buy or learn yourself, and you can’t even learn it in business school at this point. What percentage of local content do you put in your product? It depends on your line. We have a number of lines. For our diaper line, the local content is about 12 percent to 15 percent. We still import large quantities of it, but we have plans to manufacture and source some of the raw materials locally. The quantity that we can potentially manufacture locally can be 40 percent which will eventually become 52 percent locally. That is why we are hoping to get capital maybe for two to three years. And the reason that maybe possible is because of the Dangote refinery that will be coming on-board soon. That refinery should be able to provide certain kinds of raw materials, which is needed in production of our raw materials. So that will allow us to backwardintegrate, meaning that our local content for diaper will rise from 4 percent to 15 percent. We have some other lines whereby the local content is a lot higher, so there is something called maternity net-pad whereby you use light volume of cotton and tissue and thread and that content is about 70 percent local content and 30 percent import. We need to also do that to hedge our business as well. We use a lot of local cotton; in fact we need more cotton suppliers because the suppliers are really struggling to give us the volumes we need. Some other lines are 40 percent and 50 percent local. They have a mixed bag. But over the next decade, we also want to help the economy so that local content increases. And what helps the local content increment is when you can expand because when your consumption increases, it attracts the foreign guys. This now becomes a major incentive to set up a plant in Nigeria because of the large consumption by local industries. So you need a volume consumption to make the backward integration viable, as long as policies for backward integration is still there and strong, eventually it is also part of this local retention of wealth that will start to take shape. Apart from the FDI side, there is also local content side. So the economy needs to grow; it needs to expand for that local content to expand. I think companies that can sell needs a lot of support but I think the problem is that the skill, the man power and the resources are hard. This job is hard. Seven days a week you don’t sleep. It is hard. But if you get it right, it’s great, but it is hard. How would you assess Wemy Industries Limited’s impact on its host community

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in terms of Corporate Social Responsibility (CSR) in the past 40 years of its existence? We have done a lot within the motherless’ babies home close to us here; we supported them before the recession on annual basis with baby care. The local police in Ketu here, we do some CSR for them and some of them might need hospital care and things like that and we sponsor that. We have also done some things for AfriBaby as a charity that takes care of babies, and we also employ a lot of local people from Ikorodu community, for instance, which I will say maybe are from the lowest and poorest part of Lagos state. A lot of people from Ikorodu come here and work. We provide jobs for them and also have a social bent. This is a Nigerian business; it is not European. We are rigid of course, but we have corporate governance such that we have to consider the nature and culture of the environment whereby if some people have some needs, we now say okay go; we have some staff here who have to deal with certain problems. We value those kinds of workers. So there are certain things peculiar to the environment that we have to consider in looking after the people. When you do that for your staff, they become loyal, so we try our best to do that. I think the greatest CSR we can do for somebody is to provide an opportunity for them to feed themselves and live a good life. That is what we want to be able to do more of. If we can expand, we’ll employ more people, we can train more people even. For instance, some years ago, I employed somebody from Delta State, his name is Chukwudi which I remember calling him. He had just graduated with a first class and couldn’t get a job. I told him he had to come to Lagos. He said he didn’t not know anyone in Lagos, but I told him, “if you want a job you must come to Lagos”. He did the interview in fact; not that he passed or was the best, but I know that the antecedent of getting a first class in school, you need a chance. So we do have the policy of giving the poor person that might not pass a chance because everybody needs a break. I will take a chance with somebody that needs a chance. Sometimes, you know they didn’t pass, you know they are not the best, but somebody is just looking for a breakthrough and they don’t have an opportunity, so we try to do that. I will call that CSR, that’s to give someone a chance. When I was in the United Kingdom with a different life, I wanted someone to give me a break. You want someone to look at you and feels, “Let me just give you a chance”. Not all of it works, some people will disappoint you, but some will take it and run with it. It makes me happy when I see that kind of person now blossom and is now doing so well, and I will now say “remember when you came, you didn’t do well here, you failed here, you failed there, now you are doing so well”. That’s another form of giving back because we want to see other successful people in our environment.

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30 BUSINESS DAY

Monday 21 October 2019

COMPANIES&MARKETS COMPANY RELEASE

Nigerian start-up, Chaka, redefines investments with launch of global trading platform IFEOMA OKEKE

haka, a global trading platform launched in Lagos recently is offering customers access to Nigerian and global financial assets. The technology-enabled platform referred to as a digital ‘Investment Passport’ allows users to invest in stocks listed on NASDAQ, the New York Stock Exchange and the Nigerian Stock Exchange offering over 4000 assets and indexes from companies such as Apple, Alibaba, Google, the S&P 500 index and many more. The new global trading platform provides opportunities for local investors to explore international markets and diversify their portfolios into African and global capital markets. In addition to this, it offers global citizens access to invest in local capital markets with just a click, thus bridging the gap in accessing viable investment vehicles. Speaking at the launch of the product in Lagos, Tosin Osibodu, the Chief Executive Officer of Chaka, stated that, “With booming growth in many nations around the world, investors can now own a stake in the growth of other economies. Yet, for many Nigerians, this is a daunting task. We created Chaka to fill this gap, and likewise, give the

global community access to local capital markets. “Our goal is to provide premium borderless trading and investment opportunities for Nigerian professionals and investors. Chaka facilitates access to assets listed on the Nigerian stock exchange, American stock exchanges as well as global blue-chip companies from 40+ countries around the world. “In a bid to provide our customers with compliant access to the US stock market, we have partnered with a U.S. based leader in global digital trading technology, DriveWealth, LLC. Through this partnership we are ensuring that Nigerians can own a stake in their favourite companies in the US”, Osibodu added. Ensuring regulatory compliance, proper market behaviour and security of investors, all brokerage investments on Chaka are facilitated by Citi Investment Capital Limited, a licensed Nigerian stockbroking firm registered with the Security and Exchange Commission (SEC). Also speaking at the event, Seun Oluwole, CEO, Citi Investment Capital said the partnership of Citi Investment Capital in Chaka is giving it leverage above every competition in the local space. “This is something we have been looking forward to for a while. We tried our hands on it six years ago but it didn’t

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work out. Chaka founders have played in those foreign markets and with the benefit of their partnership with foreign broker like ours; it has a marriage made in heaven for us. “We have the customer service here and we are always having cutting edge technology in serving our customers. So, when we have a technology partner that is able to open a window for our customers to now have varieties of investments outside of what prevails now, it is quite a leverage for us,” Oluwole said. He explained that Chaka will enable people have options of exploring other markets if markets in Nigeria are down. “The partnership over there is like the one they have with us here, such that your partner there is highly regulated and your partner here is equally highly regulated. Tax burden has been taken care of because they are off-shore investors” Chaka maintains a user’s brokerage account through bank-grade AES encryption software that protects the communication between the user’s device and the servers. All local brokerage accounts and global dollar brokerage accounts are insured by the Investors Protection Fund -based on the Nigerian Stock Exchange rules- and the Securities Investor Protection Council (SIPC) respectively.

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Monday 21 October 2019

BUSINESS DAY

cityfile Wuse Market to enjoy steady power

019 Azu Ofala Festival Special Guest, Sir Chike Onyejekwe (r), presents the key to a brand new tricycle, also known as keke, to one of the lucky winners of the Globacom Ofala 2019 raffle draw, Okey Eneh (l), on Saturday at the Onitsha Ime Obi, during the Azu Ofala festival, sponsored by Globacom.

HARRISON EDEH, Abuja

Lagos to partner Discos on provision of prepaid meters JOSHUA BASSEY

overnor Babajide SanwoOlu of Lagos State has promised to drive reliable energy delivery to residents of Lagos with the availability of meters. Speaking during the recent 2019 Nigeria resources risk and governance summit, with the theme “energy for sustainable economic growth - threats, opportunities and governance, Sanwo-Olu said his administration was aware of the existing inadequacies in the distribution of meters to the end users. “Government is engaging with the Discos to drive reliable energy delivery to our citizens and ensuring the availability of meters. We believe that

this would increase willingness to pay, improve productivity, and more importantly, improve the living conditions of the people”, he said. Sanwo-Olu, represented by Olalere Odusote, his commissioner for energy and mineral resources, said that the state government understood the significance of steady, reliable and safe energy supply on the welfare and economic wellbeing of the people and therefore committed to encourage the development and greater use of cleaner, safer and more suitable energy. “In line with this administration’s desire to promote the wellbeing of the citizens and build a Lagos that is safe, clean and prosperous, the provision of efficient, effective

and sustainable policies to drive the operations of the energy sector is crucial.” According to him, the state is positioned to perform its statutory duties in the energy sector with a functional state energy ministry and implementation agencies such as Lagos State Electricity Board and Ibile Oil and Gas Corporation. He also assured that his administration would continue to create and review existing regulations in the sector to foster growth and development across the State. According to the governor, in order to tackle energy shortages in the state, his administration has developed an Integrated Energy Resource Plan to review and expand existing high, medium

and low voltage networks for the solar energy initiative for public schools and spaces, health and commercial centres as well as other strategic public spaces like state government facilities, public institutions, street lightning installations and much more. While calling on stakeholders to make the sector more sustainable, Sanwo-Olu, who identified huge capital outlay as most visible threat to the sector, expressed the desire to partner with federal institutions and strengthen working relationships with regulators such as Nigerian Electricity Regulatory Commission (NERC) and the Rural Electrification Agency on the Nigerian Electrification Project.

raders at the Wuse Market in Nigeria’s capital city of Abuja, will soon be enjoying steady power supply, as the Abuja Electricity Distribution Company, (AEDC) have signed an agreement with GV Projects LTD and Wuse Market to provide constant power supply adopting combination of mini-grid and on grid strategy. Ernest Mupwaya, managing director of AEDC told newsmen at the signing of agreement, weekend in Abuja, that the aim was to facilitate the development of solutions, business models which support the delivery of energy to augment grid supply, while serving underserved areas in the territory. Mupwaya said, “the result is that Wuse Market is going to witness 24 hours power supply, at the end of the project. This is going to take three to four months that

would see them complete the project.” He explained further: “With the signing of this agreement, the project has taken off. What is going to happen is that a developer is going to store a solar system with batteries, and we are going to integrate it with the grid power, and proper metering.” Speaking further, Mupwaya noted that, it was typical in a developing country, to have a grid dedicated to serving customers. This, he said, would be replicated in other markets. “There are also industrial sites like Idu, where we could have different configuration and so far, we have 341 other sites where we are planning deployment of this technologies.” “Waiting for grid-power improvement may take too long. There are technologies which could help advance power access from off-grid solutions, and we are adopting that,” he said.

Adulterated palm oil: EFCC arrests 26 in Gombe

he Economic and Financial Crimes Commission (EFCC), Gombe zonal office, has arrested 26 suspects for allegedly adulterating palm oil, and handed them over to the National Agency for Food and Drug Administration and Control (NAFDAC). Michael Wetkas, the head of operations in the zone, said while handing over the suspects to NAFDAC in Gombe, that the suspects were apprehended at Gombe Main Market. Wetkas said the arrest was based on surveillance report, which according to him, prompted the commission to carry out an investigation in that regard. He added that 32 shops were closed down while the suspects and the substance seized were being handed

over to NAFDAC for further investigation in line with its mandate. While urging the members of the public to always be at alert and report all fraudulent acts to concerned authorities, Wetkas warned those in the act to desist from it. According to him, the EFCC will carry out more surveillance to check all fraudulent activities in the zone. He said: “I am handing over 26 suspects for the alleged offence with the 32 shops sealed to NAFDAC who is in charge of food safety for further action.” Receiving the suspects, Lara s Jatau, NAFDAC’s assistant chief regulatory officer in Gombe, thanked the EFCC, saying the agency’s partnership with other security agencies was yielding positive results. NAN

Edo engages forest guards, rangers to boost security

d o g o v e r n o r, Godwin Obaseki has expressed the readiness to work with local vigilantes, forest guards and rangers in intelligence gathering to strengthen the state’s security architecture. Obaseki stated this when members of Esan Development Union, led by its president, Nosa Edeko visited the governor at Government House, Benin.

Obaseki, who acknowledged the challenges posed by armed bandits in Esan community, explained that plans were ongoing to relaunch the Edo State Security Trust Fund in order to boost security in the state. He listed other plans to check activities of bandits and other criminals in the state to include training of local vigilantes, hunters, forest rangers and guards to synergize with the Nigewww.businessday.ng

ria Police and deployment of communication gadgets for intelligence gathering. “The sole purpose of any government is to secure the lives and property of its citizens and any government that fails to do that is not fit to be called a government. We will provide the forest guards and others with training, equipment and necessary technology to fast- track information sharing and intelligence gathering,

which will reduce crime drastically. “We are relaunching the Edo State Security Trust Fund before the end of the year as it will be a veritable tool to raise finance to sustain efforts we are putting in place as a government on security”. Obaseki assured members of the union that he would support their empowerment programme in agriculture by helping with land preparations.

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He also told the people that the issue of poor power supply was being addressed as the Federal Government was engaging the services of Siemens. “President Muhammadu Buhari recently signed an agreement with Siemens to undertake a study of all the electricity distribution companies and deploy its personnel to fix the problematic areas. I am on the board @Businessdayng

of the Niger Delta Power Holding Company and will do my best to see that investment needed is made to improve electricity,” he said. Edeko appealed to Obaseki to help tackle frequent attacks on various communities by suspected Fulani herders. He also informed the governor of the union’s plans to lift the youth out of poverty through various agricultural programmes.

Monday 21 October 2019

BUSINESS DAY

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Monday 21 October 2019

BUSINESS DAY

START-UP DIGEST

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Debo Thomas: Giving glamour to Nigeria’s agriculture JOSEPHINE OKOJIE

any young Nigerians are abandoning farming and rural communities, choosing to migrate to urban centers in search of white-collar jobs. But Debo Thomas, founder of Hastom Nigeria – an agricultural firm based in Ogbomosho, Oyo State, is one successful young farmers changing the narrative and image of farming in Nigeria. Debo, who is a crop and cattle farmer, was motivated to go into agriculture when he identified an opportunity in the supply chain of cashew nuts. Before becoming a farmer, the young entrepreneur was in the business of sales of computer and telephone accessories on the premises of Ladoke Akintola University of Technology (LAUTECH). He could barely make any sales whenever the students were on holiday or strike. In search of another business, Debo ventured into poultry business, which collapsed after eight months of establishment. The young entrepreneur says that inadequate knowledge of the poultry business in the country killed the business.

“I went into poultry business but the investment failed because I went into the business without the required skills,” he says. Determine to succeed as an entrepreneur; Debo was back again searching for investment opportunities in the agricultural sector. Soon, he identified an opportunity in the real estate of farmlands. “I noticed that people interested in agriculture are mostly from the city and their major problem is farmland and in Ogbomosho, we have abundant land. So, I started helping people to purchase farmlands,” he says. “When we sold about 100 acres of farmland in two months, then I was convinced that land sale for agriculture was the right

business for me at that point,” he adds. With time, he saw another opportunity in cashew farming and quickly took advantage and ventured into the production of the crop. Today, Debo has cultivated cashew trees on 550 acres and has 430 herds of cattle. He has also sold about 3,000 farmlands since establishing his business in 2013. His initial start-up capital was from the money he made on his previous business. Since starting, the young entrepreneur has grown very fast as his business has expanded despite slow economic growth. The key to this is determination. The business now has a platform – Hastom Farms-where individuals can in-

10 Africans qualify for Jack Ma’s ANPI GBEMI FAMINU

0 Africans out of the over five thousand applicants have qualified for the Africa Netpreneur Prize Initiative (ANPI) which will see them sharing a prize of $1 million after pitching to judges at a final competition. Selected from various parts of Africa, the nominees comprise four Nigerians, two Egyptians, one from Liberia and two from Rwanda. The four Nigerians are Ayodeji Arikawe, founder of Thrive Agric, a start-up that develops relationships with local farmers and engages them with advanced methods of improving yields while also promoting investments in local farming. Next is Chibuzo Opara, co-founder of DrugStoc,a pharmaceutical company that is available online and offline.

Temie Giwa-Tubosun, founder of LifeBank, a start-up that works as a blood bank to provide and deliver to hospitals blood donated by other people. Tosan Mogbeyiteren of Black Swan, a start-up that improves children health and ensuring children complete immunisation in all parts of the country. The competition, which will come up in November, is scheduled to hold in Accra, Ghana. The pitching will be judged by Strive Masiyiwa, founder of Econet Group; Ibukun Awosika, chairman of First Bank of Nigeria; Joe Tsai, executive vice-chairman, Alibaba Group and Jack Ma. The finalists will have the opportunity to access the Netpreneur community consisting of African business leaders and leverage on the community’s expertise, network, practice, www.businessday.ng

and resources. Speaking on the initiative, Jack Ma said, “We launched the Africa Netpreneur Prize Initiative to identify top entrepreneurs from across the continent, not only to reward them but to inspire a whole new generation of potential game-changers for Africa. “I have been inspired by the entrepreneurs I met in Africa, many of whom are dealing with the same challenges we faced when we started Alibaba years ago. I truly believe the potential of Africa’s business heroes is limitless.” The Africa Netpreneur Prize Initiative (ANPI), was founded in 2017 and aims to empower African entrepreneurs. The Jack Ma Foundation will be awarding $10 million over the next 10 years to over 100 entrepreneurs during the course of this initiative.

vest in cashew and livestock production. He currently has over 200 hundred direct and indirect employees working on his cashew plantation. He tells Start-Up-Digest that the business plans to expand its operation into the processing and exporting of cashew nuts in the short run. According to him, plans are already on-going to start a processing factory next May. “We have started putting our processing plant in place and planning to open it in May next year, but the aggregation of cashew will start by February. “We plan to expand our production to 8, 000MT of raw cashew nuts and 3,000 of processed shelf cashew nuts in 2020,” he notes. “You cannot process cashew when you do not have

enough shelled cashew nuts and that is why our focus has been on planting in the last three years,” Debo explains. He adds that business will commence exporting Nigeria’s cashew to India and Vietnam next year, while noting that Hastom is getting offers from the United Arab Emirates and Hong Kong. It has not all been rosy for Debo as he surmounts numerous challenges to scale his business. He tells Start-Up-Digest that huge infrastructural gaps in the country remain the major hurdle confronting his business. He notes that young people will only find agriculture attractive when the government provides the needed infrastructure to aid farming as well as

adequate capital and technology. He identifies high cost of interest rate, inadequate capital for long-term investments and insecurity in the country as other major factors limiting his plans. He urges the Federal G overnment to enact economic policies that will drive growth and development while calling for the provision of vital infrastructure to enable young entrepreneurs to succeed. In evaluating the Nigerian cashew value chain, he says that processing remains the biggest investment opportunity that the country can harness for economic growth and diversification. He urges the government to support the processing of the crop and give it the kind of attention currently being given to other crops. He calls on the government to spur local consumption of cashew by supporting the production of the crop to drive down price as Nigerians want to consume it but cannot easily afford it. On his advice to other entrepreneurs, he says, “Be focused and start small. Keep the vision alive and grow big.” “Be honest because honesty will speak for your business,” Debo says.

KAS empowers start-ups with printing skills ANTHONIA OBOKOH

as Prints, in collaboration with the Federal Ministry of Labour and Employment, has launched the revolutionary Canon 10000VP – a digital print equipment that empowers start-ups with requisite skills in printing. “KAS Prints seeks to empower over 1,000 youths across Nigeria by training them to optimise the use of the revolutionary machine for employment and skill acquisition,” said Ademola Kasumu, managing director and chief executive officer of KAS Prints recently in Lagos, during the launch. Kasumu said that a company known as Canon, with the turnover of $37billion, has partnered with KAS Prints to take the print business a notch

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higher than it has ever been in Nigeria while also positively impacting lives of the teeming unemployed youths. According to him, Canon 10000VP is one of the world’s highest capacity print machines manufactured in 2015 and has sold over 1000 units across the globe. He further explained that KAS Prints will create a platform for all youths that are skilled in digital designs, print and photography, adding that they will equip and design hubs across the six geo-political zones, equip each of the hubs in each zone with no fewer than 100 computers with the necessary software. In his keynote address, Yuichi Ishizuka, president and chief executive officer of Canon - Europe, Middle East, and Africa, said the form is honoured @Businessdayng

to have the chance to work together with KAS and the Nigerian government, not only for business reasons but for making a big contribution to digital printing on this continent. Also speaking, Festus Keyamo (SAN), minister of state for labour and employment, said: “Federal Government viewed this partnership as an avenue by which many of the Nigerian youths can acquire the skill of digital technology and printing to become self-employed. “The Federal Government is of the view that the only way it can address the problem of employment is to make the youths acquire skills by which they can be on their own, establish macro, small and medium scale enterprises and employ a few more hands and as a result of that, engage most of the unemployed youths,” he added.

34 BUSINESS DAY

Monday 21 October 2019

START-UP DIGEST

26-year-old entrepreneur wins N1m grant at pitch and prize presentation DESMOND OKON

young entrepreneur, Olawale Omotosho, founder of Flair Underwear, has won the Pitch and Prize Presentation, an entrepreneurial contest organised by Culture Communications under its Feed Tonight Foundation Entrepreneurship Programme (FTFEP). The 26-year-old entrepreneur emerged winner after his pitch was adjudged the best out of 50 contestants’, and made it to the final round where he impressed the judges to win the grand prize of N1 million. Omotosho, who is the brain behind Flair Underwear, a fashion start-up, said the award would help him upscale productions as the current demand for his brand is more than what they can produce. “I’m so glad to be winning this. The demand we have for our products is more than the capacity we can do. So this helps us to increase production and reach more customers. My team will be so happy because it’s a step forward for us. This is a show that young people who want to do stuffs, can get support from organisations that makes us get to the next level,” he said. For Omotosho, the dream is bigger, he told journalists that

Pastor-in-charge, Province 47, RCCG, Pastor Femi Obaweya; Managing Director/CEO,Culture Communications (Initiators of Food Tonight Foundation Entrepreneurship Programme), Yomi Benson; Managing Director, Techno Culture, Eyitemi Taire, Founder and Operations Lead, Flair Underwears, Olawale Omotoso (winner of the Food Tonight Foundation Entrepreneurship Programme) and Dr. Henry Onukwuba, Senior Fellow Lagos Business School at the pitch and prize presentation of Food Tonight Foundation Entrepreneurship Programme in Lagos.

he wants to move from producing just 1,000 or 5,000 pieces to a million, hence the significance of the prize money. “We want to have a product that is African rooted and can be available in African retail stores. So, if Flair Underwear can be that, amazing. We want to be available in so many stores, that means more funds will allows us reach that level,” Omotosho, from Ondo said. Over time, economic experts have argued that entrepreneurs

are the drivers of any economy, and efforts should be made to promote and encouraged entrepreneurship, especially in young people. Therefore, FTFEP was established to empower young Nigerians like Omotosho and support start-up businesses, as well as promote entrepreneurship with the ultimate aim of lifting people out of poverty. BusinessDay learnt that the foundation started out as a charity programme which merely fed Nigerians, but after some events

and considerations, it morphed into an empowerment scheme. Explaining the origin of the empowerment idea, the managing director of Culture Communication, Yomi Benson said the idea was inspired by a social media post. “It was just a transition from something to something. The intention was really to feed, but one day we sat back to say why are we just feeding people when you can actually empower people? Then we said, what can we do to make this happen? Along the line I read a post of a lady thanking somebody in South Africa for empowering her with initial amount and it accelerated her business, and that was why we said we too could do it in this country,” he said. He further said that the intent was not just about empowering people, but for everybody to understand that something like that this could be done. “Imagine 1000 of us doing this is in this country, it’s going to lift people.” While Benson hoped to have the event yearly, he encouraged other Nigerians to help others come out of poverty, even as he expresses his belief that the government is doing its own part. “For me, I think the government is trying on its own. Whatever little thing we can do, we should do it. And in the real

sense of it, it is the entrepreneurs that drive the economy of a nation, government is only there to give us guidance. So let entrepreneurs stand up and do this…it will change lives,” he said. Praising the initiative, Eyitemi Taire, managing director, Techno Culture Limited said it the initiative helps youth showcase their ideas and “hopefully get the kind of support that they need to grow themselves to the next level. “Nigeria is mostly full of young people these days from a population perspective. Things are not that great, the economy is not that strong, young people don’t have enough opportunity to connect themselves into the economy. I think it’s a fantastic initiative,” she said. She advised that young people should spend more time on getting the data right (an area most contestant flopped), and the facts behind their ideas so they can better articulate it effectively. “An Idea might seem obvious in and of itself, but you need to spend a lot of time to figure what the idea within the idea is for you. People can have ideas, people can have emotions, but at the end of the day, it is the way that you articulate that idea that would help take it to the next level,” she said.

KOPE to leverage mentorship in deepening Investing moringa tea bag processing factory Nigeria’s tech start-up space OLUMAKINDE ONI

JOHN SALAU

he Kennedy Okonkwo Programme for Tech Entrepreneurs (KOPETECH 2019) is leveraging mentorship and industry collaboration in deepening the Nigerian technology start-up space for job creation. “At KOPE, we are laying everything on the table – resources, expertise, experience, and networks, because our young people are the best bet that we can ever make for the future,” said Kennedy Okonkwo, CEOS and founder of Nedcomoaks, a real estate company in Lagos. According to Okonkwo, the objective of KOPE is to champion the abundant potential of Nigerian youths, especially those playing in the tech startup space. “We strongly believe that KOPE will find, nurture and help Nigeria achieve its first unicorn in the tech space,” he said. Okonkwo said KOPE is starting small with this initial stage of the programme where shortlisted tech start-ups get grants of up to N1 million, which comes together with a free fully fur-

nished office space equipped with high-speed internet and constant power supply. He stated that success for him is found not just in how individuals grow their businesses and increase personal wealth but in how passionately and effectively such individuals can uplift others and enrich lives. According to him, participants at the KOPETECH 2019, which is the maiden edition of the programme, are hungry for success, especially in making a difference and building something great, not just for themselves but for the larger society. Successful tech start-ups will get free access to Human Resource (HR), legal and administrative services, as well as ample time to spend on one-on-one mentorship with the founder and other industry experts. “Our plan is to guide these budding entrepreneurs grow organically and as they begin to bloom, we will then begin to expand our scope,” he stated, calling on other corporate organisations to start investing in the ventures and endeavours of young people. “It is the only sure www.businessday.ng

way to sprout successful enterprises from a jungle as concrete as ours,” said Okonkwo. KOPE is about berthing the future of the African marketplace by helping to build entrepreneurs that will, in turn, contribute to building the country’s tech ecosystem, he added. “We need to change the narrative in Nigeria and about Nigerians to celebrate the success story of Nigerians and empower the people positively,” he said. “There is nothing like the liberating power of enterprise. When you build a successful business, you are not just freeing yourself from the clutches of poverty and basic wants, you are empowering others to achieve their freedom,” he further said. Speaking further on the importance of KOPE to deepen opportunity in the Nigerian tech ecosystem, Okonkwo said that the of the aim of the organisation is to expand the doors of opportunity, to break down the walls that inhibit access, and to ensure that start-ups don’t make the challenges they experienced while kick-starting the business.

oringa is a food, medicine, and forage crop. Moringa cultivation is gaining popularity in Nigeria in recent times. Many Nigerians are now establishing Moringa plantations and consuming a lot of the products. The health benefits of moringa are limitless. Moringa has a strong antioxidant effective against prostate and skin cancers. It is an anti-tumor and an anti-aging substance. It modulates anemia, high blood pressure, diabetes, high serum or blood cholesterol, thyroid, liver and kidney problems. It also has strong anti-inflammatory properties ameliorating rheumatism, joint pains, arthritis, edema, and lupus. It is effective against digestive disorders including colitis, diarrhea, flatulence (gas, ulcer or gastritis. It is an anti-bacterial, antimicrobial and anti-viral agent, it is effective against urinary tract infection, typhoid, Syphilis, dental carries and toothaches, fungus, thrush, common cold, Epstein-Barr virus, Herpes – simplex, HIV AIDS, warts parasites, worms, schistosomes, and trypanosomes. It is a detoxifying agent, it

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is effective against snake and scorpion bites. With all the health benefits of Moringa listed above, a Moringa tea produced in Nigeria, well packaged with aggressive marketing strategies will sell like hot cake. A moringa-tea production factory is nothing but a goldmine that will turn around the fortunes of the promoters.

Technical Information Moringa plantations are springing up in Nigeria and it has been well established that Nigeria has the potentials to grow millions of hectares of Moringa, hence the raw materials supply can never pose any problem. Not only this, the awareness of the usefulness of moringa is gaining ground every day. Moringa leaves are plucked, washed, sterilized and well dried. The dried leaves are later milled into powdery form and now flavoured. There are different flavours such as strawberry, vanilla, ginger, and others. The next step is to package in permeable tea bags. Tea bags are now stuffed in small packs. Attractive and good packaging is a pre-requisite to market acceptability. Seriousminded investors can be put through the technicality. Financial Implication @Businessdayng

A sum of N8.75 million will be required to set up this project. The breakdown is given below: • Pre-Investments N250, 000 • Accommodation N2, 500,000 • Plant and Machinery N3, 000,000 • Utilities 2,000,000 • Take-off Working Capital 1,000,000 TOTAL N8, 750,000 ========== A well-packaged feasibility report/Business plan is a prerequisite to project take-off and finance sourcing. This can be provided for serious-minded investors. Profitability The project has the potential to generate a turnover of N300 million on annual bases with a minimum pre-tax profit of N130 million already computed. This is another income and job-generating opportunity that has far-reaching positive effects on the Nigerian Economy. Serious-minded investors can be assisted in the establishment of this project. Contact author on 08023058045 or olumakindeoni2@yahoo.com and nucleusventuresnigltd@yahoo.com

Monday 21 October 2019

BUSINESS DAY

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36 BUSINESS DAY

Monday 21 October 2019

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Monday 21 October 2019

BUSINESS DAY

UNDERCOVER INVESTIGATION (2) Drug abuse, sodomy, bribery, pimping… The cash-and-carry operations of Ikoyi Prison In the second report of a three – part undercover investigative series, FISAYO SOYOMBO exposes how the courts short-change the law, and the prisons are themselves a cesspool of the exact reasons for which they hold inmates.

oo many unforeseen obstacles had sprung up against me by the time I arrived at the gates of Ikoyi Prison, Ikoyi, Lagos, on July 12: I had had my most tortuous night in the police cell; I had been messed up by the typically ruthless Friday evening Lagos traffic; I had arrived under the cover of darkness, which wasn’t the plan. Even the few things that went well would later come back to haunt me. Proceedings were well underway at Court III when we stepped into the Chief Magistrate Court, Yaba, Lagos, after my unlawful detention for five consecutive days at Pedro Police Station, Shomolu. It was a little after noon — or thereabouts. A funny but very contentious matter was ongoing. The protagonist, a woman, was being tried for, allegedly, illegally selling a piece of land belonging to a former associate of hers. This woman — ostensibly in her late 50s or early 60s — claimed, vehemently so, that the complainant indeed owed her millions of naira in accumulation of unpaid earnings for executed projects. She sold the land because she had been instructed to, to defray the cost of her service, she said. But the prosecutor insisted otherwise, arguing that the sale was fraudulent. The woman, irritated and incandescent, embraced and perhaps enjoyed every window to have a go at the prosecutor. Once, the prosecutor got under her skin by scoffing at how two of her high-profile witnesses were deceased. “Excuse you!” the woman fired back in protest. “Are you suggesting I killed them? Is it my fault that you’ve been dragging me from one police station to another and from court to court for more than 10 years?” The magistrate — a dark, softspoken, middle-aged man whose eyes often evaded the lens of his pair of glasses when talking — adjourned the matter, as expected. And after two or three other cases, mine was mentioned. His orders: remanded in prison custody, two sureties in like sum of N500,000 each, N150,000 to be paid into the Registrar’s account by each surety, sureties to be from father’s side of the family. Not long after, the court rose, to be followed by my preparations for a long and difficult journey to the prison. PRISON WARDERS ASK FOR BRIBES RIGHT IN COURT Before the authorities take my

into the employ of the Nigerian Prisons Service (recently renamed the Nigerian Correctional Service) during a recruitment “some years ago”. Though unqualified, all three were eventually employed by the service. It suddenly dawns on the warder that an ongoing promotion exercise in the prisons service offers him fresh opportunity for corrupt enrichment. “Let me quickly call the man; he may be interested in a deal to facilitate his children’s promotion,” he adds, running his hand through his breast pocket for his phone.

freedom away from me, the first thing they do is give me a final semblance of it by unfettering my hands from the handcuff, as is the custom. That was just before entering the dock. Minutes later, the same man who released the handcuff returns to hand me over to a policeman who, accompanied by Zainab Sodiq, the lady posing as my sister, leads me downstairs. First stop on the ground floor is the office of the prisons service. Manning it, comfortably sitting opposite the entrance, is a gun-wielding prison warder, legs waggling, whose shirt hangs loosely on the wall inside, leaving his trunk scantily covered by a singlet. Inside that office are three more warders. The next room is a holding cell — for momentarily detaining inmates until the arrival of the prisons bus that conveys them to Ikoyi. I expect to be led to the holding cell, but I am taken into the prisons office and encouraged to “take a seat”. What manner of magnanimity is this? I was wrong! The three officers summon my sister. “You can have a look at that holding cell and see if it’s the kind of place a human being should www.businessday.ng

stay,” one of them tells her with feigned sympathy. “Your brother can stay in our office but it will cost you N10,000.” My sister takes a moment to peep into the holding cell, then returns to bargain. The negotiating parties reach an agreement of N5,000, collected by the singlet-donning warder. Money in the bag, the warders’ initial measured disposition turns happy-go-lucky; I notice the ease with which they regale one another with tales of similarly shady financial dealings. “The day Naira Marley was billed to be taken to prison, I was on this chair making cool money,” says one of them. “I made some good money, I won’t lie. Transfers were just going up and down.” Naira Marley, the hip hop artiste whose original name is Azeez Fashola, had been arraigned at a Federal High Court in Lagos on May 20 by the Economic and Financial Crimes Commission (EFCC), on 11 counts of alleged Internet and credit card fraud. A second warder describes how he facilitated the payment of N300,000 to a senior colleague of his in Abuja, by a man who wanted to ‘smuggle’ all his three children

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‘IF YOU HAVE YOUR MONEY, YOU CAN NEVER SUFFER IN PRISON’ Seeing the lack of restraint with which they discuss acts of bribery and corruption, I approach them for guidance on the allocation of accommodation in prison. Apparently, it’s a high-wire fraud involving prison officials in court and those in the yard proper. “You can get a cell for N30,000,” one of the warders tells me. “You can also get for N100,000 or N150,000. You can even get a N1.5million cell.” “A million and five hundred thousand?” I protest. “Of course!” he insists. “When Ayodele Fayose was remanded in Ikoyi Prison, what kind of cell did you think he stayed in?” Fayose, the immediate past former Governor of Ekiti State, was remanded at Ikoyi Prison in October 2018 at the start of his N2.2billion fraud trial initiated by the EFCC. Another warder cuts in. “Don’t worry, you can never suffer in the prison yard,” he says. “As long as you have your money.” Patience, a third urges me. “The warders at the prison have warned us off striking deals with inmates while still in court,” he explains. “They’ve told us to leave them to push their own deals when the inmates get to the prison. So, when we get there, we will hand you over to the warders you will negotiate with.” EMERGENCY BAIL FOR SALE BY ‘THE MAGISTRATE’S MAN’ AND PRISON OFFICIALS Minutes later, one of the warders — dark, mild-mannered and diminutive — walks up to me to ask if I’m making progress with my bail conditions. The question confounds me. Who makes progress on bail application within two hours of a court hearing? “My lawyer is working on it,” I @Businessdayng

reply, “but it’s too early to know since it’s just a few hours ago we left court.” “No, no; it doesn’t mean,” he says. “I have a lawyer in this court who will help you perfect your bail ‘today today’. In fact, you will not get to Ikoyi Prison at all; you will go home straight from here. He works in concert with the court authorities. I can call him right now and he’d be here any minute, if you want.” Stunned and curious in one breath, I nod in the affirmative. In a matter of minutes, the lawyer, ostensibly in his late 40s or early 50s, shows up. He speaks in carefully considered and restrained patches, sporadically wiping the lens of his glasses with a silky piece of cloth. “What exactly is your offence?” he begins, then proceeds to hearing my bail conditions. He assures me that the problematic components of my bail requirements would be waived, but the process would cost me money. “Did the Magistrate order you to pay any money to the Registrar’s account?” “Yes. N150,000,” I say in error. It should have been N300,000 — at the rate of N150,000 per surety. “Okay, that’s no problem,” ‘Mr. John’, as he introduces himself, says. “Can you make everything N200,000?” I tell J I can’t. That’s a lot of money. Fifty thousand naira on top of the N150,000 is a lot of cash. But he disagrees. “You see, I am very close to the Magistrate,” he says. “I am very close to the man; therefore, we will waive many of these bail conditions for you.” We haggle for a while: N180,000, N170,000, N180,000. We eventually settle for N170,000. John takes a quick look at his watch; it’s a little past 3pm. “Hurry and get the money. It’s almost too late already — why did you wait till this long?” he laments. “Today may or may not be possible. If you had mentioned it immediately the court rose, say around 2pm, I would have been able to totally guarantee you that you would go home today without ever reaching the prison.” We exchange numbers and I promise to call, but I never do (The plan, really, is to end up at Ikoyi Prison.). Instead, I fold my secret device and tuck it away carefully. Yes, I’d taped all the conversations held inside the prisons office in the

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Monday 21 October 2019

BUSINESS DAY

UNDERCOVER INVESTIGATION

Drug abuse, sodomy, bribery, pimping… The cashout. Every inmate who comes in with cash must give up some of it at every registration point in bribes demanded through proxy, but with the full knowledge of the receiving warder. It looks a small amount but by month end it could be some stash of notes in dubious earning. In my one week in that prison, there were 16 new inmates on the day with the least number of new inmates. On one day, there were 45. If only five had enough cash to forfeit N1,000, that’s N5,000 daily, amounting to a little below or above N100,000 — depending on the number of court sittings in the month. Numerous honest, hard-working Nigerians do not even earn that! I give up N1,000 of my N7,200 as instructed, and I receive a slip indicating my new cell will be D2 — that is, Block D Cell 2. I ask to be given the outstanding N6,200 but the convict tells me the money will be handed over to the warder overseeing the block — a happygo-lucky albino who seemed very popular among inmates. Six thousand two hundred naira quickly becomes N5,200. This fresh N1,000 deduction, I am told, is to guarantee nobody in the cell lays hands on me. Again, if five inmates forfeit a thousand naira daily, that’s another N100,000 in corruptly-earned money by month end. This is more than thrice the national minimum wage approved by President Muhammadu Buhari in April, but which still hasn’t taken off five months after!

Continued from page 37 court premises. The original plan was to put the device away before going to prison, then retrieve it afterwards. I had been told that there was literally nothing I wanted to smuggle into the prison that I couldn’t; I only needed to grease the palms of warders and they would fetch it for me. But with accommodation negotiations set to take place on arrival at the prison, I began to nurse the ambition of smuggling in the device outright at point of entry. This was not the original plan. But if it works out, I would more evidence of prison-yard corruption. If it fails, I’m doomed. Big risk, I know. But I do it all the same. PHYSICAL PAIN IN EXCHANGE FOR DIGGING THE STORY The prison warders do not quite know what to make of me when they find a hidden device on me, a supposed inmate, during the routine search at the entryway shortly after an Ikoyi Prison bus conveying the latest inmates pulled over at the prison gate. After a second, more thorough search during which nothing else is found on me, they hand me over to the ‘Section’ — a position occupied by the most senior convict in a cell — of the welcome cell. As I would later find out, this was under strict instructions: no phone calls, no out-of-cell movement, no frivolous interaction with inmates. Very early the following morning, Sunkanmi Ijadunola, the third most senior warder in Ikoyi Prison, sends for me. They had seen the videos; they’d extracted the memory card from the device and watched footages of the five prison officials demanding bribes from me and the court official negotiating a premature bail with me. Sunkanmi, as he is widely known, asks me to confess: “Who are you and what is your mission here?” But he was asking the question a few hours too late. I’d spent half of the night deliberating on what to expect in the morning. I had imagined that in the best scenario, some senior official would have been thoroughly mortified by the sight of their bribe-demanding colleagues captured on tape, and would be keen to convince me about helping to further unravel the bad guys in the system. I didn’t deceive myself, though: this thinking was more or less illusory. I’d also thought that in the bad scenario, I’d be handed over to the Police; and in the worst, I’d be extrajudicially executed. After several hours of carefully considering all possibilities overnight, I resolved that even if they held a gun to my head, I would not disclose my true identity. I knew

once I did, that was the end of the story. After five excruciating, emotionally and psychologically destructive days in a police cell, I wasn’t prepared to ruin everything so cheaply. Seeing I am unwilling to offer any useful information, Sunkanmi, the Assistant Chief, accuses me of plotting a jailbreak. “You’re here to understudy the prison security so that you can send the videos to your gang members outside,” he says. “You’re planning a jail break. Or you’re working for Boko Haram; you’re a Boko Haram spy!” I do not flinch. Instead, I stick to the original story line I’d preconceived to offer in the improbable circumstance that my cover was blown. At this point, Sunkanmi sends for a cane and orders me to remove my shirt and trousers, leaving only my singlet and boxer briefs. Then he descends on me. Three rounds of beating: the first with several lashes of the cane searing straight into my skin and leaving me with blood and blisters; the second in similar pattern, with my hands cuffed behind my back; www.businessday.ng

and the last with a thick stick targeting the interior and exterior joints of my ankles, knees, hips, elbows and shoulders. Still, I refuse to disclose that I’m a journalist. By enduring the beating, I succeed in buying myself at least another 24 hours of understudying the corruption seeping through the different layers of prison operations. Bearing the pain was worth it in the end; someone needed to expose the scale of criminal corruption going on in that prison. Corruption-Laced Registration The first benefit of enduring the pain is that I am still accorded the treatment of a regular inmate, therefore I am sent for registration and documentation. The documentation holds inside a building opposite the Assistant Chief’s office. It’s a fairly big office with a small inner room littered with stacks of ragged files and paper, plus a narrow, hollow, open cell to the left where awaiting-documentation inmates sit without much latitude to stretch their legs. The inner room is manned by a warder easily

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noticeable by the ungracefulness of his chemical-bleached yellow skin. A light-skinned, heavily-built woman-warder spearheads the documentation process in the major office, assisted by three convicts. The documentation is both manual and digital, but to avoid compromising the security of the prison, I’ll skip the details. Prison warders are themselves the biggest threat to prison security, but I won’t aid them. In the very final stage, a convicted inmate tells me to step forward for my cash. The procedure is always that an inmate turns in his possessions, including cash, at the gate. At the end of documentation, the money goes to the records department, from where he can retrieve a small sum every time it is required for a specific purpose. Just before I collect mine, one of the three convicts — they’re easily recognizable in their deep blue uniforms — whispers some instructions into my ears. “You will give that woman N1,000,” he tells me, “then you can have the rest.” It’s standard practice, I soon find @Businessdayng

COVER BLOWN BUT TO O L AT E TO C O N C E A L CORRUPTION My stay at D2 is short-lived. Two members of my backup team show up as planned. They had been unable to reach me but they assumed all had gone well so far. With the extra scrutiny around me, it doesn’t take too long before they’re found out. It leaves me with no option but to admit I’m an investigative journalist and to fully disclose my mission. I just couldn’t see them endure the pain I had. This was a watershed moment in the investigation, as from then on, the prisons service bends over backwards to put its best foot forward while also eliminating my exposure to all ongoing ills. I remember overhearing a prisoner say even a death-row convict should still have the sense of self-worth to ignore the beans that was served that Saturday morning; but in my eight days at the prison, the warders ensure that I do not come in contact with the food served to inmates by the prison. The authorities relocate me from D2 to the welcome cell, with strict warnings never to leave the cell on my own under any circumstance. Unfortunately for them, it was too little too late.

Monday 21 October 2019

BUSINESS DAY

-and-carry operations of Ikoyi Prison Before they knew who she was, one of my visitors had actually been made to pay a bribe of N1,000 at the prison gate before she could be allowed to see me, much like the setting at the police station. This wasn’t at the discretion of the visitor; it was no act of voluntary tipping. Rather, she was expressly asked to part with her money as a condition for access to me. On the surface, this looks a pittance, but not so when viewed in the context of the human traffic to the prison. On Saturday evening, I had managed to do a head count of visitors: 18 of them in an hour. Do the math! This Ikoyi-visit corruption has grown in leaps and bounds, evidently; back in 2016, a N200 bribe gave a visitor access to an inmate. Not anymore! Also, one of the few lawyers who visited me was nearly asked at the gate if he was willing to enter a deal to relocate me to a more enjoyable cell. “You look too clean for your client to be in D2,” a warder at the prison gate had told the lawyer, who, several years before his admission to the bar, had earned a reputation among colleagues for his clean shaves and bespoke suits. The warder waved the lawyer in, all smiles and niceties, and suspiciously keen to converse. Once a second warder turned up abruptly to announce the name of the client in D2, everything changed. The first warder slipped into jitters; his eyes became reddened, his face contouring into a frown. “You cannot sit there,” he said as the lawyer attempted to settle into a seat. “Come this way; remove your glasses; we need to thoroughly search you.” N10,000 IS THE COST OF DELETING YOUR DETAILS FROM THE PRISON’S RECORDS Until I was called to come receive my visitors, I made my every second in Block D count. Even before reaching the block, I knew I was on borrowed time. I was certain that it was only a matter of hours before I would have to reveal my true identity. So, in between registration, feeding and dispatch to D2, I mixed with inmates as often as I could. On one of those occasions, I overheard three inmates discuss a birthday celebration by a ‘Yahoo boy’ — Nigerian lingo for internet fraudster — in prison the previous week. “It was ‘lit’,” one of them said. A second, obviously the shortest-serving inmate of the trio, asked how some of the birthday items were smuggled in. “It’s the warders,” the third answered. “With N5,000 and above, most warders will help you smuggle anything you need into the yard.” Elsewhere, I’d also run into a group of four inmates fielding questions from an inmate who was worried about the implications of his conviction. I was interested

bring a girl to the Nicon Luxury for you, set the two of you up; you f**k, you pay. It’s that easy,” he reveals. “There is free flow of drugs in prison, which is impossible without the facilitation or compromise of warders. You’ll find Colorado [a hard drug] in huge sale; I took it myself. I paid just N5,000 each time I wanted it. Tramadol and refnol are sold, too, but Colorado is the highest in demand. “Look at Vaseline, it is a very scarce commodity in prison but it is available at expensive rates for use in sodomy. At Ikoyi Prison, the powerful inmates sodomise the others, and it happens right under the nose of prison authorities. They know that these things happen. But, you see, the warders are the problem — because inmates do not have access to the outside world, and those coming from outside are screened from head to toe. Therefore, nothing can enter the prison without the knowledge of warders.”

in it, knowing the consequences are long-lasting. Section 107(1) (d) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) states explicitly that no person shall be qualified for election to a House of Assembly if “within a period of less than ten years before the date of an election to the House of Assembly, he has been convicted and sentenced for an offence involving dishonesty or he has been found guilty of a contravention of the Code of Conduct”. A similar provision in Section 137 (1)(e) makes it clear that a person shall not be qualified for election to the office of President if “within a period of less than ten years before the date of the election to the office of President he has been convicted and sentenced for an offence involving dishonesty or he has been found guilty of the contravention of the Code of Conduct”. “What’s your business with that?” one of the inmates fires, irritated. “We will delete your name from the records. There will be no trace of you. Nobody will have any evidence that you ever came here, so forget whatever the implication is. My brother’s friend did it before and it cost him only N10,000. I’ll link you to the warder who did for him; he will help you too, but that will only be after you have regained your freedom.” SODOMY, BOOZE, SEX AND DRUGS… AS LONG AS YOU HAVE YOUR MONEY While in prison, I’d exchanged contacts with an awaiting-trial inmate who had promised to reach out once he regained freedom. www.businessday.ng

True to his words, he called on the day he exited Ikoyi Prison. Weeks after, I drove about 340km out of Lagos to meet up with him. “I saw how you were beaten up in prison and I didn’t want you to suffer in vain,” he says as we exchanged handshakes, each sizing the other up for elements of trust. “I’m going to help you by giving you additional information to what you already have. But this will be a very brief meeting, and this will be the only time ever you’d see me. That’s the best way for me to stay alive, because I know these bad guys will come after me if they trace any information to me.” He explains that the special accommodation mentioned by the prison warders in court, which I was shielded from seeing, is called ‘Nicon Luxury’. It’s an apartment where inmates pay between N20,000 and N50,000 for a night’s sleep, plus access to cigarettes, drinks, Indian hemp, drugs and girls. “The apartment has air conditioners, good couches and mattresses; meanwhile, 118 inmates are packed like sardines into one room that should normally hold 30 inmates. Those at Nicon are not only political prisoners or people of influence; just people who have the money.” He describes the unfair world that the prison is, with only the poor truly imprisoned while the rich live fine. “There is a lot of impunity in the prison,” he says. “An inmate, so long he is rich, can have almost everything, even sex. Inmates sleep with prostitutes. If you want to have sex, just tell the warders. They will

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NOTHING LIKE REFORMATION OR CORRECTION IN PRISON Despite the signing of the Nigerian Correctional Service Act 2019 into law by President Muhammadu Buhari, to reflect the new thrust of inmate reformation and correction, Nurudeen Yusuf, a Lagos-based legal practitioner and human rights activist, says any prison reforms that doesn’t kick off with warders is an “absolute waste of time”. “With the sex, sodomy and abuse of drugs at Ikoyi and other prisons, there can be no reformation in the prison system. Under the law, inmates only have a right to one stick of cigarette a day, but look at the sheer availability of drugs to them,” he says. “For instance, we got a guy out of Ikoyi Prison through our advocacy programme; we paid his bail sum of N100,000. We were shocked that he was desperate to go back. In less than three weeks, he got himself sent to prison — because of the big life he enjoyed there. “The prison world is like an animal world. Inmates who have access to drugs, money and gadgets use that power to oppress the others. You see prisoners who have access to phones, they can extort outsiders right from inside the prison. Many prisoners convicted for fraud and murder are rich, and they live a big man’s life in there. Prisoners make cash transfers from their accounts while in prison. “While in prison, inmates are supposed to learn new hands-on skills with which they can earn legitimate income after serving their time. But many of the workshop centres are not functioning, even in Kirikiri Maximum prisons; no materials, no resources to work with.” Yusuf says he has had clients who were sodomised at Ikoyi Prison but the warders turned a @Businessdayng

blind eye because the victims were suspected Boko Haram members. “These people are innocent until proven guilty in court,” he noted. “Therefore, sodomising them is criminal; and this happens at almost every prison in the country.” Possible. A 31-page piece titled ‘Sodomy of Children in Maiduguri Prison and The ICRC Conspiracy of Silence’, released by imprisonedfor-life Independence Day bomber Charles Okah in March, details child prostitution, sodomy, abortions and even outright murder at the Maiduguri Maximum Security Prison, Borno State. Then Governor of Borno State, Kashim Shettima, subsequently set up a panel to investigate Okah’s claims, but its work was frustrated by Ja’afaru Ahmed, the Controller-General of the Nigerian Prisons Service and Sanusi Mu’azu Danmusa, the Maiduguri State Controller. ‘SET THE PRISONERS FREE, JAIL THE WARDERS’ Prisons in Nigeria, exist to “take into lawful custody all those certified to be so kept by courts of competent jurisdiction, produce suspects in courts as and when due, identify the causes of their anti-social dispositions, set in motion mechanisms for their treatment and training for eventual reintegration into society as normal law-abiding citizens on discharge, and administer Prisons Farms and Industries for this purpose and in the process generate revenue for the government”. The NPS continues to fulfill all these basic functions, bar two — identify the causes of misbehaviour, and kick off treatment and reintegration to society. Incidentally, these two are the most important of the lot. Yusuf worries that prison sentence is turning a catalyst for more crime rather than the deterrence it was intended to be. “The implication is that inmates have no remorse over the offence for which they have been convicted,” he says. “They are willing to commit more crimes. They have just become terrors unto the society, either in prison or out of it. If you have money, you can live the life of a governor while in prison. The only difference is that you don’t have freedom to go out of the prison.” My ex-inmate-friend sums it up more chillingly. “I was convicted for fraud but I left the prison knowing I was a better human that many of those warders,” he tells me. “You see those warders, they’re the ones who should be in jail. They’re far more fraudulent than I was. Their freedom should be in my hands, not mine in theirs!” Watch out for part three of this thrilling expose by investigative reporter FISAYO SOYOMBO inside BusinessDay and on www. businessday.ng

40 BUSINESS DAY

Monday 21 October 2019

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NAICOM plans compliance on technology standard for quality service, growth of industry

Modestus Anaesoronye

ndustry regulator, the National Insurance Commission (NAICOM) says it may set new standard for technology compliance in insurance companies to boost service delivery and growth of the industry. The commission said technology is the way to go in improving service delivery to customers as well as deepening penetration of products through improved distribution strategies. Sunday Thomas, acting commission for Insurance/ CEO of NAICOM made the disclosure during question and answer session at the industry’s 2019 Professionals Forum held weekend in Abeokuta, Ogun State. “We have gotten to the point that we may have to set a minimum level of technology a company will have, to be able to practice insurance in Nigeria”. He said “as soon as we are able to clean our house internally, we will come back to the market for technology standard of operations”. This is the way to go for the industry to move forward, so we will come up with initiatives on this, Thomas said. Eddie Efekoha, president of the Chartered Insurance Institute of Nigeria (CIIN), organizers of the forum said the theme of the forum “The Digital Era: Implications for insurance Professionals” brings to the doorstep an issues that will define the insurance industry of today and the future. Efekoha said the digital era is here and Artificial Intelligence is playing a

ON THE MONEY Throwback to Wellness Week: Things to note

L-R: Albert van der Linden, speaker/senior Research Associate, Cenfri; Eddie Efekoha, president, Chartered Insurance Institute of Nigeria; Sunday Thomas, acting commissioner for Insurance; Henry Akwara, chief executive officer, Mayflora Consulting Ltd; Nosike Agokei, principal partner, Agokei and Co. and Yeside Oyetayo, rector, College of Insurance and Financial Management, during Insurance Directors’ conference on Corporate Governance in Lagos.

major role in its evolution. “Indeed, the future which Artificial Intelligence promises for insurance is a series of touchless processes from premium collection through to the entire claims process.” He also noted that big data is all around us, ready to be harnessed and put to use. “As an industry, how are we leveraging on technology to simplify data analytics in order to make pricing of insurable risks more accurate; enhance self-servicing of customers through interactive websites; tweak sales practices in line with customer needs and wants in order to improve profitability; bring cost efficiency, as well as maximize overall performance, Efekoha asked. Thomas in his earlier welcome address challenged insurance companies in the country to embrace technology for growth, saying

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this has become necessary because it will not only enhance service delivery but will help in the effort to deepen penetration particularly in the retail space. Thomas said in this 21st century, for any business to succeed, automation of operations is the way forward and called on Chief Executive Officers of insurance companies to embrace technology in order to reap it’s benefits. According to him, in this 21st century, digital technology has integrated the world and its systems into “one global village” where all transactions are now on our finger tips. Bigger than the phase of the advancement are the implications which are already affecting us positively or negatively depending on our perspective. “Insurance business must understand that digitalisation has now taken

precedence in people’s day to day affairs and the consequence could be massive if we fail to fix any gap that this can create in our service delivery. We must effectively integrate into the robust financial circle for insurance to take its rightful place in the economy. “We must invest in technology in order to meet up with current phase of advancement and take our products to the comfort of consumers. Thomas further noted technological advancement has taken an unprecedented leap to becoming an integral part of our daily living, adding that the Digital Era actually started evolving in the 1980s and presented society with information and technologies that are essentially transforming how businesses across all industries operate and serve their customers, the Insurance industry inclusive.

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ast week, we at Old Mutual celebrated the ‘Wellness Week’. It was designed to bring awareness to health issues and how to stay healthy by adopting healthy lifestyles. There is a very common saying that ‘Health is Wealth’. Without good health, nothing else matters. In other words, if your health fails, it can overshadow everything else, including emotions, comfort, productivity, career, and social life. Depending on the severity of the health issues, it could also completely drain your finances. To continually stay healthy, you must be an active participant in your self-care. We must have read different journals about how you can help preserve your health and wellness by maintaining a balanced diet, exercising regularly, keeping to cleanliness always, getting enough rest and sleep. But is that enough? We thought it was important to dedicate one week to wellness as it provides an avenue for us to make a positive impact by uniting people towards a common goal of preventing critical illness and fighting diseases, promoting a better quality of life for all and sundry. Here are three major conclusions from the week’s campaign: Live Healthily: Live healthily, live longer. It is true that all the self-care measures earlier listed are standards for living a healthy life, but good health is not just about healthy eating and exercise, it is also about having a positive attitude, selfdiscipline, a positive self-perception, and a healthy lifestyle. Get a Doctor: It is very wise to get yourself or your family a personal doctor as a matter of priority in your healthcare plan. This is because, with a dedicated doctor, you have a medical resource who has historical and legacy understanding of you and your family’s well-being and would always

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be able to understand any future outcome based on this knowledge. So, believe it or not, research has shown that people who have a primary care doctor have better health outcomes. Get Insurance: No one intends to get sick or hurt. Despite the fact that you lead a healthy lifestyle; that you stay active; you eat the right food; you don’t take risks that might affect your health; and have no history of family critical illness, you can still succumb to ill-health, which we have to admit, can be very costly. Some medical issues cannot be handled by out of pocket spending alone, this is where insurance comes in. With insurance coverage, there is the peace of mind knowing that you are covered for medical treatment should the need ever arise. At Old Mutual, we offer a special insurance package for critical illness that pays out a lump sum in the event you are suddenly diagnosed with a specified critical illness. This cover pays out a benefit of up to N30, 000,000 if you suffer a specified critical illnesses such as stroke, cancer, coronary bypass, heart attack, or major organ transplant. It is an assurance that you are covered in the case of these eventualities. Like we always say, don’t be caught off guard, protect yourself from critical illness and have peace of mind. For more insurance education like this, you can call Old Mutual on 01 271 9393 to arrange a free financial education session for your team, or on a one-on-one basis. Our financial advisers can help you with the right kind of financial and insurance advice. For more information, visit your nearest Old Mutual branch or go to www.oldmutual.com.ng or follow our social media pages @oldmutualng on Facebook and Instagram and @oldmutual_ng on Twitter. We look forward to helping you with your money matters.

Monday 21 October 2019

BUSINESS DAY

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Insurance industry could help economic diversification in Nigeria

…as expert worries about structural constraints Modestus Anaesoronye

he nation’s insurance industry has the capacity to support government diversification efforts, but has been pulled down by pervasive structural constraints., experts said. This is according to report conducted by the Centre for Financial Regulation & Inclusion and the World Bank to understand how insurance market development can contribute to sustainable and inclusive growth. Albert van der Linden, speaker/senior Research Associate, Cenfri released the report at the Directors Conference organized by the Center for Insurance and Financial Management. He noted that there should be opportunities for insurance on the back of the turnaround of the economy; and, in principle, insurance can support several of the ERGP pillars. According to the report, foreign acquisitions of local insurers over the past few years confirm the opportunities in the Nigerian market, but however lament the market features challenging the industry’s ability to reap the returns: Amongst them areFragmented market with often poor performance At 59 licences across a relatively small premium pool, the insurance market is

Tope Smart, chairman, Nigerian Insurance Association

fragmented. Apart from a few larger and stronger insurers, there is a large tail-end of insurers with small balance sheets and often weak business fundamentals1. For many insurers, expense ratios are high and claims ratios are either too low to provide consumer value or too high to attain profitability. Limited asset base constraining capacity to absorb risk The ability of the insurance sector

to fulfill its role as risk manager in the economy is determined, to a large extent, by the size of its assets. Insurance companies hold only 2.5 percent of total financial sector assets, with the majority of those assets being on the balance sheets of general insurers. Skills constraints Technical skills are scarce, and the number of insurance professionals is disproportionately low for the number of insurers and brokers in the market. The scarcity of technical skills also affects the regulatory authority and its ability to regulate and supervise the market. Trust deficit Poor-performing insurers and a poor claims track-record are fuelling public distrust in insurance. The market’s reputation is further tainted by compulsory insurance lines that are poorly enforced and seen by the populace as a tax, rather than a benefit. Overall, Nigeria exhibits features of relatively low insurance market development: Corporate and compulsory general insurance still accounts for the bulk of premiums. Life and health insurance is largely provided on a group basis, serving only a small, relatively high-income base, and the individual retail insurance market is nascent. Against this backdrop, how is insurance in Nigeria faring in supporting household resilience, business growth and capital market development, respectively; and where do the main opportunities and imperatives lie?

Premium Pension signs fund management agreement with Jigawa State as lead PFA Modestus Anaesoronye

remium Pension Limited, a leading Pension Fund Administrator (PFA) in the country and Jigawa State Government have signed a Portfolio Management Agreement which confers on the former the authority and responsibility of managing the state’s Pension fund as the Lead PFA. This fund has been established by the State Government through the Jigawa (State & Local Government) Contributory Pension Scheme. The signing of the agreement follows the reappointment of Premium Pension as a Lead PFA for a term of two years. The agreement, which has the endorsement of the National Pension Commission (PenCom) emphasizes, among others, that the funds must be managed in accordance with the guidelines issued pursuant to the Pension Reform Act 2014 and Jigawa State Pension Law. The ceremony for the signing of the Agreement was held recently at the Pension House, Dutse Jigawa State with key stakeholders on both sides in attendance. While the Acting Managing Director of Premium Pension Limited Kabir Ahmed Tijjani signed on behalf of the Company,

the Acting Head of Service of Jigawa State HussainiKila and the Executive Secretary of the Jigawa (State &Local Government) Contributory Pension Scheme Hashim Fagam signed on behalf of the Jigawa State Government. “This is a practical demonstration of mutual trust and highly productive partnership required to drive the contributory pension scheme in the Country” said Tijjani while making remarks at the ceremony. Mr. Tijjani further said that “All the ap-

Kabir Ahmed Tijjani, executive director, Business Development North & Investment at Premium Pension Limited www.businessday.ng

pointed Fund Managers will continue to justify the confidence reposed in them by Jigawa State.” Other officials of the state present at the occasion includes the Statutory Board members of the Jigawa(State & Local Government) Contributory Pension Scheme, the state Solicitor General and other government officials. Others include Managing Directors and Company Secretaries of other fund Managers appointed by the state In another developments, as part of the strategic efforts of the Company to reach out to its teeming members towards achieving exceptional customer experience, the Management of Premium Pension Limited led by the Acting CEO Mr. Kabir Ahmed Tijjani held an interactive session with the Pension Desk Officers (PDOs) and Human Resource Managers in Kano. The colorful event took place recently at the Tahir Guest Palace Hotel. Highlight of the event was the Launching of PPL Mobile app which was timely and well appreciated by the participants. This is expected to drive and increase customer engagement as well as easy access to the Company’s services through digital platform.

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AIO to implement Schanz, Alms study report on new blueprint

frican Insurance Organisation (AIO) has come out with a new strategic plan that redefines its objective and specific actions to be taken that will impact positively operations of insurance companies in the Continent. The new road map of the AIO is the result of a study conducted by Schanz, Alms & Company, a Swiss based consultancy, contracted by the Executive Committee of the AIO. The study was based on the interviews of some senior insurance Executives of AIO member companies plus a large number of stakeholders including non AIO members, on the role of an African organisation, its performance and the role of the General Assembly. The AIO’s new strategic plan will rest on six main pillars that encompass the objectives of the organisation at birth notably ensuring a healthy African insurance/reinsurance industry and the promotion of inter African cooperation through insurance. The six strategic objectives of the AIO henceforth are advocacy, research, training, awareness/reputation, market building and networking/events. Delphine Traoré, president of the African Insurance Organisation, says “It had become crucial to review the purpose and long-term vision of the AIO and the values it brings to its members.” Elaborating on the strategic plan she clarifies “In advocacy we aim to advance the policy interests of the African insurance industry. In research we want to establish a data repository, but more importantly help with decision making and industry recognition through thought-leadership. In networking and events, we aim to retain the position that the AIO occupies in the African insurance industry, but assure a stronger focus on the plenary sessions and the topics discussed at events. In training, we aim to set standards and best practices for insurance and reinsurance education that are relevant to the industry on the African continent. In awareness and reputation building we want to strengthen the perception of the industry as a facilitator of economic and societal progress. And finally, in market building we aim to facilitate solutions that reach out to the under - or the uninsured.” Also commenting on the new strategic plan of the African Insurance Organistaion, the new Secretary General, Jean Baptiste Ntukamazina says “In terms of new initiatives the AIO has to become the advocate for the African insurance industry, establish itself as a quality seal, promoting insurance education that is relevant to the African insurance markets, strengthen thoughtleadership and agenda setting as a precondition to also be perceived as the advocate and centre of competence for the African insurance industry”. Ntukamazina adds that “with this new strategic plan, the AIO will contribute to increasing the insurance penetration in Africa. It will further strengthen the AIO’s financial flexibility, grow the AIO’s membership base, assure the perception of the AIO as the representation (voice) of the African insurance industry and improve the AIO’s overall performance rating”.

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42 BUSINESS DAY

Monday 21 Ootober 2019

REAL SECTOR WATCH What Nigeria can learn from Vietnam’s industrial success ODINAKA ANUDU

ietnam has shown that there is always a way wherever there is a will. In 2017, the Southeast Asian country earned $31 billion from exports of textile and garment industry alone, a yearon-year increase of over 10 percent, according to an online information platform Vietnam Briefing. In 2018, it made-in-Aba $16.24 billion from footwear, representing a 10.5 percent increase over 2017, according to Lefaso, the Vietnam Leather, Footwear and Handbag Association. Nigeria and Vietnam have things in common. One is that half of the population in both are less than 35, which provide ready labour force for industries and firms. But unlike Nigeria, Vietnam has welltrained skilled labour who fit into its industrial dream. This began with reforming the education system, paying attention to sciences and technology which are important for industrial growth. Two, agriculture employs more than half of the population in both Nigeria and Vietnam. Rice is the most important crop in both countries. More so, both countries have comparative advantage in leather/ shoes and have enormous raw materials in food and agro-allied sector. But Vietnam took certain steps to get to where it is. One of the major steps taken by

the country is market reforms. Vo Tri Thanh, a Vietnamese economist, said keys to the country’s growth were an acknowledgement of the private business right; the market-oriented reforms; macroeconomic and social stability, as well as the opening and the integrating of the economy into the regional and world economy, especially in the areas of trade and Foreign Direct Investment (FDI). Vietnam sees trade as the most important part of its manufacturing sector. In an article entitled ‘Vietnam’s manufacturing miracle: Lessons for developing countries’, three economists Sebastian Eckardt, Deepak Mishra, and Viet Tuan Dinh said Vietnam has numerous bilateral and multilateral free trade agreements, which dramatically cut tariffs, anchored difficult domestic reforms,

and opened up the economy to foreign investment, they said. “It is estimated that more than 10,000 foreign companies—including major global players such as Samsung, Intel, and LG—operate in Vietnam today, mostly in exportoriented, labour-intensive manufacturing,” they added. Today a sizeable number of the phones are from the country. Nigeria has over 50 trade agreements but many of them are not profiting local firms owing to lack of openness between Nigeria and the countries, and low capacity utilisation of most firms resulting from tough business environment. Vietnam reduced its cost of doing business for enterprises. The World Bank said in its 2019 Doing Business report that Vietnam

Experts canvass infrastructure development as AFCTA nears Gbemi Faminu

xperts in the maritime and manufacturing sectors have called for improved infrastructure to enable Nigeria benefit from the imminent African Continental Free Trade Agreement (ACFTA). They also called for public-private partnership to hasten the process of infrastructural development in the country. Speaking during a panel discussion at the maritime business and disputes forum hosted by the Lagos Chamber of Commerce International Arbitration Centre (LACIAC), they urged the government to put in place policies that would attract investors and improve the business environment. Mansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), at the forum, said the ACFTA was a good but long approach to economic development, stressing that Nigerian manufacturers lacked basic infrastructure to compete. MAN president, who was represented by Reginald Odia, managing director of Bennette Industries Limited, said there were a lot of issues that manufacturers still

battled with which reduced their productivity, arguing that because of the signing of the agreement, they would have to produce much more with less resources. He advised that infrastructure development should not be left for the government alone and encouraged private sector participation. He said if the government can get the policies right, investors would be encouraged to contribute their own quota to the country’s economic development. “This will speed up the infrastructure development process, but we need policies as well as the government will to encourage this action,” he said. Speaking on the border closure, he said it depicted structural problems but with all hands on deck, the measure would be short term. Chinwe Abanna, general manager, managing director’s office, Nigerian Ports Authority, said at the panel session that trade was necessary for economic development and would require standard infrastructure to be effective. She stated that while infrastructure deficit had continued to be a challenge, the congested port intensified the problem. On the AfCFTA, she said, “The trade agreement is a www.businessday.ng

redirection for people’s mindset and has set a stage for us within Africa to look inwards and tap into our resources and see how they can be effectively utilised for economic growth.” Abanna, who represented Hadiza Bala Usman, managing director of NPA, said in an interview that the country needed to put structures in place, initiate procedures, convenient and friendly legal frameworks that could enable the services of the shipping industry to grow. “Rome was not built in a day. The most important thing is that we have signed into the agreement and we can recognise the benefits. It will spur infrastructure improvement as well as economic development which will stir up innovation and encourage people to fully utilise their resources which will boost economic growth,” she said. Obiageli Duru, a maritime and logistics consultant, said: “We need to upgrade infrastructure in order to handle what the trade agreement is all about.” Regarding the border closure, she said that it was necessary for countries to reach a decision that was beneficial to all sides. She advised the authorities not to make decisions in isolation and also put policies in place to attract the private sector.

made paying taxes less costly for companies by reducing the corporate income and value added tax rates while eliminating the surtax on income from the transfer of land use rights. Taxes in Nigeria (state, federal and local governments) today are 54 and are increasing as states go increasingly cash strapped. As a serious country open to business, the country made starting a business easier by publishing the notice of incorporation online and by reducing the cost of business registration. It equally made enforcing contracts easier by making judgments rendered at all levels in commercial cases available to the public online, the World Bank added. It made exporting and importing easier by upgrading the automated cargo clearance system and extending the operating hours of the customs department. Scanners at the Customs in Nigeria are barely working, with roads to Apapa and Tin Can ports nightmares. “Of particular concern and importance to us (MAN) are the challenges we face in moving our raw materials and goods to and from the ports,” Seleem Adegunwa, chairman, Manufacturers Association of Nigeria (MAN), Ogun State chapter, said at a recent CEOs business luncheon at Agbara, Ogun State, when referring to challenges faced by Nigeria’s manufacturers at the ports. But Vietnam strengthened access to credit by adopting a new civil code that broadens the scope of assets that can be used as collateral.

Most banks in Vietnam, including VietcapitalBank, NamABank and ABBank, lend at between 8 and 8.6 percent, but almost all Nigerian banks lend at above 20 percent, and even up to 30 percent. The country likewise increased the reliability of power supply by rolling out a Supervisory Control and Data Acquisition (SCADA) automatic energy management system for the monitoring of outages and the restoration of service. According to energypedia.info, 100 percent of Vietnamese have access to electricity. However, things are different in Nigeria, with over half of Nigeria’s population without access to energy, and firms resorting to diesel or gas to fuel their generating sets. “Vietnam invested in infrastructure, especially in the power sector and connectivity. To keep pace with rapidly growing container trade (which expanded at a staggering average annual rate of 12.4 percent between 2008 and 2016), Vietnam also developed its connective infrastructure, including seaports and marine terminals,” economists Eckardt, Mishra and Dinh said. “Vietnam has leveraged its demographic dividend through effective investment in its people. In the latest 2015 OECD Programme for International Student Assessment (PISA)—which tests high school students in math, science, and other disciplines—Vietnam ranked 8th out of 72 participating countries, ahead of OECD countries such as Germany and Netherlands,” they added.

UNIDO’s new country programme will steer Nigeria’s industrial development – Bakole

ean Bankole, the United Nations Industrial Development Organization (UNIDO) representative to ECOWAS and regional director, Nigeria Regional Office Hub, has said that the new UNIDO Country Programme (2018-2022) would boost inclusive and sustainable industrial development in Nigeria, and also contribute to the country’s progress towards achieving the United Nation’s 2030 Agenda on sustainable development. Bakole stated this during a courtesy visit and presentation of the new UNIDO -Nigeria Country Programme (CP) to Nigeria’s former President, Olusegun Obasanjo, in Abeokuta. He noted that the new CP, which was signed last year by the Federal Government of Nigeria and UNIDO, is the second in the series of UNIDO’s support to the government of Nigeria, and is aimed at enhancing the country’s ongoing efforts towards achieving Inclusive and Sustainable Industrial Development (ISID) in line with the Lima Declaration adopted on 2nd December 2013 during the 15th session of General Conference of UNIDO. “The new CP is UNIDO’s concrete and effective response to support the government of Nigeria in

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L-R: Jean Bankole, UNIDO representative to ECOWAS & regional director, Nigeria Regional Office Hub, and Richard Adeniyi, minister of Industry,Trade and Investment, Otunba during a strategic consultative meeting on the UNIDO -Nigeria Country Programme in Abuja recently.

achieving inclusive and sustainable industrialisation, economic growth and diversification. It comprises nine programmatic components, namely: Industrial governance, research and statistics programme; Micro, small and medium enterprises development programme; Special economic zones (SEZs), industrial parks and private sector development programme; Innovation, science and technology management programme; Agroindustry and agribusiness development programme; Minerals and metals development programme; Trade capacity building programme; Renewable energy development programme and En@Businessdayng

vironmental management programme,” he said. “The new CP, which emanated from extensive consultation and validation by key industrial stakeholders and other partners in the country, will guide UNIDO’s interventions in Nigeria from 2018 to 2022, and is aligned to the priorities of the government of Nigeria as outlined in the Nigeria Vision 20:2020 (NV 20:2020), the Economic Recovery and Growth Plan (ERGP), and the Nigeria Industrial Revolution Plan (NIRP). It has been designed to build on the cumulative achievements of past Country Service Frameworks and Country Programme implemented by UNIDO.

Monday 21 Ootober 2019

BUSINESS DAY

REAL SECTOR WATCH

FMN: Boosting food security with backward integration investments ODINAKA ANUDU

igeria has 200 million people with growing needs for food and other necessities. With a growth rate of 2.6 percent, this demography is expected to hit 410 million by 2050. As population rises, more Nigerians increasingly fall into the hunger trap. According to the United Nations 2019 Global Report on Food Crises (GRFC), 5.3 million Nigerians suffered acute hunger in 2018. More than that number is in desperate need for food this year, especially in the crisisravaged north-east Nigeria. Rather than depress, the statistics provides an opportunity and encourages innovative firms to feed a country in dire need of food. Flour Mills of Nigeria Plc (FMN) understands this opportunity and has leveraged it to feed the nation every day. While it is a well-known fact that bread is a staple food for Nigerian households, many people are perhaps unaware that much of the flour that is used by bakers in the country today is produced by FMN. Other than producing whole wheat, pastry, bread and general purpose flour, the FMN Group boasts of the largest food basket offering of any Nigerian FMCG and has, over the years, greatly impacted the lives of many of its partners—from small-scale farmers who cultivate some of its raw materials to suppliers, distributors, bakers and retailers who are all part of its unique ecosystem in the food value chain. Judging by the extent of its investments in the food value chain, it is safe to say that the company has developed the right infrastructure to support its operations in the rather challenging business environment of Nigeria. The Group’s Golden Penny Food brand is perhaps best known as the leading name for all kinds of wheat-based products, including semolina, spaghetti, couscous, and noodles. Golden Penny Noodles, in particular, is a favourite among many of Nigeria’s urban population who want a quick meal, as it takes a little over five minutes to prepare. One of FMN’s subsidiaries, Premier Feed Mills Company Limited (PFM), is a leading manufacturer of animal feed in Nigeria. It has a complete range of products covering all aspects of animal feed requirements in Nige-

Paul Gbededo, CEO of FMN)

ria and neighbouring countries and provides these to the market at competitive prices. PFM commissioned an extrusion line in 2018 with a capacity of 5,000 metric tons (MT) of aquafeed per month. As part of its backward integration strategy, which interestingly dates as far back as 1978 when the company first acquired a 10, 000-hectare farm in Kaboji, Niger State, FMN has continued to make significant investments in the agriculture sector. Several of its businesses in the agro-allied space contribute immensely to the provision of an overall solution to the development of raw materials that are locally cultivated to meet both the demand in the Nigerian market and progressively for exports. Through the activities of Golden Agric Inputs limited (GAIL), a subsidiary of the FMN Group, FMN makes significant investments in agro-inputs, including fertilizer, seeds and agro sacks. The company also actively promotes farmer linkages, provides support and helps farmers by boosting their overall

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yields and productivity. Similarly, in the Oils and Fats Value chain, FMN’s Premium Edible Oil Products Ltd (formerly ROM Oil Mills Ltd), satisfies local oils (including palm oil, soya oils, margarine, ad spread) needs and exports to West African countries. PEOPL increased its production capacity in 2018 by 13 percent to 134,082.58 MT, according to FMN’s financial statement. Within the sugar value chain, FMN’s subsidiary, Golden Sugar Company Limited (Sunti Sugar), has been at the forefront of ensuring the country produces 1.7 million metric tons of its sugar needs. According to the National Sugar Development Council, Nigeria’s sugar production in 2018 was mere 30,000 MT. Raw sugar import at the same period was put at 1.216 million MT. Clearly, there is a huge gap between what is required by the market and what is currently being produced. But FMN is one of the few companies that are making investments towards closing the gap. FMN recently said that as part of its strategy to improve efficiency and increase internal synergies within its businesses, it had merged Golden Sugar Company Limited (its sugar refinery arm in Apapa, Lagos) with the Sunti Sugar. It has invested over N50 billion in Sunti Sugar in a bid to improve the local production of sugar. President Buhari commissioned the Sunti Sugar during the early part of 2018. Sunti Sugar comprises of 17,000 hectares of irrigable farmland and a sugar mill processing 4,500 metric tons (MT) of sugarcane per day. At full capacity, the estate can produce one million tons of sugarcane, which roughly translates into 100,000 MT of sugar yearly. This facility has already created thousands of jobs directly and indirectly for Nigerians. John G. Coumantaros, chairman of FMN, while speaking at the company’s recent annual general meeting disclosed that Sunti Sugar achieved its first development target of reaching 2,836 hectares of land under cane in July 2018. FMN also focuses great efforts around local input sourcing. In an exclusive interview in Abuja, during the just concluded Nigerian Economic Summit, Paul Gbededo, group managing

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director/CEO of FMN, stressed this point, saying that the company focuses on importsubstitution and backward integration. “Local content is an integral part of our strategy at FMN. We are doing that in so many ways. Through innovation, our agroallied businesses are helping to grow our local content,” he said. During the immediate past administration of Goodluck Jonathan, efforts were made to encourage the use of cassava flour. In the last four to five years, the idea seems to have died. But Gbededo does not think so. For him, FMN has not let off High Quality Cassava Flour (HQCF). “Gradually, we are building capacity in that space so that we can get the volumes we need to ensure we have the quality; to ensure that we blend when we produce so that there won’t be separation,” he explained. “That takes time and we have been working on that. Like I said, our goal is to focus on local content and reduce our dependence on foreign exchange. We are looking inwardly,” he stated. Gbededo further revealed why FMN has succeeded in being Nigeria’s food giant. “You have to ensure you have your supply chain working effortlessly, your storage facilities are good, and that your production processes are efficient and competitive. You must further ensure that your route to market is seamless,your products are visible to the consumer, and that they areavailable at the right quality and the right price. That basically is the food value chain,” he explained. However, he said the government has a role to play in supporting food companies like FMN to effectively feed the growing population of Nigeria. “In order for you to have that in place, you need to have the right infrastructure. One of the basic challenges is infrastructure. You can deal with certain infrastructure on your own, but it is often better if the environment is enabled so that your business can run and be oiled efficiently. For example, one of the biggest challenges facing the food value chain is power infrastructure. Energy cost, which is bloated today, puts a lot of strain on the slim resources available for production. This effectively increases the cost of production and unfortunately translates to higher cost of food across the country,” he said. “Road and rail infrastructure are also important because we need route to market. If your roads are bad, and there is no rail infrastructure, then your turnaround time with your logistics will be higher. Any discerning observer would agree that Apapa and Tin Can ports are congested and have exceeded their capacities. While government efforts at decongesting the ports are appreciated, it is important to note, that the sheer volume of imports makes the urgent development of other ports inevitable. There are two critical issues in the food value chain: quality and price. “We need to ensure that the input quality is right, and that the quality of the final products is right for the people. So, we need the support of NAFDAC, the support of SON and other government agencies to deepen quality and ensure we are producing products that are acceptable locally and internationally.” As the globe celebrates the World Food Day on October 16, it is important to remember companies like FMN that have been in the forefront of reducing hunger and food insecurity while creating opportunities for Nigerians to work and earn a living.

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44 BUSINESS DAY Harvard Business Review

Monday 21 October 2019

MONDAYMORNING

In association with

Why skills training can’t replace higher education GEORGE D. KUH

uch of the current posturing by polic ymakers and pundits about the failure of U.S. colleges and universities to adequately prepare people for today’s workplace is either ill-informed or misguided, in my opinion. Of course, short-term, vocational, skills-based programs are critically important and well suited for many people. This has always been true and will continue to be so. But is this an acceptable policy choice for addressing the demands of the 21st-century workplace and fixing the shortcomings of American higher education? No, and here’s why. Intentionally shortening and fragmenting educational and personal development in the name of bolstering economic productivity now is shortsighted, and does a catastrophic disservice to individuals, our national prosperity and the longterm well-being of a civil, democratic society. What’s

also troubling is the likelihood that learners from historically underserved groups — low-income and ethnic minorities, for example — will be disproportionately represented among (or maybe even tracked into) short-term training programs. There is no way to know

for sure, but I suspect that many of those vigorously proposing vocational education steer their own children toward baccalaureate-granting colleges or universities. Attending such schools increases the odds that students will broaden their perspectives, read and write

a fair amount and devote significant effort over an extended period to pondering difficult questions and generating alternative solutions to complicated problems — the stuff of which the future will be made. Abbreviating postsecondary preparation

programs may well reduce short-term costs for students, institutions and employers. However, privileging short-term job training over demanding educational experiences associated with high levels of intellectual, personal and social development — a foundation for

continuous lifelong learning — is a bad idea for individuals, for the longterm vitality of the American economy and for our democracy.

(George D. Kuh is the Chancellor’s Professor Emeritus of higher education at Indiana University.)

Why companies do ‘innovation theater’ instead of innovation STEVE BLANK

isruption today is more than just changes in technology, or channel, or competitors — it’s all of them, all at once. And these forces are completely reshaping both commerce and defense. As large organizations face continuous disruption, they’ve recognized that existing strategy and organizational structures aren’t nimble enough to access and mobilize the innovative talent and technology they need. Over time, as organizations grow, they become risk averse. The process people dominate management, and the product people end up reporting to them. If the company is large enough it will look to the government and regulators as the first line of defense against innovative

competition, and they’ll use regulations and lawsuits to keep out new entrants with more innovative business models. The result of monopolist behavior is that innovation

in that sector dies — until technology/consumer behavior passes it by. By then the company has lost the ability to compete. Often the first plan for innovation is to hire

management consultants, who break out their 20th-century playbook. The result is organizational theater. At the same time, companies and government

agencies typically adopt innovation activities (“hackathons,” design thinking classes, workshops and the like) that result in innovation theater. These activities

shape and build culture, but they don’t win marketplace wars. Finally, companies and government agencies realize that the processes and metrics they put in place are obstacles to innovation. Efforts to reform and recast these are well meaning, but without an overall innovation strategy it’s like building sand castles on the beach. The result is process theater. Companies and government agencies are not able to access and mobilize the innovative talent and technology they need to meet these challenges. The very processes that made them successful impede them. We can build a mindset, culture and process to fix this.

(Steve Blank is an adjunct professor at Stanford University, a senior fellow at Columbia University and a lecturer at the University of California, Berkeley.)

Monday 21 October 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

In association with

Universities should be preparing students for the gig economy DIANE MULCAHY

heis year’s news that the majority of Google’s workforce is made up of independent and temporary workers rather than full-time employees is just one example of the rapid transformation of the corporate workforce. Despite these changes, universities have yet to integrate the study or practices of the gig economy into their curriculum or career services. Instead, they continue to educate and prepare students to become fulltime employees in full-time jobs. To better prepare their students for the workforce they’ll enter when they graduate, universities can take three important steps: 1. TEACH THE BASIC SKILLS OF WORKING INDEPENDENTLY. Many of the skills required to be a successful independent worker can be taught: how to create a business entity, how to manage a small back office, how to negotiate prices and consulting contracts and how to develop and execute a market-

ing and branding strategy. 2. EXPAND CAREER SERVICES. University career services have ignored the rising incidence, and importance, of independent work. They must do a better job of helping stu-

dents find work, not just jobs. 3. TEACH WHAT THEY PRACTICE. Universities need only turn the mirror on themselves to see the working world their students will enter. Their own business models and prac-

tices are a case study in how employers are changing work and the workforce. For instance: — UNIVERSITIES RELY ON INDEPENDENT CONTRACTORS. If they are part of the trend of hiring significant num-

bers of independent workers, they should prepare their students for that future, too. — MOST PROFESSORS HAVE SIDE GIGS. Universities expect and allow their full-time tenured professors to have side gigs such as consulting and advisory work, paid research and speaking engagements, to elevate their brand and augment their income. — UNIVERSITIES ARE GOING ONLINE. Universities are separating the need to be on campus from the ability to earn course credits and degrees. Higher education’s fastest-growing new product can be found in remote courses and programs that allow students to learn when and where they choose. By teaching their students what they themselves already practice, universities can do a better job preparing their graduates for the increasingly independent workforce of today, not the traditional jobs of yesterday.

(Diane Mulcahy is an author and an adjunct lecturer at Babson College.)

Integrating the science of how we learn into education technology STEPHEN M. KOSSLYN

or well over 100 years, researchers have labored to understand how humans learn and remember. But it’s often not obvious how to use the findings of all of this research in educational settings. Using the science of learning to improve education starts with identifying general principles, some of which grow out of a property of our brains: The more intensively we process information, the more likely we are to remember it. This implies that if we want people to learn something, we should induce them to focus on it and consider its nature and its implications. There are many ways to accomplish this. One is called the principle of desirable difficulty, which states that people learn best when challenged not so much that they get frustrated, and not so little that they are bored. But there’s a problem:

What counts as a “just right” level of challenge differs for different people. Applying this principle in a traditional classroom setting is difficult. This is where technology can come in, using the principle of desirable difficulty to enhance learning by large numbers of students at the same time. First, you need a way to collect data on student perfor-

mance. For example, students can take a short quiz after each class session, and the questions could be coded according to exactly which skills are being tested. Second, small breakout groups can be designed to allow students to engage in active learning, such as group problem solving, role playing or debate, in part because these induce deep processing; critically, each

breakout group activity can be classified according to which skills are being drawn upon. Third, each of the activities that students perform in breakout groups can be “multilayered”; that is, they can be approached with more, or less, intensity. Interactions within the breakout group could be designed to lead students (who are selected to be at comparable levels for

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the activity) to adjust how deeply they process the relevant information. This approach would scale very well and incorporates the social component that is so important in learning. Technology opens up huge opportunities to use the science of learning in new ways. To take advantage of these opportunities, we need to have clear learning goals, measure each student’s progress very specifically and shift to a focus on more active learning. (Stephen M. Kosslyn is the president and chief executive of Foundry College and a former professor and dean at Harvard University.)

Monday 21 October 2019

BUSINESS DAY

PHOTOSPLASH

Impact Investors Foundation Comference in Lagos Theme: Blending Finance for Social Investment in Nigeria

Maria Glover, project lead Impact Investors Foundation giving her speech at the awards and dinner.

Roy Swan, director mission related investments on the first panel at the 2nd annual Impact Investors Foundation convening

Jennifer Pryce ,keynote speaker/ president &CEO of Calvert Impact Capital

Cross Section of audience

L-R- Innocent Chukwuma regional director, West Africa, Ford Foundation, Roy Swan, mission related investments director Ford Foundation, Mezuo Nwuleni CEO Sahel Capital, Teju Abisoye, acting. executive secretary, Lagos State Employment Trust Fund Lagos Employment Trust Fund, Ana Garcia Vinambres, special advisor on innovative success of Finance & Investment for Value Chains, GIZ SEDIN NICOP, Eme Essien Lore, country manager International Finance Corporation, CEO Sahel Capital, Jennifer Pryce, president and CEO Calvert Cap

L-R :Maria Glover, project lead, Impact Investors Foundation (IIF); Jannifer Pryce, president,/CEO,Calvert Capital; Guy Bertrand Njoya, CFO, Metro Africa Express (MAX); Olayinka David-West of Lagos Business School ; Alice Usanase, chief of staff and special assistant to the CEO of Africa Finance Corporation; Kola Aina, founder , Ventures Platform , and Afolabi Oladele, chairman board of trustees for Impact b Investors Foundation, all members of the 1st panel at the conference. Pic by Pius Okeosisi

L-R : Mezuo Nwuleni CEO Sahel Capital, Ekpedeme Inyang, Dalberg advisors, board member, Impact Investors Foundation, Afolabi Oladele, chairman Impact Investors Foundation, Maria Glover project lead Impact Investors Foundation, Mira Mehta CEO Tomato Jos, Innocent Chukwuma, vice president Impact Investors Foundation

Cross Section of audience

L-R Uwa Osa-Oboh, head corporate development , African Capital Alliance presents Mira Mehta CEO of Tomato Jos with the Impact Investors Foundation award for Social entreprise of the year

Cross Section of audience

Monday 21 October 2019

BUSINESS DAY

MARKETS INTELLIGENCE

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

2020 Budget of smoke and mirrors won’t take Nigeria to Promised Land BALA AUGIE

he Federal Government is eating its future lunch today, as debt service cost continues to eat deep into revenue, while a reduction in revenue target signals further budget deterioration. The severity of obligation cannot be overemphasized, as debt service to actual revenue is currently at 54 percent, suggesting that Federal Government spent N54 out of every N100 generated in revenue on debt servicing. A cursory examination of the chart shows debt service has spiked by 70.93 percent from N720 billion in 2014 to N2.45 trillion in 2020, but the ratio could balloon as government is in talks with the World Bank and International Monetary Fund (IMF) for an additional $3 billion loans. It intends to use the loan to finance its power project programme. The nation’s debt stock rose to N25.7 trillion as at June 2019, according to the Debt Management Office (DMO). To further exacerbate the problem of Nigeria’s debt is the rise in debt service to revenue ratio from 27 percent in 2015 to 58 per-

cent at the end of 2018. The N2.45 trillion debt service costs, which is a quarter of the N10.3 trillion 2020 budget president Muhammadu Buhari presented to the National Assembly on October 8, exceeds the N2.14 trillion earmarked for capital expenditure. A dark cloud gathers over the economy as the Minister for Fi-

nance and National Planing, Zainab Ahmed, admitted that low revenue is undermining FGN ability to service its debt, but the IMF had advised Nigeria to increase tax to raise more revenue. The minister had noted that it would be impossible to meet 80 percent revenue performance by year end; however, government has never met its set target. In 2017, the revenue target was N5.08 trillion, out of which N2.7 trillion was realised. The Federal Government’s revenue projection for 2018 was N7.16 trillion out of which only N3.96 trillion achieved. In 2019, the Federal Government’s projected revenue was put at N6.98 trillion. As of June N2.04 trillion was realized. If revenue cannot cover interest payment and operating cost, then the country is susceptible to financial crisis, and the IMF has said there is an urgent need to increase non-oil tax so as to get funds to build infrastructure and human capital. There was a reduction in the non-oil revenue target for 2020 to N1.8 trillion from N3.3 trillion for 2019, which is more in line with government capability seen in the past years, therefore the fiscal balance may deteriorate further in the year ahead. Nigeria’s revenue to GDP ratio is currently at 6 percent, one of the lowest among peers. Already, there has been an aggressive drive by Federal Government as it is about to hike Value added Tax (VAT) to 7.50 percent

P.E

SHORT TAKES N200bn

from 5 percent, while it is about to slap excise duties on alcohol and carbonated drinks. Over the past 7 years, Nigeria has had fiscal deficit, signalling short fall between income and expenditure, so government had been borrowing to plunge the hole. The amount of deficit in the 2020 budget is over 2 trillion, this compares with N1.95 trillion in 2019. The chart shows that in the last 7 years recurrent expenditure make up the large chunk of government spending, leaving a drop in ocean for capital projects in a country blighted with decrepit infrastructure. Nigeria needs as much as $3 billion per annum over 30 years to bridge the infrastructure deficit, according to the Minister for Finance, Zaniab Ahmed. In 2015, of the total expenditure (capital plus recurrent) of N4.59 trillion, 53.38 percent, representing N2.45 trillion, was earmarked for recurrent expenditure, while 46.67 percent was set aside for capital expenditure. It can be seen from the chart that the highest ratio was in 2015, when over 80 percent of government spends went to recurrent expenditure. Crude oil accounts for over 80 percent of foreign exchange earnings and two thirds of government revenue, but the economy has been growing sluggishly since the country exited a recession in the third quarter of 2017. GDP expanded by 1.94 percent in the third quarter of 2019, but it below the growth rate of 5.75 recorded in 2014, when crude oil price was at $77.50 a barrel, and inflation rate benign. The IMF had projected that the global economy would grow by its slowest pace since the global financial crisis of 2008, citing concerns about the trade spat between the United States and China a deteriorating global manufacturing output. The vagaries at the international market has cast a pall over future government revenue as oil prices may not hit $100 a barrel mark even as OPEC and its members had agreed to cut output by 1.20 million barrels so as to stabilize price. Analysts say government should sell some of its assets in order to raise money to fund its budget, and that a unified foreign exchange and benign regulatory environment would attract investment into the country.

The Central Bank of Nigeria (CBN) refunded part of the funds it debited a dozen lenders that missed its September deadline of a minimum lending threshold, after a majority of the affected banks improved their loan-to-deposit ratio (LDR) positions. The apex bank returned about N200 billion to banks whose proportion of total loans to deposits increased between September 26 and 30, a reliable source told BusinessDay. The amount represents 40 percent of almost half a trillion naira of the banks’ customer deposits restricted by CBN on September 26.

11.24% Consumer prices in Nigeria rose at a faster pace in September following a recent closure of the country’s land borders with the Benin Republic to combat smuggling activities coupled with foreign exchange ban on food imports. This is the country’s fastest increase in four months. The country’s inflation rate, a measure of composite changes in the prices of consumer goods and services, increased by 11.24 percent in September from a year earlier compared with 11.02 percent in August, the National Bureau of Statistics (NBS) said Tuesday in a report published on its website. That’s coming after three months of consecutive decline.

3.3% Gross earnings of GTBank, Nigeria’s most capitalised lender, declined by 3.3 percent to N326 billion in the first nine months of 2019 following a 5.6 percent reduction in interest income to N224.2 billion although its after-tax profit rose 3.4 percent to N146.99 billion. Bloomberg consensus Target Price of N47.50, implying an upside potential of 80.6%, based on its closing price of N26.3 Friday.

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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48 BUSINESS DAY

Monday 21 October 2019

MARKETS INTELLIGENCE

Why this is time to buy Dangote cement BALA AUGIE

lobal economic uncertainties have made safe heaven assets less attractive while the United States (US)- China trade spate and Germany’s are causing more gyrations in the stock market. This means the best bet of an investor is a company that pays bumper dividend, and Dangote Cement Plc, the largest producer in Africa’s largest economy, is about to reward its owners generously from distributable profit. A pioneer extension is expected to boost the cement makers’ profit, and its ability to deliver solid dividend yield for investors. The Nigerian Investment Promotion Council (NIPC) in its third quarter (Q3-2019) Pioneer Status Incentive (PSI) Report has approved Dangote Cement’s (Dangcem) application for a two-year PSI extension. Following the approval, Dangcem will enjoy tax holiday on its N116.09 billion Ibese Lines 3&4 and N69.54bn Obajana Line 4 until February 2020. According to management, the tax credit was as a result of N133.70

billion complete reversal on tax provisioned on profits earned from Ibese lines 3 & 4 and Obajana line 4 on the basis that they were yet to obtain approval for tax exemptions under the PSI scheme. A tax credit of N89.03 billion propelled the company’s full year 2018 profit to N390.332 billion, and the growth momentum is expected

to continue in 2019. Pioneer status is a tax relief given to a company that sets up a plant in an economically disadvantaged area, but it has a deadline (between 5 and 7), during which it lapses. Dangote Cement is a dividend aristocrat as it has been consistently increasing dividend in the last five

years. It paid a dividend of N272.06 billion in 2018, this compares with N178.92 billion, N144.92 billion, N136.40 billion, and N102.30 billion declared in 2017, 2016, 2015, and 2014. The company has an aggressive dividend policy, paying out close to seventy percent out of distributable profit to owners in 2018, 87.60

percent in 2017; 77.65 percent in 2016; 75.22 percent in 2015, and 64.13 percent in 2014. The dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company. The firm has maintained a steady cash flow since 2014, giving it the impetus to fund future expansion plans, settle its obligations and pay dividend. Cash flow from operating activities was N215.89 billion in 2014, this compares to N375.38 billion figure of 2018. Analysts at Chapel Hill have placed a Buy ratings on the shares of Dangote Cement, and the company’s stocks are attractive as price to earnings ratio stood at 6.75 times. The firm said it was looking to expand cement capacity on the continent by 29 percent to 62 million tons, consolidating its share of the Nigerian market. It plans to add six million tons in Nigeria next year, taking volume in Dangote Cement Plc’s home market to 35 million tons. Cement makers in Africa’s largest economy are poised to take advantage of Federal Government record proposed capital expenditure to spur growth and strengthen profit. President Muhammadu Buhari had directed the Ministry of Finance, Budget and National Planning to release N600 billion for Capital Expenditure in the next three months. The President gave the directive in his nationwide broadcast to mark the Nigeria’s 59th Independence Anniversary in Abuja. The president said Federal Government had so far released N1.74 trillion for execution of various capital projects in the 2018 fiscal year.

GTBank is on track to outperform full year guidance

Investors balk at green bond from group specialising in oil tankers

...earned N170.7b in Q3

Billy Nauman, New York

IFEANYI JOHN

igeria’s most efficient bank, GTBank appears to be on track to surpass its 2019 Profit Before Tax (PBT) guidance of N220 billion after posting its 9 months performance of 170.7 billion PBT last week, achieving up to 77.6 percent performance which translates to an annualized performance of N227.6 billion. Based on the bank guidance, the expected Q3 performance from its N220b full year target is to be N165bn, below its actual performance of N170.7bn. The annualized PBT of N227.6 shows that the bank is expected to beat its profit guidance by around 3.5 percent. The PBT guidance which was announced earlier in the year in its 2018 full year investor presentation

showed that the bank expected to grow its PBT by around N4.6 billion from N215.6 billion in 2018 to N220 billion in 2019. However, our calculations show that going by its current trend, the bank could grow its PBT by as much as N12 billion or 5.6 percent from its 2019 PBT performance. Despite the impressive performance by the bank so far this year, it has not been spared by the massive selloffs in the stock market as the share price of GTBank has declined by around 23 percent year to date. The stock traded around N34.50 at the beginning of the year and closed Friday around N26.65, posting a loss of around N7.85 per share despite growing its PBT by an additional N6.5 billion during the first 9 months of the year. “I think the performance by GTBank is truly commendable www.businessday.ng

although it is below our expected earnings as our guidance for 2019 was higher than that provided by the bank. Considering the bank’s retention rate of about 55% and its return on equity of around 31%, we actually expected the bank to achieve profit growth north of 15%,” said Obinna Uzoma, Chief Economist at EUA Intelligence. “Despite significant headwinds in the country and regulatory changes, the bank was still able to muscle through all obstacles and grow its profitability. I don’t think this sort of performance is surprising for the company as they have showed over the years what they can achieve. I believe they are among a small group of 4 elite companies with annual earnings before tax above N200billion which is quite a remarkable feat,” Uzoma added.

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eekay Shuttle Tankers’ attempt to float a green bond has partially run aground as investors balk at the notion that a company specialising in oil tankers can qualify for eco-friendly financing. The Bermuda-headquartered company, which owns one of the world’s largest fleets of ships that transport oil from offshore drilling sites, issued its green bond earlier this month. It was seeking between $150m and $200m to finance the construction of four new fuel-efficient tankers but fell short, raising just $125m. The cool reception comes despite the fact that the bond qualifies for a tax incentive from the Norwegian government. The bond was brought to market by Danske Bank, Nordea, SEB and DNB Markets and pays a significantly higher coupon than the market average for high-yield debt. @Businessdayng

Teekay’s struggle to raise capital is a rarity in the green bond market, which has been especially hot this year. Global issuance has been on a record-setting pace and many of the securities coming to market have been oversubscribed by investors. The fundraising shortfall was largely attributable to investors being “skittish” over the notion that Teekay could be considered green, said Maria Christina Dikeos, head of global loans contributions at Refinitiv. “Looking at this, [investors] were like ‘Hold on, we are actually funding tankers which will fundamentally enable a company to transport fossil fuels’,” she said. Teekay’s sale highlights an ongoing struggle to define terms in the world of sustainable finance. The London Stock Exchange announced last week that it was tightening its standards on green bonds and the EU is working to publish an official taxonomy to help define different types of sustainable assets, but there is currently no established set of rules.

Monday 21 October 2019

BUSINESS DAY

news

Afreximbank intervention in maritime sector hits $500m in 3 years Daniel Obi

frican Export Import Bank (Afreximbank) has calculated its intervention in the maritime sector in the last 3 years to be about $500 million. This includes facilities for the Onne Port expansion in the Onne FTZ, Nigeria, Gabon, Cote D’ivoire, and vessel finance for delighting and security patrol for offshore platforms. President of Afreximbank, Benedict Okey Oramah, made this known while delivering a paper titled ‘Awakening the blue giant : Catalysing the growth of Nigeria’s maritime economy through public rela-

tions’ at the 19th NECCI PR roundtable in Lagos, recently. According to Oramah in a statement, Afreximbank has continued to push the limits in Africa to promote intra and inter African trade, as the “total assets as at June 2019 closed at $15.4 billion, gross income of $498 million, net income of $137 million, CAR at 23%, NPL at 3%, CIR at 17.4% and shareholders’ funds of $2.7 billion.” Speaking on the importance of blue economy, he said, “The Blue economy, also referred to as the ocean or maritime economy, is a concept which leverages the strength of the maritime ecosystem including fishing; shipping and maritime trans-

port; coastal tourism; marine energy (fossil and renewable); pharmaceutical and cosmetic industries, genetic resources and general seabased products for economic growth and development. “Africa’s seas and oceans represent major assets with the potential to accelerate the development of African economies”. Indeed, according to the African Union (AU), he said, “90% of Africa’s imports and exports are conducted through the sea. The African Union has recognised the importance of the BE and has included it in its Agenda 2063, which is a blueprint for development of the continent for the next few decades.”

UK, NEPC partner to boost export trade in Nigeria IFEOMA OKEKE

r itish government, through the Prosperity Fund’s Global Trade Programme (GTP), is providing export intervention programmes to export coaches and Nigerian Small and Medium Enterprises (SMEs) interested in exporting to the international markets (including the UK). This was disclosed by Ndidiamaka Eze, press and public affairs officer, British Deputy High Commission, Lagos. This intervention is in col-

laboration with the Nigerian Export Promotion Council (NEPC), in furtherance to the MoU signed in August 2019, to increase bilateral trade relations by exploring other business potential outside the non-oil sector. The three-stage programme is aimed at bridging the gap that exists between Nigerian businesses, especially SMEs, and the international market, including the UK. First stage is the selection process, followed by the deployment of technical trainings and assistance to

selected SMEs and export coaches, and finally support for B2B linkages with international market actors. Speaking about the partnership, Olusegun Awolowo, CEO, NEPC, said, “The intervention will provide the beneficiaries with technical knowledge that will in turn boost economic growth and combat poverty for sustainable development.” The programme has now commenced the second stage with the technical training exercise which was held at the NEPC Lagos office from October 8 – 10, 2019.

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UBA assures of solid governance process as it honours Kola Jamodu HARRISON EDEH, Abuja

an African financial institution, United Bank for Africa (UBA) plc, has assured investors and shareholders of its continued adherence to solid corporate governance processes as the bank honoured its ex-director, Kola Jamodu. In a glitzy cocktail event and dinner in his honour at the Transcorp Hilton Hotel, Abuja, Jamodu was celebrated for his service on the bank’s board for 12 years as a non-executive director. Accolades were poured on him for his remarkable contributions to the group over the period that have helped solidify the bank’s footprint in its many countries of operations. Tony O. Elumelu, UBA G ro u p c ha i r ma n , c o m mended Jamodu’s efforts at contributing towards the strong corporate governance policies which UBA currently boasts of. “Chief Jamodu is a great Nigerian, a respected man and a great non-executive director to UBA. He has been wonderful and instrumental to today’s current standing of UBA across our 20 presence countries in Africa as well as

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in America, United Kingdom and in Paris. He was on the board of UBA for 12 years, and in line with corporate practices, which says at the end of 12 years you retire from the board, he is retiring and we are here to celebrate his contribution to the bank,” Elumelu said. While reeling out some of Jamodu’s many achievements, Elumelu said, “He has been extremely supportive to UBA; he served as chairman of Board Risk Committee, and he has all the experience – a chartered accountant, extremely astute, chairman of Nigerian Breweries, chairman of PZ, chairman of Nutricima, former minister of industry, a great tax expert, financial and management expert and UBA has been extremely lucky to have him on our board for 12 years,” he said. “So to him and his family, we say thank you for all the support, for the teachings, for being generous with knowledge and for asking those hard questions that made us solidify our governance processes here at UBA,” he further said. Kennedy Uzoka, UBA GMD/CEO, explained in fine details the impact that

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Jamodu’s experience has had on the bank, adding that he was able to help UBA navigate through some challenges that have now made the bank come out even stronger. “Chief Kola Jamodu is a very astute financial manager with diverse experience; he is someone that has helped us as managers to look into areas that we may not have looked into,” Uzoka said. “During his time, he helped us to navigate critical issues, and now UBA America is a bank on its own as is UBA UK. He was always asking the right questions which others would have missed, and this is what helped us to be where we are today. He started with us when we had just a few countries of operation and now today, UBA is operating in 23 countries. Kudos to Jamodu, he will be missed,” he said. Jamodu, who attended the event with his beautiful wife Funmilayo, thanked the bank for the opportunity given to him to contribute to the growth of the UBA Group, adding that as a board member one should be able to have an impact in the way things are being done, in governance principles and much more.

50 BUSINESS DAY

Monday 21 October 2019

Live @ The Exchanges Stock market declines by 0.32% in one week Stories by Iheanyi Nwachukwu

igeria’s equities market was down by 0.32percent in the trading week ended Friday October 18 while its year-todate (YtD) negative return stood at -15.85percent. The market’s record negative in the review trading week was mainly due to sell offs in mid/large cap stocks. The stock market which opened the review week with All Share Index (ASI) and market capitalisation

at 26,533.78 points and N12.917 trillion respectively, closed the review week with ASI at 26,448.62 points and market cap of N12.875trillion. The value of listed equities on the Nigerian Stock Exchange (NSE) decreased by about N42billion. All the NSE sectoral indices closed in the red except the NSE Consumer Good Index (+0.12percent) and NSE Insurance Index (+2.37percent). Others are: NSE 30 Index (-0.81percent), NSE Banking Index (-2percent), NSE Industrial Goods Index (-0.31percent), NSE Oil & Gas Index (-0.22percent),

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and NSE Pension Index (-1.03percent). “Investors continued to react negatively to diverse policies in the banking sector while the performance of the consumer goods and industrial stocks are negatively affected by stiff and unimpressive macro-economic environment. However, we believe current price levels offer good entry point for mid/long term investors”, said research analysts at Lagos-based Vetiva Securities. Despite seeing opportunities for bargain hunting, some analysts had expected the bearish sentiment in the

market to persist as there are no major catalysts to boost investor confidence. “We expect the index to continue to ramble in the negative territory. Our pessimism is on the back of the absence of any indicator to suggest possible triggers for a rebound in the near term,” said Afrinvest Research. As companies’ thirdquarter (Q3) results trickle in at the Bourse showing improved earnings, value hunters are advised to buy stocks with the history of dividend payment, which also have the potential for capital appreciation.

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NSE lauds ASHON, urges more collaboration

he Nigerian Stock Exchange (NSE) has restated its confidence in Association of Securities Dealing Houses of Nigeria (ASHON) as a body that upholds highest standard of professionalism in handling capital market issues. Besides, the Exchange which commended ASHON’s efforts in ensuring the success of the ongoing demutualisation of the market for enhanced competitiveness has sought more collaboration with the professional body at post demutualization period. Addressing the executive members of ASHON during their courtesy visit to The Exchange to ring the closing bell and sensitize members towards its Annual General Meeting (AGM), The Exchange’s Executive Director, Regulation, Tinuade Awe, explained that ASHON had always collaborated with The Exchange in all areas of market development. Awe, who represented The Exchange’s Chief Executive Officer, Oscar Onyema specifically, lauded ASHON for its

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dynamic leadership and the Association’s efforts at broadening the market. She lauded the Association’s collaborative roles towards the success of the ongoing demutualisation of the market. Presenting the symbolic gong to the Association through its Chairman, Patrick Ezeagu, for future reminder of the historic visit, Awe urged the members to continue to support The Exchange for the overall development of the market. Responding, Ezeagu expressed the members’ optimism in The Exchange’s management and assured the regulatory body of continued support to ensure the success of demutualization project. He stated that ASHON had commenced rebranding of its operations and processes to enable its members sustain their businesses after demutualisation. Ezeagu, who described ASHON’s visit and beating the closing gong as the first of its type by any council urged its members to attend the AGM and come up with relevant suggestions to move the market forward.

Monday 21 October 2019

BUSINESS DAY

news

Farmers heave sigh of relief as prolonged egg glut ends BUNMI BAILEY

armers in the poultry subsector in Nigeria are in a joyful mood as the prolonged egg glut is declining helping them to raise higher sales unlike before, BusinessDay finding shows. Usually, egg glut, which is seasonal, occurs when demand for eggs is less than its supply, and this takes place between February and May each year, which farmers attribute to rising temperature at that time of the year, and a corresponding fall in the consumption of tea, bread and fried egg. But egg famers say that this year’s egg glut took longer than expected as big players, who before now produce only chicks and feed in the poultry industry, decided to take part in the production of eggs and sold them directly to the market at a price within the range of N600- N650 unlike the usual price range of N800-N850, sold by the medium and small scale farmers. “Actually, the glut is not supposed to be this bad initially, and it started quite early. What majorly contributed to it was that some of the big poultry producers decided to start producing and raising layers for eggs production and going directing to the market to sell at a cheaper rate. Unlike before when they sell directly to the wholesalers,” Oluwafunmilola Otolorin, managing partner, Jehozadak Farms, says. “They have the capacity to produce close to 20,000 birds’ daily and with that capacity they can produce close to a

millions eggs daily,” Otolorin further states. During this year’s glut, farmers still produced in large quantities but sold at a lesser price. For example, farmers produce 10 to 15 crates of eggs daily, but for them to sell fast because eggs are perishable, they sold them between N500 and N600, unlike the usual price of N800 to N850. “I have a poultry farm. During the glut, I did not make proper sales of egg but recently two-three weeks ago, I discover that things have move up. I am now making sales unlike before,” an anonymous egg farmer says. But Mayowa Oyinkanola, a director at QMF Farms Limited, disagrees with the notion that the big players went into egg production as they have been in the production before the glut started. “What happened was that because of the issues of kidnapping and banditry in the North East, which worsened earlier this year, most of them transported the eggs to other countries like Benin Republic, Cameroon, etc., they had no choice but to internalise, that is selling inside Nigeria unlike outside and that worsened the glut in the market,” Oyinkanola says. According to some of the farmers, the reduction of the egg glut is attributed to the availability of yam in the market, school resumption, because most children take eggs as breakfast and lunch to school on daily basis, forcing the big companies to stop the production of eggs.

IPSAS: Lagos trains 800 public sector accountants for service delivery JOSHHUA BASSEY

agos State government has commenced the training of 800 chartered accountants in the state’s employ on International Public Sector Accounting Standards (IPSAS) to enhance their capacity and increase efficiency in service delivery. Rabiu Olowo, state commissioner for finance, said at the flag off of the training that the state having transited from cash-based reporting to IPSAS from 2016 financial year, there was the need to further sharpen the skills of accountants in the public sector of Lagos to keep them abreast of global developments and international best practice in the accounting profession. “The state is passionate about the adoption and continuous application of IPSAS due to numerous embedded advantages, and increasing global demand for transparency as well as adherence to value of fair reporting,” said Olowo, who reiterated the commitment of the Babajide Sanwo-Olu-led government to training and retraining of officers of the state workforce. According to Olowo, the government strongly believed that employees are the biggest assets needed to achieve the state’s THEMES strategic development agenda. The ongoing training,

Olowo said, ‘is unprecedented’ because over 800 account officers across the state service were involved. He explained that the accountants were also being prepared to write and pass the ACCA Certificate in IPSAS examination, which has come to replace the cash-based reporting in the public sector due to its inherent transparency, openness, effectiveness and efficiency. “It is expedient for government to deliver on promises, and this would better be facilitated and made possible by high quality accrual based financial reporting that strengthens public financial management and increase public trust,” he said. Speaking on the direct benefits of IPSAS and its implementation to Lagos, the commissioner the said it represented fundamental steps for the government to not only increase transparency and accountability to citizens and stakeholders, but also to engender effective decision making by contributing to fiscal stability and sustainability, for greater dividends of governance. He maintained that the government had no greater priority now than to build the capacity of the public service in line with the current administration’s commitment of ensuring that the best global standards of accounting techniques were adopted in Lagos. www.businessday.ng

L-R: Obinnia Abajue, member of the board of Page Financials; Remi Ogunsipe, executive director, Kola Olawunmi, Solape Hammond, Wale Olawoyin, chairman, and Segun Akintemi, CEO, during the dinner hosted by Page Financials in honour of Solape Hammond on her appointment as special adviser to the Lagos State governor on the Sustainable Development Goals (SDGs) and Investments.

Demand for Nigerian rice expected to grow in line with strong drivers – KPAMG’s rice report …FG in right direction with border closure …giant agribusinesses commit $1.111bn to support local production DAVID IBIDAPO

nto the third quarter of 2019, the Nigerian Federal Government, in the bid to protect and spur local production of agricultural produce, closed indefinitely the borders. This has been perceived by KPMG experts as a step in the right direction, owing to the rise of private investments in the sector and monetary policies to spur lending to the private sector. While demand for local rice is expected to grow in line with strong drivers, worries are to how supply can be improved to improve selfsufficiency. In the light of this, a rice industry review report launched by KPMG professional services reveals that consistent with the Federal Government’s faith in Nigeria’s agriculture sector capacity, rice demand in the country is expected to grow in line with strong demand drivers, such as increasing population and urbanisation, changing consumer preferences and humanitarian feeding, complementing the efforts of the Federal Government in economic diversification. Rice being the third most consumed staple food after grains and cassava is expected to see a surge in demand with rapid population growth anticipated to exceed 200 million by the year end at an annual population growth of 2.4 percent. Also, according to the report, there has been a downward trend in the rural-tourban ratio over the past 25 years. As more regions within the country become increasingly urban, consumption and demand for rice will increase. Meanwhile, the report reveals that there is likely to be greater demand for locally produced rice as imports become more expensive given the uncertainty of the foreign exchange market and prob-

able ban of imported rice. Hence, there is need for investment in local production to meet the persistent rise in rice demand. Recall the advent of the border closure saw prices of rice among others surge by some 47 percent to N22,000, which supply not matching current demand as the festive period draws near. “Even though the volume of rice is increasing, the price is also increasing because we are scaling up our production with a lot of investments. The truth is if we want to accelerate our local capacity, we have to deal with the substandard imports and also protect our investors in this sector,” Ijeoma Emezie-Ezigbo, partner, deal advisory, says. According to EmezieEzigbo, we can’t try to spur local production and leave the boarders open as it will be counterproductive. Meanwhile, the borrder closure is not done in isolation as the CBN has also moved to spur lending to the productive private sector by increasing bank’s Loan to Deposit Ratio to 65 percent. “This will mean hopefully that increased investment in the sector will accelerate production in the sector and also drive prices down when supply matches with demand for rice,” Ijeoma adds. The report also highlights the key trends and drivers for the supply of rice in Nigeria to consist of international price, which has increased due to natural disasters in rice exporting countries causing shortages and affecting importation by countries such as Nigeria; increased participation of the private sector in investments, and increased intervention from the government and supporting bodies. “One major question was around so much money being spent on rice import and how government is able to boost local capacity. One thing we

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have discovered from our sources is that while we’ve been having that gap in consumption versus production, local production has continued to increase as in the last few years, we’ve gotten quite a number of investments in local rice production across the different species by Nigerians,” Ayotunde Funsho, associate director, clients and market KPMG, states. To mention but a few, according to the report, Dangote Group has invested over $1

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billion in the construction of a processing mill in Hadin, Jigawa State. Also, Olam Nigeria Limited announced a total investment of $111 million to introduce mechanised rice farming in Nasarawa State coupled with running an outgrowers programme. Goodluck Obi, partner and head, consumer and industrial markets, KPMG Nigeria, says, “The world is changing and so is Nigeria; we cannot speak of the economy without mentioning the agribusiness.

52 BUSINESS DAY

Monday 21 October 2019

news

AXA Mansard bags Most Innovative Insurance Company of the Year awards

XA Mansard, a member of AXA, a leader in Insurance and Asset management, has received the 2019 Nigerian Finance Innovation Award for the Most innovative Insurance Company of the Year. The company’s CEO, Kunle Ahmed, also emerged as the Insurance CEO of the year. The Nigeria Finance Innovation Awards, now in its fifth year, recognises the accomplishments of financial executives and organisations for their financial leadership and contributions to their companies’ and industry growth. The event, which held on Saturday, October 12, 2019, at the Oriental Hotel, Victoria Island Lagos, had in attendance dignitaries from the financial and other sectors in the country. In a statement released by the company to mark this achievement, Kunle Ahmed, CEO at AXA Mansard Insurance stated, “AXA Mansard remains committed to empowering people live better lives. Our deep yearnings to continuously find solutions for our customers’ pain points led to the need for innovation in the products and services we offer to our customers

and the way these services are delivered. It is therefore very rewarding to be the recipient of this award”. The annual awards rewards success, growth and innovations of finance executives and their team’s efforts towards its organizations sustainability while showcasing excellent work that has been rendered by firms that provided them with the services, support and technology that enabled their success. Chief Customer and Marketing Officer, Jumoke Odunlami, also noted that the company is very privileged to have visionary leaders, the receipt of the Insurance CEO of the year award is a testament to this. We are excited and we celebrate with our CEO Kunle Ahmed. AXA Mansard offers Life as well as Property & Casualty insurance products and services to individuals and institutions across Nigeria. The Company also offers asset/investment management services, health insurance solutions and pension fund administration through its three subsidiaries - AXA Mansard Investments Limited, AXA Mansard Health Limited and AXA Mansard Pensions Limited, respectively.

FG restates commitment to play leading role in global mining subsector HARRISON EDEH, Abuja

oncerned by weak impact of the mining sector to the overall economy, the Federal Government has expressed its determination to play leading role as a world mining player. Olamilekan Adegbite, minister of mines and steel development, gave the assurance when he appeared before the House Committee on Mines and House Committee on Steel to brief them on the activities of the Ministry. Adegbite said in a statement on Sunday that the ministry had worked out modalities to improve on the efforts and legacies of successive ministers in the sector. He acknowledged the initiatives and efforts of past ministers, he believed had come into fruition, most especially in the establishment of agencies such as Mining Cadastre Office (MCO) and the Nigeria Geological Survey Agencies (NGSA). He reaffirmed in the statement that part of the mandate of the Ministry is to diversify the economy and to begin to tap into the rich mineral resources of Nigeria so as to create employment, wealth and getting people out of poverty. The minister informed the committees that the agencies under the Ministry are undergoing reforms to ensure optimal performance. “We have started out by first identifying the potentials within the Ministry, so some of the activities being carried out is to first of all assess all the pro that the agencies as well as department of the

Ministry are having and what needs to be done to ensure they perform optimally,” he said. He pointed out that the activities of the MCO and NGSA are being computerized and being put online so that at the touch of a button, investors can access data and information on all minerals in the country from any part of the world. He promised that the activities of NGSA and MCO would soon be accessible online. While fielding questions from the Hon. Members on the ministry’s plan concerning Artisanal Miners, Adegbite said the problem of mining in Nigeria was that about 90% or more of miners was in the realms of artisanal mining, which is the small scale miners who have not gone through the right process to mine. He informed them that the Ministry is currently adopting strategies to organize the artisanal miners into cooperatives to enable them benefit from various programmes of government, most especially in the area of training on safer mining practices, funding and to also ensure that they get good value for whatever they mine. He also added that the Federal Government had created a legitimate buying centre to enable miners sell at the prevalent market price so as to prevent exploitation of the small scale miners. On the challenges facing the Ministry, the Minister appealed to the committee to assist in increasing funds allocation to the sector. www.businessday.ng

L-R: Gabriel Fasoto, past president, The Chartered Institute of Taxation of Nigeria (CITN); Gladys Olajumoke Simplice, president, CITN, and Asiata Atinuke Agboluaje, head, international tax and regulatory, Deloitte, at the CITN seminar on current issues in Nigerians taxation in Lagos, at the weekend. Pic by Olawale Amoo

Emefiele refutes reports on stress test, says health of Nigerians banks strong ... says will not allow 300% increase in cost of USSD ... as FG orders suspension of USSD charge on calls Hope Moses-Ashike & Onyinye Nwachukwu in Washington, D.C entral Bank of Nigeria does not mean that those banks (CBN) on Friday re- are weak, what we are saying futed reports on seven is that there areas that they are banks failing stress weak, we try to make sure they tests, saying the strategic health of address them. If for instance, Nigerian banks was very strong. they fail capital adequacy ratio, Godwin Emefiele, gover- we counsel them about how to nor of the CBN, said this during resolve it. So, it has nothing to do a press briefing at the annual with the weakness of any bank meetings of the International that would lead to any panic or Monetary Fund (IMF) and the systemic crisis in the industry.” World Bank in Washington, D.C. On the other hand, the CBN He said the central bank has, has opposed the N4:00 charge as a matter of policy since 2015, per 20 seconds on Unstructured tried to avoid being sensational Supplementary Service Data about stress-testing, as “stress- (USSD) access to banking service testing has become part of our by telecoms companies. normal routine, in trying to check The transactions to be afthe strategic health of all the fected by the charges include banks in the industry. intra- and inter-bank money “The fact that you read that transfers, through USSD, among seven banks failed stress test others.

“I understand that about three to four weeks ago, rather than reduce it, they went ahead to increase from N1500 to N4500 that is a 300 percent increase. I opposed it and I have told the banks that we would not allow this to happen,” Emefiele said. The banks are the people who give these businesses to the telecoms companies, he said, and that he allowed the banks and the telecoms companies to engage, “And I have told the banks that they have to move their business and move their traffic to a telecoms company that is ready to provide it at the lowest possible rate and if not at zero cost, and there is where we stand and we must achieve it.” Meanwhile, the Federal Government has directed the immediate suspension of N4:00

charge per 20 seconds on USSD access to banking services, from October 21, 2019. Accordingly, Isa Pantami, minister of communications, has directed the Nigerian Communications Commission (NCC) to ensure compliance by mobile network operators. Spokesperson for the Pantami, Uwa Suleiman, who conveyed the directive, said the minister was unaware of the planned tariff, saying, “The attention of the Federal Ministry of Communications has been drawn to the viral text message allegedly sent by the mobile network operators, MTN Nigeria and other mobile operators notifying subscribers of a tour naira (N4200) charge per 20 seconds on USSD access to banking services from the 21st of October 2019.”

Dangote: Investments to create jobs, alleviate poverty is my strategy SEGUN ADAMS

hairman of Dangote Cement Plc, Aliko Dangote has promised to continue to do all within his power to help in alleviating poverty and spread wealth even as he charged Nigerians not to lose hope in the country. Speaking against the backdrop of commendations by winners in the on-going extended Dangote Cement bag of Goodies National Consumer Promotion in Akure and Asaba, who lauded the gesture by the foremost entrepreneur to launch what they call economic life saving promo, said his joy is to touch as many lives as he could within the ambit of god has given him. Represented by the Dangote Cement National Sales Director, Mr. Yemi Fajobi at the presentation of Saloon Car star prize to a block moulder who is also a former Local Government Councilor in Akure, Dangote said most of

…says ‘Bag of Goodies’ promo is to lift Nigerians his businesses are driven by the desire to touch lives and improve the standard of living of Nigerians. According to him “the bag of Goodies promo is not just a promo. The uniqueness of it is in the choice of items being won by the people. Our company is intentionally empowering its customers through the promo. The cars, tricycles and motorcycles are items that economically lift the customers by creating additional means of livelihood and improve their economy. Dangote disclosed that the company decided to run the biggest promo ever in Nigeria as a way of contributing to the economic well being of the consumers of its products. He said the promo is to reward valued consumers for their unflinching partnership in ensuring that “our range of cement products remains today the first choice for con-

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struction purposes across the country.” He added that the consumer promotion gives opportunity for existing and new consumers to get a step ahead of their struggle for economic emancipation by winning any of the give-away items, which has economic value. Said he: “We have made it so transparent that you don’t have to go through any raffle draw or the so called lucky dip associated with many other promotions in the country. For Dangote cement, you win instantly because what is revealed in the scratch card is what you win”, he stated. “In Dangote Cement, we adhere strictly to best global standards in producing our range of cement which makes them the best in the market. Our products; BlocMaster, 42.5R, 42.5N and Falcon are all top-of-the-range brands developed to ensure that ce@Businessdayng

ment users have a choice on the type of product suitable for their projects. “Much research and tests went into the development and production of these products as we are determined to offer consumers the best quality and experience either in building personal houses or in commercial construction works. After presenting the star prize of a brand new car to the Asaba winner, Simeon Egualeonan he specifically commended the people of Delta State and Asaba for remaining faithful to the brand adding that the promo is a way of saying thank you to the consumers. Fajobi stated that the first star prize winner emerged from Warri, Delta State and today, a second star prize winner has emerged from Asaba, the same Delta State, an indication that the promo is real.

Monday 21 October 2019

BUSINESS DAY

news Morocco’s Saham exits Unitrust amid insurance... Continued from page 2

end of December 2018 from N3.69 billion at the end of December 2017. Saham Unitrust’s net claims expenses rose by 73 percent to N505.11 million in 2018 from N291.94 million, attesting to its ability to continue to promptly respond to the claims demands of its clients. The group’s total investment income increased marginally by 0.34 percent to N1.1484 billion as at December 31, 2018 from N1.144 billion on December 31, 2017. Saham Unitrust had stated that it would continue to intensify its efforts to ensure that investment income remains a key revenue source. The company during the 2018 financial year paid

a dividend of 12kobo per share, summing up to N396 million for the year ended December 31, 2018, from N198 million paid in the corresponding period of 2017. The group has a shareholders’ fund of N11.17 billion at the end of 2018 financial period. The company, a general insurer, underwrites motor, marine, aviation, engineering, bonds, fire and special perils, burglary, money, goods in transit, personal/ group personal accident, employers’ liability, fidelity guarantee, including oil and gas insurance, and is a major player in travel insurance. John Ijerheime, managing director of the company, is always passionate for excellent service delivery.

L-R: Callistus Obetta, group executive, technology & services, FirstBank; Gbenga Shobo, deputy managing director, FirstBank; Victor Asemota, founder, Swifta Systems & Services and keynote speaker; Adesola Adeduntan, chief executive officer, FirstBank, and Abdullahi Ibrahim, executive director, public sector, FirstBank, at the FirstBank FinTech Summit 3.0 held in Lagos.

Zenith, FBNH, UBA, others win big in 2019... Continued from page 2

der which UBA, Africa’s global bank, has grown in leaps and bounds since he took over at the helms of affairs in 2006. Both banks won the Glenmorangie Single Malt Scotch Whisky award. In the Global Category also, FBNH emerged as Nigeria’s Best Bank Holding Company for the second year running. DLM Advisory Partners won Deal Advisor of the Year, Zedcrest Capital carted home the Diversified Financial Services Group of the Year award, Rand Merchant Bank Nigeria Ltd raked awards in the Merchant Bank of the Year category and also won the Debt Arranger of the Year award. Coronation Merchant Bank Ltd won Investment Bank of the Year for the second year running, while LAPO Microfinance Bank Ltd, which accounts for 24 percent of total microfinance credit in Nigeria, emerged Microfinance Bank of the Year. Polaris Bank Ltd won Restructuring and Turnaround of the Year; Akinwande Ademosu of Credit Direct Ltd was Consumer Finance CEO of the Year, while Cititrust Holdings plc was recognised as Investment Holding Company of the Year. In the Non-Bank Financial Institutions Category, Credit Direct Ltd won Consumer Finance Company of the Year, Page Financials won Most Innovative Consumer Lender of the Year, while Zenith Pensions Custodian Ltd won Pension Fund Custodian of the Year. Trustee of the Year went to STL Trustees Ltd, Africa Prudential plc was Registrar of the Year, while MasterCard took the awards for Payment Solutions and Technologies Provider of the Year and Future of Payments Company of the Year.

Eagles Global Market (EGM) won Digital Trading Platform of the Year and Axa Mansard emerged Insurance Company of the Year. In the Segment/Services/ Divisional Category, Jaiz Bank won Best Bank in Non-interest Banking, Zenith Bank took the award for best in Retail Banking, and the ePayment Bank of the Year went to First Bank. Fidelity went home with the award for SME Bank of the Year, Sara by Wema was Bank Product of the Year, and WillPower by UTL Trust Management Services Ltd was Best Non-Bank Financial Product/ Service of the Year. In the Judges Awards category, special recognition was bestowed on the Central Securities Clearing Systems plc (CSCS) as Continental Leader in Post-Trade and Custody Services. FMDQ OTC Securities Exchange was awarded Integrated Financial Market Infrastructure Provider of the Year, while The Nigerian Incentive-Based Risk Sharing System for Agricultural Lending Plc (NIRSAL) was recognised as the Outstanding Development Finance Institution of the Year. “This year’s event was an improvement from the previous one and shows that subsequent ones would be better,” said Godwin Esewei Ehigiamusoe, MD/CEO of LAPO Microfinance Bank Ltd. The BAFI Awards is the most prestigious recognition event for outstanding performance in Nigeria’s financial services industry and several of its winners have gone to global acclaim by winning international awards. The award cuts across banking, insurance, fintech, capital market, markets infrastructure and technology, investment management, pension funds, trustees, registrars, stockbroking and the likes. www.businessday.ng

Nigeria’s refineries had N90.97bn deficit... Continued from page 1

Energy Resources Limited, said the Federal Government has no business being involved in running these refineries because just a handful of people are benefitting from the system while the larger population of the people are living in penury.

“For example, Kaduna refinery has a budget allocation with over 2,000 staff that collect salaries on a regular basis and sometimes go for training overseas. When was the last time Kaduna refinery refined a drop of crude oil?” Awodeyi asked. Another source in the NNPC explained that labour or personnel cost for all the refineries is a major contributor to the high operating cost recorded. “When we put a structure in place to lay off workers, PENGASSAN and NUPENG national leaders threatened to shut down operations across the country,” the source said. Further analysis revealed operating expenses of Nigeria’s refineries for the first seven months of 2019 stood at N88.95 billion. “One of the recommendations submitted by one of the seven committees to advise the NNPC management on revamping the refineries is the redeployment of staff. So, where do we deploy them to? They are between 3,000 and 4,000 workers which is a big issue,” the source said. A former general manager of Warri refinery who chose to speak anonymously told Busi-

nessDay that selling the refineries is the best option, adding that fundamentally refineries are potentially profitable if they are upgraded and handled professionally. “The refineries can be upgraded. It is the size of refinery that is most important and unless all the units are upgraded, we cannot have 90 percent optimisation from these four refineries,” he said. The refineries’ operational deficit of N90.97 billion in seven months is also higher than N44.5 billion allocated to Basic Health Care Provision Fund (BHCPF), the fund set aside for the basic health needs of over 200 million people. “The priority of any proactive government should be to rid the country of these four afflictions currently managed by NNPC,” said BudgIT, a civic organisation that applies technology to intersect citizen engagement with institutional improvement to facilitate societal change. Nigeria’s refineries have degenerated over time. In the last 18 years, the refineries became comatose, as successive governments failed to bring them up to their installed capacity despite promises to improve the performance of the refineries and commit significant resources to their rehabilitation. The highest average capacity utilisation of the three refineries in an 11-year period from 2008 to 2018 was 26 percent recorded in 2009 while the latest data from NNPC revealed the three refineries currently

Edo, Delta, Ekiti, Ondo seek 40% equity stake... Continued from page 2

play minimal role in the power sector going forward, asking that state governments be allowed and encouraged to partner with private sector investors to build mini and micro electricity plants in their territory. “If you take electricity, one of the things we have been trying to do, states that are

within the BEDC, which are Edo, Delta, Ekiti and Ondo, we have been trying get approval from the Federal Government to take over the 40 percent shareholding that is still there, because the current operator of Benin DisCo, as far as we can tell, are not investing enough,” he said. Godwin Obaseki, governor of Edo State, who corroborated Fayemi, noted

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operate at zero percent capacity utilisation. NNPC, the government agency entrusted with the national asset, said in July that the three refineries processed “no crude and produced no product compared to the previous months as combined yield efficiency is 0.00 percent compared to 31.19 percent recorded in June 2019 owing largely to rehabilitation works being carried out in the refineries”. “No associated crude plus freight cost for the three refineries since there was no production while operational expenses amounted to N14.66 billion in July. This resulted to an operating deficit of N13.84 billion by the refineries in July,” NNPC said in its monthly report. The inability to get the refineries working is taking a toll on Nigeria’s economy as a report by Nigeria Natural Resource Charter (NNRC) said between 2013 and 2017, Nigeria spent an estimated $36 billion importing petrol, an amount which can build four world-class refineries similar to Dangote refinery valued at $9 billion. NNRC recommended that to get the four refineries functioning optimally, the government needs to divest at least 75 percent majority stake, engage service of competent consultants on the valuation of the assets, and organise a transparent and fair bidding round managed by independent advisors under the supervision of BPE. “Appoint a Post Privatization Performance Monitoring Team comprising BPE officials

and independent consultants to checkmate the activities of investors and track performance of the refineries while also ensuring that the processes leading to the divestment of the four refineries are not politically hijacked and devoid of political interference or bureaucratic infraction of any sort,” NNRC, a global initiative designed to help governments and societies effectively harness the opportunities created by natural resources, said. In what seems like a ritual, rather than fix its refineries, the NNPC requests bids from local and international oil companies to its share of 455,000 bpd allocated to it from joint venture arrangements with exploration companies. These companies bring back refined products which meet over 90 percent of Nigeria’s consumption. Over time, previous governments have made spirited efforts to revamp the refineries but they failed because of corruption and lack of political will. It was only former President Olusegun Obasanjo that attempted to revitalise the refineries by selling them to Aliko Dangote, who led a consortium of investors which had paid $721 million for two refineries, as the Federal Government was finding it difficult managing the facilities as at that time. The sale was, however, unfortunately overturned by late President Umaru Musa Yar’Adua. Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC), said he would work towards getting the nation’s four refineries working at optimal performance by 2023.

that the state government partnered with investors to raise about $1 billion to build the 450-megawatt Azura power plant. He said that in Benin City alone, the state has generating capacity of about 900 megawatts. Obaseki, however, lamented that despite the huge investment and the 900-megawatt capacity, Edo State is still in darkness. He raised further concern that the states are hindered

by the national constraints as projected by the Federal Government, noting that this had made it impossible for the states to do much. The electricity distribution companies have been raging over the recent threat by NERC to revoke the licences of eight Discos for failing to meet remittance threshold set for July 2019 and the government’s decision to impose new members on their board.

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BUSINESS DAY

FINANCIAL TIMES

Monday 21 October 2019

World Business Newspaper

JOSEPH COTTERILL IN GABORONE

otswana’s former president Ian Khama has accused his own successor of endangering the future of Africa’s most established democracy, on the eve of closely-fought polls that may unseat the ruling party of over five decades. Mr Khama, son of the diamondrich southern African country’s first president, said that Mokgweetsi Masisi had stifled dissent ahead of Wednesday’s polls and would threaten Botswana’s status as a beacon of good governance if he won. “Our whole reputation is being undermined locally and internationally. Our democracy is now in decline,” Mr Khama told the Financial Times in Gaborone, Botswana’s capital. “We won’t be the example that we have been for so many years. All that will be eroded.” Mr Khama anointed Mr Masisi when he stepped down last year but they almost immediately became embroiled in a bitter feud that could determine the election’s result and the fate of the Botswana Democratic party (BDP), which has ruled the country since independence in 1966. AlsoatstakeisBotswana’sreputation for political stability, which has made it one of Africa’s richest nations with a higher gross domestic product per head thanSouthAfricaandthemosttrustworthy credit rating in the region. According to Mr Khama, that is now in danger because of Mr Masisi’s “leadership style [which is] foreign to this country”, including the use of the state spy agency to harass political opponents. As president, Mr Khama, a former

Botswana’s ex-president hits out at successor ahead of election

Ian Khama accuses Mokgweetsi Masisi of damaging country’s reputation for good governance

Botswana’s president Mokgweetsi Masisi, left, and his predecessor Ian Khama. The pair have been embroiled in a bitter feud since Mr Khama stepped down last year © Bloomberg/AP

soldier, had similarly harsh words for Botswana’s neighbouring autocrats. Abuses by other African leaders often drew his ire. He disdained the frequent trips to foreign summits that are beloved by many heads of state on the continent, and criticised Zimbabwe’s late dictator Robert Mugabe

Foreign secretary Raab says cross-party coalition of at least 320 MPs likely to back agreement

Relations sour as Addis Ababa nears completion of Africa’s biggest hydroelectric project

dispute over the use of the water in the river Nile has raised tensions between Egypt and Ethiopia threatening to provoke a new crisis in relations as Addis Ababa nears completion of the continent’s biggest hydroelectric project in the Ethiopian highlands. After talks stalled earlier this month over the filling and operation of the Grand Renaissance dam on the upper reaches of the Blue Nile, Ethiopia has accused Egypt of seeking to frustrate the project and block the country’s development. Egyptian officials said Addis Ababa’s plans would give Ethiopia unfettered control over the flow of the river — a lifeline for 100m Egyptians — threatening their nation’s already scarce water supplies. The deadlock threatens to do further damage to relations between two countries with a long history of mistrust. Cairo wants Ethiopia to guarantee an agreed minimum flow of water from the dam in order to maintain the level of its own High Aswan dam, farther

downstream, and ensure there is enough water for Egyptian power generation and irrigation. Addis Ababa said Egypt wants to control Ethiopia’s water system and has rejected Cairo’s call for international mediation. “Egypt wants to have veto power, telling Ethiopia what it can do,” said Fesseha Shawel Gebre, the Ethiopian ambassador to London. The east African nation has long charged that Egypt and Sudan have divided the flow of the Nile between them under a 1959 agreement to which Ethiopia was not a party. By seeking to preserve the water rights guaranteed to Egypt under that agreement, Cairo wanted to continue the unequitable use of the Nile waters and leave Ethiopia “in the dark”, said Mr Fesseha. Cairo insists it wants to work out a “co-operative” approach to minimise damage, and that its principal concern was the management of the river during times of drought. “Ethiopia is not offering clear procedures on what to do if we are faced with certain hydrological conditions,” said an Egyptian official close to the negotiations. “They say when there is a drought we will discuss it.” www.businessday.ng

ing imperiously, claims he denies. Those accusations were “just a lot of nonsense”, he said. He had trusted Mr Masisi to take over but saw his mistake when his successor took a ruthless approach to consolidating power, he said. As the rift deepened this year,

Boris Johnson to make fresh Brexit push on Monday

Tensions rise between Ethiopia and Egypt over use of river Nile HEBA SALEH IN CAIRO AND TOM WILSON IN LONDON

for clinging on to power. Mr Khama has himself been accused by the opposition and activists of an authoritarian streak in power, such as presiding over harassment of journalists and allowing state intelligence service to overstep the mark, muzzling the press and rul-

Mr Khama took the dramatic step this year of leaving the ruling party his father founded. He became the patron of a breakaway movement that is working in tandem with the main opposition coalition Umbrella for Democratic Change. “We have a president who fears competition. There is a democratic malfunction,” said Duma Boko, the coalition’s leader. Mr Boko said Mr Khama had become “a believer in the truths we have been stating”. Analysts say the race could be too close to call in Botswana’s first-pastthe-post system. Mr Masisi’s party won less than half of the popular vote in elections in 2014 and now is threatened by Mr Khama’s party in its central heartlands, where he is a traditional chief. Mr Boko’s coalition has campaigned by highlighting inequality and joblessness that are the dark sides of Botswana’s diamond-driven growth. But many voters remain loyal to the party that Mr Khama’s father built, despite his son’s departure. “You can’t break the BDP. I promise you, we’re going to win,” said Dikgang Masena, a water merchant at a Gaborone bus rank. “We voted for Ian Khama with love. But we are voting brand BDP.”

GEORGE PARKER IN LONDON AND SAM FLEMING IN BRUSSELS

oris Johnson will on Monday make a new attempt to win parliament’s backing for his Brexit deal, amid growing confidence that he can overcome a series of setbacks at the weekend and now has the backing of the 320 MPs needed for victory. Mr Johnson insists he can still deliver Brexit on October 31, in spite of losing a key vote on Saturday and being forced to write to the EU seeking a three-month delay to the Article 50 exit process. “We appear to have the numbers to get it through,” Dominic Raab, foreign secretary, told the BBC. Calculations by the Financial Times suggests Mr Johnson is on course to win by a majority of five, but the result is on a knife-edge. The UK prime minister has a two-pronged strategy for making progress this week: either winning a new “meaningful vote” on Monday or by securing a majority when legislation implementing the deal is put to a vote on Tuesday. The idea of a new “meaningful vote” on the deal — replacing the vote aborted by Mr Johnson on Saturday af-

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ter MPs effectively voted to delay giving their approval — may be scuppered on Monday if the Commons Speaker John Bercow refuses to allow it. Government insiders admit that a more likely route forward is the second reading of the withdrawal agreement on Tuesday, where MPs will be asked to vote on whether they agree with the principle of Mr Johnson’s new deal. Keir Starmer, shadow Brexit secretary, said Labour could back the new deal provided it was subject to a second referendum. Mr Johnson is fiercely opposed to a new poll and the House of Commons has so far failed to back one on any occasion. Labour is also backing amendments to soften the economic impact of Mr Johnson’s “hard Brexit” strategy, seeking to rewrite the law to require the prime minister to keep the UK in the EU’s customs union and close to the single market. If Mr Johnson wins Tuesday’s vote he will bring forward a “programme motion” to accelerate the Brexit legislation through the Commons and Lords in time for the October 31 deadline. EU ambassadors met in Brussels on Sunday to discuss the latest Brexit chaos at Westminster and agreed to continue preparations for @Businessdayng

the ratification of an exit deal in time for Britain’s possible departure on November 1. The EU is likely to offer a short extension ]to Mr Johnson if he needs more time to ratify his deal or a longer extension if the government cannot win MPs’ backing for the deal and a general election follows. “An election is coming soon in any scenario,” said one ally of the prime minister. The only question in Number 10 is whether there is time to hold a poll before Christmas or whether Mr Johnson could be forced to wait until next spring. Michael Gove, cabinet office minister, said on Sunday he was “triggering Operation Yellowhammer” — the government’s no-deal contingency plans — in case the EU refused to grant Mr Johnson’s request for an extension. “The risk of leaving without a deal has actually increased because we cannot guarantee that the European Council will grant an extension,” Mr Gove told Sky’s Sophy Ridge. According to an analysis by the Financial Times based on past voting records and public statements, there could be a majority of five for the Brexit deal. Some 320 MPs currently appear set to back Mr Johnson’s deal, with 315 opposed.

Monday 21 October 2019

BUSINESS DAY

NATIONAL NEWS

Kurdish forces leave Syria border town of Ras al-Ain in boost to US-Turkey deal Erdogan to also discuss fate of Kobani and Manbij with Putin on Tuesday AYLA JEAN YACKLEY IN ISTANBUL AND ANDREW ENGLAND IN LONDON

urdish militants began pulling out of a key Syrian border town on Sunday in a significant boost to a fragile US-brokered deal to halt at Turkish offensive in north-east Syria. A convoy of 86 vehicles was leaving Ras al-Ain, which has been at the centre of more than a week of clashes, the Turkish defence ministry said, adding that it was co-ordinating with the US. Kino Gabriel, a spokesman for the Kurdish-dominated Syrian Democratic Forces, said the group had evacuated all its fighters from the town. “We don’t have any more fighters in the city,” he said in a statement. The withdrawal comes after both sides accused each other of violating the deal which was mediated by the US on Thursday after fighting triggered by the Turkish offensive against the SDF killed scores of people and forced at least 160,000 people to flee their homes. Under the tr uce, Ankara agreed to halt its offensive to allow the Kurdish militants, which have been armed and trained by the US, to withdraw from the border area. Turkish president Recep Tayyip Erdogan has said he wants to create a “safe zone” 440km along the frontier and 30km deep into Syria that is cleared of the Kurdish fighters. Turkey does not distinguish between Syrian Kurdish militants and the Kurdistan Workers’ party (PKK), which has waged a threedecade-long insurgency against the Turkish state. Mr Erdogan has long pressed Washington to agree to the creation of a buffer zone along the border. However over the past week, some of the towns in the area have fallen under the control of Syria regime forces, supported by Russia, after the SDF struck a deal with Damascus in a bid to help stem the Turkish north-east incursion. It means that Syrian government troops have been able to return to the oil-rich for the first time in years. Mevlut Cavusoglu, Turkey’s foreign minister, said on Sunday that Mr Erdogan would discuss the removal of SDF forces from the towns of Kobani and Manbij, where Syrian government forces are present, at talks with Vladimir Putin, Russia’s president, on Tuesday. Syrian regime forces moved into the two strategically important towns last week. The talks between Mr Erdogan and Mr Putin, which will be held in Sochi towards the end of the five-day deadline for the withdrawal of the Kurdish militants, underscore Russia’s role as the pivotal powerbroker in Syria.

Moscow intervened militarily in Syria’s civil war in 2015 to back Bashar al-Assad and swung a conflict that has now dragged on more than eight years in Damascus’s favour. The Assad regime has reasserted its control over much of the country, with the opposition controlling one last stronghold in Idlib in north-west Syria. Russia’s foreign ministry said in a statement on Saturday that a Russian delegation had met Mr Assad and discussed the situation in the north-east. “Russia plays an important role in carrying messages between Damascus and Ankara,” said Hasan Selim Ozertem, an independent Turkish security analyst. “If Erdogan feels he has Putin on his side and is unhappy with the extent of the YPG [Kurdish militia] withdrawal, then the operation will likely resume west of Tal Abyad. Erdogan expects to receive certain guarantees from Putin on Manbij, where Syrian regime troops are present. If he doesn’t, then we could expect the operation to continue.” The Kurdish militants, which were backed by the US to fight Isis in north-east Syria, did not confront the regime during the civil war but used the conflict and the battle against Isis to carve out an autonomous region outside of Damascus’s control. The Kurdish militants were left vulnerable to the Turkish attack after US President Donald Trump announced he was pulling back from border region, paving the way for Ankara to launch its offensive. Mr Trump then announced he was withdrawing the 1,000 American troops from the country, despite widespread criticism from within his own Republican party that it would mean abandoning Washington’s local ally, the SDF, while emboldening the Assad regime and its foreign backers, Russia and Iran. Mark Esper, the US defence secretary, told reporters at the weekend that the US troops being withdrawn would be redeployed in western Iraq, where they would continue operations against Isis. Mr Erdogan said on Friday that he would accept Syrian regime troops being in the north-east as long as the Kurdish militants are not in the border region. He has vowed to “crush the heads of the terrorists” if they do not pull back. “If Damascus folds the SDF into its forces and removes its heavy weapons and reaches an acceptable political arrangement, then there isn’t anything for Turkey to do,” Mr Ozertem said. “But if the SDF continues to pose a threat to Turkey by keeping its heavy weapons, Turkey will intervene.” www.businessday.ng

Abiy Ahmed’s peace prize sends a message to Africa

Ethiopia’s prime minister must work to finish the liberal reforms he has started THE EDITORIAL BOARD

t took 18 months from becoming Ethiopia’s prime minister for Abiy Ahmed, earlier this month, to be awarded the Nobel Peace Prize. That is twice the length of time it took Barack Obama, only nine months into his presidency when he got the call from Oslo. Fortunately for the Nobel committee, Mr Abiy’s prize is twice as well deserved. Almost inevitably there are complaints that the award is premature. It is true the peace agreement with Eritrea, which contributed to the Nobel committee’s decision, has stalled. It is true too that Mr Abiy, almost universally lauded abroad, has many detractors at home where his message of national unity grates with those pushing for more regional autonomy. The liberal reforms he has introduced are far from complete. Yet none of this detracts from Mr Abiy’s real achievements. At

the Financial Times Africa Summit in London last week, Cyril Ramaphosa, South Africa’s president, said Mr Abiy’s prize would send a message to the continent about the need for “a new generation of bold, courageous” leaders. It is worth restating Mr Abiy’s list of successes. More far-reaching still than ending the 20-year military stand-off with Eritrea is the string of daring actions he has taken at home. Soon after he took office in April 2018, Mr Abiy emptied the jails of thousands of political prisoners and unbanned political parties. Exiles, even ones who had promoted armed rebellion, were invited home. Mr Abiy admitted the state had been involved in torture and committed his government to free and fair elections in 2020 while appointing an opposition critic as head of the electoral commission. He promoted women to half the positions in his cabinet. He also encouraged reconciliation in the Horn of Africa, and helped to hammer out

an agreement between opposition forces and the military in Sudan. It is hard to overstate how thrilling these changes have been for tens of millions of Ethiopians. Yet it would be foolish to underestimate the forces that could yet leave his legacy in tatters. After years of authoritarian rule, Mr Abiy’s push for freedom of expression at home has released many demons suppressed for decades. The constitution has encouraged a strong sense of identity in the country’s nine ethnically constituted provinces. In the new more liberal atmosphere ethnic nationalism has come back with a vengeance. Mr Abiy faces stern tests ahead. One is to balance the need to maintain law and order with laudable instincts to allow freedom of expression. The police crackdown on a demonstration in Addis Ababa, the capital, shortly after the Nobel announcement shows that the state’s authoritarian instincts are not yet fully dead.

Ghana pushes to eliminate paper from most services West African country vows to make payments for government resources cashless DAVID PILLING IN LONDON

hana is seeking to vie with Kenya as Africa’s most digitalised economy as the government pursues an ambitious drive to eliminate paper from most services and transactions by next year. The government has said it will, by early 2020, have “electronically tagged” every home in the west African country of 30m people, including informal housing in slums, by using GPS to give homes an electronic address. It has also pledged to make payments for all government services, such as permits and driving licence applications, cashless by next year. Speaking at the FT’s Africa Summit in London last week, Mahamudu Bawumia, Ghana’s vice-president, said digital technology would

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squeeze out middlemen and space for corruption, and would draw more people into the formal economy, making it easier to both tax them and provide services. “By leveraging technology to improve transparency and accountability in administrative systems, we are completing in short order what many years of administrative reforms had not been able to accomplish,” he said. Ghana, with Kenya and Ivory Coast, are among the most advanced of Africa’s 54 countries in digitalising government and payment services. By the end of last year, there were 456m unique mobile phone subscribers in Africa, a penetration rate of 44 per cent, according to GSMA, an industry body. That is expected to rise to 623m by 2025. Mr Bawumia said that, in mobile payments, Ghana had already surpassed Kenya by enforcing full @Businessdayng

interoperability of mobile wallets across telecoms companies and banks, in effect turning every mobile phone into a mini-bank account. Kenya is considered a pioneer of mobile money after, a decade ago, introducing M-pesa, a phone-based cash transfer service that handles nearly 2bn transactions annually. Ghana is also digitalising its land registry using blockchain technology, the vice-president said, reducing land disputes. Within two years, he added, it would have digitalised all hospital records and was in the process of digitalising court records. Ghana was also in the process of introducing national ID cards in what Mr Bawumia called a “game changer” for effective administration. “It will form the basis of an integrated database with passports, tax identification numbers, and drivers’ licences,” he said. “No one can hide.”

Monday 21 October 2019

BUSINESS DAY

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Monday 21 October 2019

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Monday 21 October 2019

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60 BUSINESS DAY

Monday 21 October 2019

BUSINESS DAY

PHOTOSPLASH

7th BusinessDay Banks’ and Other Financial Institutions awards in Lagos at the weekend

Aliyu Abdulhameed, MD/CEO, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc) making a speech.

Frank Aigbogun (r), publisher/CEO, BusinessDay Media, presenting Mixed Fund of the Year Award to Lanre Fabunmi, MD/CEO, AIICO Capital.

Frank Aigbogun (2nd r), publisher/CEO, BusinessDay Media, presenting Integrated Financial Market Infrastructure Provider Award to Emmanuel Etaderhi (2nd l), SVP, economic development, and others, all of FMDQ Securities Exchange Plc.

Frank Aigbogun (2nd l), publisher/CEO, BusinessDay Media, presenting Outstanding Development Finance Institution Award to Aliyu Abdulhameed (2nd r), MD/CEO, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), and others.

Aliyu Abdulhameed (r), MD/CEO, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), presenting Bank Holding Company of the Year Award to UK Eke (m), GMD, FBN Holdings Plc, and Oyewale Ariyibi, CFO, FBN Holdings Plc.

Aliyu Abdulhameed (2nd r), MD/CEO, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), presenting Deal Advisory of the Year Award to Sonnie Ayere (2nd l), chairman/CEO, DLM Group, and others.

Aliyu Abdulhameed (m), MD/CEO, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), presenting Diversified Financial Services Group of the Year Award to Adedayo Amzat (2nd r), GMD, Zedcrest Capital, and others.

Haruna Jalo-Waziri (m), MD/CEO, CSCS Plc, presenting Consumer Finance CEO of the Year Award to Abiodun Adigun (l), country sales manager, Credit Direct Limited, representing Akinwande Ademosu, MD/CEO, Credit Direct Limited, and Godwin Clark (r), divisional head, control and compliance, Credit Direct Limited.

UK Eke (m), GMD, FBN Holdings Plc, presenting Consumer Finance Company of the Year Award to Oluseyi ToluBoluwatise (l), divisional head, corporate services, Credit Direct Limited, and Abiodun Adigun (r), country sales manager, Credit Direct Limited.

UK Eke (2nd l), GMD, FBN Holdings Plc, presenting Trustees of the Year Award to Funmi Ekundayo (m), MD/CEO, STL Trustees, and others.

UK Eke (2nd r), GMD, FBN Holdings Plc, presenting Payment Solutions and Technologies Provider/Future of Payments Company of the Year Award to Bola Ashiru (2nd l), principal, Middle East and Africa, MasterCard, and others.

Frank Aigbogun, publisher/CEO, BusinessDay, delivering a welcome address.

UK Eke (2nd r), GMD, FBN Holdings Plc presenting Insurance Company of the Year Bola Ashiru (m), principal, Middle East and Africa, MasterCard, presenting Best NonAward to Yomi Onifade, executive director, Axa Mansard Insurance Plc. Bank Financial Product/Services of the Year Award to Olufunke Aiyepola (2nd r), MD/ CEO, UTL Trust Management Services Limited, and others.

Bola Ashiru (r), principal, Middle East and Africa, MasterCard, presenting Best Bank in Non-Interesting Banking Award to Alhassan Abdulkarim (l), regional manager, Lagos.

Bola Ashiru (m), principal, Middle East and Africa, MasterCard, presenting Bank Product of the Year Award to Okwuchi Ugorji (l), head, inclusive banking, Wema Bank Plc, and Amarachi Ekwomadu, inclusive banking, Wema Bank Plc.

R-L: Morufa Apanpa, executive director; Oyinade Kuku, head HR, and Tolu Oluwole, head, investors relations, all of FBN Insurance,

L-R: Tunde Lawanson, marketing services manager; Bode Oguntoke, head, internal audit, and Douglas Elisha, technical assistant to GMD, all of FBN Holdings Plc. Pictures by Pius Okeosisi and David Apara

BUSINESS DAY

Monday 21 October 2019

PHOTOSPLASH

7th BusinessDay Banks’ and Other Financial

Frank Aigbogun (r), publisher/CEO, BusinessDay Media, presenting the Fixed Income Fund Award/Real Estate Investment Trust (REIT) Award to Patrick Ilodianya (l), MD, SFS Capital while others look on.

Godwin Ehigiamusoe, MD/CEO, LAPO Microfinance Bank, (3rd left) receiving the Micro Finance of the Year Award from Haruna Jalo-Waziri , (3rd right) while Elizabeth wife of Ehigiamusoe and others watch with interest.

Folasade Femi-Lawal,( 2nd left) head card business, First Bank receiving the E-Payment of the Award for Bola Ashiru, principal, Middle East and Africa, MasterCard, while others look.

Frank Aigbogun (2nd l), publisher/CEO, BusinessDay Media, presenting the Continental Leader in Post-Trade and Custody Services Award to Haruna Jalo-Waziri (2nd r), MD/CEO, CSCS plc, and others.

Aliyu Abdulhameed (2nd l), MD/CEO, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), presenting Bank of the Year Award to Nkem Oni-Egboma (2nd r), MD, Zenith Pensions Custodians Limited, and others.

Ibrahim Bello,(3rd left ) executive vice president , Coronation Merchant receiving the Investment Bank of the Year Award from Haruna Jalo-Waziri while others look on .

Monday 21 October 2019

BUSINESS DAY

PHOTOSPLASH

Institutions awards in Lagos at the weekend

Haruna Jalo-Waziri,(3rd right) presenting the Restructuring and Turnaround of the Award to Abdulahi Mohammed,( centre) executive, Polaris and others .

Kate Nwosu, COO,(2nd right) African Prudential plc, receiving the Registrar of the Year Award from UK Eke, GMD, FBN Holdings Plc, while others look on .

Derek Omoleh (centre) of Cititrust Holdings, receiving the Investment Company of the Year Award from Haruna Jalo- Waziri, and other members of staff of Cititrust.

Gbite Oduneye,( 2nd left) co-founder, EGM, receiving the Digital Trading Platform of the Year Award from UK Eke, while other members of the staff of EGM look on.

Segun Akintemi, CEO, Page Financials receiving Most Innovative Consumer of the Year Award from UK Eke, GMD, FBN Holdings Plc.

Henry Ndulo (left) of Fidelity Bank receiving the SME Bank of the Year Award from Bola Ashiru, while Ben Uzor look on . Pictures by Pius Okeosisi and David Apara

64 BUSINESS DAY

Monday 21 October 2019

abujacitybusiness Comprehensive coverage of Nation’s capital L-R: Ishaq Yahaya, director compliance, certification and monitoring, Bureau of Public Procurement (BPP), Babatunde Kuye, director of energy and infrastructure BPP, Mamman Ahmadu, DG BPP and Eze Obasi, director special procurement BPP during the presentation and training on Procurement Planning and Submission of Procurement Records using NOCOPO, held in Abuja. picture by TUNDE

N28bn 2020 budget: FCTA prioritizes completion of ongoing projects James Kwen, Abuja

he Minister of the Fe deral Capital Ter r itor y (FCT ) Muhammad Bello presented a National Priority Budget proposal of N28, 422,804,431 for the year 2020 to the Senate Committee on the FCT with priority on completion of on-going projects. Presenting the budget proposal to the Committee, Bello said in view of the poor performance

o f t h e Fe d e r a l C a p i t a l Territory portion of the 2 0 1 9 Na t i o n a l P r i o r i t y Budget, the FCT Administration has decided to re-prioritize and rollover only essential on-going projects without making provisions for new ones. He said a total of 13 projects, compr ising12 ongoing projects and one new project will be the focus of the budget, explaining that the new entrant was the rehabilitation of Federal Govern-

ment buildings at the cost of five billion Naira. Fielding questions from the lawmakers, the Minister who described the 2020 budget proposal as a budget of stability, stressed that the focus on ongoing road projects within the Federal Capital City and satellite towns was deliberate and a measure to forestall any traffic gridlock in the nearest future. Bello said, “if we don’t build all the link roads a n d i n t e rc h a n g e s n o w

to accommodate traffic spills, it will come back to haunt us in the next two years or so because the city is ever expanding”. The Minister explained that the ongoing projects highlighted in the budget proposal were awarded some years ago to address the infrastructural demands of the FCT but over the years the FCT Administration had accumulated huge liabilities in order to roll out the projects.

CJN, CBN Governor harp on financial system stability Stella Enenche, Abuja

echnological innovations over the years, have necessitated rapid growth in banking and other critical financial development sub-sectors. As a result, efforts must be intensified at ensuring that this development facilitates a financial system stability, as part of a wholistic approach at economic growth and prosperity. In consideration of this, however, judicial officers, who adjudicate over financial-related disputes, must develop the needed capacity

to confront the rapid changes, in terms of new financial laws, guidelines and others. This was the consensus expressed by the Chief Justice of Nigeria, Justice Tanko Mohammed, Central Bank of Nigeria Governor, Godwin Emefiele, as well as President, Chartered Institute of Bankers of Nigeria, Uche Olowu. The trio spoke at the 19th national seminar on banking and allied matters for judges at the National Judicial Institute, in Abuja. In his keynote address, the CBN Governor said the seminar was a veritable plat-

form for judges, law enforcement agents, legal practitioners, financial Institutions and regulators to deliberate on legal aspects of challenges faced by the banking system. Emefiele who was represented by the Deputy Governor, Cooperate services, Edward Adamu said the theme of the seminar, “Disruptive Innovations in the Nigeria Financial System: The Legal Considerations”, was apt, considering the rapid technological innovations and their impact on the system. “There is no gain saying that rapid automation and

technological innovations over the past decade has impacted almost every facet of human endeavour. Technology has transformed the way we learn, communicate, deliver services, experience entertainment, etc. “The impact of technological innovation is even more profound in the financial system. Digital finance and the Fintech have experienced rapid growth over the past decade, disrupting conventional banking models and opening up new possibilities for designing and distributing financial services.

ICAN inaugurates integrated reporting committee to strengthen corporate reporting in Nigeria Cynthia Egboboh, Abuja

s Nigeria set the stage to attract more investments, the Institute of Chattered Accountants of Nigeria (ICAN) has inaugurated the Nigeria Integrated Reporting Committee (NIRCO) to strengthen corporate reporting in Nigeria. Speaking during the inauguration of the Committee in Abuja, the President of the Institute of Chartered Accountants of Nigeria, Nnamdi Okwuadigbo said that the establishment of NIRCO will complement the efforts of the Federal Government in aligning GDP growth with the sustainable development agenda, as envisaged by initiatives like the National Social Investment Program. He further explained that adopting the Integrated Reporting will enable companies align their Financial and sustainability reporting to

enhance decision making by investors and business executives. “Championed by the Institute of Chartered Accountants of Nigeria (ICAN), NIRCO will serve as an influential Committee that will promote and support the adoption of Integrated Reporting in Nigeria and West Africa. Integrated Reporting has been recognised by International Federation of Accountants, the World Bank, International Monetary Fund and other multilateral agencies as the future of Corporate reporting”, Okwuadigbo said Patrick Kabuya, World Bank Representative in his remarks, said that Integrated Reporting will be a paradigm shift of thinking by boards and management on their business models, strategy and operations to mindfully incorporate the three dimensions of sustainable development: people, planet and profit, considering all capitals in long-term value creation.

WaterAid intensifies campaign to end open defecation in communities Godsgift Onyedinefu, Abuja

s part of efforts aimed at making Nigeria Open Defecation Free, WaterAid Nigeria has called on government and relevant stakeholders to intensify efforts to achieve open defecation free status by 2025. Experts in the public health sector have expressed concern that Nigeria may not end open defecation by 2025, saying the country’s current progress on the target is far from realization as available statistics indicated that millions of Nigerians still lack access to clean water and clean toilets. Blessing Sani, Communications Officer at WaterAid, who spoke at a case study identification and documentation workshop in Bauchi

said WaterAid is using a strategy called Sanitation Marketing in selected communities to drive the sale and demand for toilets especially the Water Easy Toilets (WET). She explained that the strategy was adopted as it had been observed that Community dwellers often rely on government and non governmental Organizations to provide toilets and therefore do not see themselves as being responsible in providing toilets for their households. The Cmmunications Officer further advised that all efforts towards improving access to clean toilets, water must be community based, adding that Water, Sanitation and Hygiene (WASH) projects will best thrive if communities can embrace it as theirs and not just some government or political intervention.

Nigerian firm, BSTAN to collaborate with govt to reduce 17m housing deficit Innocent Odoh & Harrison Edeh, Abuja

Nigerian Housing Company, BSTAN Group has expressed its readiness to collaborate with governments at all levels to provide decent and affordable houses for Nigerians thereby reducing the estimated housing deficit of 17 million the nation is facing. The President and Group Managing Direcwww.businessday.ng

tor of BSTAN Group, Becky Damilola-Oke, gave this indication during opening of a three-day National HouseFair 3.0 on the 3rd Annual summit on Housing Economy and Government Policies with the theme “New Economy: Amplifying the Impacts and possibilities of Real Estate Utilizing Technology” which commenced in Abuja on Wednesday. Damilola –Oke said the House fair is summit

where both the government agencies, developers and other stakeholders in the |Housing system come together to reduce the deficit in Nigeria. “BSTAN has been doing so much for Nigeria, we have done over 20, 000 housing units and we are doing 22, 000 this year, so there is so much we are putting in place. But we cannot do that alone without the partnership of government and that is

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why this kind of summit is put together so that we can collaborate with the government. Let them know what we are doing and what they need to do so that we reduce the deficit drastically. This and much more is what BSTAN is putting together,” she said. She called on the Federal Government to sort out the lingering issue of 30,000 minimum wage and take other measures that will help provide de@Businessdayng

cent homes. Damilola-Oke also tasked the Federal Government on renewed urbanization system thereby preventing flooding in the country, adding that the displacement of people caused by flood overtime can be prevented if the Government takes the impact of urbanization seriously. She said the government needs to sort urbanization out through the Public Private Partner-

ship (PPP) for new economy and good vision. One of the Ambassadors of BSTAN and also a Nollywood actor, Femi Branch, told reporters that the housing issue is very important in any nation and in any economy. He commended BSTAN Group for providing affordable houses for the masses because they know that the g ov e r n m e nt ca n n o t d o it alone adding that it is timely.

Monday 21 October 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

JOSEPH COTTERILL IN GABORONE

Botswana’s ex-president hits out at successor ahead of election

Ian Khama accuses Mokgweetsi Masisi of damaging country’s reputation for good governance

Botswana’s president Mokgweetsi Masisi, left, and his predecessor Ian Khama. The pair have been embroiled in a bitter feud since Mr Khama stepped down last year © Bloomberg/AP

Foreign secretary Raab says cross-party coalition of at least 320 MPs likely to back agreement

Relations sour as Addis Ababa nears completion of Africa’s biggest hydroelectric project

Boris Johnson to make fresh Brexit push on Monday

Tensions rise between Ethiopia and Egypt over use of river Nile HEBA SALEH IN CAIRO AND TOM WILSON IN LONDON

GEORGE PARKER IN LONDON AND SAM FLEMING IN BRUSSELS

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Monday 21 October 2019

BUSINESS DAY

NATIONAL NEWS

Abiy Ahmed’s peace prize sends a message to Africa

Ethiopia’s prime minister must work to finish the liberal reforms he has started THE EDITORIAL BOARD

Ghana pushes to eliminate paper from most services West African country vows to make payments for government resources cashless DAVID PILLING IN LONDON

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Monday 21 October 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Matthieu Pigasse to leave Lazard to start own venture French political adviser turned star banker had been rumoured to be joining a rival firm SUJEET INDAP AND JAMES FONTANELLA-KHAN IN NEW YORK, AND HARRIET AGNEW IN PARIS

atthieu Pigasse, the longstanding head of France for Lazard and co-owner of Le Monde newspaper, has resigned from the financial advisory and asset management company. Rumours had swirled for weeks that Mr Pigasse would join a rival boutique firm looking to start a Paris office. However, he said he would be starting his own venture. “Lazard in France has an unsurpassed franchise, with strong momentum. I am excited to begin my next chapter beyond investment banking in a new entrepreneurial project.” Mr Pigasse said. Mr Pigasse, 51, is a punk rock aficionado and self-styled enfant terrible of France’s close-knit financial world. He has advised some of the country’s largest companies, including Carrefour, Sanofi, L’Oréal and Danone, and carved out a reputation advising on sovereign debt restructuring for Iraq, Ecuador, Argentina, Cyprus and Greece. The departure of Mr Pigasse, perhaps Lazard’s best-known rainmaker, is a blow to the elite M&A advice firm whose fortunes have sagged this year as the deal market has slowed and competition has ramped up from upstart boutiques. He was elevated in May to global head of banking and deputy chief executive of Lazard’s global financial advisory unit. The firm has seen several leadership changes this year. Peter Orszag, the former Obama cabinet official, was named earlier this year as new CEO of Lazard’s financial advisory group, a step that appeared to indicate that he was being groomed to replace longtime chief executive and chairman Ken Jacobs.

“I admire and respect Matthieu Pigasse for all he has done for our clients and our global franchise,” said Mr Jacobs in a statement. Mr Pigasse’s resignation follows weeks of speculation that he was departing to start the France office for another boutique bank, either Evercore or Centerview Partners. However, Mr Pigasse said he was starting a new venture outside of investment banking. Bankers in the Lazard Paris office, while concerned about the loss of Pigasse’s deep client book, expressed relief that the uncertainty hanging over them had been ended. Senior bankers in Paris were summoned to the office for a meeting on Sunday night. Paris, with 135 bankers, has long been Lazard’s strongest office in Europe. The firm in September appointed a veteran of its London office, Cyrus Kapadia, as the new head of its UK unit replacing William Rucker who became chairman. A handful of more junior Lazard bankers recently left the Paris office and Mr Pigasse’s departure is certain to embolden rivals to challenge the market position of the firm whose operations in France trace back to the 19th century. Mr Pigasse studied at France’s Ecole Nationale d’Administration, the country’s training ground for the political elite, and then had a stint in politics serving two finance ministers. He was cabinet adviser to Dominique Strauss-Kahn between 1998 and 1999 and chief of staff to Laurent Fabius between 2000 and 2002. Mr Pigasse once harboured ambitions to be president of France, Alain Minc, an adviser, told Vanity Fair in a 2018 profile. Instead that path was taken by another of Mr Minc’s protégés: Emmanuel Macron, a former investment banker at Lazard’s arch rival Rothschild.

Goldman Sachs banker charged with insider trading Bryan Cohen accused of tipping off trader about bids involving Syngenta and Arby’s KADHIM SHUBBER AND LAURA NOONAN IN WASHINGTON AND ARASH MASSOUDI IN LONDON

Goldman Sachs banker has been charged with insider trading in a scheme that allegedly generated $2.6m in illegal profits as he tipped off a trader about multibillion-dollar deals involving bank clients like Syngenta. Bryan Cohen, a vice-president at Goldman, was arrested Friday on federal criminal conspiracy charges in New York and released on bail, according to court records. The indictment was not immediately available, but parallel civil charges filed by the Securities and Exchange Commission detailed the alleged scheme. The SEC alleged Mr Cohen, 33, tipped off an unnamed trader about bids for Swiss agribusiness Syngenta

in 2015 by Monsanto and ChemChina, and about Arby’s 2017 takeover of Buffalo Wild Wings in 2017. “During the course of the scheme, Cohen in fact received substantial cash payments from Trader A in exchange for the inside information,” the SEC alleged. The securities regulator alleged the scheme generated at least $2.6m in illicit profits. An attorney for Mr Cohen did not immediately return a request for comment on Saturday. A spokesperson for Goldman said the firm was co-operating with the authorities. “Protecting client confidential information is our highest internal priority and we condemn this alleged behaviour,” the spokesperson said. A person familiar with the situation said Mr Cohen had been put on leave on Friday, adding there was no indication that the bank itself was being accused of any wrongdoing. www.businessday.ng

Huawei admits that US sanctions are hurting Chinese telecoms group struggles to replace Google apps on phones after export ban KIRAN STACEY IN WASHINGTON

uawei is struggling to replace Google apps on its mobile phones after being hit by US sanctions, the company’s executives have admitted, saying it will be years before they can develop their own alternatives. The Chinese telecoms company, which is in the middle of a global technology war between Washington and Beijing, is being hurt by the US export ban, its executives told the Financial Times. Senior executives from Huawei US said they had been able to find replacements for much of the equipment they used to buy from the US, but not the computing services sold by Google. Joy Tan, vice-president of public affairs at Huawei US, said: “After the entity list, we were able to figure out some of the alternative solutions. The most chal-

lenging part is Google-managed services. We can continue to use the Android platform, since it is open-source, but we cannot use the services that help apps run on it.” Officials in the Trump administration say they believe Huawei poses a risk to national security since its equipment could be used by Beijing for spying. This year it imposed an export ban that prevents companies from selling it US-made parts. The move is part of a broader push to curb China’s economic and political power, including waging a trade war and sanctioning other technology companies that Washington says are involved in rights abuses. Huawei has continued to grow despite the US sanctions, however. Last week it announced that sales had surged 27 per cent over the past year. Customers with existing Huawei mobile phones are able to still access Google’s Play app

store, Google Maps and other products provided by Google Mobile Services, because of a temporary exemption that allows US suppliers to continue to service existing equipment. But these services are not available on new Huawei models, which the company worries will deter foreign customers. Google services are already banned from Chinese handsets. Huawei has been developing its own alternative operating system known as Harmony, but Ms Tan said it was a long way from being ready. Asked whether it could take years before Harmony was able to replace everything Google can do, she replied: “Yes. We have to find alternative solutions for that ecosystem, but it’s going to take some time to build. “There are so many Android users in Europe and south-east Asia, and they’re so used to these Google applications on top of Android phones.”

Policymakers’ fears of a global recession grow Chatter at IMF and World Bank meetings focused on trade and economic uncertainty CHRIS GILES AND JAMES POLITI IN WASHINGTON

ublicly, finance ministers and central bank governors have held off on raising fears that a global recession is coming — but in private, international and national officials are not nearly so certain. The communiqué issued at the end of the IMF and the World Bank’s annual meetings in Washington this week agreed that the global economy is not slipping into recession. But as policymakers and economists gathered in the bustling corridors of the buildings surrounding 19th Street in Washington, the worry was that the forecast of an improving global

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outlook next year could, at any moment, be punctured by a tweet from the White House. That would turn the IMF’s relatively sober forecast that 3 per cent global growth this year will rise to 3.4 per cent in 2020 into something much uglier. Kristalina Georgieva, the IMF’s new managing director, captured the concerns when she said the chill in the Washington air reminded her of an “unfortunately appropriate” line from the Russian poet Alexander Pushkin. “The breath of autumn begins to ice the roadway,” she said. The IMF broadly defines a world recession as growth slipping below 2.5 per cent a year. This is still far from the fund’s base case. Although the global economy is experiencing @Businessdayng

its weakest performance since the financial crisis — because trade wars have knocked confidence, investment, trade and manufacturing — the IMF expects a pick-up next year. Highly stressed economies are unlikely to suffer the same fate in 2020 as they have this year, and the large emerging economies of Mexico, Brazil and Russia are likely to do a bit better, the IMF believes. But it did not forecast any improvement in the “big four” global economies — China, the US, the eurozone and Japan. On the sidelines of the meetings, the mood was gloomier. The IMF’s forecast could easily be knocked off course by further tit-for-tat trade disputes — perhaps quite soon if the Trump administration imposes tariffs on European automobiles.

Monday 21 October 2019

BUSINESS DAY

ANALYSIS

Why Facebook’s Libra might be a good thing In a financial system overly dependent on too-big-to-fail banks, innovations like Facebook’s could be crucial RICHARD WATERS

hen companies are threatened with retaliation by powerful politicians merely for exploring a radical new business idea, it doesn’t bode well for innovation. That is what has happened in recent weeks with Facebook’s cryptocurrency project, Libra. A quarter of its initial supporters have now backed out. For the payments companies involved, it made sense to protect their current businesses rather than defy politicians over a project with long odds of reaching the finish line. If this results in the premature destruction of an idea that tries to push the boundaries of finance in important ways, so much the worse. A decade after the financial crisis, the financial system is still overly dependent on too-big-to-fail banks. At its core, it has also been impervious to innovation, despite the flowering of “fintech” at the edges. This has not been lost on financial regulators like the Bank of England, which appeared to approach Libra from the start with an open mind — though the political backlash against the project has since pushed regulators on both sides of the Atlantic into trying to sound tough. From a purely political point of view, it always looked a stretch for Facebook to lead the disruption of a core part of the global finance system. When it was a small upstart trying to connect the world, its “Trust Us” message was easy to swallow. That trust is now in short supply. There is more to the Libra debacle than this political miscalculation. There have been gripes from some Libra members over Facebook’s early handling of the project. By keeping their heads down rather than addressing the many potential

problems that have been raised, the project’s backers have also left a vacuum that has been easy for the doomsayers to fill. The project itself is also in need of retooling, even before it starts. A cryptocurrency based on a currency basket that does not relate directly to any consumer’s actual life will be a tough sell. And despite efforts to reduce Facebook’s role, important governance issues need resolving to prevent it becoming a tool of vested interests. It would be a shame if these early mis-steps cut short further deliberation. There are plenty of substantive issues that need to be aired — even if Libra proves to be a dead end. Central banks, for instance, have rightly worried about the risks that so-called “stablecoins” like Libra could pose to the financial system, should they be adopted at scale. The international Financial Stability Board has been working on some of these problems, and hopes to come out with rules by the middle of next year. If Libra has added a new urgency to the regulators’ deliberations, then so much the better. The same can be said for the fear that Libra would become a “dark money” network making it easier to do things like launder drug money and finance terrorism. With the rise of cryptocurrencies, such networks already exist. One answer could lie in national regulation of the “apps” that run on the digital money platform — though the borderless nature of the internet poses an obvious challenge. Regulation of the platform itself could also be a possibility, for instance by capping the size of payments it can handle or enshrining a way to reverse transactions in exceptional circumstances (an idea that is anathema to cryptocurrency purists, but might be a necessary compromise).

Fierce gunfights erupt in northern Mexico at drug lord’s hideout City becomes war zone when troops attempt to arrest a son of jailed ‘El Chapo’ JUDE WEBBER IN MEXICO CITY

ierce gunfights erupted in the northern Mexican city of Culiacán on Thursday, as the Sinaloa Cartel mobilised to prevent security forces arresting one of the sons of jailed drug lord Joaquín “El Chapo” Guzmán. Video footage of the violence included dramatic scenes of men with heavy-calibre weapons cruising in trucks, a gunman lying in the road opening fire and burning lorries blockading streets. The war zone-like scenes, which apparently thwarted the arrest of Ovidio Guzmán, marked a serious escalation of violence after two major clashes elsewhere in Mexico this week killed 29 people. The deterioration came despite security minister Alfonso Durazo on Monday hailing that a “tipping point” had been reached in the

country’s surging violence. José Luis González Meza, a lawyer for El Chapo, told Milenio Televisión, a cable news channel, that the younger Guzmán “has appeared, thank God”, had been in touch with his family and was free. In a confusing message aired on social media, Mr Durazo, flanked with military and police chiefs, avoided saying if Mr Guzmán had been arrested and freed or not been arrested at all. Mr Durazo said a routine patrol of soldiers and the new National Guard had chanced upon Mr Guzmán in a house in Culiacán on Thursday afternoon after coming under attack. But the troops were swiftly outnumbered as gunmen surrounded the house, sparking terror among residents. Mr Durazo said Mexico’s security cabinet “agreed to suspend its actions” so the local population were not put at risk.

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Evo Morales: ‘We are not a country of beggars any more’ The Bolivian president on fighting for a fourth term, his autocrat ‘friends’ — and why he’d like to chew coca with Corbyn ANDRES SCHIPANI

vo Morales polishes off another strip of chicharrón and licks his fingers. Latin America’s longestruling sitting president seems to be savouring not just the mountain of deep-fried pork in front of us, eaten in true campaign trail style with bare hands, but also the prospect of possible controversial fourth electoral victory on Sunday. We are sitting at a rusted metal table, ringfenced by guards, in a remote village in central Bolivia where the 59-year-old has just delivered a fiery speech. As is usual for these parts, the reception was warm. “People tell me, ‘Evo, if you do well, we’ll do well’,” he tells me. Everybody, from voters to ministers to foes, calls him “Evo”. I have been with him since dawn, when he started his day in the capital, La Paz. We drove to nearby El Alto, where he addressed a group of youngsters from his Movement for Socialism (MAS) party, before boarding the presidential jet to fly 200km south-east to Oruro. Then it was on by helicopter to the village of Caracollo, where he inaugurated a road and took the wheel of a Land Cruiser for two hours to test it himself. When we stopped at toll booths, he paid with money from his own pocket. Along the way, people gifted him ponchos, hats and garlands of flowers, potatoes and coca leaves. “Evo no se cansa,” or “Evo doesn’t get tired,” ran a campaign tune playing on his car’s radio. It’s true. At almost every stop we made, people offered us bowls of quinoa with grated fresh cheese. “Fancy enough for lunch with a ‘gringo’ newspaper?” Morales quipped. “Quinoa is good, it will give you energy.” I wonder whether the peasant president is fully aware of the quinoa craze currently sweeping through the capitalist US and Europe. It is just past 3pm before we finally stop for lunch, prepared at a campaign outpost under a blue

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tarpaulin. As she sees us coming, a Quechua woman dressed in a pink apron and a denim bucket hat pulls a dripping joint of pork from a deep aluminium pot and puts it on a plastic platter, excited to be able to serve food to “my brother president”. “Eat, eat!” says Morales. “Let’s see if you can keep up, because we have yet another activity [to come]”. He chuckles at my exhaustion and points to the bleeding blisters on his feet, which have been exposed for most of the day in the stinging Andean cold: “I have to wear sandals because I have been around too much.” I feel self-conscious in my heavy Blundstone boots. Morales is used to toiling. Aged five, he was already herding llamas on the chilly plateau in Orinoca, western Bolivia. He has been a trumpet player, a coca farmer and a combative trade unionist. In 2006, when he took office as Bolivia’s first indigenous president, it was a historic moment — in robes fit for an emperor, he received the chieftain’s staff in the pre-Inca ruins of Tiwanaku. As a reporter, I have been following him ever since. Such has been his influence as president that many people from across the political spectrum describe him as Bolivia’s equivalent to Turkey’s Mustafa Kemal Ataturk — someone who “refounded” a nation. Morales is one of the survivors of Latin America’s “Pink Tide” of leftwing governments that dominated the region until five years ago, and just a few hours in his company are enough to show that his instincts as a populist remain sharp. But as he prepares to face the voters again on October 20, his aura of invincibility is beginning to fade, and increasing numbers of critics fear that their country may be tilting towards autocracy. I am keen to find out what has changed since a conversation we had in 2014, soon after he won his third term, when he told me that he did not plan to find a way around constitutional limits to @Businessdayng

seek a fourth. Instead, he said, he would devote his time to his two passions outside politics, playing football and farming coca — cocaine’s raw material, but a mild and traditional Andean stimulant in its unprocessed form. Three years later, during an official visit by Equatorial Guinea’s ageing strongman Teodoro Obiang, it was reported in local media that Morales asked the coup leader turned four-decade president how to win elections with 90 per cent of the vote. “What did he tell you?” I ask. Morales deflects deftly: “I remember the question,” he says. “I don’t remember the answer.” We attack the pork — crispy on the outside, tender on the inside, greasy and tasty throughout — and sip pineapple juice from big plastic cups. Behind us, supporters are chanting “Evo Forever!” It is a reference to the constitutional dispute in 2016, when Morales narrowly lost a referendum to allow him to stand for a fourth time. Undeterred, however, his party argued that term limits violated the American Convention on Human Rights. Bolivia’s constitutional court agreed. Many Bolivian voters, understandably, now feel cheated. Does he feel it is legitimate to run again? “This was not an invention of Bolivia, nor an invention of Evo,” he replies. Although Morales tells me he is running again because it is a “request from the Bolivian people”, an increasing number of Bolivians do not want him in office for five more years. The latest polls suggest that he is ahead of his closest contender, yet it is unclear whether the margin will be large enough to prevent a run-off in December. Critics argue that his ego is becoming out of control — reflected in the construction of a new 25-storey presidential palace in La Paz and a museum in his birthplace to honour him. But he dismisses the idea that a cult of personality has grown up around his presidency. “I am still a humble man, nothing has changed, you can judge for yourself,” he says.

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Monday 21 October 2019

BUSINESS DAY

Commodities

cover

PERSONAL FINANCE

Boosting local rice appeal: Opportunities in de-stoning

Border Closure: 25 made-inNigeria rice to look out for this Christmas

Ways to make rising inflation benefit you

Why you should not wait for a disaster to get insurance

If you are a game of thrones fan, you should be familiar with the phrase “winter is coming”, for Nigerians it is rising inflation analysts warn about, but savvy investors can take positives out of it.

Ask the average Nigerian how prepared s/he is prepared in case of a disaster that could result in loss of property, fortune or injury to self or loved one(s), and you are likely to get “God forbid!” as a reply

As the border closure lends itself to shifting emphasis from foreign made rice to locally grown varieties, opportunities in the process chain of rice production are also being highlighted alongside.

It is no longer news that the Nigerian government has completely closed the country’s land borders with neighbouring countries to curtail smuggling of rice and other commodities, a move which is weakening the supply of foreign rice, increasingprices, and supporting local production of the food item.

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70 BUSINESS DAY

Monday 21 October 2019

BD Weekly Tenders Wrap-up

Market Review

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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Monday 21 October 2019

BUSINESS DAY

Commodities Boosting local rice appeal: Opportunities in de-stoning Temitayo Ayetoto

s the border closure lends itself to shifting emphasis from foreign made rice to locally grown varieties, opportunities in the process chain of rice production are also being highlighted alongside. De-stoning is particularly a gap that appears yet to be fixed in the finishing of Nigerian rice reproduction as wholesalers, retailers and consumers tend to shy away based on this. Adelakun Ajala’s ‘Analysis of Challenges Facing Rice Production in Nigeria’ published in the Journal of Food Processing identified the presence of stone as the main problem of Nigerian rice grains. David Ukaoka, in his tweet dated 15 of October said: “So I went to buy rice from my wholesale guy and he just kept lamenting that they closed the borders. They were refusing to buy the Nigerian rice because they found out the rice is 25 percent sand and stones.” Another user with the handle @ Grace_found confessed that “Nigerian rice is sweet, but the ones in the market now is full of stones. If we sincerely take our quality standard a bit higher, I believe all unbelievers will become believers and be encouraged to patronise locally made rice.” @d_shefizzle said “I bought a Nigerian made rice because I could not get an imported one in my area due to the border closure of course but I have been eating stones instead of rice. They want us to buy Nigerian made and Nigerians are not packaging their goods well.” These testimonies and many more prove the validity of the problem, equally presenting a potential opportunity for entrepreneurs to venture. Agriculture experts already affirm that mechanisation gaps, which de-stoning falls under, remains a drawback in agricultural practices, limiting delivery of improved standards. Accelerating mechanisation alone can double Nigeria’s rice production to 7.2 million tonnes, according to a Pricewa-

terhouseCoopers report on boosting rice production. It estimates that increasing the mechanisation rate in Nigeria from 0.3 horsepower per hectare (hp/ha) to 0.8 (hp/ha) in the next five years, Nigeria will need to at least triple its current stock of machinery over the same period. In addition to raising production, adequately increasing mechanisation has the capacity to raise yields, increase labour productivity, reduce post-harvest losses, increase income generated by farmers and deepen import substitution, the report stressed. In this case of de-stoning, mechanisation has the capacity to win the heart of teeming Nigerian away from imported rice consumption. Rice is one of the most consumed staples in Nigeria, with consumption per capita of 32 kilogramme. In the past decade, consumption has increased 4.7 percent, almost four times the global consumption growth, and reached 6.4 million tons in www.businessday.ng

2017. This accounts for 20 percent of Africa’s consumption. As at 2011, rice accounted for 10 percent of household food spending, and 6.6 percent of total household spending. Given the importance of rice as a staple food in Nigeria, boosting its production has been accorded high priority by the government Anchor Borrower’s Programme of the Central bank of Nigeria. Rice production in Nigeria reached a peak of 3.7 million tons in 2017. In spite of this improvement, Nigeria’s rice statistics suggest there is an enormous potential to raise productivity and increase production. Yields have remained at 2 tonne per hectare, which is about half of the average achieved in Asia. More than 80 percent of Nigeria’s rice is produced by small scale farmers, while the remaining 20 percent is produced by commercial farmers. Most of the processors are small scale with low capacity (less than 300 kilogramme per hour) and obsolete mills.

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However, the hiring services model is evolving in Nigeria with a potential to change the agriculture mechanisation landscape. There is a changed in approach to increasing mechanisation from providing machinery through subsidised direct sales to private sector hiring services, PwC says. An instance is a scheme funded by a partnership with government, financial institutions, agro-machinery vendors, and service providers. Commercial funding is provided directly to the service providers at an interest rate of 9 percent payable over 4 years. Also, subsidies are provided to small-scale farmers who require tractor services. By 2015, the scheme had facilitated the establishment of 118 hiring centres across 28 states with an estimated 400 tractors, 500 power tillers and other machinery. Entrepreneurs can invest in de-stoners for hiring and even run aggregation centres alongside.

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72 BUSINESS DAY

Monday 21 October 2019

Cover Story Border Closure: 25 made-in-Nigeria rice to look out for this Christmas

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SEGUN ADAMS

such as 5kg, 10kg, 20kg and 50kg and it costs N17,500 to buy a 50kg of the product. Mama’s Pride Mama’s Pride is another product of Olam Nigeria Limited. Besides being a parboiled rice with natural health benefits, Mama’s Pride is stone free and takes relatively less time on fire. The product’s price ranges between N16,000 - N18,000 per 50kg bag. Danyaro Rice Danyaro Rice is a long grain parboiled rice which is produced and packaged in Kano State, Nigeria. Naija Sweet Rice Unlike Danyaro Rice, Naija Sweet Rice is a medium parboiled rice grown, processed and packaged in Lagos, Nigeria. Elephant Pride Elephant Pride Sortexed Quality Rice and Elephant Gold Thai Super Deluxe Sortexed are the two rice brands of Elephant Group Plc. Elephant Pride rice brand is locally produced and comes in two different bags, the colourful

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Ways to make rising inflation benefit you

Cottage Rice This brand of rice is produced by Abujabased Cottage Mills Ventures (CMV). The company processes paddy rice and distributes its products within the Abuja community as well as Lagos state. A 50kg of Cottage Rice is sold at the rate of N17,500 in major cities across the country. Adaminna Rice This product is processed, packaged and distributed by Adaminna Farms, one of the leadingexporters of high quality agricultural products Nigeria to other West African countries and beyond. Just as the name implies, Adaminna Rice is grown in Minna, Nigeria and it only costs N15,000 per bag. Big Bull Big Bull Nigerian Parboiled Rice is a premium quality Nigerian-grown parboiled rice processed by agro-allied company, West African Cotton Company (WACOT) Limited. Big Bull rice comes in different packages

BUSINESS DAY

Personal Finance

OLUWASEGUN OLAKOYENIKAN t is no longer news that the Nigerian government has completely closed the country’s land borders with neighbouring countries to curtail smuggling of rice and other commodities, a move which is weakening the supply of foreign rice, increasingprices, and supporting local production of the food item. If the government’s decision on border closure against imports and exports persists, it then means Nigerians would most likely have no other choice than to embrace rice brands produced locally which are already finding their ways into different markets across the country. But how many of these local rice brands do you (Nigerians) know? More than fifty respondents were asked this question randomly in a recent street survey conducted by BusinessDay. Almost all the respondents mentioned less than five brands, suggesting Nigerians probably have come across some locally produced rice but confused them with foreign rice owing to their seemingly similar packaging models. This shocking revelation informed the compilation of homegrown rice to keep Nigerians in the know of Madein-Nigeria brands, particularly those who are willing to make a quick switch to locally produced rice as Christmas season draws near. Mama Gold Mama Gold is arguably one of the most popular Nigerian brands of rice processed and packaged by Olam Nigeria Limited with high quality grains. It has gained wide acceptance by Nigerians over the years because of its low starch content which makes it easy to cook. The product comes in different packages and sold at varied prices in the markets across the country. But with the information we gathered from traders in Lagos and Abuja, a 50kg bag of Mama Gold sells between N16,000 to N18,500.

Monday 21 October 2019

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yellow bags are the new design while the other one with green colour is the previous design. They both have 50kg and 25kg bags. COSRICE This brand is a product of Coscharis Farms in Anambra state and classified as 100 percent Sortexed long-grain parboiled rice. While the supply of the product may not yet be well distributed in all parts of Nigeria, Coscharis Farms assured that it will soon be available nationwide. Ga’ate Gold Ga’ate Gold is another Made-in-Nigeria rice which is already in the market. It is produced by Nigeria Farmers Group & Cooperative Society (NFGCS) in Nasarawa State, and made from brown rice that is destoned, unpolished and nutritious. Lake Rice Lake rice is a popular brand of rice and a product of a collaboration between the Lagos and Kebbi state governments. The product is also available in the market. Ebony Super and Gold Ebony Super and Gold are two brands of rice from Ebony Agro in Ebonyi State. Mama’s Choice Mama’s Choice is a premium double polish parboiled rice also produced and packaged by Olam Nigerian Limited. Mama Choice is not sticky, very nutritious, clean and stone free. A 50kg bag of the product costs between N16,500 to N17,500. Royal Stallion Some Nigerians would probably have seen this but assumed it’s a foreign brand. Royal Stallion is a Nigerian grown rice with its logo having semblance of the Nigeria’s Coat of Arm. The brand is adjudged one of the best brands in the country with more than 10 varieties. Labana Rice Labana Rice is produced and packaged by Labana Rice Mills Limited, an integrated rice mill in Birnin Kebbi, Kebbi State. Owing to this, the brand is majorly available in thenorth-west region of the country. Other locally produced rice include Kufa Rice produced rice in Benue State, Ibk, Maf, Umza, Ofada, Lula, Miva, Igbemo, and Mama Happy Choice.

f you are a game of thrones fan, you should be familiar with the phrase “winter is coming”, for Nigerians it is rising inflation analysts warn about, but savvy investors can take positives out of it. Food prices rose following a partial border closure which started in August and this caused inflation to rise to 11.24 percent, the highest in four months. Nigeria has recently closed its borders completely so local food production can improve but this would cause prices to go up as festivity approaches, analysts warn, while a possible increase in Value Added Tax (VAT), as well as the implementation of the new minimum wage, could keep inflation elevated. Being a shrewd investor involves figuring out ways to mitigate losses emanating from the situation beyond your control even if you cannot make money from such. Here are ways to minimize risks from rising inflation and still grow your wealth. Use longer-term, fixed-rate debts One of the typical features of inflation is that debtors benefit and creditors lose. This is because in periods of inflation the value of money falls so that what used to be purchased for a certain amount would require more money to acquire. If you have a project which must be financed through debt, endeavour to go for the ones that require a longer time to repay and costs a fixed rate of interest. This approach would mean it would require less to repay your debt as the value of money keeps falling. For this to work, however, you must be certain inflation would not fall below the agreed-upon interest throughout the debt. You must also take caution to take debt only when you necessary so you are not unduly burdened. Robert Kiyosaki says taking a debt with a fixed rate of interest to finance a cash-flowing asset that covers the debt payment, using less of one’s money can increase returns on investment.

“The reason my investments and income grow is because I purchase assets that hedge against inflation,” Kiyosaki says. Save smart, seek high yielding options It is easy to think financial prudence means piling cash in the bank but it is not exactly a smart move when inflation is rising. Banks usually take depositors money to invest in instruments that offer returns which beats inflation and in turn pay rates lower than inflation to customers who keep money with them. This means the value of your cash at bank erodes during rising inflation. Look for savings products (or assets) that guarantee rates equal to or higher than inflation so you are preserving or growing wealth. Buy now, enter future/forward contracts If you are a business person dealing with items that will be affected by www.businessday.ng

“

Being a shrewd investor involves

figuring out ways to mitigate losses emanating from the situation beyond your control even if you cannot make money from such

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inflation in the future, so far they are not likely to become out–of–date or spoil before the rising inflation trend reverses, you can buy such items and store for future use or resale. Individuals can also adopt such measure to avoid buying important items at a higher price later. Businesses can also lock in longerterm supplies (that is, enter agreement for suppliers to deliver certain items at an agreed-upon price and quantity on a specific future date) to reduce cost and protect their future returns. Buy Real Estate In times of inflationary pressure owing assets like lands, houses or other buildings can earn you attractive returns because the price (or rent) on these assets usually go in the same direction with inflation. As the general price level rises, the interest rate is increased to match inflation and this means properties can give owners higher returns. @Businessdayng

74 BUSINESS DAY

Monday 21 October 2019

Personal Finance

Why you should not wait for a disaster to get insurance SEGUN ADAMS

sk the average Nigerian how prepared s/he is prepared in case of a disaster that could result in loss of property, fortune or injury to self or loved one(s), and you are likely to get “God forbid!” as a reply. The same Nigerian, however, can, in the same breath, admit to life’s uncertainties and give instances of tragedies that have befallen themselves or others, like the sad news of a fire outbreak in a busy Onitsha market last week which resulted in the loss of lives and properties. #Onitsha fire and #Prayforonitsha trended last week on social-sharing platform, Twitter, as discussions formed around the failure of firefighters to respond to the tanker – fire, and minimize the loss which should run into millions of naira in terms of properties lost. While some Nigerians blamed the state government and others prayed that God averts any more tragedies, there can be no denying that uncertainties are a part our daily lives and it has intensified for many of the fire victims who have no insurance and would have to start over from the remnant of the fire. These insurance policies could have made a difference In the case of the Onitsha fire, insurance could not have prevented the fire but policies like fire (and special peril) insurance, life insurance, home insurance, burglary and theft insurance, and consequential loss of business interruption insurance, can make the discomfort in the aftermath of such event more bearable. In case you are wondering what insurance is, think of it generally as a contract between you and an insurance company that guarantees a restoration to your previous state if any bad thing happens to whatever you insured. While you must pay a certain fee called premium to be able to access the insurance product, the events insured against must not be self – inflicted. One need not get all the policies as some of the above-stated insurance policies already imply the others.

Fire and Special Peril This refers to insurance policies that compensate a policyholder for loss incurred in a fire accident including those caused by an explosion, lightning, and chemicals. The policy also covers damage from natural events like flood, earthquake, landslide etc., while compensation for loss from social events like a riot, strike, malicious damage as well as liability from the bursting of pipes, water tanks, and impact by animal, vehicles and aircraft are guaranteed. It should be noted that the premium to be paid would depend on your probability of being a victim of the events insured against. For instance, if you work with very combustible items then you would be required to pay a premium much higher than someone else with less risk. As mentioned before, to enjoy the benefit of fire insurance, the accident must not be deliberate. The insurance policy guarantees a rewww.businessday.ng

turn if the fire grows beyond the normal limit to damage items which should not be on fire, damages caused by firefighters in the course of putting out the fire and damages to the structure caused by the accident. Life Insurance Life insurance is an agreement between a policyholder (perhaps, you) and an insurance company for a named beneficiary to receive payment of a death benefit upon the death of the insured. There was the silent “God forbid” right? Nobody hopes to die, but God would love one to make sure his or her family does not suffer when s/he is no longer alive. Life insurance is so powerful in that in instances of a conflict between will and a life insurance policy in terms of the beneficiary, the former takes precedence. Referring to the Onitsha tragedy (only to draw lessons), breadwinners of families were among the deceased

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and the implication could be that their loved ones would have to start fending for themselves. If the family left behind are majorly dependents, the accident would throw them into economic despondency. Home Insurance In the accident last week homes were also affected by the inferno, resulting in loss of property. People can go from landlord to becoming tenants if their residential properties are affected by devastating accidents. With the net worth of a good number of people in real estate (especially in buildings), life investments can go down the drain in a few hours. Corporates and individuals (whether landlord or tenants) can leverage this policy to get compensation when events like fire, theft and burglary and environmental damage occur concerning the insured building. The policy can also guarantee rebuilding cost, replacement of damaged property and personal accidents.

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Monday 21 October 2019

BUSINESS DAY

Data

Federal government Eurobond Yields on Eurobonds rose 0.125 percent point week on week from an average of 6.56 percent when the market closed last week to 6.68 percent following sustained selloff in Nigeria’s Sovereign Eurobonds.

Corporate Eurobond Yields on corporate Eurobonds saw dipped of 0.055 percent points across all tickers weekon-week with average yield rose slightly from 5.398 percent last week to 5.34 percent.

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Monday 21 October 2019

BUSINESS DAY

Personal Finance Creating wealth for posterity is a must, let’s show you how DAVID IBIDAPO & SEGUN ADAMS

arents often pray that one’s children should be better in all human endeavour. The path to success could be a long one if not properly planned and also if the required support a parent should lend to their kids is missing. This may result in children upon attaining adulthood having to struggle in other to make ends meet. This can be avoided if parents take the right measure today to secure to an extent the future of their kids. The interesting thing here is that you don’t have to wait till you bare a child before taking necessary steps to a better life for your unborn child(ren). To plan for your child’s future, you have a galore of investment avenues but planning and investing wisely is no child’s play. Simply, saving and investing in an ad-hoc manner may

not help. You need to identify the appropriate investment avenues at an opportune time to meet your financial goals. Moreover, you need to strike the right asset allocation balance as you progress towards each of the financial goals set for your children’s better future. Here are some tips Family planning: The first step to creating a prosperous future for your children (and perhaps theirs) is in planning how many children you should have based on your financial capacity (amongst other considerations) to take care of them. In the past, people believed having a lot of children could improve one’s fortune because more children meant a higher likelihood of one of them making it big in life. Today such argument is no longer convincing as having more children than one could cater for would result in depriving them of quality education, health and nutrition. Invest on behalf of your child(ren): It is never too early to create investments for your

child(ren). You should set aside a portion of your income that would be put into asset classes that can preserve wealth so they can be passed on to your chil(ren) Invest in Real Estate: One of the best ways to invest for a long period is in real estate because property value typically goes up over time. Imagine being handed a property located in Victoria Island that was acquired some decades back by your parents; you would agree that at the time of acquisition the property would not be valued as much as it is today. Since land is fixed in supply, the value is sure to grow over time so make plans to pass on good real estate to your offspring. Avoid unnecessary debt, be prudent: To be able to pass on wealth to your child(ren) you must be financially responsible and avoid being roped in debt. This is not to say debt is a bad thing because you would need to borrow at some point in time. You can borrow to invest in ventures with an attractive and cer-

Week Ahead (Monday, October 21 – October 25, 2019) Week Ahead

tain return. The important thing here is to ensure you do not leave debt instead of wealth for your children. To do this ensure you balance your debt-to-income ratio should not exceed 36 percent according to Investopedia. Plan your retirement: To avoid becoming financially dependent on your children endeavour to plan your retirement ahead of time. Making provisions for life after work is beyond having a pension account and includes making investments you can fall back on eventually. Make a will: The perception of a will in this part of the world is a funny one as some may imply that making a will may indicate death is around the corner – which no one prays to experience – hence, because we are very religious, we act by faith that we won’t die soon and ignore the importance of making one. Let’s look at the bright side. According to Investopedia, a will is a legal document that sets forth your wishes regarding the

distribution of your property and the care of any minor children. If you die without a will, those wishes may not be followed. Further, your heirs may be forced to spend additional time, money, and emotional energy to settle your affairs after you’re gone. You can consider insurance Insurance in its purest sense is protection against a financial loss/uncertainty which includes the risk of illness, disability, damage to property, and the most final of them all - one’s demise. The value of your loved one’s life is a very sensitive issue as your loved ones are priceless. But it becomes necessary to safeguard from problems caused by under-insurance. Human Life Value (HLV) of an earning member in the family could be defined as the amount that the family would require to retain the same standard of living in the absence of the earning member. This would be the maximum amount for which a person can seek insurance protection.

Chart of the week

Nigeria’s inflation rises most in 4 months on border closure

Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodity

Oil: Brent prices traded a little below $60 per barrel in the previous week. The commodity settled at $59.18 on Friday as concerns about China’s economy outweighed bullish signals from its refining sector. However, the losses were slightly offset by hopes for progress toward a U.S.-China trade agreement. Currency The exchange rate was relatively stable across all market segments. It traded flat at N360/$ at the parallel market. At the interbank market, the currency hovered N306 to a dollar, and traded at N362/$ on the Investor and Exporter window. Going forward, the naira is expected maintain stability across all windows given CBN’s continuous intervention in the currency market. Fixed Income The Federal Government bond market was bullish as market participants focused more on the long-dated asset. Buying interest was noticed at the long segment of the curve causing yields to close lower at 14.26 percent. Yields at the short- and mid-end of the curve closed at 14.28 percent and 14.12 percent respectively. The Debt Management Office (DMO) is expected to reopen the 5-year, 10-year and 30year bond auction next week. The debt agency will offer N150 billion at N50 billion each across the three tenors, according to circular released on its website. Analysts at Chapel Hill Denham expects marginal rates at the auction to close slightly lower compared to the previous level to reflect the recent downward repricing of yields in the secondary market. Similarly, another N315.99 billion worth of OMO Bills will mature on Thursday, 24 October 2019. This would likely be followed up with an OMO auction by CBN to mop-up the maturities. www.businessday.ng

Consumer prices in Nigeria rose at a faster pace in September following a recent closure of the country’s land borders with the Benin Republic to combat smuggling activities coupled with foreign exchange ban on food imports. This is the country’s fastest increase in four months. The country’s inflation rate, a measure of composite changes in the prices of consumer goods and services, increased by 11.24 percent in September from a year earlier compared with 11.02 percent in August, the National Bureau of Statistics (NBS) said Tuesday in a report published on its website. That’s coming after three months of consecutive decline.

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Monday 21 October 2019

BUSINESS DAY

78 BUSINESS DAY

Monday 21 October 2019

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Monday 21 October 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 18 October 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 261,257.41 7.35 -0.68 118 8,877,863 UNITED BANK FOR AFRICA PLC 196,646.67 5.75 -0.86 177 20,567,106 ZENITH BANK PLC 547,868.82 17.45 -1.41 418 21,005,325 713 50,450,294 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 190,245.05 5.30 -0.94 147 17,778,681 147 17,778,681 860 68,228,975 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,646,086.70 130.00 0.78 52 3,561,873 52 3,561,873 52 3,561,873 BUILDING MATERIALS DANGOTE CEMENT PLC 2,470,873.57 145.00 85 1,020,047 LAFARGE AFRICA PLC. 244,033.10 15.15 -0.98 35 347,392 120 1,367,439 120 1,367,439 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 304,225.84 517.00 41 12,122 41 12,122 41 12,122 1,073 73,170,409 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 0 0 UPDC REAL ESTATE INVESTMENT TRUST 13,074.52 4.90 2 242 2 242 2 242 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 0 0 0 0 0 0 2 242 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 0 0 OKOMU OIL PALM PLC. 52,417.35 54.95 31 349,552 PRESCO PLC 38,400.00 38.40 11 25,222 42 374,774 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,500.00 0.50 5 38,800 5 38,800 47 413,574 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 0 0 214.03 0.55 3 200,000 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,460.95 1.02 0.99 45 6,653,225 U A C N PLC. 18,440.30 6.40 -4.48 67 4,253,328 115 11,106,553 115 11,106,553 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 6 29,844 ROADS NIG PLC. 165.00 6.60 0 0 6 29,844 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 -9.91 7 5,085,000 7 5,085,000 13 5,114,844 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 8,142.68 1.04 1 19,000 GOLDEN GUINEA BREW. PLC. 242.22 0.89 0 0 GUINNESS NIG PLC 64,287.74 29.35 33 61,685 INTERNATIONAL BREWERIES PLC. 108,307.86 12.60 10 3,480 NIGERIAN BREW. PLC. 368,257.34 46.05 27 199,084 71 283,249 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 115,000.00 23.00 45 300,532 DANGOTE SUGAR REFINERY PLC 122,400.00 10.20 33 125,374 FLOUR MILLS NIG. PLC. 61,915.73 15.10 44 69,071,848 HONEYWELL FLOUR MILL PLC 7,850.90 0.99 1.01 14 1,649,806 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 0 0 NASCON ALLIED INDUSTRIES PLC 39,344.16 14.85 4 11,000 3,321.07 12.15 0 0 UNION DICON SALT PLC. 140 71,158,560 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,500.29 9.85 15 81,580 NESTLE NIGERIA PLC. 967,040.63 1,220.00 29 408,462 44 490,042 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 0 0 VITAFOAM NIG PLC. 4,402.97 3.52 -9.74 25 763,213 25 763,213 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 22,036.15 5.55 -9.76 33 3,159,771 UNILEVER NIGERIA PLC. 153,391.64 26.70 8 119,918 41 3,279,689 321 75,974,753 BANKING ECOBANK TRANSNATIONAL INCORPORATED 128,446.86 7.00 35 562,464 FIDELITY BANK PLC 49,836.65 1.72 1.18 91 25,491,607 GUARANTY TRUST BANK PLC. 774,040.01 26.30 -1.31 377 75,216,407 JAIZ BANK PLC 14,732.12 0.50 -1.96 3 106,500 STERLING BANK PLC. 51,822.75 1.80 13 421,433 UNION BANK NIG.PLC. 203,845.27 7.00 29 576,115 UNITY BANK PLC 7,364.28 0.63 5 109,060 WEMA BANK PLC. 22,373.19 0.58 22 248,996 575 102,732,582 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 0 0 AIICO INSURANCE PLC. 4,573.93 0.66 3.13 7 303,159 AXAMANSARD INSURANCE PLC 17,850.00 1.70 1 1,355 CONSOLIDATED HALLMARK INSURANCE PLC 2,682.90 0.33 10.00 3 118,400 CONTINENTAL REINSURANCE PLC 23,961.04 2.31 8 220,000 CORNERSTONE INSURANCE PLC 4,713.44 0.32 -5.88 4 231,000 GOLDLINK INSURANCE PLC 909.99 0.20 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 1 700 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 0 0 LASACO ASSURANCE PLC. 2,050.56 0.28 0 0 LAW UNION AND ROCK INS. PLC. 2,019.28 0.47 -4.08 9 10,263,961 LINKAGE ASSURANCE PLC 4,080.00 0.51 2 30,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 0 0 NEM INSURANCE PLC 12,145.16 2.30 6 600,817 NIGER INSURANCE PLC 1,547.90 0.20 0 0 PRESTIGE ASSURANCE PLC 2,745.10 0.51 2.00 5 4,494,303 REGENCY ASSURANCE PLC 1,333.75 0.20 0 0 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 0 0 STACO INSURANCE PLC 4,483.72 0.48 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 0 0 WAPIC INSURANCE PLC 4,683.96 0.35 105 7,940,929 151 24,204,624 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,721.10 1.19 2 4,762 2 4,762

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BUSINESS DAY Monday 21 October 2019 www.businessday.ng

Seplat targets top spot in Nigeria’s oil & gas with Eland acquisition DIPO OLADEHINDE & SEGUN ADAMS

he decision by Seplat Petroleum Development Plc to acquire London-listed independent exploration company, Eland Oil & Gas, is expected to help stabilise the firm’s position as a leading independent Exploration and Production (E&P) company in Nigeria. “This acquisition signals the next step in our journey that will underpin Seplat’s ambition to be the leading independent E&P in Nigeria,” Bryant Orjiako, Chairman of Seplat, boasted. The acquisition could raise Seplat’s oil production by 30 percent to about 64,000bpd by 2020, according to data from Bloomberg, although the deal would not be boosting Seplat’s gas production. As a standalone, Seplat’s production forecast prints at 33,000bpd while Eland has a working interest of 16,000 bpd including new production at the Gbetiokun field in August. However, following the acquisition, analysts from ARM Securities Limited estimate an increase in Seplat’s 2020 production level to 50,000 bpd. On the back of the deal, Seplat will gain Eland’s 45 percent operating stake in OML 40, an onshore asset in the Niger Delta, where continuous drilling on both Opuama and Gbetiokun has led to OML 40’s average net production increasing for five consecutive half-year periods with average net production of 9,948bopd seen during the first half of 2019. Also, Seplat is expected to takeover Eland’s 40 percent interest in the Ubima licence that is now estimated to hold 9.3 million barrels of proven and probable reserves after a resource upgrade earlier this year. Recall, Eland is a Nigeriafocused upstream oil and gas exploration company which was founded in 2009. The company in 2012, through its joint venture company, Elcrest, purchased a 45 percent interest in OML 40 and in 2014 acquired a 40 percent stake in Ubima. Its headquarters are in Aberdeen, with additional offices in London, Lagos, Benin City and Abuja. The acquisition made possible as International Oil Companies (IOCs’) divest from onshore to offshore assets, would not result in Seplat overtaking domestic rival, Aiteo E&P, which analysts at Lagos-based Chapel Hill Denham say produces around 80,000bpd. The Eland deal would, however, be a step towards Seplat’s goal to become Nigeria’s leading E&P company.

US$mn

Combined Entity Snapshot - Latest financials H1-2019 H1-2018

Revenue 461 410 EDITDA 248 274 EBITDA Margin 53.8% 66.7% 155 93 PAT Total Assets 3149 2,784 Total Equity 2044 1,733 Total Liabilities 1104 1,051 Gross Debt 414 570 Cash 465 540 Net Debt/(Cash) (51) 30 CFO 279 256 (21) NCI -310 236 FCFF (32) (134) 94 FCFF Source: Company financials, Chapel Hill Denham Research ARM Securities Limited estimates Seplat’s 2P liquids reserves to increase by 41 million barrels to 268million barrels, with its 2P Oil Reserves and 2C Oil Reserves expected to increase by approximately 65 million barrels to 330 million barrels, bringing total oil and gas reserves to 626 million barrels of oil equivalent. “The Acquisition, made possible by our robust operational platform and headroom in our capital structure, is in line with a key part of our established strategy which is to pursue opportunities in the onshore and offshore areas of Nigeria that offer near-term production with cash flow and reserves potential,” said Austin Avuru, CEO of Seplat. “The Acquisition reinforces Seplat’s status as one of Nigeria’s leading indigenous, independent E&Ps and will create a Nigerian E&P champion with the footprint and technical capabilities to further grow and consolidate in Nigeria.” Seplat’s new acquisition however serves as a reminder of the period between 2010 and 2018, when a number of indigenous companies including Starcrest Energy, Aiteo, Oando, Seplat, Eroton, First E&P, Neconde, Midwestern, Notore Lekoil, PanOcean, Newcross and Shoreline threw in billion-dollar cheques in their scramble for assets divested by major multinational oil firms which have recorded mixed performance. Oando Energy Resources, a subsidiary of Oando plc, incurred a $2.5 billion debt after its 2014 acquisition of oil and gas assets from U.S. giant ConocoPhillips, while Seven Energy, a Nigerian

company founded in 2004, ran into troubled waters after several defaults on its debt servicing obligations. Terms of Agreement Seplat is offering to pay 166 pence for each unit of Eland shares, a premium of 33 percent to the six-month average share price of Eland and a premium of approximately 32.7 percent to the six-month volume-weighted average price per Eland Share. Eland Shareholders on the register at the close of business on October 18, 2019, will be entitled to receive and retain the interim dividend of a pence per Eland share to be paid on October 31, 2019, ahead of the acquisition. While Eland Directors which have 0.28 percent stake, and Helios Natural Resources and Lombrad Odier Asset Management, which jointly own about 60 percent shareholding, have agreed to sell their stake to Seplat, a goahead from at least 75 percent of Eland’s minority shareholders is necessary to seal the deal. Financial performance The latest financial results from both companies in H1 2019 show that Seplat’s revenue grew 3.6 percent year-on-year to $355 million while Eland saw a 57.2 percent surge in revenue which hit $106 million. As a combined entity revenue rose 12.4 percent. EBITDA margin, a measure of operating profit as a percentage of revenue, fell 11.6 percent points to 53.2 percent for Seplat while Eland’s declined 20.5 percent points to 56.2 percent in the period. As a combined entity EBITDA margin stands at 53.8 percent. Profit after tax for Seplat surged

Change (yoy) 12.4% -9.3% 66.15% 13.1% 18.0% 5.15 -27.4% -13.8% NM 8.9% NM NM NM

151.7 percent to $122 million but Eland pared profit 26.9 percent to $33 million. As a combined entity profit rose 66.1 percent A closer look at Eland’s financials shows a healthy balance sheet with a net debt of $33 million and debt to capital of 16percent as at half-year 2019. This includes $65 million outstanding loans which are used to finance the 2019 $80 to $90 million CAPEX plan. Like Seplat, Eland is in recovery from the troughs of 2016/2017 as heavy CAPEX plans have weighed on the company’s FCF which printed at -$24 million in H1 2019. Furthermore, while Eland’s cashflows will give some boost to Seplat’s, the lower cashflow margin from Eland’s 22 percent in half-year 2019 is expected to be a drag on Seplat’s 36 percent in the same period. The combined asset was at $3.149 billion as of H1 2019, compared to Seplat’s standalone of $2.6 billion while total equity of both firms is $2.04 billion compared to Seplat’s $1.7 billion leaving total liabilities of the combined companies at $1.1 billion compared to Seplat’s standalone of $899 million as at H1 2019. Corporate governance Ojunekwu Augustine Avuru is Chief Executive Officer and Executive Director of Seplat while Ambrosie Bryant Chukwueloka Orjiako serves as the Non-Executive Chairman of Seplat. The company’s corporate governance practice is evident in its listing both on the Nigerian Stock Exchange (NSE)’s premium board for companies that meet NSE’s corporate governance practice, and also its listing on the London

Stock Exchange (LSE). The other members on the company’s board 12 – person includes two Executive Directors, one Senior Independent Non – Executive Director, five Independent Non – Executive Director, and two Non – Executive Directors. The board boasts of highly experienced professionals with in-depth knowledge of the domestic and international oil and gas industry. Company history Seplat is an independent indigenous Nigerian upstream exploration and production company which operates a portfolio of assets in the Niger Delta region of Nigeria and is listed on both the Lagos and London exchange. The company was formed in June 2009 through the partnership of Shebah Petroleum Development Company Limited and Platform Petroleum Joint Ventures Limited to specifically pursue upstream oil and gas opportunities in Nigeria, and in particular, divestment opportunities arising out of the incumbent Major IOC’s portfolios. In December 2009, Établissements Maurel et Prom (“MPI”) acquired a 45 percent shareholding in Seplat and was followed by other pre-IPO investors. In July 2010, the Company acquired a 45 percent working interest in and was appointed operator of, a portfolio of three onshore producing oil and gas leases: OMLs 4, 38 and 41, located in the prolific western delta basin of Edo and Delta states. Initially, Seplat formed a JV partnership with NNPC, until NNPC transferred its 55 percent interest to its subsidiary, NPDC. Today, Seplat operates the blocks on behalf of the Seplat/NPDC joint venture. In June 2013, Newton Energy, a wholly-owned subsidiary of Seplat, reached an agreement with Pillar Oil to acquire a 40 percent participating interest (non-operated) in the Umuseti/ Igbuku fields (OPL 283). In 2015, the Group purchased a 40 percent participating interest in OML 53, onshore northeastern Niger Delta, from Chevron Nigeria Ltd and a revenue interest in OML 55, southeastern Niger Delta. In January 2017, the Group incorporated a new subsidiary, ANOH Gas Processing Company Limited, a midstream gas company committed to the processing of gas from OML 53 for distribution to the local market. Seplat’s portfolio comprises six oil blocks- direct interests in five blocks in the Niger Delta area, four of which Seplat operates, and one further revenue interest.

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