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Lingering fuel crisis revalidates call for removal of N730bn annual subsidy T T

CBN raises capital requirements for Primary Mortgage Banks by 73.3% HOPE MOSES-ASHIKE he Central Bank of Nigeria (CBN) on Friday raised the capital requirements of the Primary Mortgage Banks (PMBs) by 73.3 percent to a total of N13 billion as a whole, from N7.5 billion in 2013. A breakdown of the financial requirements of the sub-sector shows that operators of national category of the PMBs are required to shore up their capital base to N8 billion, which is an increase of 60 percent compared to Continues on page 4

INNOCENT ODOH, Abuja, & STEPHEN ONYEKWELU, Lagos

he dreaded queues for Premium Motor Spirit (PMS) temporarily returned in Abuja, Nigeria’s federal capital, and some major cities in the country last week fuelled by some semblance of mass hysteria that the Federal Government plans to remove subsidy on the petroleum product. This was against the backdrop of the advice of the International Monetary Fund (IMF), which suggested that Nigeria, Africa’s biggest oil producer, should remove fuel subsidy. Christine Lagarde, managing director of the Washingtonbased Fund, had on April 12 called on Nigeria to remove fuel Continues on page 4

Inside Aiteo declares force majeure on Nembe Creek Trunk line over fire P. 2 incident L-R: Jonathan Bamidele Osin, proto presbyter, Methodist Church Nigeria (MCN); Michael Akinwale, secretary of conference, MCN; Samuel John Uche, prelate, MCN, and Omotayo Babalola, bishop, Trinity Church Council, Tinubu, at the 2019 Easter Sunday service of the church in Lagos, yesterday. Pic by Olawale Amoo

Monday 22 April 2019

BUSINESS DAY

NEWS Aiteo declares force majeure on Nembe Creek Trunk line over fire incident …company produces 150,000 bd of oil OLUSOLA BELLO & ISAAC ANYAOGU

iteo, an independent oil producer, has declared a force majeure on Nembe Creek Trunk line following a fire outbreak

on it, the company said. The fire outbreak was discovered by the company’s surveillance team comprising the JTF, FSS around NCTL RoW near Continues on page 4

Nigeria’s electronics market slows on weak purchasing power L-R: Ceejay Jibunoh, co-curator, Journey to Mastery Exhibition; Ayoola Gbolahan, exhibitory artist; Ifeoma Dozie, curator, Journey to Mastery Exhibition, and Uche Edochie, exhibitory artist, at the Journey to Mastery Exhibition to celebrate 50th anniversary of Didi Museum in Lagos. Pic by David Apara

Shipping firms turn Nigeria to dumping ground as empty containers, tankers litter Lagos roads ... businesses, residents suffer losses on long travel time AMAKA ANAGOR-EWUZIE

igeria is gradually turning into a dumping ground for empty containers as shipping companies operating in the country’s ports are failing to retrieve their empty containers littering virtually every corner of Lagos, Nigeria’s commercial nerve-centre. The ubiquity of trucks carrying empty containers on Lagos roads and bridges, coupled with petroleum tankers and other articulated vehicles used in hauling import and export cargoes, is leading

to endless traffic congestion across the mega city. The worst hit are roads, streets and bridges that have connection with Apapa, the seat of Nigeria’s two busiest seaports. These include Apapa-Oshodi Expressway, Lagos-Badagry Expressway, Awodi Ora and Wilmer Roads in Ajegunle, Kirikiri, OrileIganmu, Second Rainbow -Apple Junction, Ago Palace Way, Ikorodu Road, Ijora, Eko Bridge, among others. The littering of empty containers and tankers on Lagos roads is as a result of the Federal Government’s failure to properly manage empty

containers in the ports, said Jonathan Nicol, president, Shippers Association of Lagos State. The outrage started after port terminals were concessioned without reserving holding-bay for truckers to park, he said, faulting the Federal Government’s concession model that ceded 100 percent of the port property to private operators. “Prior to concession, the whole of Apapa port used to accommodate almost 60 percent of the trucks that are parked on the highway today. Then, truckers had holding bay inside the port, where they

park pending when they get another job after offloading the empty containers,” he said. Nigeria has more empty containers in the terminals’ stacking areas than the laden containers, Nicol said, adding that the failure of the shipping lines to retrieve their empty containers was turning Nigeria into a dumping ground. The littering of Lagos roads with empty containers leaves motorists and residents suffering long travel time to and fro their workplaces, business premises, among others, lead-

Continues on page 4

What Nigerian job market loses over low investment in real estate sector CHUKA UROKO

ow investment in the construction and real estate sector of Nigeria’s economy is costing the country millions of opportunities annually that could have translated into employment creation, the BusinessDay findings have shown. Amidst a large and growing population, Nigeria has a high unemployment rate which increased from 18.8 percent in the third quarter of 2017 to 23.1 percent in the third quarter of 2018, according to the National Bureau of Statistics (NBS). Contrary to what obtains in most economies, a growing population in Nigeria means more citizens are getting poorer. A recent Bloomberg report quotes the International Monetary Fund (IMF) as saying that the country’s population is growing while

ANALYSIS gross domestic product per capita is shrinking, adding that the trend would continue until at least 2024. But this trend could be reversed or halted if more investment is encouraged and made in the country’s construction and real estate sector, analysts say. The construction industry, they note, has high growth prospects, predicting that by 2020, the country alongside India will enjoy higher growth rates than notable nations like China. According to a 2012 report by Business Monitor International, investment inflows into Nigeria’s construction industry are expected to reach $9.4 billion (about N1.5 trillion) by 2021, giving the industry very bright prospects and outlook, especially in the areas of job creation and wealth generation. www.businessday.ng

However, these bright prospects are being eroded by heavy debt burden arising from unpaid contract jobs by the federal, state and local governments which runs into hundreds of billions of naira, discouraging fresh and increased investments in the sector. Solomon Ogunbusola, former president, Federation of Construction Industries (FOCI), affirms that despite the prospects in the sector, investment in the sector remains very low because industry players are operating under serious constraints including high interest rate on bank loans. Ogunbusola notes further that low investment in the sector means heavy job loss, explaining that even N100 million invested in the construction sector has the capacity to create jobs for over 100 workers besides the multiplier effect of job creation. Paul Onwuanibe, CEO,

Landmark Group, agrees, pointing out that millions of jobs are held back by low investment in the real estate sector where the construction of one square metre of real estate space creates three jobs. Onwuanibe lamented that in spite of the growth potential coupled with opportunities in the sector, investment is still very low for reasons that ranged from unfavourable tax system to long, costly and cumbersome property registration and titling procedures. “Some quality discussions one has had in the last six to eight weeks show that investors are ready and willing to come into this country to invest, but everybody is looking to see how things get better and easier. We are looking at $2-3 billion investment that is waiting to come into Lagos State alone,” Onwuanibe said.

•Continues online at www.businessday.ng

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BUNMI BAILEY

eak purchasing power and consumer demand are dampening sales in Nigeria’s electronics market, BusinessDay learnt through interactions with sales representatives of some major electronics stores. Dealers in electronics or household appliances like air conditioners, dishwashers, refrigerators, washing machines, dryers, microwave ovens and so on are experiencing low patronage, a weekend visit to some electronic stores in Lagos showed. Lack of improvement in consumer income has made consumers focus on food and food-relateditemsorbasicitems whileshiftinginterestawayfrom secondary or disposable items like electronics, said Johnson Chukwu, CEO, Cowry Asset Management Limited. “Aggregate demand and consumption have weakened because over time consumers’ income has been eroded by inflation and devaluation of the exchange rate which has made it difficult for them to afford the volume of goods and services they used to afford before,” Chukwu said. This is despite a downward adjustment of prices after the 2016 foreign exchange crunch that forced a doubling of prices because most of the products are imported. “We have adjusted our prices by just, say, 5 percent after the dollar crisis. For example, the price of a Panasonic fan was around N17,000N18,000 in 2015. It rose to N30,000 in 2016, and now it is N24,000. But still, people are not buying,” said Blessing Obi, a sales representative at a Panasonic store in Ikeja, Lagos. The foreign exchange crisis of 2015-2016 affected the cost of imported spare parts or finished products of electronics, causing a spike in the cost of production which ultimately fed into higher retail prices. “The level of patronage is not like before. There is no money,” Obi said. Nigeria entered its worst recession in 25 years in 2016. Even though the country has @Businessdayng

exited the recession, its aftereffects linger, reflected in the Brookings Institution’s ranking of the country as the new poverty capital of the world in a 2018 report, with 87 million citizens in extreme poverty. The country’s per capita income has been on a decline since 2014. Per capita income in Nigeria declined to $1,994 in 2017, from $3,268 in 2014, according to the International Monetary Fund (IMF). Electronics dealers at Alaba International Market, West Africa’s largest electronics market located in Ojo, Lagos, are also feelingtheheatoflowpatronage. “What is happening to them (the big stores) is also happening to us. The purchasing power of people has dropped and the economy is not doing well,” Emmanuel Amaife, special assistant to the executive chairman, Alaba International Association (Electronics Division), told BusinessDay. “There are also other factors like government policies which have not been favourable to the business community, such as multiple taxation, and poor road network leading in and out of the environment. So sales have not been friendly to us,” Amaife said. Growth in the electrical and electronics sector declined to 3.75 percent in 2018, from 6.47 percent in 2014, data from the National Bureau of Statistics (NBS) show. The revenue of PZ Cussons Nigeria plc, a publicly listed Nigerian manufacturer and distributor of consumer products that covers home, personal care and electrical, reported a 12.9 percent decline year-on-year to N55.1 billion in the first nine months of 2018/2019, from N63.3 billion in the corresponding period of the previous year. Although the revenue for the electronics segment (Haier Thermocool) was not made known in its financials, a research report by Lagosbased CSL Stockbrokers said the segment remained weak as consumers continued to ration income in favour of essentials.

•Continues online at www.businessday.ng

Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

NEWS Lingering fuel crisis revalidates removal... Continued from page 1

subsidy due to low revenue

mobilisation in terms of tax to gross domestic product. Rumours that petrol pump price hike was in the offing fed on President Muhammadu Buhari’s comments after his victory at the February 23, 2019 presidential election. Buhari said his next four years would be tough and Nigerians may have started feeling the heat. Zainab Ahmed, minister of finance, had earlier given the impression that the government could consider the IMF advice but later said the templates to have a complete removal of subsidy have not been created, fuelling rumours that the government may after all heed the IMF call.

Africa’s most populous nation spent N730.9 billion on subsidising the retail price of petrolin2018,anamountwhich was higher than funds allocated to education, health, infrastructure and other key ministries and parastatals that would have increased the economic growth or standard of living of its over 180 million people. Wumi Iledare, a professor of Petroleum Economics and Policy Research at the Centre for Petroleum Energy Economics and Law, University of Ibadan, said payments of subsidy is a gorilla that will swallow Nigeria’s economy and lead to the collapse of education institutions, road infrastructures and health facilities because the country

spends more than one quarter of the budget subsidising petrol which benefits the elites more than the populace. “Ghana, our next door neighbour, doesn’t control the price of petrol, so why do we?” Iledare asked. Over the years, the Nigerian government has subsidised electricity and petrol, paying the difference between the cost of production and the cost charged to customers in order to make them more affordable. Buhari’s government has spent N7.9 trillion in the past four years importing petrol to augment supply from the country’s rickety refineries according to data from the National Bureau of Statistics (NBS). This is more than Nigeria’s entire 2017 budget of N7.2 trillion and 5 percent of the country’s current gross

domestic product. “It is a big shame that we are one of the world’s biggest producers of crude oil and still the world’s biggest importer of petrol. This has to change,” said Adeola Adenikinju, director, Centre for Petroleum and Energy Economics and Law and member of the Central Bank Monetary Policy Committee (MPC). BusinessDay’s analysis of the latest financial records of Nigerian National Petroleum Corporation (NNPC) showed that in 2018 alone, the government spent N730.9 billion on subsidy, popularly called “Under Recovery”, which was higher than total budget of individual ministries such as Education (N651 billion), Health (N356 billion), Transportation (N267 billion), and Agriculture and Rural Devel-

opment (N203 billion). This could persist for the next four years unless the government finds a way around the fuel subsidy quagmire. BusinessDay had in an earlier report quoted analysts at RenCap as saying that “there seems to be some unwillingness on the part of the government to completely remove the de facto subsidies at this time”. Rather, “the intention will be to progressively deal with the subsidies by ensuring a better subsidy regime in a bid to ultimately reduce them over time”. But despite these realities, the reaction from Nigerians has been immediate and sharp against any planned removal of subsidy which will lead to increase in fuel price. Many said this would affect the already impoverished masses and throw

CBN raises capital requirements for... Continued from page 1

N5 billion it stood in 2013.

Forregionallicence(formerly state), operators are expected to increase their financial base by100percenttoN5billionfrom N2.5 billion six years ago. KolaAbdul,managingdirector/CEO, Brent Mortgage Bank, could not give his opinion on this when contacted by BusinessDay as he said he was busy. The PMBs are required to pay non-refundable application fee of N1 million, non-refundable licensing fee of N2 million, and change of name fee of N100,000. These were contained in the exposure draft for revised PMB guidelines released by the CBN on Friday. The last time the regulator issued revised guidelines for Primary Mortgage Banks in Nigeria was in November 2011. The new guidelines introduced enhanced requirements

for capital, risk management, internal control, and corporate governance, according to a circular signed by Ibrahim Tukur, director, financial policy and regulation department, CBN. AccordingtoTukur,notwithstanding the measures put in place, the mortgage sub-sector continued to struggle against the headwinds occasioned by unfavourable macroeconomic and other developments. The CBN’s draft half-year 2018 report indicated that there were 34 licensed PMBs in operation at end-June 2018, comprising 11 national and 23 state PMBs, same as at the end of December 2017. Total assets of the PMBs decreasedmarginallyby1.0percent to N384.37 billion at the end of June 2018, from N388.58 billion attheendofDecember2017,due largelytolossesfromloanimpairments in the review period. Shareholders’ funds amounted to N109.74 billion

Aiteo declares force majeure on Nembe... Continued from page 2

Awoba, on Sunday, it explained. Aiteo produces 150,000 barrels of oil per day. “We have been informed of an outbreak of fire by our surveillance team comprising the JTF, FSS around NCTL RoW near Awoba today, 21

April, 2019,” the company said in a statement on Sunday evening. “Our Operations Emergency Response team was immediately activated and following its urgent intervention and containment action, we are constrained to shut in injection as well as other related operations

Shipping firms turn Nigeria to dumping... Continued from page 2

ing to loss of man-hour. BusinessDay checks show that a journey of about an hour or less now takes about three to four hours while many now find it increasingly difficult to drive their vehicles to their offices due to impediments created by the presence of these heavy duty vehicles. “Government is supposed to take out at least 25 percent of its property to ensure presence in the port. However, there is need to give the shipping companies ultimatum to clear their containers off our

ports,” Nicol said. The menace has not only put the integrity of the affected roads and bridges in question, but has also succeeded in escalating the transportation cost for commuters. Due to the congestion on Apapa-Oshodi Expressway caused by containers and other heavy duty vehicles, Emeka Chukwu, a car dealer in Berger automobile market, said that it has become very difficult to commute from Berger to the popular Ladipo market just to buy spare parts. “It has become a nightmare for us auto dealers bewww.businessday.ng

L-R: Ipalibo Harry-Banigo, deputy governor, Rivers State; Nyesom Wike, governor, Rivers State, and Austin Opara, chairman, fourth anniversary and inauguration committee, at the inauguration of the committee by Wike in Port Harcourt. NAN

the country into deeper crisis. The Nigeria Labour Congress (NLC) immediately rose to denounce any planned removal of subsidy on fuel, saying “it would result in astronomical increase in the pump price of petroleum and cost of other goods and services”. Ayuba Wabba, NLC president, said in a statement that the IMF advice was harmful because among the agenda usually set for any president that emerges in the country are “the devaluation of currency, removal of subsidy, and opening of the country’s borders to free trade”. He added that the solution to the problem of subsidy was local refining of products, which will drive down cost of products and end the corruption associated with the present subsidy regime. cent,respectively,toN177.17billion, N36.52 billion and N108.83 billion at the end of June 2018, whileotherliabilitiesroseby10.6 percent to N98.17 billion. Investible funds available to the sub-sector amounted to N31.49 billion at the end of June 2018. The funds were sourced mainly from mobilisation of other liabilities (N9.44 billion); long-term loans (N4.33 billion); and increased paid-up capital (N1.03 billion). Additional funds were also sourced from reduction in placement with banks (N5.73 billion), disposal of non-current asset held for sale (N7.63 billion) and sale of quoted investment in equities (N2.67 billion). The funds were utilised for accretion to reserves (N23.6 billion), increase in bank balances (N3.60 billion) and acquisition of other assets (N2.65 billion). Tukur said the guidelines have been reviewed to strengthen the PMBs as well as complement other on-going reforms in the mortgage sub-sector.

at end-June 2018, compared with N132.35 billion at the end of December 2017, indicating

17.1 percent decrease due mainly to operating losses. Total loans and advances,

placement with banks and deposit liabilities decreased by 0.4 percent, 0.4 percent and 0.8 per-

into the NCTL. In accordance with standard procedure, we requested the other injectors to do the same,” it stated. The NCTL had enjoyed smooth operations before this incident, raising suspicion that the fire may have occurred through an illegitimate, third-party breach of the functionality of the pipeline, a critical

national asset, the company said. The company added that relevant investigations were continuing while further information about the remote and direct causes of the fire would be communicated as soon as these became available. “We ask our stakeholders to await further, detailed briefing in due

course,” it said. Aiteo Group is an integrated, global-focused Nigerian energy conglomerate founded in February 2008 by Benedict Peters. The company has significant business interests in oil and gas exploration and production; bulk petroleum storage; refining of petroleum products; trading, marketing and

supply as well as power generation and distribution. Its subsidiaries are Aiteo Eastern Exploration and Production Company Limited (AEEPCo) and Aiteo Power. Aiteo Group acquired OML 29 from Royal Dutch Shell and emerged as Nigeria’s leading oil and gas company after successfully tripling production levels.

cause the congestion has doubled our transportation fare as we pay as much as N1,000 for a journey that we should ordinary pay N500. Also, people are killed every now and then on these roads by upturned containers and other heavy duty vehicles,” he said. Tony Anakebe, managing director, Gold-Link Investment Ltd, blamed shipping companies for the reckless parking of container-laden trucks on Lagos roads. He said government needs to either revive the refineries or make use of pipeline in evacuation of petroleum products to stop tankers from coming to

Apapa. “If the Federal Government reconstructs the bad portions of the roads leading to Apapa up to Lagos-Ibadan Expressway with these tank farms still here, the tankers will continue to convert the roads to parks and the problem will continue,” Anakebe said. According to him, the low volume of Nigeria’s non-oil export has made majority of containers used in bringing imports to be taken out of Nigeria empty, which makes things increasingly difficult for shipping companies. The National Bureau of Statistics (NBS) in its recent

foreign trade report confirmed that crude oil export has been the mainstay of the nation’s economy, as it accounts for over N4.2 trillion, representing 84.2 percent share of the total exports in the fourth quarter of 2018. NBS further revealed that non-oil products (including solid minerals, manufactured goods and agric produce) accounted for 4.6 percent of the total exports, leaving the remaining oil products (not crude) to account for 11.2 percent of the total exports in the quarter under review. “The delay in returning empty containers in our ports is a deliberate act to drain im-

porters of their hard-earned resources. If you bring empty container today, discharge it tomorrow and return the next day, the shipping companies will not make money. Government needs to stamp its authority that every shipping company must provide holding-bay for dropping empty containers,” Anakebe said. He further said shipping companies collect demurrage charges from shippers for not returning empty containers as and when due, adding, “They collect billions of naira worth of Container Deposit Charges per annum. This is why they will continue to frustrate return of empty containers.”

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Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

NEWS ICAN sees robust technology alignment as strategy to improve accounting profession KELECHI EWUZIE

he Institute of Chartered Accountants of Nigeria (ICAN) says a robust alignment with new technologies is one of the strategic measures the institute is adopting to improve skills of accounting professionals in Nigeria. Razak Jaiyeola, president of ICAN, observes that technology has moved from being a tool for making businesses and jobs efficient and for business survival, adding that in this digital age, the role of accountants as custodians of data, information, and finance and investment oracles has not changed, but the methods of achieving the roles has changed and will continue to change. Jaiyeola states that accountants must not just appreciate

technology, but be very versed in deploying different forms of technology for business survival and growth. Speaking at a press conference in Lagos to announce the institute’s Annual Accountants Technology summit also known as Accounteks in Lagos, Jaiyeola says the summit will provide a platform of interaction between members and manufacturers/ vendors of these technologies in addition to helping narrow the technology gap between members who are Chief Finance Officers and their Chief Information Officers counterparts. According to Jaiyeola, “The two-day summit scheduled for 29th and 30th April 2019 will feature topics covering Artificial Intelligence; Robotics; Analytics; Digital Payments; Technology Security; Public Sector Technology.” Other topics include: Block-

chain; Datamatics; Digital Auditing Technologies; Virtual Accounting; Digital Taxation and Fintech, Regtech, Insuretech and Auditech. He states that the reality on ground is that ICAN is no longer producing analogue accountants, saying, “What we produce now are digital accountants. The digital accountants of today as produced by ICAN are more involved in board management decision making, strategic ways of moving the work forward that is what the digital accountant is supposed to be.” Responding to question about the rejection of the Bill for an Act to establish the Chartered Institute of Forensic and investigative auditors of Nigeria by the House of Representatives recently, the ICAN president says the decision of the lawmakers to reject the bill is a victory for professionalism in Nigeria.

Glo gains highest number of new subscribers in February SEGUN ADAMS

lobacom, an indigenous telecoms service provider, has sustained its growth trajectory as it emerged the highest gainer of new telecom subscribers in the month of February 2019. Globacom gained 400,879 subscribers to top the gainers’ table, according to the latest data published on the website of the Nigerian Communications Commission (NCC), while 9mobile gained 345,264 subscribers to take the second spot on the table. Airtel took the third spot on the gainers’ table despite attracting only 4,559 new users in the month of February 2019. On the other hand, MTN lost 1,099,480 subscribers in the

month under review. The latest NCC statistics show that while Globacom narrowed the gap between it and MTN, it widened its lead over Airtel and 9mobile. Globacom now has 46,004,517 customers against Airtel’s 44,975,532. Globacom leads the third largest operator by 1,028,985 subscribers in February. In January, Glo had 632,665 users more than Airtel, as the figure for the two operators stood at 45,603,638 for Globacom and 44,970,973 for Airtel. While Globacom grew by 0.87 percent in February, Airtel grew by 0.01 percent in the same month. 9mobile’s subscriber base stood at 16,730,581 in February, after adding 345,264 subscribers (2.1 percent) to its base

of 16,385,317 in January. While Glo led 9mobile by 29,218,321 subscribers in January, the gap widened to 29,273,936 in February 2019. Globacom has been experiencing a steady positive growth for several months. In the month of November 2018, the network gained 1,691,133 customers within one month to gross 43,273,188 subscribers by the end of that month, from the 41,582,055 subscribers it had at the end of October 2018. This further increased to 45,255,297 in December 2018 and 45,603,638 in January 2019. Globacom said its growing subscriber base is due to its consistency and commitment to improvement in network infrastructure, leading to overall increase in quality of service.

FG sets for another repair work on 3rd Mainland Bridge JOSHUA BASSEY

he Federal Government says it will be embarking on another round of repair work on the Third Mainland Bridge, Lagos, as part of the routine to ensuring the bridge remains in position to serve the motoring public. This is revealed in a statement from the Federal Ministry of Power, Works and Housing, superintendent over by Babatunde Fashola, on Sunday. According to the ministry, the repair work will involve changing some expansion joints, but addS that the bridge, however, is very safe for motorists to ply pending the commencement of work. “The general public is hereby informed that the expansion joint shown in a Facebook video clip,

is one of those slated for change during repairs to the Third Mainland Bridge which will commence soon. It is still functioning and our engineers and consultants have advised that it does not pose any structural danger to the bridge and it is safe to use,” the statement reads. It would be recalled that the Third Mainland Bridge was shut down for a three-day investigative maintenance in August 2018. Tests done on the expansion joints then, referred to as ‘static and dynamic load tests,’ were to check the functionality of the joints, as a number of expansion joints were identified for replacement. More recently, in March this year, underwater confirmatory tests preceding the repair works to be done on the bridge, were also carried out on the piles to determine any further deterioration

Outsource Global expands into UK

utsource Global, Nigeria’s leading BPO service provider, has announced its operations in the United Kingdom at the recently concluded B2B Sales Innovation Expo 2019, in London, between March 27 and 28, 2019. The Sales Innovation Expo is Europe’s leading marketing event, connecting the most proactive marketing professionals with the tools, techniques, and innovations they need to be at the forefront of the ever-evolving world of marketing. The event also provided a platform for Outsource Global to introduce its UK Country Director, Joshua King to the UK B2B community. Outsource Global CEO, Amal

Hassan, said, “We are excited to offer services to the UK business community as they seek to reduce costs whilst continuously improving satisfaction for citizens. The United Kingdom expansion strengthens our footprint and reinforces the drive towards growing our global market presence.” The BPO market continues to evolve rapidly, with new geographies and capabilities reflecting the growing demands of clients who must balance cost, risk and performance. With our vertical expertise and unique understanding of industry-specific needs, we are well-positioned to help our clients become operationally efficient and competitive, she added.

UBA rewards 20 more customers with N30m in ‘Wise Savers Promo’

nited Bank for Africa (UBA) has rewarded another set of 20 customers who emerged winners in the second quarterly draw of the UBA Wise Savers Promo with N1.5 million each, bringing the total amount won by 40 customers so far to N60 million. The electronic raffle draw which was held at UBA House on Thursday was witnessed by the Consumer Protection Council, National Lottery Regulatory Commission and Lagos State Lottery Board. The promo, which commenced in September last year, is expected to run till September 30, 2019 and will see another 40 customers from across Nigeria become millionaires, winning N60 million in the remaining quarters of the year. At the end of the promo, a total of N120 million will have been won by 80 customers. Lucky winners who emerged in the second edition cut across all regions of the country. They include Alli Abiodun Ganiu, Tari E. Francis, Onah Joseph, Okwandu Faith Ezinne, Igwedinma

Chiedozie Onyekachi, Mgbakor Edmund Eke, Nwokoye Adeseye Ifeanyichukwu, and Achi Sheyin Michael. Others are Onyekwuluje Christiana Osho, Ibilola U. Okeke, Amos Luka, Mukhtar Halima, Musa Abubakar, Olanrewaju Kolade David, Okongwu Hillary Chidinma, Loretta O. Okodua, Adeyemo Biodun Adeola, Oyewusi Oyeyinka Abidemi, Adeola O. Adewumi and Anyanwu Vivian. Ayo Liadi, UBA’s executive director, expressed satisfaction at the level of response received from customers across the country, adding that the campaign was targeted at rewarding loyal customers and also inculcating in them the habit of saving regularly. He noted that there was a remarkable increase in the number of participants in this edition compared to the previous one, adding that the bank’s objective of helping customers save for the rainy day was being achieved. “It is very easy to spend money but to save is a habit all must imbibe. Our key objective is to encourage our customers www.businessday.ng

on the piles from that done in 2018. However, all the tests done preparatory to closure of the bridge to commencement of comprehensive maintenance works indicate that the integrity of the bridge is intact. “Therefore the Third Mainland Bridge is safe for use, and people should desist from spreading or sharing false information about the bridge on social media platforms,” the ministry advised. It reiterated that the expansion joints to be replaced were part of a regular bridge maintenance programme that had been neglected for decades, but now being done by the present administration. “Such maintenance works include resurfacing of the bridge, along with several others, which this administration is also undertaking as the bridge users will attest to a better driving surface,” it says .

to save regularly. We are here to support our customers and to encourage them to save as well,” Liadi said. Tomiwa Sotiloye, head, retail liabilities, while explaining that the promo was consistent with the bank’s novel initiatives in prioritising customers, said it was necessitated by the invaluable belief the bank has in its customers. “We will continue to listen and give them nothing short of the best that they deserve. UBA will not relent because we are impressed with the impact this has made so far and will continue to touch the lives of our loyal customers positively,” Sotiloye noted. The criteria for qualifying for the draw is to save at least N30,000 in your UBA savings account or in instalment of N10,000 each for a period of three months. Those yet to be UBA customers can open a savings account on any of the bank’s numerous bank channels including Magic Banking (*919*20#) and LEO, or in any of the UBA branches across the country and start saving. https://www.facebook.com/businessdayng

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According to a study conducted by Grand View Research Inc, the global business process outsourcing (BPO) market size is expected to reach $343.2 billion by 2025. The need to reduce operational costs is a key factor anticipated to drive the market. The emergence of next-generation services such as big data analytics, cloud services, and robotic process automation are other factors projected to fuel market growth. Today, Outsource Global provides high-quality Business and Knowledge Process Outsourcing (BPO/KPO) services to some of the largest banks, telecoms, insurance, and technology companies in the world.

Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

NEWS China slowdown, risk of monetary policy error, trade friction top worries for global investment portfolios ISRAEL ODUBOLA

slowdown in world’s second-biggest economy, China, lingering regulatory uncertainties, likely policy error from major central banks and trade frictions were found to be major headwinds to investment portfolios in the global economy, findings from Institute of International Finance (IIF) Long-Term Investor Survey show. Participants in the survey comprises 17 investment firms, with combined Total Assets under Management (AUM) of over $12 trillion, who are institutional partners with the US-based finance institute. Majority of respondents, which constituted 70 percent, averred that possible economic slump in China, trade conflict, destabilisation in the Eurozone, central bank liquidity traps and unexpected rise in inflation were the top-five risk factors to global outlook in the first half of 2019. Other risk factors highlight-

ed include climate change, constitutional crises in the US and volatility in energy prices. Majority of participants positioned that current macroeconomic and investment environment remain broadly supportive for long-term investment, albeit many find the current economic conditions slightly less supportive compared to a year ago. More than three-fifth of participants pointed lingering regulatory uncertainties, lack of pipeline in infrastructure opportunity, tighter data localisation requirements and environment, social & governance as concerns for the global economy. The need for regulatory alignment across border, improved regulatory backdrop, deeper capital markets and development of pipeline for investable projects were highlighted by participants as critical factors that would elevate appetite for long-term investment. On risk of monetary policy error, significant fraction of respondents were worried about a likely Federal Reserve

or European Central Bank policy mistake in the next 12 months. Participants expect the Fed policy rate, which is presently between 2.25 percent – 2.5 percent to reach 2.75 percent in the current tightening cycle before Feds begin to cut rate. Over half of the respondents opine that there is room for policymakers to use fiscal and monetary stimulus to react to possible economic downturn in the global space, in which more than 95 percent expect reaction with more monetary stimulus, while some 75 percent forecast further fiscal stimulus. Participants unanimously agree that investors now have renewed appetite for emerging market assets. More than threequarter expect modest rise in allocations to hard-currency bonds in the emerging market space in the next 12 months, and demand for local currency bonds is also expected to trend upwards in near terms, while another 40 percent foresee higher volatility to emerging market stocks.

Benin Monarch urges HoS, civil servants to support Obaseki’s agenda

ba of Benin, His Royal Majesty, Omo N’Oba N’Edo Uku Akpolokpolo, Oba Ewuare II, has charged the Edo State Head of Service (HoS) and other top civil servants to continue to support the Governor Godwin Obaseki-led administration to fast track development in the state. The Oba made the call in his Palace in Benin City during a courtesy visit by the state HoS, Isaac Ebose Ehiozuwa. According to the Royal Father, “I call on you to put in your best, be committed to service. I encourage you to put in your best and support the government to ensure development in the state. I call on you, the Head of Service, to talk to your

people to be transformed, committed and develop positive attitude to work. We will continue to pray for you to be up and doing in supporting the transformation agenda of the Governor Obaseki-led administration in the state.” He noted, “The door of the Palace is always open; feel free to come at any time when you need support, advice and prayers. We are ready to support you to enable you succeed in your new position as the Head of Service in Edo State.” Ehiozuwa said he was at the Palace to inform the Oba of his appointment as the new HoS in the state, noting, “I am here to inform you of my appointment as the new Head of Service of Edo State. Before now I served

as both Permanent Secretary (PS) and Accountant - General for a period of nine years. I am here to seek for your blessings and support to enable me join hands with the governor to develop Edo State and take it to greater heights.” He stressed his commitment to ensuring that civil servants work towards ensuring excellence in service delivery in Edo State, noting, “I am aware of civil servants’ attitude to work but I have promised the governor and the people of excellent service delivery in Edo State Civil Service. I have discussed with Permanent Secretaries and we have started working in this regard in training our people to address the issues and ensure efficiency.”

Anambra develop health policy strategy to boost service delivery Emmanuel Ndukuba, April

nambra State has developed a health policy strategy, `State Task Shifting Task Sharing (TSTS)’ to address health workforce shortage. Anambra State commissioner for health, Joe Akabuike said this during stakeholder’s meeting on TSTS at King David Hotel, Awka, explaining, “The goal of TSTS policy is to meet universal health coverage through mobilisation of available human resources. “It also helps to ensure equity, accessibility and effectiveness in the delivery of essential health services.’’ The commissioner noted that TSTS policy was in line with the goals and priorities of

the National Health Policy on Human Resources for Health (HRH). He explained that the policy had been stipulated in a number of National Documents such as the National Health Strategic Development Plan II (20182022) and National Health Act of October 2014. He, however, urged the stakeholders during the meeting, to critically review the policy that would enable the state to achieve its aim of initiating the TSTS policy development plan. Executive secretary, Anambra State Primary Healthcare Development Agency, Chioma Ezenyimulu, noted that the State Health Act mandated the State Council on Health to develop health policies and guidelines.

“It also has the mandate to monitor provision, distribution, development, management and utilisation of human resources within the health system,” she said. Head of Department, Planning Research and Statistics, Ministry of Health, Edith Nwachukwu, gave the situation analysis of HRH and the rationale for TSTS in Anambra. She observed that increase in the numbers of nurses and midwives’ cadres was not keeping pace with population growth in the state. Saving One Million Lives Programme for Result Programme Officer, Obiageli Uchebo, re-affirmed the importance of adapting the TSTS policy to strengthen the healthcare system.

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Monday 22 April 2019

BUSINESS DAY

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For First Bank of Nigeria, 125 years is not just a number

Bashorun J.K Randle

he combination of One plus Two and Five – making eight has significant implications amongst magicians, tarot card readers, fortune tellers, snake charmers and Pentecostal preachers of prosperity, who insist that it is supercharged with spiritual dimensions. Regardless, we must abandon metaphysics and concentrate instead on heartily congratulating our nation’s oldest bank on its 125th Anniversary. It comes at a price – to remain silent or to rewind the tape going back to its conception; impregnation; midwifery and deliverance at the inaugural meeting of shareholders at the Colony Hotel, London in 1894. It was not by pure happenstance that in attendance at the birth was my grandfather, Dr. J. K. Randle. He did not need to wear his surgical gown and gloves. He was there as an investor in pursuit of a grand vision which would leapfrog in 1898 when according to the archives: “As far back as 1898 Dr. John Kehinde Randle; Dr Akinwande Savage; and Joseph Ephraim Casey Hayford (of the Gold Coast) the founders of the National Congress of British West Africa had begun to agitate for the independence of Nigeria, and the rest of West Africa.” Hence, when the promoters of the Bank christened the baby as “Bank of British West Africa” it was a profound confirmation that the Almighty had divined a holy convergence of the respective

interests of those who were advocating independence for West Africa and the institutional promoters of the introduction of banking as the lubricant for trade and finance in the region. It was not lost on my grandfather and his colleagues that their “Business Model” which was anchored on Health and Education as the precursor to Independence, needed to be rejigged in order to include water, sanitation, waste disposal and roads as the minimum contribution to the basic needs for survival in a challenging region. They were not day dreaming. They sought to replicate on the native soil of West Africa what they had witnessed during their sojourn as students and professionals in Britain. To put matters in context, perhaps we need to remind ourselves that the Bank was midwifed at a time when all over Nigeria and the rest of West Africa, the common currencies were cowrie shells which were subsequently replaced by the manilla!! The only other alternative was trade by barter or countertrade When the Bank opened for business at 35 Marina, Lagos its next-door neighbour was none other than Dr. J. K Randle who lived in grand style at number 31. There was no other building separating them as “33” was considered unlucky by the soothsayers. The history of the Bank became intricately intertwined with the narrative of what preceded what we now call Nigeria and beyond – to the rest of West Africa. It is the prerogative of the Bank to remind us of the rapidity with which it firmly established itself as the banker to the colonial government and the local/native/national entities that were sprouting all over West Africa. As there was no Central Bank at that time in Nigeria or any of the other British colonies in Gambia, Sierra Leone; or Gold Coast (Ghana), the Bank was not only the banker to the government with responsibility for the collection of taxes and duties as well as payment of salaries of civil servants, it was also financing trade

between the colonies and primarily Britain. As we are not compelled or obliged to go into the nitty gritty, it is sufficient to record that the colonies in West Africa exported raw materials – cocoa, cotton, groundnuts, palm oil, rubber etc. to Britain in exchange for finished goods. There is no evidence to provide confirmation that Nigeria exported coal from Enugu to Newcastle in England!! If we are somehow able to persuade the Bank to surrender the keys to its vault and archives, we shall most certainly find convincing evidence of gold bars (and silver) stored in the vaults when the currency had to be backed with gold (in accordance with the “Gold Standard”). The gold had to be checked first thing in the morning and at the end of the day before the doors were shut. If there was any discrepancy, nobody could go home!! We leave it to the discretion of the Bank to avail us of records of mundane matters such as the recruitment of staff from Britain and “amongst the natives”.We can skip the delicate issue of salaries paid to expatriates versus what was paid to local staff. Regardless, they worked happily together towards the accomplishment of a common purpose. We can take it for granted that the Bank kept comprehensive records written with old style pen and ink in cursive – tellers, mails, telegrams, ledgers, transfers of staff from one “station” to another, disciplinary matters, and of course marriages as well as obituaries of staff. It there were any financial or sexual scandals, the records were kept under lock and key in the safe (with combination code) of the General Manager/ Chief Executive of the Bank. The current chairman of First Bank of Nigeria, Plc, Mrs. Ibikun Awosika and the other ladies on the Board – Ms. Olusola Oworu and Dr. (Mrs.) Ijeoma E. Jidenmaare probably aware that right from its inception the Bank discriminated massively against women. Now, it is payback time!! To the best of my knowledge, the Bank

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He did not need to wear his surgical gown and gloves. He was there as an investor in pursuit of a grand vision which would leapfrog in 1898

did not recruit any women from Britain to manage any of its branches in West Africa. This was regardless of whether the women were single or married. The role of women was confined to the category of “accompanying spouse”. I stand to be corrected, but I believe that the first woman to be appointed a manager was Mrs. Odedina (nee Agbaje). This was at a time when her father Chief J. K.Agbaje was an Executive Director of the Bank. In this regard, it would be unfair to single out the Bank for chastisement. The policy was anchored on the belief/perception that West Africa was a hardship area and the expatriate men were encouraged to leave their wives and children behind in Britain while they strove to survive in the heat. Their domestic lives were at the mercy of loyal cooks, stewards and drivers. The delicate matter of mistresses will have to be consigned to later chapters. Perhaps we shall need to devote an entire chapter to the snail’s progress of women who rose through the ranks before assuming higher responsibilities at the levels of manager, Executive Management, or Non – Executive Director. So far there has been no female Chief Executive of the Bank!! When Mrs. Bola Adesola and Mrs. Remi Odunlamiwere appointed as Executive Directors, there was intense speculation that one of them might make it to the top as the Managing Director/ Chief Executive of the Bank. Alas, it did not happen. I am however obliged to confess that I am not an entirely unbiased umpire in the matter as Bola (nee Lardner) is the great – grand daughter of Dr. J. K. Randle. She may not have disclosed this to the Bank. Her later father Mr. Harry Afolabi Lardner SAN, who was a brilliant lawyer was my first cousin as well as the executor of the Estate of Dr. J.K. Randle.

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

Do we trust tech? How presidents and CEOs work on prosperity GrowthView

Christina Wehbe Data & Software | Sustainability | Living Standards

rowthView first asks, why is it we look up to our elders? And how can AI (artificial intelligence) build on the right knowledge to have a positive impact in our world? These questions are tied together as we start building new technologies. Today’s article introduces Social Technology which is a natural continuation from our last article on inclusive trade. We discuss how mobile tech and social apps (WhatsApp, Skype, Facebook) achieve the UN SDG #8; where tech brings governments, people and revenue in one. The motto “help me - help you” is the vast potential for our technology. The social component of technology is that it links people together beautifully, in the palm of “our” own hand. It allows us to communicate, be connected, share memories and help our loved ones. Technology boomed at a rate unseen before - and we always trusted these new ideas. Has our trust changed today?

Why do we trust our elders? They have years of experience, knowledge and lived through changes in education, medicine and the evolving living standards - we may never see. So how can technology build on this knowledge or know-how? Note: living standards -a socioeconomic measurement. Corporates can look at older or predecessor firms to be sustainable in the future. Rather than compete towards achieving their monopoly they can learn from software such as IBM, Nokia in the mobile tech world. Nokia 9000 communicator - how can we learn from the past, to move forward, sustainably? The smartphone was an innovation of the 1990s, specifically 1992 with IBM and then 1996 with Nokia, before even the iPhone was out. So, don’t shy away, learn how sustainable institutions do it. There is a reason why certain agencies have stood the test of time. “Emerging technologies can build a more prosperous life for many. If done right, built on people, our trust and learning from governments on impact-driven logical frameworks.” Let’s start with the basics. the technology in itself, what makes it smart?Or, what makes it clever? Technology is in other words able to predict, support you in your daily basis - regardless of the different scenarios. Being smart, does it start with how much we know? We can still be clever and smart despite knowing little. We call this in some western cultures, being street smart, however it confirms that as human-beings and individuals are intelligent. www.businessday.ng

We only decide to use our intelligence in different ways. To predict the scenarios effectively, we build frameworks, so we can categorise and make it simpler. Intelligence is built overtime. This is why looking at your elders is the way to learn. Collect |build your intelligence with knowhow, data and historical trends. Learn |how to use this information & intelligence, in ways that improves your life. Predict |certain outcomes or scenarios. Use your knowledge in a smart way. When a child eats an apple or learns the word “apple” - it often times learns that an “apple is red”, it builds its first sentence, with the word “apple” is connected to a “description” so the child next time, can smartly say “oh mummy, look I want that red apple”. When at oddler grows up, he learns new shapes and forms of apples, they can be green apple, bitter, sweet and varieties go on indefinitely. Nevertheless, the child knows how to identify the fruit. Collect | this is how intelligence grows, first with information, collecting all the possible “variables” which in this case, are the colours, fruit, tastes. Learn | we learn by looking at the full-picture, we look at the apple visually, we smell it, we hear how it crunches, how it tastes; to know these are the attributes of an apple. Predict | we can then predict with these visual, audio and sensory “hints” to then decipher, what this object is. The next time we bite into an apple eyes closed. On the same token, a “smart technology”

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builds these variables and scenarios, predicting for you the basics. This is only possible if we collect the right information. So how can we do that with social impact, prosperity and economic sustainability? These are values that are on a spectrum. This is the purpose of the UN and the clearly defined UN SDGs. This is a framework, of a lifetime, for us to build technology that is “smart” and does “good” - where our values as individuals are part of this “smart framework”. How can we incorporate values such as “helping your neighbour”, “bring food to your elderly parent”, “educating children in remote poor communities”, “giving electricity where there is no grid” - more simply put, how can technology help us, help others? In the next GrowthView article, we will discuss in more details the role of SmartCities or Smart Technology that can help us be prosperous - we, as individuals, in our society can have our values heard in the next technology. Key take-aways: 1. Learn from the past 2. Collect the right data 3. Build smartly 4. Make tech social 5. Governments and software are linked Wehbe is passionate about helping others and fighting poverty & injustice. She is the founder of GrowthView. She writes from Zurich, Switzerland.christina.wehbe@gmail. com Cell: +41 79 950 4760 https://www.urbanemerge.com/people https://www.qeh.ox.ac.uk/alumni/christina-wehbe

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Can design thinking help solve our problems?

Olukunle A. Iyanda “We spend a lot of time designing the bridge, but not enough time thinking about the people who are crossing it.” – Prabhjot Singh, Director of Systems Design at the Earth Institute ver thought of the best way to solve some of the intractable socio-economic and political problems in a developing economy like Nigeria? Problems and challenges are universal realities, but when it comes to Nigeria, one would want to take exception. The flashy cars and beautiful structures notwithstanding, more than ninety-one million citizens are living in extreme poverty. Nigeria has got a burgeoning population where more than 50% of the entire population of 196,000,000 are below 35 years of age, yet the unemployment rate stands as high as 23%. It is scary to note further that a whopping 36% of the unemployed population is between the ages of 18-24. The country GDP crawls between 1.8% to 2.5%, though the population is projected to hit 400million by 2050 the national infrastructure to support businesses, education and healthcare are still in acute paralysis. Self-centeredness at individual and institutional level sits at the heart of this lacklustre performance because individualism is elevated above collectivism. Unhealthy competition and rivalry are promoted above unity and collaboration. An intentional mind switch is required to solve this national crisis that has seeped into the pores of

corporate organisations. Can Design Thinking Facilitate New Thinking and Culture Change? Design Thinking is a human-centred socio innovation. Regardless of disciplines, sectors and contexts, it is an essential tool for innovation-minded people. A deep understanding of the Design Thinking makes you walk in another person’s shoe so you can understand and feel where the shoe pinches. This is called Empathy, and it is one of the rudiments of the Design Thinking concepts. Design Thinking trains you to think human first; therefore, you examined every problem with human-centeredness. It quells the strong sense of individualism and self-acclaimed superior knowledge and empowers the users with collective wisdom, nudging collaboration with different stakeholders. Design thinking nudges workforce to allow all ideas without labelling anyone stupid and by collectively agreeing on the idea that best delivers value and creates greater goods. No institution can survive without being innovative and most innovative effort fail even before they are started because they leave out a critical success driver: Human Centeredness. Whether it is a policy, service or product innovation, every design should come with strong human feelings for the users, and this should be done taking into consideration their current state and possible stages in the future. Human kindness makes us have a deep understanding of what people need, it makes us celebrate people above self, therefore, superior products, services and policies are designed and roll-out, when this resonates well with the people there will be a better and improved society, excellent performance by businesses because the products or services align well with the users. The following are the benefits of Design Thinking. Promotes Empathy: walking in

someone else’s shoe is a powerful metaphor in Design Thinking. If you don’t know where it hurts, how would you be able to nurse the wounds? This is what happens when leaders and service providers leave their comfort zone to walk in the zone of their customers and potential customers. There are two ways to know what your customer wants; you can either ask them, or you can be them. When you ask them you are still at whims and caprices of interpretation, but when you step into their shoes, you get to see life from their perspective, and you gain valuable insights. It increases tolerance level: Patience and tolerance are on the paths that you will take in the school of Design Thinking. Design Thinking will assist you to leave your biases, everybody’s view is welcomed, and none is labelled stupid, so there is no pressure to subscribe to Group Think or the Think Alike Look Alike strategy. Without tolerance innovation and diversity of thinking cannot become the norm in any society or organisation. It facilitative Inclusiveness: Design Thinking encourages the culture of diversity and inclusion. A proper understanding of Design Thinking will defuse exclusive practices and will promote diversity and inclusion. By embracing the culture of inclusion, the country can solve problems for a greater good. Our multiplicity of tribes and tongue will be envied if we harnessed our separate abilities Free Flow of Ideas without intimidation: ideas rule the world, and many organisations and societal problems in a society like Nigeria would have been resolved if ideas were properly treated. There are few places where one can learn how to treat ideas as a good brainstorming session in Design Thinking. From the unhindered generation of ideas (everybody has a voice) to the filtering of the ideas (dispassionately, without bias), the most practical or

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Design Thinking encourages the culture of diversity and inclusion. A proper understanding of Design Thinking will defuse exclusive practices and will promote diversity and inclusion

most innovative that will inspire better and improved solutions surfaces. If we can apply this to the formulation of policies and the passing of bills in Nigeria, how beautiful will it be? Improves the existing system: Design Thinking stretches our thinking capacities; it allows us to ask critical questions that produce answers that ultimately lead to revolutionary solutions. Some questions can cause unease in the room and most times, and these are avoided to prevent offence. Until some of these questions are genuinely asked and attended to, the status quo continues. Great leaders are never turn off by uncomfortable questions as long as they are genuine. They hold potential solutions to the most complex problems. Help identify opportunities and unlocks innovation: a compelling benefit of the Design Thinking process is its ability to spot opportunities and unlock innovation. As you embark on the ethnographic research in the Design Thinking Process, fresh opportunities are spotted which are hitherto unknown to you. These discoveries enable you to come up with innovative products and services which could create an entirely new service line for the good of the society and open up channels that were never in the initial roadmap. Conclusion Beyond the provision of services or the design of goods, design thinking changes everything, from how we see things to who we are. As a developing nation or emerging indigenous corporation that aspires to become bestin-class, it is important that everyone understands design. It brings all, from the president, governor, executive leadership to those in engineering, sciences, human resources, marketing etc. to the same page. At the end of it all, there will be happy citizens, happy societies, happy leaders, happy followers – it is going to be a happy world. Dr Iyanda is a Strategy and Innovation Advisor.

Africa Magic’s our perfect wedding: Promoting Nigeria’s rich culture Adeolu Atayero

eddings are a unique aspect of Nigeria’s culture and national integration. This is evident in the glitz and glamour that surround the weekly weddings held all over the country. It is also telling in the way the different tribes carefully carry out this all-important, and naturally jollof-rice filled ceremony. Nigerian weddings are sacred, and the importance attached to the processes that lead to them is proof of this. The Igbos start the day with what is called Igbankwu, meaning wine carrying. The bride carries a cup of freshly brewed wine, cutting through a forest of young, catcalling men, to find her man. When she finds him, she kneels down before him to present the wine. If he accepts it, they both dance for the formal introduction and prayers. This is a culmination of previous stages of smaller ceremonies between both families like door knocking, where the groom-to-be family pays the bride’s family a visit. This visit is not done empty-handed in Igbo land. The visit is accompanied by several gifts such as kola nut, soft-drinks, dry gin and palm wine. This leads to another series of investigative visits to find out the origin of each family. The Igbo women light up the occasion with their flamboyant elegance during the

ceremony. The colourful mélange of George wrappers, headgear and coral beads gives the party a rhythm of its own. The Hausa wedding is less noisy but no less glamorous; it carries with it a certain air of dignity that is hard to capture or define in words. Where people from the two other major tribes lament the cost of organizing a wedding, the Hausa wedding provides a simple and inexpensive way of getting married and yet having all the countless joy that a wedding present. But it is the Yoruba way of conducting weddings that continues to define and redefine this aspect of the Nigerian culture. The Yoruba culture has coloured and supplied many local words for describing parties in the country such as owambeand mogbomoya. The wedding ceremony makes it clear that it is not just the wedding of individuals, but families. It is also punctuated by the most vibrant attires, assorted food and drinks and dance and music. It is a mark of the elaborate celebration put up by the Yoruba that we have a thriving asoebi industry and gele in the country. Recently, however, some aspects of the Nigerian wedding ceremony have been modernised. To a large degree, the Yoruba have done away with the exorbitant bride price. They remind the groom with this token of generosity that their daughter is priceless, not for sale and should, therefore, be well-taken care of. Also, for some class of Nigerians, it is not enough these days for two couples who love each other to be joined together in holy www.businessday.ng

matrimony; it must come with some fanfare, paparazzi and online traffic. The new generation of couples have redefined how Nigerian weddings should go. If it is not heralded by a pre-wedding photo-shoot, trended on major online wedding blogs, and concluded in a destination European city, then it is not the wedding. Welcome to the birth of society weddings in Nigeria. Between 2010 and 2019, several high society weddings have been held that shook the internet. Banky W and Adesuwa’s wedding party, both the fictional and the real, is perhaps the most glamorous of them all. From start to finish, it was a written stylebook for future celebrity weddings in the country, as it combined an elaborate traditional wedding with a destination wedding. There was a sentinel of Nigerians online keeping watch for the latest pictures of the wedding. Popular wedding blogs were also busy shopping for the latest photos to publish. When the popular music personality tied the knot in 2016, the buzz was also frenetic. The internet kept vigil for photos with such tumbling energy that was not yet seen. Even Africa Magic exclusively brought behind the scenes moments leading up to the wedding in a documentary called “The Wellingtons” in 2018. It showcased the hot celebrity fashion, makeup, outfit changes and the exchange of vows. These two weddings showed Nigeria’s insatiable appetite for the beautiful and the

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fantastic. DStv has released a new reality show, called Our Perfect Wedding Nigeria, to help lovers of weddings enjoy great wedding moments. The reality show, which is a platform to celebrate and spread the rich culture embedded in the Nigerian wedding, follows the couples’ love story as it unfolds. The show, unlike the social media buzz, captures the tension, the disappointments and surprises, the ‘thank God’ moments and the untouchable joy that come with choosing the perfect dress, cake, venue for a wedding. Capturing weddings from different parts of the country, the show relays the fears and challenges couples face when nursing intertribal marriages. Couples share with viewers how these fears were overcome. It also shines a spotlight on the diversity of Nigeria that is a source of pride and strength, an anchor of our national unity. Weddings have been a source of integration in Nigeria. A part of Nigeria’s indivisibility lies in the many strong ties by marriage scattered across tribes. These marriages have made identity both fluid and progressive and it is no doubt important to highlight this from time to time. Therefore, DStv’s attempt to bring to the fore one of our principal sources of national integration through a platform like Our Perfect Wedding is commendable. Atayero is a Lagos-based Communications/Reputation Advisor

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Monday 22 April 2019

BUSINESS DAY

EDITORIAL Publisher/CEO

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

Regional discrepancies in education

igeria continues to grapple with the challenge of providing qualitative education to its young ones. Over time, the quality of education provided across board from primary to university has so depreciated that education tourism has become an industry in the country. But even more urgent is the problem of access to education in Nigeria. A survey conducted by UNICEF and the Nigerian government shows that Nigeria has the highest number of out of school in the world at 13.2 million. A majority of these out of school children come from the three geopolitical regions of Northern Nigeria – Northwest, Northeast and Northcentral. Perhaps, it is the desire to ensure every Nigerian child has access compulsorily to primary and three years of secondary education that led the government to introduce

the Universal Basic Education in 1999, a scheme where the both the federal government and state governments contribute to fund basic education across the country. Sadly, since becoming fully operational in 2004, the UBE has not recorded much improvement in enrolment not to talk of quality in recent years. Sadly the regional discrepancies in access to education have continued and are reflecting in the number of those gaining admission in Nigeria’s higher institutions. According to recent data from the National Bureau of Statistics, NBS, and the Joint Admissions and Matriculation Board, JAMB, five southern states of Imo, Anambra, Osun, Oyo and Delta accounted for one-third of students admitted to study a degree course in 2018. According to the data, a total of 422, 245 were admitted to study for one degree course or another in the Universities in 2018, a slight increase from the 418, 298 that got admit-

ted in 2017. Out of these, Imo state led the pack with 23, 799, Anambra followed closely with 20, 686 candidates, followed by Osun with 18, 975, Oyo with 17, 693 and Delta with 16, 341. Of course, the five states with the least places in Nigerian universities were northern states with Zamfara coming last with 2, 359. It was closely followed by Sokoto 3, 623, Jigawa 3, 672, Kebbi 3, 748, and Yobe at 5, 803. Sadly, the regions with the lowest admission in Nigerian universities also have the highest number of children out of school and the lowest literacy rates in the country. Added to these is the longstanding cultural belief which discourages girl-child education. It is clear that this situation cannot be allowed to continue. We cannot have a situation where policies are designed to provide access to education to all Nigerians but a section of the country continues to act in ways that continually exclude their people and put them in

disadvantage of competing with their peers in other parts of the country. This situation is at the root of the insecurity and social disorder engulfing the north of the country. You can’t have a different outcome when the greater majority of your youth were not educated at all or dropped out of school as children and have no skills or job to engage them as they grow up. Perhaps, the federal government may want to take a closer look at how the UBEC funds accessed by the states are expended. There are strong suspicions that the funds are misapplied or diverted. That must be stopped. Ultimately, it is down to the political and traditional leaders in northern states to change the educational outcomes of their people to give them a fighting chance of self actualisation and also save the regions and the whole country from the coming anarchy if a majority of northern youth remain uneducated and unemployable.

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Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

In Association With

A glimmer of light

Too many challengers First woman

How to solve South Africa’s energy crisis

President Cyril Ramaphosa must face down unions to embrace clean power

N THE CONTROL room of Scatec Solar in Cape Town Johan Badenhorst gazes at the six monitors on the wall. The screens display the status of the firm’s 16 plants in 11 countries. The three in South Africa are doing nicely, producing enough energy to power 93,000 homes. Problems are rare, says Mr Badenhorst, Scatec’s senior control officer, before correcting himself: once a bird dropped a tortoise on a solar panel, smashing the glass. Such issues, while upsetting for tortoises, are minor compared with those faced by Eskom, the stateowned utility that supplies 95% of South Africa’s electricity. At least one-third of its power stations are broken or shut for maintenance. Over recent months the talk of the country has been of “load-shedding”: a euphemism for blackouts because Eskom cannot meet demand. March was the worst-ever month for loadshedding, when Eskom regularly took 4,000-megawatts (MW) off the grid, about one-eleventh of its total capacity (45,561MW), or enough to power 3m homes. Further failures could have severe consequences. “Eskom is the greatest systemic risk to the South African economy,” says Colin Coleman, the boss for sub-Saharan Africa of Goldman Sachs, a bank. Goldman reckons power cuts could reduce GDP growth by 0.9 percentage points, about half the rate of official growth forecasts. Eskom also threatens South Africa’s public finances. Since 2007 Eskom’s debt has risen from 40bn to 420bn rand ($30bn). It is effectively insolvent, borrowing to pay interest on its debts. In February the Treasury announced a 69bn rand bail-out. It will not be the last. “There is a real risk of financial meltdown,” says Anton Eberhard, who advises President Cyril Ramaphosa on energy. The president, who took over from Jacob Zuma last year, is standing in elections on May 8th. People may not take kindly to voting in darkness. Eskom’s predicament has deep roots. Between the 1960s and 1990s the apartheid government built big and dirty power stations hoping cheap electricity would spark industrialisation. After white rule ended in 1994 the African National Congress (ANC) had Eskom provide power to the more

Raya al-Hassan takes on Lebanon’s warlords— and the patriarchy The Arab world’s first female interior minister is shaking things up

N A COUNTRY of crusty old warlords, Raya al-Hassan is challenging stereotypes. A decade ago she was appointed Lebanon’s finance minister, the first woman in the Arab world to hold such a post. In January she broke new ground, becoming the first female interior minister in the region. As such, she commands a force of over 40,000 police officers, including the elite counterterrorism brigade known as the Panthers. The ministry’s

than two-thirds of black households that lacked electricity, one of the fastest electrification projects in history. In the past two decades Eskom has symbolised South Africa’s failings, rather than its successes. In the 2000s the government of Thabo Mbeki delayed building new plants, mostly because of overcapacity. By 2008, when this capacity was used up, Eskom started load-shedding. Two huge coal-fired power stations were meant to fill the gap, adding 4,800MW of power to the grid. But construction is running years late and about three times over budget, says Chris Yelland, an independent analyst. One reason is that some of Eskom’s bosses have spent more time stealing than managing. Cronies of Mr Zuma and his patrons, the Gupta brothers, are alleged to have siphoned off tens of billions of rand in inflated or irregular contracts. The utility sells less electricity than it did in 2007 but spends three times as much on employees and five times as much on coal (though inflation accounts for some of this). Eskom’s structure makes matters worse. The utility is “vertically integrated”, meaning that it has a critical role in the three parts of electricity supply: generation (power plants), transmission (the national grid) and distribution (the final power lines). Most rich

countries have ditched this monolithic model, with good reason. It blocks competition, reduces transparency and deflects accountability. On February 7th Mr Ramaphosa said that Eskom would be broken up. It was the seventh time that a president has used his State of the Nation Address to make such a pledge. But this time may be different because there is a clear alternative to the coal-dominated monolith—a market-based model that is open to renewable energy. It is a model with which the country has begun to experiment (see map). In 2011 South Africa launched a renewable power programme that was widely acclaimed for using auctions to drive down the cost of power. It was set up at the urging of the Treasury, an island of competence in a swamp of corruption. These auctions led to $14bn in private capital investment and about 5,000MW of extra capacity. But in 2015 Eskom refused to sign agreements with independent power projects that had won the auctions. This was because Mr Zuma’s allies were trying to force through a ruinous deal he had struck with Vladimir Putin for Russian nuclear power stations. (Fortunately this venture was unsuccessful.) It was only last year that the stalled projects could go ahead. As part of this revival Scatec Solar is

building three plants in Upington in the Northern Cape. More renewable energy will help the environment. Just three countries in the world get a higher share of their electricity from coal. Yet there is also a financial case for them. Wind and solar stations can go up quickly without straining Eskom’s balancesheet. They also generate power more cheaply than that humming down the line from Eskom’s coal-fired power stations. Recent international auctions have priced renewable power at about 30 South African cents per kWh, versus more than 50 cents for Eskom’s existing coal plants. “South Africa should never build another coal station ever again, purely on the basis of economics,” argues Tobias Bischof-Niemz, a former Eskom engineer who is now a director at ENERTRAG SA, a renewables firm. Whether it will depends on the government’s long-delayed Integrated Resources Plan, due to be published after the election. It ought to lay out how South Africa will make two transitions: from coal to renewables; and from a monopoly to a market-based system. Vested interests in Eskom and mining unions will resist both. Assuming Mr Ramaphosa wins on May 8th, he will have to face them down. If he fails, the future will be dark, for him and for South Africa.

website features a photo of her leading a pack of female cadets. Ms Hassan seems intent on weakening the men who fought Lebanon’s civil war of 1975-90 and who have remained in power ever since. She has called on them to remove the roadblocks around their enclaves. She plans to visit Dahiya, Beirut’s Shiadominated southern suburb, to ensure that Hizbullah, the main Shia party-cum-militia, complies. If Ms Hassan, a Sunni Muslim by upbringing, is concerned about her safety, she doesn’t show it. She has removed many of the walls around her ministry, jettisoned her predecessor’s big motorcade and cut his large security retinue. Women hail Ms Hassan as a role model for taking on the patriarchy. Parliament has only six female members (out of 128). In the previous government even the women’s affairs minister was Continues on page 15

Monday 22 April 2019

BUSINESS DAY

In Association With

The trouble with tech unicorns

Tech’s new stars have it all—except a path to high profits Millions of users, cool brands and charismatic bosses are not enough

NVESTORS OFTEN describe the world of business in terms of animals, such as bears, bulls, hawks, doves and dogs. Right now, mere ponies are being presented as unicorns: privately held tech firms worth over $1bn that are supposedly strong and world-beating—miraculous almost. Next month Uber will raise some $10bn in what may turn out to be this year’s biggest initial public offering (IPO). It will be America’s third-biggest-ever tech IPO, after Alibaba and Facebook. Airbnb and WeWork could follow Lyft, which has already floated, and Pinterest, which was set to do so as The Economist went to press. In China, an IPO wave that began last year rumbles on. Thanks to fashionable products and armies of users, these firms have a total valuation in the hundreds of billions of dollars. They and their venture-capital (VC) backers are rushing to sell shares at high prices to mutual funds and pension schemes run for ordinary people. There is, however, a problem with the unicorns: their business models. As we report this week, a dozen unicorns that have listed, or are likely to, posted combined losses of $14bn last year. Their cumulative losses are $47bn (see Briefing). Their services, from ride-hailing to office rental, are often deeply discounted in order to supercharge revenue growth. The justification for this is the Silicon Valley doctrine of “blitzscaling” in order to conquer “winner-takes-all” markets—or in plain English, conducting a high-speed land grab in the hope of finding gold. Yet some unicorns lack the economies of scale and barriers to entry that their promoters proclaim. At the same time, tighter regulation will constrain their freedom to move fast and break things. Investors should demand lower prices in the IPOs, or stay away. Tech entrepreneurs and their backers need to rethink what has become an unsustainable approach to building firms and commercialising ideas. Today’s unicorn-breeding industry would not have been possible 25 years ago. In 1994 only $6bn flowed into VC funds, which doled out cheques in the single-digit millions. Before Am-

azon staged its IPO in 1997 it had raised a total of only $10m. Three things changed. Growing fast became easier thanks to cloud computing, smartphones and social media, which let startups spread rapidly around the world. Low interest rates left investors chasing returns. And a tiny elite of superstar firms, including Google, Facebook and China’s Alibaba and Tencent, proved that huge markets, high profits and natural monopolies, along with limited physical assets and light regulation, were the secret to untold riches. Suddenly tech became all about applying this magic formula to as many industries as possible, using piles of money to speed up the process. Make no mistake, the unicorns are more substantial than the turkeys of the 2000 tech bubble, such as Pets.com, which went bust ten months after its IPO. Ride apps are more convenient than taxis, food delivery is lightning quick, and streaming music is better than downloading files. Like Google and Alibaba, the unicorns have large user bases. Their core businesses can avoid owning physical assets by outsourcing their IT to cloud providers. As IPO documents point out, their sales are growing fast. The big worry is that their losses reflect not temporary growing pains but markets which are contested and customers who are promiscuous. In the key digital monopolies, the network becomes more valuable to each user the more people use it— hence Facebook’s 67% market share in social networking. The unicorns’ dynamics are not as

compelling. Despite subsidies, ride-sharing customers are not locked in to one firm. No wonder Lyft’s shares have fallen by over 20% below their IPO price. Anyone can lease an office and rent out desks, not just WeWork. Some unicorns have to fight other richly funded rivals and established firms. Spotify, which listed in 2018, has a 34% share of music streaming in America and is going head-to-head with Apple. Because the unicorns’ markets are contested, margins have not consistently improved, despite fast-rising sales. Managers are terrified of cutting their vast marketing spending, for fear of losing customers. Many firms are scrambling to develop ancillary products to try to make money from their users. And without deep moats around their businesses a permanent questionmark hangs over the unicorns: if Uber really is worth $100bn, after investing only $15bn or so, why wouldn’t its rivals keep trying their luck, or an established tech giant be tempted in? External forces will make blitzscaling harder, too. The earlier generation of firms did not face many rules—few legislators had imagined the internet—so they could charge ahead first and beg forgiveness later. The unicorns followed suit: Airbnb sidestepped taxes on hotels and Uber drove through regulations on taxi-licensing. Today a reaction is in full swing, including over digital taxes and data and content laws. The unicorns’ investor circulars have pages dedicated to their legal dangers

and gory regulatory risks. All this is good for consumers. Money is being thrown at them; the subsidy to the public from the dozen firms amounts to $20bn a year. Whereas the commanding heights of the tech industry, such as search and social media, have been monopolised, the unicorns are at least creating competition in other areas. Investors, meanwhile, need to hold their nerve. It is tempting to extrapolate the triumph of Google and Alibaba to an entire new group of firms. In fact, most unicorns face a long war of attrition and soggy margins. Eventually, struggling firms may be bought. And here another risk arises: most unicorns cap outside investors’ voting rights (Uber is an exception), and many have “poison pills” too, making takeovers hard and constraining investors’ ability to intervene if the firms do not eventually find a way to make enough profits to justify their IPO valuations. And what of Silicon Valley and China’s bustling tech hubs, where the unicorn idea was dreamed up? Billions of dollars are flowing to VCs, tech founders and employees. The familiar question is how many luxury homes, philanthropic vanity projects and personal space programmes they will pay for. The urgent question is how this capital will be recycled into new technology firms. The blitzscale philosophy of buying customers at any price is peaking. After the unicorns, a new and more convincing species of startup will have to be engineered.

Raya al-Hassan takes on Lebanon’s... Continued from page 14

a man. The interior ministry only began admitting women into its forces in 2012. But three of the eight directors-general in the ministry are now women and Ms Hassan plans to promote more. The religious leaders who control family affairs are also in her sights. Within days of becoming minister she made headlines by calling on clerics to let Muslims and Christians marry each other. The men under her command seem to like her. One compares her to Aisha, the Prophet Muhammad’s favourite wife, who led Muslims into battle. In a country of backbiters, she has made remarkably few enemies. Her no-nonsense manner reminds some of Rafik Hariri, the post-war prime minister who rebuilt Beirut. Hariri, alas, was killed by a car-bomb in 2005 after calling on Lebanon’s militias to disarm. Ms Hassan is more cautious. The state should have a monopoly on the use of force, but Hizbullah’s weapons are a separate issue, she says. Ms Hassan is not immune to the grubbiness and sectarianism of Lebanese politics. She is a member of the Future Movement, the Sunni party led by Saad Hariri, the prime minister (and son of Rafik). Her critics claim she turned a blind eye to graft when finance minister. The economic zone she launched in her home town of Tripoli is empty despite the millions of dollars earmarked for it. For all her talk of removing roadblocks, she has kept silent on those surrounding the enclave where Mr Hariri lives (when he is not in Paris). Cynics even say that Ahmad Hariri, the Future Movement’s general secretary and the prime minister’s cousin, can overrule the ministry. Not so, says Ms Hassan: “I am in charge.”

Monday 22 April 2019

BUSINESS DAY

In Association With

No questions asked

Chinese money is behind some of the Arab world’s biggest projects The region’s autocrats appreciate Beijing’s no-strings approach

HERE IS NOT much to see for the first 500km south of Oman’s capital, Muscat, as the highway slices through the Hajar mountains and down a barren coast. Then it hits Duqm, a sleepy fishing village that is being transformed into a mega-port. The government’s hope is to capture a share of the shipping trade between Asia, Africa and Europe. And there, in the middle of nowhere, a consortium of Chinese firms wants to invest $10bn to build a 1,000-hectare industrial zone. “Petrochemicals, glass, solar panels, car batteries—they want to attack all these markets,” says Reggy Vermeulen, the port’s CEO. For decades the Middle Kingdom saw the Middle East as a petrol station. About half of China’s oil came from Arab states and Iran. Little went in the other direction. In 2008 the region got less than 1% of China’s net outbound foreign direct investment (FDI). Skip ahead a decade and Chinese money is everywhere: ports in Oman, factories in Algeria, skyscrapers in Egypt’s new capital. Last year it pledged $23bn in loans and aid to Arab states and signed another $28bn in investment and construction deals (see chart). The Arab world is hungry for such investment. Annual FDI inflows have fallen by two-thirds since 2008 and lag far behind other emerging markets. Take Egypt, which is famous for its cotton. Its state-run textile firms are a mess, with machinery that has not been updated in decades. Enter China: in January it promised 2.1bn Egyptian pounds ($121m) to build modern textile factories outside of Cairo. Officials hope the project will create more than 100,000 jobs. Such job creation is not common, though. Since 2005 China has signed $148bn worth of construction deals with Arab states, estimates

A Chinese firm won the tender to operate a new port in Haifa, Israel’s third-biggest city, where American warships often call. America wants Israel to reverse the decision. Oman got a similar warning over Duqm. “They can have a piece of the industrial zone, but we’re keen to keep them out of the military side,” says an American diplomat in Muscat. In recent months Oman has signed deals that allow the American and British navies to operate in Duqm. China received no such privileges.

the American Enterprise Institute, a think-tank. More than one-third of that sum went to energy projects which, while necessary, will not employ many locals. Even the construction itself does not create many local jobs. The China State Construction Engineering Corporation has built both a five-star Sheraton resort in Algiers and a less luxurious prison south-east of Algeria’s capital. On these projects, and dozens of others in Algeria worth a combined $16bn, some 40,000 Chinese labourers did most of the work. Trade between China and the Arab world is lopsided. In 2017 Tunisia imported $1.9bn worth of goods from China, 9% of its total imports. It exported just $30m to China. “Twenty-five percent of our trade deficit comes from China alone,” says Lotfi Bensassi, an adviser to the prime minister. The trinkets hawked to tourists in souqs are usu-

ally made in Chinese factories, not Arab workshops. In the occupied West Bank even the makers of keffiyehs, a symbol of Palestinian identity, cannot keep up with their Chinese competitors. A few Arab states hope that China’s growing taste for olive oil will lower their trade deficits a bit. But China will not put millions of unemployed Arabs to work. Instead it is following the model that has burdened some Asian and African states with crippling debt. Arab governments have been more cautious. There are no local equivalents of Sri Lanka’s “ghost airport”, built with Chinese capital and devoid of flights. Algeria, struggling with low oil prices and a high budget deficit, stopped signing big deals with Chinese firms two years ago. Infrastructure loans from China to the Middle East grew almost tenfold from 2015 to 2016, to $3.5bn. But more than half went to the United Arab Emirates

(UAE) to finance projects like the expansion of Dubai’s airports, the world’s busiest. Wealthy Gulf states like the UAE have no trouble repaying big loans. Although the UAE is keen to attract China’s cash, it is also nervous about its ambitions. Officials at DP World, a port operator mostly owned by Dubai, say its network of ports and railway hubs will complement the Belt and Road Initiative (BRI), a programme of global infrastructure projects by China. Maybe so, but the BRI is also a threat. Almost twothirds of Chinese exports to Europe, the Middle East and Africa move through Emirati ports. If the Chinesefunded port at Gwadar, in Pakistan, becomes a trans-shipment hub, it could take business from Dubai’s flagship Jebel Ali port. Duqm poses a similar threat. Other countries that are active in the region worry about security.

Sow early

Warmer temperatures could play havoc with crops Even in temperate regions crops need future proofing

ISING CARBON-DIOXIDE levels and the climate change associated with them portend many problems, but one group of people might be expected to give them a cautious welcome: farmers in Earth’s temperate zones. More CO2 typically results in more photosynthesis and therefore higher yields, and milder weather means longer growing seasons. Balanced against these potential benefits, however, is the potential for blight. It is hard to predict how changes in the climate and the atmosphere’s chemistry will affect the prevalence and virulence of agricultural diseases (see article). But there is a risk that such changes will make some plant infections more common in all climatic zones, perhaps catastrophically so. To fend off this danger, seed companies and

botanists need to band together to stockpile a genetic arsenal before it is too late. Part of the problem is that centuries of selective breeding have refined the genomes of most highvalue crops. They are spectacular at growing in today’s conditions but genetic variations that are not immediately useful to them have been bred out. This is good for yields but bad for coping with change. A minor disease or even an unknown one could suddenly rampage through a

genetically honed crop. Indeed, this is already happening in America, where a mysterious pathogen is killing apple trees, and India, where warmer-than-usual winters have spread wheat-blast disease, ravaging the country’s second-largest crop. New diseases are unlikely to make the West starve. It will always be able to buy its way out of a shortage by importing calories from elsewhere. But soaring world food prices would cause widespread malnutrition and suffering. What is more, the threat of new diseases is a problem with a ready solution. All crops have wild relatives that are ill-suited to agriculture but which have vastly more genetic diversity than their cultivated cousins. Within the DNA of these wildlings are genes with the potential to grant resistance to future pathogens. As an

insurance policy, those genes need to be collected, studied and stored, usually in the form of seeds, until a time comes when a threat arises that requires them to be inserted into the genome of a specific crop. This is being done, but too slowly. Genebanks contain too few specimens of two-thirds of the pertinent wild relatives of crops. The rest are not included at all. You might think that the giant commercial agribusinesses would help. Ploughing more resources into gene-banks and understanding wild varieties would strengthen food security and, in the long run, would boost the firms’ bottom lines. However, in spite of the threat, firms like Bayer and Syngenta still see futureproofing crops against disease as a responsibility for governments to take on.

Part of what makes China an attractive partner is that its money comes with few strings attached. Its policy of political “non-interference” lets it build ties with mortal enemies—Saudi Arabia and Iran, Israel and Syria—and makes it a useful hedge against America, which Arab autocrats fear will abandon them. But the lack of strategic engagement has a downside. Without ships in the Mediterranean, China needed Greece’s help to extract its citizens from war-torn Libya. The opening of China’s first overseas military base, in Djibouti, in 2017 may be a sign of broader ambitions. Arab officials who once ignored China talk of it as a rising regional power—a softer sort than America or Russia. An influx of Chinese tourists has led to hotels in Cairo teaching staff to speak Mandarin and cook Chinese dishes. Diplomats from Beijing often have a command of Arabic that puts their Western counterparts to shame. When Lebanon’s prime minister formed a government in February, after nine months of deadlock, his first visit came from the Chinese ambassador. But China seems to have little interest in sorting out the civil war just over the border in Syria. Mercantilism is its priority, not fixing the region’s many problems.

Monday 22 April 2019

BUSINESS DAY

COMPANIES & MARKETS

Nestle, Cadbury outshine peers in efficiency test

COMPANY NEWS ANALYSIS INSIGHT

Pg. 18

CONSUMER GOODS

No let up for consumer goods in 2019, Unilever’s 44% Q1 profit slump signals LOLADE AKINMURELE

i g e r i a’s oldest conglomerate, Unilever, has got off to a sloppy start in 2019 as an industry wide storm hurts the bottom-line of consumer goods firms in Africa’s most populous nation. Thanks to weak consumer demand which ate into revenues, Unilever had to settle for a 44 percent decline in profit to N1.5 billion in the first quarter of 2019,

from N2.7 billion in the first quarter of 2018, according to Q1 figures published by the consumer goods company last week Despite keeping c o s t s a t b ay i n t h e first quarter of 2019, a 21 percent slump in revenue proved costly f o r Un i l e v e r. Re v e nue declined for the first time in 5 years to N19 billion in Q1 2019 from N24 billion in the comparable period of 2018. Gross profit settled at N3.9 billion, the lowest in eight years,

according to data compiled by BusinessDay. The breakdown of Unilever’s results indicates a 26.9 percent and 13.1% year-on-year contractions in revenue from the Home & Personal Care (HPC) and food products segments respectively. Analysts attribute the decline in the HPC segment to sustained consumer downgrading to cheaper alternatives as consumer purchasing power wanes. Unilever is only one of the many consumer goods companies that

Unilever’s gross profit falls to 8-yr low

Source: Company financials

L-R: Andrew Nevin, advisory partner and chief economist, PwC West Africa; Okechukwu Enelamah, minister of Federal Ministry of Industry, Trade & Investment; Eme Essien, country manager, IFC Nigeria and Paul Kokoricha, board chair, PEVCA Nigeria at the Breakfast Forum of the Private Equity and Venture Capital Association, Nigeria (PEVCA) “Macro Outlook from a PE perspective” held recently.

appear to be struggling in Nigeria where population growth has now outpaced economic growth four years straight. While other consumer goods companies are yet to publish Q1 earnings, the trend in 2018 suggests the industry is feeling the strain of low demand for consumables in an economy yet to fully recover from a

contraction in 2016. The industry’s revenue shrank 4 percent in 2018 while costs soared on the back of double digit inflation. Cadbury, Dangote Flour, Dangote Sugar, Nestle and Nascon performed better in the year 2017 compared to the 2018 financial calendar as the combined revenues of these five companies declined

from N600.364 million to N590.73 million at the end of 2018 accounting period. Costs grew by 7.09 percent if the 27.86 percent fall in Dangote Sugar costs of sales which tracked the corresponding fall in revenues. Total combined profits dropped by 26.74 percent from 2017 figures of N94.28 million to N69.07 million in 2018.

FINANCIAL SERVICES

Africa Prudential kick-starts 2019 with 23% surge in contract income ISRAEL ODUBOLA

agos-based share registration service provider, Africa Prudential Plc, saw its income from contracts with clients, soar some 23 percent in the first quarter of 2019, buoyed by an upsurge in fees from corporate actions undertaken by a number of its clients ahead their dividend declaration and Annual General Meeting (AGM). The firm’s interest income, which constituted about 69 percent of its gross earnings, hit N595.5 million in the review period, relative to N734.3 million in the previous period, driven by doubledigit cut in interest earned

on treasury bills (51%) and bonds (64%), coupled with lowered yields during the period. This weighed down on gross earnings as it dip 9 percent from N957.8 million in the previous period to N869.3 million in the review period, despite revenue from contracts with clients up some 23 percent. “We were faced with some challenges which impeded our performance this past quarter, one of which was the declining yield environment thus mildly impacting one of our income line-item – interest income”, said Obong Idiong, Managing Director of Africa Prudential Plc in a statement filed at the Lagos bourse. Profit before and after

taxation got their beating from dip in interest income as they declined 17 percent each. Pre-tax profit shed some N89 million from N542 million in the previous period to N453 million in first three months of 2019, and aftertax profit reduced to N381 million from N542 million realized in the first quarter of 2017. Profit margin in the review period shed slightly to 44 percent compared with 46 percent in the previous corresponding period, implying that the registrar firm was able to retain N440 from every thousand naira generated as revenue. Operating margin fell some 8 percent points, return on assets dropped some 1 percent points and

return on equity shed 9 percent points, indicating that the firm’s profitability performance weakened slimly in the review period. Africa Prudentials significantly lowered its finance cost by 46 percent, given the fact that the firm settled outstanding bank loans which led to a cut in interest paid. A look at the balance sheet showed total assets depreciated marginally by 4 percent to N20.4 billion, driven by 37 percent reduction in debt instruments – loan & advances and treasury bills, despite cash & cash equivalent soaring by 144 percent. Total liabilities trimmed by 2 percent year-on-year following the repayment of over N2 billion bank loans, and shareholders’ fund

was down by 7 percent to N7.9 billion. Obong disclosed that management is keen to spur performance in the coming quarter following the launch of some strategic business units such as digital technology, Cooperative business and EasyCoop Mart. “To complement the traditional registrar busi-

ness, the benefits of the new business segments will be effect in the second quarter”, he stated, adding that the firm is unrelenting to delivering unique customer experience to clients. Its shares traded flat at N4 after Thursday’s trading, and has returned 3.36 percent since the start of 2019.

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

Monday 22 April 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

CONSUMER GOODS

Nestle, Cadbury outshine peers in efficiency test SEGUN ADAMS AND ISRAEL ODUBOLA

he fragile state of the Nigerian economy coupled with lingering infrastructural challenges have left consumer goods firms in dire need of improved sales as squeezed consumers’ wallet leave sector players worse-off than previous year, although food producers were better off than peers. Players in the sector were not only bitten by the decline in their top-line which shed some 5 percent in 2018, but they became less efficient in creating value from assets. Asset turnover, which measures how efficient a firm is in generating earnings from assets, dropped some 0.22 points in full year 2018 for players in the consumer goods space, indicating that firms struggled to utilize assets to create revenue. On the average, seven consumer goods firms realized N1.15 in revenue for each naira invested in assets in 2018, compared to N1.37 in the preceding year. Two food manufacturing giants, Nestle and Cadbury had tangible gains in their asset turnover, and that of Unilever remained almost unchanged. In addition, the return on assets (ROA) of sampled players worsened some 1.08 percent points on the heels of a double-digit dip of 13 percent in their bottom-line, affirming players’ waned efficiency to grow earnings per asset, although Nestle, Cadbury and Unilever bettered

their ROA by 3.52 percent, 1.93 percent points and 1.85 percent points respectively. “Weak consumer spending and cost pressures constrained their ability to hike prices and protect margins”, said Gbolahan Ologunro, research analyst at CSL Stockbrokers, noting that both factors combined to weigh on their net earnings. The high rate of unemployment, which soared to 23.1 percent in quarter three of 2018, coupled with slow pace of recovery from 2016 economic slump have seen household become more frugal, slowing revenue growth of companies. Meanwhile, the inability of producers to keep cost in check amid dilapidated state of infrastructure impeding flow along supply distribution chain, have seen firms post weaker scorecards for 2018. Despite of industry wide decline, the food segment however grew revenue with the likes of Nestle and Unilever reporting 9 percent each in their top-line. “Regardless of the thinning pockets of consumers, the food segment has performed better because food commodities inelastic demand” said Yinka Ademuwagun, who furthered explained that consumers would rather cut purchases on electronic than food, a basic necessity of life. Across segments in the consumer goods space, there were peculiarities in the macro-environment and industry that affected performance. Among the brewers for instance, the

expansion of AB-InBev intensified competition, and the introduction of excise duties meant brewers found difficulty in transferring cost burden via price and had to absorb them. The food millers were beset by the influx of smuggled products which saturated the market with sub-standard and cheap alternatives like sugar. Of course, given the poor posture of the broad economy, consumers switched to the inexpensive products, lowering industry prices. The Apapa axis gridlock was a bottleneck to the flow of goods in and out of production and storage facilities in the Lagos port area. Many producers in their financials didn’t spare words in lamenting the adverse impact the poor state of road infrastructure had on commerce. Despite International Monetary Fund (IMF) upped its growth projection to 2.1 percent in 2019, Ologunro sees little improvement in consumer spending as he expects producers of inelastic food commodities like palm oil, flourmill and salt to raise prices and offset gains in nominal income. Ademuwagun however believed that the new minimum wage will better consumer spending, but raises concern on the impact of a possible fuel subsidy on consumers’ pocket. The sector gained 99 basis points in value after Monday’s trading, outperforming the benchmark index that dip some 22 basis points. The sector has lost 11.86 percent since the start of the year.

L-R: Egwakhe Johnson, director, Babcock University Centre for Executive Education (BCED); Michael Ewa, chief security officer, Jagal Group; Wale Adeagbo, chief operating officer, Academy Halogen; Roy Okhidievbie, chief executive officer, August Eye Limited; Alexander Agbotia, security expert, and Fasimirin Lekan, coordinator, Halogen/Babcock Programme, at the maiden graduation ceremony for Academy Halogen and Babcock University Certificate in Security Management (CISM) for security specialists in Lagos.

L-R: Charles Anajemba, MD, SPUD Consultancy and Services; Yibudonga Yikarebogha, chief engineer, NPDC Drilling; Mammadu Gadzama, chief geologist OML 13 Asset NPDC; Eunice Okoro, business development manager, SPUD, and Timothy Okon, senior special adviser to the minister of state for petroleum resources, during a presentation by SPUD, at the recently concluded SPE “Field Optimization and Economics Symposium (FOPES) 2019”in Benin.

BANKIING

Ecobank’s debut $450 million Eurobond oversubscribed ...proceeds to refinance lenders existing Holdco’s obligation MICHAEL ANI

he $450 million debut Eurobond, raised by Ecobank Transnational Incorporated (ETI) was fully oversubscribed by investors, the company said. The proceeds from the issuance will be used for general corporate purposes and to refinance the existing Holdco obligations of the firm, the Pan-African lender said in a note. “The success of this Eurobond reflects appetite from high quality and real money institutional investors globally and the trust that continues to be conferred on our institution and the markets we have chosen to participate in,” Greg Davis,

Group Chief Financial Officer (CFO), for the LomeBased parent company said. The Global Offering is a 5-year unsecured note (144A/RegS) listed on the main market of the London Stock Exchange. The bond will mature in April 2024 was issued with a coupon pricing of 9.5 per cent with interest payable semi-annually in arrears, according to the bank. The debut issuance which was rated “B” – (Stable) by both global rating agencies, Fitch and S&P, had Deutsche Bank ; Renaissance Capital; Standard Bank and Standard Chartered Bank as joint financial advisers. The bank noted that the issuance Investor interest www.businessday.ng

across the globe including the United Kingdom, United States, Europe, the Middle East, Asia, and Africa. “This is another first for Ecobank and I’m very excited at the prospects for the Group as we continue the second phase of our 5-year ‘Roadmap to leadership’ strategy”, Ade Ayeyemi, Group Chief Executive Officer of ETI, said According to Adeyemi, the successful issuance shows that the efforts of the bank toward greater operational and capital efficiency are paying off. This offer is another example of the measures we are taking to strengthen our institution and deliver value for all of our stakeholders”.

L-R : Dele Awolala, head, human resources; Tolulope George-Yanwah, country manager; Omolola Onasanya, head, Vendor Experience; Ernest-Eguasa, chief financial officer, all of Jumia Nigeria, at the Jumia Nigeria IPO press conference in Lagos. Pic by Pius Okeosisi

L–R: Osita Ede, head, consumer liability products, Access Bank plc; Shokunle Shakaru, Diamondxtra, N1million winner; and Victor Etuokwu, executive director, retail banking, Access bank plc, at the cheque presentation ceremony to DiamondXtra winners in Lagos

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Monday 22 April 2019

BUSINESS DAY

CITYfile Osun uncovers 769 workers with fake, forged certificates

Passengers travelling ahead of Easter celebration waiting to collect tickets at the Idu Train Station in Abuja on Friday.

Respite expected as Lagos lists 87 roads for repair JOSHUA BASSEY

espite is expected from the prevailing anguish on the roads in Lagos metropolis, as the state government says it is commencing repair works on 87 major roads across the state. Special adviser on Lagos State Public Works Corporation (LSPWC), Temidayo Erinle, said the agency has been directed by Governor Akinwunmi Ambode to commence immediate rehabilitation of critical roads across the state. According to Erinle, the roads mapped out for repair are those presently in terrible state and imped-

ing the free flow of traffic. “We have received quite a number of complaints from residents and motorists on the state of roads and how it is directly affecting travel time which in turn has negative effect on the ease of doing business in the state. “ The governor has therefore directed the public works corporation to immediately move in and commence repair on identified roads to ameliorate the traffic congestion that residents have been going through as a result of the state of the roads,” he said. Some of the roads listed for repair are Ikotun-Egbe, Ijegun roads, Alimosho and Dopemu roads, AkaKemberi road, Amuwo

Odofin, Marina Beach road, Apapa, Olaniyi road in Ifako Ijaiye, Acme-Oba Akran road and Ikeja. Other include Ijede road, Sabo market road in Ikorodu, Costain road by Brewery, Glover road, Herbert Macaulay road in Mainland local government, Itire-Ogunlana drive intersection, Itire-Lawanson, Babs Animashaun road in Surulere, Alakija/WAEC Rrad, Somolu, Obalende road, Eti-Osa, among others. Erinle appealed to residents and motorists to bear with the state government, urging them to drive carefully while the roads are being fixed. He assured that in the next few weeks, all the

potholes would disappear on Lagos roads. It has been a tale of pain and anguish for millions of residents in Nigeria’s commercial city, as major roads are riddled with potholes and craters. This couple with heavy presence of petroleum tankers and contain bearing trucks on major roads and bridges in the state, has led to gridlock, forcing commuters to spend upward of four to five hours for journeys that should take less than one hour. The situation has been particularly hurting in densely populated areas like Alimosho and Ojo, where residents are often seen trekking long distances to their destinations.

AIG warns against extra judicial killings MIKE ABANG, Calabar usa Kimo, the Assistant Inspector General of Police (AIG) in charge of zone 6, has warned men and officers of the Nigeria Police Force (NPF) under his command, to shun extra judicial killings, as any culpable would face the law. Kimo gave the warning, weekend, in Calabar while decorating 21 newly

promoted officers of the zone. According to the police chief, everyone would answer for his/her action. Kimo said the Inspector General of Police, Mohammed Adamu approved the promotion in the belief that the beneficiaries will live up to the tenets of the police. “I have known the Inspector General of Police for about 33 years and I know that he believes in promoting worthy officers. www.businessday.ng

But the police hierarchy is not happy that the force is in the news always for all the wrong reasons. We must change the narrative and not allow Nigerians to die innocently because of us,” he said. He added: “If we behave well, majority of Nigerians will be happy with us. Be professional about your job. It is one thing to be promoted and another to work harder, and ensure that you protect your rank.

If you don’t, anything can happen.” He commended the Inspector General of Police for approving the promotion of the officers, and hoped that those promoted will justify the gesture. Two of the officers were promoted from the inspector rank to assistant superintendent of police; two others were promoted to superintendent of police while about 17 were promoted to other ranks.

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sun governm e n t s ay s i t has discovered 769 workers in the state’s civil service who were working with fake and forged school certificates. Adelani Baderinwa, who is supervising the information and strategy ministry, said the discovery was made after five years of screening carried out by a consultancy firm employed by the state government. “A consultancy firm, The Captain Consultants, engaged five years ago by the state government to verify the results and other necessary documents of the workers in the state has completed its assignment and submitted its report. “ The screening of the workers’ credentials came on the heels of controversies and reported forgery of results with which some of the workers allegedly used to secure job in the Osun civil service. “At the commencement of the screening exercise in 2015, all the civil servants in the state were asked to submit their credentials in their personal files from which the Captain Consultants firm got access to their results and begun the verification exercise. “Each and every result submitted by each of the workers was verified in their various secondary schools, post secondary schools and tertiary institutions. “Some of the workers who were suspected to have forged/fake results

were summoned by the firm and asked to present original results or go to their various schools for either attestation or reconfirmation. The firm, on its own, approached the schools for ‘confirmation of results’ of the affected workers for which they were obliged. “The verification process uncovered serious certificate infraction on the part of some of the workers across Ministries, Departments and Agencies of the government. It was discovered that in some cases, some of the affected workers used another person’s result, while some forged their secondary and post secondary schools results to secure job in the civil service. He said in the case of some people employed as drivers in the service, it was discovered that they forged the O’Level results they submitted for their appointment. “However, the firm in its report recommended that some of the civil servants caught in the certificate infraction be pardoned, while some should not be pardoned. “Recommended for pardon are 102 drivers and 30 other workers who are to be pardoned on compassionate ground. A total of 586 workers are not pardoned, while the case of some 51 workers are still pending.” Some of the workers cleared and pardoned are said to be receiving their salary while those not yet pardoned have their salary suspended.

Enugu: Police probe mysterious death of prophet

he police command in Enugu has commenced investigation into an alleged mysterious death of a prophet in his room, within Enugu metropolis. The command’s public relations officer, Ebere Amaraizu, disclosed this on Friday. Amaraizu said that the incident happened on April 16, 2019. He said that the deceased, one Anthony Nwoko, was allegedly found dead in his room at Ezebungu Street of Ugbene 2 axis of Trans @Businessdayng

Ekulu, Enugu. “The Commissioner of Police, Sulaiman Balarabe, on receipt of the report, directed the operatives of the homicide section of the state Criminal Investigations Department (CID) to conduct diligent investigations. “The commissioner has directed them to unravel the mystery and bring those behind it to book,” he said. The police spokesman said that the body of the deceased had been deposited in a mortuary while investigations continued.

Monday 22 April 2019

BUSINESS DAY

Monday 22 April 2019

BUSINESS DAY

INTERVIEW

Quackery is not allowed in our profession – Rabiu Musa Rabiu, group chief human resource officer at Dangote Cement Plc. has been in human resource management practice for over three decades. In this interview, he outlines a three-point agenda he would pursue, if elected as president of Nigeria’s Chartered Institute of Personnel Management (CIPM). He spoke to Stephen Onyekwelu. Excerpts:

Tell us about your professional path. have been practising human resource management for the last 32 years. I am a fellow of the Chartered Institute of Personnel Management. My career has taken me through academics. I was an assistant lecturer in the department of Economics at Ahmadu Bello University, Zaria from 1986 to 1990. Then I joined Shell as personnel officer in 1990, spanning 18 years, which took me through Warri, Lagos and four years in The Hague, at the central offices of Shell in the Netherlands. I took early retirement in 2008, to pursue other career aspirations outside oil and gas. But I have been very active in the CIPM. I was invited to be first the acting registrar/chief executive officer, when the institute had some challenges with managing the organisation. I was there until 2010. This was the period that the institute re-engineered itself and we were able to lay a stronger foundation for the achievements that occurred in the last 10 years. I decided to move on from CIPM to focus on some professional challenges. So, I went into independent consulting. And I did that for one year plus, I became the human resource consultant for the Nigerian National Petroleum Corporation at their headquarters in Abuja. I provided consulting services in competence management, career development and general human resource policy advice. I left NNPC in 2017 after five years to join the Dangote Group as chief human resource officer. In brief, this is my profile. Of course, I have been active in other professional bodies. I am a member of the Nigerian Institute of Management. I am a fellow of the Nigerian Institute of Entrepreneurial Studies of the Institute of Business Development. I am a member of the Nigerian Institute of Training and Development, and several other professional bodies outside Nigeria. You started out as teacher. What led you into human resource practice? I have always wanted to be an academic and lecturer. The ideal role for me was eventually to become a professor, when I was younger. It started well, because I read economics, which I liked. And fortunately, being the best graduating student I was asked to come back after the National Youth Service Corps to be a graduate assistant. This meant I had to immediately start my master’s degree and teaching at the same time. I finished my master’s and started my doctor of philosophy (Ph.D). Initially I got admission at the University of Manchester; this was in 1986/7. However this was the time the Federal Government introduced the Structural Adjustment Programme. One of the implications was that funding for universities was drastically reduced. In those days if you got such admission, you go on in-service. This means that the university will continue to pay your salary and also pay your tuition. The university told me, sorry we have stopped that. There is no more funding. You should explore studying in Nigeria. I got admission into ABU, Zaria, faculty of Agricultural Sciences, but I went to do Agricultural Economics. I completed the course work and was about starting the research when I felt I just could not continue. This was because I was the highest earning member of my family and

had siblings to cater for. The reality dawned on me that I could not continue getting degrees. Painfully, I had to leave. Before going to the university, I was a bank worker at the United Bank for Africa (UBA) Plc. as a clerk. I went to a teachers’ college, but I did not quite like teach after I finished. In my form five, first term, I wrote the General Certificate of Education (ordinary level) examination. So, when I was writing my grade two teachers’ exams, the GCE results was released and I passed all nine subjects. So, while I was waiting to get my grade two results, I already got a job with UBA. Apart from the teaching practice I did during the five years, I did not teach. I got a job with the bank and was posted to Maiduguri. Eventually, I resigned because I wanted to go for further studies, that is, undergraduate studies. During my undergrad days, I also went back to UBA during long vacation to work. They would just pay some stipends but reasonable amount. I had this affinity with UBA and even when I graduated the pull was to go back and work in the bank. But when I got the graduate assistance role, I felt I should do my master’s and after master’s, Ph.D. When I was leaving the academia, I applied everywhere and where I was hoping to get a job immediately was in the banking sector, UBA in particular. It came after I got the job in Shell. When the offer came, it was not exciting because I did not know the oil and gas. And even the function, personnel in those days was little understood. I was an economist; what was I going to do with personnel. My wife and I were desperate to earn more income and we thought since this is the first one that has come along, it is better to take it. That was how I went to Shell and I went with the intention of staying for a few months, until I got the ideal job in the bank, which came afterwards. But after a year at Shell, I realised, the income had significantly increased and the oil and gas was sophisticated, particularly at Shell. There was a lot to learn and if one

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we need to strengthen the relationship between the Council, which is national leadership and the various state branches. We also need to strengthen compliance with the Institute’s Act as well as the bye-laws

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Musa Rabiu

wanted a structured career, that was the place to be. After the first year, positive things started happening, I got promoted, got more challenging responsibilities and I was transferred to Lagos, the headquarters of Shell in Nigeria. This was how instead of a few months, I was there for 18 years. What is your take on the phenomenon of graduate employability and the lack of jobs? Jobs are available for those with the right skillset. So, when graduates say there are no jobs, it means they do not have the skills for the jobs that are available. The employer is looking for ready-t-use. But very sophisticated and broad-minded employers also know that there is a tutelage period, when graduates have to learn the roles, grow and become solid in the job. What I know from experience is that our educational institutions have been churning out graduates that have not been meeting the

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standards we had in the last 20 years or so. I saw this when I was at Shell. Shell will go through its recruitment process in a very rigorous manner and by the time you are employed, you have what it takes. You may not know very much about oil and gas industry practice, but you have the potential you to be the best anyone can be. After that you will be taken through Shell’s training and you become solid and can work anywhere in the world in the oil and gas field. I think about 1995/6, Shell realised that the quality of graduates it was getting from the university system dropped. They exhibit all the desired qualities but when it came to the content of the different subject matter areas of the disciplines like physics, chemistry, geology and even information technology, they were not deep. So, the problem was not the individual but the system that they went through. Shell introduced

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the Shell Intensive Training Programme. It was a 12-month programme, very intensive and it deepened the understanding of the new recruits in those areas. Shell did this in collaboration with a university in Aberdeen, Scotland. After the training some of them were so good that the left Shell to work for other companies abroad. The problem was not the person but the system they went through. So, if graduates say there are no jobs, it means they do not have the right skills for the jobs available. In addition, because of where we are in the economic cycle, just recovering from a recession, there has not been much growth in the economy because of the diminished economic activity. If you have a contraction in the economic system, then demand for skills will also be constrained. We also have structural unemployment, if industries are demanding for more engineers but the university system is churning out arts and humanities graduates, you have a structural unemployment.

What are the key determinants of an efficient and effective human resource policy for any organisation? Human resource policy will respond to the macroeconomic environment, in terms of regulation and economic policy formulation by the government. When the annual budget is released, how does that change funding business activities, bank loans, and fiscal policies? In a nutshell the business environment must be in the right frame. Human resource policy will therefore respond to the stage at which the economy is at any point in time. The entire value chain of the human resource practice starts from attraction, recruitment, performance management, compensation and benefits, employee industrial relations, including learning and development and general talent management. Human resource policy will then seek to optimise each stage in the value chain. On attraction, companies can go to higher institutions of learning, particularly those who have the financial muscle to market their attraction packages and value proposition. This will be a policy that takes employment beyond job adverts in newspapers. When this happens, then lecturers will also pay attention to the needs of these companies and design curriculum in alignment with industry needs. The times have changed, there is artificial intelligence now and various forms of technologies that actually help the employees perform at their best. This interaction will begin to shape the quality of graduates through curriculum review. When it comes to selection, there is need for human resource policy to focus on evidence-based selection process, not `man knows man or woman knows man.” In this sense you then have clear expectation on technical competence, inter-disciplinary skills, leadership or people management skills. Regardless of the method used, it should be evidence-based. Policy on compensation and benefits should be based on best practice and competitive. You must make sure your compensation and benefits are attractive. If you are looking for the best then you must be able to put money behind it. If you do not, you will spend time and money to attract but they will not stay. Retention will be an issue. Beyond the pay, which is a hygiene factor, you also need clear policy on how to develop the talents you employ. This is learning and development or training. Every good organisation should have funds to keep training its workers. This enables them to have informed discussions with peers within and outside the country. The people you have create the value, not the machines or infrastructure. If you do not invest in their continuous development then they cannot enhance the value they are bringing to the organisation. For employee relations, you must have clear policy dealing with that. This will be captured in the staff handbook. Every recruit into the organisation in this sense knows their rights and obligations, in terms of welfare, what to do, time to come to work and disciplinary measures. In this sense, nothing is hidden. Finally but not conclusively, is the issue of managing talents and succession planning. There must be a policy that allows you to hire

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somebody, whether young or not young and to be able to help them to move up in their career. A succession plan will allow you to cover for the top management because nobody will be on the job forever. People move around. The organisation must have a policy on succession planning. Who will be behind this guy in case he decides to leave or if he is moved to a different job? For the younger ones, there should be a clear view of where they will be in the next five or more years. How does the CIPM regulate human resource management in Nigeria? The CIPM was established by an Act of parliament to regulate the practice of human resource management in Nigeria. The Institute regulates first by having registered members who are sworn to a professional code of conduct. The first task therefore is to get people into the Institute and then start the process of education, which comes through training and re-training. You cannot practise if you do not have the human resource management professional license. It is evidence that you have been assessed and certified fit to practise. The license is valid for only two years after which the holder goes through the certification process again. As practitioner you cannot remain stagnant. You must attend conferences, seminars, training and workshops or you are facilitating them. So, it is then about registering, training, assessing and certifying human resource management practitioners in Nigeria. Not everybody who is doing human resource management in Nigeria is registered. CIPM has over 12, 000 registered members but not all of them have license to practise. The effort is on to get them re-trained and certified fit to practise. Quackery is not allowed in our profession. It is like having a doctor who is about to perform a surgical procedure for which he is not certified to carry out. And the CIPM, backed by the Act of parliament can actually sanction offenders, but we want to first attract and train. If this route fails then we might use coercive measures. To get into CIPM, there are two routes: the exam or professional path. The exam route has a study process and examination that you have to do. There is the first, second and more senior parts. When you are through with the exams, you get a CIPM diploma. Then you have to undertake six months’ internship to gain hands-on experience, with coaching. With this you become an associate member (ACIPM). The next grade is the full membership (MCIPM) and the highest grade is fellow (FCIPM). In between these are periods of practice. What are some of the challenges? The first challenge has been getting full compliance with many organisations, in terms of appointing registered members of the Institute into human resource management leadership positions. So, you go to an organisation, the human resource manager, is she a member of the Institute? We have more compliance in the private and formal sectors than in the public and informal sectors. This is a major challenge and this is why the institute was established to close that gap. We have been working to get the Federal Government to accept the CIPM diploma as

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entry requirement into certain cadre of the civil service. That effort is still on. The second challenge has to do with penetration across the 36 states and the Federal Capital Territory. Historically, the Institute started from Lagos State and have more members from here. But there is potential to increase our reach especially to the northern parts of the country. This is where we have an opportunity. Thirdly, getting support to execute certain initiatives has been challenging. It can be funding but it is more about resources. We need more collaboration with organisations, to provide opportunity for internships to candidates training to become members of the Institute. This can reduce unemployment and offer hands-on experience, which counts towards employment. You are contesting for the position of CIPM’s presidency. What is the motivation for this? The motivation is to serve. I have been serving the institute in the last 25 years. My first leadership opportunity was when I was chairman of the Delta State branch – 1997 to 1999. I became a member of the Strategic Planning and Implementation Committee, which is a committee of Council. After that I became a registrar of the Institute for two years. Afterwards, I contested and was elected a council member. I subsequently contested for the position of vice president but was declared unsuccessful. The president at that time appointed me a member council. Thereafter, I was appointed to chair the Management of the National Unemployment Committee, which looked at the challenges of national unemployment and possible solutions. This earned the Institute a seat on the quarterly business review meetings of the Federal Government. The Institute was made a member of the National Employment Council. So, you see, I have been in leadership positions at the Institute at various levels. Naturally, I feel if I am elected as president, I will add to what has been achieved up to date. I am not just a member of the Institute but have been its chief executive officer. I am familiar with the challenges and have ideas that with the support of members in council, we can take the Institute to where it should be in line with its vision and mission statements. What are the issues you plan to tackle immediately, if elected as president of CIPM? In terms of my manifesto, I am looking at three things. The Institute has a strategic plan of three to four years. Out of the plan, I have figured out three areas. One is the issue of governance. Two is branding. Three is capacity building. For governance, we need to strengthen the relationship between the Council, which is national leadership and the various state branches. We also need to strengthen compliance with the Institute’s Act as well as the bye-laws. Branding is important because, how the Institute is perceived by stakeholders matters for its operations. The Institute has achieved a lot in this regard already. Capacity building will focus on two segments: secretariat staff and our own members. One challenge of course will be to getting a quick buy-in of council members.

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Monday 22 April 2019

BUSINESS DAY

BOOK SERIALISATION

W H Y N OT Citizenship, State Capture, Creeping Fascism, and Criminal Hijack of Politics in Nigeria

Continued from Friday

Chapter VI The Gideon §project Finding Grass and its Roots

hen I arrived Abuja, my first stop was to call on an old friend, the then freshly appointed Secretary to the Government of the Federation, Boss Mustapha. Boss and I shared a few things in common. We were both national directors of the Full Gospel Businessmen’s Fellowship International and had collaborated in efforts at building consensus coalitions of the political opposition parties for several years. He welcomed my consideration of the gubernatorial race and asked who else was indicating interest. I mentioned Great Ogboru, Victor Ochei, and some others. He was quick to rule out Great Ogboru. According to him, on more than two separate occasions, he had reneged on agreements reached with ACN and APC. The meeting with Adudu Ogbeh produced the same result. The Agriculture Minister dismissed Ogboru as perennially unreliable. With Party Chairman John Odigie Oyegun, I was more measured because I knew there was a lot of pressure to have a new chairman elected. Adams Oshiomole, was speculated to be a potential successor. Still, I updated Oyegun on my effort to reconcile factions of the party in Delta State. He was most welcoming of my efforts and we spent several hours at his home discussing the party and the country. I also reached out to operatives in the presidency. Abuja seemed comfort¬able with the idea, or so it seemed. So, I turned my efforts to my base, Delta State. Abuja would not be taken for granted but my run was from Lagos to Delta. It would become an almost weekly commute. Face to Face with Transaction Politics Engaging the grassroots, began with the opinion leaders, APC leaders in Delta including segment influencers such as women and the youth leaders. It would soon be my routine to be on the Arik Air or Aero flight to Warri every Friday morning. From the home of chieftains around Warri and Sapele, I would typically head north to my operating base in Ibusa in

the State capital territor y either by Saturday evening, Sunday evening or Monday morning. I had learnt, hosting meetings to reconcile the feuding factions of the party in Delta is part of a political meeting. The first of those meetings was in Abuja at the Transcorp Hilton Hotel where I was lodging as part of the transition committee working on a strategy for governing after the elections of 2015. It was a meeting of about 14 people crammed into the suite. I had to arrange drinks and some light chops. Given the location, that set me back a little, but I welcomed the outgoing as duty. As the meeting ended, one or two of those who came complained that I was not acting like a politician. That was my baptism into the lubrication by politicians. I had been expected to provide everyone who attended some amount of money to take home. As my weekly visit to Delta began two years after, I would only then get a full understanding of what is called ‘Shiagwaeri’ money. On each visit we identified a silent number of influencers to visit. On each visit, you were welcomed with kola-nut offering and some prayer money. You in turn, returned the favour in multiples. After a few weeks, I realised that I had taken a sure path to bankruptcy. Besides the cost of tickets to fly to Delta for some of my aides and I, there

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-ings was in Abuja at the Transcorp Hilton Hotel where I was lodging as part of the transition committee working on a strategy for governing after the elections of 2015.

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was the cost of drinks, Shiagwaeri money and the cost of logistics for the motorcade of supporters, security personnel, from uniformed police to the private youth groups marketing their muscle and support. Then there were the private requests – every burial, wedding or chieftaincy title event awaited a gift. The leaders among the main group that came to lobby me into joining the race chipped in a bit at first, but that source soon dried out. My pocket was on its own. The irony was that one got into politics precisely to end these kinds of transactions that encouraged politicians to abuse the treasur y as they seek to recoup their investments. This ultimately sows a deep culture of corruption that is debilitative to progress and the advance of the common good of all. Each protest against the entrenched bad habits was met with the counsel that the idea of ending the practice was a good one but that the way to do that was to get there and

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change those inappropriate traditions with the authority of the elected man at the helm. However, to get there, you had to walk the old order. I found the excuse lame, but I was swimming against the tide. Of all the persons that were despicably irritating in defining politics as financial transactions for acquiring loyalty, and there were many in Delta, none was more obnoxious and disgusting than Hyacinth Enuha, a well lettered professional and an engineer who had risen to be chief executive of an oil service company. It would take a whole book to describe the damage Hyacinth Enuha did to the culture of politics in Delta State and to prospects of progress that would free Deltans from development reversals occasioned by government failure. He was self-proclaimed leader and elder. No one ever elected him but the tradition of respecting age and his disposition to fostering patron-client networks made him a grave danger to the democratic process and the values of the society. He collected

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money from one and all and even from people contending for the same position. I felt such shame for him because he was a friend of nearly 30 years and part of a group that we founded more than two decades earlier. The aim of the group was to work for the social, economic and political advance of the Anioma people, the Igbo speaking peoples of the North of Delta State. His conduct in politics came to represent the very opposite of what we conversed in Oganihu Anioma. I was s o pained by the example of his ways I nearly quit because of it. If he could be that way, how could I assure anyone I would be different. His credentials, like mine, were of an educated professional who had been a man of commerce. Most of the people I had to deal with on those frequent trips to Delta may not have been a s b a d a s E nu h a, but the conditions in which chieftains sold their support for personal gain remained the dominant way of Delta politics. Still, I wanted some issue-politics because that was the only way I figured that the people could come to own the issues that h av e i m p e rilled their happiness. Their a c t i o n s h av e facilitated consequences that have made misery their lot. I began speaking at town hall type meetings about these issues; hoping to find enough people who cared and grasped some understanding. Of great a burden for me was the state of unemployment and lack of purposefulness rife in the life of most of its youth. Lack of education or its poor quality and difficulty to access were preventing the promise of progress. I would take to the importance of education and how to offer both STEM-based education and vocational education. But I know I could not talk about my preferred approach which I called the Pedagogy of the Determined. They would brand my adaptation of Paulo Freire’s, Pedagogy of the Oppressed as big grammar, “theory and being in an Ivory Tower”. So, I spoke about the current condition of the State’s finances, especially its indebtedness, and about my cardinal programmes for education, healthcare that is available and affordable and infrastructure initiatives that opened up the State and created new growth hubs linked by world class highways, railways

Monday 22 April 2019

BUSINESS DAY

BOOK SERIALISATION and waterways; and for Burutu to regain its colonial era prime port status and the Forcados River becoming the channel of intermodal transport. This would lead a Blue Ocean Trade and Investments Strategy resulting in Delta being the true gateway to the heart of the Nigerian economy. It would sadly be the remarks about the indebtedness of the State that drew the first jitters. Speaking at a big town hall meeting in Abara Ottor, my main focus was on autonomous local governments and how to empower communities for a community centred development strategy in which the communities determined their need. To ensure effective implementation, a strong team at the State level would need to be set up to provide guidance. However, what would generate a fight-back from the former St at e G ov e r n o r, Em ma nu e l Uduaghan, was my mention of a future mortgaged by past borrowings by a State that received more resources than it could wisely use. Add the borrowing to the accruals from the federation account and there was still nothing to show for it in infrastructure, development, investment or planning for the years. Uduaghan responded with an ad hominem blast at me even though I did not as much as mention him. Regardless, I welcomed it; I was born for that kind of issuebased fight. I would stick to the issues holding back no punches. In the middle of the media spat, I finished another round of consulting with APC influencers in Ethiope East and then had to go to Abuja. I drove to Benin to catch a flight to Abuja. Already seated as I got on board in a most unusual coincidence, was Dr Emmanuel Eweta Uduaghan; I greeted him warmly. For me these things were not personal, just a different understanding of things purely in the marketplace of ideas that the public sphere offers. An hour after I arrived in Abuja, my phone rang. It was Bishop Mathew Hassan Kukah. He wanted to know where I was in Abuja. He confirmed that he too was in Abuja and would want me to stop by. I said that I was on my way to an event, but I agreed to make a quick stop. When I got there, Governor Uduaghan was there as well. That was a real surprise! For years Bishop Kukah and I have carried on about who was more itinerant. Even General TY Danjuma told me once that Bishop Kukah assured him that I would go to two or three other meetings before showing up briefly for a meeting he and I had scheduled, so he was surprised to see me arrive on time. I knew that I had accused the Bishop of similar and more, including attempts at bilocation. I had not expected that he could conjure up the

‘‘

Of all the persons that were despicably irritating in defining politics as financial transactions for acquiring loyalty, and there were many in Delta, none was more obnoxious and disgusting than Hyacinth Enuha, a well lettered professional and an engineer who had risen to be chief executive of an oil service company presence of these two people taking on each other in the news. It was quickly evident that Uduaghan had been in touch with him and had told him I just got into Abuja. The Bishop quickly went into his great reconciler mode. I assured him that there was no quarrel and that I had greeted him warmly on the plane. He insisted that we shake hands and take a picture. I had no problem with that, and we did. Less than an hour later, I was inundated with calls. The picture, a copy of which I did not have, had gone viral. I thought then that it was best to leave those issues for the time being. Months later, Uduaghan told Adams Oshiomole, who was now party chairman, that his hesitation w ith making the switch from PDP to APC was because the leaders of APC in Delta were more focused on scrambling for control of the party structure than in building up the party to be a contender in the general elections. He stated that I was the only one trying to do that and that effort resulted in our media battles. On returning to Delta I wanted to focus more on the youths and women meeting them in small groups in communities, but many of those who had joined the campaign team still wanted consultation calls to be made on the so-called influencers. This was not only a bigger drain on the pocket but less certain of being valuable because yesterday’s influencer after much ‘Shiagwaeri’ expense and a quick invitation to the burial of one of their relatives would soon leave for another party rendering that investment a waste. We began to structure town hall type meetings at senatorial zone levels in Warri, Ughelli and Asaba. I addressed large www.businessday.ng

gatherings at considerable expense with those who collected yesterday saying the next day, that nothing had ever come their way. Are These My Friends? I have often been referred to as the new Zik because of my being active in the public life in my region of domicile, the south-west of Nigeria. My role in founding The Concerned Professionals and the struggle for the reversing of the annulment of the elections of June 12, 1993 increased this perception of the man seen as well-adjusted and comfortable with the Yoruba elite and political class. In truth, it was not in my nature to see a difference between people in terms of race, ethnicity, language or gender. I was comfor table w ith my northern friends as with my Yoruba friends. Secondary school education in Ibadan made my network in the south-west seem even more south-west inclined. To compound matters, I loved many of the ideas of Chief Obafemi Awolowo. O ne older fr iend, O lorogun Felix Ibru, whose demise just before the Gideon Project started, hit me hard used to say to me we are Awoists. He was the first elected Governor of Delta State and I sometimes wonder what role he would have played in my consultations had he been alive. The urbane architects used to refer to us both as Awoist activists. When the Awolowo family lost Chief Oluwole Awolowo, Chief Felix Ibru and I spent a long day visiting the family in Ikene. There we talked quite a bit about our connection to the Awolowo family. When Bola Tinubu returned from “NADECO exile” in 1998 and reached out to me on account of where I stood in the fight against the Abacha dictatorship and the June 12 project, I did not hesitate to offer my assistance in whatever way I could for the advance of the common good. I was soon involved in working closely with members of the Tinubu cabinet and leading their cabinet retreats pro bono. The result was a web of friendships with many of the officials who would later become governors and leading politicians in the south-west. One Sallah holiday some Anambra politicians considering joining the APC asked that I take them around APC leaders in Lagos after visiting Oba Akiolu, we went to Tinubu. As he was seeing us to our cars musicians began praises singing. He broke into dance. Not to look awkward I tried to shuffle across. Two hours later got a call from a friend who commented on my partying with Tinubu. I wondered what he was taking about. Someone recorded that moment. It went viral and three years later was still being recycled. I call it my longest 30 seconds.

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It was natural to consider them political allies. Good judgement suggested that I work them into the strategy for rescuing Delta. I had working for me as tailwind, or so I thought, conversations and activities involving Bola Tinubu in which he had urged me to run for Governor of Delta in 2011. As I indicated earlier, I had been less enthusiastic because I was more concerned with national matters. He even went as far as suggesting that after Delta where he would place all the resources possible in play, he would support national elections bid for me. I had passed up on the offer then, but presumed that saying yes now, would delight him. I therefore, had to have a programme of consultations with my friends in the south-west. One track for obtaining their support in our planning, was a one-western-region philosophy of development partnership for a zone stretching from Asaba to Lagos. I chose that as my theme for my 2018 homebased birthday celebration. For nearly 20 years, I had marked my birthday with an international colloquium in Lagos. I would then journey to Delta to host a luncheon for the members of my local church parish after a mass of Thanksgiving. It became the pattern until after one thanksgiving event in my hometown, when the parish priest came to me and said that many of the people at the lunch thought it was not fair of them to be having such a feast whilst their children who had not seen such quality food for a long time, starved at home. They requested therefore, to be allowed to take the food packs home. I was so pained by that revelation that I subsequently ensured that the so-called yearly quality meal for the poor of the parish would now be part of my birthday tradition. In 2018, with the Gideon Project unfolding, I chose to add local talk to the Ibusa thanksgiving event and chose for a theme, Consolidating the gains of the West. I took the idea to Osun State Governor, Rauf Aregbesola, who had

‘‘

When Bola Tinubu returned from “NADECO exile” in 1998 and reached out to me on account of where I stood in the fight against the Abacha dictatorship and the June 12 project, I did not hesitate to offer my assistance in whatever way I could for the advance of the common good.

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served as Commissioner in the Tinubu Government before being elected Governor of Ogun State. He loved it, at least I got that impression, and he accepted to be my support base for an “invasion” of Ibusa. As the day drew nearer, he became more and more difficult to reach. Not even Rotimi Akeredolu, my school mate and friend of nearly 50 years, was anywhere to be found. Fortunately, it would turn out to be a great day. After a thanksgiving Catholic mass service led by the prelate of the Metropolitan See of Onitsha, Archbishop Valerian Okeke, Dr Tunji Olaopa and Ortive Igbuzor spoke brilliantly on the theme. The Edo State Governor, Godwin Obaseki, the Minister of Petroleum Resources, Dr Ibe Kachikwu and leader of the mainstream APC in Delta, Otega Emerhor led the stream of APC faithfuls. The Aregbesola talk but noshow was an early signal that I should be careful and not expect much from my apparent “friends.” So, what then should I make of his earlier comment dismissing Ogboru as competition? He had asked me to research and see if Ogboru, in so many runs for the office of Governor of Delta State, had ever made one complete intelligent statement about how to govern or his vision for Delta. The evening he made that statement, one UK based Delta born blogger of the same ethnic group as Ogboru published material saying just about every material she could find on Great Ogboru whilst on the campaign trail was in Urhobo language. That surprised me because I had reached out to Great Ogboru and rated him as having some substance beyond being the civilian who joined soldiers to plot a coup that aimed to expel some parts of Nigeria from the Federation. I was however more concerned about what to make of my political friends from the south-west than Great Ogboru’s inadequacy for the position of Governor. I had breached the issue of the pressure to run with party leader and south-west champion, Bola Ahmed Tinubu. My real political disposition was that if he as much as hinted that there would be a challenge with my running, I would exit the process and use it as justification to those on my case to rescue Delta. On each occasion that I sought his opinion, he said I should not consider getting off the train. I had pointedly told him that I was waiting for a sign of any challenges in the road ahead and I would quit. Each time though, he was against my quitting but the irony is he never did anything to either show public support nor offer any other support. Continues on Tuesday

Monday 22 April 2019

BUSINESS DAY

insurance today

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Brokerage fraternity pushes for deeper insurance penetration Stories by Modestus Anaesoronye

L-R: Tope Adaramola, assistant executive secretary, Fatai Adegbenro, executive secretary/CEO; Shola Tinubu, president,; and Tunde Oguntade, honourary auditor, at the 2019 First Quarter press conference of the Nigerian Council of Registered Insurance Brokers (NCRIB)held in Lagos.

lack of adequate compensation to victims, called on the co-operation of all stakeholders to address this ugly trend. He further noted that despite the laws enacted in Nigeria on Building Insurance, so many contractors, owners of buildings are yet to take up insurance policy to mitigate risk that may arise by negligence, which may result in death, bodily injury or property damage to workers on site or members of the public. While congratulating President Muhammadu Buhari on his reelection, he tasked the administration on creating an improved enabling environment for business and professional growth. He said ” As actors in the financial ecosystem,

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BN General Insurance, a subsidiary of FBNInsurance and a member of the FBNHoldings Company has launched a new service called FBNGI Claims Alert Service targeted at enhancing its comprehensive motor insurance consumer experience. FBN General Insurance ClaimsAlert Service is designed to provide a responsive service to all her Comprehensive Auto Insurance policyholders who have been involved in an accident within the Lagos Metropolis where the service is currently active: Eti-Osa, Lagos Island,

…seeks impetus from Govt

nsurance brokerage fraternity with membership numbering over 500 says it’s committed to using the resources within its disposal to compliment the efforts of the larger industry in deepening insurance penetration. The brokers under the umbrella of the Nigerian Council of Registered Insurance Brokers (NCRIB) believe that the current penetration level of insurance still less that 0.5 percent is unacceptable given the country’s population of over 180 million. The Council leadership, while commending the efforts of the National Insurance Commission (NAICOM) in driving penetration through different initiatives, says government must give insurance the needed impetus to enhance its contribution to economic growth of the country. Shola Tinubu, president and chairman of Council of the NCRIB during a Quarterly Media Briefing in Lagos called on the government to give more impetus to the implementation of the enforcement of compulsory building insurances as stipulated in Section 64 and Section 65 of Insurance Act 2003. Tinubu who lamented the spate building collapse across the country without risk management applications in building and constructions, as well as

FBN General Insurance launches ClaimsAlert Service to boost customer experience

the NCRIB is using this platform to advise the government to inject fresh ideas into the running of the nation’s economy while at the same time sustaining the tempo of existing positive economic policies already put in place by the government. The reflection of the economy should be anchored on enhanced promotion of local capacity to reduce over dependence on foreign goods and services, and by so doing reduce the strain on the nation’s currency vis-a-vis other foreign currencies.” “It is a known fact that politics and economy are inextricably woven, as one negative or positive development in one would most assuredly affect the other, and vice versa, says Tinubu, adding that the stability of

Nigeria political environment is an harbinger of a stable and progressive economy.” “In specific terms, urgent attention must be paid to reducing poverty, which has as its bye product, unemployment and poor standard of living. While Nigerians are awaiting government to give more teeth to implementation of Oil and Gas reforms, power sector reforms and human capital development and redouble efforts in promoting agriculture, more attraction should also be given to the state of security in the country.” Since insurance thrives more when the economy thrives, it is our believe that the industry will witness desired northward trend when the economy is on a sure sound footing, Tinubu said.

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Lagos Mainland, Surulere, Kosofe, Shomolu and Ikeja. The FBN General Insurance ClaimsAlert Service is a value-added service to all her Comprehensive Auto Insurance Policyholders only and this comes at no extra cost, says Bode Opadokun, managing director/ CEO of the company. Opadokun said FBN General Insurance has a dedicated team of Claims Agents, Customer Support Staff and Auto Garages for prompt and quality repairs of your vehicles. Customers will get claims to the value of N50, 000 and below resolved at the scene of the accident.

Fall in traditional equity drives 3% decline in global reinsurer capital

lobal, dedicated reinsurance capital declined by 3 percent in 2018 ending the year at $585 billion, driven by a fall in traditional capital as the alternative sector grew once again, according to Aon’s 2019 Reinsurance Market Outlook. From the end of 2017 to the end of 2018, traditional reinsurer capital declined by 5 percent, or $28 billion to $488 billion, driven mostly by a number of macroeconomic factors, says insurance and reinsurance broker Aon. These include higher U.S. interest rates, the strengthening of the U.S. dollar, and also a stock market correction in the final quarter of last year, with a change to accounting significantly impacting company results. The reduction in traditional capital throughout

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the year was somewhat offset by the continued, albeit slowed entry of alternative, or third-party reinsurance capital. According to Aon, alternative capital increased by 9 percent, or $8 billion to $97 billion in the period, mitigating the negative impacts of macroeconomic factors on the capital level of the global reinsurance market. Aon notes that the above chart shows the total of alternative capital gross of trapped collateral, as a result of the catastrophe events in 2017 and 2018. Insured catastrophe losses over the last two years exceeded $240 billion, but despite this, Aon highlights that global reinsurer capital remains resilient and in fact, excess capacity continues to exist in spite of greater demand for reinsurance solutions, globally.

Monday 22 April 2019

BUSINESS DAY

insurance today

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E-mail: insurancetoday@businessdayonline.com

8 insurers paid N71.bn in claims in 2018 BALA AUGIE

o fewer than 8 insurers have paid N71.01 billion to policy holders in 2018, representing a 14.53 percent increase a year ago, as companies continue to incur more expenses in generating each unit of revenue despite an economic recovery. Rising claims expenses means insurers are committed to honouring their obligations and delighting customers, but they have to be consistent in meeting obligations to allure more customers. The average claims expense ratio or loss ratio of the 8 firms under coverage increased to 51.18 percent in December 2018 from 50.34 percent the previous year. This means that for every N100 of premium collected by insurers during the year, N51 was paid out in claims. Many insurers manage claims expenses because if it eats deep into revenue, it can bloat combined ratios and result in deteriorating underwriting performance. A breakdown of the figures shows FirstBank Insurance Limited’s net claims ex-

penses were up 9.50 percent to N4.71 billion in December 2018 from N4.30 billion the previous year. Loss ratio fell to 16.91 percent in the period under review from 21.52 percent as at December 2017; this means the company is spending less on claims expenses in generating each unit of revenue. Custodian and Allied insurance Plc’s claims expenses increased by 10.0 percent to N15.30 billion in the period under review from N13.90 billion the previous year. Loss ratio fell to 74.27 percent in the period under review from 73.93 percent as at December 2017; this means that for every N100 of

premium income collected by the insurer during the year, N74.27 was paid out in claims. Aiico Insurance Plc paid claims of N23.86 billion in the period under review; this represents a 14.89 percent increase from a year ago. Loss ratio rose to 74.90 percent in the period under review from 74.32 percent the previous year. This means for every N100 collected in premium, the insurer paid out N74.90 in claims. Efficient underwriting capacity helped Aiico revert to underwriting profit of N3.21 billion in December 2018 from a loss of N4.02 billion the previous year. AXA Mansard Insurance

Plc’s claims expenses were up 27.18 percent to N12.13 billion in the period under review from N9.53 billion as at December 2017. However, the company has spent less on expenses in generating revenue as loss ratio fell to 61.57 percent December 2018 from 69.17 percent as at December 2017. Consolidated Hallmark Plc’s claims expenses increased by 26.48 percent to N1.80 billion in the period under review as against N1.42 billion as at December 2017. Loss ratio moved to 42.12 percent in the period under review from 38.63 percent the previous year. Continental Reinsurance Plc claims expenses were flat

N10.7 billion in the period under review, but loss ratio increased to 46.34 percent in the period under review from 46.0 percent the previous year. Sovereign Trust Insurance Plc’s claims expenses moved by 37.15 percent to N1.78 billion in December 2018 from N1.30 billion the previous year while loss ratio increased to 35.31 percent in the period under review from 33.82 percent as at December 2017. Prestige Assurance Plc claims expenses surged by 1.32 billion in December 2018 from N655.73 million the previous year while loss ratio moved to 58 percent from 45.27 percent as at December 2017. Analysts say the economic recession of 2016, rising inflation, and fraudulent claims are responsible for a surge in industry claims. For instance the replacement cost of assets has risen due to time value of money. For instance if a vehicle was insured when inflation as 9 percent, then the vehicle got damaged 2 years later when inflation had risen to 14 percent, then the insurance company would pay more to compensate the customer. The economy of Nigeri-

an has been relatively stable since the central bank introduced a new foreign exchange policy in 2017 while a rebound in crude oil price helped the country exist its first recession in 25 years. Nigeria’s Gross Domestic Product (GDP) growth rate increased to 2.38 per cent (year-onyear) in the fourth quarter of 2018 (Q4, 2018), indicating a 0.55 percentage rise compared to the 1.81 per cent growth recorded in the preceding quarter, according to the National Bureau of Statistics (NBS). Nigeria’s Consumer Price Index (CPI) report for March published this morning showed headline inflation eased for the third consecutive month by 6bps to 11.25 percent yoy from 11.31 percent yoy in February. The cost of replacing an insured asset has risen. So, the replacement cost is not the same any more. It is easy for insurances that are designed on replacement values, but for those that are not designed on replacement values, they will be hoping that they will get replacement values and this puts some pressure on both the brokers and the underwriters because most time, you are pursuing some unknowns”.

NAICOM directs on timeline for delivery of policy documents, claims notification acknowledgment

nsurance regulator, the National Insurance Commission (NAICOM) has directed insurance institutions in the country on timelines for delivery of policy documents to the insured, as well as acknowledgement of all reported claims. According to the Commission, insurance institutions shall document evidence of the acceptance of a policy contract by the insured as enshrined in the 2003 insurance Act, while for claims, insurance institutions must within 48 hours of claims notifications by the insured give acknowledge to the effect. This is contained in a circular signed by Pius Agbola, director, Policy and Regulation, National Insurance Commission(NAICOM) onbehalf of the commissioner for Insurance with the them ‘ ‘Circular to In-

surance Institutions on fair Trade Practice And Fair Treatment of Customers’. The circular reads: As part of the roles of the Commission to establish standards for the conduct of insurance business in Nigeria and in furtherance of the government’s drive towards operational transparency and enhance ease of doing business in Nigeria, it has become imperative to issue this circular for compliance by all insurance institutions in Nigeria. “Insurance institutions are reminded that the timeline required in delivery of insurance policy document which is an evidence of insurance contract shall be in accordance with provisions of insurance Act 2003. In line with the above, insurance institutions are required to adequately document evidence of delivery of insurwww.businessday.ng

ance policy document to the insured.” The circular also stated

that insurance Institutions shall obtain an appended signature of the insured or

his representative evidencing his or her concurrence with the content of the pol-

L-R: Shola Osho, head, Business Development, FBN General Insurance; a ClaimsAlert Service agent; Bode Opadokun, managing director/CEO, FBN General Insurance; another ClaimsAlert Service agent and Elizabeth Agugoh, head, Marketing and Corporate Communications, FBNInsurance at the launch of the ClaimsAlert Service https://www.facebook.com/businessdayng

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icy document. On the issue of claims, the Commission also said in line with the express provision of the insurance Act 2003 in connection with the time to settle claims, insurance institutions are hereby reminded of their responsibilities and obligations to settle claims promptly. “Further to the above, institutions are required to acknowledge all reported claims not later than 48 hours from the date of notification. “ Besides, Insurance Institutions website are required to be regularly updated (But not later than three months with the following minimum information to the insuring public - The average timeline to settle claims for various classes of insurance; business location and contact number of all its branches; and the complaint procedure, the Commission said.

Monday 22 April 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

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How younger salespeople can win over older customers DAVID PRIEMER

s companies build out their sales organizations, I find that more and more are putting younger team members — millennials — in charge of connecting with buyers at earlier stages of the sales cycle. That helps explain why, as I train and advise sales teams, many report a rising intergenerational challenge. I call it experience asymmetry. These young salespeople find themselves pitching older decision-makers who have much more experience than they do. Often, the potential buyers are wary, skeptical that the inexperienced representative can offer them ways to improve

how they do their jobs or run their businesses. I’m able to train people

on how to handle these situations partly because of my own experience. Early

in my career, I was a sales engineer for a high-growth software company. Our

products were designed to help keep track of employees’ work hours and schedules. I was 25 years old. Many potential clients I was pitching had worked in the industry, and even at their company, for decades. There are three key steps to overcoming experience asymmetry. They are the steps I teach and recommend to this day: KNOW THEIR PAIN POINTS.Nothing helps prospects realize “this person can actually help me” better than a seller who comes equipped with well-articulated points that speak to the problems they’re facing. INVOKE THE CREDIBILITY OF OTHERS. The customer generally doesn’t care what you think, and those phrases only serve as reminders of your relative

lack of experience. Instead, continuously put the focus on what experts have to say. PRESENT ARGUMENTS WITH CONVICTION. How you pitch is every bit as important as what you say. When facing experience asymmetry, keep in mind that it’s largely about respect. As with all things in sales, it’s important to listen more than you speak, ask lots of questions and let the customer know that you’re learning from them. The more you do that, the more they’ll trust you to deliver value.

(David Priemer is founder of Cerebral Selling and adjunct lecturer in sales leadership at the Smith School of Business at Queen’s University.)

How departing leaders can pass along their wisdom HAL GREGERSEN

arlier this spring I had the chance to witness two of the “farewell talks” that Ed Catmull gave to the people of Pixar. Catmull shared — over and over again — what he believed the whole company should be thinking about as it looks ahead. Catmull has always been unusually reflective about the challenges of leading creative organizations, and generous in sharing the practices he finds effective. In his farewell talks, he showed the same level of thoughtfulness. He decided to: — MAKE THE SESSIONS INCLUSIVE. Catmull talked to everyone, including hundreds of people who

had never sat in meetings focused on high-level strategic issues. As a result, his parting act was immensely unifying. — KEEP IT INTIMATE. With so many people to

connect with, Catmull made the sensible decision to do many talks. Each talk, therefore, was intimate enough to create a conversational atmosphere.

— POSE QUESTIONS RATHER THAN OFFER ANSWERS. Catmull didn’t want to proclaim solutions. He wanted to prompt his colleagues to think cre-

atively about big strategic issues. He put vital questions on the table, “even if they couldn’t be readily answered.” — CREATE THE SPACE FOR PEOPLE TO AIR THEIR OWN THOUGHTS. Appropriately, Catmull left plenty of time at the end of his comments for his colleagues to speak up and pose questions of their own. — DISPLAY UNDIMINISHED CURIOSITY. Catmull ended each talk with a complete digression into territory he personally found fascinating. So, why were these conversations valuable to the company? First, Catmull provided Pixar employees with his well-informed perspective on the challenges

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ahead. Second, he gave them a launching point and maybe even the framework for future conversations, among themselves, about how Pixar will continue to thrive. And third, the sessions honored how important this transition point was. Sometimes a creative act by one leader can put a new question on the table for others. Ed Catmull’s farewell talks did just that. The question is: How will you share your hard-earned wisdom at the end of a long career?

(Hal Gregersen is executive director of the MIT Leadership Center and a senior lecturer at the MIT Sloan School of Management.)

Monday 22 April 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

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The mistake companies make when they use data to plan diversity KATIE WULLERT, SHANNON GILMARTIN AND CAROLINE SIMARD

but the most important step for any organization is to increase small numbers. Take an honest look at your organization’s hiring, retention, advancement and cultural practices. When you understand where the problems are, you can start to fix them. To create lasting change, organizations should be willing to analyze small numbers, gather detailed interview data on employee experiences, engage managers as allies for change and hold themselves accountable to making small numbers grow.

n working with companies seeking to improve diversity and inclusion, we have found small numbers can be a big sticking point. With such limited data, many companies revert to broad categories (e.g., “all women”) as they structure diversity initiatives. In fact, articles on people analytics advise practitioners to “beware of small numbers” because it’s hard to determine what they mean. Taking this logic too far, however, can have highly damaging effects. Our research identifies four key steps companies can take to ensure they don’t fall victim to the faulty logic of small numbers. BE WILLING TO MAKE CLAIMS BASED ON SMALL NUMBERS. When you have small numbers, each loss, each hire and each promotion matters. Small numbers can create uncertainty, but they don’t mean you can’t do analysis or take action. Instead of dismissing such trends, examine them

and what they might mean about the organizational environment. DIG DEEPER. Descriptive work shows the ways in which organizational outcomes are patterned by race, gender and other characteristics. In order to understand what these patterns mean and where they come from, the next step is to dig deeper. Small numbers

are the perfect opportunity for gathering interview-based data. In order to make interview data most useful, its collection should be thoughtful, systematic and flexible. ENGAGE MANAGERS AS ALLIES. Organizations can help managers act as allies by creating an environment where crucial and often difficult conversations can take place. This

starts with educating managers about intersectionality. Employees do not experience organizations based on their race or gender separately; they live their lives at the intersection of these characteristics. DON’T SETTLE FOR SMALL NUMBERS. Analyzing existing conditions and cultivating support is a big part of implementing inclusive diversity efforts,

(Katie Wullert is a doctoral candidate at Stanford University. Shannon Gilmartin is a senior research scholar at the Stanford VMware Women’s Leadership Innovation Lab and an adjunct professor at Stanford University. Caroline Simard is senior research director at the Center for the Advancement of Women’s Leadership at Stanford University.)

How companies should prepare their forecasts constructing them. By forcing management teams to detail the risks they face and to consider the resources needed to pursue opportunities that might emerge, the forecasting process helps those teams develop a playbook for situations that may arise. Leaders who focus on forecasts and integrate the finance function into their decision making stand the greatest chance of creating value for investors.

C. FRITZ FOLEY AND MARK KHAVKIN

enior management teams tend to focus on achieving results that will show up on their most current income statements. We have found that particularly strong management teams actually spend less time obsessing over the current income statement and more time focusing on a different report: the forecast. There are several reasons for this. To start with, the forecast is a vital tool for value creation. The forecast also provides a scorecard to evaluate if strategy is appropriate and effective, and directs attention away from short-term results toward longer-term strategic objectives. Furthermore, the forecast guides actions by providing inputs needed to execute operational initiatives. Not all forecasts are built alike, however. We find that a great forecast has five attributes: First, it includes projections of operating results and resource needs for the next three to five years. Second, it reflects the firm’s

(C. Fritz Foley is a professor and senior associate dean for strategic financial planning at Harvard Business School. Mark Khavkin is the chief financial officer of Pantheon Platform.) industry context. It should be consistent with estimates of the size of the firm’s total addressable market and insights about how that market is evolving. Third, the firm’s strategic choices should form the basis for assumptions about how it will grow and what resources it will require. Fourth, projected growth rates and margins should re-

flect the competitive dynamics the firm faces. And finally, employees throughout the organization should have a sense of the steps they will need to take to meet the strategy’s financial targets given the industry context and competitive dynamics. Instead of emphasizing the development of a single basecase forecast, it is often more

informative to consider a range of possible outcomes. This process captures a more complete picture of the opportunities and risks a firm faces and generates a lively discussion of what considerations should and should not be included in the base case. Importantly, great forecasts do not have to prove to be correct to be worth the trouble of

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Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

Start-Up Digest

In association with

Steve Babaeko: Rising star in Nigeria’s advertising industry ODINAKA ANUDU

teve Babaeko is a rising star in Nigeria’s digital advertising/ marketing/branding industry. He is the group chief executive officer of X3M Group, made up of X3M Ideas, X3M Music and Zero Degrees, among others. Though he has only been a chief executive for fewer than 10 years, his works speak for him, both locally and internationally. His older colleagues respect his creative finesse and enjoy working with him. Babaeko is also the vice president of the Association of Advertising Agencies of Nigeria (AAAN). As an entrepreneur with a sizzling drive, he has his eyes on Africa. He has expanded to Lusaka, Zambia; Accra, Ghana; and Johannesburg, South Africa, and South Central Africa. He still eyes other African countries, notably those in East Africa. But what is motivating the entrepreneur to move into these markets? “I sat down and compared the rate of intra-continental trade in the world and I noticed that Africa is the lowest,” he says. “The continent is not going to grow unless we take our destinies into our own hands and shatter those barriers to be able to trade with each other, create values and reduce poverty,” he explains. He says the only way to pull a country like Nigeria out of extreme poverty is by enhancing intra-continental trade. “If we go to South Africa and Lusaka, how are we able to set up businesses to give our brothers and sisters opportunity to earn a living and give them more skills?” he asks. “I think if we have more money, these are the big ideas we have for the continent. If this continent takes its true seat in the comity of continents, you even find more people travelling and coming to display their skills and helping us to develop the continent. But we have to be drivers of our own destinies,” he notes. South Africa’s economy is in crisis and is hard hit by xenophobic attacks on foreigners. How do these affect Babaeko’s business in Nelson Mandela’s country? “This is even the time to go there, because if you go there and play by the rules, you won’t have any problem,” he replies. “Once you are ready to become a good corporate citizen, any other challenge you face is just business and you can always overcome them. It is in our doing business together that we can reduce the adverse effect of xenophobia. Once you remove the roadblocks, it is just two people talking and exchanging values. I think that is what we are not really doing on this continent,” he elucidates. Is he making money from South Africa? He says the business is still at an inchoate stage. “Business is like a human being. You give birth to a child, you nurture the child, the

Steve Babaeko

child starts school and grows. Business is about adding value,” he states. This year, Babeko has been invited to sit on the panel of Cannes Film Festival, one of the most prestigious film festivals on earth, which takes place in France. This privilege has not been given to any player in his industry in the country before now. “I am really excited to be going to Cannes this year,” he says. “I am going to be on the panel that will be talking about the authentic African story. It is something I am excited about. I don’t know how many Nigeria CEOs that have had the opportunity to be speaking at that level. As usual, I will be flying the flag of Nigeria that you see in many works,” he elaborates. For him, his participation at that level gives Nigeria and Africa an opportunity to tell their stories. The entrepreneur says Africa needs a voice that can tell positive stories of what the continent and its people are doing well. “Africa is one of the most significant continents on earth,” he says. “Youth population is strong here, while other continents have their youth population depleting. Having I.2 billion people on this continent is huge. Somebody has to be telling this story and we feel privileged to be somewhere we will be sharing this story with the rest of the world.” Only recently, the entrepreneur was invited to sit on New York Film Festival, which shows that the world has noticed his industry prowess. He says his greatest takeaway from the event is the quality of the organisation and www.businessday.ng

award. “It does not have to be an elaborate event for you to have a big award. Secondly, it is an opportunity to learn and see what Nigeria can learn. It is a great thing for me to go there and interact with other judges,” he tells Start-Up Digest. Babaeko says Nigeria’s advertising industry is the next big thing to happen, even though many may not see it that way. He explains that lot of new generation agencies are getting it right as they know that they must bring big ideas on the table and think out of the box to survive. It is often said that Nigerian agencies are not winning global awards because of poor quality work. But Babaeko dismisses this notion as untrue. “No African country has won the World Cup, but it does not mean African teams have been terrible at the World Cup,” he says. “There are lots of reasons they are not winning. Those reasons are personal because I don’t have any empirical data to back up my claims. First of all, it is a very expensive award to enter into. You are paying in euro but earn in naira. The purchasing power has already put the Nigerian agency at a disadvantage. For some agencies based in Europe, they can enter 50 works, but you may not be able to enter 50 works as a Nigerian agency,” he elucidates. “Most Nigerian agencies enter five pieces of work, which are like a spit in the ocean. Two, I don’t think Africa is represented well enough at that judging level, which means

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that the cultural nuance represented here is lost on the judges there,” he adds. However, he urges agencies to package their works better. “An agency could have a better idea but may not be able to put it better. With the jury which will see thousands of works, if your case file does not come fully packaged, nobody will look at it.” He points out that Nigerian agencies are not relenting as a lot of them are fighting very hard to ensure they fly the flag of Nigeria. “Nigeria is the next big thing to happen on the continent as far as advertising is concerned. At the Cristal award, where I had the privilege of being a judge, Nigerians did well. A Nigerian agency won a top prize and X3M Ideas (his firm) won 17 or 20 awards there,” he discloses. Babaeko is increasingly being sought after at the moment. What is the secret behind this? “There is no local agency or business anymore,” he says. “Any part of the world where you are, you are global. In that digital space where you put your ideas, everybody will see what you are doing. This is why I can be here and the New York Advertising Festival, which is probably one of the oldest advertising festivals in the world, will call me or any other Nigerian to be a judge. All they need to do is to Google top advertising or creative agencies in Nigeria and names will pop up. If you are doing the right thing, there is nowhere you can hide. The world will see you,” he says. He further explains that the only way Nigeria’s advertising industry can be stronger is through mergers. “It is definitely the next big thing in the industry. I always use the examples of banks. The banks, for example, do it regularly. They come together and see how they will make their brands stronger. Two banks just did that. In our industry, we must do it. It is something that must happen.” The entrepreneur is already grooming his time for the next generation of ad men and his association AAAN is working on setting up an academy.

Start-Up Digest Team

@Businessdayng

Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

Monday 22 April 2019

BUSINESS DAY

Start-Up Digest

Emmanuella Onyekwere: CEO of 3 thriving businesses from China and the popular Obalende Market in Lagos. “The challenge confronting me now is related to the importation of goods from China,” she says. “Most times, my goods are delayed, thereby causing delays to my customers. But thank God today that I have been able to get my customers’ trust because I deliver on time most times.” She urges the government to support entrepreneurs with more skills acquisition centres and provide tangible start-up funds to help boost businesses. “The government needs to support our manufacturing industry so that we can stop importing everything we know we can manufacture here in Nigeria,” she admonishes. “In Aba, there are so many talented young people. If we have a textile company that is up and running, these guys can get jobs there, but, of course, we need steady power supply to make it run. So the government should look into the power sector too. Trust me, this country has a lot of potential.” The entrepreneur says the reason her business stands out from those of her competitors is that she understands that the customer is king and is always

Jonathan Aderoju

nyekwere Emmanuella owns three businesses. She is a model for other young people who are desirous of success. Emmanuella is the CEO of Signature By Ellah, a clothing line; Ellah Event, an event planning platform; and Zobo By Ellah, the Zobo drinks section. Emmanuella is a graduate of International relations, who was inspired to go into the businesses when she lost her mother while still in school. She decided to make ends meet by exploring her marketing skills. She started her business with as little N50,000, which she got from her savings and some family members. Emmanuella says her businesses has grown more than the way they started, over one year now, as she has a lot of customers that testify to her services every day. She has customers outside Lagos as she gets orders and delivers promptly. The entrepreneur employs about three people permanently and offers part-time delivery jobs to many young people. She sources her materials

Emmanuella Onyekwere

LCCI urges FG to support young entrepreneurs Gbemi Faminu

he Lagos Chamber of Commerce and Industry (LCCI) has urged the federal government to implement policies that will encourage entrepreneurship among Nigerian youths in a bid to reduce the unemployment rate and boost economic development. Speaking at the opening ceremony of the 2019 LCCI mentoring programme organised by the Business Education, Services and Training (BEST) unit of LCCI in Lagos, Babatunde Ruwase, president of LCCI, said youth unemployment in Nigeria has become a disturbing social and economic menace, thereby creating an opportunity for entrepreneurship to thrive. “In Nigeria, youth unemployment rose to 27.9 percent in Q3 2018,” he said. “The federal and state governments should come up with policies that would inculcate entrepreneurship in the youths to make them employers of labour,” he recommended. He continued that youths need to be supported by the

government, private sectors, investors and other stakeholders in order to turn commercial ideas into marketable businesses. Speaking on the programme, he said it is one of the LCCI’s corporate social responsibility projects targeted at impacting positively on the business environment, especially among young entrepreneurs. Michael Olawale-Cole, chairman, board of BEST, disclosed that since the beginning of the programme seven years ago,303 entrepreneurs have benefitted from the it with an additional 60 selected for the 2019 edition. Olawale-Cole, who doubles as the vice president of LCCI and was represented by Opeyemi Amina, said “developing a business into a successful enterprise is a tough call on many entrepreneurs.” “LCCI as a leading business advocate took it upon itself to simplify entrepreneurship adventure and continuously mould a business nursery fields that gives soft landing to businesses through its entrepreneurship mentoring programme.” He advised the beneficiaries of the programme to maximise www.businessday.ng

the available opportunities and leverage on the platform to create a sustainable network that will be beneficial for their businesses. He stated that the beneficiaries will be monitored even after the programme to maintain progress. Obafela Bank-Olemoh, special adviser to the Governor Akinwunmi Ambode of Lagos on education, represented by Yetunde Kalesanwo, said it is imperative to equip and train youths to become marketable in the labour market, adding that it will contribute to the development of the state and foster economic growth. Funke Oloniyo, head, BEST unit, speaking about the programme, mentioned that it spans over eight months from April to November and that the LCCI hopes to increase the number of beneficiaries from 65 to 1,000 annually with aid of private organisations and the government. Adetoro Eko, one of the beneficiaries from the 2016 edition, said the programme is a platform aimed at making businesses thrive and advised the present beneficiaries to utilise the opportunity judiciously.

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true to her word. The young entrepreneur says she has the capacity to deliver to customers wherever they are. On her business expansion plans, she is looking forward to establishing outlets of Signature By Ellah in many parts of the country so as to make delivery efficient. Also, she has set her sights on rebranding her zobo with more delightful taste and packaging. Emmanuella’s businesses are registered at the Corporate Affairs Commission (CAC), and she attends a lot of entrepreneurial seminars and events that help grow her businesses. Ella, as she is fondly called, looks up to Dan Lok, a ChineseCanadian business magnate, global educator, and founder of Closers.com as a benchmark for her own business. The entrepreneur wants to become one of the most successful female youths in Nigeria and Africa in the next five years. She advises youths to stay focused and convert their weakness into strengths. “Don’t look down on yourself or the situation of the country. The sky they say is the limit, but I say to you, the sky is only your starting point and also remember to make money in a legitimate way.”

Business Opportunity

Setting up tissue paper/serviette production plant The level of unemployment in Nigeria is increasing on daily basis. One of the best ways to tackle it is to empower entrepreneurs to establish small and medium scale industries. Government should pay much attention to small-scale manufacturing, local industrial developments and agriculture. Any type of manufacturing engaged by individuals or groups of individuals or corporate organisations will go a long way in contributing towards the growth of the nation’s economy. It will generate employment opportunities and add to GDP. Nigerian investors can now go into this lucrative business using locally made machines. Though there are imported machines as well, our local investors do not need to waste their scarce foreign exchange for the importation. The writer will assist you in procuring and installing quality machines that stand the test of time at moderate and affordable prices. The attractiveness of this project is that both the raw materials and equipment are locally available and the technology involved is very easy to understand and master. The essential equipment needed are: (1) Core making machine (2) Rewinding System (3) Band Saw cutter @Businessdayng

(4) Embossing Unit (5) Perforating Unit These pieces of equipment are portable, simple to operate and durable. The machines will be procured from highly experienced local producers. You can go for either imported or locally assembled machinery. Any of the options is good depending on the budget of the investor. Secondly, the source of your locally assembled machines is very important. If you make mistake in this regard, it will hurt you forever and frustrate your plans. You can get the machines— both locally made and imported ones— from us. Estimated Cost Implications (N’000) Preliminary Expenses 300 Machinery & Equipment 2,500 (locally assembled machines) Working (Variable) 3,500 Accommodation (Rented) (variable) 500 Contingencies 750 Total N7,550 For further enquiries, please contact the writer Uba Godwin Global Trust Consulting, 56, Ishaga Road (1st floor),Surulere, Lagos Tel: 08034494437, 08023664368 E-mail: ubagodwin@yahoo.com

Monday 22 April 2019

BUSINESS DAY

Start-Up Digest

How Samuel makes his mark in electrical space Gbemi Faminu

lushola Samuel i s o n e o f Ni g e ria’s hardworking youths. The Lagosbased electrician is the chief executive officer of Olusam Engineering. He describes his business as the best option for providing quality electrical services. He started on August 1, 2018, and has recorded successes despite challenges and hurdles that clog his path. He was inspired to go in the electrical space because since his childhood, he has always been intrigued by creativity involved in using wires. He has an O’level certificate which he acquired in 2014 and has undergone a 42-month training on electrical engineering as well as other informal trainings on electrical application. He pooled all the knowledge together to start his business. Since his business is about services, he started by getting necessary tools one after the other. After rendering quality services for his first client, he

Olushola Samuel

was able to grow his business and clientele through referrals and freelancing. Although the nature of his

job does not require use of a lot of materials, he gets his materials from major markets in Lagos such as Ojo and Alaba as well as

U.S. supports tech-driven solutions to disability issues

rom April 13-18, students of the University of Ibadan, Oyo State, gathered for the 2019 Campus Labs Disability Hackathon that seeks to address the challenges and needs of people with disabilities using technology solutions. Following a five-day boot camp facilitated by three Mandela Washington Fellows —Emeka Ossai (CEO, CampusLabs), Busola Majekodunmi and Tobiloba Ajayi, 26 participating students representing seven teams pitched their ideas before a jury of leading tech leaders and disability inclusion advocates. The hackathon is supported by a public diplomacy grant from the

United States Consulate in Lagos. Speaking on Thursday at the grand finale of the hackaton hosted at the University of Ibadan, Russell Brooks, U.S. consulate public affairs officer lauded the students for working collaboratively to improve accessibility and mobility for people living with disabilities. Brooks, who also served as a member of the jury for the pitch competition, explained that hackatons provide opportunities for solving problems in novel ways. “The United States government is proud to support initiatives like this which seek to leverage the exponential power of technology

Russell Brooks, United States consulate public affairs officer (right); Olanike Adeyemo, deputy vice-chancellor for research, innovation & strategic partnerships, University of Ibadan, (left); with Team Afia ––winners of the U.S. Consulate-supported 2019 CampusLabs Disability Hackathon Pitch Competition held in Ibadan last Thursday. Photo Credit: U.S. Consulate General Lagos. www.businessday.ng

to solve problems and promote a culture of social innovation and inclusion,” Brooks noted. He explained that about 15 percent of Nigeria’s population representing 25 million people have disability and called for concerted efforts to promote inclusion and reduce the obstacles they face. “Inclusion is a good indicator of how much we value and respect human life. We must become more actively involved in creating a more inclusive environment for all,” he added. Idowu Olayinka, vice-chancellor of the University of Ibadan, who attended the event alongside principal officers of the institution, expressed his commitment to supporting students working hard to promote inclusion of people living with disabilities. Team Afia won the competition with their pitch for an app that will ease access of people living with disabilities to connect with providers of basic social services. They were rewarded with a cash prize of N500, 000 for their impressive performance. All the seven teams in the pitch competition came up with varying technological solutions after meeting with families and people living with disabilities to gain a better understanding of the challenges they face. CampusLabs works across Nigerian universities to raise a community of budding social entrepreneurs capable of implementing high-impact projects that benefit their local communities.

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from online stores. Speaking on his business, he says, “My job is a very risky one because I deal with electricity. Therefore, it requires carefulness. Most people just believe it is all about twisting wires, they do not understand that even while twisting or connecting wires you have to make sure you do not connect two wrong wires to avoid accidents,” he explains. Despite how much he enjoys his job, the young entrepreneur still encounters challenges that are a clog in his wheel of progress. He says that his inability to access funding for expansion purposes has hindered viable prospects of his company, adding that getting helping hands, especially when he has large volume of work, is difficult as most people are not interested in dealing with electricity. Although Samuel has been able to manage some of the various challenges on his own, he urges the government to make low interest loans accessible to business owners and also address the infrastructure deficit in Nigeria. He affirms that his uncompromising habit and affordable

quality services have endeared him to many of his clients who will not hesitate to refer his services to other people. He adds that his extensive knowledge and experience have also helped to grow his business to its present stage. “I ensure that all my customers are satisfied with my work and even follow up with them to ensure that whatever I have done for them does not develop additional faults. I also work hard on creating enough publicity for my business and this increases the inflow of my clientele,” Samuel adds. Speaking on his expansion plans, Samuel says, “I intend to further my education, engage in self-development exercises and also work on making my business official.” “I want to build my people network and get collaborations with companies for electrical contracts, which I will boost my business,” he adds. Advising other entrepreneurs, Samuel says,” You have to be honest and trustworthy with whatever business you engage in. And above all prayer is the key to a successful business.”

Private sector canvasses low interest rate for SMEs to unlock growth ODINAKA ANUDU

rivate sector players say only loans with singledigit interest rate can help unlock the growth of small businesses. They say micro, small and medium enterprises (MSMEs) create the most jobs and therefore should be supported with low-interest funds to enable them do more. “Five percent interest rate would stimulate the productive sectors of the economy, create jobs and provide new opportunities for the micro, small and medium enterprises (MSME) operators,” Iyalode Alaba Lawson, president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said in a recent statement . According to the most recent Enterprise Baseline Survey conducted by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), there are 37 million MSMEs in the country, contributing almost 50 per cent to the country’s Gross Domestic Product (GDP) and over 60 million jobs for Nigerians. The CBN said in 2016 that banks’ lending to this category of business was less than four @Businessdayng

percent. The private sector says Nigeria needs to cut the Monetary Policy Rate, which is the benchmark interest rate, down from 13.5 percent. Frank Jacobs, former president, Manufacturers Association of Nigeria (MAN), had said what Nigeria needs now to recover fully was a single-digit rate of five percent. “What we need is an interest rate of five percent. We believe that this is what can stimulate SMEs and manufacturing,” Jacobs had said in Lagos. The average borrowing rate by real sector players in 2017 was 22.8 percent, representing 0.4 percentage point increase from 22.4 percent recorded in 2016, according to MAN. Tony Elumelu, founder of Tony Elumelu Foundation, recently said that every $1 spent on SMEs generates $5. “It is important to fast-track the recapitalisation of the Bank of Industry (BoI) to enable it to meet up with huge credit demands of the industrial sector,” Jacobs had said. “It is critical to intensify the implementation of the Moveable Collateral Registry and Credit Reporting system which were recently passed into law,” he added.

Monday 22 April 2019

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: April 18th – April 26th, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.38

Q4 2018 — Higher by 0.57% compared to 1.81% in Q3 2018

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

Credit to Private Sector (N’ trillion)

22.72

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y)

23.29 11.25

Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018 Decreased to 11.25% in March 2019 from 11.31% in February 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 13.5

Adjusted to 13.5% in March 2019 from 14% (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

44.74 72.93 1.73

April 17, 2019 figure — an increase of 0.28% from April start April 18, 2019 figure— an increase of 5.67% from the prior week March 2019 figure — a increase of 0.58% from February 2019 figure

NSE ASI & Bond Index

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

18/04/19

12/04/19

30,086.31 11.30

29,565.95 11.11

Volume (bn)

0.23

Value (N’bn)

1.74

1.97

MONEY MARKET NIBOR Tenor

Friday Rate

(%)

OBB O/N CALL 30 Days 90 Days

Change(%)

18/04/19

YTD Change (%)

72.93 2.51

5.67 (6.34)

13.14 (17.87)

2381.00 89.90 78.64 12.57 447.75

(0.54) (3.54) 0.43 (2.33) (4.22)

22.99 (30.95) 1.47 (18.00) 3.29

1275.51 14.98 292.85

(1.44) (0.66) (0.58)

(3.19) (12.86) (10.66)

18/04/19

12/04/19

9.8600

20.2900

(1043)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

21.5700 19.4000 11.9480

(1100) (870) (14)

Tenor

(45)

1 Mnth 3 Mnths

10.65 10.68

10.77 11.25

(12) (56)

Friday

1 Month

(N/$)

Rate (N/$)

6 Mnths 9 Mnths 12 Mnths

13.62 14.39 14.52

13.96 14.48 14.61

(35) (9) (10)

10.5700 10.7000 11.8055 11.9708

Friday (N/$)

18/04/19

12.4164

12/04/19

Friday

Change

(%)

(Basis Point)

18/04/19

12/04/19

18/03/19

Official (N) Inter-Bank (N)

306.95 360.34

307.00 360.32

306.95 360.25

BDC (N) Parallel (N)

0.00 360.00

0.00 360.61

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

(%)

BOND MARKET AVERAGE YIELDS Tenor

1-week Change (%)

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) (2.49) Agriculture Cocoa ($/MT) (11.85) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Change Gold ($/t oz.) Silver ($/t oz.) (Basis Point) Copper ($/lb.) 1.76 1.76

FOREIGN EXCHANGE MARKET Market

Indicators

(%)

18/04/19 Friday

Friday

Change

(%)

(Basis Point)

18/04/19

12/04/19

3-Year 5-Year

0.00 14.70

0.00 14.81

0 (11)

7-Year 10-Year 20-Year

14.25 14.30 14.54

14.25 14.35 14.53

(0) (6) 1

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

Index

Change (Basis Point)

12/04/19

2,809.88

2,804.61

0.19

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.46 5.58

8.44 5.27

0.19 5.82

YTD return (%) YTD return (%)(US $)

14.39 41.42

14.17 -41.66

0.22 83.08

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

5,849.03 3,500.00

10.1499 12.5

17-Apr-2019 17-Apr-2019

364 Day

49,141.30

12.74

17-Apr-2019

Global Economy In the US, headline CPI inflation accelerated to 1.9% y-o-y in March from 1.5% in February. The pickup was largely driven by higher fuel prices, reflecting the recent rally in the price of oil. However, underlying inflation remained benign, with core inflation moderating to 2% y-o-y from 2.1%. On balance, the softer-than-expected inflation prints will likely support the Federal Reserve's resolve to keep the policy rate on hold this year as it waits to see how the economy weathers the expected global slowdown and the winding down of domestic fiscal stimulus. In a separate development in China, the trade surplus increased sharply in March, coming in at $32.64bn after slumping to $4.12bn in February according to customs data. This was a result of dollar-denominated exports surging by 14.2% y-o-y while imports continued to contract, falling by 7.6%. The rebound in exports possibly reflects seasonal factors as business activity resumed following the Lunar New Year holidays, while the fall in imports suggests that domestic demand remains subdued. These latest trade figures come as the US and China iron out details of a possible trade deal. The two sides agreed to set up 'enforcement offices' to monitor the implementation of any agreedupon deal, removing a key stumbling block in the talks. Elsewhere in Japan, consumer sentiment declined from 41.5 in February to 40.5 in March, marking the sixth straight drop, official government data showed. Consumers were markedly more pessimistic about their overall livelihood category and their willingness to buy durable goods. Job prospects waned significantly, while confidence about income growth recorded a smaller decline. Regarding prices, expectations of higher prices rose slightly in March, with 86.4% of respondents expecting prices to trend higher (up 0.4 percentage points from last month's survey). The consumer confidence index measures consumers' expectations for the next six months on a scale of 0–100; a figure of 100 indicates that all respondents see their living standards improving. Domestic Economy The Consumer Price Index (CPI) which measures inflation rose by 11.25% year-onyear in the month of March 2019, which is 0.06% points lower than the 11.31% recorded in February 2019. The food index increased by 13.45% (year-on-year) in the reference month, slightly lower than 13.47% recorded in February, thus indicating declining pressure in the prices of food items. The core sub-index, which excludes prices of farm produce declined by 0.3% to settle at 9.5% in February 2019 from the previous month's figure of 9.8% year-on-year. During the month, the highest increases were seen in the prices of soft drinks, fish, bread and cereals, vegetables, meat, fruits, potatoes, yam and other tubers, oils and fats. Others are domestic services and household services, tobacco, major household appliances, dental services, medical & hospital services, actual and inputted rent for housing. In a separate development, the Nation's external reserves rose to $44.7 billion as at the 16th of April 2019, the highest in 6 months. This is as a result of foreign portfolio investors, FPIs, sustained dollar injection in a bid to take advantage of the double-digit interest rate on Nigeria's fixed income instruments.

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

Stock Market The Nigerian Stock Exchange market ended the week above the 30,000 psychological mark due to bargain hunting by investors upon the release of Q1 2019 financial scorecards. The All Share Index (ASI) gained 1.76% to close at 30,086.31 points from 29,565.95 points the preceding week. Similarly, market capitalization added 1.76% to settle at N11.30 trillion from N11.10 trillion the prior week. We anticipate more bullish momentum in this new week due to more anticipated releases. Money Market The system was awash with liquidity during the past week as market participants had the ability to assess the CBN window. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates slipped to 9.86% and 10.57% from 20.29% and 21.57% respectively the previous week. Likewise, longer dated placements headed southwards with the 30-day and 90-day NIBOR settling at 11.81% and 11.97% from 11.95% and 12.42% respectively the previous week. Rates are expected to move higher due to retail Secondary Market Intervention Sales (SMIS) auction this week. Foreign Exchange Market The naira maintained relative stability across all market segments in the week ended April 18th, 2019. At the NAFEX window the local currency depreciated marginally by 2kobo to close at N360.34/$. Meanwhile, at the official window it ended at N306.95/$, a 5 kobo appreciation from the previous week. However, the parallel market remained unchanged at N360/$ from the prior week. We see the naira hovering around prevailing levels this week due to higher oil prices and CBN FX interventions. Bond Market Average bond yields pushed lower in the week ended April 18, 2019. This moderation was driven by demand on most tenure placements. Yields on the five-, and ten-year debt instruments closed lower at 14.70% and 14.30% from 14.81% and 14.35% respectively the preceding week. Consequently, the Access Bank Bond index rose marginally by 5.27 points to close at 2,809.88 points from 2,804.61 points the previous week. This week, we expect mixed market sentiment barring any impactful news. Commodities Oil prices jumped last week as the U.S. crude stockpiles fell by 1.4 million barrels. China's Q1 economic growth of 6.4% and a further 3.2% year-on-year refinery also boosted the rise in oil prices. Bonny light, the Nigerian Benchmark crude, rose $3.9, or 5.7% to $72.93 per barrel. Contrastingly, Gold prices were bearish as heightened buying in riskier equities dented the appeal of safe-haven metal. Gold shed $18.70, or 1.44%, to $1,275.51 an ounce. Silver also declined by 10 cents or 0.7% to $14.98 an ounce. This week, we expect oil prices to trend lower as the OPEC+ deal comes to an early end. For precious metals, concerns on global growth may support prices. MONTHLY MACRO ECONOMIC FORECASTS Variables

Apr’19

May’19

Exchange Rate (Interbank) (N/$)

363

Inflation Rate (%)

11.3

11.35

Crude Oil Price (US$/Barrel)

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

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Jun’19 363 11.39 62

Monday 22 April 2019

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Will banks ever increase lending to economy amid attractive yield? BALA AUGIE

igerian Banks will continue to put a brake on lending to the real sector of the economy as yields on government securities remain attractive to them. While the recent credit condition survey report by the Central Bank of Nigeria (CBN) for the first quarter of 2019 showed increased lending supported by improving economic outlook, analysts are of the view that banks loan growth will remain muted. Analysis by Markets Intelligence validates the above position of experts because loans have been ebbing since 2016 and there has not been an improvement in 2018 as interest income continues to nose dive, and hence, undermining profitability. For instance, the 2018 audited financial statement of 12 largest lenders quoted on the floor of the bourse showed cumulative loans and advances fell by 7.96 percent to N12.13 trillion from N13.18 trillion. A breakdown of the figures showed combined gross loans increased by 25.89 percent to N10.50 trillion between 2013 and 2014 financial year, while it was up by a meagre 2 percent to N10.71 trillion between

2014 and 2015, period when the devaluation of the currency ballooned dollar denominated asset, but the loans fell by 21.97 percent between 2015 and 2016. “Even in the event of a moderation in yields on fixed income instruments, many banks believe that as long as yields remain above 10 percent, they still remain attractive considering that fixed income instruments have no Capital Adequacy Ratio (CAR) implications, are tax free and do not result in NPLs,” said analysts at CSL Stock Broker Ltd. Analysts at CSL Stock Brokers expect that the weak economic recovery will constrain strong demand for loans as they forecast an average loan growth of 10 percent for the tier one banks while average loan growth of 15 percent for the tier 2 banks within their converge. Drilling down the figures shows GTBank’s total loans and advances fell by 9.69 percent to N1.45 trillion in the period under review from N1.59 trillion the previous year. Zenith Bank’s total loans and advances were down 8.57 percent to N2.10 trillion in December 2018 from N2.28 trillion the previous year. First Bank Holdings Plc’s total loans and advances were down 7.43 percent to N2.74 trillion in the period under review from N2.54 trillion the previous year.

P.E

SHORT TAKES 66.68% Domestic transactions at the Nigerian Stock Exchange (NSE) fell 66.68% to N1.185 trillion in 2018 from N3.556 trillion in 2007. Total foreign transactions accounted for 51% of total transactions carried out in 2018, and domestic transactions 49%.

57.4 index points The manufacturing purchasing manager’s index in the month of March stood at 57.4 index points, indicating expansion in the manufacturing sector for the 24th consecutive months. 11 of the 14 subsectors including food, beverage & tobacco and cement reported growth.

N24.4 trillion

Nigerian banks paid N161bn in taxes in 2018 IFEANYI JOHN

he federal government collects payment for security and other services rendered to businesses in the operating in the country and the financial sector is a regular contributor to its coffers. In 2018 the commercial banks listed on the Lagos bourse paid a total of N161 billion to the Nigerian government. The Banking industry earned a total of N1.02 trillion for the 2018 full year accounting period before accounting for taxes to be paid to the government. Of this sum earned after operations and payments to

creditors, a total of N161.21 billion was paid to the federal government. This figure is N50 billion above the tax expense paid in 2017 from total pretax earnings of N854.24 billion recorded in the previous accounting period. BusinessDay analysis of the tax expense of lenders listed on the bourse shows a total of N161.21 billion received by the federal government of Nigeria in 2018 from 12 banks. Zenith Bank, Ecobank, GTBank and UBA paid a total sum of N126.93 billion almost 80 percent of total tax expense of the total banking industry. The four companies made 67.35 percent of earnings before tax with a total of N689.57 billion. Tier 2 lenders contributed a mere

4 percent of total sums paid to the government. FCMB, Fidelity Bank, Wema Bank, Union Bank, Sterling Bank and Unity Bank paid a total of N6.82 billion. With a total PBT of N69.80 billion from the total N1.02 trillion, the smaller banks contribution to the total was negligible as the earnings and tax expense seemed negligible. First Bank of Nigeria Holdings and Access Bank paid the lease amounts in comparison to their respective sizes. First Bank posted pre tax earnings of N65.29 billion and paid less than 10 percent of that sum as tax expenses. The Nigerian bank with a total asset size in excess of N5.5 trillion accounted for N5.5 billion as

taxes in 2018. Access Bank, who recently concluded the merger with Diamond Bank and released Q1 earnings showing total assets in excess of N6.4 trillion, paid N8.2 billion in taxes from its 2018 pre tax profit of N103.19 billion. Stanbic IBTC concludes the list of banking industry participants with a total payment to the government in excess of N13.71 billion from pre-tax earnings of N88.15 billion recorded in 2018 full year financial calendar. The NSE Banking index has shed 13.04 index points since the beginning of the year recording a year to date performance in the red. The index, comprising of 10 of the 12 banks is down 3.27 percent since January.

Nigeria’s total debt grew 9.1 percent or N2.7 trillion to N24.4 trillion ($79.4 billion) in 2018, from N21.7 trillion in 2017. The huge addition was recorded in quarter four of 2018 which came with N1.96 trillion or 8.03 percent higher against N22.43 trillion in Q3 2018.

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 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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Monday 22 April 2019

BUSINESS DAY

MARKETS INTELLIGENCE Zenith Bank, May & Baker top peers in dividend return per stock ISRAEL ODUBOLA

ividend yield for Nigerian stocks has grown on the back of low stock prices following the recent bear dominance at the domestic bourse which pushed a number of equities to new lows. Analysis of the dividend yield, an estimate of the dividend only return of a stock investment, revealed that Zenith Bank, Rakunity Petroleum, McNichols, Okomu Oil and May & Baker are the top performers in their respective sectors. Dividend yield is the ratio of a company’s dividend per share to its stock price, and is represented as a percentage. On the axiom that dividend remains unchanged, the yield will rise when stock price falls, and vice versa. Dividend yield tends to be unusually high for stocks that are falling quickly simply because there is an inverse relationship between yield and share price. A company with a high dividend yields pays a substantial share of its profits in form of dividends. Investors wishing to utilize his or her portfolio to supplement income would likely prefer companies with higher yields ceterisparibus. However,

dividend yield might not reflect stock fundamentals and overall performance. Despite oil prices above budget benchmark, improved earnings scorecard of blue-chip companies and IMF upward revision of Nigeria’s growth rate to 2.1 percent, performance of the equity market still remain lacklustre. The benchmark index gained a mere 39 basis points after Thursday’s (April 18) trading, with yearto-date and one-year return down by 4.64 percent and 26.48 percent respectively, an indication that the bourse is in dire need of vigour to spur performance. Nigeria’s second-biggest lender by market capitalization, Zenith

Bank has the highest yield in the financial services at 13.37 percent on Wednesday, compared with UBA (12.88%), GTB (7.90%), Access (7.30%) and First Bank (3.42%) in the tier-one space. The lender’s shareholders approved a final dividend of 250 kobo per share in addition to the 30 kobo per share earlier paid as interim dividend, bringing dividend pay out to 280 kobo per share in full year 2018, compared with 270 kobo in the preceding year. Among the drug makers, May and Baker Nigeria Plc outshines peers with a yield figure of 7.69 percent relative to GlaxoklineSmith (5.43%), Fidson (3.53%) and Pharmdeko (3.33%).

May & Baker’s directors proposed for shareholders’ approval 20 kobo per share in 2018, same as 2017, the highest pay-out since 2014. Lafarge’s dividend yield after Thursday’s trading stood at 12.67 percent, topping Cutix (12.5%), Bergers Paints (7.74%) and Cap (7.35%) in the industrial goods sector. Shares of the cement market shed 4.17 percent after Thursday’s trading to N11.40, and has lost 3.61 percent year-to-date and whopping 74 percent in one year. McNichols Plc had highest yield at 8.62 percent in the consumer goods space simply because its low stock price trading at

58 kobo. The sugar maker is trailed by Dangote Sugar (7.72%), FMN (6.1%), and Nascon (5.19%). In the agriculture sector, Okomu Oil Palm Plc with a yield of 3.75 percent outpaces its rival Presco (3.19%) to become the best dividend yield performing stock as at present. The palm oil has been flat at N80 close to a month. Rakunity Petroleum Plc, the least-capitalized firm in the oil & gas sector, has a yield figure of 22.73 percent compared with peers - Total (8.67%), 11 Plc (4.71%) and Conoil (8.7%) and Seplat (2.23%). Shares of the indigenous oil marketing firm have been dormant at N0.40 for more than nine months.

Access Bank resilient as peers’ assets lose value in dollar term David Ibidapo

he annual downward pressure on naira value against the dollar has taken a toll on Nigeria big lenders’ assets in dollar term,

causing them an aggregate loss of N6.32 trillion ($20.65 billion) in asset value since 2014, however with the exception of Access bank, which remained resilient to exchange rate pressures in the last five years. In naira terms, the big lend-

ers which include Access Bank, Guarantee Trust Bank, United Bank for Africa, First Bank and Zenith bank; have all recorded impressive growth in assets under management during the period under consideration. However, this is not the case in dollar term.

Amongst peers, Access bank recorded an annual average growth rate in asset value by 19 percent, highest amongst peers. However in dollar term, its asset value appreciated annually at an average of 4 percent when adjusted for exchange rate since 2014. As revealed in the bank’s financial position released for the year ended 2018, asset value appreciated by 135 percent to N4.95 trillion against N2.10 trillion in 2014. However, 94 percent devaluation in Naira within the last 5 years slowed appreciation in Access bank’s asset value to 22 percent in dollar term, recording $16.19 billion in value in 2018. In contrast to Access Bank’s performance during the period, peers in the industry however suffered loss in value when considered in dollar term. Our analyses revealed GTB and First bank plc as the biggest hit amongst peers in asset value in the last 5 years. Result showed that both banks suffered decline by 34 percent respectively in asset value since 2014 despite growth by 28 percent in Naira term. During the period, asset value declined to $8.86 billion from

$13.41 billion in 2014 in the case of GTB, while First bank recorded $18.19 billion in asset against $27.39 billion in 2014. Zenith bank on the other hand saw its asset decline by 25 percent during the period under consideration as asset value in dollar deteriorated to $16.19 billion from $21.59 billion, making the bank seat second on the worst hit chart. Least hit was UBA, despite significant growth in its asset under management by 76 percent in naira terms, witnessed a decline in asset value by 9 percent to $15.91 billion in 2018 from $17.42 billion in 2014. Total asset under management recorded for the year ended 2018 of all tier one lenders in the banking industry amounted to N23.06 trillion. This represented an increase by 56 percent from 2014 asset value of N14.76 trillion. However in dollar term, the aggregate value of these banks depreciated by 19 percent to $75.36 billion in 2018 from $93.10 billion in 2014, with GTB, Zenith and first bank underperforming the industry performance. Meanwhile, Access bank and UBA outperformed the industry in dollar term.

Monday 22 April 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Thursday 18 April 2019

Top Gainers/Losers as at Thursday 18 April 2019 LOSERS

GAINERS Company

Opening

Closing

Change

DANGCEM

N188

N189

CCNN

N16.3

N17

0.7

UNILEVER

N33.5

N34

DANGFLOUR

N10.4

N10.7

N33.75

N34

0.25

Company

Opening

Closing

Change

N177.9

N175

-2.9

JBERGER

N27.5

N25

-2.5

0.5

BETAGLAS

N58.35

N56

-2.35

VOLUME (Numbers)

0.3

BERGER

N9.25

N8.4

-0.85

VALUE (N billion)

N7.99

N7.2

-0.79

MOBIL

CILEASING CAP

ASI (Points)

30,086.31

DEALS (Numbers)

3,399.00 226,979,352.00

MARKET CAP (N Trn

1.738 11.300

Investors gain N44bn as stock market rises further Stories by Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) All Share Index (ASI) increased further by 0.39 percent at the close of trading on Thursday April 18 as bargain hunting activities continued on the 9th floor of the Exchange. As more investors moved to Custom Street with the aim of buying into recent dip, twenty-six (26) stocks gained as against thirteen (13) losers. The All Share Index closed at 30,086.31points against the preceding day close of 29,970.86 points while Market Capitalisation closed at N11.301 trillion as against preceding day close of N11.257 trillion, indicating an increase of about N44billion. The Year-to-Date (ytd) return stood at -4.28percent.

Dangote Cement Plc led the advancers list after its share price moved from N188 to N189, adding N1 or 0.53percent; while Unilever Nigeria Plc followed, rising from N33.5 to N34, up by 50kobo or 1.49percent. Mobil Oil Nigeria Plc de-

clined most, from N177.9 to N175, losing N2.9 or 1.63percent, while Julius Berger Nigeria Plc followed after its share price declined from N27.5 to N25, losing N2.5 or 9.09percent. “As the ASI continues to recover lost ground, we

foresee a positive open to the next trading session. With the expectation of the release of positive earnings and as investors begin to regain confidence in the market; we should see market players continue to take position. In our opinion, prices at current level still present opportunities for medium to long term investors”, equity research analysts at Vetiva Capital Management said in their April 18 note. The volume of stocks traded increased by 5.08percent, from 216.01million to 226.97million, while the total value of stocks traded decreased by 46.12percent, from N3.22billion to N1.73 billion in 3,399 deals. The Financial Services sector led the activity chart with 168.69 million shares exchanged for N1.291 billion; followed by ICT with 13.94 million shares traded for N5million.

Network International lists on London Stock Exchange

ondon Stock Exchange welcomes Network International, a leading enabler of digital commerce across the Middle East & Africa (MEA), to the premium listing segment of its Main Market. The company has raised £1.1 billion ($1.4 billion), valuing the company at £2.2 billion ($2.8 billion) and is the largest MEA IPO listed on any exchange globally since 2014. The listing is also the largest ever technology IPO from a MEA-based firm globally and the largest technology company to list on London Stock Exchange since 2015. Simon Haslam, Chief Executive Officer, Network International said: “I am delighted that Network International will join London Stock Exchange through

a Premium Listing on the Main Market, marking an exciting new stage in our journey. Over the past few weeks we have seen significant support from the investment community and I would like to take this opportunity to welcome our new shareholders, including Mastercard, onboard. I would also like to thank all our employees, whose hard work and dedication have got us to this point. I am confident that Network International is extremely well positioned for future growth with

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unique scale in the world’s most underpenetrated payments markets. The Middle East and Africa are at an early stage in the shift from cash to digital payments and our new listing on London Stock Exchange will enable all new shareholders to benefit from this structural growth opportunity.” Robert Barnes, Global Head of Primary Markets and CEO Turquoise, London Stock Exchange Group: “We warmly congratulate Network International on its listing and are proud to

welcome the largest MEA tech IPO on record to London Stock Exchange. With more than 140 companies from the region raising a combined $36 billion in equity capital on our markets, London continues to be a strong funding partner to dynamic MEA companies seeking to attract international investment. Network International’s IPO also adds to a fast-growing community of tech companies choosing our markets to support their growth journey, reinforcing London’s ability to provide access to sources of liquid, long-term international investor capital.” William Vereker, Prime Minister’s Business Envoy: “I’m delighted that Network International has chosen London for its landmark listing.

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Global market indicators FTSE 100 Index 7,459.88GBP -11.44-0.15% S&P 500 Index 2,901.39USD +0.94+0.03% Generic 1st ‘DM’ Future 26,539.00USD +111.00+0.42%

Deutsche Boerse AG German Stock Index DAX 12,222.39EUR +69.32+0.57% Nikkei 225 22,090.12JPY -187.85-0.84% Shanghai Stock Exchange Composite Index 3,250.20CNY -12.92-0.40%

GTBank gets shareholders’ nod to pay final dividend

he shareholders of Guaranty Trust Bank Plc at its 29th annual general meeting (AGM) held on Thursday April 18, 2019 in Lagos authorized the bank’s directors to pay final dividend of N2.45kobo per share. It had paid interim dividend of 30kobo per share, bringing the total dividend paid for the year 2018 financial year to N2.75kobo. Also at the meeting, the shareholders received and adopted the bank’s audited financial statements for the year ended December 31, 2018 and the report of the directors, auditors and statutory audit committee thereon. The bank’s results in the review financial year show positive performance across all financial metrics and im-

In addition, coverage ratio for NPL stood at 105.1percent and Capital adequacy ratio remained very strong, closing at 23.4percent despite the implementation of IFRS 9. On the backdrop of this result, Post Tax Return on Equity (ROAE) and Return on Assets (ROAA) closed at 30.9percent and 5.6percent respectively. “We are firmly on track towards executing our strategy, achieving our vision and fulfilling our purpose. Given the outlook of improving macroeconomic conditions, the bank remains resolute in taking advantage of these opportunities to growing earnings, improving profitability and delivering returns to our esteemed

proved strategic positioning of the brand. Gross earnings for the year grew by 3.7percent to N434.7billion from N419.2billion reported in the December 2017. Profit before tax stood at N215.6billion, representing a growth of 9.1percent over N197.7billion recorded in the corresponding year ended December 2017. The Bank’s customer deposits increased by 10.3percent to N2.274trillion from N2.062trillion in December 2017, however, loan book dipped by 12.9percent from N1.449trillion recorded as at December 2017 to N1.262trillion in December 2018. In view of the above, the Bank closed the 2018 financial year with Total Assets of N3.287trillion and Shareholders’ Funds of N575.6billion. In terms of Assets quality, non-performing loans (NPL) ratio and Cost of Risk improved to 7.3percent and 0.3percent in December 2018 from 7.7percent and 0.8percent in December 2017 respectively.

shareholders,” said Osaretin Demuren, chairman, GTBank Plc. She noted that as the bank continues to consolidate its leading position in Nigeria’s financial services sector, “we are also making progress in growing our business across select, high growth Africa markets. We believe that our commercial success depends on the prospects of Africa and we, in turn, play a significant role as a catalyst for her growth.” Segun Agbaje, Managing Director/CEO of Guaranty Trust Bank Plc said, “In 2018, our focus on staying nimble, strengthening customer relationships and driving our digitalfirst strategy paid off. We successfully navigated the pressures of our challenging and radically changing business environment, recorded growth across key financial indices and reaffirmed our position as one of the best performing and well managed financial institutions in Africa.”

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Monday 22 April 2019

BUSINESS DAY

real sector watch

Wemy eyes export market, wants incentives for surviving diaper companies Stories by ODINAKA ANUDU

emy Industries Limited plans to export diapers to West African countries to earn foreign exchange. The firm urges the government to provide incentives in the form of tax holidays and import restrictions on cheap but inferior items to save few existing firms “We intend to export to ECOWAS countries,” Paul Odunaiya, managing director, Wemy Industries, told BusinessDay in an interview. Wemy Industries, founded in 1978, is a manufacturer of adult, feminine and baby diapers, sold under Dr Brown’s and Nightingale brand names. The company was hard hit by recession of 2016, as it was heavily exposed to foreign exchange risks, being an importer of raw materials and finished products. But opportunities exist in the industry as seven million children are born each year, according to the Unit-

ed Nations International Children’s Emergency Fund (UNICEF). Data from the National Population Commission in 2015 said there were 32 million under-five children born in Nigeria that year, which could potentially rise to 58 million in 2050. However, Odunaiya said

in the face of economic realities, government needs to provide incentives to save the industry. “We still have a low penetration rate in the industry,” Odunaiya of Wemy said. “There is multiplicity and duplication of functions by government agencies which needs to stop.”

“Players need to be encouraged,” he added. The diaper industry was once dominated by Procter &Gamble’s Pampers, manufactured in its Ibadan and Agbara plant. P&G shut down its $300 million Agbara plant in July 2018 and insiders told BusinessDay that the company is now

importing pampers. Until July 2018, it had been the biggest US non-oil investment in Nigeria. Sources close to the company told BusinessDay that the company faced multiple taxation and harsh treatment in the hands of Nigeria Customs Service, which regularly acts as a revenue earner rather than a business facilitator. Industry sources say today’s industry leader is the Agbara, Ogun State-based Hayat Kimya, which makes Molifix, preferred by a number of mothers. The Lagos-based Kimberly Clark is also a key player, producing Huggies, which is also a major brand. But insiders told BusinessDay that the company is leaving Nigeria. The insiders said the company would leave Nigeria and return in 18 to 24 months. “There are many substandard diapers flooding the Nigerian market. They pack them in white bails, sell them to Nigerian merchants at ridiculously low prices and bring them into this market. What we need is to stop this kind of prod-

ucts from coming into this market because they cause rashes and infections and there could be leakages because they are not of good quality,” Wemy MD added. It was a facility from the Bank of Industry (BoI) that resurrected the company. The development finance institution provided funds for Wemy at a critical stage when it was struggling to survive. “We have been able to deploy the funds into our business. The impact of the BoI intervention fund and the investment we got from BoI will come to light this year. We have started seeing some impact on baby diapers. Remember, we are the pioneers of baby diapers in Nigeria. We started in 1979. The future of Wemy Industries is better today than it was in 2015. We are also bringing in an adult diaper machine so we are going to be pioneer adult diaper manufacturer whereby we are going to service the Nigerian market and that of the whole West Africa by exploring these regions. We are also the pioneers of baby wipes in Nigeria,” he stated.

Nigeria tans 50m skins, earns $800m from leather export

n e x p e r t, B e l l o A b b a Ya k a s a i , says Nigeria tans between 40 and 50 million skins annually, earning $600 to $800 million yearly from export of leather. Speaking at a roundtable event organised by the Manufacturers Association of Nigeria in Kano State, Yakasai said the industry employs about a million people directly and indirectly. Citing Ogbonnaya Onu, minister of science and technology, Yakasai said the Nigerian leather industry could be worth about $900m in export in the coming years. He disclosed that the value of hides and skins from Nigeria to China is put at $6 million to $8.5 million annually, while China produces 300m pairs of footwear from them. “Instead of exporting leather from Nigeria, China/ Nigeria should invest into further processing of the

products. This will result in more growth, employment,” he said. “It is important to train Nigerian artisanal processors of leather and leather products to enhance the growth of MSMEs,” he stated. He urged Nigeria to encourage export of finished leather products to earn Nigeria bigger foreign exchange from the industry. Aba, Lagos, Onitsha and Kano are leading leather hubs in Nigeria. While Kano leads in leather tanning, Aba is popular for the manufacture of shoes, trunk boxes and bags. One million pairs of shoes are produced by more than 80,000 leather makers in Aba each week. With 48 million pairs produced each year at an average price of N2,500 a pair, the industry is said to be worth up to N120 billion. Traders from West African neighbours storm the industrial city every week to buy different product www.businessday.ng

designs, just as Southern African schools are beginning to place orders directly from the shoe makers. Canadians, Europeans and the Chinese are also in the party, placing orders themselves directly or through their Nigerian proxies, BusinessDay was told in Aba. “We are already struggling to meet demands,” said Ken Anyanwu, secretary of the Association of Leather and Allied Indus-

trialists of Nigeria (ALAN), who produced Nigerian armed forces shoes in 2016. The Abia leather industry is made up of shoes, trunk boxes and belts. It provides employment for tens of thousands, with many specialising in different stages such as designing, patterning, cutting, skiving, stitching, peeling and finishing. It is made up of clusters such as Powerline, Imo Avenue, Bakassi, Aba North Shoe

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Plaza, Omemma Traders and Workers, ATE Bag, and Ochendo Industrial Market, comprising input supplers, among others. However, the industry is in thriving in chaos as the majority of shoe makers in the industrial city are poorly structured and are not registered at the Corporate Affairs Commission. Exports are made informally, making tracking and planning difficult.

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Their machines are crude and much of their work is still done by human labour. The more advanced shoe makers in Lagos are mostly foreigners, who design their shoes abroad and then import Completely Knocked Down shoes back to the country for finishing. “This is where the problem lies. We in Aba have no good machines,” Anyanwu of ALAIN said. Aba shoe makers import animal skins from China and many parts of Africa and Europe despite tanning a lot of it. “What happens is that the tanneries in Kano and Kaduna process animal skins and sell them as leather in the global market, earning foreign exchange,” said Chinatu Nwagbara, coordinator of Made-in-Aba Project, who produced shoes for Olusegun Obasanjo in 2016. “So we go to China and other countries to buy. Sometimes, we buy our products and re-import,” he said.

Monday 22 April 2019

BUSINESS DAY

real sector watch

Capacity utilisation in manufacturing sector rises to 61% ODINAKA ANUDU

apacity utilisation in Nigeria’s manufacturing sector rose to 61 percent in the second half (H2) of 2018, from 59.24 percent in the preceding period of 2017. This represents 1.76 percentage point increase, data from the Manufacturers Association of Nigeria (MAN) say. “The increased capacity utilisation in the sector over the review period was due to general improvement in the macroeconomy and the sustained quietude in the forex market,” MAN says. Nigeria exited recession in the second quarter of 2017 but the ghost of 2016 economic lull still looms large as weak naira and purchasing power persist. But the foreign exchange crisis faced by manufacturers in 2016 has eased as they can now get dollars to import inputs and packaging materials,

unlike then when firms got less than 10 percent of the greenback they needed. According to MAN, cross sectoral group analysis revealed that capacity utilisation increased in almost all the manufacturing groups. In textile apparel & footwear group, capacity utilisation increased to 59.9 percent in the second half of

2018 as against 57.2percent recorded in the corresponding half of 2017, indicating 2.7 percentage point increase over the period. Capacity utilisation in the group averaged 55.04 percent in 2018 as against 55.09 percent average of 2017, signifying 0.05 percentage point decline over the period. Similarly, capacity in the packaging, pulp, paper, plas-

tics, among two others (6Ps), edged up to 68.1 percent in the second half of 2018, representing 9.3 percentage point increase from 58.8 percent recorded in the corresponding half of 2017. Capacity in the group averaged 62.52 percent in 2018, representing 6.5 percentage point increase when compared with 55.96 percent average of 2017.

In the period under review, capacity utilisation in food, beverage and tobacco rose to 62.9 percent, while that of wood & wood products edged up to 59.9 percent. Moreover, capacity in chemical and pharmaceutical group was 59 percent within the period, while that of domestic/industrial plastic and rubber stood at 60.1 percent. Also, analysis across industrial zones shows that almost all the zones improved in the second half of 2018. In Ikeja zone, capacity utilisation increased to 67.6 percent in the period under review, representing 4.4 and 12.42 percentage points rise when compared with 63.2 percent and 55.18 percent recorded in the corresponding half of 2017 and the first half of 2018 respectively. Capacity utilisation in zone averaged 61.39 percent in 2018 as against 59.9 percent average of 2017, indicating 1.49 percentage point

increase over the period. In Ogun zone, capacity in the second half of 2018 stood at 69.5 percent, representing 1.3 and 8.32 percentage increase from 68.7 percent and 61.18 percent recorded in the corresponding half of 2017 and the preceding half respectively. More so, capacity utilisation in the zone averaged 62.34 percent in 2018 as against 62 percent recorded in 2017, showing 0.34 percentage point increase over the period. In Apapa, it stood at 68 percent in the period under review, from 70.7 percent of the corresponding half of 2017, representing 2.7 percentage point decline over the period. It, however, increased by 10.56 percentage point when compared with 57.44 percent recorded in the preceding half. Capacity utilisation averaged 67.72 percent in 2018 as against 66 percent average for 2017, indicating 1.72 percentage point increase over the period.

After rejecting Ajaokuta Bill, Buhari must now privatise complex

fter rejecting the infamous Ajaokuta Steel Company Completion Fund Bill recently, Nigeria’s President Muhammadu Buhari must now begin the process of privatising the behemoth, say experts. “Privatisation should simply be the next move,” said Ike Ibeabuchi, a manufacturing sector analyst whose firm operates in the chemicals space. “Divert the resources you channel to the steel complex to education and health. Hand it over to a private company like it was done to Delta Steel,” he added. The Senate recently sent a bill requesting a $1 billion for the revitalisation of Ajaokuta Steel. “The inputs of key stakeholders are necessary to create the optimal legal and regulatory framework as well as the institutional mechanism to adequately regulate the steel sector,” Buhari had said while rejecting the bill. The Ajaokuta Steel was established in 1971 to develop Nigeria’s steel sector and stimulate the exploration of God-given natural re-

sources, especially iron ore. Between 1980 and 1983, the then federal government stated that it had achieved 84 percent completion of Ajaokuta steel plant, having completed the light mill section and the wire rod mill. It was also widely reported that erection work on equipment reached 98 percent completion around 1994. Ever since then, Nigerians have been made to believe that Ajaokuta is 98 percent completed. But here lies the biggest puzzle: Why is a company that is 98 percent completed still failing to produce a sheet of steel over 35 years after its establishment? Despite being unproductive, government after government has continued to pump billions into the complex. Government records show that successive administrations have pumped $8bn so far into the complex since 1979. The current government of Muhammadu Buhari has joined the party of spenders on a government facility that needs to be in private hands. In a move that shocked economists and finance experts, the federal governwww.businessday.ng

ment budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the moribund Ajaokuta Steel Company, despite an earlier business case in the last administration showing that the complex could only work if properly privatised. There was also a humongous budget on it in 2018. “So why would anyone continue to pump money into an enterprise that is unproductive?” Ibeabuchi, asked. “The government says new investors are inter-

ested in taking over the complex, so why would Nigeria spend that huge fund on it?” “I do not think Nigeria is doing the right thing by such mammoth investment in Ajaokuta,”a player in the steel sector, who did not want his name in print, said. “It is like pouring water in an ocean,” he added. Eleven private investors have expressed interests in the concessioning of Ajaokuta Steel Company, Abubakar Bawa Bwari, minister of mines and steeldevelop-

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ment, said in the nation’s capital on January 15. Bwari said it would be concessioned to a firm with the financial muscle, technical know-how and genuinely committed to the nation’s steel sector development. Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others, but it is yet to produce a sheet. It has a managing director and staff members

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who are paid from tax payers’ funds. “Currently, I am not sure those technologies at Ajaokuta are competitive in steel making. The world has moved on. What is required now is for the private sector to get more and more involved in the downstream and the upstream segments in the steelbusiness,” Raj Gupta, chairman, African Industries Group, a consortium of 12 companies, including six steel plants, told BusinessDay recently. BusinessDay’s recent visit to Premium Steel showed that the company employs 160 workers in its rolling mill, which is the only functional section at the moment. There is also a plan in place to revive other sections of the factory with N600 billion. Nigeria is a cash-strapped economy struggling to pay its workers and meet infrastructure obligations. Federal allocation to states was N660.37 billion in February as against N1.19 trillion in August 2013. Industry analysts believe that Buhari was right to reject the bill and urge him to privatise it as soon as possible, while stopping allocations to it.

Monday 22 April 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Cyber security, your digital footprint and your personal finances MONEY MATTERS

Nimi Akinkugbe

recently attended the Bank Directors Association of Nigeria (BDAN) Conference 2019 on Cyber Security. It was a fascinating discussion with an excellent keynote address by Joseph Tegbe, KPMG Nigeria Technology Advisory Partner and Head of Markets on “Cyber Security: The Role of Boards.” Here are some of the facts that he shared. Everything is connected in the digital age. There are no longer perimeters to a bank, country, or continent. With the surge in the growth of technology, more than half the world’s population, some 4.3 billion people are connected on the internet. By 2020 21 billion “things” will be connected; from Phones, Music, lighting, cars, cameras, home appliances etc. We no longer exist in isolation. The technology and innovation are accelerating and being disrupted everyday. One must thus be proactive about taking steps to try to secure your business or at least reduce vulnerability from attacks. This one of the greatest risks we face today. Are you aware of the threats and cyber risks that you face as an individual in your personal finances? Cyber security is crucial now for everyone who is using a computer and there is the necessity to make sure we are being careful with our personal and financial information. Have you ever thought about your digital footprint? The integration of smartphones in both personal and professional lives has made us more vulnerable than ever; we are walking around with our most sensitive information literally at the click of a button. It is time to seriously consider the implications of leaving your personal data exposed. It is worrying if you aren’t a techy to even begin to try to wrap your head around what is at stake. The good news is that there are some steps you can take to protect your self. Here are a few: Password or passphrase Are your smartphones, laptop and other devices password protected? If your password or PIN [Personal Identification Number] is compromised, this could lead to devastating losses should unscrupulous people gain access to your financial information. Do not share your passwords or PINs with anyone. If you might forget them

and need to write them down, then store them securely. Better still, a password manager tool will help you remember them. Reusing the same password for everything puts you at extremely high risk of being hacked. Change your passwords and PIN numbers periodically, and use different codes for different accounts. We are so used to passwords including letters, numbers, symbols etc and for our own comfort we tend to use easy to remember words, family birthdays, pets names etc; they are so easy to decipher. Be creative about your choice of passwords and PIN numbers Passphrases are much more difficult for hackers to breach. Consider using easy to remember passphrases that are unique to you. When last was your software updated? Those software update notifications can be so irritating. Do you tend to ignore them for days, weeks, months? They often include some important security upgrades and enhancements that you could be missing out on. When the update notification appears, don’t just click on “remind me tomorrow.” Regular updates help you minimise the risk of getting hacked. Update your computer and your phone promptly to make sure you have the latest security running on all of your devices. You can even automate updates in your device settings. What are you posting on social media? Social media is a constant in our lives. How much of your personal information is out there? What are you posting? In our world of social media with twitter, facebook, instagram, linkedin, it seems so natural to put seem-

ingly innocent information about yourself and your family out there. Geo-tagged photos inform people exactly where you are; this could expose you and your family to crime. When you use the Internet or your mobile devices for texting, emailing and social media, you leave behind a detailed history of interactions that can often be permanent; your digital footprint. Of course you want to keep your friends and community updated with what you are doing, but be conscious and careful not to reveal sensitive information inadvertently. Back Up, Back Up, Back Up When last did you back up your data? 812 days ago?! Back up your personal data to the cloud or an external hard drive so that if the worst happens and your device is lost, stolen or compromised, you can recover at least most of it. A periodic back up, say weekly or monthly is important so that you can access the most up-to-date data. Ignore phone calls or email requests for personal information. Your bank and other legitimate companies will never request for sensitive information such as passwords and PINs by email; these are usually fraudsters attempting to defraud you. Contact your bank directly and report such incidents. Download with caution That strange email that you aren’t quite sure of, don’t click on it. That is one of the most commonly deployed mechanisms for hackers to get into your system. Avoid using public Wi-Fi for sensitive matters It is generally safer to use your own computer for your financial transactions. If a private Wi-Fi

‘

If you must use a public computer, be sure to clear your “history” before you log out otherwise other users can intercept your information

network isn’t an option, try using a personal hotspot through your phone; it is a far more secure way to be online. If you are travelling and must get on line in a public space such as an airport or cyber café, be particularly careful about sensitive transactions as your information could be compromised. If you must use a public computer, be sure to clear your “history” before you log out otherwise other users can intercept your information. Free wireless internet “hotspots” are often not at all secure. Use secure websites for your transactions; the address will usually start with “https” and there is a key or closed padlock in the status bar. “It can’t happen to me” We often exist in a state of oblivion to the dangers that surround us and that such things happen to “other” people. Hackers are everywhere and may well be attempting to get into your system as you read this. You don’t want to have to endure the painful experience of being a victim of fraud or identity theft in which personal documents are stolen and the data is used fraudulently. Your financial information is very personal and must be carefully protected. In today’s “virtual” world, we are much more vulnerable than ever, and must be more vigilant in securing our hard earned money. There is no guarantee that your financial information will be completely secure even if you put all these measures in place. However with knowledge, you certainly stand a better chance of limiting access to sensitive information and protecting your personal finances from fraudsters.

Follow Nimi Akinkugbe on: Twitter and Instagram: @ MMWithNimi, Facebook: ‘Money Matters With Nimi’ Send an email to info@ moneymatterswithnimi.com Or visit her Website www. moneymatterswithimi.com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi.com Twitter: @MMWITHNIMI Instagram: @MMWITHNIMI Facebook: MoneyMatterswithNimi www.businessday.ng

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Monday 22 April 2019

BUSINESS DAY

ABUJACITYBUSINESS COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

FCT Minister, Bello calls for interfaith cooperation, pledges support for peace efforts JAMES KWEN, Abuja

inister of the Federal Capital Territory (FCT), Muhammad Bello has stressed the need for interfaith co-operation and pledged the FCT Administration’s support for activities aimed at ensuring peaceful coexistence among different

religious faiths in the FCT. Bello who spoke during a courtesy visit by the Archbishop of Abuja Catholic Archdiocese, John Cardinal Onaiyekan also urged religious leaders to focus efforts at curbing incessant hate speech which he said, was posing a challenge to peaceful coexistence amongst Nigerians. “I want to urge you to use your position to fight

the menace of hate speech, especially among our youth” Malam Bello said. He decried the extent the social media were being used as a platform to propagate hate and regretted situations where religious preachers are also involved in the harmful practice. “This was not the case when we were growing up. Back then we were each oth-

er’s keeper and that is how it is supposed to be”, he said. The Minister described Cardinal Onaiyekan as a man of peace and lauded his championing of interfaith cooperation and promoting peaceful co-existence through dialogue. He also pledged the continued support of the FCTA to the Archbishop’s activities in the pursuit of peace.

NGO Trains over 380 women in business skills OYIN AMINU, Abuja

non-governmental organization, Mums Booth has organized its 5th edition of training tagged “Project Start Bump” to train and equip women, youths with fundamental business skills. The training centred on the businesses of vocational skills such as hair making, baking, catering, Information Technology, and how to convert skills learned to a business and also understanding the importance of marketing with over 380 women and 52 Children both in Abuja and Jos as beneficiary from previous editions. The organizer, Martha Tawiyah who spoke with newsmen, said a lot of people trained in these skills have challenges of launching out because they do not understand how to launch the business side of it. “This edition is focusing

on the business side of it. We are trying to get them to know what to do, and there will be practical sessions. We are working with DB-Innovations, startup experts to teach these women and give them handson today and afterwards follow them up”, Tawiyah said. On the achievements recorded so far from the trainings, she said; “the success stories are really good. I’m amazed a lot of times, because it’s a one day programme and we make it intensive. A lot of women have started their businesses, so we have good feedback.” She however called for government and cooperate bodies support in order to extend the training programme to a few more days, hence “there’s a lot of work on ground”. The Guest speaker from DB-innovations, David Babale said so many people are doing things but they lack a structure to scale it.

Mafita presents multi-million Naria empowerment kits to Kano youths ADEOLA AJAKAIYE, Kano

The 41million naira drug addiction rehabilitation centre constructed by Katsina State government. Inset: Katsina State deputy governor, Mannir Yakubu (m), unveiling the rehabilitation centre.

AGF tasks committee on 5th Treasury Journal HARRISON EDEH, Abuja

he Accountant-General of the Federation, Ahmed Idris has called on the members of the Treasury Journal Finance Committee to work assiduously to bring innovative ways that will ensure that funds are available for the production and publication of the 5th Edi-

tion of the Treasury Journal. Idris made this call recently in Abuja while inaugurating a 13-member committee put together by the Accountant-General of the Federation to secure the sustenance of the publication of the Treasury Journal. The Accountant General was qouted in a statement issued by Henshaw

Ogubike,who heads the Press and Public Relations Office in the office of the Auditor General saying that, “The Treasury Journal is a source of pride to the Office of the Accountant-General of the Federation, and represents our determination at showcasing the role of the OAGF in Government programmes and activities”. However, he

tion said out of so many who applied, and were screened during the last post UTME screening exercise, only 2,218 were admitted. Jen however, warned the students against vices that could destroy them and their future, saying that the authority of the college would not condone any act from any student capable of tarnishing the good image of the institution. He urged the students to

study earnestly and conduct themselves in accordance with the rules and regulations of the institution in their interest and that of the educational sector. “Today you have become full-fledged students of the College of Education Zing. By the virtue of the oath you have taken, you are bound by the College rules and regulations which must be kept if you must graduate from the College.

regretted that its funding has not been as expected as it has largely been through advertisements and other supports from MDAs which usually affects the production of the Journal as at when due. The AGF also charged the Editorial Board of the Journal to ensure highest standards and quality of inputs and publication of the Treasury Journal.

Taraba College of Education matriculates 2,218 Students NATHANIEL GBAORON, Jalingo

HE College of Education (COE), Zing in Taraba State has matriculated Two thousand two hundred and eighteen (2,218), students into the 2018/2019 academic session. Mike Dio-Jen, Provost of the College who announced this at the 40th matriculation ceremony of the students of the institu-

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“You must imbibe discipline and hard work because the only alternative to success is the fear of God, discipline and hard work, “Jen said. Jen who further urged the newly matriculated students to refuse religious bigotry also advised them to shun cultism, drug abuse, examination malpractice, among other social vices to enable them graduate successful and to be good future leaders.

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afita, an economic empowerment programme being implemented in four core northern states of Kano, Jigawa, Kaduna and Katsina, a UK-government funded programme has presented working tools to over 1,149 marginalized youths, recently trained under the scheme. Arrangements have also been concluded to graduate over 5600 other youths trained in vocational areas, such as: Electrical Installations and Repairs, Masonry, Building, GSM Repairs, Satellite Installations and Repairs, as well as Garment Making, among others. The presentation of the working tools to the beneficiaries was presided over by the Kano State Commissioner for Planning and budget, Shehu Na`Allah Kura, at a brief ceremony held at the DFID office in Kano. Speaking before the presentation was Mohammed Sagagi, the Programme Manager said that the presentation of the items was to aid the beneficiaries of the programme to put to practice the various skills they have acquired under the Apprenticeship and COSDEC component of the programme. “Mafita is an economic growth programme which set out to economically empower marginalized youths through skills training and local economic development support. The term Mafita is Hausa word for ‘A Way Out’ which embodies the objectives of the @Businessdayng

programme. “The programme started piloting its interventions activities in 2015 under the name Northern Nigerian Skills Development programme in Kano, Kaduna, and Katsina, and in October 2017, Jigawa State was added to the list of benefiting states. “The primary beneficiaries are marginalized youths between the ages of 15-24 years. They are also young people living under #360 a day and are not enrolled in any full-time formal education or training at the point of entry into the training programme” he stated. Sagagi revealed that the programme will be winding down next year, as against the year 2012, it was initially scheduled to end, adding that in view of the development, the management of the programme, has intensified discussions with local stakeholders on how to sustain the programme as a result of it many socio-economic benefits. Also speaking, Abba Isyaku Adamu, who is a manager in charge of Technical and Vocational Education training of the programme, gave further insight into the empowerment initiative, and efforts to make it certify its graduates through National Board for Technical Education (NBTE). Commenting on the programme, Kano State Commissioner for Planning and Budget, Shehu Na`Allah Kura, commended the British Government for its commitment to empowering youths in the state through the programme.

Monday 22 April 2019

BUSINESS DAY

NEWS

Int’l Day for Monuments and Sites: Edo harps on safeguarding heritage,

do State Governor Godwin Obaseki has assured that the state will continue to safeguard its rich cultural heritage, as ongoing efforts to reclaim and preserve monuments will pull tourist traffic to the state. Obaseki, who gave the assurance in commemoration of the International Day for Monuments and Sites, noted that concerted efforts were being made by relevant stakeholders in promoting and safeguarding Edo heritage and showcasing its cultural sophistication to the world. He noted, “Culture is one of our strongest assets as a state, and we must make the best of this prized inheritance. We are collaborating with the Oba of Benin and other critical stakeholders in agitating for the repatriation of over 6000 artefacts looted during the Benin Expedition of 1897. These artefacts are parts of our priceless heritage objects with global appeal. Through the partnership with the Oba of Benin, Oba Ewuare II, we intend to build a world-class Royal Museum to hold stolen artefacts. This will ensure that once the artefacts are reclaimed, they are safeguarded. Our grand plan is to make the artefact part of valued assets in our tourism master plan.” “We are very proud to have inherited rich cultural structures that tell of our history as a people and the immense influence wielded by the Benin Kingdom across the globe. We are determined to unlock the

cultural and tourism potential of these priceless gifts handed down by our forefathers,” the governor said. He added that efforts were being made by the state government to document and preserve other cultural assets across the state to boost social-economic activities in the culture and tourism sector, adding that the cultural assets will be on display at the National Festival for Arts and Culture (NAFEST) to be hosted by Edo State later in the year, to raise the profile of the cultural expo. Obaseki urged culture enthusiasts, tourism promoters, art collectors and other stakeholders to support efforts by the state government to promote culture and tourism to maximise the gains the sector holds for development. According to the United Nations Educational, Scientific and Cultural Organisation (UNESCO), the International Day for Monuments and Sites (World Heritage Day) is an international observance held on April 18 each year around the world with different types of activities, including visits to monuments and heritage sites, conferences, round tables and newspaper articles. The day was proposed by the International Council on Monuments and Sites (ICOMOS) on 18 April 1982 and approved by the General Assembly of UNESCO in 1983. The aim is to promote awareness about the diversity of cultural heritage of humanity, their vulnerability and the efforts required for their protection and conservation.

Pipeline vandalism: Killing of Ogoni youth by Army sparks row Ignatius Chukwu

youth in Ogoni area of Rivers State has been shot to death and another critically ill. This has however created a row as the Movement for the Survival of Ogoni People (MOSOP) has accused the Army and a multinational oil company of plotting the death of the youths in Ogoni. Military sources however said they acted in self-defence and that pipeline vandalism was at the root of the shooting in Ogoni. A statement by MOSOP’s publicity secretary, Sunny Zorvah, said 39-year-old Nen-Elkpege Lezor was shot dead and Lenu Kpegezor was shot to critical condition, say-

ing the killing was unprovoked. A video footage going viral showed Lezor lying lifeless on the floor in his family compound in Kegbara-Dere (K-Dere), Gokana local council area. The voice which said the victim was his brother said soldiers burst into their compound and started shooting people, thus killing Lezor and wounding Kpegezor. A chief in the area and chairman of the Community Development Committee (CDC), Festus Legbara, said soldiers attached to the oil company working in nearby B-Dere came to K-Dere and killed the men. He said the soldiers later went back to B-Dere and waited with the oil workers till 6.30pm and escorted them back to Port Harcourt. Addressing newsmen in K-Dere, the community leader showed press-

men round the killing zone. MOSOP said the movement was galled by the shooting and killing in K-Dere community by men believed to be soldiers of the Nigerian Army, and totally condemns such operation. It called on the security agencies to stop reckless killings in Ogoni communities. The incident took place at about 10am on Friday, April 18, 2019. MOSOP said; “The natives stated that men of the Nigerian Army came in company of oil pipeline workers and started shooting without any explanation resulting to the sudden death of a young man and other casualties. Even though the Movement is in support of genuine efforts by legitimate authorities and government to fight criminality in Ogoniland and other parts of the

State or country, we do not support and will not tolerate unprovoked military onslaught and reckless killings in any Ogoni community or elsewhere. MOSOP urged security actions should be taken with respect of the rights of innocent citizens and that the military or any arm of the security agencies should act within the ambit of the law, especially, according to the rules of engagements. “We call on relevant security agencies, particularly the Police to urgently commence investigation into the reported military raid and killing in K. Dere community and ensure that all those behind such destructive and warranted operations are brought to book to avert total breakdown of law and order in the area.

Cleric urges Nigerians to hope for better future in commemoration of Easter SEYI JOHN SALAU

he Diocesan Bishop of the Diocese of Lagos (Anglican Communion) Rt. Rev. Humphrey Olumakaiye, in commemoration of Easter has urged Nigerians to hope for a better future. “Beloved, today is significant in the history of Christianity, our salvation is perfected, and our hope is renewed. The death could not hold our master – Jesus captive,” he said.

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Olumakaiye stated this in his 2019 Easter message to Nigerians, especially Christian faithful, stating that one of the messages of the resurrection was the hope that Jesus Christ brought to mankind through his resurrection from the dead. According to the cleric, hope is a word of optimism and expectation that looks forward to a promising future, yet multitudes of people have lost hope. “We cannot overemphasize the various challenges facing

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us as a nation, especially our dwindling economy, insecurity and poor state of infrastructures and many others. Some people may even be having challenges in their marriage, health, finance, or job. ‘’Passing through all these, we ask the question, “Is there hope?” Yes, there is hope for our nation through our resurrected Jesus Christ and saviour. In all of these, we are encouraged that there is hope of a better tomorrow through the power of

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the resurrection. It also assures us that all who belong to Christ will through faith in him share in his victory,” said Olumakaiye. The Anglican bishop of Lagos stated that the resurrection of Jesus also shows that the power of God can turn things around for good. “He created us to live with purpose, working toward goals with a sense of anticipation for things to come. The story of Jesus’ resurrection is one that gives hope to us as a nation,” he said.

Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

NEWS ICAN sees robust technology alignment as strategy to improve accounting profession KELECHI EWUZIE

Glo gains highest number of new subscribers in February SEGUN ADAMS

FG sets for another repair work on 3rd Mainland Bridge JOSHUA BASSEY

Outsource Global expands into UK

UBA rewards 20 more customers with N30m in ‘Wise Savers Promo’

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Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

NEWS

Edo SDG programme fits 17 markets with sanitary facilities, power

n fulfilment of Governor Godwin Obaseki’s promise to traders during a recent tour of major markets in the state, the state government has completed the installation of sanitary facilities, including toilets and potable water as well as power generating sets in 17 markets across the state. Speaking during the handing over of the facilities to the traders, the Edo State Focal Person on Sustainable Development Goals (SDGs), Ifueko Alufohai, said the facilities were installed in fulfilment of Governor Obaseki’s promise to the traders. She said the governor directed the SDGs programme to deliver the project within three months, noting, “with time, more markets in the state will benefit from Governor Obaseki’s promise.” Alufohai said, “This is a fulfilment of a promise made by the governor who has so much concern for issues that affect women in markets. He was not happy that traders lacked toilet and water facilities, so he stepped in to deliver these projects through the SDG

programme.” She urged the traders to take ownership of the facilities and ensure that they are properly maintained, stressing, “Now that the governor has fulfilled his promise to construct toilet and water facilities in markets, it is left for you to take it as your own and ensure proper maintenance of the facilities. “With the handing over of the toilet and water facilities and the generating sets, the facilities no longer belong to the state government but the traders. The maintenance of the facilities by you all will encourage the governor to do more for traders across the state.” She said other projects being carried out by the SDG office in the state include the construction of school buildings and primary healthcare centres. She applauded plans by the traders to devise means of sourcing funds to power the generating sets provided by the government. Alufohai also urged the traders to support Governor Obaseki and his deputy, Philip Shaibu’s in the forthcoming elections in the state

Prisons’ decongestion gains traction on N2.8bn FEC approvals ... digitalises record keeping Stella Enenche, Abuja

ope came the way of awaiting trial inmates in various Prisons across Nigeria recently following Federal Executive Council’s (FEC) approval of N2.8 billion Nigeria Prisons Service (NPS) digitalisation funds. The approval is expected to add spark to the process of decongesting Prisons across the country through a process of digitalisation of inmates’ records. The development will enable the Prisons’ authorities track records of attendance of the inmates in courts as well as next adjourned dates of hearing of their respective cases. Spokesman for the Service, Francis Enobore, made the disclosure in an exclusive interview with BusinessDay, in Abuja.

It would be recalled that the FEC recently approved N2.8 billion for the digitalisation of the Prisons system in the country. This is coming in the face of the rising inmates’ population, which currently stands at 76,000. A breakdown of the number shows that, Awaiting Trial inmates are about 50,000, while the figure of those convicted is about 26,000. According to Enobore, the Service was only implementing an aspect of the whole digitalisation project, which is to be implemented by the Attorney General of the Federation and Minister of Justice. “The Federal Government is intending to carry out that project under the auspices of the attorney general of the federation,” he said. He noted however that the one that the Nigeria Prisons Service carried out was the Prisons Information Management System (PIMS), explaining that the

component of the PIMS was to digitalise the record keeping for the inmates including their court attendance. “The essence is to ensure that cases are given speedy hearing. With the introduction of PIMS, we are able to monitor court attendance, know why cases are adjourned, do a follow-up and know where there are gaps. In addition to that, it will enable us keep permanent record of anybody that has ever been to the Prison,” he explained. When BusinessDay asked for further clarification on the project, against the backdrop of fear of duplication, the Prisons’ spokesman noted thus: “No, they are not going to do the same kind of jobs. The one approved by FEC is under the auspices of the attorney general of the federation. Of course, you know justice process involves those

that have the arresting power, those that prosecute, and those that pronounce judgement and those of us that keep those that are sent to us. “The triangular movement of individuals that are passing through the course of justice will have each of the custodians of the tripod having specific role to play. The prisons will keep those arrested.” Meanwhile, Enobore has said that the presidential pardon granted inmates in 2018, was a demonstration of government’s determination to see the decongestion project through. According to Enobore, “3,612 where granted pardon from different Prisons formation for 2018. Earlier this year, the presidential committee on Prisons Reform and Decongestion visited Edo and Delta states and freed 43 prisoners from Delta and 76 from Edo.

2019 Polls: Rights body compiles cases of electoral malpractices Emmanuel Ndukuba, Awka

ational Human Rights Commission (NHRC) has begun full-scale compilation of all forms of electoral malpractices recorded during the last 2019 general elections across Nigeria. Already, consultations had commenced with stakeholders includingmembersofcivilsocieties, who monitored the elections with a view to producing comprehensive report on the conduct of the polls. Anambra State coordinator of the Commission, Nkechi Ugwuanyi, told newsmen in Awka on Friday, shortly after an interactive session with some stakeholders that the exercise

was to determine the credibility of the elections. She said the Commission would soon release a documented report of all election offences recorded during recently held elections across the nation in line with its monitoring mandate. “We intend to ensure compliance to policies, there is no need churning out policies that will not be implemented. This will help us to determine if the elections were free and fair. “The exercise will be an opportunity for us to know the extent to which voters were disenfranchised and to ensure that in the event of lapses, INEC is repositioned for better performance,’’ Ugwuanyi said.

EU, Cross River sign MoU on N1.3bn ICT project MIKE ABANG, Calabar

he Cross River State government with support from European Union (EU), managed by World Bank, has awarded a contract worth N1.3 billion to Counterhouse Limited for the upgrade and re-implementation of the State Integrated Financial Management Information System (SIFMIS) of State and Local government Reform Project (SLOGOR). The memorandum of understanding (MoU) was signed in Calabar by the Ministry of International Donor Corporation and the consultant. Francis Etta, commissioner for International Donor Corporation, said the project was aimed at addressing the financial operations of the state with ease. Etta said the project was also targeted at adopting a long-term strategy where Information and Communication Technology

would be integrated into its operations and its Ministries l, Departments and Agencies. According to Etta,”The project is what we call SIFMIS and if that comes operational, it means the financial operations of Cross River State would be digitalised, at a press of a button, the budget is out, the accounting systems are out and the audited account of the state will just be out unlike the way we have been going manually that takes a whole lot of time to produce an account, that would become a thing of the past and that is the core essence. “With the governor’s concept, being a digital governor, we want to digitalised the operations in Cross River State for him.” Rotimi Olugbohungbe, managing director/CEO of Counterhouse Limited, assured the state of delivering the project in two weeks, immediately necessary things were put in place. www.businessday.ng

L-R: Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI); Babatunde Yusuf, dean, faculty of management sciences, Lagos State University (LASU); Babatunde Ruwase, president, LCCI, and Akin Onafalujo, head of department, insurance, LASU, during a courtesy visit of the Lagos State University to LCCI in Lagos.

Wage: OPS endorses implementation of N30,000 … as labour wants states to comply JOSHUA BASSEY

igeria’s Organised Private Sector (OPS) has endorsed the Federal Government’s decision to implement N30,000 new minimum wage agreed to by tripartite national minimum wage committee and the National Assembly. President Muhammadu Buhari signed the minimum wage bill into law on Thursday, April 18, thus setting the stage for the commencement of implementation of the new wage benchmark, up from existing N18,000, which came into effect in 2011 under former President Goodluck Jonathan. There are, however, concerns about the ability of some state governments to pay the new

benchmark. Analysts believe it will balloon states’ existing wage bill and put further pressure on their recurrent expenditure thus living very little for capital projects, which the economy is in dire need of. Only a few states have been faithfully paying the N18,000 minimum wage. Many of the 36 states of the federation have either not paid or paid in instalments. But Timothy Olawale, director-general of Nigeria Employers’ Consultative Association (NECA), a key member of the OPS, welcomes the signing of the wage bill by President Buhari. “The organised businesses wish to commend the President for attending to the national minimum wage bill as sent by the National Assembly. It shows

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that he cares for the welfare of the masses and working class in particular. We believe that the implementation date will be the date of assent,” Olawale says. The DG explains that the national minimum wage is not a general salary increase but a wage below, which no employer should pay. According to Olawale, employers who are already paying above N30,000 are not obligated to comply while urging other social partners to respect the position of the law so as not to jeopardise the peace in the private sector. Peter Ozo-Eson, general secretary of the Nigeria Labour Congress (NLC), believes that with the signing of the bill, imple@Businessdayng

mentation should immediately commence just as he appreciates President Buhari for not disappointing labour. “We urge employers, particularly federal and state governments, to commence immediate negotiations with the appropriate unions on the impact of the new law on the wage structure with a view to timely and judicious implementation,” Ozo-Eson says. Bobboi Kaigama, president, Trade Union Congress (TUC), says the new wage will give workers a sense of belonging, saying, “While labour appreciates the approval of the new wage, it is also instructive to note that its gains have been eroded by inflation as prices of commodities have gone up.”

Monday 22 April 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Facebook signals softer stance on ad rules for EU elections Social media group’s new campaign rules sparked fierce backlash among MEPs MEHREEN KHAN

acebook is ready to give in to pressure from Brussels over criticism that its new rules on online political advertising restricts EU parties from campaigning in next month’s European elections. Nick Clegg, Facebook’s head of global affairs, has written to Antonio Tajani, president of the European Parliament, offering to explore ways to exempt European parties and EU elections from the campaign rules after they sparked a fierce backlash among MEPs. As of last week, Facebook’s new transparency rules require any individual or group posting political adverts on the platform to register in each EU member state they want to show them in. The measures were unveiled as part of the tech group’s attempts to tackle “online disinformation” and foreign interference in European elections, which will be held across the EU on May 23-26. Similar rules, which force campaigners to have a valid registered address in every EU

country, were rolled out for the US midterm elections and also apply in the UK. But the measures have been heavily criticised in Brussels, where pan-EU parties and candidates have complained they will stop parties from running cross-border campaigns and have threatened to take legal action against Facebook. In a letter seen by the Financial Times to Mr Tajani, Mr Clegg identified 19 EU political parties, groups and institutions that the platform could exempt from the rules for a month leading up to May 26. Mr Clegg said Facebook was “exploring whether we can technically build tools that would allow authorised administrators of the 19 institutional pages we identified to target ads to people right across the EU”. “It will be a challenge to do this in the requested timescale and I will need to confirm whether or not it is possible with you if we agree that this is the right solution”, wrote Mr Clegg, who was deputy UK prime minister in David Cameron’s coalition government.

Platform aimed at tackling compliance issues to be used to validate payments

PMorgan Chase is to widen the use of the industry’s leading blockchain technology to help smooth the banking industry’s payment system while also inviting fintechs to experiment on how to develop the platform. The expansion of the Interbank Information Network (IIN), which enables banks to share information on a mutually accessible ledger, comes after 75 of the world’s biggest banks joined the venture last year. The platform already allows banks to quickly resolve compliance issues that can delay payments by weeks. They also hope that by making the global payments rails run more easily they will be able to better defend their cross-border-payments business from the rise of digital payments providers such as TransferWise, Revolut and Ripple. The banking industry generally has cooled on the potential of blockchain technology to revolutionise the industry, but JPMorgan’s head of global clearing, John Hunter, said development of the IIN continued apace with plans to expand its functions. More than 220 banks have now signed up to the original service of allowing data sharing on payments over network so that errors can be resolved quickly. “The initial use case was around sanctions screening,” he said. “Now we’re looking at the ability to do more at the point of settlement.” Mr Hunter said JPMorgan has

individual MEPs to flout the registration rules. “While we can see why the institutions might need to run campaigns that target people across all of the EU, we are not aware of cases where an individual candidate would need to target large numbers of countries.”

The tougher registration requirements would mean MEPs running to become the next European Commission president, such as the conservatives’ Manfred Weber or the socialists’ Frans Timmermans, would need to have staff registered in any member state in which they wanted to campaign.

Race to succeed Draghi throws up fresh stimulus ideas from leading candidates

developed a function that would verify in real time that a payment was going into a valid account, removing the potential of it being rejected days later because of an error in an account number, sort code, address or other aspect of the transaction. “Banks straight through processing rates are in the mid-80s to the mid-90s. It’s that gap — the 5 to 20 per cent of payments — that have to be assessed by operations where we’re trying to alleviate some of that pain,” he said. The system will be live in by the third quarter, for both domestic and international payments, though JPMorgan expects it to be more useful for international payments, where error rates are higher. The IIN is also setting up a sandbox for fintechs to use the network to “develop and put out applications”. The testing environment, which JPMorgan expects to launch in the third quarter, will offer developers building blocks such as secure messaging, document file transfer and data modelling. “This removes many challenges and hurdles — tooling, ecosystem, data, environment, etc,” said Mr Hunter. “Developers only need to bring their intellect.” The IIN’s services are currently free, but it may eventually offer both paid for and commercial applications, with banks picking and choosing what they use. “Banks replicate a lot of the same infrastructure over and over again,” said Hunter. “There’s no reason banks wouldn’t deploy a utility type service with the network.” www.businessday.ng

Facebook had previously argued it had no choice but to force campaigners to abide by national electoral rules on campaigning in the absence of EU-wide regulation on the transparency of adverts. Mr Clegg’s letter said that although the platform could exempt parties and institutions, it cannot allow

ECB hopefuls offer policy remedies for bloc’s stuttering economy

JPMorgan to widen use of blockchain system LAURA NOONAN

Under Facebook’s rules MEPs such as Manfred Weber, left, running to replace Jean-Claude Juncker as the next commission president, would need to have staff registered in any member state in which they wanted to campaign

CLAIRE JONES

he eurozone’s economic downturn is proving a boon for policymakers who are jostling to succeed Mario Draghi at the bloc’s central bank — offering them an opportunity to tout favoured policy proposals and burnish their credentials for the job. The European Central Bank is preparing to respond to the slowdown with more monetary stimulus, most likely by extending its commitment to keeping interest rates at record lows past the end of 2019 and further into 2020 — well beyond Mr Draghi’s term in office. But the hunt is on for additional policy options in case the stuttering growth persists — and those who would succeed Mr Draghi as ECB president are keen to show they can provide them. Since taking the helm at the eurozone’s monetary guardian in 2011, Mr Draghi and members of his inner circle have acted aggressively to hold together an often disparate monetary union. The flipside of his dominance was that at times the heads of the region’s central banks took a back-seat role in policymaking. The impending departure of the man who has shaped eurozone monetary policy for the past eight years gives the bank an opportunity on a search for fresh ideas. With just a couple of months before the decision is expected to be made by EU heads of state at a summit in mid-June, some of the leading candidates are stepping out of the Italian’s shadow to compete for the

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attention of national capitals. Of the leading candidates, only Benoit Coeuré, a member of the bank’s executive board, has been a key figure in the Draghi era’s crisis response. Mr Coeuré, with a reputation for understanding the region’s financial markets and the political dynamic between Berlin and Paris, is the preferred candidate of many ECBwatchers and would represent a continuation of Mr Draghi’s ideas. The ECB board member “has been instrumental” in weighing in with ideas to help the bank combat the region’s economic woes, said Frederik Ducrozet, economist at Pictet Wealth Management. But he may not have the political support needed to override EU laws that prevent board members from serving more than eight years on the bank’s executive board. One of the main debates among policymakers is whether to compensate banks for charges associated with negative interest rates — an idea proposed this year by Banque de France governor François Villeroy de Galhau. His push for a tiering system for negative deposit rates — now at minus 0.4 per cent — has attracted economists’ attention. By agreeing to hand back to banks some of the €7.5bn they pay each year on deposits with central banks in the single currency area, the ECB could have more room to cut interest rates, Mr Villeroy de Galhau argues. However the idea is unpopular with parts of the governing council, including some of Mr Draghi’s inner circle. Klaas Knot, the head of the @Businessdayng

Dutch central bank who is also in the running for the top job, has publicly criticised it. Another stimulus option would be to let inflation run above its target of below but close to 2 per cent for a limited period, a possibility that Mr Draghi noted this month. This idea has been mooted by Bank of Finland head Olli Rehn. Mr Rehn’s call for a review of how to keep prices stable follows a similar initiative by the US Federal Reserve. “The most recent update of the ECB’s monetary policy strategy took place in 2003 — before the financial crisis and other subsequent events and changes,” the Bank of Finland governor said in March, adding that a review would not question why the bank targeted low levels of inflation and instead would focus on “guiding principles, key assumptions and tools used for the implementation of monetary policy”. ECB watchers view the idea of a review as welcome, but think any change would take years. “The redefinition of the bank’s price stability mandate as close to but below 2 per cent took many years before it was officially endorsed in 2003,” said Mr Ducrozet. “This kind of change could take even longer, or it could be that another major crisis is needed for the ECB to embark on such a quantum leap.” Others in the race are Bundesbank president Jens Weidmann — a policy hawk — and former Bank of Finland chief Erkki Liikanen, who played a key role in reshaping banking regulation after the financial crisis.

46 BUSINESS DAY

Monday 22 April 2019

NATIONAL NEWS

Sudan opposition ups stakes with push for civilian regime Plan to name council will test military leaders’ willingness to hand over power DAVID PILLING

pposition leaders in Sudan were set to announce the line-up of a proposed civilian state council on Sunday evening, ratcheting up pressure on the country’s military leaders to cede power. The naming of what would be, in effect, a parallel government in the north African country of 40m people is a high-stakes gamble that will test the new military council’s willingness to yield authority to civilian leaders. The military council took over in a coup 10 days ago after ousting Omar al-Bashir, who ran Sudan with Islamist support for 30 years. Military leaders turned against Mr Bashir after four months of protests, initially triggered by a rise in bread prices, which quickly turned into a nationwide “Sudanese revolution” aimed at bringing down the regime. Early this month, protesters began a mass sit-in in front of the military headquarters, bringing the crisis to a head. The new council, led by General Abdel-Fattah Burhan, has said it does not want to hold on to power, but many protesters doubt it will easily step aside. On Sunday afternoon, signatories of the Declaration of Freedom and Change, a broad coalition of opposition forces, were discussing whether to name a civilian prime minister in line with a proposal by the military council to share power over a

transitional period before democratic elections are held in two to four years. One name mentioned was Abdalla Hamdok, a technocrat who has spent years abroad, most recently as deputy executive secretary of the United Nations Economic Commission for Africa. There is disagreement among the opposition, which covers a broad spectrum from doctors’ and lawyers’ associations to trade unions and traditional political parties, about how to deal with the military council. Some want to engage while others are suspicious of being lured into a trap. Protest organisers said in a statement that they would provide further details about “ongoing efforts to form the civilian legislative council and expertise executive council” at a press conference on Sunday evening. Sara Abdelgalil, spokeswoman for the Sudanese Professionals Association, which has spearheaded the protests, said: “Our words are clear. We are not calling for a parallel government. We are calling for a handover.” She urged the international community to watch closely in case the military council, made up of former Bashir loyalists, became more confrontational, adding: “We are very anxious. We will be vigilant and observant over the next few hours.” Dozens of protesters have been killed in demonstrations that began as bread riots last December. The fractured military apparatus has stopped targeting civilians since the April 11 coup.

Sovereign wealth funds lay foundations for a low-oil future Norway’s $7.5bn divestiture raises questions for others over dependence on fossil fuel JENNIFER THOMPSON

orway’s plan to ditch a host of oil and gas companies has highlighted the pressure on petroleum-rich sovereign funds to cut their exposure to a sector that is facing serious questions from investors over its long-term prospects. Norway’s $1tn sovereign wealth fund, the biggest in the world, last month said it planned to divest holdings worth about $7.5bn from oil and gas companies that focus on exploration and production. It stopped short of dumping larger energy companies such as BP and ExxonMobil but the move, which is subject to parliamentary approval, is still likely to result in one of the largest divestments of fossil fuel assets. The fund owns oil and gas shares worth about $37bn in its $623bn equities portfolio. Norway’s divestment proposal was prompted by a desire to limit the country’s dependence on the oil sector. Last year the fund received NKr34bn ($4bn) from its petroleum reserves but policymakers do not want it to increase its exposure by using that capital to buy shares in the sector. “They are a massive reference point for the entire industry,” says Mark Lewis, global head of sustainability research at BNP Paribas Asset Management. “It is going to force people to think harder about oil and gas.” Nevertheless Norway is regarded as something of an exception when compared with its sovereign wealth

fund peers. “I don’t see SWFs as a whole group pulling out of oil and gas. [Norway] is bit of an outlier,” says Michael Maduell, president of the Sovereign Wealth Fund Institute. “For them to drop those companies was pretty big.” However, recognition is growing of the longer term financial risk about investing in the sector when an investment vehicle’s source of capital is also oil and gas. The oil sector faces many challenges: the rise in electric vehicles and renewable energy, tougher environmental legislation and investor pressure to axe fossil fuel stocks following the 2015 Paris climate change agreement. Wood Mackenzie, an oil consultancy, last year forecast that global oil demand would peak within two decades, citing changes in transport technologies. “The debate among most sovereigns [on] how to get investments that are fundamentally different from their source of capital . . . has become more of an issue for most of them,” says Cyrille Urfer, head of sovereign wealth funds and institutional clients in the Middle East at Unigestion. Investment vehicles in Saudi Arabia and Abu Dhabi have both made attempts to diversify. Saudi Arabia’s Public Investment Fund, which has more than $300bn in assets, was created with the mandate to diversify the kingdom’s economy from oil and gas. It invests domestically, concentrating on funding companies in non-oil sectors such as entertainment and tourism both at home and overseas. www.businessday.ng

Sri Lanka Easter Sunday blasts kill more than 200 people Island-wide curfew imposed after bombings of three churches and three luxury hotels CHATHURI DISSANAYAKE, AMY KAZMIN AND SIMON MUNDY

series of bombs ripped through three churches packed with Easter worshippers and three luxury hotels in Sri Lanka on Sunday in the worst violence to hit the island nation in a decade. Hours after the first wave of bomb attacks, which occurred around 9am, bombs exploded in two more sites: a low-budget guest house and a residential housing complex, where those responsible for the devastating terror attacks were believed to be have been holed up. About 207 people, including at least 27 foreign visitors, were killed in the explosions, with about 450 others injured. Among the dead were several Sri Lankan police officers, who were killed in the two later blasts while trying to arrest the perpetrators. Ruwan Wijewardene, the defence minister, said 13 people had been detained in connection with the attacks. The attacks, many of which were reported to have been the work of

suicide bombers, occurred as the island was packed with foreign visitors enjoying the Easter holiday. Sri Lanka’s foreign ministry said nationals from the UK, Portugal, Denmark, the US, Turkey and India were among the dead. Sri Lankan authorities imposed an immediate island-wide curfew, ordering all but essential personnel off the streets. WhatsApp and other social media were temporarily blocked. The attacks, the most lethal violence in Sri Lanka since the end of its long civil war in 2009, are a major blow to an already fragile economy struggling with severe financial difficulties and which depends on tourism as its third-largest source of foreign exchange. Sri Lanka received about 2.1m foreign visitors last year. In February, the IMF agreed to extend the country’s $1.5bn loan facility by another year. No group immediately claimed responsibility. But Mr Wijewardena told reporters on Sunday that security forces had identified the perpetrators as “religious extremists” who would be taken into custody as soon as possible. “We will take all necessary ac-

tion against any extremist group that is operating in our country,” he said. “Whatever religious extremism they are following, we will take the necessary actions against them and we will stop these groups from operating in the country.” According to the AFP news agency, Sri Lanka’s police chief, Pujuth Jayasundara, had issued a warning earlier this month to security agencies that suicide bombers planned to hit “prominent churches.” The warning, which identified the potential attackers as Islamist extremists from the National Thowheeth Jama’ath, had also said that the Indian High Commission in Colombo could be targeted, the AFP reported. Shortly after the first blasts, Ranil Wickremesinghe, prime minister, called for calm, urging Sri Lankans to avoid spreading rumours or “propagating unverified reports and speculation” as authorities begin investigating. “I strongly condemn the cowardly attacks on our people today,” he said in a tweet. “I call upon all Sri Lankans during this tragic time to remain united and strong.”

Billionaire family behind London’s Tulip tower keeps low profile JUDITH EVANS AND GEORGE HAMMOND

ne Sunday morning in the autumn of 2014, a Brazilian man arrived at London’s Gherkin tower with his young son; the two toured the building at the quietest time of the week for the City’s financial district. Almost none of the thousands of people who work in the distinctive Norman Foster-designed tower knew it had received a visit from Jacob J Safra, who had just agreed a £726m deal to buy the building. A person who knows him says the visit was typical of the style of the heir to the Safra banking dynasty — financiers who have long shunned personal publicity. That low-key approach stands in stark contrast to the extravagant creation they hope to plant on the London skyline. If Mr Safra gets his way, by 2025 a slender 305m stalk will sprout from the ground close to the Gherkin’s base at 30 St Mary Axe, its bulbous head standing above the angular

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skyscrapers that dominate the City. Unlike the surrounding offices, the “Tulip”, also designed by Foster + Partners, would function purely as a tourist attraction, with rotating “gondola pods”, a restaurant and sky bar. It would be the second tallest building in western Europe after the Shard, less than a kilometre away across the river Thames. Mr Safra, 43, chairs the international division of the family’s J Safra Group, named after his 81-year-old father Joseph — who is ranked by Forbes magazine as the world’s richest banker. Born in Lebanon to a Jewish family with Syrian roots, his wealth was estimated by the publication at $24.7bn last month. The family moved to Brazil in 1952 and three years later established Banco Safra in São Paulo. Jacob Safra has been closely involved in the Tulip, according to people working on the project; its genesis came out of difficulties in opening the Gherkin to the public on a more regular basis.

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The J Safra Group estimates the paid-for attraction could draw 1.2m visitors a year. It declined to give details on the price of the project, how much the entry tickets would be — other than that they would be “comparable to other London attractions”, or how long it would take to recoup the development cost. In a statement, Mr Safra praised the building’s “elegance and soft strength” and its provision of a “classroom in the sky”. Having won planning permission from the City of London Corporation, the financial district’s governing body, the company must now persuade the mayor of London, Sadiq Khan, to endorse a scheme that has sharply divided opinion. Among the Tulip’s critics are Duncan Wilson, chief executive of Historic England — the public body that protect’s the country’s heritage. He has called it “a lift shaft with a bulge on top” that would “cause permanent and irreversible damage to the setting of the Tower of London”, which is less than 1km away.

Monday 22 April 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Man Group urges investors to back Jersey move Holding group in tax haven will free global operations from UK regulatory oversight OWEN WALKER

an Group has urged shareholders to sign off its plan to set up a holding company in Jersey, after the alternative investment specialist won regulatory approval for the move. The Financial Conduct Authority has agreed to Man’s proposal, which the London-listed group said would free its global operations from British regulatory oversight. Man said it did not expect the arrangement to affect its tax rate as it would still be domiciled in the UK for tax purposes but market-watchers suggested the move would bring advantages. “This added ‘flexibility’ will make it easier to access potential tax savings structures, such as easier sharing of tax losses between entities, especially in the US,” said David McCann, an analyst at Numis. Man’s chairman, Ian Livingston, wrote to shareholders last week asking them to back the plan at the company’s annual meeting on May 10. Man needs the support of shareholders that own 75 per cent of its stock. This would allow the group to set up the structure later that month. Big shareholders in Man include Franklin Templeton, Silchester, BlackRock and Standard Life Aberdeen. Analysts expect the vote to pass with little resistance. Man would still be listed on the FTSE 250 index. The UK and European businesses would continue to be regulated by the FCA and report into the Jersey holding company, while the US and Asian entities would report directly into the holding com-

pany and bypass the UK regulator. “At present, Man’s businesses in the US and Asia are prudentially regulated by the UK authorities as well as local regulators,” Lord Livingston wrote to shareholders. “The proposed structure would result in the group no longer being subject to global consolidated capital requirements and would therefore provide the group with greater flexibility going forward comparable to other such global groups.” The FCA has taken an increasingly tough stance on the asset management industry after a hard-hitting government investigation two years ago. Last week, for example, the FCA said it would publish profit margins of investment groups and increase its scrutiny of the fees charged by active managers. Analysts said the reorganisation offered other advantages. “The proposed structure would result in Man Group no longer being subject to global consolidated capital requirements and would thereby provide it with greater flexibility comparable to other such global groups,” wrote Jon Peace, an analyst at Credit Suisse. Man said it was following international best practice. Janus Henderson, the New York and Sydney-listed group, has a similar structure, with a holding company registered in Jersey. Henderson Group set up the Jersey entity in 2008. Janus Henderson is tax-domiciled in the UK. Fidelity International, the sister company of US manager Fidelity Investments, is registered in Bermuda. Fidelity said it paid taxes in all the countries in which it operated and did business.

Cuadrilla ‘ready’ to frack second shale gas well in Lancashire Company urges regulator to relax rules governing fledgling industry NATHALIE THOMAS

uadrilla, the company seeking to produce shale gas in the UK, said it was “ready” to frack a second well at a site near Blackpool, despite admitting previously that it was impossible to work within current rules governing the industry. Time is running short for the private equity-backed company because its planning permit for the site at Preston New Road in Lancashire, north-west England, expires at the end of November. Cuadrilla has already partially fracked one well at the site — a process that involves pumping water, sand and chemicals under the ground at high pressure to release gas from rock formations. However, it could not complete tests of the exploration well after it was forced to suspend work on a number of occasions last year when it triggered earth tremors exceeding 0.5 on the Richter scale. A “traffic light system” that governs the industry dictates that work must be paused if earthquakes reach that level or above. A letter seen by the Financial Times from Frances Egan, Cuadrilla’s chief executive, to Andy Samuel,

chief executive of the UK’s oil and gas regulator, highlights the time pressure on the company as it tries to keep the fledgling fracking industry alive. Cuadrilla has spent around £200m on its bid to commercially produce shale gas in the UK. It is the only company so far to frack in Britain. In the letter sent in December, which was obtained via by a Freedom of Information request, Mr Egan urged the regulator to carry out a review of the current rules and make fresh recommendations on safe seismic limits by the end of March. Meeting this deadline would allow “further exploration wells [at Preston New Road] to be safely and effectively hydraulically fractured and tested within the 2019 planning approval window”, Mr Egan said. So far, pleas by both Cuadrilla and Ineos, the energy and petrochemicals company that hopes to frack for shale in England, have been rebuffed by the government and the regulator, although the Oil and Gas Authority (OGA) said in February it was carrying out a “scientific analysis” of the data gathered from Cuadrilla’s recent work. This analysis did not, however, constitute a review of the traffic light system, the regulator stressed. www.businessday.ng

Man’s US and Asian entities would report directly into the Jersey holding company

Will US company results neutralise ‘earnings recession’ fears? The key questions for investors in the week ahead FT REPORTERS

ill US company results neutralise ‘earnings recession’ fears? An “earnings recession” could be looming for the US stock market. Analysts estimate that earnings for companies in the S&P 500 index of blue-chip stocks contracted 4.6 per cent in the first three months of the year, and they forecast that they will shrink another 0.4 per cent in the second quarter. If these estimates prove true it would technically constitute what some analysts term an earnings recession. However, the initial spate of first-quarter results from US companies indicate that these fears may not come to pass. The large US banks that typically lead earnings season have outperformed estimates. JPMorgan even delivered the best quarterly profit on record for a US bank, hauling $9.1bn in profits, comfortably beating Wall Street’s predictions. Jonathan Golub, chief US equity strategist for Credit Suisse said the convention of companies down-

playing anticipated results to soften analyst estimates before comfortably beating them further reduces the likelihood of an earnings recession. “Assuming historical heads, earnings per share should actually expand 2.5 per cent in the first quarter,” Mr Golub said. Given the strong stock market recovery of 2019, a scenario where corporate earnings remain robust would constitute a major fillip to investors. But if the coming week of results disappoint, then markets could prove vulnerable to a setback. Richard Henderson What does hotpot stock say about Chinese stimulus measures? When looking for a standout success story in Chinese retail, you could do worse than Haidilao Hotpot, a Chinese restaurant group, whose stock is up 68 per cent since its October float in Hong Kong. The rise is not just down to the restaurant’s mouth-watering morsels. Chinese retail more broadly is experiencing an uplift, with the Hang Seng Consumer Goods & Services Index rising 23 per cent this year so far. The reason why has a lot to do

with Beijing’s latest raft of measures to stimulate the economy. Previous rounds of stimulus in 2008 and 2015 were focused on China’s old-growth, state-owned enterprises and infrastructure projects. This time Beijing has won praise for focusing much more on the private sector with measures like a Rmb2tn (almost $300bn) in value added tax cut to help corporations and smaller businesses cut costs and invest more. The goal is to boost consumption, which now accounts for more than half of gross domestic product. Ben Luk, senior multi-asset strategist for global markets at State Street, said that was good news for stocks that were consumer and technology orientated — “all things geared toward the domestic demand story”. The downside for the rest of Asia, Mr Luk said, is less stimulus will spill over to industries in other countries linked to Chinese infrastructure spending and real estate, which got a boost from earlier stimulus packages. The likes of Korean shipbuilders and Australian iron ore miners, for instance, will have to look elsewhere for a pick-me-up.

Why gender diversity matters for Japan’s economy While the wishlist is long, the rewards are potentially massive KATHY MATSUI

wo decades have passed since we published our first report on womenomics, but has anything really changed on Japan’s gender diversity front? After all, based on the World Economic Forum’s latest Global Gender Gap Index, Japan ranked just 110 out of 149 countries, and the systematic lowering of female applicants’ exam scores by a local medical university in 2018 suggests that the diversity agenda is moving backwards, rather than forwards. However, there has been progress. Thanks to widespread labour shortages and Prime Minister Shinzo Abe’s declaration that “Abenomics is womenomics”, Japan’s female labour participation rate — previously among the lowest in the OECD — has soared to a record 71 per cent, surpassing both the US and Europe. Japan now boasts one of the most generous parental leave benefits globally, companies are required to disclose gender

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diversity statistics and labour reforms mandate legal limits on overtime hours and equal pay for equal work. Despite such progress, Japan continues to face a demographic tsunami, where one out of three citizens are elderly and by midcentury its workforce will shrink 40 per cent from 75m to 45m. Japan remains one of the few countries where the number of registered pets (dogs and cats only) outnumbers children under the age of 15. Indeed, the IMF recently warned that in the absence of meaningful structural reforms, demographic headwinds could cause Japan’s real GDP to decline by more than 25 per cent in 40 years. Averting such a scenario requires a three-pronged approach involving government, corporations and society. Government policies should be aimed at areas including creating more flexible labour contracts to eliminate the rigid duality of full-time versus part-time workers @Businessdayng

(the latter now account for 40 per cent of all employees and 70 per cent of all part-timers are female). They should require gender pay gap disclosures — Japan’s gap is the largest of the G7 at 25 per cent — and rectify tax disincentives that discourage married women from working full time. Policies should also introduce parliamentary gender quotas (at 14 per cent, Japan’s female representation in the Diet is lower than Saudi Arabia and Libya) and promote female entrepreneurship. They should loosen immigration rules to allow more foreign child/elder caregivers, especially because Japanese fathers typically spend less than 1.5 hours a day on childcare and household chores — half that of fathers in the UK and US. Companies should sensitise their managers to gender differences through unconscious bias training, create more flexible work environments, shift from seniority to performance-based evaluations and engage male diversity champions.

Monday 22 April 2019

BUSINESS DAY

ANALYSIS

FT Spain’s open election highlights its polarisation problem

Four decades after Franco, and fuelled by resentment over Catalonia, Madrid’s two-party system has come apart

pain this month faces the most wide-open electoral contest since the restoration of democracy that followed the death of Francisco Franco in 1975 and the gradual dismantling of his dictatorship. A proudly modern European country since it closed the chapter opened by the fascist victory against the Spanish Republic in the 1936-39 civil war, Spain risks joining a stream of rightwing populism now rife across the EU and the west. The snap general election on April 28 was precipitated by the fall of the minority Socialist (PSOE) government of Pedro Sanchez, which lasted barely nine months after toppling the centreright government of Mariano Rajoy and his Popular party, or PP, brought down by a multi-party vote of censure in parliament last June after one corruption scandal too many. The contest reflects a sharp polarisation of Spanish politics, the worst

centre-left. Both sides regularly needed the backing of mainstream nationalists in Catalonia and the Basque Country, who often traded their support in Madrid for more powers at home — a home-rule system that helped define a vibrant and plurinational democracy and banish the ghosts of the past. Four decades on the two-party system has come apart. The devolution package risks being unpicked as a result of Catalonia’s misfired secession referendum in 2017 — illegal under the 1978 constitution declaring Spain indivisible. The three parties on the right are competing to prove who can be the most bellicose towards minority nationalisms — the touchstone issue of rightwing populism in Spain rather than immigration, as in the rest of Europe. Iván Espinosa de los Monteros, a Vox leader, told the FT it is “an aspiration” of the party to abolish all home rule. Vox has been around for five years, he says, but “what’s changed is Spaniards are [now] acutely aware the nation is

since the tensest moments of the democratic transition that diehard Francoists conspired unsuccessfully to derail in 1976-81. “This election is more transcendental than 1977,” says Jordi Alberich, former head of the Círculo de Economía, a business think-tank in Barcelona. “There was a road-map to Europe then; now we are lost.” Amid hyperbole, hysteria and slander, the politicians are digging trenches to hurl charges at each other. The largest constituency, polls say as the campaign begins, is the “don’t knows” — at up to 40 per cent of the electorate, but even more among women and the young. While the political spectrum is fragmenting, democratic Spain does not appear to be so easily polarised — for now. The current high tensions — which it was thought complacently that democracy had defused — concern: an upsurge of Spanish nationalism in response to Catalan separatists and their botched attempt to secede from Spain; a consequent hardening of rightwing sentiment that regards the Socialist party as a usurper because it reached power with the help of Catalan separatist MPs in parliament rather than victory at the ballot-box; and an unbridled tussle on the right where the PP, under new leadership, is running scared of the ostensibly liberal centre-right Ciudadanos, or Citizens, party, while both have lurched right to fend off the sudden emergence of the far-right Vox. At the first elections after Franco, in 1977, most Spaniards, of all political colours, knew their future lay in Europe, a view that still commands a clear majority. Embracing a European identity united the country, governed in a twoparty system by the centre-right and the

being broken up”.Other rightist leaders, in both the PP and Ciudadanos, talk of taking back Catalonia’s autonomous powers as part of a broad recentralisation that often sounds like a permanent state of emergency. The eurozone crisis from 2009, after which Spain needed EU help to bail out banks mired in real estate speculation and impose bitter austerity, has left livid scars. That, and the aggression with which elements of the right are trying to rewind the clock on women’s rights, means this general election is an identity contest, a left-right conflict and a culture war rolled into one. Josep Borrell, foreign minister in the Sanchez administration and former leader of the PSOE, says these elections are of “existential importance”, warning that Spain’s democracy is being corroded by a culture of insult and incitement, particularly by ever more radical rightwing and Catalan separatist parties. “There is a systematic exacerbation of tension and conflict, incited by people from both sides because that’s what they live off,” said Mr Borrell. The PSOE and its main partner in the outgoing government, the leftwing anti-establishment Podemos, or We Can, party, are trying to mobilise voters by sounding alarms about a Francoist revival, after the PP and Ciudadanos formed a government backed by Vox in Andalucía in December, ending 36 years of Socialist regional rule. This was a shock to Spain’s political system, inviting the idea of a government that depends on what critics say look alarmingly like neo-fascists. “Spain has reached a major crossroads, and Vox is setting the pace for the PP and Ciudadanos,” says Pablo Echenique, campaign chief of Podemos. “This would be a profoundly reactionary government.”

DAVID GARDNER

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Notre-Dame: why the French elite is picking up the tab

Donations by France’s richest families illustrate the changing relationship between business, culture and the state HARRIET AGNEW AND VICTOR MALLET

n Monday evening guests arrived at the Château de Versailles near Paris to celebrate the reopening of the Queen’s Apartments after a three-year refurbishment. They had barely begun to sip champagne and marvel at the rococo decoration where Marie-Antoinette once lived when word reached them of a fire at Notre-Dame cathedral. Soon the guests were hunched over their smartphones watching the medieval Gothic masterpiece in the centre of Paris engulfed in flames, as its burning spire crashed through the roof. “It was a moment of distress and sorrow,” says Elisabeth Ponsolle des Portes, who heads the Comité Colbert, the French luxury association. “Everyone had tears in their eyes.” Just as private donors have played a crucial part in the continuing restoration of Versailles, so they have quickly emerged to raise funds for a restoration of Notre-Dame cathedral after the fire at one of the most visited tourist sites in Europe. On Monday night, President Emmanuel Macron stood in front of the still-burning cathedral that he called “the epicentre of our life” to announce a national subscription fund to rebuild Notre-Dame. Before the fire had even been extinguished, the Pinault family, who control luxury conglomerate Kering, promised €100m from their family holding company Artemis. “Faced with such a tragedy, everyone wishes to restore life to this jewel of our heritage,” said François-Henri Pinault, Artemis chairman. Hours later, the rival Arnault family, whose patriarch Bernard Arnault is the richest man in Europe, said that alongside its luxury group LVMH it would give €200m for the restoration and put its creative, architectural and financial teams at the state’s disposal. “As caretakers of these big French names we feel a responsibility,” Antoine Arnault, who is Mr Arnault’s eldest son, told the FT. “Given everything that France has given us, we try to give back when something catastrophic happens.” The response to the fire highlights the way in which the relationship between governments in Europe and private wealth is changing in an era of budget austerity, growing economic inequality and populist political pressures. “Historically contributions of this kind were not part of the French culture because like everything else it was the job of the state,” says Ezra Suleiman,

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professor of international studies at Princeton University. “Now the state cannot afford to fund these projects and, therefore, the private sector has to step in.” Both the Pinault and Arnault families made much of their fortunes in the luxury industry, a sector synonymous with the pride and heritage of “Made in France”. Their donations to NotreDame are the latest illustration of the outsized role that the two families — old rivals ever since the Pinaults won the battle for control of Italian luxury brand Gucci 20 years ago — have come to play in sponsoring French culture. In 2014, Mr Arnault opened the Frank Gehry-designed Fondation Louis Vuitton, a contemporary art museum in Paris, which will one day be gifted to the city. The Bourse de Commerce, a former commodities exchange in central Paris, is being turned into a museum featuring works from François Pinault’s vast art collection. Mr Pinault also contributed €3.5m for the recently-restored Hauteville House in Guernsey, where Victor Hugo — author of French Gothic novel The Hunchback of Notre-Dame — lived in exile. Mr Suleiman says the two families are playing the sort of role in French public life that wealthy industrialists played a century ago. “The Pinaults and the Arnaults have taken a pioneering role in business and are now active in arts and philanthropy, like the Carnegie and Rockefeller families in America at the turn of the 20th century,” he says. By midweek, over €800m of donations had poured in from France and abroad. Among the largest were €100m from French energy group Total and €200m from the Bettencourt Meyers family alongside its cosmetics group L’Oréal and the family foundation. The French taxpayer is also contributing, including €50m from Paris city council and €10m from the Îlede-France region, which incorporates the capital. “We have seen a reflex of national unity around this symbol of NotreDame,” says Jean Garrigues, a history professor at the University of Orléans. “It’s perhaps the major symbol of our history, of our culture, even of our French identity.” At a fashion show in Rome for LVMH-owned Fendi in July 2016, the models walked on water. They glided down a glass runway that stretched over the 300-year-old Trevi Fountain, which had recently completed a €2.5m restoration funded by the Italian luxury brand. Fendi’s reconstruction of the Ba@Businessdayng

roque fountain is just one of many examples of French and Italian luxury groups taking the lead in restoring famous European monuments. “Luxury brands have got an interest in linking their image with monuments that are treasures of humanity, and are located in places that are among the most visited cities in the world,” says Mario Ortelli, an adviser for the luxury industry. There are also juicy tax breaks. In 2003 France passed a law through which individuals and businesses benefit from at least a 60 per cent discount on charitable gifts. In Italy, the equivalent tax break for cultural donations by businesses and individuals is 65 per cent. In recent years, Bulgari has supported the refurbishment of Rome’s Baths of Caracalla and the Spanish Steps; Venetian businessman Renzo Rosso, founder of fashion brand Diesel, donated €5m to the restoration of the Rialto bridge across the Grand Canal in Venice. And in 2011 Diego Della Valle, chairman and owner of Italian leather goods company Tod’s Group, embarked on a €30m restoration of the Colosseum in Rome. “It’s because of love for one of the most important Italian monuments — representing Italy all around the world,” he said at the time. “When we are able to contribute, why not?” The rapid pledge of hundreds of millions of dollars for Notre-Dame’s restoration has come at a time of growing resentment of the establishment and the French elite. The grassroots gilets jaunes movement that has shaken the government since November is in part a protest against high taxes, inequality and a perception that Mr Macron is a “president of the rich”. “I’m not sure this type of philanthropy will really be appreciated by French society,” says Mr Garrigues. “These are several Frances, which don’t like each other, which hate each other.” Indignation from the gilets jaunes and trade unionists followed almost as quickly as donations poured into the restoration fund. “The oligarchy gives to Notre-Dame,” said Benjamin Cauchy, a prominent gilet-jaune, in a tweet. Ingrid Levavasseur, an early instigator of the movement, condemned “the inertia of big companies when faced with poverty when they show how they can mobilise a truckload of cash in one night for Notre-Dame”. Philippe Martinez, head of the CGT, a big trade union federation, said: “In a click €200m, €100m . . . If they are able to give tens of millions to rebuild Notre-Dame, let them stop telling us that there is no money to satisfy the social emergency.”

BD Money

Monday 22 April 2019

BUSINESS DAY

Analysis

EQUITIES

Cover

PERSONAL FINANCE

Profit is not all that matters in evaluating a company’s financial performance

Three penny stocks show impressive performance with jumbo year to date returns

Everything you need to know about Personal Income Tax - 2

Navigating through the storm of ‘needs’

Penny stocks got their appellation based on the fact that they are owned by small companies and trade at lower share prices relative to other stocks listed on the stock market.

In continuation from the first series, BusinessDay met with Femi Fashina, a senior tax officer at Lagos Inland Revenue Service (LIRS).

The release of financial results by public quoted companies come with a lot of expectations from shareholders as they look out for a return on their investment especially dividend to be paid by such companies.

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More often than not, decisions on and plans executed towards meeting needs leads many into being pressured and overwhelmed by this pursuit.

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Monday 22 April 2019

BUSINESS DAY

Analysis Profit is not all that matters in evaluating a company’s financial performance

OLUFIKAYO OWOEYE

he release of financial results by public quoted companies come with a lot of expectations from shareholders as they look out for a return on their investment especially dividend to be paid by such companies. Most shareholders are usually not happy when a company fails to declare dividend and more saddened when such companies declare losses. However, instead of fighting the directors, shareholders need to take a deeper look at financial results beyond the surface to determine the value of such a company because there are times in business when it is actually more important to look at revenues and not profit. Whilst profitability is important in determining the value of the company, revenues also play a key and sometimes even a more important role in determining the value of a company. This is why when a company’s revenue dips, its share price sometimes tank despite also reporting profit growth. So,

“

A profitable business may not necessarily mean the business is a solvent one. You can sell a product, which cost you N2000 for N4000 and make a 100% gain

when is revenue actually more important than profit and what are the implications? A loss making business can sometimes be looked at as one with an intrinsic value provided revenue is growing. This is because growth in revenue indicates the current losses may be temporary due to high operating cost or interest expenses or taxes or a combination of both. In this situation, shareholders should view the company as one that requires major restructuring of operations rather than one that needs to shut down. Companies invest in new products line, acquire more assets however, some products or assets take time to breakeven and during this “gestation period,” companies could run into losses. Also, the company may be spending so much on research and development;

marketing and promotional cost all in a bid to ensure its product is noticeable and garnering market share. In such cases, shareholders should focus more on revenues and not necessarily profits. An increase in revenue shows that consumers like the products resulting in higher demand which sooner rather than later turns to profit. Businesses that operate on low margins often walk on the thin line as they trade on huge volumes, high operating cost, and low-profit margins. As such, a sudden rise in operating cost or drop in revenue can lead to a huge loss. However, a hike in operating cost is often bearable when compared to a drop in revenue. If revenue growth persists despite low profits, management sees an opportunity to widen margins by cutting wastes. If the company focuses on profits

alone and disregard revenue, then in no time it will continue to rake in losses eventually losing to your competition and probably shut down. Oil and Gas companies and small retail supermarkets fall in this category. Some companies face huge losses due to misfortune or circumstances beyond their control. This is called Exceptional and/or Extraordinary Items in accounting because it is not expected to occur again. It could be that a fire or a lawsuit or a write-down of a loss-making division affected the company’s business so much it made a loss. It is often advisable to absorb those losses to clear the way for a brighter future. Focusing on revenue during this “trying period” help stakeholders determine if the company is able to reverse its fortunes quickly enough. A profitable business may not necessarily mean the business is a solvent one. You can sell a product, which cost you N2000 for N4000 and make a 100% gain. However, if you do not collect the N4000 cash your profit it’s as good as gone. The business must generate enough cash flows. Profit is realized when the company receives cash from the revenue. So whilst cash is dependent on revenue, profit is dependent on cash and also on revenue. As such, companies that show ability to generate huge cash flows are typically valued higher even though they report low profits. Companies with an economic moat typically report an increase in revenues in spite of the competition around it and even in economic downturns. If it consistently grows revenues despite competition then investors believe even when it suffers losses it is temporary and profitability will resume once the problems are identified and resolved. Economic moat describes a company’s competitive advantage derived as a result of various business tactics that allow it to earn above-average profits for a sustainable period of time

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 22 April 2019

BUSINESS DAY

Equities Three penny stocks show impressive performance with jumbo year to date returns OLUWASEGUN OLAKOYENIKAN

enny stocks got their appellation based on the fact that they are owned by small companies and trade at lower share prices relative to other stocks listed on the stock market. Shareholders of three of these microcap stocks on the Nigerian Stock Exchange (NSE) have garnered more returns on their investments this year compared with most listed stocks in the market. That reward came amidst high risk that abounds in small-cap stocks and that is only accruable by investors with high tolerance for risk. The other side to it is that the investors could as well have lost a sizeable amount or all their investment owing to the stocks’ high volatility and speculative nature. A million naira invested in Chams Plc at the beginning of this year means N1.8 million value for the shareholder, implying with a 9.09 percent increase in share price to 36 kobo on Thursday, the stock has delivered 80 percent return for its shareholders so far in 2019. That places the ICT company as the second-best performer at the NSE.

The appreciation in Chams’ share price reflects buying interests from investors having come out of the woods in 2018 with 130 percent growth in net profit to N380 million from N1.27 billion loss in the fullyear 2017. Consequently, Chams rewarded its shareholders for the first time in five years with 3 kobo final dividend declaration in 2018 despite recording negative

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retained earnings of N1.92 billion for the year. Nigerian mid-tier lender, Sterling Bank Plc, trailed with 44.21 percent share return for its shareholders since the start of this year, implying one million naira invested in Sterling Bank in January 1, 2019 would amount to N1.44 million for the investor as of Thursday, April 18. The stock remained unchanged at its

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52-week high of N2.74 per share after the close of business on the NSE on Thursday. Sterling Bank was able to sustain its profit growth, although at a slower pace, for the second consecutive year in 2018 by 19 percent to N9.47 billion, this is after it halved its profit after tax to N5.18 billion in 2015 from N10.29 billion. However, its retained earnings still remain within the negative territory at N3.1 billion as of endDecember 2018. Caverton Offshore Support Group Plc followed with the third-most impressive share performance among Nigerian-listed penny stocks. The company’s stock has a year to date return of 32.81 percent to N2.55, even though it neither appreciated nor lost value on Thursday. A look into Caverton’s full-year 2018 audited financial results shows the company’s net income, which stood at N4.29 billion for the year, was 64 percent more than N2.62 billion achieved in 2017. Owing to this, the directors of the company excited the owners of the company by declaring a final dividend payment of 25 kobo, translating to 67 percent from 15 kobo paid in 2017. Unlike Chams and Sterling Bank, Caverton’s retained earnings was N9.98 billion in 2018 from N7.42 billion a year earlier.

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Monday 22 April 2019

BUSINESS DAY

Monday 22 April 2019

BUSINESS DAY

Cover Story

Personal Finance

Everything you need to know about Personal Income Tax - 2 SEGUN ADAMS

n continuation from the first series, BusinessDay met with Femi Fashina, a senior tax officer at Lagos Inland Revenue Service (LIRS). Femi Fashina takes us through a step-by-step approach to calculating Personal Income Tax. What is Personal Income Tax (PIT)? Personal Income Tax is an amount deductible from the income of an individual based on rates in accordance with the law, for instance the PIT Act 2011 (as amended) in Nigeria. In simple terms, PIT is the amount on income earned whether from salary, business profit, property or investment that is to be paid to the government. The obligation is a proportion of the income (tax base) hence varies. The Federal Inland Revenue Service (FIRS) says the tax is imposed on the income of individuals, corporate sole or body of individuals, communities, trustees or executor of any settlements. How do I calculate PIT? As stated earlier, the tax rate varies with income size. Nigerian Personal Income Tax Laws states that all taxable persons are entitled to a consolidated

Navigating through the storm of ‘needs’ David Ibidapo

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Personal Income Tax is an amount deductible from the income of an individual based on rates in accordance with the law

relief allowance of 20% of gross income plus higher of 1% of gross income or N200,000. In other words, you are taxed only on a certain portion of your income. STEP 1: Calculate your annual income multiplying your monthly income by 12 I earn N150,000 per month, my an-

nual income is N1,800,000 STEP 2: Account for the consolidated relief allowance of 20% gross income and N200,000 I remove 20% from N1,800,000 by multiplying by 0.8. I get N1,440,000. The next sub-step is that I remove the N200,000 from the N1,440,000 which leaves me with N1,240,000 taxable income. STEP 3: Refer to the Annual Taxable Income Rate to know your rate Since your income is greater than N1.1 million but less than N1.6 million you pay 15 percent rate which translates to N186,000. NB: You do need to calculate your tax by yourself if you find it cumbersome. The hiring tax consultant is a good way to go. Apart from the reliefs, certain deductibles are allowed before the income or profit can be taxed. A tax consultant can help you learn more. How do I pay my PIT?

Annual Taxable Income Rate

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Personal Income Tax can be paid on a Pay As You Earn (PAYE) basis or directly paid by the tax payer depending on the nature of economic engagement. For instance, most companies pay the tax on behalf of the employees on their payroll directly to relevant tax authorities. Hence for PAYE, the tax would already have been deducted before employees are paid monthly remuneration. On the other hand, in the case of a selfemployed person tax is paid directly by the business owner to relevant tax authorities. BusinessDay correspondent was referred to the LIRS by the FIRS for Personal Income Tax concerns. Fashina says the LIRS would issue a Form A to the business owner or self-employed to ascertain the individual’s annual income.

ore often than not, decisions on and plans executed towards meeting needs leads many into being pressured and overwhelmed by this pursuit. Hence, navigating through the storm of conflicting needs and wants may require proper planning and execution. An average family man in Nigeria is faced with day to day basic needs shelter, clothing, feeding and security for his family, all expected to be met within the constraint of his income which in most times is limited. A pilot survey of major needs that accounts for a larger portion of family’s streams of income streamlined the list to paying of rents and children school fees amongst others; which will be a major focus of our discussion. Housing Challenges Housing has been a major challenge in Nigeria for decades and there seems to be a preponderance of ineffective or motionless housing policies that has led to the inability of government to address the housing challenge. Housing deficit in the country has been estimated around 20 million in the thought of Prof. Yemi Osinbajo, Nigeria’s vice president at the unveiling of the Federal Mortgage Bank of Nigeria (FMBN) Digital Platform at the International Conference Centre, Abuja last year. Faced with this challenge mostly are the middle and lower income earners, whose incomes are not sufficient enough to adequately cover housing cost hence, necessitating the need to effectively appropriate funds to alleviate the challenge? Challenge of paying children’s school fees An average Nigerian parent would love to send their children to very good schools. However this may demand higher cost as relatively, good schools are expensive. This is not to say however that all expensive schools are good schools but there are higher chances that a cheap school may not deliver the best value to children. For example, some analysts have argued that current government schools have failed to deliver value to students. www.businessday.ng

Therefore a parent seeking value for their kids would prefer to enrol such in private schools. BusinessDay speaking with some successful parents who have been able to weather the storm of conflicting needs have this to tell that the challenge isn’t a rocket science. Here are important points noted by some in response to this Cut your coat according to your cloth This is another way to say to plan one’s aims and activities in line with one’s resources and circumstances. Living within one’s income is key in this regards in other to avoid undue pressures. Research have proven that most people are prone to purchasing ‘‘wants’’ rather than ‘‘needs’’. Needs are something that you must have, in order to live. On the contrary, wants are something that you wish to have, so as to add comforts in your life. A man coveting to live in a duplex which cost N3.5 million with a gross annual salary of N2 million is basically wanting. If peradventure he gets it through ceasing income opportunities, needs to ask the question of sustainability of such move. Same goes for the payment of school fees. The cost of a school doesn’t necessarily translate into quality; however the quality of a school may translate to higher cost. Speaking with Mr James Akinola, a

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successful civil servant who has trained four children in all school levels indicated that, ‘‘there are still good schools which are within the confine of an average Nigerian income.’’ ‘‘what is most important is the seriousness of the kid and the post education parents give their kids when they are back from school,’’ he further explained. Birth Control Ironically there is this believe that the poor gives birth to more children than the rich despite being financially handicapped. The financial capability of parents should determine most times the number of kids born into the family. Across the streets of Lagos are under aged children hawking and struggling to survive. Although sex is regarded as a basic need of man, preventive measures can be put in place to prevent a child coming into the world to suffer. With fast rising population in the country which is estimated to grow to about 402 million people in 2050 according to the Census Bureau of the United States and rising unemployment rate, there is more pressure on the nation’s resources. Analysis has shown that growth in GDP is slow compared to growth in population leaving more Nigerians poorer by the day. In conclusion, analysts also further advice for multiple streams of income to help reduce the pressure of conflicting

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Monday 22 April 2019

BUSINESS DAY

Commodities

Outweighing foreign dominance in Nigeria’s chocolate market needs more local players Temitayo Ayetoto

s the race to dwarf foreign dominance of Nigeria’s chocolate market becomes more intense with the rise in local participation in production, there is need and opportunity for more players to join the local team to win the largest market share, agriculture stakeholders say. But some new crop of processors says their effort face challenges from over-concentration of locally produced cocoa on exportation. Tomi Shodimu, an Ilorin based graduate of chemistry passionate about food processing said cocoa farmers are reluctant about selling within the country because they are eager to export for the dollar benefit. “That makes it hard for people who want to buy within the country. That Nigeria grows cocoa does not mean it is necessarily accessible as people think,” Sodimu told BusinessDay, noting that people are even more doubtful of making

forays due to the lack of financial and infrastructural resources to compete healthily with foreign brands. Foreign makers of chocolate lead the market, particu-

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larly in retail sales and have been innovating with pairing of new flavours to retain their dominance of the global market they serve. Retail sales for chocolate

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confectionery in Nigeria rose to $39.7 million in 2017 from $25.9 million in 2012 and are projected to grow 5.2 percent to hit $51 million by 2022, according to Euromonitor International, a market data provider. Giant makers, Mars and Mondelez, which sells to Cadbury Nigeria - make up the majority market with 37 and 11.2 percent respectively share in 2016, making Mars the largest chocolate company in the country. Barry Callebaut, chief executive officer of Mars, world’s largest chocolate company sees demand for cocoa outweighing production by up to 1 million metric tons by 2020 according to Washington Post. Whereas countries like Nigeria, Ivory Coast and Ghana, who account for over 70 percent of the @Businessdayng

world’s cocoa production, continue to groan about raking only a paltry sum of the total value of the global chocolate market. The groaning could be on the verge of ending if more local companies like Shara, Honey Pot and Raw Essence attempt to join Cadbury and Multi Trex in exploring the possibilities of products obtainable from cocoa processing. In its bid to promote natural food resources and a healthy lifestyle, Shara Foods for instance through value addition processes locally sourced Cocoa beans into chocolates alongside dried fruits and food products. Nestle Nigeria with different brands of chocolates vie with Cadbury chocolates in the market place as well as Multi Trex that has launched huge production of chocolate bars in Nigeria. Multi Trex is one of the companies that aim to compete favourably with international companies in the production of chocolate bars. According to BusinessDay’s calculations, If local processors completely used Nigeria’s cocoa in 2018, the country’s second-largest export earner after oil, in making products like butter and cake before exporting in 2018, an additional $275 million could have been made in the process. For every 2.6 metric tonnes of raw cocoa beans, a processor gets a tonne of butter and 1.5MT of cake. The average price of processed cocoa intermediate products, such as butter and cake, for 2018 was $7,429 and $ 1,300 per tonne. Nigeria ranks joint fifth with Cameroun with 210,000 metric tonnes production in the 20162017 season, the International Cocoa Organisation (ICCO) states.

Monday 22 April 2019

BUSINESS DAY

Data

Federal government eurobond Yields on Eurobonds fell week on week by c.106bps from an average of 6.87 percent last week to 6.80 last week as buying interest on sovereign Eurobonds increased. Brent maintained its $71per barrel range which it reached on account of the violence in Venezuela, OPEC cut and US Sanctions on Venezuela and Iran that tightened supply and forced prices up.

Corporate eurobond Yields on corporate Eurobonds fell 3.77 across all tickers last with average yield at 8.02 on Thursday when market closed for Easter break, compared to 8.34 percent on Friday April 12. Yields on Zenith Bank fell the most by some 13 percent while Access Bank II rose 0.52 percent, the most among listed corporate Eurobonds. www.businessday.ng

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Monday 22 April 2019

BUSINESS DAY

Questions of the week Which is the best investment option for me right now, Fixed Income or Equities? The answer to this question depends on two factors. One is the investment horizon of the person asking and the other is his or her risk appetite. Stocks are currently undervalued and do not reflect their true fundamentals right now but by the second half of the year where there is clear policy direction, the equities market should begin to recover. So people who position in stocks especially banking stocks now have that in mind. For the Bonds, there are opportunities depending on the risk appetite of the investors as there is a strong possibility of upward pressure in bond yields.

Gbolahan Ologunro, Equities Analyst at CSL Stockbrokers Ltd Is it advisable for a young couple, without kids, to rent a 3-bedroom apartment? It is not recommendable at all. It is a waste of resources. The money should be kept to foot future expenses. This can even cause conflict between friends and family relations because if there are enough extra rooms, they will start visiting. In the long run, visitors might not want to leave anytime soon because of the comfort of the extra room, thereby bringing a burden on the couple. It is a no-no for me. Adeyinka Desalu, Teaching Assistant, Department of Economics, Lagos State University.

Banks’ Non Performing Loan for Full Year 2018

Nigerian lenders saw sizeable improvement in asset quality last year, thanks to de-risking measures in the telecom sector and stronger oil prices during the period, which allowed lenders recover tangible amount of defaulted loans in their books. The average NPL ratios of 10 lenders stood at 6.32 percent in 2018, in which Access Bank led the pack with 2.5 percent, followed by Stanbic IBTC (4%), Zenith Bank (4.9%), and Pan-African lender, Eco Bank, with highest figure of 9.6 percent.

Chart of the week WeekAhead Ahead (Monday, 22th April – Friday, 26th April, 2019) Week Commodities Week Ahead (Monday, 8th April – Friday, 12th April, 2019)

Oil – Brent to trade within the range of $70 - $73 per barrel in the short term as OPEC sustain its production cut agreement. Sugar - Prices to trend upwards in the coming weeks on lower sugar output from key Asian producing nations. Fixed Income Commercial paper with description “Flour Mills CP V 26-April-19” issued by Flour Mills of Nigeria Plc at 14.25% issue yield will mature Friday, April 26. 5-year Corporate Eurobond issued by Zenith Bank at 6.25% coupon will mature Monday, April 22. Currency The naira is expected to trade around current levels at various windows boosted by sustained supply of liquidity by Nigerian Apex Bank to the market. Data Release The Nigeria Bureau of Statistics to release data on Daily Energy Generated and Sent Out for first quarter of 2019 on Wednesday, April 24. Event The Annual General Meeting of United Bank for Africa Group will come up on Tuesday, April 23 at Eko Hotel & Suites, Victoria Island, Lagos to consider its unaudited financials for the first three months of 2019. www.businessday.ng

Last week, the NBS reported that Headline inflation rate (consumer price index), which measures the prices of goods and services in Nigeria, moderated for the third consecutive month to 11.25% in March 2019, representing 0.06 percent points drop over 11.31% recorded in February. This is the lowest inflation rate since September 2018.

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Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

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Monday 22 April 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Thursday 18 April 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. 243,484.80 6.85 3.01 537 58,396,894 UNITED BANK FOR AFRICA PLC 227,426.15 6.65 2.31 261 15,980,012 ZENITH BANK PLC 656,186.72 20.90 0.24 285 27,421,194 1,083 101,798,100 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 274,598.99 7.65 1.32 177 5,768,933 177 5,768,933 1,260 107,567,033 BUILDING MATERIALS DANGOTE CEMENT PLC 3,220,655.90 189.00 0.53 37 291,559 LAFARGE AFRICA PLC. 185,239.65 11.50 -4.17 99 3,334,988 136 3,626,547 136 3,626,547 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 335,413.40 570.00 - 9 6,789 9 6,789 9 6,789 1,405 111,200,369 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 1 1,000 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 1 1,000 1 1,000 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 1 1,000 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 76,312.80 80.00 - 6 8,085 OKOMU OIL PALM PLC. PRESCO PLC 62,750.00 62.75 - 7 4,116 13 12,201 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 9.09 6 211,768 6 211,768 19 223,969 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 -7.14 6 395,093 182.90 0.47 - 0 0 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 - 2 3,600 TRANSNATIONAL CORPORATION OF NIGERIA PLC 48,371.11 1.19 0.85 94 12,272,406 20,025.01 6.95 0.72 50 1,076,889 U A C N PLC. 152 13,747,988 152 13,747,988 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 3 35 3 35 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 33,000.00 25.00 -9.09 23 143,112 ROADS NIG PLC. 165.00 6.60 - 0 0 23 143,112 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 5 18,463 5 18,463 31 161,610 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 10,334.94 1.32 - 3 27,530 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 131,422.97 60.00 - 32 79,894 INTERNATIONAL BREWERIES PLC. 197,704.82 23.00 - 9 1,352,139 NIGERIAN BREW. PLC. 519,798.63 65.00 0.23 115 1,210,233 159 2,669,796 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 53,500.00 10.70 2.88 102 2,579,969 DANGOTE SUGAR REFINERY PLC 171,000.00 14.25 1.79 44 568,367 FLOUR MILLS NIG. PLC. 67,246.23 16.40 - 39 827,264 HONEYWELL FLOUR MILL PLC 9,278.33 1.17 - 13 122,150 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 3 6,062 NASCON ALLIED INDUSTRIES PLC 51,001.69 19.25 - 10 24,813 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 211 4,128,625 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,660.22 11.00 - 9 12,602 NESTLE NIGERIA PLC. 1,252,396.88 1,580.00 - 28 6,926 37 19,528 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,377.95 3.50 -9.09 11 273,432 11 273,432 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 37,521.01 9.45 - 13 93,563 UNILEVER NIGERIA PLC. 195,330.18 34.00 1.49 28 346,520 41 440,083 459 7,531,464 BANKING ECOBANK TRANSNATIONAL INCORPORATED 197,257.68 10.75 2.38 27 260,269 FIDELITY BANK PLC 56,211.11 1.94 3.19 98 6,284,201 GUARANTY TRUST BANK PLC. 1,024,205.04 34.80 0.14 114 1,594,789 JAIZ BANK PLC 14,437.48 0.49 2.08 9 670,300 10,687.83 0.77 - 0 0 SKYE BANK PLC STERLING BANK PLC. 78,885.75 2.74 -1.46 113 8,127,616 UNION BANK NIG.PLC. 198,021.12 6.80 - 31 175,635 UNITY BANK PLC 9,351.47 0.80 1.27 8 354,000 WEMA BANK PLC. 26,616.38 0.69 1.47 26 1,358,304 426 18,825,114 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,197.65 0.75 2.74 22 561,354 21,000.00 2.00 5.26 4 8,003,000 AXAMANSARD INSURANCE PLC CONSOLIDATED HALLMARK INSURANCE PLC 2,113.80 0.26 - 1 2,046 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 2 21,000 GOLDLINK INSURANCE PLC 2,001.98 0.44 - 0 0 1,228.00 0.20 - 0 0 GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 4 316,000 LAW UNION AND ROCK INS. PLC. 2,320.02 0.54 - 1 40,000 LINKAGE ASSURANCE PLC 4,160.00 0.52 - 0 0 1,760.00 0.22 - 7 6,715,270 MUTUAL BENEFITS ASSURANCE PLC. NEM INSURANCE PLC 10,613.81 2.01 - 5 210,000 NIGER INSURANCE PLC 1,547.90 0.20 - 3 510,847 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 3 4,627 REGENCY ASSURANCE PLC 1,600.50 0.24 -7.69 16 1,981,102 SOVEREIGN TRUST INSURANCE PLC 2,001.80 0.24 - 5 1,284,500 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 - 1 20 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 -8.70 5 2,000,100 WAPIC INSURANCE PLC 5,353.10 0.40 2.50 20 880,476 99 22,530,342 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,361.36 1.47 - 7 51,700

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7 51,700 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 - 56 494,226 CUSTODIAN INVESTMENT PLC 37,349.84 6.35 - 3 200,100 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 37,625.15 1.90 -0.52 77 5,229,159 ROYAL EXCHANGE PLC. 1,131.98 0.22 10.00 5 730,025 STANBIC IBTC HOLDINGS PLC 473,113.55 46.20 - 9 70,152 UNITED CAPITAL PLC 14,880.00 2.48 -9.82 235 12,993,928 385 19,717,590 917 61,124,746 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 15 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 - 7 861,667 8 861,682 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,225.00 4.15 - 8 26,712 GLAXO SMITHKLINE CONSUMER NIG. PLC. 11,002.06 9.20 - 30 123,400 MAY & BAKER NIGERIA PLC. 4,485.61 2.60 1.92 29 924,083 1,063.53 0.56 - 9 268,312 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 1 100 77 1,342,607 85 2,204,289 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 3 105,100 3 105,100 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 1 2,000 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 1 2,000 PROCESSING SYSTEMS CHAMS PLC 1,690.58 0.36 9.09 25 13,838,666 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 0 0 25 13,838,666 29 13,945,766 BUILDING MATERIALS BERGER PAINTS PLC 2,434.52 8.40 -9.19 14 94,577 CAP PLC 23,800.00 34.00 0.74 4 162,897 CEMENT CO. OF NORTH.NIG. PLC 223,439.52 17.00 4.29 47 837,082 FIRST ALUMINIUM NIGERIA PLC 865.25 0.41 7.89 4 400,000 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 2 2,000 PREMIER PAINTS PLC. 1,279.20 10.40 - 1 50 72 1,496,606 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,818.12 1.60 3.23 17 907,142 17 907,142 PACKAGING/CONTAINERS BETA GLASS PLC. 27,998.43 56.00 -4.03 1 123,078 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 123,078 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 90 2,526,826 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 3 189 3 189 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 0 0 0 0 3 189 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 11 42,030 11 42,030 INTEGRATED OIL AND GAS SERVICES OANDO PLC 59,670.78 4.80 -2.04 51 381,009 51 381,009 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,104.17 175.00 -1.63 9 21,624 CONOIL PLC 15,960.90 23.00 - 11 5,372 ETERNA PLC. 5,607.82 4.30 - 11 192,477 FORTE OIL PLC. 35,101.87 26.95 - 17 46,943 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 1 300 TOTAL NIGERIA PLC. 66,546.28 196.00 - 20 20,722 69 287,438 131 710,477 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 2 60 2 60 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 346.95 0.74 - 0 0 0 0 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,637.89 1.75 4.79 3 149,236 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 2 210 TRANSCORP HOTELS PLC 41,042.18 5.40 - 2 10,271 7 159,717 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 2,400 1 2,400 PRINTING/PUBLISHING ACADEMY PRESS PLC. 199.58 0.33 - 3 2,480 LEARN AFRICA PLC 1,033.74 1.34 - 0 0 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 798.11 1.85 - 5 73,268 8 75,748 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 547.04 0.33 - 1 1,500 1 1,500

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Insight Nigeria’s failure to protect contract and property rights harms its progress global Perspectives

OLU FASAN

et’s start with definitional and conceptual issues. So, what are contract and property rights, and why are they important? Well, contract rights are those rights that arise from an agreement freely and voluntarily entered into by two or more parties, and property rights, which derive from contracts, are the legal and proprietary rights that a person has over a property, in this context, a physical property. Those property rights confer on a person real ownership, which, as a distinguished legal academic puts it, entails at least six conditions: “not only must the owner be free to use an object at will, they should also be able to sell it, rent it, give it away, throw it away and appeal to the police if it is lost, stolen or illegally encroached upon”. No wonder the famous economist Friedrich Hayek said that “… law, liberty and property are an inseparable Trinity”, and John Locke based his concept of the social contract on the protection of property rights. The existence of enforceable contract and property rights is an irreducible core of a true market economy, the key driver of the wealth and prosperity of nations and people. In any society where valid contracts are not strictly adhered to or enforced or where property rights are not defended and enforced, people will lack the incentive to produce and exchange goods and services, and investors will lack the encouragement to invest their money; after all, money goes where it is most safe and will yield the high-

est possible returns. Thus, it goes without saying that a country that doesn’t protect contract and property rights cannot attract quality investments or engender the production and exchange of goods and services that drive economic growth and prosperity. But the key to contract and property protection is not just to have contract and property laws on the books – many countries do – but, equally important, to have the supporting legal institutions that ensure the effective implementation of the laws. Here, we are talking about the need for government officials and agency that operate within the rule of law, an independent and competent judiciary that ensure equality of treatment between actors, and professional and effective enforcement services that operate without fear or favour. A society that has these elements, the right contract and property laws and strong supporting legal institutions, is bound to be a successful market economy. The evidence, indeed, shows that countries that have high scores in the contract enforcement category of the World Bank’s Ease of Doing Business rankings are also successful economies. The same is true of countries with high scores on the International Property Rights Index (IPRI). But Nigeria languishes at the bottom of the World Bank and IPRI indexes. For instance, in the 2018 Ease of Doing Business index, Nigeria ranked very low on the speed and efficiency of enforcing contract, scoring 8 out of 18 on the quality of judicial process. I mean, this is a country where, as a Nigerian legal practitioner recently wrote, in relation to commercial litigation, “Final decisions from courts of first instance up to the appeal court can last for a span of ten years in Nigeria”! In terms of property protection, Nigeria was ranked 116th out of 125 in the 2018 International Property Rights Index. Of course, the problem with contract and property rights in Nigeria is not just about the quality of their protection, but also of the laws themselves. Much of Nigeria’s business and investment laws are out dated, some predating the country’s independence. In 2016, a study sponsored by the UK Depart-

ment of International Development (DfID) stated that “54 Nigerian laws are obsolete”. Nigeria’s contract law system falls short of international standards. For instance, Nigeria is not a signatory to any international treaty for the recognition and enforcement of foreign judgements, such as the Hague Convention on the Recognition and Enforcement of Foreign Judgements in Civil and Commercial Matters. Such a county can hardly be taken seriously by foreign investors on contract rights protection! What about property rights? Well, Nigerians do not ab initio have private property rights, given that the Land Use Act vests ownership of all urban land within state in the state governor, and that of all non-urban or rural land in local governments. The governor or local government chairman then has the power to grant a time-limited “statutory rights of occupancy” in a piece of land to an individual, who can then transfer it to another person through “deeds of assignment”. Of course, a situation in which citizens can only secure original ownership in land at the behest of the state and only for a defined period of time (usually 99 years) lacks the indicia of the classical conception of property as a right. It’s not surprising that most people have called for the reform the Land Use Act. They are right! But even more problematic are the legal institutions designed to protect the limited rights that exist. According to the National Content Standards in Civics and Government, property rights can be established and secured in three ways. The first is the rule of physical force, basically, a state in which brute force reigns. The second is the rule of men, which includes “the ability of government officials and others to govern by their personal whim or desire”. And the third is the rule of law, where no one is above the law, not even the state. It is universally recognised that the rule of law is the acceptable basis for organising and managing economic activities and interactions, including the creation and protection of contract and property rights, in any society. Sadly, however, both the rule of force and the rule of

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Sadly, Nigeria has a global reputation for weak contract and property rights protection

men compete with, and sometime override, the rule of law in Nigeria. And this is often the case in contracts between individuals and government. Take the story of a respected and decent Nigerian and (at the time) head of one this country’s pillars of corporate integrity, who was arraigned by the EFCC before a Federal High Court for allegedly improperly acquiring a federal government’s land. The problem was not the legal action itself; after all, that’s part of the rule of law. Rather, it was that both the rule of force and the rule of men were also in display, as powerful individuals, with strong political influence, put enormous pressure, including using the EFCC and financial inducement, to force this person to give up the land. But why? Well, because it was sold to the “wrong” person! But, recently, the rule of law prevailed, as the court held that the person’s company properly acquired the land, following due process! But here is the point: how many ordinary Nigerians are victims of the rule of force and rule of men when it comes to land ownership in this country, with no money to secure legal defence? Yet property rights offer the poor the most powerful opportunity to ascend the economic ladder! Sadly, Nigeria has a global reputation for weak contract and property rights protection. In a damning article in a London financial paper, City A.M, last year, the former UK International Development Secretary, Shriti Patel, warned foreign investors to be wary of investing in Nigeria, citing the case of an Irish against which Nigeria reneged on a contractual commitment and has refused to pay damages awarded by a London tribunal. Similar cases abound! Truth is, Nigeria is not doing enough to protect contract and property rights. The rule of men often supersedes the rule of law. But the country can’t develop that way.

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

Youth unemployment and the vocational education imperative

Tunji Olaopa

f one is asked to put a finger on two defining indices of Nigeria’s postindependence socioeconomic crisis, it is not difficult to identify youth unemployment and poverty as the core of the national malaise. While they are not peculiar to Nigeria, they are definitely the source of social instability since Nigeria became a sovereign nation. Indeed, youth unemployment places the Nigerian government within a serious paradox. The youth population of any state points at a humongous human capital energy that is to be harnessed towards productivity, economic growth and national development. This is all the more so if such a state has a large proportion of its population in the median age that define a youth. According to international conventions, a youth is someone between the ages of 15 and 35 years. This age bracket is significant because it defines a period when most people enter into the workforce and transforms the productivity

profile of any nation. In demographics, when any state has the majority of its population within this age bracket, it is called the youth bulge. And it instigates government rapid efforts at human capital development that will link efforts at achieving labor productivity with policy intelligence about harnessing this youth energy. The good news about the Nigerian socioeconomic situation is that the Nigerian state is demographically prepared for development. The fact that Nigeria’s median population is 18.4 years of age highlights two significant points. The first is that Nigeria is in the prime of her youth bulge. This means that the Nigerian population framework is youthful. The second point is that this demographic fact ought to be the dynamic that stimulate policy intelligence from the Nigerian state in a way that harness this youth bulge into a significant productivity workforce. Unfortunately, successive Nigerian governments have not adequately taken advantage of this socioeconomic opportunity. And this is established by the glaring statistics of approximately 52.65% of Nigerian youths who are unemployed. We do not even have the figure of those who have been swallowed up in the informal sector in semi-employment, and even the vast millions who are unemployable. So many factors and variables explain Nigeria’s unemployment dilemma. I will mention a few. First, Nigeria’s

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The second fundamental solution framework is for as many youths as possible to explore the numerous entrepreneurial grants and opportunities that are available from government and private individuals and organisations

higher education dynamics is the first culprit as it enables a curriculum crisis which truncates what ought to be a smooth school-to-work transition. Second, here is a critical dearth in the industrial skill needs including areas of current and emerging skills shortages and competencies paraded by products of colleges and universities in Nigeria. Third, there is a low level of enterprise-based training and investment going by international standards. Fourth, there is changing structure of labour market’s due to changing global flexible employment practices, work patterns, globalization of HR that has formalized the institutionalization of brain drain and the level of competitiveness defining career growth. Fifth, there is a demographic change and high population growth rates which throw up two contradictory trends of ageing workforce with attendant organizational amnesia on the hand and challenge of equipping the restless youthful but nomadic new generation workforce with adaptive and multiskilling flexibilities. And last, there are also critical issues of the availability of jobs and employments, and their capacity to employ. This is due largely to the uncomplimentary ease of doing business profile of Nigeria. On the World Bank Ease of Doing Business Index for 2018, Nigeria ranked 146 out of a total of 190 countries. More significantly, we are witnessing a failure in policy and implementa-

tion that has failed to impact the way we conceive of education and the capacities it confers on the youths and the nation. This failure in policy results from fundamental absence of a cultural adjustment programme and a loss of value orientation that have failed to direct the educational philosophy for performance and productivity. Thus, for example, the 6-3-3-4 educational framework is grounded on a solid background that ensures not only certificates but capacities. With this system, it was guaranteed that a student will achieve self-reliant functionality when he or she finally graduates and enters the labor markets. Vocational and entrepreneurial education was central to the conception of the 6-33-4 framework. Unfortunately, the rejection of this framework, through lack of policy intelligence, ensures that students now only sign on for empty certificates and fruitless searches for white-collar jobs. The reality today is that the Nigerian labor market is flooded with all sorts of certificates, genuine and counterfeits, but with no improvements in productivity and economic development. Continues online @www.businessday.ng

Prof. Tunji Olaopa is executive Vice Chairman, Ibadan School of Government and Public Policy (ISGPP), Ibadan tolaopa2003@gmail.com tolaopa@isgpp.com.ng

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