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news you can trust I ** wednesDAY 22 april 2020 I vol. 19, no 547

FG envisages spike in confirmed cases of COVID-19 as it ramps up testing …commences disinfection of 125 aircraft, 13 airports TONY AILEMEN, HARRISON EDEH, INNOCENT ODOH, SOLOMON AYADO, CYNTHIA EGBOBOH & JAMES KWEN, Abuja

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he Presidential Task Force (PTF) on COVID-19 on Tuesday said it envisages an increase in the number of confirmed cases of the coronavirus in the country as it ramps up testing.

“Because we are increasing the number of tests as we ramp up, there is the possibility that we will continue to have more and more cases coming in,” Sani Aliyu, national coordinator of the task force, said during the daily briefing of the task force in Abuja.

Nigeria has recorded 665 confirmed cases of coronavirus as at 5:00pm on Tuesday, April 21, with 188 recoveries and 22 deaths recorded.

“We do note the concern about increased reporting of cases, we are closely monitoring Kano, Osun, Oyo and Edo.

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For Nigeria, investment-led growth is the only option LOLADE AKINMURELE

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s the nation grapples with the economic fallout from the crash in oil prices and coming global recession due to the coronavirus pandemic, one major message

To overcome COVID-19, oil slump

from economists, business leaders and analysts polled by Businessday, to the President and his economic team, is that the days of easy oil money are over.

They add that adopting an

economic plan that has at its core an investment-led growth strategy, is the only way Africa’s largest economy will recover and stay on its feet amid plunging crude oil revenues and the

Covid-19 pandemic that has put the world economy on the edge.

Such a plan if enacted, would be arriving at a time of great unContinues on page 29

Continues on page 29

Inside

Lockdown stifles supply chain as stores face stock depletion P. 2

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Zainab Ahmed, minister of finance, budget and national planning, during the 2020 Virtual Spring Meetings of the WBG/IMF.

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news Nigeria’s inflation accelerates to 12.26% ONYINYE NWACHUKWU, Abuja

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nflation accelerated to almost a two-year high to 12.26 percent in March, some 0.06 percent points higher than the 12.20 percent reported in February 2020.

Both food and core inflation moved up, but the National Bureau of Statistics (NBS) which released the figures Tuesday morning clearly ruled out possible impact from COVID-19 lockdown on the inflation numbers.

Food inflation rose to 14.98 percent compared to 14.90 percent on account of accelerated increases

in prices of bread and cereals, fish, potatoes, yam and other tubers, oils and fats, vegetables, and fruits, according to the NBS. Core inflation was reported at 9.73 percent, up by 0.3 percent when compared with the 9.43 percent recorded in February.

NBS said core numbers were pushed up majorly by prices of passenger transport by air, tobacco, household textiles, major household appliances, domestic services and household services, pharmaceutical products, maintenance and repair of personal transport equipment, water supply as well as catering services.

MARKETS

Listed insurers generate N1.15trn premium income in 6 years BALA AUGIE

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igeria’s listed insurers have raked in a combined N1.15 trillion over the past six years, but analysts see the coronavirus pandemic weighing on future revenue.

A breakdown of the figures as gleaned from the 2019 audited financial statements of the 18 largest quoted insurers showed gross premium written increased by 19.57 percent to N276 billion in December 2019 from N231.56 billion the previous year.

That compares with a 1.16 percent premium growth in 2015 financial year, a period that coincided with the economic downturn brought on by the sharp drop in price of oil that tipped the country into its first recession in 25 years.

“Premium incomes will not grow this year because financial services move in the direction of the GDP. The coronavirus pandemic will undermine operating performance,” said Afolabi Lawal, chief operating officer, Old Mutual Insurance.

“Government, being the largest spender, has slashed its budget as it is poised to prioritise spending and that is a double whammy for the insurance industry that relies on corporate clients for significant revenue,” he said.

Lawal said the country could go into a recession, and that it is in a growing market that companies introduce new products.

Moronfola Monsuru, actuarial scientist at Wapic Insurance plc, said there could be lay-offs after the crisis since transactions are not coming in large numbers.

“Already, insurance isn’t on the scale of preference of

people,” said Monsuru.

Economic activities have ground to a halt as the government last week extended by two weeks the lockdown ordered to contain the spread of the virus, which means businesses will remain stuttered for an indeterminate period of time.

According to the International Monetary Fund (IMF), Nigeria’s economy will contract by 3.4 percent in 2020, but rebound with 2.4 percent growth in 2021.

Zainab Ahmed, finance minster, recently warned that the country could fall into its second recession in five years if drastic actions were not taken to cushion the effects of the economic blow.

A sharp drop in the price of oil due to lower demand on the back of COVID-19 and dispute between Saudi Arabia and Russia forced the central bank to weaken the currency to N360/$ from 306/$.

The Federal Government had reduced its oil projections to 1.7 million barrels and has slashed a record budget of $35 billion it had approved in December by 15 percent.

The largest listed insurers are operating in an industry hobbled by poor regulations, apathy to insurance, and lack of innovation, which is why industry contribution to the economy is abysmally poor.

Nigeria, with a population of 200 million and a GDP of $444 billion, has an insurance penetration of 0.31 percent, compared with countries with similar GDP per capita, such as India with insurance penetration at 3.69 percent.

Despite the myriad of challenges, listed insurers have continued to grow revenue and reward shareholders from distributable profits. www.businessday.ng

Lockdown stifles supply chain as stores face stock depletion ODINAKA ANUDU & TEMITAYO AYETOTO

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hijioke Orimadike, a drug store owner at Mushin, Lagos, should have been elated by the government’s directive to allow pharmaceutical firms to operate amid lockdown aimed to halt the spread of coronavirus disease. But he is rather disenchanted. His store remains shut as both the restriction on movement and a lack of personal vehicle caged him at his Ikotun residence, a 22.3km distance from his store.

“It is really affecting me. I have not been going to work.

My customers have been calling me but there is no bus to move,” he complained.

Many retailers of medical

supplies have largely been challenged with getting to their respective outlets due to the collapse of public transportation, unable to serve the needy consumers at this period. Those with the means to reach their stores, on the other hand, have been experiencing depletion of their stock supply and an untold hardship replenishing their stock.

Apart from the ballooning prices of preventive medical products – face masks, hand gloves and hand sanitisers – that have trailed the outbreak of COVID-19, getting drugs that were often demanded under regular circumstances has become a 50/50 chance due to manufacturers’ inability to access raw materials needed for production.

Wholesalers are placing premium on available stock with

retailers scrambling not to run out of basic stock.

Anti-malarial, antibiotics and analgesics have been hugely impacted by COVID-19, with their prices soaring up to 40 percent higher than pre-coronavirus era, Judith Okoro, a pharmaceuticals vendor, told BusinessDay. Interestingly, the demand for these drugs has dropped by 50 percent in what Okoro attributed to reduction in stressful and energy-sapping activities that drive demand for painrelief medicines, for instance. It has been the same for diabetes and hypertension drugs.

“People wanted analgesics and sedatives that will make them sleep. We used to order high quantities but now we don’t do that anymore. Our drugs now last weeks more than they used to. It was mov-

ing fast before and could finish in a week. We buy different brands of anti-malarial drugs.

But the demand has dropped,” Okoro explained.

“Some were N500 but now they are N700. Our sales have dwarfed by 50 percent. Before we used to close by 8pm, now we close by 6pm. In fact, we could stay 30 minutes without a customer calling in,” she said.

Okoro reckons that wholesalers are also apprehensive about losing their stock since the measures to contain the outbreak has included shutting of borders.

A March 23 report by BusinessDay had predicted that Nigeria may experience drug shortages in the coming months if the coronavirus continues its spread into the third quarter of the year.

L-R: Zoura Youssoufou, chief executive officer, Aliko Dangote Foundation; Herbert Wigwe, group managing director, Access Bank plc, and Ferdi Moolman, chief executive officer, MTN Nigeria, briefing newsmen on the activities of the Private Sector Coalition Against COVID-19 (CACOVID), in Lagos, yesterday.

Analysts expect 1% GDP growth for Q1 amid coronavirus crisis ENDURANCE OKAFOR

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GDP growth above 1 percent for the first quarter of 2020 will be anything but a miracle for Nigeria’s oil-dependent economy, according to estimates by analysts polled

by BusinessDay. The impact of the coronavirus crisis is expected to kick in and slow the growth of Africa’s largest economy to an average of 1 percent for the first three months of 2020.

“Anywhere between 0.9 percent-1.2 percent will be the most probable outcome. Either way, it means quarterly growth will be half what it was in Q4 2019,” ObinnaUzoma,chiefeconomist at EUA Intelligence, said.

This would be a growth decline of 1.5 percentage points from the country’s Q4 2019 expansion of 2.5 percent, and will also be lower than the 2.01 percent reported in the corresponding quarter of 2019.

Official figures for the first quarter GDP growth will be released by the National Bureau of Statistics (NBS) on May 25, according to the calendar on NBS website.

“GDP growth for Q1 2020 will be between 1 percent-1.5 percent. Anything above that is a miracle. PMI figures for March were disheartening – it would drag on January and February,” Ayorinde Akinloye, research analyst at CSL Stockbrokers, said.

Nigeria’s Purchasing Man-

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agers’ Index (PMI), a gauge for manufacturing sentiments, slowed in March 2020 to its lowest in almost three years, according to data by the Central Bank of Nigeria (CBN).

In March, PMI stood at 51.1 index points when compared to 58.3 points in February.

Although a 51.1 index point indicates an expansion in the manufacturing sector for the 36th consecutive month, it also depicts a disruption in economic activities brought about by the outbreak of COVID-19.

To curtail the spread of the deadly coronavirus, President Muhammadu Buhari announced a 14-day lockdown in Lagos, Abuja and Ogun States and later extended the lockdown by another 14 days. @Businessdayng

Nigeria reported 86 new cases of coronavirus on Sunday, bringing the total number in Africa’s most populous country to 627 confirmed cases. Data by NCDC show that 170 of the confirmed cases have been discharged while 21 were reported to have died from the infection.

“The economy is expected to take a hit from the spreading impact of COVID-19. Also, the monetary authorities are trying to keep the economy rolling by pumping money into the system,” Yinka Ademuwagun, research analyst at United Capital.

He said, however, that the injection can achieve very little intermsofspurringgrowthinthe face of rising lockdowns across the states.

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Nigeria’s cocoa midcrop export to shrink as coronavirus hits global demand Josephine Okojie

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igeria will see a decline in its 2020 midcrop cocoa export as the novel coronavirus pandemic hits the global demand for chocolate.

The demand for chocolate at the international market has declined tremendously owing to the closing of borders, halting of public and private transport, selfisolation and quarantine administration across cities globally to curtail the spread of the virus.

This has caused the average price of a metric ton of cocoa- a major input for the production of chocolates to rise by 14percent since the novel virus spread across continents.

Data from The International Cocoa Organisation (ICCO) show that the monthly average price declined from $2,716 in February to $2,338 in

March, while the figure for April is yet to be made available. “ The global demand for chocolate has declined and this is attributed to the coronavirus pandemic which has shutdown several major cities in Europe and North America,” said Dokun

Thompson, the Oloni of EtiOni and the chairman of Eti-Oni Development Group in a response to questions.

“This has slowed down all economic activities and greatly affected export of commodities and cocoa was not spared as prices have dipped to below $2,000

since the beginning of the pandemic,” Thompson said.

He stated that the country’s export of cocoa beans will be affected if the situation fails to improve before the midcrop cocoa season fully commence next month.

He called for Federal

Government support for cash crop farmers, noting that their means of livelihood have been badly affected by the pandemic.

Cocoa is Nigeria’s major cash crop non-oil export earner and the country is among the top grower of the crop.

Nigeria has two cocoa har vest seasons which include the smaller midcrop from April to June, and the main crop from October to December.

The midcrop accounts for about 30percent of Nigeria’s cocoa output while the maincrop accounts for the remaining percentage.

Africa’s most populous nation now ranks fourth with 255, 000 metric tons production in the 2017/2018 cocoa season, recent data from the International Cocoa Organisation (ICCO) states.

“The situation is really bad for us farmers. We are just pilling up our cocoa and waiting for the pandemic to be over. Cocoa can be stored for up to two years if properly

s t o r e d ,” S a y i n a R i m a , national president, Cocoa Association of Nigeria (CAN) said by phone from Ikom in South-South Nigeria.

“Prices are just tumbling now because there is no market right now for cocoa.

Input prices are surging and cost for labour is rising amid the lockdown,” Rima said.

He stated that cocoa farmers across the country are feeling the pains and most are yet to commence harvesting for the midcrop season owing to the pandemic.

The outbreak of the virus has also reduced the global grinding of cocoa beans.

Processing of cocoa has declined in the first quarter of 2020 on falling chocolate d e m a n d , a c c o rd i n g t o a sur vey conducted by Bloomberg.

In Europe – the biggest consuming region of chocolate, grinding may fall three percent from a year earlier, according to the median estimate of Bloomberg.

Lockdown hampering essential inputs supply – Fish farmers Makinde signs Oyo State Agribusiness Development Agency Bill into law …seek inclusion of home-grown fish in palliative measures Josephine Okojie

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he current lockdown of major cities in the country to curtail the spread of the coronavirus pandemic is sparking fears of food insecurity as the supply of essential inputs to farms is being obstructed, fish farmers say.

The fish farmers under the auspices of the Catfish and Allied Fish Farmers Ass o c iat io n of Nig e r ia (CAFFAN) appeal to the Federal Government to grant input suppliers and farmers special movement permit to move inputs and fish products to areas of need within the country.

Rotimi Oloye, national president, CAFFAN in an interview with the News Agency of Nigeria, said that due to restriction of movement of persons to curtail the spread of the virus in the country, its members now have difficulties accessing their farms across the nation and getting supplies of essential inputs.

Oloye stated that the farmers mostly affected were those close to border towns.

“The inability of fish farmers to have access to their farms would have a multiplier effect across the fish value chain. Without access to our farms, we won’t be able to purchase fish fingerlings,” he said. “ We w o u l d a l s o b e unable to purchase fish feeds, which will have an impact on our sales and businesses. Those whom we sell fish to will also not be able to purchase this very important source of protein and nutrient,” he further said.

“It could potentially lead to loss of employment while people who have shown interest in investing in the fish farming may lose interest,” he added.

He says that the c o nt i nu o u s re s t r i c t i o n on the movement of fish farmers would eventually affect players across the value chain.

The national president stated that the situation www.businessday.ng

is already making prices of inputs more expensive, increasing farmers cost of production.

“This is adding to the cost of production that is already on the high side owing to FX volatility used in importing more than 70 percent of our inputs like fish meal, hormones and other additives like lysine and methionine among others,” he said.

“This can force farmers to abandon their farms, thereby, leading to threats of food insecurity. As everyone is well aware, unless properly processed and preserved, fish has a very short shelf-life value,” he added.

Oloye also advised the government to include p ro c e s s e d h o m e g ro w n catfish to the palliatives being shared to poor Nigerians, emphasising that fish and fishery products w ere nutr itional fo o ds because they contained adequate nutrients necessary to boost human body cells and immune system.

REMI FEYISIPO, Ibadan

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o v e r n o r, S e y i Makinde, recently signed the Oyo State Agribusiness Development Agency (OYSADA) Bill into law.

“I have just signed the law to make provision for the establishment, composition, and powers of the Oyo State Agribusiness Agency and every other matter connected therewith,” Makinde said after signing the bill into law.

“Agribusiness is one of the cardinal programmes of this administration and what we have done today is to give a legal backing to Oyo State Agribusiness Development Agency,” he added.

He said that the signing of the agency bill into law would allow the agency which is based in Saki, to start work fully and to kick-start the operation of the farm estates projects in Eruwa in Ibarapa axis and Akufo, Ibadan.

“With the signing into law of the Agency bill, they are now free to start business as OYSADA. They will be based in Saki and they will be starting the first two projects as soon as possible.”

“The first is the Farm

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Estate at Eruwa and the second is the farm estate at Akufo. So, I thank you for coming to witness this s ig n i ng c e re m o ny ,” t h e governor said.

Makinde said that the state decided to sign off on the bill at this critical time in readiness for the expected boom in its economy through the derivable benefits from agribusiness initiatives.

Giving further insights into the advantages the state stands to gain from the New bill, the governor said the agency aims to develop a strategy to coordinate and implement agribusiness investments and projects in the state through public, private and development partnerships.

“This will enhance the optimisation of agrofood value chain business within Oyo state through an agricultural ecosystem that strengthens productivity, value chain growth and the processing and packaging of agro-based production,” he said.

According to him, the agenc y will support the State’s economic growth through engagement in domestic trade in agro-food @Businessdayng

by import substitution and exportation of nutritious processed and package agrobased products.

A statement signed Taiwo Adisa, chief press secretary to the governor, quoted the governor as saying that.

“Another benefit derivable from the agency is that it will promote engagement o f you t h i n ag r i cu l tu re through the development of agribusiness enterprises from downstream, midstream to the upstream of the agricultural sector.”

Debo Akande, executive adviser to the Governor on Agribusiness, who also spoke on the signing of the bill into a law said it was meant to put in motion the plan of the state with regards to developing its agribusiness sector.

“A g r i c u l t u r e , a s w e have known for a very long time, has been practiced in this state but practiced differently,” Akande said.

“So, our grandfathers and grandmothers have done their best in a way that we know agriculture should be done. But now, there are modern approaches that need to be adopted in agricultural practices,” he added.

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The future of work: Organisations should prepare to adapt

OSAYI ALILE

“Change is the law of life. And those who look only to the past or present are certain to miss the future.”

– John F. Kennedy rom the manufacturing industry, financial services and the audit sector to the hospitality, agriculture, health care and telecommunications sectors…businesses in these sectors previously depended substantially on manual processes to drive operations. We can compare the time frame within which financial auditors (for instance) concluded audit exercises in previous times as against now, as these professionals had limited work tools to help simplify tasks.

We have benefited from the transition from an outdated paper-based system to digitisation of records as is traversal across all sectors. As a consumer in this present age, we can

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reminisce about the old days of long queues in the banking halls when we waited for countless hours to process basic transactions. As business owners, who now have access to a wider pool of human capital, information, techniques, partners, finance options including an expanded market, we can agree that the continuous revolutions, in particular this fourth one, the technological revolution (which is predicted to raise the bar like never before!) have made life easier and better. So, when I binge-watch movies about aliens and technology, somehow, I am thankful for these disruptions which has changed every aspect of our lives, especially how we perceive and approach the concept of work.

As innovations ranging from Automation, Machine Learning, Artificial Intelligence, Cloud computing, Data Analytics, etc. are becoming popular, there are concerns about how these breakthroughs will affect the world of work. According to the Mckinsey Global Institute, as much as these technologies improve operational efficiency, their deployment may displace the need for human effort in most repetitive tasks people are paid to perform thereby leading to labour substitution. These realities are not far from us. Banks are launching their own Automation and Artificial Intelligence technology: UBA’s chat bots LEO; Zenith Bank’s Qwerty Banking;

Stanbic Banks’s Blue Bot; Diamond bank’s (Now Access Diamond) Ada and Union Bank’s Robotics Process Automation (RPA).

As more and more organisations employ these technologies, it appears indeed that there would be a displacement of human effort especially in this part of the world hence people would lose their source of livelihood. However, many reports on this subject highlight an emergence of new tasks in existing roles or recreation of new sources of employment. On the flip side, these forms of innovation will benefit these institutions in many ways. For one, they will be better well positioned to enhance customer experience; will achieve savings in time and costs, improve efficiency, prevent fraudulent activities and be empowered to provide personalised services in real time.

Meanwhile, as technology sets the new rules for work and business operations, shifting demographics patterns, migration, and changes in economic growth are other factors which will impact significantly on the new world of work. Interestingly, the COVID 19 pandemic scare may just accelerate the advancement of work.

To ensure business continuity, most organisations have been forced to implement work from home while devising new ways of maintaining employee engagement and redefin-

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As workers settle with this new idea of telecommuting, the idea of going to a place of work may no longer be desirable.

Managers would need to create (where there is none) or review existing policies on remote work and tighten information technology governance to protect access to company data

From frying pan to fire

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read recently in the newspapers that our government is planning to evacuate Nigerians from China as they have allegedly been maltreated by the people of Guangzhou. If I hadn’t expended a lifetime of tears already, weeping for my country, my tears would have flooded my house on that day. Even if the allegations against the Chinese are true, I’m trying hard to understand what these Nigerians will be coming here to do.

Have you created more jobs or an enabling environment for commerce? The last time I checked, Nigeria had the largest number of people in abject poverty and one of the highest numbers of unemployed citizens, anywhere in the world. Corruption has spiralled out of control, our human rights record is poor, purchasing power is abysmally low, electricity supply is embarrassingly insufficient, the education system is in total disarray, with tertiary institutions churning out graduates who can barely spell their own name and a health care system that’s even worse than all of these put together.

For a second, let’s put aside the fact that the Coronavirus pandemic began from China and let’s focus instead on what they did to contain it. This is a country where when push came to shove, multi-storey, fully functional hospitals were erected from scratch to finish, within a space of ten days. I think one was as quick as a week. They possessed the resources, the know-how and the political will to do what needed to be done, when it needed to be done. To the best of my knowledge, China is not a country where the leaders feel the need to bolt out of the country whenever medical attention is required. And here we are threatening fire and brimstone, planning to evacuate our people, who to all intents and purposes, chose to flee their own country when economic hardship and

a pervading sense of hopelessness, became too much for them to bear.

Don’t get me wrong, I’m not proposing the government abandons its people in their time of need, though it wouldn’t be a first time. No, my objection is the grandstanding by a country which in real terms has repeatedly demonstrated its total disregard for its own people. Foreign governments have been known to show more concern about the safety of Nigerians living in Nigeria than our own governments have. The facts speak for themselves.

When are we going to stop believing this hype of us being the giant of Africa? That horse bolted from the stable a long time ago.

What should have been a relative advantage has itself now become more of a burden, as the burgeoning population, coupled with a frighteningly low productivity level and rampant corruption, means we have one of the lowest per capita incomes in the world. What does this mean? Despite our deceptive swagger and tireless “effizy”, the country is poor.

Washington Burnap’s statement, two hundred years ago, that: “The grand essentials to happiness in this life are something to do, something to love, and something to hope for” is just as true today as it was back then.

Ask the Nigerian youth of today why he’s unhappy and he will tell you. Lack of jobs, even less to give hope and a country that’s becoming increasingly more difficult to love.

The scriptures too buttress this where it says “hope deferred makes the heart sick”.

With this firmly in mind, what would be the purpose of bringing our people back here? What does our government have in store for them? I, for one have never totally agreed with our frequently spewed mantra, that where there’s life, there’s hope. It really depends on what you define as life. I’m more inclined to believe that where there’s hope,

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there’s life. A life devoid of hope, effectively rendering it meaningless, appears to defy its very purpose.

There are many tell-tale signs of an increasingly repressive society. Our Customs boss, Colonel Alli, said some time ago, without any apologies to anyone, that where security issues take the front burner, people should forget about their fundamental human rights and the rule of law. But is it not the law itself, the constitution by which any administration governs, where he derives his powers and authority from? So, if the law doesn’t matter, what gives his actions legitimacy?

Periodically, hordes of young men are rounded up and arrested at nightclubs and our law enforcement agencies hinge the basis of their action, on the fact that these young men are in possession of sophisticated phones! You don’t go after the few that you have actually investigated but just cast your net as wide as possible (as I heard someone put it on radio) and then expect them to start explaining themselves and posting bail, which we all know is free only in theory. What happened to our rights? Young people are accosted, harassed and even arrested by policemen just because they exercise their right to enjoy the perks that come with success and you wonder why our youths are abandoning these shores in droves?

The other day, during this lockdown period, my wife and I needed to stock up on some items so we headed for the supermarket.

Approaching one of the police checkpoints on the way, we were asked to wind down the window. Upon enquiry, we informed him that we were off to stock up. The conversation was as polite as any until he asked us if we had a movement letter. A movement letter to go out and buy food and provisions? So, my family should just sit at home and starve?

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ing deliverables. Managers may now need to redefine work vs work place.

Does presence in the work place translate to productivity? Will it matter the location where work occurs if employees have the tools, they need to deliver on set objectives?

As workers settle with this new idea of telecommuting, the idea of going to a place of work may no longer be desirable. Managers would need to create (where there is none) or review existing policies on remote work and tighten information technology governance to protect access to company data. Furthermore, in terms of learning and development, it is paramount for workers to pursue a live long process of training to remain relevant. Organisations should also commit to reskilling or upskilling in ways that support employees to adapt to these changes and enhance their performance.

Organisations would have to proactively engage these trends. More importantly, managers should look internally and examine how these changes apply to the company. More so, they may need to rethink the assumptions behind policies, products, services and business models.

Alile is the CEO ACT Foundation and consultant for Access Bank Plc on its CSR projects, Ms. Alile was the Executive Director of FATE Foundation, a leading private sector led not-for-profit organisation in Nigeria

Character Matters with Daps

Dapo Akande Let’s just say I thank God my wife was there to temper the whole situation. I feel that the more he tried to assert his position, the more it began to sound as ridiculous to him as it did to us, so he eventually waved us on.

Our propensity to oppress our compatriots seems to know no bounds and this goes for both those in some form of authority and even the ordinary man. I often wonder if it’s just a black thing? In my book, you’re better off facing racism at the hands of those who feel you’re coming to their country to take their jobs, than face such oppression and worse at the hands of your own people, because of envy and frustration. In a somewhat macabre way, it’s somewhat easier to understand. After all, it’s their country. Put your own country right and there’ll be fewer reasons for you to subject yourself to such treatment. But as long as you continue to treat your compatriots as people whose life lacks value, you shouldn’t expect foreigners to treat you or your compatriots any differently. No one will value you more than you value yourself or yourselves.

Changing the nation...one mind at a time.

Akande is a Surrey University graduate with a Masters in Professional Ethics. An alumnus of the institute for National Transformation and author of two books; The Last Flight and Shifting Anchors. Contact: dapsakande25@ gmail.com

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Will COVID-19 lead to another recession?

Olanrewaju Rufai

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s the world continues to battle the COVID-19 pandemic, it is becoming increasingly clearer that the economic repercussions of the pandemic could be even more drastic than anticipated. Already, the outbreak has caused severe economic and market dislocations across the globe, disrupting global supply chains and travel, and causing a crash in the price of crude oil. Given the overall vulnerability of the Nigerian economy to external shocks, particularly to volatility in global crude oil prices and disruptions in the nation’s biggest trading partners, the impact of the coronavirus on the Nigerian economy cannot be underestimated.

Before the pandemic, the Nigerian economy was yet to fully recover from the recession it suffered in 2016, with its 2019 GDP growth tapering around 2.3 percent. In fact, the IMF had in February revised the 2020 GDP growth rate from 2.5 percent

to 2 percent, as a result of relatively low oil prices and other macroeconomic headwinds. Furthermore, the country’s debt profile had also been a source of concern, with debt servicing already consuming over 60 percent of the nation’s revenue. Now with the outbreak of the pandemic, it seems inevitable that the nation’s economic indicators could get even worse, Since the outbreak of the pandemic, the oil market has suffered enormous losses, with Brent crude oil price falling to less than $30 per barrel.

Furthermore, the near-term outlook of the nation’s principal export looks grim as the forecast for the rest of the year remains considerably unfavourable. The effect of this development on the Nigerian economy could be significant. The last major crash in the price of crude oil in 2014 precipitated the downturn in the nation’s economy, culminating in a recession. Thus, there are reasonable fears that a sustained period of low oil prices could send the nation’s economy spiralling into another downturn.

In addition, the current crude oil price of below $27 a barrel as at Monday 12:24pm is significantly below the $57 per barrel initial benchmark of the FG’s 2020 budget and also below the revised benchmark of $30. Therefore, if the low crude oil price regime persists for an extended period of time, the viability of the nation’s 2020 budget will remain further in doubt.

Already, the nation’s Finance Minister has alluded to this, expressing worries that a sustained period of low crude oil prices could scupper the nation’s financial projections.

Furthermore, given that China ac-

counts for about a quarter of Nigerian imports, greasing much of the country’s supply chain; and that the nation is reliant on China for raw materials, inputs and machinery utilised in local production, there is a significant possibility that the pandemic could induce an increase in the cost of local production or at least a significant reduction in the already limited local production capacity.

Against this backdrop, the notion that another recession might be looming is not farfetched. It is therefore pertinent that the nation’s economic managers adopt the right policy frameworks to manage the impending economic repercussions of the pandemic.

Already, the Central Bank of Nigeria (CBN) seems to be taking the right steps by moving toward a flexible exchange rate, in contrast to the stance adopted in 2015. It should be recalled that in the aftermath of the 2014 slump in global oil prices, the CBN rolled out a string of policies geared towards maintaining an artificially strong Naira reliant upon high crude oil prices and external borrowings. A situation which put even more pressure on the already pressured exchange rate and the nation’s overall economy. Therefore, the CBN’s new policy which aims at a flexible exchange rate seems a step in the right direction.

Furthermore, the decision to implement a monthly pricing modulation style which reflects the global oil market fundamentals to determine the price of petroleum products in the country is a welcome development.

The implementation of the price modulation policy has led to a drop

‘

There is a need to diversify the nation’s economy away from a reliance on crude oil. The need to restructure and diversify the productive base of the economy, with a view to reducing dependence on the oil sector and imports has never been more apparent

in the price of gasoline, which should help curb rising inflation, especially food price inflation.

Perhaps most importantly, there is a need to address the biggest elephant in the room: Nigeria’s reliance on the sale of crude oil as the major source of the nation’s foreign exchange earnings. There is a need to diversify the nation’s economy away from a reliance on crude oil. The need to restructure and diversify the productive base of the economy, with a view to reducing dependence on the oil sector and imports has never been more apparent. As long as the Nigerian economy remains a mono-economy totally dependent on oil revenues, the nation will continue to remain vulnerable to oil price shocks. Therefore, Nigeria needs to ensure sustainable fiscal management that is resilient to global oil price cycles.

Overall, there is a significant likelihood that the economic impacts of the coronavirus pandemic on the Nigerian economy could be even more far-reaching and extensive than anticipated. Given the overall vulnerability of the Nigerian economy to volatility in global oil prices and disruptions in its biggest trading partner, China, the impact of coronavirus on Nigeria might go far beyond infectious diseases.

Therefore, now is the time to act and set plans in motion to protect the nation’s economy from an impending COVID-19 induced economic recession.

Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.

Strategy: Repositioning after a crisis

T

he greatest fortunes are made when the cannonballs fall at the harbour, not when the violins play in the ballroom. - Nathaniel Rothschild.

“In rapidly evolving systems, permanent competitive advantage does not exist; there is only continuous effort to create new sources of temporary but sustainable advantage.’’

Superior performance is not possible without a clearly designed and executed strategy that creates and sustains an advantage for the firm. This strategy is defined by the uniqueness of the choices the company makes across its value chain, the consistency of those choices and their sustainability.

Determining the right choices to be made usually depend on a clear understanding of the environment where this business will operate in terms of the key players that have the exact influence in the environment and have the power to determine the profitability available in the environment.

Superior performance thus depending on understanding the structure of the business environment or industry and the position of the company in question. This is what gives the company the advantage in competition.

This is what separates the company from the pack and guarantees superior performance.

Without a clear advantage, a business has no basis for expecting superior performance, the forces of competition will determine what happens to it and it has no guarantee of even remaining in business.

Strategy is such an important subject in business literature and this is underscored by

the results of a search of the academic literature using “strategy” as a keyword: More than four million citations were listed. Amazon lists more than 49,000 books with strategy in the title and a broad Google search shows 800 million hits Two obvious conclusions can be drawn from this interest: First, strategy is clearly important; and second, given the disparate approaches, there does not seem to be a consensus about “how” strategy works—in spite of the fact that there is good consensus on the definition of the term itself. Yet, superior performance is not possible without strategy.

Given the definition that strategy is the positioning of a firm within its competitive environment, it does follow that the company must be repositioned when there is a shift in that competitive environment.

This repositioning first entails the understanding of the industry and what has really changed, what kind of change it is and to what extent the industry changed. The company is then in a better position to make the right choices based on the options the new industry structure now presents.

The outbreak of the coronavirus has changed the world and shaken the foundation of many industries. Supply chains have been shaken, policies have been adjusted and just about everything that makes competition work has been challenged. Most of all the world has slipped into a recession. CNBC reports that the business travel sector will lose $820 billion in revenue on the pandemic.

That’s a loss of over 50 percent for a sector

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worth just a little over a trillion dollars.

How should you respond in a period like this? That’s a million-dollar question and a situation which definitely requires making hard choices. As a guide I will recommend the following: Review your corporate values and ensure you stay true to it. In periods of difficulties as it is, you need a compelling reason to stay in business and thrive in the midst of difficulties.

Sit with your team and yourselves, ask why you got into business in the first instance. Why do you have to do this? Just for the money? That’s not good enough! You will need a compelling reason that inspires everyone and that should come from your value. ‘We are here because our society needs security. 2000 clients nationwide currently depend on us for this need and through the difficulties we will find a way to stay on and thrive. We believe in resilience!’

That’s how values can inspire. The more you stay on this the more you see options you never knew were there.

Understand the exact impact on your industry.

Review your critical assets.

Review your value chain and reconsider your choices.

Remain strategic in the face of difficulties.

Organisations that will thrive in the post coronavirus business world will largely be those guided by ideas such as the ones I have identified here.

No organisation can afford to ignore just one of the steps and expect to thrive.

In the post coronavirus world, survival will

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Brian Reuben

depend on responding appropriately to the changes the pandemic presents, thriving will depend on taking advantage of the chaos the pandemic has brought to control the structure of your industry to some extent.

Chaos is an important strategic tool in changing the competitive structure of an industry because it throws people out of balance and destroys competitive advantage.

COVID-19 is the biggest chaos in recent history and could leave new phone industry champions in its wake. Any organisation that wants to thrive must prioritise its strategy review and reassessment.

To understand how to change the competitive structure of your industry email admin@ brianreuben.com and request for the training material – CHANGING THE GAME. For free Strategy assessment tools email admin@ brianreuben.com with the subject STRATEGY TOOLS. Dr Reuben is one of the most sought after thought leaders on the subject of Strategy in Nigeria. He speaks at business events globally.

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Wednesday 22 April 2020

BUSINESS DAY

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COVID-19 & poverty crisis in Nigeria: Possible short-term solutions!

Franklin Ngwu

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ith a very weak health sector for a rapidly growing population of about 200 million people, Nigeria faces enormous health and socio-economic challenges with the increasing COVID-19 epidemic. While primarily a health problem, the nature of COVID-19 particularly the rate and mode of spread clearly demonstrates that it is far more than just a health challenge.

It is complex with far reaching negative socio-economic impacts and risks on both global and African economies including Nigeria.

In a bid to contain the spread, the global economy including Africa and Nigeria are on lockdown and all sectors are affected from transport to manufacturing and from financial sector to agriculture. It is really a low frequency, high impact global risk with IMF stating that about $114 billion will be required in 2020 to fight COVID-19 in Africa. In a continent where about 1/3 (about 422 million) of her population live below the global poverty line, it is estimated that about over 20 million formal jobs and 250 million informal jobs will be at risk.

With Sub-Saharan Africa likely to experience about 5.1 percent contraction, output losses range between $37-$79 billion. Mckinsey projects that

Africa might lose between $90-$200 billion and experience the first recession in 25 years! Impact on household are severe and dramatic with welfare losses of 7 percent in a best-case scenario. Agriculture will decline by about 2.6-7 percent, food imports between 13-25 percent. The same decline will be the case with Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), consumption expenditure, manufactured goods, utilities, transport, energy and services. With major disruption of supply chains, exports will likely decline by about 30 percent.

Even foreign aid, remittances will all decline in addition to massive capital flight with Nigeria projected to lose over 50 percent of her revenue from oil in 2020! It is really a tough period!

As the above African scenario is the same for Nigeria, it means that we are in for very challenging times. The situation in Nigeria might even be worse than many African countries given that we are the poverty capital of the world with almost half of our population living in extreme poverty.

The question is what we should do to mitigate the emerging disaster! From the way things are going the era of our governors and states relying mainly on the Federal government for monthly revenue allocations is going and might be difficult to sustain least in the next two years. To survive through this crisis, there is need for strategic thinking and innovation from our leaders particularly the governors. As majority of Nigerians live in villages and farms, there is no better time to jumpstart the mitigation strategies than now, the beginning of the farming season!

With global food prices already rising due to COVID-19, an immediate short to medium term measure is for the governors through the Nigeria Governors forum in collaboration with

‘

COVID-19 presents opportunities for some sectors and products to thrive, it is another low hanging fruit for some of our governors to tap into

the federal government to identify about 100 agricultural products that will be allocated two to three per state for massive cultivation and production based on the state’s agricultural comparative advantages. To address the short-medium term revenue impacts, the focus for this agricultural season will be on crops with three – six months gestation period. Crops like maize, yam, cassava, sweet potatoes, beans, and others fall into this category. In a recent study on the business opportunities of some of these crops, it was noted that the gaps between demand and supply are huge. For instance, while the gap in the demand and supply of Garri in a year is over N430 billion, for Maize flour processing, it is about N240 billion. While Netherlands makes about N285 billion from potatoes every year, the 2020 total budget of Plateau state is about N172 billion.

Interestingly as Plateau potatoes are perceived to be of better quality than the ones from Netherlands, it means that Plateau can afford to bid goodbye to the revenue from the federal government and still achieve a higher budget.

Just as it is with potatoes, so it is with other agricultural products. While Kenya and Ethiopia make about $1 million each from fresh flower, Germany and Spain exported pork meat worth about $4.4 billion and $4 billion respectively in 2018. If they are achievable in other places, so it should be in Nigeria. The factors lacking are effective leadership, strategic leadership and innovation from our governors.

As majority of our people are hungry and poor, all that is required from our governors is to provide the required support for people to farm particularly security of life and property. In addition to security of life and property, other key factors include availability of improved seedlings and access to land

US health and humanitarian aid

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he story of U.S. leadership in the global battle against COVID-19 is a story of days, months, and decades.

Every day, new U.S. technical and material assistance arrives in hospitals and labs around the world. These efforts, in turn, build on a decades-long foundation of American expertise, generosity, and planning that is unmatched in history.

The United States provides aid for altruistic reasons, because we believe it’s the right thing to do. We also do it because pandemics don’t respect national borders. If we can help countries contain outbreaks, we’ll save lives abroad and at home in the U.S. That generosity and pragmatism explains why United States was one of the first countries to help the Chinese people as soon as reports emerged from Wuhan of another outbreak. In early January, the United States government offered immediate technical assistance to the Chinese Centers for Disease Control.

In the first week of February, the U.S. transported nearly 18 tons of medical supplies to Wuhan provided by Samaritan’s Purse, The Church of Jesus Christ of Latter-Day Saints, and others. We also pledged $100 million in assistance to countries to fight what would become a pandemic – including an offer to China, which was declined.

Our response now far surpasses that initial pledge. Since the outbreak of COVID-19, the U.S. government has committed nearly $500 million in assistance to date. This funding will improve public health education, protect healthcare facilities, and increase laboratory,

disease-surveillance, and rapid-response capacity in more than 60 of the world’s most at risk countries– all in an effort to help contain outbreaks before they reach our shores.

Our aid helps people in the direst circumstances. For instance, the U.S. government works with NGOs to deliver medicines, medical supplies, and food to the Syrian people, including those living in regime-held areas.

We are helping United Nations agencies and nongovernmental organisations build more water, sanitation and health facilities across northern Syria to prevent the spread of the virus. We are aiding friends from Africa to Asia, and beyond.

America’s unsurpassed contributions are also felt through the many international organisations fighting Covid-19 on the front lines.

The U.S. has been the largest funder of the World Health Organization since its founding in 1948. We gave more than $400 million to the institution in 2019 – nearly double the secondlargest contribution and more than the next three contributors combined.

It’s a similar story with the U.N. Refugee Agency, which the U.S. backed with nearly $1.7 billion in 2019. That’s more than all other member states combined, and more than four times the second-largest contributor, Germany.

Then there is the World Food Program, to which the U.S. gave $3.4 billion last year, or 42 percent of its total budget. That’s nearly four times the second-largest contributor, and more than all other member states combined.

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We also gave more than $700 million to the United Nations Children’s Fund (UNICEF), more than any other donor.

We are proud that when these international organisations deliver food, medicines, and other aid all around the world, that too is largely thanks to the generosity of the American people, in partnership with donor nations.

Our country continues to be the single largest health and humanitarian donor for both long-term development and capacity building efforts with partners, and emergency response efforts in the face of recurrent crises.

This money has saved lives, protected people who are most vulnerable to disease, built health institutions, and promoted the stability of communities and nations.

America funds nearly 40 percent of the world’s global health assistance programs, adding up to $140 billion in investments in the past 20 years – five times more than the next largest donor. Since 2009, American taxpayers have generously funded more than $100 billion in health assistance and nearly $70 billion in humanitarian assistance globally.

It’s also why the U.S. government is providing $6.7 million to Nigeria in USAID International Development Assistance health and humanitarian funding for the COVID-19 response. These funds will go toward risk communication, water and sanitation activities, infection prevention and control, and coordination. This assistance is in addition to the more than $5.2 billion in U.S. health assistance and more than $8.1 billion in total assistance the State Department and USAID

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in terms of roads and other infrastructure such as evacuation and storage facilities. These the state governors can easily provide once there is seriousness and commitment.

In addition, as COVID-19 presents opportunities for some sectors and products to thrive, it is another low hanging fruit for some of our governors to tap into. For instance, as facemasks will be in high demand from now to at least 24 months, it is an opportunity states like Abia should grab with two hands. With Aba boys already in the frontline of manufacturing locally made facemasks, what is required is for Governor Ikpeazu to provide all the necessary support to ensure that Aba will account for over 50 percent of the facemasks to be consumed by over 1 billion people in Africa. This is also the case with the protective wears used by our health workers that costs about N70,000 for one.

With a clear strategy and partnership with the private sector, Abia state can generate over N200 billion from facemasks and other clothes used by health workers. By implication, COVID-19 has presented an opportunity for Abia state to strategically generate higher than their 2020 total budget of about N137 billion. While COVID-19 poses immense health and socioeconomic challenges to Nigeria and states, a little responsible leadership, strategic thinking and innovation from our leaders particularly the governors can help us mitigate the challenges especially the revenue gaps. As they say, where there is a will, there is a way and the time to act is now!

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

E-mail- fngwu@lbs.edu.ng

Mary Beth Leonard

have provided Nigeria over the past 20 years.

Our help is much more than money and supplies. It’s the experts we have deployed worldwide, and those still conducting tutorials today via teleconference. It’s the doctors and public-health professionals trained, thanks to U.S. money and educational institutions.

And it’s the supply chains that we keep open and moving for U.S. companies producing and distributing high-quality critical medical supplies around the world.

Of course, it isn’t just our government helping the world. American businesses, NGOs, and faith-based organisations have given at least $1.5 billion to fight the pandemic overseas. American companies are innovating new technologies for vaccines, therapeutics, diagnostics, and ventilators. This is American exceptionalism at its finest.

As we have time and time again, the United States will aid others during their time of greatest need. The COVID-19 pandemic is no different. We will continue to help countries build resilient health care systems that can prevent, detect, and respond to infectious disease outbreaks. Just as the U.S. has made the world more healthy, peaceful, and prosperous for generations, so will we lead in defeating our shared pandemic enemy, and rising stronger in its wake.

Leonard, U.S. Ambassador to Nigeria

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BUSINESS DAY

Wednesday 22 April 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun

13

Now is the time to fix Nigeria’s petroleum downstream sector The FG must urgently publish a policy framework for the downstream sector

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

O

il prices have crashed to levels last seen in decades and demand has dropped globally too by at least 20 percent on the back of the Coronavirus pandemic. Refiners are feeling the heat, shuttling refineries as profit margins drops significantly but this presents an opportunity for Nigeria to fix its downstream petroleum sector.

Market data shows that gasoline and jet fuel margins have plunged to their lowest levels in years on the back of weak demand and crude oversupply. Worse still storage facilities are full. Refineries in India and Europe are shutting down. Italy’s API said it would close operations temporarily at its Ancona refinery, which has capacity of 85,000 barrels per day (bpd). In India, top refiners Indian Oil Corp and Mangalore Refinery and Petrochemicals declared force majeure, with MRPL in the process of shutting down its entire plant.

Nigeria is buying petrol cheaply and can afford to lower retail price of petrol and now Mele Kyari, head of the Nigerian National Petroleum Corporation (NNPC) is announcing

an end to the wasteful petrol subsidy programme that has crimped the economy for about two decades only it is not his remit.

As the boss of the state-oil firm, the NNPC GMD is hired by the government to manage its commercial oil business not to frame public policy.

The Petroleum Ministry headed by Muhammadu Buhari and the Petroleum Products Price Regulatory Agency (PPPRA), are qualified to speak on policy according to extant laws but they have remained silent.

This is unwise and evidence a government that is shoddy, unprepared and not in sync.

We agree with Kyari that subsidy is elitist because it is the elites that benefit from it. We are just flummoxed that this is coming from someone working for a statist government.

As Kyari said, there are many things wrong with the under-recovery and it not just that it leads to oversupply, it engenders corruption. The NNPC under recovery programme significantly reduces revenue from sale of oil, distorts markets in the West African sub region and encourages smuggling.

The NNPC’s GMD did not provide coherent framework on how the plan would be operationalised. This

is because he clearly lacks the powers to make it happen. We have called for a full deregulation of the petroleum downstream sector but this government like the others have consistently ignored this counsel. Now, backed into a corner by falling oil earnings, it is beginning to see that its ideas are obtuse.

For the avoidance of doubt the minister of petroleum resources or his deputy should announce government’s policy on the downstream sector and provide clear guidance on whether it wants to fully deregulate the sector or liberalise effectively as it had failed to do.

A full deregulation allows market forces to determine prices and government’s role is limited to regulation.

It will get improved tax returns, remove inefficiencies and allow private companies who more effective to run things. Liberalisation will mean it will still maintain a control price band and put a cap on profits, get reduced tax income, allow private operators but could intervene when oil prices rise and begin subsidising again on account of political pressure.

The minister has to make it clear why there needs to be a controlled price for petrol when diesel, avia-

tion fuel and other products do not have any. What would be the role of independent marketers going forward? What is the roadmap for the petroleum downstream sector in the long-term when oil prices recover?

How will the government manage the expectations of the public for cheap petrol when oil prices recover and landing cost exceeds N120/litre?

The labour unions have argued that it is immoral to remove petrol subsidies while the nation’s refineries lay comatose. Their argument is valid. Now Kyari has said that the refineries would be handed over to private operators but has yet to clarify how this model would work. Similar arrangements in the past have failed, it remains to be seen what is different this time around but the downstream sector cannot work effectively unless the challenges with the refineries are resolved.

We call on this government to urgently publish a policy framework for the downstream sector of the petroleum industry. The current realities in the market show that the characteristic Nigerian government shoddy policy making, which essentially makes it up as we go, will no longer suffice.

HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong

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14

Wednesday 22 April 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

BONDS

FMN commences sale of N30bn commercial papers SEGUN ADAMS

F

lour Mills of Nigeria PLC (FMN) has commenced the sale of its commercial paper sales, seeking to raise up to N30bn in order to finance its short term working capital requirements.

The N30bn is the thirteen and fourteen series of its ₦100.0bn Commercial Paper (“CP”) Programme, with a tenor of 182-Days for the former series and 269-Days for the latter, while their respective effective yields are 6.7500% and 7.7499%.

Discount rates for the two series are 6.5308% and 6.9584%.

The offer opened Thursday, 16 April 2020 and would close Friday, 24 April 2020 (11:00 am) with settlement on Monday, 27 April 2020, said Afrinvest in a note to clients.

Commercial Paper is a

money-market security issued by corporates to obtain funds to meet short-term debt obligations and this is usually backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note.

Commercial Papers are usually issued for maturities between 15 days to 270 days maximum tenor, including rollover, from the date of issue.

The choice of bonds by Flour Mills is to lengthen the maturity profile of its debt in a low-interest-rate environment, and also reduce refinancing risk of short-dated securities.

The CP programme will help the company strengthen its balance sheet, while it continues to focus on its strategic objective of sustaining its market leadership position within the food and agro allied-space, said FMN in a

note published by the Nigerian Stock Exchange (NSE).

FMN, which has a short term ratings of A2 (GCR) and a long term rating of BBB+ (GCR), said all issuance totaling N7bn under the CP programme are quoted on the FMDQ Exchange.

Flour Mills of Nigeria’s revenue for the nine months ended 31st December 2019 rose 7.9% to N432.47bn from N400.64bn. Cost of Sales increased 6% to N375.64bn from N354.04bn in the same period in 2018, leaving gross profit at N47.82bn from N46.59bn in the same period in 2018.

Selling and distribution expenses jumped 7.9% to N6.4bn from N5.93bn in the same period in 2018, with administrative expenses surging to N17.26bn from N14.93bn in 2018. Net profit increased 3.4% to N8.16bn from N7.89 bn.

Revenue from its Food segment increased 2.9% to

N262.09bn from N254.57bn, Agro-allied segment ballooned 19.6% to N81.31bn from N67.96bn. Sugar value chain increased to N67.61bn from N59.96bn, sadly revenue from support services plummeted to N12.45bn from N18.53 bn.

During the period, the group’s expense on advertisement surged to N1.48bn from N1.39bn.

Shares of Flour Mills as of Monday were priced at N21.2 a unit, 7.61% on year-to-date basis compared to doubledigit decline in the broader market.

Flour Mills of Nigeria PLC provides food and agricultural products and services. The Company offers flour, noodles, pastas, oil and spreads, and sugar, as well as feeds, fertilizers, and logistics and support services. Flour Mills of Nigeria serves customers in Nigeria.

L-R: Adewunmi Alode, general counsel and company secretary; Ikechukwu Ogah, minister of mines and steel development; Adamu Mohammed, acting plant manager Ewekoro, and Titilope Oguntuga, sustainable development and corporate brand manager, during the visit of the Honourable Minister to the Lafarge Africa Ewekoro Plant in Ogun State.

MARKETS

NSE issues guidance for virtual meetings SEGUN ADAMS

T

he Nigerian Stock Exchange (NSE) has issued its guidance and thought leadership for listed companies on virtual meetings which have increasingly become a necessity for many businesses amid the COVID-19 pandemic.

According to the NSE, meetings, whether of companies’ Boards of Directors, or of their Committees, or Management, are an essential aspect of the decision making process in companies, with firm roots in good corporate governance.

Therefore, “Members’ active participation at meetings is extremely important, and it is desirable, as it provides attendees with the opportunity to make enquiries, provide inputs and objective criticism, receive clarification, and be generally more informed, to guide decision making,” NSE said, noting concerns that stakeholders might have participating in virtual meetings.

NSE noted that in deciding whether to implement a virtual meeting, companies should take the interests of all relevant stakeholders into account.

Questions bordering on adequate technology to reach all stakeholders who wish to participate, plan in place to give equal opportunities to both in-person and online participants (in the case of a hybrid meeting), enabling meaningful engagement with relevant stakeholders, among others, must be answered ahead of such meetings, the bourse advised.

It also said the Company Secretary, under the direction of the Board/Committee Chairperson or the Chief Executive Officer, is responsible for convening and facilitating virtual meetings of the Board, Committee, or Management, respectively.

Key points to note, according to NSE are precise agenda for the meeting, external attendees, confirmation of attendance, engagement of attendees, timely distribution of meeting materials, equipment, support, information security and a dry run or rehearsal prior to the virtual meeting to confirm that all equipment are in good working order.

NSE said although teleconferencing, web-conferencing, video conferencing etc. are all tools which make virtual meetings possible, the successful use of these tools to achieve the desired outcomes requires planning and attention to detail.

As such, the Company Secretary should ensure that good technical support is available for meetings.

Accordingly, the Company Secretary should promptly notify the company’s technology team/personnel of the details of the virtual meeting (i.e., date and time), as well as the technology media to be used. An appropriate and practical means of contacting attendees and the technical team, i.e., phone number, text message, etc., should also be agreed upon in the event of any disruptions, and where technical assistance is required, NSE said.

The NSE in its report outlined five responsibilities of Company Secretaries in ensuring a smooth virtual meeting. It also outlined 16 responsibilities of Virtual Attendees to ensure they get the most out of such meeting, as well as the role Chairpersons play in ensuring a smoothly run and productive virtual meeting where all participants feel included and engaged.

NSE also gave its advice on matters like appearance and use of residential work spaces for meetings.

Ecobank Group contributes US$ 3m to support fight against COVID-19 in Africa HOPE MOSES-ASHIKE

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cobank Group, the Pan African Bank, has contributed about US$3 million to the fight against COVID-19 across its footprint in Africa.

In line with its commitment to the continent, various contributions were made to support the efforts of governments, the World Health Organization as well as the private sector in alleviating the effect of the pandemic on the most

vulnerable on the continent.

With our knowledge of Africa, and to compliment various government efforts, we provided support in form of cash, healthcare equipment and supplies, strong and sustained awareness campaigns while also using our digital platform to provide cash to some vulnerable members of our societies, amongst others.

Ade Ayeyemi, group CEO, Ecobank group said: “Covid-19 is a major global threat adversely affecting all coun-

tries and our home, Africa, is particularly vulnerable. We believe in the importance of creating awareness in our communities, while also empowering them to protect themselves and their families as we battle the pandemic.

We are particularly mindful of the needs of our communities and therefore focused on these to ensure positive impact both in our urban and rural areas. “ “We are also paying attention to the effect of the

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COVID-19 outbreak on our various customers and have taken the decision to alleviate some of the adverse impact by making some bank charges free on our digital channels.

We will continue to anticipate situations that may require our support as developments evolve. “Ade Ayeyemi added.

At Ecobank, the health and well-being of our staff and customers are our priority and we are closely following guidance from the World Health Organisation, govern-

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ments and health agencies.

We are encouraging virtual/ remote working, wherever possible and have since suspended physical gatherings, observing the required social and physical distancing in offices and branches which are open while also ensuring branches and ATMs are regularly disinfected across our network. We continue to promote good hygiene and health measures within our offices and externally using our social media platforms @Businessdayng

to sensitize the public on preventive measures needed at this critical period.

Ecobank’s ATMs and call centres remain open 24/7 and full range of banking services are available via our digital platforms for all category of customers. Ecobank Mobile and Ecobank Online for the Consumer Bank customers, Ecobank Omni Lite for our Commercial Bank customers and Ecobank Omni for our Corporate and Investment Bank customers.

Wednesday 22 April 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

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TECHNOLOGY

COVID-19: Air Peace donates food items to less privileged in Lagos IFEOMA OKEKE

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ir Peace, on Friday, engaged in a laudable corporate social responsibility outreach as it distributed food items to several indigent families in different areas in Lagos.

The airline’s officials visited Sabo, Makoko and Ajegunle areas of Lagos where they gave out edibles, includes bags of rice, cartons of noodles and loaves of bread to hundreds of people whose sources of livelihood have been adversely affected by the COVID-19 lockdown aimed at curtailing the spread of the pandemic that has stifled global economy.

In his remarks, Allen Onyema, the Chairman, Air Peace, stated that the airline is aware that the current lockdown has made it very difficult for many Nigerians to eke out a living as they are compelled by government directive to stay at home, so as to curtail the spread of Coronavirus.

Onyema said that the initiative to give out food items

was inspired by the need to provide succour to the less privileged many of whom survive on daily earning from their work but can no longer work due to the stay at home policy.

“What we have done is our own way of touching the lives of the people directly. That’s why we came to Makoko, which is populated by very indigent people. When we leave here now we are going to Ajegunle. We are providing them bags of rice and cartons of noodles. This large turnout of people is a witness to the fact that there is hunger. We cannot leave the care for the people to government alone.

The private sector must be involved in this. If you have N2 million in your house, use N200, 000 to help people around you. If you have N1 million, use N100, 000 to help people. We are living in extraordinary times.

“One way or another, let us take positives from the Coronavirus situation.

Now, people have discovered that wealth is nothing because you cannot take this money to your grave.

So you must do anything

you can to touch the lives of people around you. My happiness will not be complete if people around me do not benefit from my prosperity,” the Air Peace Chairman and CEO said.

Elated by Air Peace good gestures, Taiwo Hassan Olayeni, the Baale of Okira Olayeni located in Ajagunle, thanked the company and said that this is the kind of support people expect from corporate organisations and expressed gratitude to the airline.

“I am very happy that the company came to our area to feed us. We have been expecting this gesture from corporate organisations for over three weeks now. I am very happy for Air Peace and I pray that God will continue to prosper the company. This is a very happy thing for me. I am so happy that they selected my community to benefit from their good gesture so I don’t know how I can thank the company. But I know that God will continue to prosper Air Peace and those that will benefit from the company’s kindness,” he said.

L-R: Konyenasom Ikuni, learning and development manager, Inlaks; Femi Muraino, executive director, Inlaks; Femi Adeoti, MD/CEO, Africa Operations, Inlaks; Adetokunbo Ayo-Ogunsanya, group head, human resources and administration, Inlaks, and Rufus Fayeun, human resources, business partner, Inlaks at the 2020 Inlaks Graduate Development Program in Lagos.

L-R: Funmi Awelewa, CSR manager, IHS Nigeria; Olufemi Arosanyin, chief commercial officer, IHS Nigeria; Cima Sholotan, associate director, CSR, IHS Nigeria, and Honourable Folorunso Oladoyin, commissioner for education, Osun State, at a recent courtesy visit to explore partnerships around STEM and Digital Literacy, in Osun State.

NIMASA, Navy integrates C4i Centre with Falcon Eye to enhance data sharing AMAKA ANAGOR-EWUZIE

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he Nigerian Maritime Administrat i o n a n d Sa f e t y Agency (NIMASA) and the Nigeria Navy are perfecting plans to integrate the Command, Control, Computer Communication and Information (C4i) Centre of the Deep Blue Project with the Falcon Eye of the Nigerian Navy in order to improve on information sharing.

Rear Admiral Oladele Bamidele Daji, flag officer commanding (FOC) of Western Naval Command, disclosed this when he led a team of senior officers from the command on a working visit to NIMASA, according to a statement signed by Philip Kyanet, head, Corporate Communications of NIMASA. Bashir Jamoh, director general of NIMASA, who noted that both agencies have interwoven mandates, suggested that since NIMASA is not an arm bearing agency that it would be important to support the Navy with necessary platforms

for it to optimally safeguard Nigerian Waters.

“Just like our Special Mission Vessels are manned by men of the Nigerian Navy, we are also looking at the possibility of linking the C4i center at kikiriki with the Falcon Eye of the Nigerian Navy. This would ensure safe shipping and that maritime industry remains virile for economic prosperity,” he said.

According to Jamoh, the Global Maritime Distress and Safety System (GMDSS) facility at Takwa Bay will become functional very soon and it would also enhance intelligence gathering as well as information sharing with the Nigerian Navy.

He further noted that activities of unapproved ship scrapping yards had become a source of concern for the agency, warning that those involved in such act would be made to face the full wrath of the law if they fail to desist from indiscriminate scrapping of vessels.

“We are aware of the challenges wrecks, derelicts and activities of illegal scrap www.businessday.ng

yards pose on ship navigation on the waterway. We would share information with the hydrography department of the Nigerian Navy, so that appropriate steps which would be in the best interest of the country would be taken to curb that,” he said.

On his part, Rear Admiral Daji applauded the already existing relationship between the agency and the Navy, stating the need for continuous information sharing between the Navy and NIMASA in order to ensure a safer and secured maritime sector.

He also corroborated the stance of the DG of NIMASA on zero tolerance for piracy on the nation’s waterways, stating that the Navy is prepared to tackle the issues head-on, for the overall good of the maritime sector.

Rear Admiral Daji appealed for cooperation with the NIMASA hydrography unit especially with regards to standard charting of the Nigerian waters as well as mapping out the wrecks for unhindered navigation.

L-R: Segun Ajekiigbe, permanent secretary, Oyo State ministry of energy and mineral resources; Temilolu Ashamu, commissioner for energy and mineral resources, Oyo State, and Arto Tenhunen, chairman of Soprano PLC, during the signing of Memorandum of Understanding between the State Government and Finnish Consortium on the establishment of Energy Innovation Centre for Excellence at Tampa, Florida, United States of America. NAN. L-R: Magnus Nnoka, president, Risk Management Association of Nigeria and Mobola Faloye, executive director/chief risk officer, Standard Chartered Bank Nigeria at a a Courtesy visit by RIMAN executive council to Standard Chartered Bank’s head office in Lagos, recently.

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Wednesday 22 April 2020

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Insurance response as house, shops burglary rises in COVID-19 lockdown Modestus Anaesoronye

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ar ts of Lagos and other cities in the country have witnessed some form of burglary attacks by hoodlums and organized criminals since the wake of the coronavirus (COVID-19) pandemic and subsequent lockdown following states and federal government directives.

Some residents of Lagos particularly have seen hoodlums called ‘One million boys’ break into their shops while they are at home observing the lockdown, while some others have been attacked in their homes, and their personal belonging carted away also during this period.

The question now is; what is the role of insurance in the wake of all of these? What responses are expected from the insurance industry to enable residents and business owners who suffer losses as result of the burglary get some level of compensation?

Eddie Efekoha, expert

and managing director/ CEO, Consolidated Hallmark Insurance Plc said during an interview in Lagos that if the business owners have taken insurance for burglary and this kind of event occur, they can make claims from insurance.

“Yes, some burglars have taken advantage of the coronavirus lockdown by burgling shops of business owners who are observing the lockdown directive of the Federal Government. In such case, if the business owners have insurance, they can be rest assured of compensation.”

Efekoha who is also the President of the Chartered Insurance Institute of Nigeria (CIIN) also noted that the insurance industry may not pay claims for business interruption flowing directly from the outbreak of Coronavirus due to the absence of the cover, but however noted that the sector remains poised to respond appropriately when business interruption occurs due to specified risks in policies like fire outbreak, explosion damage etc.

In Nigeria, most gen-

eral or non-life insurance companies offer fire and burglary insurance together, and this account for about 9 percent of the industry total premium.

Burglary insurance according to experts is a

policy that covers losses resulting from a burglary.

Burglary denotes the act of entering a property unlawfully with the intention of committing a crime and it might not always involve theft. Burglary

insurance, then, will cover property damage as well as financial losses arising from: the theft of property from within the household premises or within the automobile Insurance companies

there will require policyholders to notify the police of the burglary as one of the first steps to take before filing a claim.

People also refer to burglary insurance as crime insurance.

Insurance supervisors take steps to address impact of COVID-19 on industry Modestus Anaesoronye

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he Executive Committee of the International Association of Insurance Supervisors (IAIS) has met over impact of the coronavirus disease (COVID-19) on the global insurance sector and the IAIS’ activities.

The rapid global spread of COVID-19 and the steps taken to limit contagion are having a significant impact on the global economy and, consequently, on the financial system. Insurers are exposed on both sides of their balance sheets; on the liability side because of changes to interest rates as well as the potential increase in claims and on the asset side due to market volatility.

Insurers are generally wellcapitalised with sophisticated risk management capabilities, which should help the sector as a whole to withstand the shocks associated with COVID-19. Insurance has an essential role to play during a

Sunday Thomas, acting commissioner for Insurance

pandemic event such as COVID-19, providing protections to individuals, households and businesses. IAIS member supervisors remain vigilant in terms of the financial soundness and operational resilience of insurers, in support of the protection of policyholders and the maintenance of financial stability.

The IAIS’ work over the past decade on enhanced international standards for supervision of the global insurance sector has contributed to more advanced risk management and greater resilience in the insurance sector. IAIS members are also pursuing a range of regulatory and supervisory measures to provide operational relief to insurers in the wake of the COVID-19 outbreak and to provide appropriate flexibil-

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ity to help insurers maintain their safety and soundness and deliver the essential services they provide to policyholders and the economy.

A number of IAIS members have also adopted measures to support fair treatment of customers, including clear disclosure and efficient claims processing in light of COVID-19 developments.

The IAIS supports the implementation of these various measures by its members and will continue to facilitate the sharing of information on supervisory measures being taken or planned in this regard.

The IAIS also agreed on the following initial adjustments to its work programme to provide operational relief to our member supervisors, insurers and other stake-

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holders, while continuing to further a coordinated supervisory response at the global level in support of policyholder protection and the maintenance of financial stability: The IAIS will utilise the framework it has developed in recent years for forwardlooking risk assessment to undertake a targeted assessment of the impact of COVID-19 on the global insurance sector; The IAIS, in consultation with the Financial Stability Board (FSB), will review the 2020 timelines for the implementation of the Holistic Framework for the mitigation of systemic risk in the global insurance sector; The IAIS will review and adjust the timelines for the data collection for the Insur@Businessdayng

ance Capital Standard (ICS) confidential reporting in 2020, as well as the Aggregation Method (AM) data collection being supported by the IAIS. As a first step, the submission deadline will be extended to 31 October, to provide operational relief to participating insurers. In the current circumstances, submissions should be on a best efforts basis. The IAIS will monitor the situation closely and propose additional adjustments if necessary. The workplan for development of high-level principles to inform the development of criteria by which to assess whether the AM provides comparable outcomes to the ICS will be adjusted to re-schedule the consultation previously planned for July 2020.

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Wednesday 22 April 2020

BUSINESS DAY

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insurance today E-mail: insurancetoday@businessdayonline.com

Insurers may see premium default over COVD-19 Modestus Anaesoronye

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ome insurance policies that will be due for renewal in the months of March and April 2020, and ordinarily requiring the insured to pay premiums for the new period may suffer renewal lapses.

But with the continuous lockdown across the country over Coronavirus (COVID-19), some insured’s are not able to pay their premiums at this time, meaning that some policies will elapse, except insurers were able to offer some palliatives.

This policy renewal challenge will be more common with consumers of motor insurance, particularly comprehensive covers which because of poor economic situation in the last few years, are now allowed to pay premium bit by bit (monthly or quarterly) as the case may be.

In India for instance, InsurTech Acko General is providing a one-

Tope Smart, chairman, NIA

Eddie Efekoha, president CIIN

month insurance extension to car and bike owners who are unable to use their vehicles during the COVID-19 lockdown period.

Customers, who renew or are first time buyers of Acko’s auto

insurance policy, will need to pay only for 12 months and will get a one-month extension at no extra cost. This initiative will provide relief to customers for the month of the lockdown where their car or

bike has not been used.

For existing Acko customers, the time frame for the one-month lockdown extension is for the full financial year from 2 April 2020 to 31 March 2021.

In addition, Acko is offering a one-month extension of third party and own damage policies at no extra cost.

India’s ministry of finance has announced a grace period for premium payments for third-party policies until 21 April.

Nigeria operates a ‘No Premium No Cover’ regulation, which implies that if the insured were not able pay premium, the policy is assumed to have expired.

The policy though has been in the Insurance Act 2003, was given full enforcement on 1st January 2013, with NAICOM warning then that any insurance company found in its book unpaid premium for policy granted to clients would be sanctioned or license revoked on extreme cases.

“No Premium No Cover” is an import of section 50 (1) of the 2003 Insurance Act which stipulates that “the receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of the insurance risk unless the premium is paid in advance.”

Meristem offers insight into what investors can do amidst pandemic …as insurance recapitalisation continues Modestus Anaesoronye

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eristem Securities, a capital market conglomerate has continued to offer professional guidance to investors seeking opportunities amidst the global economic uncertainty and the COVID-19 pandemic.

The organization is giving insights in a bid to support investors who are willing to preserve their assets and manage their portfolio exposures, as economic shocks ravage the investment climate.

TheCOVID-19 pandemic has caused slowdown in economic activities as a result of strict guidelines of social distancing and in some cases partial and complete lockdown of some states in the federation. These guidelines have further compounded preexisting growth challenges in the domestic front like the crash in oil prices, which contributes a significant amount to government revenues and the nation’s foreign exchange reserves.

Despite this challenge, the organization affirms that pockets of strategic opportunities still exist for investors who are looking to invest in the Nigerian capital market and economy.

With the recent announcement by the International Monetary Fund, that the global economy is in a recession which is at least of the magnitude as the 2009 economic crisis, with a predicted recovery in 2021, Sulaiman Adedokun, man-

aging director of Meristem Wealth Management, while speaking with our reporters stated that “Since the official exit of Nigeria from a recession in Q2:2017, the Nigerian economy has consistently recorded slow growth (under 3 percent) in real Gross Domestic Product (GDP), much below the pre-recession levels of 3-5 percent. Although non-oil sectors such as telecommunications, agriculture and manufacturing have supported real GDP growth, the oil sector continues to be a key determinant of the overall growth of the economy. Thus, the crash in oil prices from an average USD67.31 per barrel in December 2019 to USD32.98 per barrel in March 2020 is expected to have far-reaching consequences for economic growth given the contribution of the oil sector to government revenues and foreign exchange

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reserves.” Commenting across the various sector of the economy “The banking sector is more resilient than previous years, the consumer goods industry is going to be guided by demand for essential items during this time, the recapitalization of the insurance industry is expected to continue amid the current crisis and we see growth in the telecommunications sector due to demand for voice and data services as most businesses now work remotely” He concluded.

Damilola Hassan, head Wealth Management at Meristem stated that “The overall outlook for the financial market though clouded with uncertainties at this moment, we are of the opinion that fixed income securities will provide safer investment opportunities for investors given the volatility that exists in the equities space and the accom-

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panying risk of capital loss associated with such investments, but there are certain equity products that can help to diversify and broaden your portfolio exposure like the recently launched Meristem Value and Growth Exchange Traded Fund..

Coupled with the aforementioned, we expect the downward review of Nigeria’s sovereign rating outlook by global rating agencies and the elevated risk environment to lead to an upward repricing of yields in the fixed income space. We also recommend investments in dollar-denominated fixed income instruments as a means of hedging against foreign exchange risks” Damilola added.

Meristem offers a wide a range of products that cater to all classes of investors regardless of the stage in their financial journey, products like the Meristem Diaspora Trust,

@Businessdayng

Fixed Term Investment Portfolio Tip (Fx-Tip), Real Estate Advantage Portfolio (REAP), Meristem Ethical Earnings Portfolio (MEEP) and a host of other money market and equity market fund, offer varying options to interested investors. The recently launched Meristem Exchange Traded Funds offer hassle-free and cost-effective investment option to investors and with a minimum of N10,000, Investors can have access to a wide range of stocks across different sectors including banking, industrial goods, conglomerate, agricultural sectors and a host of others that meet their investment style criteria. The Exchange traded fund typically mirrors the performance of the index it tracks.

Meristem for the past 16 years has been consistent in value creation and innovation within the capital market space. In 2018, the Nigerian stock exchange awarded Meristem as the best digital broker of the year. In 2018 also, Meristem became the first Nigerian asset management firm to attain compliance with the Global Investment Performance Standards (GIPS) by the CFA Institute. Still in 2018, Meristem received two nominations from Business Day, for the best Money market Fund and Equity Fund. In 2017, Meristem handled the single largest trade in the history of the Nigerian Stock Exchange.

The firm has remained a leading player in Nigeria’s competitive investment market with a solid reputation as a highly professional and client-centric firm.

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Wednesday 22 April 2020

BUSINESS DAY

TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

Automakers to restart operations with testing kits, masks MIKE OCHONMA Transport Editor

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lobal automakers reeling from the pains inflicted on their survival by the rabaging COVID-19 pandemic are accelerating efforts to restart factories from Wuhan to Maranello to Michigan, using safety protocols developed for China even as certain safety measures differ from manufacturer to manufacturer.

Under this move, automakers and suppliers are converging on a consensus that temperature screening, daily health questionnaires, assembly lines redesigned to keep workers 3 to 6 feet (0.9 m to 1.8 m) apart, and lots and lots of masks and gloves can enable largescale factories to operate safely.

The COVID-19 pandemic has thrown the global auto industry into the worst situation since the 2008-2009 financial crises. As the pandemic rages on, consumer demand for vehicles has collapsed as governments have enforced lockdowns in China, Europe and the United States.

In Europe, major automakers have said they hope to begin building vehicles again in midto-late April, while in the United States, several big automakers, including Fiat Chrysler Automobiles, Honda and Toyota are aiming to restart production during the first week of May.

MIKE OCHONMA

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For the Detroit automakers and their suppliers, the shutdown of profitable truck and SUV plants in North America has choked off cash flow.

“We know the protocols to keep people safe,” Gerald Johnson, GM’s executive vice president for global manufacturing, told Reuters in an interview. GM has relaunched vehicle plants in China and kept factories running in South Korea, he said.

Although, GM has not said when it will reopen assembly plants in the United States, other automakers are putting dates out in public, even though health officials and federal and state policymakers are wary of lifting lockdowns too soon.

General Motors’s head of work-

place safety, Jim Glynn, said GM is not persuaded as blood tests are useful. He said GM has studied and adapted measures taken by Amazon to protect warehouse workers, such as temperature screening to catch employees with fevers before they enter the workplace.

At General Motor’s ventilator assembly plant in Kokomo, Indiana, workers and managers have been fine-tuning details such as when employees are handed masks, and when they step in front of a temperature screening device.

Ferrari said it would offer voluntary blood tests to employees who wanted to know if they had been exposed to the virus, Fiat Chrysler and unions are discussing plans for beefed-up health

Lockdown: Avoid cleaning car’s interior with sanitisers MIKE OCHONMA

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ost people held by the global coronavirus-induced lockdwon are wiping down surfaces in their homes and offices with disinfectant wipes and hand sanitisers.

But beware as hand sanitisers which contain alcohol can damage the interior. Hand sanitizers can dry out leather and possibly (when used repeatedly) can cause plastics to crack. According to analysts, just like home and office surfaces, the car interior needs attention and the cleanliness should be considered too.

So, what products should you be using? Soap and water (or dishwashing liquid and water) will do a great job to clean your car’s interior. Plastic, metal or faux metal surfaces should not be damaged by soap and water. Assuming you wipe gently, leather will also respond well.

The steering wheel needs a very good clean, as do other areas that are used regularly such as the climate and audio controls, infotainment systems, window

COVID-19: FRSC begins face mask production for personnel

measures at Italian plants to pave the way for production to restart as soon as the government eases a national lockdown due to expire tomorrow.

Among the proposals from Fiat Chrysler’s Italian unions: move meals to the end of shifts, allowing employees to choose to avoid canteens, eat their food elsewhere and leave half an hour earlier without losing pay.

In the United States, some nonunion automakers have also said they hope to restart vehicle plants as soon as next week like Bridgestone tyre makers that said it plans to restart U.S. production on April 13. But the Trump administration has said people should continue to practice social distancing until April 30.

ederal Road Safety Corps (FRSC) has commenced the production and distribution of customised face masks for its personnel across the country.

This is in response to the recommendations of the Presidential Task Force (PTF) on COVID-19 for all federal government ministries, departments and agencies (MDAs) to procure and distribute locally made face masks for use by their staff as part of established efforts to quell the spread of the virus.

To ensure a timely response to this directive, Boboye Oyeyemi, corps marshal of FRSC, has directed the tailoring unit of the Corps to commence immediate and speedy production and distribution of customised face masks for officers and marshals of the Corps nationwide due to the critical role it plays in the ongoing enforcement of the restriction order nationwide.

Oyeyemi noted that FRSC personnel being at the front line in the enforcement of the Presidential restriction order on Covid-19, they

‘Stallion group will deliver on its COVID-19 promise’ MIKE OCHONMA

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controls and the like. When working on areas containing electronics, disinfecting wipes are better than soap and water. Ensure that the wipes don’t contain bleach.

Furthermore, cleaning a car properly can be complex and the windows are no exception. From time to time, it is necessary to give the upholstery and carpets a good clean too and as much as possible avoid bleach-based cleaners as these will damage your car’s interior.

Use specific purpose-dewww.businessday.ng

signed cleaners instead like a carpet cleaner or a leather upholstery cleaner, for instance. These are readily available online or at aftermarket stores. If you have children who leave toys in the car, don’t forget to give those a very good clean too.

Just as you would not want dirty toys full of germs in your house, the same applies to your car. Like so many other aspects, having a cleaner car is a simple case of time, patience, attention to detail and common sense.

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rpita Roy Luthra, general manager in charge of marketing at Stallion group has assured that, the company will fulfil its project of supplying bags of rice and fish to hospitals designated as centres in the country towards the fight against the coronavirus pandemic in the next 90 days.

The company’s general manager told BusinessDay in a telephone chat this week that, embarking on such a corporate social responsibility is a worthy initiative as it concerns the lives of Nigerians that are affected by the global pandemic.

She assured that, the team saddled with the task of ensuring that, the relief materials gets to the designated hospitals treating the coronavirus scourge are working round the clock to ensure prompt and efficient delivery of the items.

Recently, the Stallion group conglomerate with diverse business interests embarked on CSR campaign towards the ongoing fight against the killer coronavirus Continues on page 19 @Businessdayng

Boboye Oyeyemi

have every tendency of coming in contact with different categories of people including carriers of the infectious disease, and as such deserve to adopt all precautionary measures, especially the constant use of face masks while discharging their statutory functions.

He further stated that the produced facemasks to be distributed to personnel have been certified by medical experts to be fit for use by all staff.

Bisi Kazeem, corp public education officer of FRSC recalled that following the outbreak of the pandemic, the Corps Marshal had supervised the distribution of alcohol based sanitizers and the conventional medical face masks to staff at the national headquarters and other formations including the National Driver’s Licence capture centres.

Wednesday 15 April 2020

BUSINESS DAY

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TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

Train wagons, coaches to be fumigated after COVID-19, says NRC MD MIKE OCHONMA

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New Jaguar XF spotted ahead of 2020 launch MIKE OCHONMA

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py photograph images of the facelifted version of the Jaguar XF undergoing testing on UK roads have been spotted, and there are strong indications that, the British brand’s updated mid-sized saloon will make its debut later this year.

Set to arrive later this year, the new Jaguar XF will sport fresh with a handful of styling and technology tweaks, offering fresh competition for the Mercedes E-Class and BMW 5 Series.

The heavy cladding

around this mule’s nose and tail makes it difficult to pinpoint the car’s exterior revisions. However, if the XF follows the trend of the recently refreshed XE saloon, the updates should be fairly subtle, stretching to a pair of slimmer headlamps, new LED lighting graphics, a fresh radiator grille and a pair of reshaped bumpers.

Jaguar’s interior revisions should be more thorough. Each of the brand’s most recent models have benefitted from a massive technology upgrade, moving to Jaguar’s new Touch Pro Duo infotainment setup. The system

will replace the XF’s aging eight-inch touchscreen and rotary knobs with a 10.2-inch central screen and a secondary display for climate control functions.

Like the XE, the XF’s analogue dials will be replaced with a customisable digital instrument panel. Jaguar’s “Clearsight” rear-view mirror should also feature, allowing the driver to switch between a conventional mirror and images relayed from a rear-facing camera, giving the driver a wider angle view, which is less affected by adverse weather and unobstructed

by rear-seat passengers.

Details on powertrain updates are still scarce, but the new XF is likely to have a similar engine line-up to the current model. Buyers will be offered the same mix of four- or six-cylinder units, ranging in output between 161bhp for the entry-level diesel and 296bhp for the flagship V6-engine petrol model.

A simplified trim level, as used elsewhere in the Jaguar range, is also likely to be introduced, while buyers will be offered the choice of either a comfort-biased base model or sporty, R-Dynamic variant as a starting point.

Kia to suspend Korea production on low demand MIKE OCHONMA

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ia Motors plans to s u s p e n d o p e ra tions at three of its domestic factories as the coronavirus outbreak weighs on exports to Europe and the United States.

The message which was delivered to its labour union has not yet decided whether to accept the plan under which operations would be suspended from April 23 to 29 because negotiations over pay are ongoing, a Kia official said. “ Th e au t o ma ke r i s currently reviewing the suspension of some of its plants in Korea in response to declining global demand due to Covid-19. However, a decision has not been made at this time,” Kia Motors said in a statement.

It would be recalled that Hyundai halted a line

igerian Railway Corporation (NRC) said it will embark on the fumigation of wagons and coaches when the corporation is set to resume operations if the country’s succeeds in battling the coronavirus pandemic that is presently the world like a holocaust.

Fidet Okhiria, managing director of NRC who said last weekend that the orgainsation will not be decontaminating its wagons and coaches for now disclosed that, the exercise would be carried out when the corporation is set to resume operation.

Last week, the Nigerian Railway Corporation (NRC) started the fumigation of its administrative buildings, staff quarters and other facilities within its headquarters in fight against the killer coronavirus pandemic. NRC also plans to carry out such decontamination exercise in all the railway facilities nationwide.

Fidet Okhiria, managing director of Nigerian Railway Corporation told BusinessDay that, the management has committed resources towards fumigating the headquarters as part of organizational intervention and mitigation to deal with risk of exposure to Covid-19 scourge.

According to the NRC managing director, ‘’As we all know, Lagos state is the worst hit by Covid-19 pandemic in Nigeria from statistics available till date, hence the quick Intervention of the NRC management, engaging services of environmental health professionals in collaboration with the Environmental Health Department of the Lagos Mainland Local Government in driving the process of active and targeted.

Okhiria who spoke through the director of operations, NRC, Niyi Alli, said that the corporation is carrying out the exercise at the instance of the NRC management

and commitment backed by resources to facillitate the logistics, manpower, potent decontaminants and the entire project delivery.

The process commenced last Saturday and will continue till every place mapped is covered. Apart from quarters in Ebute Metta, the disinfection effort will cover other NRC quarters at Tejuosho, Rotimi, Mushin, Ikeja and Apapa.

He assured that management will continue to play her role as a responsible and proactive organization committed to public safety especially during this critical pandemic period in the life of our nation and of the world at large.

‘Stallion group will deliver...

Continued from page 18

producing its Tucson SUV in the southeastern city of Ulsan from April 13 to 17.

As at the time of filing this report, Hyundai and Kia Motors have suspended operations at most of their factories outside South Korea and China as

the coronavirus spreads fast beyond Asia.

While government restrictions on movement to slow the spread are impacting consumer spending around the globe, South Korea’s exports for the first 10 days of April

plunged 18.6 percent from the same period a year earlier, far below the 20.8 percent jump over March 1 to 10. Shipments of vehicles and vehicle components during the period tumbled 7.1 percent and 31.8 percent respectively.

scourge.

Sunil Vaswani, chairman of Stallion group while stating that these are exceptionally difficult times, noted that urgent emergency resources have to be deployed to cope with the needs of affected states and support their health care systems. ‘’At Stallion group, our top priority is the health and safety of our employees, customers and our community”.

The Stallion chairman said.

The Stallion team in collaboration with the Lagos state government is also deploying staff buses to ferry health care workers to hospi-

tals dedicated to COVID-19 treatment in Lagos apart from pledging free rice and fish delivery for three months to all the hospitals handling the COVID-19 pandemic.

Frontline health workers will have a dedicated pick up and drop services during the federal government’s directives on enhanced community quarantine.

The buses will be attached to the COVID-19 dedicated hospitals for the next three months to ensure safer and comfortable transportation of the healthcare providers who are in the frontline in the fight against the corona virus.

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Wednesday 22 April 2020

BUSINESS DAY

Harvard Business Review

ManagementDigest

Social distancing doesn’t have to disrupt mentorship David G. Smith and W. Brad Johnson

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hile continuing to lead direct reports and collaborate with customers remains a business imperative in the new “workplace,” don’t forget your mentees. Great mentors show up and engage with mentees in crises and uncertain times, even when that requires creativity and adaptation. There are several reasons not to let your commitments slide.

First, mentors play a pivotal role in safeguarding retention and building organizational commitment, particularly in times of crisis. Second, at their best, mentorships are life-altering relationships that inspire mutual learning and development. Finally, moments of adversity offer golden opportunities to create indelible mental maps of what excellent mentoring looks like. Here are several additional recommendations for continuing and deepening your mentorships in a time of social distancing: — COMMUNICATE WITH YOUR MENTEES, BUT DON’T ASSUME YOU UNDERSTAND

THEIR SITUATIONS: Reach out, ask how they are faring, learn about their unique circumstances and stressors. If they’re amenable, find time for a phone call or a video meeting, even if for only a few minutes.

— MAKE ADJUSTMENTS TO ESTABLISHED NORMS: If a mentee is eager to continue with tele-mentoring, figure out a new rhythm and the best me-

dium for meeting in the online environment.

— BE AUTHENTIC, AND WELCOME RECIPROCITY: Sharing your situation makes mentees more comfortable sharing theirs. Don’t miss the opportunity for a good laugh if children or pets integrate themselves into a meeting!

— SHOW CARE AND COMPASSION: Test your listening

skills, and focus on your mentee’s concerns.

— ADDRESS CONCERNS THROUGH COPING SKILLS: Offer support that will enable your mentees to overcome challenges on their own.

Although social distancing is necessary during the pandemic, it doesn’t mean you can’t remain close with your mentees. Use this period to explore

new ways of staying connected, show that you care, validate feelings of distress, develop talent and challenge yourself to get out of your mentoring comfort zone.

(David G. Smith is a professor at the U.S. Naval War College. W. Brad Johnson is a professor at the U.S. Naval Academy.)

The coronavirus puts corporate social responsibility to the test Mark R. Kramer

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or much of America, the current crisis is one that requires the kind of immediate action that only companies can take.

When the U.S. drugstore chain CVS chose to go more deeply into health care, it decided that it could no longer sell tobacco products, giving up $2 billion in revenue. When my social-impact-consulting firm, FSG, encountered the 2008 recession, we made a decision not to lay people off, but instead to reduce salaries on a sliding scale so that those who made the most took the deepest cuts.

People still talk about that decision, and we have decided to repeat it now.

I understand that corporate leaders face pressure from investors and bankers to conserve cash and reduce losses, but neither investors nor bankers will go hungry. Here are some things that companies can do to help their employees, small suppliers, health care providers and communities:

— EMPLOYEES: Continuing to pay wages, even at less than full pay, is one option. This is essential not only as a matter of corporate responsibility; it will also substantially reduce the costs of rehiring employees when the economy returns to normal.

Lending money to employees is another option. Corporations should use their corporate credit and collateral to arrange low- or no-interest loans. They should calculate employees’ www.businessday.ng

take-home pay after payroll deductions, and ask their banks to make loans available equal to a month of net wages at 3% interest, guaranteed by the corporation. Employees can pay the loans back over the next year out of their salaries when they return to work.

In all likelihood, very few of a company’s employees will actually require medical care, but if they have no insurance, care can bankrupt them. Companies should offer to cover the medi-

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cal expenses of all noninsured employees — probably somewhere between 2% and 5% will actually incur significant bills, and companies can negotiate with their insurer an additional premium to cover them.

— SMALL SUPPLIERS: Companies should offer advance payments to their small suppliers, giving them cash today for goods they will need when they return to production. It’s the corporate equivalent of buying gift cards to keep your local @Businessdayng

store in business.

— HEALTH CARE PROVIDERS: As a global company you have access to resources everywhere. Companies should purchase and ship supplies from where they are available to where they are needed. They should tap their inventory of whatever they have that might help, send it where it will do the most good and take the loss.

— COMMUNITIES: Major corporations should use their foundations to aid food pantries, free clinics and other nonprofits in addressing immediate needs of the communities where they have operations.

No one expects or requires major companies to take extraordinary measures to help their many stakeholders, but the bold and creative steps they take today to deliver immediate assistance will define their legacy tomorrow.

(Mark R. Kramer is a senior lecturer at Harvard Business School.)

Wednesday 22 April 2020

BUSINESS DAY

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BANKING Covid-19 lockdown: Futher slowdown in banking sector credit growth Stories by HOPE MOSES-ASHIKE

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OVID-19 has had a direct dampening impact on economic activity in Nigeria through widespread movement restrictions since the index case was uncovered in February 2020.

President Muhammadu Buhari on March 29, 2020 in a nationwide broadcast ordered the restriction of movement in Lagos, Ogun and Federal Capital Territory, Abuja, as a result of the persistent spread of Covid-19 in the country.

The banking industry is not left out in the dampening impact of the Covid-19 lockdown as analysts at FBNQuest have anticipated further slowdown in banking sector loan book expansion due to the lockdown, notwithstanding the pressures of the Loan to Deposit Ratio (LDR).

Private-sector credit extension continues to grow at a double-digit rate y/y although the latest data suggest a loss in momentum, according to a report by FB-

NQuest.

The expansion in February has fallen a way behind that for nominal GDP: this will be a concern since financial intermediation in Nigeria lags many peer economies, the analysts said.

Private-sector credit/ GDP remains below 20 percent of GDP, and the authorities will be looking for healthy acceleration.

“The reporting season for the listed banks for Q1 2020

is shortly to begin, and we look forward to hearing their guidance on loan book expansion,” the analysts said.

According to the report the difference between the M2 and M3 measures of money supply consists of CBN bills held by money holding sectors. These would generally be bills issued within its open market operations (OMO).

The difference at the end of February was N4.25trn, compared with N8.06trn

at end-November, and the sharp fall is consistent with the exit of offshore investors in OMO bills.

The MPC last month noted an increase of N2.35trn in aggregate credit between end-May 2019 and end-February. It identified the main driver as the cbn’s steady increass in the minimum loanto-deposit ratio for deposit money banks (DMBs), to 65 percent as at end-December.

The differentiated cash reserve requirement for banks

was a secondary factor according to some committee members.

“It is quite encouraging that most financial soundness indicators have remained strong notwithstanding the rapid expansion in credit –strong Tier 1 capital (88.2 per cent of the total qualifying capital at end-February 2020); relatively low non-performing loans (NPLs) ratio; rising industry capital adequacy ratio (15.0 per cent in Feb-

ruary 2020 from 14.5 per cent in December 2019); and growing industry size,” said Edward Lametek, a member of the MPC and former deputy governor of CBN. He said Sustaining the stability of the banking system continues to be a key policy priority on it own merit and in view of its importance in the economic growth process.

Aishah Ahmad, deputy governor, financial systems stability directorate, noted there are imminent risks to the banking sector arising from the spillover effects of the COVID-19 pandemic.

She said at the last MPC meeting that there was potential default risk by obligors with oil-related repayment sources, or others unable to meet obligations due to the economic downturn, increased concentrationof oil and gas exposures, deterioration in the foreign currency asset book, pressure on capital adequacy from currency depreciation, pressure on liquidity from reduced trading lines and heightened exposure to cyber threats.

Ecobank advises informal sector to embrace instant account opening

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in a bid to check the spread of the virus.

The bank’s mobile channels- Ecobank Mobile and *326# make it easy to open the Ecobank Xpress account, an end to end digital account instantly. With this account, customers are able to receive funds, send money, buy airtime and carry out basic banking transactions from the comfort of their homes.

No paperwork or documentation is required, everything happens on mobile. In addition, Ecobank had since last year, waived the USSD session fees, thereby making it possible for users of the bank’s USSD, *326# to transact at zero session charges.

Olukorede Demola-Adeniyi, head of consumer banking, Ecobank Nigeria, noted that “every Nigeri-

cobank Nigeria is encouraging unbanked and underbanked Nigerians which include artisans such as mechanics, carpenters, electricians, small scale retailers, transporters and others who depend on daily earning for survival, to open bank accounts instantly simply by dialing the bank’s USSD code*326#.

According to the bank, owning bank accounts will enable them save easily and access micro loans (Xpress Loan). This will also enable them easily receive monetary support from friends and family members as the need arises, especially during the period of the COVID-19 lockdown, while maintaining social distancing via digital transactions, www.businessday.ng

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an should as a matter of necessity have bank accounts that can aid them to save quickly, access loans and other financial support when the need arises”.

Furthermore, she reiterated that “Ecobank Mobile and *326# bring easy, affordable and convenient financial services to the youth and members of the public who hitherto had no access to formal banking services.

Ecobank Nigeria had earlier announced a zero charge for digital money transfers below N5,000 for its customers until April 30, 2020” as part of the bank’s initiatives to encourage affordable, safe banking during the lockdown.

According to Demola-Adeniyi, beyond owning bank accounts, every customer @Businessdayng

of the bank can utilise the bank’s several digital offerings, thereby making it easy for them to transact safely and conveniently from the comfort of their homes.

“We are determined to support the Nigerian government by ensuring that the impact of the lockdown is minimal on citizens. We encourage every Nigerian to make use of our self-service digital solutions such as Ecobank Mobile *326#, Ecobank Online, EcobankPay, Ecobank Omni Plus, Omni Lite and the Rapidtransfer App to carry out their personal and business transactions without having to visit branches.

This is part of our efforts to ensure social distancing which will help curtail the spread of COVID-19”, she stated.

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Wednesday 22 April 2020

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Brazil’s ‘coronavoucher’ holds financial inclusion lessons for Nigeria Stories by Endurance Okafor

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aving almost the same unbanked population as Nigeria, Brazil with a new technologydriven financial inclusion exercise-coronavoucher holds lessons for Nigeria’s cash-based economy which is largely dependent on banks for access.

The Brazilian government recently launched the emergency aid programme aimed at giving support to 54 million of its population who became financially vulnerable as a result of the coronavirus crisis.

Through the country’s central bank- Caixa Econômica Federal (CEF), Brazil is paying its vulnerable population 600 reais ($117) monthly until June through the coronavoucher. This includes millions of previously unbanked citizens, who are being provided with a mobile-based savings account.

As of April 8, 2020, 24 hours after the emergency aid registration website and app went live, CEF said it had processed applications from over 25.1 million Brazilians. Of that total, 39.3 percent were reported to have opened the digital account offered by the bank to receive the monthly payments.

The digital account of Brazil’s coronavoucher provides basic functions such as payments and transfers. With no plans of issuing physical cards, the five main telecommunications providers operating in the country – Algar, Claro, Oi, TIM and Vivo – are enabling free access to the app.

The database of socially vulnerable citizens handled

by Dataprev, the social se-

curity technology company owned by Brazil is automatically assessed and validated against the personal information of citizens applying for financial aid through coronavoucher.

According to CEF, the website where citizens can sign up for the financial support programme had 240 million views since launching on April 7, 2020. Some 62 million SMS messages had been sent to confirm the requests.

Data by the bank show that the Android version of the emergency aid registration app had been downloaded by 21.8 million users, while the iOS version saw 699,000 downloads.

A large number of Brazil’s unbanked population is expected to receive emergency assistance from the government through the coronavoucher, a boost to the country’s 79 percent financial inclusion rate.

Meanwhile, Nigeria with almost 40 million unbanked population, one of the highest financial exclusion rates in Africa at 36.8 percent prefer red cash instead of electronic transfers in cushioning the economic impact of the coronavirus

pandemic on its vulnerable population.

Just like Brazil, Nigeria has put up measures to ease the pressure coronavirus crisis is having on the income of many households, particularly the most vulnerable in society. The Federal government through the Ministry of Humanitarian Affairs embarked on a Conditional Cash Transfer programme. The National Social Investment Programme (N-SIP), a department under the ministry, handles the cash transfers through its Household Uplifting Programme (HUP).

So far, the Federal Government has rolled out the Conditional Cash Transfer (CCT) palliative in Anambra, Katsina, Kogi, Plateau, Oyo, Kano, Cross River, Bauchi, Adamawa, and Nasarawa states.

“Two days ago at the task force meeting, the Head of Service told me that the conditional cash transfer from the Federal Government would be N20,000 to people in 10 local government areas of Oyo State,” Seyi Makinde, governor of Oyo State said regarding the outcome of the programme in his state.

But, with the choice of physical locations for the conditional cash transfer programme Nigeria is losing an important opportunity to reach the population of financially excluded through digital payment channels which are safer and costeffective.

In every state the programme has reached, it involved the expensive logistics of transporting bags of cash escorted by heavily armed security personnel to physical locations, long queues by residents and handing over of N20,000 by officials of HUP in the open.

Apart from the security risks this portends, the programme has come under heavy criticism with some people alleging that the process of selecting beneficiaries and disbursement lacks transparency.

To spur inclusive access to financial services in Nigeria, industry experts have recommended the use of electronic payment channels like mobile money and USSD as they have been identified as the easiest way to reach the unbanked population.

“Longer-term, we run the risk of more Nigerians be-

coming financially excluded as a result of this crisis, at the exact moment when they as individuals and the overall economy would need their participation the most,” said Ashley Immanuel, head of Programmes at Enhancing Financial Innovation & Access (EFiNA) said.

Unlike the Telecommunication companies in Brazil, Telco operators in Nigeria which according to the data by the Nigerian Communications Commission (NCC) has a reach of 86 percent, and 182.7 million customers, the single largest customer base in the country have not been given the opportunity to provide financial services despite showing interest.

Telcos in Africa’s later economy are cur rently awaiting the Central Bank of Nigeria for a mobile money licence.

Telecommunication operators’ push to offer mobile money service officially got a nod by the central bank of Nigeria with the issuance of guidelines in October 2018 for players to apply for the licence to operate as payment service banks (PSB).

Before October 2018, only banks and licensed financial institutions were allowed to provide financial services in Nigeria.

Although telecom operators and other Fintech companies indicated interests to operate in the market, the CBN policy would not allow them.

The regulator eventually shifted because of the increasing rate of financially excluded people in Nigeria and the lack of progress in getting banks to provide financial services to people living in areas that lack access.

But after almost one year and a half since the apex loosened its policy to ac-

commodate new players in Nigeria’s financial services industry; the direction of the mobile money initiative remains unclear.

According to EFInA, the organization that conducts biennial report for Nigeria’s financial inclusion industry the Central Bank of Nigeria is unlikely to achieve its target of 80 percent financial inclusion rate at the end of this year.

Haven covered Nigeria’s financial inclusion space in the last 12 years, EFInA said the 20 percent exclusion target is unlikely to be achieved due to the country’s widening exclusion rate.

It said even though its 2018 data shows that more people became financially included, the financial inclusion pace was however not matching the country’s population growth rate.

“What we saw between the 2016 and 2018 data was that more people were becoming financially included but not at the same pace as the population growth rate which is why the 80 percent target of financial inclusion for this year or conversely the 20 percent exclusion target is unlikely to be met if we are all particularly realistic,” Ademola said.

The Central Bank of Nigeria through its National Financial Inclusion Strategy (NFIS) plans to ensure that 80 percent of Nigerian adults are included in the financial net by the year 2020.

The 2018 data by EFInA put Nigeria’s financial inclusion rate at 63.2percent, meaning that as much 36.8 percent still lack access.

If the apex bank is to achieve its objective through the strategy launched seven years ago, it would have to bridge the 16.8 percent inclusion gap before year-end.

EFInA recommends financial service agents for FG’s palliative distribution

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o distribute palliatives to households who have been affected by the coronavirus pandemic Enhancing Financial Innovation & Access (EFiNA) has recommended the use of financial service agents to also open bank accounts for the beneficiaries.

Estimated at 300,000 across Nigeria, financial

services agents who are important rail for providing financial services, especially in hard to reach areas were recently excluded from the Central Bank of Nigeria’s list of financial institutions exempted from government lockdown restrictions.

“The Nigerian government can use financial services agents to drive

account opening among beneficiaries of cash transfer programmes, which will not only cushion the effect of the pandemic but also contribute to Nigeria’s financial inclusion drive,” H e n r y C h u kw u , A g e n t Banking Programme Manager at EFInA told BusinessDay by mail.

The financial sector organization also advised that

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Financial service providers (FSPs), should come up with measures to support agents during this pandemic period.

It said their support could be through the provision of soft loans, equipping agents with personal protective equipment (PPE), and online training on precautionary measures that agents can take to re-

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duce the risk of infection.

“FSPs also need to seek business collaboration that can stimulate transaction flow at agents’ locations to help agents remain active and profitable,” Chukwu said.

According to EFInA, financial ser vices agents have been playing an important role in their communities for many years as @Businessdayng

they have been extending access to financial services to underserved Nigerians.

“They can now play a critical role in helping those communities through the COVID pandemic. We must work together to support agents in operating safely and to identify ways in which agent networks can help us weather the coming storm,” it said.

Wednesday 22 April 2020

BUSINESS DAY

23

tax issues COVID-19 pandemic: FIRS announces additional palliative measures for taxpayers Iheanyi Nwachukwu

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he Federal Inland Revenue Service (FIRS) has announced the following additional measures to further manage the impact of the Coronavirus disease (COVID-19) on taxpayers.

The measures include: waiver of late returns penalty for taxpayers who pay their tax liabilities early but submit their tax returns later.

Evidence of tax payment can be forwarded to the relevant FIRS e-mail address, or submitted later to the appropriate tax office.

FIRS has also extended timeline for remittance of VAT from the 21st day to the last day of the month, following the month of deduction; taxpayers facing challenges in sourcing foreign exchange (FOREX) to settle tax liabilities on their FOREX-denominated transactions are permitted to pay the Naira equivalent, based on the prevailing Investors & Exporters FOREX window rate on the day of payment.

The FIRS also extended personal income tax (PIT) returns filing deadline for personnel of Foreign

Affairs, Military and Police, and non-resident persons by three months to June 30, 2020 and indefinitely suspended all field tax audit, investigation and monitoring visits.

Following the paliative meas-

ures, KPMG expects the FIRS to continue to review the COVID-19 situation and introduce additional palliative measures for business survival in this challenging time.

“We commend the FIRS for in-

troducing additional measures to help reduce the effects of COVID-19 on taxpayers. While, the phrase “early payment” was not defined, it can be taken to mean payment in advance or by the last due date for

payment.

“However, beyond granting waiver of penalty and interest in such instance, the FIRS should consider waiver of interest and penalty where a taxpayer files its tax returns by the due date, but is not in a position to fully pay its tax liability at once due to the severe impact of COVID-19 on its cashflow. France, Netherlands, Austria and Belgium are examples of countries that have announced plans to waive interest and penalty on any late payment of income taxes during the pandemic”, KPMG tax experts said in their April 20 note.

“We also laud the FIRS for permitting companies to settle their FOREX-denominated tax liabilities in Naira. At the same time, the FIRS should be willing to allow such taxpayers the flexibility to pay their tax liabilities in instalments if they are not liquid enough to make the payment in a lump sum.

“Lastly, the extension of PIT filing deadline and indefinite suspension of field tax audit, investigation and monitoring visits by the FIRS are steps in the right direction given the need to maintain social distance in order to curtail the spread of COVID-19”, KPMG stated further.

‘Tax, fiscal policy responses should continue to support households, businesses’ Iheanyi Nwachukwu

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ax and fiscal policy responses are playing a critical role in limiting the hardship caused by containment measures, and should continue to do so as governments seek to support households and businesses, protect employment and pursue economic recovery from the global pandemic, according to new analysis by Organisation for Economic Co-operation and Development (OECD).

Tax and Fiscal Policy in Response to the Coronavirus Crisis, a report requested of the OECD by the Saudi G20 Presidency, was presented during a virtual meeting of G20 Finance Ministers and Central Bank Governors.

The report takes stock of the emergency tax and fiscal policy measures introduced by countries worldwide. It discusses how tax and fiscal policy can cushion the impact of continued containment and mitigation policies and subsequently support economic recovery. It also outlines the major policy reforms that will be needed to prepare for restoration of public finances.

The report shows that while many governments have taken rapid, extensive and often unprecedented action, getting the support to the most vulnerable households and firms still poses significant challenges. It underlines that developing countries will need specific support - notably significant financial support – for helping health and fiscal systems withstand the current shocks.

“Tax policy responses have been strong and rightly focused to date on providing liquidity,” said OECD Sec-

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retary-General Angel Gurría. “This has helped maintain confidence through an unprecedented shock.

These efforts will need to continue as containment is relaxed gradually, to ensure a strong recovery.

We should meanwhile map out the trajectory to a tax system that can help restore public finances while sharing the burden evenly.”

Maintaining business cash-flow has been a core goal of the fiscal policy measures. Measures include extending deadlines for tax filing, deferral of tax payments, faster tax refunds, more

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generous loss offset provisions, and some tax exemptions.

Governments have also helped businesses retain their workers through short-time work schemes or wage subsidies, and have extended income support to households, eased access to and expanded eligibility for sick-leave benefits, and sometimes broadened the coverage of unemployment benefits to selfemployed workers.

The report points out that as containment is gradually relaxed, expansionary fiscal policy may be

@Businessdayng

needed for a sustained period to stimulate broader household consumption and business investment where recovery is anaemic. Stimulus could foster resilience to health risks and encourage decarbonisation, while policy coordination will make stimulus more effective.

Tax policy can contribute to covering the costs of the crisis, according to the report. The unprecedented nature of the crisis should prompt debate on how wide-ranging tax reforms, including solidarity levies, carbon taxes and supporting greater progressivity across the tax system, can help governments better restore public finances. Lowincome countries could benefit from new international efforts to address the challenges they face in taxing cross-border activity and offshore assets.

Addressing the tax challenges posed by digitalisation of the economy, and ensuring that Multinational Enterprises pay a minimum level of tax, will become more prominent issues after the crisis. The increased use of digital services and the need to collect more revenues could provide new impetus to efforts to reach agreement internationally, the report said.

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Wednesday 22 April 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Shipping firms, terminals fail to meet dollar obligations to NPA, NIMASA over lack of FX

…As Shippers’ Council rolls out new guideline to service providers amaka Anagor-Ewuzie

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hipping companies and terminal operators that have dollar payments to the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA), are currently failing to meet their financial obligations due to their inability to access foreign exchange during lockdown, the Nigerian Shippers’ Council (NSC) has said.

According to the Council, international trade is now seriously hampered as shippers do not have access to foreign exchange for importation and export purposes.

Stating these in a statement released over the weekend, the Council called on the Central Bank of Nigerian (CBN) to direct banks to provide foreign exchange to shipping companies to enable them fulfill their financial obligations to government agencies.

Meanwhile, the Council has also rolled out new operational guidelines to banks, terminal operators, shipping companies, truckers and other service providers to ensure smooth operations at ports within the period of lockdown.

According to NSC, banks needs to support international trade, port operations and ensure unhindered port services by opening more branches within the port area to receive duty payments, confirm payments for bank drafts as well as online

APM Terminals charters aircraft to deliver health supplies to Nigeria amaka Anagor-Ewuzie

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P M Te r m i n a l s , a top container terminal operator, has paid for a chartered flight to deliver vital health supplies acquired under the auspices of the United Nations to support the fight against Coronavirus pandemic otherwise known as COVID-19 in Nigeria.

Mo ha m m e d A h m e d , managing director of APM Terminals Nigeria, who confirmed this development over the weekend, said the chartered flight delivered the essential items to Nigeria last Thursday April 16, 2020.

“It is very important to keep the flow of food supplies, medicine and personal protective equipment (PPE) running to be able to navigate through the COVID-19 breakout. Therefore, we are happy to support in flying vital equipment to families in Nigeria,” Ahmed said.

Ahmed said this was in addition to the contribu-

tion of USD200,000 (over N75 million) to the United Nations in Nigeria Basket Fund, and the contribution of another N200 million directly into the Federal Government’s COVID-19 Relief Fund Account at the Central Bank of Nigeria (CBN) to boost government efforts in addressing the pandemic.

He also recalled that the company spent an additional N25 million on creating community awareness through the media as well as fliers to sensitise Nigerians about the pandemic.

The chartered flight, which landed at the Murtala Mohammed International Airport, Lagos brought in various health items made up of 10,000 test kits, 15 oxygen concentrators, and various PPE, vaccines, IEHK/ PEP kits, and other vital health supplies acquired by the UN. The supplies will support the Federal Government, through the Nigeria Center for Disease Control (NCDC), to prevent and respond to the COVID-19 pandemic in affected states www.businessday.ng

across the country.

“COVID-19 is no respecter of persons, boundaries or territories. All hands must therefore be on deck to curtail its spread across the world. Our various contributions, which collectively amounts to over N400 million so far, show our high esteem for the country and for our people. We believe that when we work together, we will overcome this pandemic soon,” Ahmed said.

He also emphasised the importance of strict adherence to the various safety measures issued by the World Health Organisation (WHO) and NCDC in curtailing the virus.

Ahmed further requested importers to take delivery of their containers lest the terminals become congested.

APM Terminals in both Apapa and Onne has continued to provide uninterrupted services during the lockdown. Measures such as providing hotel accommodation around Apapa for personnel have ensured smooth operations.

transfers and provide foreign exchange to shippers, shipping line agents and terminals.

The Council fur ther noted that terminals and shipping companies need to provide decent waiting areas for port users in order

to improve on the level of compliance to social-distancing guidelines within their environment.

“Shipping companies and terminals should upgrade their online services to discourage human contact especially during the COVlD-19 period and provide functional helplines to enable agents make necessary inquiries and obtain information to avoid physical presence. This was in addition to improving on the level of service delivery and reduction of delays,” said the statement signed by Hassan Bello-led management of the Council.

Worried that many shippers are not taking delivery of their cargo from the port, the Council advised freight forwarders to patronise online platforms of the service providers for submission of documents, rotation number in order to minimise physical presence in terminals, banks and shipping company premises.

“We appeal to all freight forwarder to be orderly at all the service points to facilitate quick delivery of cargoes. Unless it is absolutely necessary, freight forwarders should stay at home and meet the terminals and shipping companies only when they have business that cannot be done online,” NSC stated.

On truckers, NSC noted that most truckers were not evacuating cargo from the port and returning containers to holding bays, adding that truckers were also not observing COVID-19 health and safety guidelines.

While noting that costs charged by truckers are prohibitive, the Council insisted that truckers should be guided by the agreed Indicative Haulage Rates issued by Nigerian Shippers’ Council.

The council also appealed to the police to desist from harassing and arresting legitimate port workers during the lockdown in Lagos, Ogun and other states.

NPA extends suspension of terminal storage fees by 14-days amaka Anagor-Ewuzie

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he Nigerian Ports Authority (NPA) said it has directed all terminal operators to extend the suspension of all applicable terminal storage fees on consignments for another 14 days effective April 13, 2020.

NPA, which attributed this to the extension of lockdown order by the Federal Government in response to the coro-

navirus outbreak otherwise known as COVID-19, said the suspension was part of the relief measure to port users, who found it difficult to take delivery of their consignment.

“We recognises the pressure, which COVID-19 pandemic imposes on businesses, the responsibility imposed on the Authority to relief this burden on its customers as well as attain the objective of the Federal Government’s Ease of Doing Business Policy at this trying period,” said Jatto

Adams, general manager, Corporate and Strategic Communications of NPA in a statement issued over the weekend.

To Jatto, the Authority had already stated that compensation to terminal operators would be as spelt out in its April 8, 2020 letter to terminal operators.

He warne d that NPA would not tolerate any form of non-compliance with the directive and not hesitate to apply the appropriate sanctions to defaulters.

SALS commends NPA, NSC for granting demurrage waivers to shippers amaka Anagor-Ewuzie

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hippers Association Lagos State (SASL) has commended the Nigerian Ports Authority (NPA) and Nigerian Shippers’ Council (NSC) for securing demurrage and storage waivers for cargo owners to cover the period of compulsory lockdown embarked on to contain the spread of COVID-19 pandemic.

To SALS, the lockdown made it impossible for shippers to pay Customs duties as expected because many banks were shut down.

“Factories and offices were

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also shut. So, there were gross limitation on shippers to do the needful. Shippers should not be sanctioned for a situation that was no fault of theirs,” said Jonathan Nicol, president of SALS. Nicol, who estimated losses to the lockdown at over N5 trillion, appealed to the Council to prevail on Standards Organisation of Nigeria (SON) and NAFDAC to emulate the NPA to waive their handling charges on cargo for the period of battling the pandemic, stating that the offices of these agencies were shut as well.

He also commended the Council for the Regulation of Freight Forwarding in Nigeria @Businessdayng

(CRFFN) and freight forwarders for their sacrifices and continued activities during this period.

While stating that a lot of empty containers would have been evacuated as well to ease movement of trucks in and out of Apapa Port, Nicol pointed out the need for all to come together to make Nigerian port environment enviable.

“We suggest that shippers who paid demurrages to terminal and shipping operators should provide receipt of payment and their terminal Delivery Order because we would approach the Council to ensure that people get a refund,” he assured.

Wednesday 22 April 2020

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FG envisages spike in confirmed cases...

Continued from page 1

We note the particular the

Babajide Sanwo-Olu (m), governor, Lagos State, briefing the press during the state COVID-19 update at Lagos House, Marina. He is flanked by Akin Abayomi (l), commissioner for health, and Tayo Ayinde (r), chief of staff.

For Nigeria, investment-led growth is...

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certainty for Nigeria and as President Muhammadu Buhari is set to appoint a new Chief of Staff to replace his longtime trusted confidant Abba Kyari who tragically died from the Coronavirus.

Exposed for its lack of economic diversification and faced with the prospect of its worst economic crisis in 40 years, Nigeria may now have all the excuse it needs to jettison its largely unsuccessful statist approach to the economy and adopt an investment-led strategy that relies on privatisation and attracting Foreign Direct Investment (FDI).

With oil receipts under threat from the coronavirus-induced slump in demand which has left millions of Nigeria’s bonny light crude unsold and prices as low as $12, the government’s already stretched resources will be further exposed.

That w i l l n o t o n l y threaten the financial stability of the 36 states heavily reliant on federal allocations to pay their bills but also significantly hamper the implementation of the federal budget, putting an already battered economy in worse shape.

That’s particularly disturbing for Nigeria which has largely shuned private capital in the last five years while favouring debt capital. The problem is the room for debt has narrowed given how much Nigeria already commits to debt servicing.

In the face of thin options, adopting an investment-led strategy to economic growth may be the only way the economy stays on its feet, according to economists and political analysts.

“There aren’t many options at this time for the government, it’s not feasible to borrow so much neither can government revenues trigger an economic resurgence,” one senior investment banker told Business day.

“However, it will take much more from the government at this time to convince private investors that the country is open for business and needs their capital,” the person said.

“The priority should be how do we get foreign direct investment on a large scale to help the economy through the hard times post-Covid.”

There aren’t enough opportunities for Foreign Direct Investors (FDI) looking to park their cash in Nigeria.

That’s because Abuja has maintained its 100 percent ownership of key infrastructure, including rail transport, pipelines, power transmission, stadiums, public universities and tertiary hospitals across the country, effectively limiting options for private investment in the country.

Even the oil and gas sector, which has typically attracted the larger chunk of new FDIs to the country, has come unstuck, as a set of fiscal reforms (contained in the Petroleum Industry Bill, meant to unlock new investments) has stalled for decades.

The lack of investmentfriendly reforms has been telling. FDI flows fell to $2.2 billion in 2018, the lowest in 13 years, according to United Nations Conference on Trade and Development (UNCTAD).

Many of Nigeria’s peers recognize the benefits of financial globalization www.businessday.ng

and have implemented reforms to attract record inflows of FDI, by liberalizing infrastructure, and privatizing a growing share of government ownership in infrastructure assets.

With its Liberalization, Privatization and Globalization (LPG) policies since 1992, India is a worthy example of this.

Saudi Arabia, with its National Transformation Plan (NTP) announced in 2016 and the 16-sector privatization programme announced in 2017, is fast becoming another example of an oil economy serious of diversifying.

By not taking the steps needed to unleash massive inflows of FDI, Abuja has been needlessly exposed to liquidity shortages which has now come back to haunt it.

“The government needs to open new spaces for foreign investors to unlock Greenfield FDI,” one economist said.

“This needs to be done now more than ever.”

Up to the early nineties, Nigeria had a larger stock of Foreign Direct Investment (FDI) than India, South Africa or the United Arab Emirates.

Enter 2018 and Abuja has been left behind, with India now having more than triple, and Saudi Arabia having more than double, Nigeria’s FDI stock.

The need to privatise redundant state assets and adopt the model of the efficiently-run Nigerian Liquefied Natural Gas (NLNG), where the government owns 51 percent and the private sector holds 49 percent, is hardly a new counsel to the government, but it has largely fallen on deaf ears since 2015.

An over bloated public sector desperate to exert itself on business is a

main reason why reforms have stalled, according to Wale Okunrinboye, head of research at Lagos-based Pension Fund Managers, Sigma Pensions.

“The public sector is small but looms large,” Okunrinboye said.

“There is massive private capital waiting on Nigeria to get its head right in terms of implementing reforms before they start pouring in, but there has been a lack of urgency in pushing those reforms,” Okunrinboye told Business Day. Up to the early 1990s, Official Development Assistance (ODA) or Foreign Aid was by far the largest inflow to developing economies like Nigeria, being twice as large as any other inflow.

Until then, developing countries either relied on export revenue or foreign aid.

However, from the mid1990s, FDI, Remittances and Foreign Portfolio Investment (FPI) caught up with and overtook ODA one after the other, as the countries embraced Financial Globalization.

FDI overtook ODA by 1994 and remained the largest type of inflow until 2016. Remittances overtook ODA in 1996 and remained the second largest and the most stable type of inflow into developing countries until 2016 when it caught up with FDI and is now projected to become the largest inflow into developing countries from 2017 onwards.

FPI has proved the most volatile of all inflows often surging past ODA at different points since 1996 but perennially falling below it before surging past it again; backing an earlier claim that FPI is volatile and insufficient in building a sustainable economy.

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concern with Kano and we have engaged closely with the state government,” Aliyu said.

While the Federal Government continues to strengthen measures to address the virus, Aliyu emphasised the need for citizens to comply with the lockdown policy in Lagos, Ogun and the Federal Capital Territory (FCT) and urged them to respect the physical distance, avoid mass gathering and use face masks.

Mohammed Mahmoud, minister of environment, said in its inter-agency collaboration, the ministry was partnering with the Nigeria Civil Aviation Authority (NCAA) and the Federal Airports Authority of Nigeria (FAAN) in the disinfection and decontamination of 125 aircraft and 13 airports across the country to contain the rising concerns on the spread of the pandemic.

“We have mapped out 125 aircraft and 13 airports across the country for decontamination and disinfection,” he said.

Mohammed said there has been environmental health surveillance activity right from the beginning of the pandemic, the purpose of which is advocacy and promotion of hygiene.

“Our coverage area is the 774 local government areas where we have already deployed over 7,000 environmental health officers,” he said.

He said the ministry had also consolidated efforts for grassroots mobilisation, informing that community volunteers were being trained also.

He said the Federal Ministry of Environment, through one of its agencies (the Forestry Research Institute of Nigeria), is producing hand sanitisers which are urbanbased to ensure the containment of the spread of the virus.

“We are distributing this to communities and high risk areas and among the security personnel that are in the process of ensuring that people comply with the lockdown,” he said.

Olorunnimbe Mamora, minister of state for health, disclosed that 23 Rapid Response Teams supporting COVID-19 has been deployed to the states affected by the pandemic, saying the relevant health authorities are doing active case search in communities sequel to the rising spate of community transmission.

He said the strategy requires more testing kits and diagnostics, hence the authorities are assessing additional laboratories for accreditation and will announce more laboratories soon.

The minister said the Federal Ministry of Health has intensified efforts in risk communication at grassroots level and stressed the need to avoid mass gatherings without protecting oneself.

“I, therefore, urge all Nige@Businessdayng

rians to practice hand and respiratory hygiene, avoid mass gathering and put on a face mask at all times. The improvised cloth mask will suffice at community level. Please, always wash, iron and ensure the improvised cloth mask is not dirty,” Mamora said.

“I urge all Nigerians to make this sacrifice for all of us and for our loved ones.

Together, we shall stop the spread of the virus,” he said.

Boss Mustapha, chairman of the PTF on COVID-19 and secretary to the government of the federation, said the task force would immediately commence distribution of medical equipment and consumables available in stock to the states.

The task force had received several consumables, including face masks and test kits, and Mustapha said “the physical distribution shall commence immediately”.

“This will be in addition to the Jack Ma equipment and materials already shared to the states,” he said.

Pursuant to its objectives, the task force had dispatched Chikwe Ihekweazu, director general of the Nigeria Centre for Disease Control, and the WHO representative on the PTF on tour of the states to assess and standardise their infrastructure and their readiness.

So far, the team has visited six states, including Imo, Anambra, Rivers, Delta, Katsina and Kano, with three more states to be covered by Wednesday (today).

Mustapha said the PTF continues to assess the impact of the lockdown preparatory to the submission of a report to PresidentMuhammaduBuhari.

“However, much more work shall be required in the creation of awareness among the people and securing the buy-in of stakeholders. I find it necessary to remind us all that this COVID-19 pandemic is not a joke and it is a global pandemic. I therefore renew the appeal of the PTF to all Nigerians to view it as such and comply with all advisories and directives in the interest of humanity,” he said.

Mustapha assured the states of more collaboration, saying that governors have been at the head of the response, which is encouraging.

“The state EOCs and their treatment centres are in place; there are improved levels of preparedness and response activities – focusing more on strengthening current capacity where they exist over building new structures,” Mustapha said.

“There is obvious need to support the states in strengthening coordination across board. More guidance should be provided in the area of non-pharmaceutical interventions. Particular attention is to be focused on some states with heavy burden, particularly, Kano, and priority is being placed on Intensive State Level Support,” he said.

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Wedday 22 April 2020

BUSINESS DAY

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World Business Newspaper

Oil prices under pressure after sub-zero plunge

Brent crude drops below $20 per barrel for first time in 18 years after WTI crash Myles McCormick, Anjli Raval, Henry Foy and Hudson Lockett

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l o ba l o i l ma rket s remained under intense pressure on Tuesday, with Brent crude dropping below $20 per barrel for the first time in 18 years while other major benchmarks across the world tumbled.

Brent crude, the international oil marker, slipped as low as $18.10, before recovering slightly to trade around $19.50 by midafternoon in Europe.

The fall suggests traders see no immediate let-up in the collapse in crude demand that sent some US oil benchmarks plunging below $0 for the first time on Monday, leaving producers paying for buyers to take their oil away.

The severe drop in demand has coincided with still robust levels of production in the US with oil storage tanks just weeks away from reaching capacity.

“The car is speeding up and market forces will inflict further pain until either we hit rock bottom, or Covid clears, whichever comes first,” said Michael Tran, commodity strategist at RBC Capital Markets.

Coronavirus has sent the oil sector into a state of crisis, with lockdowns and travel bans implemented by authorities slashing global demand for crude by as much as a third this month from pre-crisis levels.

Contracts for the US bench-

Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma © REUTERS

mark West Texas Intermediate for delivery next month tumbled as low as minus $40 a barrel on Monday, marking the first time it had fallen in to negative territory, where it largely remained on Tuesday. The slide was exacerbated by traders seeking to offload any obligations to take on physical product ahead of the contract’s expiry today as storage reached capacity at its delivery point in Cushing, Oklahoma.

The June contract, which held above $20 a barrel on Monday, has also come under heavy selling pressure, dropping 30 per cent to $14.50 as trading began in New

York, suggesting the blowout in the May contract was more than just a technical blip.

“The contagion has spilled over to WTI June 2020 deliveries, which could also be well on their way into the red as we move towards physical delivery dates,” said Louise Dickson at Rystad Energy.

Analysts said both Brent and the June WTI contract were likely to face further downward pressure in the coming weeks, given the supply glut shows little signs of abating.

Plans for unprecedented supply cuts by some of the world’s

biggest producers such as Saudi Arabia and Russia have so far failed to offset the tumble in oil demand. This has prompted officials and Opec delegates to talk up the market in any way they can.

Saudi Arabia said on Tuesday it is prepared to take additional measures, alongside other producers that are part of the Opec+ alliance, to prop up the oil market and achieve market stability.

Riyadh’s state news agency SPA cited a cabinet statement saying: “[The] Kingdom is committed with Russia to implement production cuts over next couple of years.”

For its part, Russia downplayed the collapse in crude prices, saying there was no need to view it as an “apocalyptic” event after its Ural blend, which is loosely based on Brent, fell to its lowest level since 2002 on Tuesday.

“The chaos with futures is absolutely speculative, just a trading issue,” Kremlin spokesman Dmitry Peskov said. “Of course there is no need to give this an apocalyptic hue.”

Wall Street opened lower, with the S&P 500 sliding 1.5 per cent, dragged down by a 2.1 per cent fall in energy stocks.

The oil collapse has also underscored the powerlessness of US president Donald Trump, who had pressured Saudi Arabia and Russia to agree to supply curbs in a bid to support the domestic shale industry.

On Tuesday he said on Twitter he had told the energy and Treasury secretaries to “formulate a plan” to make funds available to energy producers “so that these very important companies and jobs will be secured long into the future”.

European equities also traded lower, due in part to weakness in energy stocks, with the continentwide Stoxx 600 down 2.4 per cent.

In London the FTSE shed 2.3 per cent, while Frankfurt’s Dax slid 3 per cent.

In fixed income, the yield on the 10-year US Treasury fell 0.04 percentage points to 0.572 per cent as investors retreated to the safety of core government debt.

Scores of US public companies take small business rescue funds FT analysis finds that more than 80 listed groups tapped bailout money before it ran out Sujeet Indap

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ore than 80 publicly listed companies have tapped the US Treasury’s $350bn bailout fund for keeping small businesses afloat through the economic shutdown, as the ethics of making use of the scheme are hotly debated in Washington and across corporate America.

While the use of the fund by multinational restaurant chains including Shake Shack sparked public anger and a backlash on Capitol Hill, an analysis of public filings by the Financial Times shows that recipients of the money come from a variety of industries, ranging from radio station operators through to biotechs and coal miners.

Some companies have already shown an ability to raise money in the public markets de-

spite the coronavirus lockdowns.

One recipient, the electric truck start-up Nikola Motor, is in the throes of a merger with a public company that values it at $4bn.

The disclosures, which included more than a dozen filed on Monday alone, will sharpen discussion in Washington about the design of the bailout scheme, known as the Paycheck Protection Program, which was intended to help ordinary businesses keep employees on payroll and to meet basic operating expenses.

The PPP was fully subscribed last week with many mom-andpop entrepreneurs unable to secure funding before the first allocation was spoken for.

Congress is expected this week to add hundreds of billions of dollars to the fund, but there have been calls for greater oversight. Shake Shack, which has a market capitalisation of $1.7bn, said on Monday it would give back its $10m PPP loan after an outcry. www.businessday.ng

“Public companies that have access to other sources of money should not be using this,” said Charles Elson, a corporate governance expert at the University of Delaware. “Small businesses need this pot to survive.”

Ohio-based biotech company Athersys raised almost $60m in a stock offering on Monday after its shares have nearly doubled so far in 2020. Still, the company secured more than $1m through the PPP on Wednesday. The company did not respond to a request for comment.

We are doing everything we can to protect their jobs through this period of uncertainty, which includes applying for the PPP loan Wave Life Sciences Several other pre-revenue or low revenue healthcare and biotech companies were also able to secure loans, which carry interest rates of just 1 per cent and can be forgiven entirely if businesses do not dismiss workers.

The FT analysis of Sentieo

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data identified 83 public companies that had collectively borrowed more than $330m from the PPP, on average $4m each, though the Small Business Administration has trumpeted that the average loan for the programme was just $200,000 among all recipients.

Indiana-based coal miner Hallador Energy took $10m after it had sacked 60 employees in March. Also taking $10m was the data storage company Quantum. Emmis Communications, the dotcom boom star which operates the Hot 97 radio station in New York, borrowed almost $5m, according to a securities filing.

Large restaurant groups including Potbelly and the owner of Ruth’s Chris Steak House disclosed last week that they had each drawn $10m or more, taking advantage of an exemption for restaurant and hotel chains to the rule that otherwise limited PPP funding to businesses with fewer than 500 employees. @Businessdayng

The public company recipients identified by the FT had a collective equity value at the end of 2019 of $12bn.

“We have been able to maintain limited US operations in our lab and manufacturing facility in Massachusetts without reducing our workforce thus far,” said Boston-based biotech company Wave Life Sciences, which took a $7m loan. “We are doing everything we can to protect their jobs through this period of uncertainty, which includes applying for the PPP loan that will be used exclusively to support US operations, including payroll.”

Nikola Motor, whose financial backers include the asset management giant Fidelity and the hedge fund ValueAct, secured its $4bn valuation when it announced in early March that it would merge with blank-check company VectoIQ. Yet it borrowed $4m from the PPP this month, according to a disclosure

by VectoIQ.

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@ FINANCIAL TIMES LIMITED

Chinese iPhone factories cut workers as demand dips

Some of the biggest factories supplying Apple are reducing staff and cutting overtime Ryan McMorrow and Nian Liu

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hinese factories that supply Apple have slowed production and reduced staff as the coronavirus pandemic dents global demand for smartphones and other gadgets.

Foxconn, the contract manufacturer, has paused hiring at its huge factory complex in Zhengzhou, Henan province, which assembles iPhones, according to several workers.

They said that the plant, which employs hundreds of thousands of workers and is nicknamed “iPhone City”, has also begun to cut some of the temporary workers it hired in large numbers in February as it ramped up production after a long pause.

Overtime hours, a staple of factory work that boosts salaries, has been curtailed as well, the workers said, and notices seen by the Financial Times encouraged workers to take holidays.

“We heard the outbreak is very serious in the US. It’s had a big impact on us,” said a worker surnamed Li, who assembles the

Apple CEO Tim Cook visits Foxconn’s ‘iPhone City’ plant in Zhengzhou © Reuters

iPhone 11 model at the plant. Mr Li said he expected a week-long break over the May 1 labour day holiday. Last year he was given one day off.

“We have not worked overtime since April 10,” said another worker surnamed Wang, also on the Apple production line. Mr Wang said temporary workers at the factory were dismissed last week.

Apple closed all of its stores outside of Greater China in March and has only recently started to reopen some of its retail outlets beginning with South Korea last week. “The hit to offline retail goes without saying.

Apple only managed to reopen its first store outside of China on April 18,” said Jia Mo, analyst at market research company Canalys.

TrendForce, a technology industry research company, said it had cut its forecast for Apple smartphone production this year from 200m units to 180m units because of the pandemic.

“The global economy has taken a nosedive, which may induce iPhone users to postpone their phone replacement cycles,” said Mia Huang, an analyst at Trendforce. Goldman Sachs analysts

expect iPhone shipments to fall 36 per cent this quarter.

Taiwan’s Pegatron, another large Apple contract manufacturer, also appears to be cutting workers at its Shanghai factory as demand falls. “About a thousand temporary and third-party dispatched workers were fired,” said one employee at the plant, who asked to remain anonymous.

“The US orders are not coming, so why would we keep all the workers,” he added. Pegatron has also encouraged temporary workers to leave voluntarily.

“Temporary workers normally drift around between big factories but now they have nowhere to go,” said Li Chao, a third-party recruiter for Foxconn and Pegatron. “Workers are being laid off across the country.”

“The only places that are hiring are face mask factories but they are usually small scale and fill up fast,” said Mr Li. Apple and Foxconn declined to comment. Pegatron did not immediately respond to a request for comment.

Tell us about what’s happening around you. Are jobs being cut? Are workers being put at risk? Send your tips and stories to coronavirus@ft.com

What negative US oil prices mean for the industry Monday’s price crash in West Texas Intermediate crude is a nasty sign of a deeply dislocated marDerek Brower, David Sheppard, Anjli Raval and Gregory Meyer

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enchmark US crude oil prices traded with negative prices for the first time in history on Monday, sending shockwaves through the global energy sector.

But what are negative prices and what do they mean for the wider industry?

What happened?

US oil prices traded below zero for the first time ever, meaning producers or traders were essentially paying other market participants to take the oil off their hands.

It is the clearest sign yet that coronavirus, which has cut oil demand by up to a third worldwide, has turned the US oil market on its head.

The price crash came as the US benchmark oil contract, known as West Texas Intermediate, headed towards its expiry date for May delivery, the month when demand hit from lockdowns and travel restrictions is expected to peak.

Each month WTI future contracts, which trade on CME Group’s New York Mercantile Exchange, need to be settled with physical delivery of crude oil, giving a real-

world link to one of the world’s most heavily traded derivatives.

Normally this happens each month without incident or drama.

But Monday was different. Analysts believe a lack of available storage capacity at the WTI contract’s delivery point of Cushing, Oklahoma — known as the Pipeline Crossroads of the World — set off panic among traders holding derivative contracts, who found themselves with nowhere to put the oil.

WTI opened for trading on Sunday night at $18 a barrel. By the end of the day it had dropped to as low as minus $40 a barrel.

“With adequate storage in Cushing unavailable to those who need it, selling intensified,” said Ann-Louise Hittle at consultancy Wood Mackenzie.

“This issue is most intense for May WTI because oil demand is at its weakest, with full coronavirus containment measures in place across much of the US. Storage at the Oklahoma facility is expected to be full within weeks.”

As of April 10, Cushing’s tanks housed 55m barrels of crude, or 72 per cent of working storage capacity of 76.1m barrels, according to the Energy Information Administration. The remaining capacity was www.businessday.ng

not necessarily available to those who had not already leased it.

CME Group said its market was functioning, adding that the negative price suggested that spot and futures prices were converging as designed.

“Today’s negative settlement price in the May WTI futures contract reflects both the global oversupply of crude oil and high levels of storage utilisation in the United States,” the exchange operator said late on Monday.

Traders with long-term leases were probably able to score huge profits. WTI contracts for delivery in June are still trading above $20 a barrel, even though they have fallen from near $60 at the start of the year. Get paid $30-$40 a barrel to take the oil, then sell it forward in the futures market for $20 a barrel.

What will it do to the sector?

Several casualties will be visible as the dust settles on Monday’s unprecedented price rout. They range from traders left holding contracts that lost almost $60 a barrel in a single day, to US industry executives who only a few days ago were hailing an Opec deal that was supposed to put a floor under the oil price. That floor was obliterated on Monday.

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One day’s trading of a contract on the eve of expiry will not on its own cause significant damage to the US energy sector — but sub-zero prices will tarnish the commodity’s brand as a safe investment, especially among retail investors that piled into oil contracts in recent weeks.

But the biggest worry for the sector is the colossal imbalance in US supply and demand that underlies Monday’s flash crash. As the coronavirus lockdowns spread and unemployment rises, the US is now on its own producing 2m b/d more than its slowing refineries need, and lacks available storage to handle the excess, say analysts.

Consumption has to leap higher, oilfields need to be shut sooner or new unknown storage capacity needs to be found faster.

Until the imbalance is fixed, prices will remain low and volatile, crippling the sector and forcing widespread distress on producers.

The May contract’s capitulation is a nasty sign of a deeply dislocated market.

How will the main players react?

Sub-zero oil prices are an embarrassment for Saudi Arabia and Russia, which just over a week ago agreed the biggest co-ordinated @Businessdayng

supply cuts ever — and President Donald Trump, who pushed them to seal the deal.

Their powerlessness in the face of the demand collapse was plainly visible in Monday’s capitulation.

Despite Opec delegates feeding rumours of deeper and swifter cuts and more talks among producer nations led by Saudi Arabia and Russia, they are unlikely to help.

Even a doubling of the Opec supply reductions, due to start in May, would do nothing to add storage capacity in Cushing now.

It is an embarrassment for Mr Trump, who set out to protect the US shale sector after being extensively lobbied by industry executives in recent weeks. After an agreement was reached between global producers he called it “a great deal for all”.

The federal government has some measures it might now pursue, including urging deeper cuts from Opec; tariffs on foreign oil imports; freeing up more storage capacity, including in the Strategic Petroleum Reserve (SPR); paying producers to keep oil in the ground; or extending financial support to oil companies. All have been discussed at various levels of the US government.

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COVID-19: 60% of tenants won’t be able to pay rents in Nigeria in coming months CHUKA UROKO

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bout 60 percent of tenants will not be able to pay their house rents in Nigeria in the coming months as the rampaging coronavirus pandemic persists with its crippling impact on household income, estate agency professionals have said.

This, according to the professionals, means that six out of every 10-renter will default in their rent payment or, at least, they will struggle to pay not necessarily because they don’t want, but because they cannot pay.

This is going to affect residential and commercial properties, but Chudi Ubosi, managing partner at Ubosi Eleh+Co, a firm of estate surveyors and valuers, reasons that the default will be more on residential properties.

He has two reasons for that.

One is that landlords, on moral and humanitarian grounds, find it difficult to push tenants out of their houses. The second, according to him, is that tenants in commercial properties don’t joke with their rents because delayed or nonpayment can affect their business.

should get in touch with their landlords as soon as possible if they feel they may not be able to keep up with their monthly payments; “and we would encourage all landlords to be constructive in their conversations with tenants who are struggling through no fault of their own during the current crisis,” he advises further.

The rental market in Nigeria has always been active despite the lull in the real estate market which exited a 12-quarter recession in the first quarter of 2019, but slipped again into negative growth in the following quarter.

Sustained activity in the rental market until the coming of coronavirus was understandable. A report on ‘The State of the Real Estate Market’ estimates that 80 percent of Nigeria’s 200 million population lives in rented accommodation.

The report, conducted by the Pison Housing Company, reveals that, in Lagos, the country’s commercial nerve centre, over 60 percent of the city’s 20 million people lives in rented accommodation, meaning that six out of every 10 Lagosian are renters who, the report says, spend over 50 percent of their income on paying house rents.

Fears of rent default are worldwide. In UK, for instance, Propertywire, an online residential property platform, reports that about 40 percent of renters will struggle to pay because their ability to pay rent has been hit by the coronavirus crisis.

Ryan Bembridge, editor of the online platform, notes that not being able to keep up with rental payments is the number one concern of many tenants, with the ability to pay council tax, financial instability and ‘survival’ also being cited as key areas of fear during the pandemic.

This, indeed, is a trying time for the property market, but the reason is not far-fetched. “There is no economic activity going on anywhere because of Covid-19 and so, people are not earning income. This has been made worse by the lockdown which has confined everybody to their house,” Ubosi explains.

Tom Gatzen, co-founder of Ideal Flatmate, shares this view, saying, “clearly, this is a very concerning time for many renters and our recent findings bring into focus the worries many tenants have at the moment.”

Gatzen advises that renters

Lagos discharges 67 Nigerians quarantined at Seme border Tuesday … as COVID-19 deaths hit 16, 2 more deaths confirmed Joshua Bassey & Anthonia Obokoh

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agos State government on Tuesday discharged the 67 Nigerians who had been on quarantine at Seme border since the last two weeks.

The 67, who were intercepted as they crossed into the Nigerian shores from Benin Republic the Seme border, according to the government, have tested negative for coronavirus.

Governor Babajide SanwoOlu, who made this known while giving an update on developments relating to Covid-19 in Lagos, said the government was happy that the returnees had not contracted the deadly disease.

“Fellow Lagosians, you may recall that two weeks ago, I briefed you about 67 Nigerians who wanted to return to the country through the Seme border. Upon

arrival at the border, they were quarantined at our isolation centre in Badagry. Today, I am, however, pleased to announce that all the returnees have tested negative to the virus and will be discharged from the facility on Tuesday.

“Conversely, we also had a second batch of 23 returnees through the Seme border; of which two have tested positive and have been moved to an isolation centre,” the governor said.

Sanwo-Olu, who confirmed the highest daily positive cases of the virus, 70, which was recorded on Sunday, April 19, shooting the number in the state to 379, however, said 93 patients had been discharged, while deaths remained 14 as at Monday, April 20.

According to Sanwo-Olu, the increase in infection “is as a result of increased inflow from neighbouring states, as some of

these people want to or choose to stay in our facilities for expert medical care.”

“I just want to assure Lagosians that there is no need to panic. The increase in number as recorded is equally due to improved strategy and testing of individuals across the various local governments in the state.

“We have expanded testing across the Local Governments.

As testing goes further into the communities, cases are expected to increase,” he stated.

“So far, we have been able to reach over one million homes in our community and house-tohouse testing of persons, and we still intend to reach more homes in earnest,” he said.

Meanwhile, the state has confirmed two more Covid-19 deaths, bringing the deaths in the state to 16 since the outbreak of the disease.

NSC directs truckers to reduce transport cost to aid port decongestion AMAKA ANAGOR-EWUZIE

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igerian Shippers Council (NSC), on Tuesday in Lagos directed haulage operators to reduce transportation cost to aid decongestion of the nation’s seaports amid the outbreak of Covid-19 pandemic.

Speaking in a meeting with truck owners under the aegis of Council of Maritime Truck Union and Association (COMTUA), Hassan Bello, executive secretary of the Council, urged truck owners to make sacrifice and contribute to the sustainability of the nation’s economy during this global health crisis.

According to Bello, the nation seaportdoesnotneedastronomicalor unrealisticfreightrateascargoesneed tobeevacuatedtoforestallcongestion at the terminals.

“NSChastriedtobringoutindicative freight rate for guidance. Though, we are not directing you to obey that but we can’t continue to have price differentials at whims and caprice of truck owners. There must be some

guidelines on freight rate just like we are doing with shipping companies, terminal operators and others,” he said.

Bello said there must be a price regime that would be controlled by demand and supply, there must be some limit, saying, “We want you to help us to have a standard rate so that there would be competition.”

He further stated that the Council would also engage the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Ports Authority (NPA) on reduction of their charges.

“We want you to look at the cost because everyone is making a sacrifice at this time. Terminal operators and shipping companies have made sacrifice. Please don’t allow Nigeria economy to be at stand still and after the Covid-19 we don’t want it to be writtenthatitisownersoftrucksthatlet the nation down,” he appealed There are vessels lining up to come into the port to discharge but thereisnospace,hesaid,saying,“This is why we appeal to you to look at the

cost of lifting cargoes from the port.”

He stated that since the Council and NPA have both secured storage and rent free period for importers, the haulage operators should also ensure movement of the cargoes out of the port.

Bello, who noted that there were limitation in trucks lifting cargoes from the port, said the appeal was to find solution because the Council hadbeengoingtotheterminalsandit discovered that the rate of occupancy was getting to 90 percent.

This, he said, means that there is no space for cargoes at the terminal anymore and it was because trucks are not coming to evacuate cargoes.

Also speaking, Stephen Okafor, general coordinator, Council of Maritime Truck Unions and Association (COMTUA), agreed that the truck owners would lower to price to meet present realities.

He said the Council must however call an expanded meeting after the Covid-19 pandemic to draw up a uniform freight rates for all truck owners.

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Wednesday 22 April 2020

BUSINESS DAY

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news

FBNQuest holds 5th annual general meeting, reports N4.2bn PBT SEGUN ADAMS

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BNQuest Merchant Bank, the investment banking and asset management subsidiary of FBN Holdings plc, has declared a profit before tax (PBT) of N4.15 billion for the year ended December 31, 2019. This represents a 48 percent increase from the N2.8 billion recorded in the previous year, as reported by Bello Maccido, chairman, Board of Directors, at the 5thAnnual General Meeting which held on April 14, 2020 in Lagos.

The total assets of the group also grew to N144.8 billion, from N134.5 billion in 2018. This performance was driven by robust

growth in key business lines, especially in fixed income trading, corporate banking and asset management. While gross revenue declined slightly by 2 percent due to lower interest income in the period, operating income increased by 8 percent compared to the previous year as the bank ramped up earnings from non-interest sources.

At the meeting, the bank also announced its new three-year strategic plan which focuses on growing market share by nurturing its human capital and leveraging digital technology to serve its customers better, while also accelerating growth by actively building partnerships, and improving the group’s brand.

“As we end our three-year strategic cycle, we have transformed the business in line with the constantly evolving operating environment in order to achieve our goal of being the leading investment bank and asset management firm in Nigeria,” Kayode Akinkugbe, managing director and chief executive officer of FBNQuest Merchant Bank, said at the Annual General Meeting.

“Our diversified product portfolio remains our collective strength, and enables us to remain competitive and mitigate downside risks to any one particular business line,” he said.

In his statement, Maccido, chairman, FBNQuest Merchant Bank, noted that considerable

preparation, in collaboration with other subsidiaries of FBN Holdings plc, went into the 2020-2022 strategic planning process. He also commended the continued commitment of the board members, management and staff to the growth of the organisation.

FBNQuest participated in a number of outstanding transactions in 2019 and was recognised by international and local awarding institutions. The firm received three awards from EMEA Finance for the Best African Sukuk for the FGN N100bn Sukuk, Best Local Investment Bank (Nigeria) and Best Asset Manager, as well as the FMDQ Gold Award for Most Innovative Registration Member.

OPEC+ Ministers reaffirm commitment to supply cut amidst oil market rout

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il ministers from the OPEC+ coalition held an unscheduled conference call on Tuesday to discuss the collapse in crude prices, though a closing statement signaled they didn’t settle on any new policy measures.

Alarmed by the market’s unrelenting plunge, despite their announcement of record production cuts earlier this month, several producers held informal talks “to brainstorm the current dramatic oil market situation,” the Organization of Petroleum Exporting Countries said on Twitter. They reaffirmed their commitment to the curbs and agreed to hold regular calls to consult on the market.

Crude prices have continued to slump, even though the 23 OPEC+ nations intend to cut global supply by 10%, with futures falling below zero in New York on Monday for the first time ever. The targeted output reduction of 9.7 million barrels a day isn’t nearly enough to counter lost demand as the coronavirus outbreak forces countries to lock down.

“We continue to see extraordinary turmoil in oil markets in this Black April for the industry,” Fatih Birol, executive director of the International Energy Agency, said on Twitter.

“The OPEC+ supply cut is a solid start but insufficient to rebalance the market immediately due to the scale of the drop in demand.”

Saudi Arabia, OPEC’s biggest member, reiterated in a statement on Tuesday that it’s prepared for further measures with the rest of the group and its allies to ensure market stability.

The organization has also received a proposal from Algeria, which this year holds OPEC’s rotating presidency, to start the planned cutbacks immediately, instead of May 1 as currently scheduled. The suggestion hasn’t so far received backing from bigger members.

It’s also unclear whether the Saudis and other major exporters in the group like Russia have the will, or the ability, to make deeper cuts. The latest deal already requires participants to make sharp cutbacks, which many will likely struggle to deliver.

The closing statement didn’t specify which producers had participated in the call, though photographs posted by OPEC’s secretariat on Twitter showed representatives from Azerbaijan, Angola, Iraq, Kazakhstan, Nigeria and Venezuela. Russia, one of the most influential countries in the alliance, didn’t participate, according to a delegate.

The statement said that ministers should “continue holding such consultations on the market situation on regular basis.” Venezuelan President Nicolas Maduro earlier suggested to Russian leader Vladimir Putin that OPEC+ should hold one of its monitoring meetings on May 10.

Nigeria in more trouble as Brent crashes to $18 per barrel Oluwarotimi Akeredolu (m), governor, Ondo State, flanked by government functionaries and heads of security agencies in the state, during a press briefing on the COVID-19 pandemic in the state, at the Government House, Akure.

Africans retreat into homes on coronavirus, but scared about food SEGUN ADAMS

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orethantwo-thirdsofover 4,500 Africans reached by GeoPoll across 12 nations have reported they are self-quarantiningtopreventtherisksandspread of coronavirus.

Yet, as Africans retreat into their homes, they are worried about food and their economies to almost as great a degree as they are worried about the global pandemic.

In a survey administered remotely through GeoPoll’s mobile-based research platform, it was found that 80 percent of respondents were frightened about coronavirus spreading in their countries, but 71 percent said they were also ‘very concerned’ about its economic impact.

The degree of health fears in each nation appeared related to the level of quarantine now in place.

For while 63 percent of Africans believe they are at risk of contracting the virus, Rwandans judge themselves to be at the lowest risk, at 37 percent, in a situation where 90 percent have self-quarantined.

Conversely, in countries such as Mozambique and Zambia, which report lower rates of selfquarantining, citizens feel far more vulnerable, with over 80 percent in each of these countries believing they and their families are at risk.

Such fears across nations with limited ICU capacity and often scant supplies of oxygen has wrought other changes of behaviour, with 54 percent of respondents increasing hygiene and hand washing, and 50 percent avoiding public

places.

There are also rising concerns over food supplies. Most of the Africans polled reported that they were shopping for food less often, while just 20 percent reported that all food markets around them are currently operational. Additionally, more than 85 percent of respondents in the DRC, Rwanda and Kenya have worried in the last seven days that they would not have enough to eat.

“A health crisis such as coronavirus hitting vulnerable populations can have devastating effects on development, food supplies and resources. Reliable data is needed to accurately track on-the-ground situations, and using our remote mobile methodologies GeoPoll was able to gather valuable information quickly and safely,” said Nicholas Becker, GeoPoll CEO.

“Some governments in Africa have been proactive about lockdowns in order to prevent the virus from quickly spreading through densely populated areas, but coronavirus is already present in many African nations, and this study shows there is a fear that the worst is yet to come.”

There is a growing concern that many nations in Africa are poorly prepared for a pandemic as easily transmissible as COVID-19. This has triggered widely different approaches and very different levels of public support.

In Rwanda, 81 percent of respondents believe their government has done enough to stop the spread of the virus, as do 60 percent in Uganda, but in Zambia, Nigeria and Kenya, less than a third are confident enough has been done.

Covid-19: Lagos launches Eko telemed to deliver remote care for residents Anthonia Obokoh

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agos State has launched “EKO TELEMED” for the residents in order to further protect the citizens and reduce their risk of contracting Coronavirus - COVID-19.

Emmanuella Zamba, general manager, Lagos State Health Management Agency (LASHMA), speaking on the online launch, said with effect from Wednesday, April 22, 2020, residents would have access to highly trained and experienced medi-

cal doctors for non-emergency primary care advice via voice or video call without going out from their homes.

Zamba said residents who develop any non-COVID health issues during the lockdown period only needed to dial 08000EKOMED (08000356633) free toll.

According to Zamba, the free toll line would enable residents have direct access to non-emergency primary care via voice or video call and speak with trained medical doctors in any of the four www.businessday.ng

major languages in Lagos State English, Yoruba, Hausa and Igbo.

She said doctors and case managers would be available 24/7 on EKO TELEMED to provide medical services to the residents of Lagos State for a period of 8 weeks as the State continued to roll out its strategies for containing the COVID-19 pandemic.

She added that if further medical treatment is needed after due consultation with the medical Doctors, non-Covid 19 cases would be referred to designated and empaneled Healthcare Pro-

viders under the Lagos State Health Scheme (LSHS) or where applicable, preferred Healthcare Providers but patients with high index of COVID-19 suspicion, would be referred to designated testing sites and isolation centres in Lagos State through the COVID19 HOTLINE 08000CORONA. Zamba, who commended Governor Babajide Sanwo-Olu for approving the project, said EKO TELEMED provided by the Lagos State Health Management Agency (LASHMA) was part of COVID-19 response.

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… unit cost of onshore production $20 Olusola Bello

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more dangerous dimension may be setting in for the Nigerian economy as the price of crude oil, used as benchmark for the country’s Bonny light, Brent, has fallen by 20 percent to $18 per barrel.

The drop, sparked by a perfect storm of COVID-19 fuelled demand destruction and global crude storage facilities reaching their limits, is unlike anything oil markets have ever seen.

The unit cost of production of crude oil onshore is put at $20 per barrel while that of deepwater is put at $30 in Nigeria. Nigeria’s budget benchmark was initially $57 per a barrel with a daily production of about 2.3 million barrel per day.

This was however reviewed to $30 per a barrel after the price came crashing in such an alarming rate. About 50 cargoes carrying Nigeria crude totalling approximately 50 million barrels are roaming about on the international waters across the globe

without buyers.

Tuesday witnessed a historic crash when the West Texas Intermediate US benchmark settled at -$37.

The coronavirus has severely reduced oil demand around the world due to large declines in airline, car, shipping, and trucking traffic as well as manufacturing production.

Demand for crude oil is projected to fall by 29 million barrels per day this month, according to the International Energy Administration, as COVID-19 has forced countries around the world to issue “stay-at-home” orders to slow the spread of the disease.

Lower economic activity means weaker demand for crude oil and its by-products, including gasoline and jet fuel.

Supertankers are in high demand and often left idling offshore as on-shore facilities are out of space. In the North Sea, for example, vessels have been parked for days, loaded with gasoline and jet fuel with nowhere to go.

Dollar hits N420 at black market as oil price falls further Hope Moses-Ashike

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he pressure on the foreign exchangeintensifiedonTuesday as the dollar was trading at N420 at the black market, after oil price crashed to $20 per barrel.

The price of Brent crude has fallen to as low as $20 per barrel as at Tuesday, following the outbreak of coronavirus pandemic globally.

With the current exchange rate, it implies that the Nigerian currency is losing N2.50k per dollar compared to N417.50K traded the previous day.

The dollar can only be pur@Businessdayng

chased from a very few operators in Lagos as many others are not trading due to the Covid-19 lockdown announced by the Federal Government.

“Actually for one month now I have been at home. I have not gone to market and there has not been any transaction since then,” one of the dealers said.

The foreign exchange market opened with an indicative rate of N385.71k/$ on Tuesday, gaining marginally by 0.02 percent from N385.79k opened on Monday at the Investors and Exporters (I&E) forex window, data from FMDQ showed.

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Wednesday 22 April 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 21 April 2020

Top Gainers/Losers as at Tuesday 21 April 2020 LOSERS

GAINERS Company

Opening

Closing

Change

NPFMCRFBK

N1.15

N1.25

0.1

OMOMORBNK

N0.55

N0.6

0.05

LEARNAFRCA

N0.95

N0.97

0.02

LASACO

N0.24

N0.25

0.01

N0.2

N0.2

0

SOVRENINS

Company

ASI (Points)

Opening

Closing

Change

N19.9

N18.35

-1.55

DEALS (Numbers) VOLUME (Numbers)

GUARANTY JBERGER

N26.95

N25.8

-1.15

ZENITHBANK

N14.15

N13.05

-1.1

WAPCO

N11.4

N10.35

-1.05

VALUE (N billion)

SEPLAT

N495

N494.4

-0.6

MARKET CAP (N Trn)

22,629.92 4,877.00 250,346,066.00 2.325 11.793

Global market indicators FTSE 100 Index 5,641.03GBP -171.80-2.96%

Nikkei 225 19,280.78JPY -388.34-1.97%

S&P 500 Index 2,735.61USD -87.55-3.10%

Deutsche Boerse AG German Stock Index DAX 10,249.85EUR -426.05-3.99%

Generic 1st ‘DM’ Future 22,890.00USD -598.00-2.55%

Shanghai Stock Exchange Composite Index 2,827.01CNY -25.54-0.90%

Stock market goes south as investors take profit on recent gains the last few sessions, which resulted to most fundamentally sound stocks recording capital appreciation, the market has now witnessed a trend reversal.

Market watchers expect no deviation from this trading pattern when dealing members start to trade on Wednesday April 22 on the heels of persisting challenge with the global crude price which creates more uncertainties in the market.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased by 1.27 percent on Tuesday

Stories by Iheanyi Nwachukwu

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igeria’s stock market furthered into the negative zone on Tuesday April 21 as investors continued to take profit on recent gains.

The market had posted about 7.2 percent increase or N801.3billion gains last week while the Bulls consolidated their position on the Bourse.

But following the record dominance by the Bulls in

to 22,629.92 points, from 22, 920.41 points recorded the preceding trading day.

Year to date, the market has yielded negative return of -15.69percent.

In 4,877 deals, stock investors exchanged 250,346,066 units valued at N2.325billion. The value of listed stocks decreased by N152billion to N11.793trillion, from N11.945trillion.

Equity research analysts at Lagos-based Vetiva Securities said they do not foresee any positive catalysts that is capable of lifting sentiment.

United Capital posts 53% rise in Q1’20 pre-tax profit

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nited Capital Plc has released its unaudited results for the first quarter (Q1) period ended March 31, 2020, posting 53 percent increase in profit before tax (PBT).

The company’s statement of profit or loss shows revenue: N1.92 billion in Q1 2020, compared to N1.45 billion in Q1 2019, which represents 32 percent year on year (YoY) increase.

Operating Income: N1.89 billion in Q1 2020, compared to N1.35 billion in Q1 2019 (40 percent YoY increase).

Operating expenses: N0.74 billion in Q1 2020, compared to N0.68 billion in Q1 2019 (9percent YoY increase).

Profit Before Tax: N1.18 billion in Q1 2020, compared to N0.77 billion in Q1 2019 (53percent YoY increase).

Profit After Tax: N0.99 billion in Q1 2020, compared to N0.64 billion in Q1 2019 (54percent

YoY increase). Earnings Per Share: 17 Kobo. (2019: 11kobo) Its statement of financial position shows total assets: N197.41 billion, compared to N150.46 billion as at FY 2019, which implies 31percent yearto-date (YtD) growth.

Total liabilities: N176.69 billion, compared to N130.88billion as at FY 2019 (35percent YTD growth).

Shareholders Fund: N20.72 billion, increased by 6percent YtD as at FY 2019 N19.59 billion.

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Comparing Q1 2020 with Q1 2019, the company noted a few points to note such as Total Revenue: United Capital Plc’s total revenue increased significantly by 32percent year on year, “on the back of the company’s 55percent increase in fee and commission income and 223percent increase in net interest margin as well as a 149percent growth in Net trading income”.

“Cost-to-Income ratio: This improved significantly, recording 39percent in Q1 2020 compared to the 47percent recorded in the same period last year, as the Group continues to implement its cost containment measures.

PBT Margin: During the period under review, PBT Margin stood at 61percent on the back of revenue growth and sustained implementation of cost containment measures.

“PAT Margin: During the period under review, PAT

Margin stood at 52percent on the back of revenue growth and sustained implementation of cost containment measures.

Total Assets: Total Assets grew YtD by 31percent as a result of the 154percent increase in cash and cash equivalent and 2percent increase in Trade and other receivables.

“Total Liabilities: This increased by 35percent owing to the growth in short term investment by 57.50percent, trust funds by 79.17percent and sinking funds by 92.25percent. In aggregate, the Group’s managed funds grew by 61percent.

“Shareholders’ Fund: The Shareholder’s wealth grew by 6percent YtD on the back of the increased PAT leading to a 6percent growth in retained earnings,” it stated.

While commenting on the group’s performance the Group CEO, Peter Ashade said: “Year 2020 has posed

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a lot of challenges to the Nigerian economy - as we saw decline in oil prices- the operating environment was also impacted negatively, with the exchange rate becoming more volatile, continued fall in rates in the money market as well as bearish sentiments in the capital market. Our business was not immune to these challenges; however, the Group was able to endure the first quarter of the year. Thanks to our well-articulated and diligent implementation of our plans set out last year, we were able to deliver a 32percent year on year increase in revenue and 53percent increase in PBT. This increase was generated basically from our margin on investments and the 55percent YOY increase achieved on our Fees and commission income as well as a 149percent growth in net trading income. Our investment income shrank this quarter due to the drop in returns in the money market. @Businessdayng

“As we work into the coming quarters, we are constantly reviewing our strategy in light of the current global pandemic in the wake of COVID-19. As a Group, we were able to invoke our business continue framework which has worked immensely well over the past few weeks as we have been able to stay afloat with our work-force working remotely to ensure the continued operations of our business,” he said.

Discussing the result further Ashade noted that; “In line with our initial strategy for the 2020 business year, we shall continue to push further our market diversification and costoptimization initiatives as well as implement phased automation of our business processes whilst upholding our commitment to ensuring a significant improvement in our value delivery to all our stakeholders.”

Wednesday 22 April 2020

BUSINESS DAY

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BUSINESS DAY Wednesday 22 April 2020 www.businessday.ng

How coronavirus brought aerospace down to earth The industry has been one of the hardest hit, with contracts cancelled, production halted and pleas for big bailouts Peggy Hollinger

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t the end of March, just days before Boeing was set to hand over a new 787 Dreamliner to one of its most valued customers in the Middle East, the airline’s head of procurement picked up the phone to the US aircraft maker. The deal was off, unless Boeing was willing to increase the 55 per cent discount it had already agreed on the $338m list price.

In normal times, an airline would hesitate before threatening to cancel an order at such a late stage. Cancellation would normally mean heavy penalties and forfeiting the downpayments, which for Boeing’s state of the art twin-aisle model amounted to close to $100m of the agreed $150m price tag.

But these are not normal times.

Boeing caved in and cut the price by a further 15 per cent, according to people involved in the deal.

The US aircraft maker — which declined to comment on the contract details — saw more value in getting the jet out of the hangar than haggling for a few million dollars more.

Despite supplying more than 90 per cent of the world’s commercial aircraft, Boeing and its European rival Airbus do not have much leverage when nearly all their airline customers are fighting for survival.

As international air travel grinds to a halt in the face of the coronavirus pandemic, the global aerospace industry is being forced to confront some hard truths about a future it once believed was secure for at least the next decade.

Record order books, built on a decade of booming demand and worth more than $1tn at list prices, are looking less certain by the day as airlines push back deliveries and even cancel orders to survive the worst crisis in aviation history.

More than 60 per cent of the world’s commercial aircraft have been grounded as governments quarantine their populations and close borders. And with little or no revenue coming in, airlines are cutting costs, drawing down huge credit lines to bolster liquidity, and calling for billions in state aid.

Ed Bastian, chief executive of the world’s biggest carrier, Delta Air Lines, says his company is burning through $60m a day while 600 aircraft are parked on the tarmac and 80 per cent of April’s scheduled flights are cancelled.

Iata, the aviation industry’s trade body, has warned that some 25m jobs in both the aerospace and aviation sectors are at risk if governments do not step in with lifelines.

“I wish I could predict this

would end soon,” Mr Bastian told employees in April. “But the reality is we simply don’t know how long it will take before the virus is contained and customers are ready to fly again.”

For Boeing, already struggling to overcome the grounding of its 737 Max single-aisle fleet after two fatal crashes, and for Airbus, which earlier this month slashed aircraft production by a third, the world has changed enormously.

It is a sharp U-turn for companies which in recent years had so relentlessly increased production that they sometimes struggled to sustain it.

Only in February Boeing and Airbus were confidently predicting demand for more than 40,000 aircraft worth roughly $7tn over the next 20 years. In March, even after Italy went into lockdown, Airbus was pushing European suppliers to invest in accelerating production of the single aisle A320 — the company’s runaway success — says one of its key programme partners, who asked to remain anonymous.

Now airlines are preparing for a long period of depressed demand and, having taken on substantial debt to survive the crisis, will not be fighting for aircraft delivery slots as they were just a few months ago.

“More order cancellations and deferrals are coming,” predicted Cai von Rumohr, aerospace analyst at Cowen investment bank, in a note to clients last week. “We are in uncharted waters.”

The impact of the aviation shut-

down on the aerospace industry is beginning to raise concern at government level.

Aerospace companies are not only lifelines for tens of thousands of high-tech suppliers, ranging from big international companies such as Rolls-Royce and General Electric to small family-run businesses providing low volumes of critical components. They are also strategic enterprises for their governments. They pay higher than average wages, drive innovation and generate healthy trade surpluses. In 2018, the sector was responsible for the largest share of the EU’s high-tech exports at €94bn, while US civil aerospace exports were worth $122bn.

When Boeing had to suspend deliveries of the 737 Max single aisle after it was grounded last year, US economic growth slowed.

President Donald Trump said in April he would do “whatever is necessary” to help Boeing, which has called for $60bn in state aid to help the industry and its supply chain through the crisis.

Teal Group, the aerospace consultancy, estimates the total value of the global industry is close to $1tn. More than half that value lies in the supply chain behind the big aircraft and engine manufacturers, according to Aerodynamic Advisory, another consultancy.

Many of those suppliers have invested heavily in recent years to meet the demands of aircraft makers, anxious to capture the more than 6 per cent average annual growth in passenger traffic the industry has experienced over the

‘‘

As international air travel grinds to a halt in the face of the coronavirus pandemic, the global aerospace industry is being forced to confront some hard truths about a future it once believed was secure for at least the next decade

‘‘

It is a sharp Uturn for companies which in recent years had so relentlessly increased production that they sometimes struggled to sustain it past five years. While passenger traffic growth had begun to slow before the crisis, in particular for widebody aircraft, the market was still growing on the back of demand in countries such as China and India.

In 2018, Boeing increased the number of employees in its passenger jet division for the first time in six years — hiring 9,000 new workers to raise its total to more than 64,000. Since 2016 Airbus has increased employees in its commercial aircraft business by 7,000 to nearly 81,000 to help deliver on its record order book.

But some in the sector believe the shape of the aviation industry will be vastly different when the crisis ends, with consequences for aircraft demand and the number of jobs in the industry. Much will depend on how and when governments decide to lift travel restrictions and what passengers will expect when they finally decide to travel again.

“Do we really want to be flying within a few centimetres of someone? Will we be expecting more space on aircraft in the future?” asks Phil Seymour, president of the International Bureau of Aviation, which advises airlines and leasing compa-

nies on fleet management. “All of this is potentially game changing for what airlines can offer as a product and what it will mean for manufacturers.”

Rob Morris of Ascend by Cirium, an aviation data consultancy, estimates that seven years of passenger traffic growth could be wiped out if Iata’s prediction for a 48 per cent fall in traffic this year proves true. “To return to the level of traffic we enjoyed in 2019 would require nearly 100 per cent of compound growth on the demand forecast for 2020,” he says. “Achieving that growth even over the next two years seems extremely optimistic.”

Under the Iata scenario, between 12 and 35 per cent of the 20,150 commercial passenger jets in service at the beginning of 2020 would be surplus to requirements by the end of the year, he adds.

That is up to 7,000 aeroplanes.

Fewer aircraft in operation will also mean lower income from aftersales services, an important profit stream for the aircraft makers and engine manufacturers such as Rolls-Royce and GE. Brian Burridge, chief executive of the Royal Aeronautical Society, believes there will be no going back to the good times for several years at least. “We believe the airline ecosystem will be 50 per cent smaller,” he says. Many airlines will shrink and others collapse.

“Out of the world’s nearly 1,000 airlines a lot are just bubbles of debt with wings.”

Boeing halted all commercial aircraft production at its facilities for nearly three weeks to introduce safety measures such as new shift patterns and social distancing to protect workers, several of whom have fallen victim to the virus.

But no one expects the US aerospace giant — which faces a $19bn bill for the 737 Max crashes — to return to previous production levels when it restarts this week. The company has reportedly looked at job cuts of up to 10 per cent of the workforce. And it may be forced to delay the launch of its newest wide-body jet the 777X.

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