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Aba’s N120bn shoe industry booms despite neglect L ODINAKA ANUDU

eonard Kujabi, a Gambian bank worker, was in Aba, Nigeria’s shoe capital, in May 2018. He came to the country with his family for a three-week holiday. After crisscross-

Amy Jadesimi (r), CEO, Lagos Deep Offshore Logistic Base (LADOL), receives from Charlie Walker, head of equity primary markets of the London Stock Exchange Group (LSEG), award of recognition on behalf of LADOL as one of the ‘Companies to Inspire Africa in 2019’ by LSEG, in London.

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ing Powerline, a cluster in Ariaria Market, one of the days, he bought 15 pairs of shoes, selling 10 to friends and neighbours while keeping the rest for his family.

“Aba-made shoes are gaining traction in The Gambia,” Kujabi said on the phone. “They are strong, durable and cheaper, compared with what we get in our country.” One million pairs of shoes are Continues on page 37

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Annual gathering of global business and political leaders opens amidst rising nationalism ...Davos welcomes the world BY OUR REPORTER

he annual elite gathering of the global leaders from business and politics will open here in the Swiss alpine city of Davos, with focus on how to make globalisation work better for a world increasingly divided by nationalism and anti-immigration fervour sweeping across the globe. Many world leaders, from US President Donald Trump to Chinese President Xi Jinping, as well as French President Emmanuel Macron who lit up last year’s gathering with his blistering criticism of nationalism, will be staying away this year, but the 2019 annual meetings of the World Economic Forum promise to be just as engaging. The world is at a cross-

roads, say the organisers of the meetings, adding, “We can continue the present trajectory of polarising views, increased conflicts and numerous unresolved problems. At best this path will result in permanent global crisis management. At worst, it will deteriorate into chaos, with innumerable unintended consequences. There is another option – shaping a global architecture in the age of the fourth industrial revolution. Together, we can and we Continues on page 37

Inside

DisCos on edge over Tesla’s entry into Nigeria’s power sector

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Tuesday 22 January 2019

FG’s 5m agric jobs target suspect as previous schemes hang CALEB OJEWALE

T L-R: Gbemiga Owolabi, director, human resources, Airtel Nigeria; Babatunde Fashola, minister of power, works and housing; Segun Ogunsanya, MD/CEO, Airtel Nigeria, and Emeka Oparah, director, corporate communications and CSR, Airtel Nigeria, at the 2019 edition of the Airtel Employee Knowledge Series at the Airtel headquarters, Ikoyi, Lagos.

DisCos on edge over Tesla’s entry into Nigeria’s power sector ISAAC ANYAOGU

ince BusinessDay broke the story that American electric car maker Tesla is planning entry into Nigeria’s power sector, electricity distribution companies (DisCos) have been in a panic mood over what they perceive as threat to their revenue. “I understand the story has sent panic into the market since it broke,” Chuks Nwani, an energy lawyer, said by phone on Saturday. “The DisCos are taking the threat really seriously.” Last week, DisCos held meetings on how the industry will respond to the perceived threat from Tesla. The mood at these conversations has been sombre and serious, according to two people who were present in the meetings. A key concern is that since DisCos do not have exclusivity over franchise areas, Tesla and any other competitors can easily lure away their choice customers, especially as they seek to focus on industrial customers who pay higher electricity bills. Babatunde Fashola, minister of Power, Works and Housing,

and the Nigerian Electricity Regulatory Commission (NERC) have maintained that DisCos do not have exclusivity over their franchise areas, a situation that creates room for competition in the sector. This is why projects like the Sura Market Independent Power Project and the Ariaria Market IPP have proceeded despite lawsuits by the DisCos. The Enugu DisCo took Ariaria Independent Energy Distribution Network Limited (AIEDN) to court in June last year, saying it encroached and trespassed on its distribution licensed coverage area by illegally constructing distribution lines without a licence and without the DisCo’s authorisation. The Nigerian Electricity Regulatory Commission (NERC), the sector regulator, responded by issuing AIEDN a licence the next day. Also, last year, in Lagos, Eko DisCo bared its fangs against a private company, PIPP LVI Distribution Limited, directing it to remove all the lines it laid on its network and cease soliciting further business from its customers. The directive didn’t stop the company’s work.

Under the Rural Electrification Agency’s Energising Economies programme, markets including Ariaria in Abia State, Sura and Iponri in Lagos and Sabon Gari in Kano have been taken away from the DisCos and handed to private investors who can provide 24-hour power supply at a tariff that is costreflective. Curiously, the same regulator has also prevented the DisCos from pricing electricity sold to the public at market prices. DisCos are also worried that Tesla’s superior product offering and focus on industrial customers could wipe off a significant chunk of their revenue. The company is said to be mulling providing batteries with a capacity of between 1Kilowatt hour to 1MW, capable of powering an industrial complex or an industrial estate, or between 10,000 to 100,000 homes. When contacted, Tesla’s Nigerian office referred this paper to the corporation’s US press office. Robert Pierce, an energy communications representative at Tesla, said the company does not have a comment at this time “but

Continues on page 37

he Federal Government’s recent announcement that it would create 5 million jobs in agriculture to be funded with a $1.1 billion loan from Brazil appears to be the newest in a growing list of political games to bait hopeful, unemployed young Nigerians. Now 18 months since July 2017, the Federal Government has kept the dreams of 5,916 young Nigerians hanging on what may now be another white elephant scheme. The entrepreneurs were meant to be beneficiaries of the FADAMA Graduate Unemployed Youth and Women Support (FADAMA GUYS), an initiative of the FGN-World Bank FADAMA Additional Financing III. Each one of the entrepreneurs was supposed to get between N1.8 million and N1.9 million as grant, and the World Bank re-

portedly backed this project with about N9 billion. As earlier reported by BusinessDay, many of these nowdisappointed beneficiaries say the fund has been released to the Ministry of Agriculture, where disbursement was meant to be done. However, till date, the beneficiaries are clueless as to what has caused the delay. Some have even suggested that certain individuals may be reaping interests from the funds, which should have been disbursed. When BusinessDay reached out to the World Bank office in Nigeria, the response suggested that certain funds have already been made available to the Federal Ministry of Agriculture and Rural Development, although the sum was not explicitly stated. What was clearly stated, however, was that disbursement is “expected to start soon”, just as promised every

Continues on page 37

Nigeria’s mid-tier banks to hunt for market niche as large lenders sustain dominance OLUWASEGUN OLAKOYENIKAN & BUNMI BAILEY

igerian tier-two lenders may need an aggressive pursuit for market niche to remain competitive in the nation’s banking industry as large lenders continue to take bigger market share by assets, analysts have projected. With the proposed merger and acquisition deal between Access Bank and Diamond Bank aimed at creating Nigeria and Africa’s largest retail bank by customers, Nigeria’s banking industry will be amplified and five largest banks will have more than 60 percent market share by assets, according to Fitch Ratings, a global credit rating agency. This leaves the remaining 40 percent market share largely dominated by tier-two lenders, putting pressure on the financial institutions to seek for untapped opportunities in the industry to leverage and create a robust corporate strategy. “In having that strategy, a good technology platform is very important,” said Ibrahim Tajudeen, head of research, Chapel Hill Denham. The consolidation of Access and Diamond Bank is viewed to widen the margin between large banks

and those in the tier-two category. Analysts say only strategic objectives of individual mid-tier lenders would determine their market presence and competiveness in the long run. Large banks typically have higher ratings than small ones as they tend to have stronger financial profiles and more resilient business models, according to Fitch Ratings. “The industry is becoming more competitive and everyone has to understand what they are doing and find a better way,” said Ayodele Akinwunmi, head of research, FSDH Merchant Bank. “The big ones are encroaching into the smaller ones.” Some of the mid-tier lenders leverage their social media prowess to reach out to young and upwardly mobile population, while some others see opportunities in technology-driven Small and Medium Scale Enterprises (SMEs), entertainment, fashion, agriculture and even in certain geographical locations. In fact, some lenders leverage Islamic banking, also known as nointerest banking, to have a portion of the market to themselves. •Continues online at www.businessday.ng

Dividend tops boardroom discourse on companies’ full-year scorecards IHEANYI NWACHUKWU & MERCY IBEMERE

…Zenith, GTB, UBA, Stanbic top list

n the wake of high-geared efforts at unleashing their financial scorecards for the full year 2018, debates relating to more rewarding full dividends have become utmost in many companies’ board meetings. In line with the post-listing requirements of the Nigerian Stock Exchange (NSE) for quoted companies, many companies have been notifying the regulator of their closed periods and board of directors’ scheduled meetings where they are expected to con-

sider the audited financial statements for the year 2018 as well as make recommendations for payment of final dividend. A closed period is the time period between the completion of a listed company’s financial results and the announcing of these results to the public. The closed period is intended to prevent trading in a company’s shares by its insiders ahead of the public dissemination of its financial results. Zenith Bank Plc is the early

bird in the full-year results release process as the company’s board of directors at its meeting of January 18, 2019 approved, among other things, the audited accounts of the bank for the financial year ended December 31, 2018 for onward delivery to the Central Bank of Nigeria (CBN) for approval. Banks are required to forward their audited accounts to the CBN for approval prior to the release of the results on the floor of the Nigerian Stock Exchange. Zenith had in a January 4, 2019 letter to

the NSE noted, among others, that the Board of Directors would make recommendations for payment of final dividend. Aside from Zenith Bank Plc, Guaranty Trust Bank Plc, United Bank for Africa Plc and Stanbic IBTC Holdings Plc have issued notice of their closed periods and are perfecting the submission of their full-year scorecards to appropriate regulators. The meeting of the Board of Directors of GTBank Plc is scheduled to hold Wednesday, January 30, to consider the audited financial statements of the bank for the

year ended December 31, 2018. “Issues relating to full-year dividend may also be discussed at the meeting,” GTBank Plc said in a January 4 note to the NSE. In what seemed like the bulls grabbing the baton from the bears last week on Custom Street, the domestic bourse traded in green territory on all five trading days of the week and consequently gained 3.9 percent week-onweek (wow) to close well above the 30,000 points threshold at 31,005.0 points. •Continues online at www.businessday.ng

Tuesday 22 January 2019

BUSINESS DAY

4 BUSINESS DAY NEWS

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Tuesday 22 January 2019

2019: ‘FG’s claims on security threat, plot to frame opposition’ OWEDE AGBAJILEKE, Abuja

pposition parties in Nigeria have described the claim by the Federal Government alleging security threat by opposition parties as a smoke screen to frame them up. Describing the claim as baseless, the Coalition of United Political Parties (CUPP) raised the alarm of plans by the Federal Government to arrest and detain key opposition figures on terrorism charges. Spokesperson of CUPP, Ikenga Ugochinyere, stated this on Monday in Abuja at a press conference. The CUPP was reacting to an allegation by the minister of information, Lai Mohammed, that opposition political parties were busy mobilising bandits and members of Boko Haram to cause crisis in order to stop the forthcoming elections. However, Ugochinyere debunked the claims, insisting that the government had no single evidence to support its claim. This, he stressed, is aimed at diverting attention from the issues raised by former President Olusegun Obasanjo, who likened the present administration to that of the late military dictator, Sani Abacha. “It is now clear that opposition’s consensus candidate Atiku Abubakar will win so Lai Mohammed and Buhari are already suffering from defeat phobia. They are scared that is why they are spreading fake news. “Buhari is a well known patron of Miyeti Allah and pro-bandit’s group while Lai is their spokesperson, they are the ones encouraging them. The rise in Boko Haram was caused by Buhari incompetence and misappropriation of security

money. “We urge Nigerians to give deaf ear to the noise of this fake news carrier called Lai Mohammed and heed to the advise of former President Obasanjo “Just like he said, If Nigerians fail to take a definitive step by voting Mr Buhari out of power in next month’s general election, Boko Haram and its Islamic State’s West Africa Province (ISWAP) may soon take over the entire West African region and make life unsafe not only for Nigerians but Africans in General,” he said. In the same token, the main opposition Peoples Democratic Party (PDP) called on Nigerians to hold President Muhammadu Buhari responsible if there is escalation of violence in the country. Speaking at another press conference in Abuja on Monday, Kola Ologbondiyan, PDP National Publicity Secretary, described the claim by the Information Minister as irresponsible and ludicrous. According to Ologbondiyan, the party has conducted rallies in many states of the country without a record of violence. “The APC cannot make a similar claim of a peaceful rally in its few attempts at interacting with its members and the public. It is just a measure for building the ground for framing up and arrest of leading members of the opposition as he has just confirmed our concerns. Its party primaries ended in violence and multiple deaths. Its rally in Lagos state ended in a fiasco and recorded fatalities. Its Presidential candidate is known all over the world for inciting supporters against peace-loving Nigerians, when he said that baboon and dogs will soak in their blood,” he said.

L-R: Abubakar Rasheed, executive secretary, National University Commission (NUC); Mahmood Yakubu, chairman, INEC, and Joseph Ahouneku, chairman, Committee of Vice Chancellors of Nigerian Universities (CVC), during a meeting between INEC and CVC on the forthcoming 2019 general elections in Abuja. Pic by Tunde Adeniyi

London Stock Exchange selects LADOL as a Company to Inspire in 2019 ENDURANCE OKAFOR

agos Deep Offshore Logistic Base (LADOL) was selected by London Stock Exchange (LSE) as one of its Companies to Inspire in Africa 2019. The report by the LSE was launched on Wednesday at the opening of the market in London at the LSE. This is the second edition of this prestigious report, which identifies Africa’s most inspirational and dynamic private, high-growth companies. The report aims to give these companies global recognition and attract foreign investment into the continent. Managing Director of LADOL, Amy Jadesimi, said, “LADOL is honoured to be included in London Stock Exchange’s (LSE) list of Companies to Inspire Africa. We thank the entire LSE team for all their hard work in complying the report and today’s launch, at which I was proud to be invited to speak.

Order halting removal of CJN from office subsists - Industrial Court FELIX OMOHOMHION, Abuja

ational Industrial Court, Abuja, Monday, said its earlier order restraining the Federal Government and its agents from forcefully removing the Chief Justice of Nigeria (CJN), Walter Onnoghen, from office over alleged failure to declare all his assets, stays. Onnoghen’s scheduled arraignment at the Code of Conduct Tribunal (CCT) last week was adjourned till today, owing to improper service of the tribunal’s summons on the defendant. While ruling on ex-parte motion seeking the court’s intervention on the planned removal of Onnoghen as a

result of his trial at the CCT, last week, Justice Sanusi Kado halted the scheduled trial by ordering all parties in the suit to maintain status quo, pending the hearing and determination of the main suit. Defendants in the suit filed by Peter Abang, include the Attorney General of the Federation (AGF), chairman of CCT, the Code of Conduct Bureau (CCB), the National Judicial Council (NJC), the Federal Judicial Service Commission (FJSC), the Inspector-General of Police (IGP) and the Senate president. Justice Kado in granting the ex-parte last week said was inclined to do so in order to avert a threat and constitutional breaches regarding

the position of the CJN, as the number one judicial officer of the country. Subsequently, he adjourned to January 21, to enable service of hearing notice to all the defendants. However, when the matter came up for hearing, yesterday, the claimant counsel, James Igwe, informed the court that originating processes and the interim order had being served on all the defendants in the suit, except on the 2nd defendant. According to Igwe, the CCT chairman had directed his secretary to accept service on his behalf. He then applied to the court for permission to serve the CCT chairman through substituted means.

“LSE’s high-profile focus on real indigenous private sector companies across the African continent is an important step in highlighting the fact that Africa is already home to a thriving and growing number of leading companies. “The broad range of companies represented show how shallow investment understanding of our currently markets is and how many opportunities there are for investment today. We look forward to working with the LSE and cooperating with the other indigenous companies highlighted.” Investment in Africa is about the market case, noting that instead of eking out low returns from investments in developed markets, international investors should focus on the many hugely lucrative market opportunities across Africa, she explained. “Investing in Africa requires a seismic change in investment strategy - international investors that want to remain relevant and viable need to immediately invest in new diverse

teams and new financial instruments that will enable them to invest in Africa. Teams that use outdated and inappropriate bankability definitions will continue to struggle to tap into this highly lucrative market. “Operating out of LADOL saves IOCs 50% on their costs in deep offshore logistics, saving billions of USD each year. This compelling value proposition was well known for over decade and a half, yet today LADOL is the only deep offshore support base in Lagos. A clear example of how international investors are missing out on billon dollar investment opportunities by not investing in market case-based business models in Africa,” Amy said. Commenting on 2019 report, LSE CEO, David Schwimmer, said: “London Stock Exchange Group’s ‘Companies to Inspire Africa’ report showcases inspirational and entrepreneurial businesses from across the African continent, representing a wide variety of industries and countries. “It is particularly encour-

aging to see the increasing influence of women in leadership roles in these fast-growing companies, playing a pivotal role in shaping the future of African business. “These high growth companies have the potential to transform the African economy and become tomorrow’s job creators. At LSEG, we are committed to helping companies realise that potential and we are pleased to highlight and celebrate the company success stories behind one of the world’s fastest growing markets.” Uyi Akpata, West Africa regional senior partner, PwC, said: “Initiatives such as this help expose these companies to a global audience, and we hope will lead to further collaboration across border with London-based investors and strategic partners. “It is also great to see the public sector represented here. It is an important testament to their commitment to supporting the private sector and continuing to drive improvements in ease of doing business.”

Polls: FG appeals to Nigerians to be vigilant following increasing terrorist threats OYIN AMINA, Abuja

he Federal Government has called on Nigerians to be vigilant of possible terrorist attack ahead of 2019 general elections. Lai Mohammed, minister of information and culture, issued the alert at a press conference in Abuja on Monday, saying the government had credible intelligence that armed bandits and Boko Haram insurgents had been mobilised to engage in massive attacks and other acts of violence in several states across the country. ‘’Before you accuse the government of crying wolf, let me tell you, gentlemen, that we have credible intelligence that armed bandits and Boko Haram

insurgents have been mobilised to engage in massive attacks and other acts of violence in several states across the country, including Adamawa, Bauchi, Borno, Benue, Kano, Kaduna, Nasarawa, Plateau, Taraba and Zamfara,’’ the minister said. He further said the Benuebased armed criminal group, led by Terwase AKWAZA, also known as Gana, had been commissioned to strike soft targets in Benue, Nasarawa and Taraba states, while in Kano State, a group of notorious miscreants had been mobilised by some prominent opposition leaders to provoke massive chaos before, during and after the elections. ‘’There is also an international dimension to the evil plan. Some armed mercenaries

from Niger Republic have been contracted to attack top government functionaries, including state governors, across the North-west between now and the elections,’’ Mohammed said. According to Mohammed, desperate opposition has been orchestrating widespread violence with a view to truncating the 2019 general elections, and such plans he said could snowball into an interim government. ‘’Having realised that their fortunes have dwindled badly ahead of the polls, the desperate opposition is orchestrating widespread violence with a view to truncating the elections, thus triggering a constitutional crisis that could snowball into the establishment of an interim government,’’ he said.

Tuesday 22 January 2019

BUSINESS DAY

6 BUSINESS DAY NEWS Buhari gives marching order to end ASUU nationwide strike www.businessday.ng

KEHINDE AKINTOLA, Abuja

resident Muhammadu Buhari on Monday issued a marching order to Chris Ngige, minister of labour and employment, to end the three-month-old nationwide strike declared by the Academic Staff Union of Universities (ASUU). Ngige disclosed this in Abuja, at the resumed negotiation with the leadership of ASUU led by its president, Biodun Ogunyemi.

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concern over the situation prevailing in the university system, hence his steady and holistic approach to tackling the rot through adequate funding, notwithstanding the dwindling accruals. “The President told me to assure you of his determination to reposition our universities as he would do everything possible to cast the present challenges in our tertiary education to the dustbin of history,” the minister said. As of press time, no update came out of the meeting.

“The President has directed me to pass the night here until all issues that have kept our children away from school are resolved and the strike called off. “He (Buhari) has also directed me to impress upon you, the imperative of little sacrifice from all sides, knowing fully well that the revenue of the Federation has dwindled from what it was before the present administration assumed office,” Ngige said. According to Ngige, President Buhari expressed

Dangote feeds 30,000 IDPs in Zamfara

n yet another massive intervention, the Aliko Dangote Foundation Monday officially launched a major philanthropic programme in Zamfara State, doling out food items running into several millions of naira to support victims of insurgency. The farmers-herders clash and sporadic attacks by cattle rustlers have displaced thousands, many of who are currently seeking refuge at Maradun Local Government Area of the state. According to official reports, over 3,000 people have been killed, about 100,000 displaced, of which about 30,000

are in Maradun LG, and over 500 people kidnapped. Group Executive Director Government Relations and Strategic Relations, Mansur Ahmed, who presented the food items on behalf of the Group president, Aliko Dangote, said the Foundation was supporting the government and traditional leaders in meeting the needs of the IDPs. Only recently, Dangote was rated world’s 6th largest donors, and Africa’s richest person for almost a decade. His Aliko Dangote Foundation has been endowed with a staggering $1.25 billion. He was also listed by Forbes Magazine

among the 75 people that make the world turn. Dangote Foundation had also injected over N7 billion to create succour in North East in the wake of the Boko Haram insurgency. Ahmed, an engineer, said Dangote was very disturbed about the plight of the displaced persons and quickly directed that everything possible be done to provide succour. Ahmed said the company was building a 200000-ton capacity of rice mill in Maradun and that when completed this year it would create hundreds of job opportunities for the people of Zamfara State.

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Tuesday 22 January 2019

NIMASA grows capacity in justices system to boost investor confidence … says efficient dispute resolution vital to securing FDI in shipping AMAKA ANAGOR-EWUZIE

etermined to boost investor confidence and encourage more foreign direct investment (FDI) into the nation’s maritime sector, the Nigeria Maritime Administration and Safety (NIMASA) has moved to grow capacity among judges responsible for dispensing justice in-country. This aims at creating proper dispute resolution mechanism that functions efficiently and impartially, and will go a long way to boost confidence among investors by ensuring that in the case of any dispute around their investment, there would a trusted justice system to decide. Speaking in Lagos on Monday at the eighth strategic Admiralty Law Seminar for judges organised by NIMASA, Dakuku Peterside, director-general of NIMASA, said one of the major factors that determined the level of investment in a country was the existence of a proper dispute resolution mechanism. “This is a faction of a number of factors, including the knowledge of the law by judges who preside over this process. “Today, we are building capacity among judges of the Federal High Court, State Court and Supreme Court to equip them for proper dispensation of justice. Aside from knowledge of the judges, there is this issue of timeliness of dispensation of justices, including the quality of the law as well as the integrity of the justice process,” Peterside said. According to Peterside, whenever issues around the fact that judges are likely to deliver judgment that is compromised and without justices, the investors would lack the confidence to invest in Nigeria. In the area of maritime security, he said to ensure safe and secure shipping in the nation’s territorial waters NIMASA was pushing for the passage of the Anti-Piracy Bill, which aimed at criminalising piracy and other criminalities on the waters. “Piracy has been an issue for some time and Nigeria has been in the news for the wrong reasons because of that. We push for the passage of the Anti-Piracy Bill, which has been approved by the Federal Executive Council (FEC) and is currently before the National Assembly. It has passed through first reading in both chambers of the assembly,” he said. He however assured that the agency was working with the leadership of National Assembly to ensure the passage of the bill before the end of the present eighth Assembly in May 2019. “We have received commitment that the amended Merchant Shipping Act would also be passed by this Assembly. This is because they understand how critical these bills are to the economy, not only for business of shipping in Nigeria but even for the quality of life in terms of freight charges, insurance charges and cost of goods and services,” he said.

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7 NEWS

BUSINESS DAY

Confusion trails Lagos 2019 budget presentation … we’re ready to present budget - Executive JOSHUA BASSEY

n atmosphere of uncertainty has continued to hang over the presentation of Lagos State 2019 budget size of N852.317 billion, as the legislative and executive arms of government appear not to be on the same page. The executive said on Monday it was ready for the budget presentation while the legislature on the other hand turned back State House journalists who had gone to the Lagos State House of Assembly to cover the proposed budget presentation, saying they were holding a private meeting and not ready yet. Earlier in the day, indications had shown that the governor would be in the House

…we’re not ready yet to receive budget - Lawmakers

to formally present the budget, which had become controversial owing to accusations and counter-accusations between the two arms of the state government. Recall that the executive had three weeks ago said the contents of the 2019 budget had been sent to the House since December 2018. The lawmakers had responded swiftly, saying the governor sent the budget at a time they were in recess and demanded that Governor Akinwunmi Ambode come personally to lay the budget before the House as required by law. Heavy security presence at the early hours of Monday had given a hint that the budget would be presented. However,

some of the lawmakers spoken to expressed surprise over the development as they said they were not aware that the budget would be presented. Hours later, at about 2:45pm, journalists covering the State House, driven in the Lagos Office’s press crew bus, had arrived at the assembly complex having been informed by the public affairs officer in the Office of Chief Secretary (CPS) to the governor, Habib Aruna, that the governor was set for the House of Assembly to present the 2019 budget. However, at the assembly premises, one of the security aides to Mudashiru Obasa, speaker of the Lagos State House of Assembly, turned back the journalists, saying the

speaker and members of the House were in a private meeting and were not ready for the budget presentation. Also, some of the lawmakers said they only heard about the budget presentation when they got to the office on Monday. “You know the norm and that governor would write to the House to inform that he would be coming to present the budget. This letter would be read on the floor of the house during plenary and preparations would commence to receive him. “In this case, we are yet to hear anything. Remember we adjourned sitting till today (yesterday). I am not aware, except the letter came in this morning,” one of the lawmakers said.

However, one of the aides to Amboe, who was at the House of Assembly complex as part of advanced team of the governor, told BusinessDay at about 5:42pm that they were still waiting at the House, expecting the lawmakers’ signal to the governor to come for the budget presentation. “The executive is ready and we’re still here (House of Assembly complex) expecting the lawmakers to signal the executive to come forward for the budget presentation,” says the governor’s aide. At the time of this report, it was still uncertain that the governor would still come as normal activities continue within the Assembly complex.

Edo approves N843m for payment of pensioners

Godwin Obaseki, governor, Edo State (l), with Zhou Pingjian, Chinese Ambassador to Nigeria, at the Forum on the Belt and Road Initiative and Production Capacity Cooperation between China and Nigeria, held in Lagos, to mark the Chinese New Year.

IMF projects Nigeria economy to grow 2% in 2019 … cuts global growth to 3.5% HOPE MOSES-ASHIKE & DIPO OLADEHINDE

nternational Monetary Fund (IMF), a Washingtonbased financial institution, is expecting a growth expansion of 2 percent for Nigeria in 2019, up from 1.9 percent projected in 2018. IMF growth projection for Africa’s biggest economy in 2019 is lower than the World Bank’s 2.2 percent growth for Nigeria in the same year. In its World Economic Outlook for 2019 released Monday, IMF also projects Nigeria to grow by 2.2 percent in 2020. Reacting to the development, Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said the IMF projection was far lower than the GDP growth rate that could create job and reduce poverty in the country. The Fund said sub-Saharan Africa growth was expected to pick up from 2.9 percent in 2018 to 3.5 percent in 2019, and 3.6 percent in 2020. “For both years, the projection is 0.3 percentage point lower than last October’s projection, as softening oil prices have caused downward revisions for

Angola and Nigeria,” according to the report. IMF noted that the headline numbers for the region mask significant variation in performance, with over one-third of sub-Saharan economies expected to grow above 5 percent in 2019 to 2020. Akinwunmi, who said the IMF projection for 2019 was lower than the projections of FSDH Research at 2.48 percent and that of World Bank at 2.2 percent, said, “Nigerian economy should be growing at over 5% before we can celebrate.” This can only happen if there is adequate infrastructure (both physical and human) in the country and policies that are friendly to investors, he said. Also, the IMF projected global growth at 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage point below last October’s projections. “The global growth forecast for 2019 and 2020 had already been revised downward in the last WEO, partly because of the negative effects of tariff increases enacted in the United States and China earlier that year,” according to the report.

The report admitted that an escalation of trade tensions beyond those already incorporated in the forecast remained a key source of risk to the outlook. “Financial conditions have already tightened since the fall. “Across all economies, measures to boost potential output growth, enhance inclusiveness, and strengthen fiscal and financial buffers in an environment of high debt burdens and tighter financial conditions are imperatives,” IMF said. The IMF acknowledged that financial conditions in advanced economies had tightened since the fall, as equity valuations, which were stretched in some countries, had been pared back with diminished optimism about earnings prospects amid escalating trade tensions and expectations of slower global growth. It also expects economic activity in emerging and developing economies to tick down to 4.5 percent in 2019, mainly because of a large projected contraction in Turkey, amid policy tightening and adjustment to more restrictive exter-

nal financing conditions with a rebound to 4.9 percent in 2020. “Emerging market and developing economies have been tested by difficult external conditions over the past few months amid trade tensions, rising US interest rates, dollar appreciation, capital outflows, and volatile oil prices,” IMF said. IMF noted that in some economies, addressing high private debt burdens and balance-sheet currency and maturity mismatches will require strengthening macro prudential frameworks. “Exchange rate flexibility can complement these policies by helping to buffer external shocks. Where inflation expectations are well anchored, monetary policy can provide support to domestic activity as needed.” IMF said growth in advanced economies is projected to slow from an estimated 2.3 percent in 2018 to 2.0 percent in 2019 and 1.7 percent in 2020. “This estimated growth rate for 2018 and the projection for 2019 are 0.1 percentage point lower than in the October 2018 WEO, mostly due to downward revisions for the euro area.”

n line with the promise to clear pension arrears inherited by his administration, Edo State governor, Godwin Obaseki, on Monday approved the release of N843,324,509.46 for the payment of arrears owed local government pensioners covering 2015 to 2018. Jimoh Ijegbai, commissioner for local government and community affairs, made this known during a press conference with members of Local Government Pensioners Association, Edo State, in Benin City, the state capital. Ijegbai said: “You will recall that during the May Day celebration last year, the governor approved N1.5 billion to defray arrears of pensioners of the unified local government system in Edo State. “This recent approval of N843, 324, 509.46 is a further demonstration of the commitment of the Obaseki-led administration in Edo State to ensure that all arrears of pension are cleared.” He explained, “Last year, on a monthly basis, we were using N264 million to pay pensioners and at the close of December, we paid pensioners to the tune of N3.168billion. If you add this to the N1.5 billion that we paid in June last year and this recent approval of N843, 324, 509.46 that we are paying today, it will bring the total amount used in paying pensioners for one year to N5, 511,324, 509.46. “That is what we have used to pay pensioners of the unified local government system in one year.” The commissioner assured, “Governor Obaseki is determined to clear the little arrears that we will have after now. Between now and June, we will pay another batch of 2009 to 2014 and thereafter, we will pay what is left before the end of the year.” He called on pensioners in the state “to continue to support the Obaseki administration to take the state to the next level,” adding, “We are determined to ensure our senior citizens do not suffer unduly after retirement and we have put machinery in place to ensure that as you exit from the service and complete all your papers, we will ensure that payments are effected.”

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Edo’s industrialisation drive receives fresh impetus from China’s Belt, Road Initiative ... Industrial Park, River Port, others top China’s list of projects

f f o r t s by t h e Ed o State governor, Godwin Obaseki, to turn the state into a hub of industrial activities have received further assurance of the Chinese government, with the roll out of the implementation of the Chinese G overnment’s Belt and Road Initiative in Nigeria. This was disclosed by Chinese officials at the Forum on the Belt and Road Initiative and Production Capacity Cooperation between China and Nigeria, held in Lagos on Sunday, to mark the Chinese New Year. Edo State g overnor, Godwin Obaseki, was a special guest at the Chinese Consulate in Nigeria to mark the celebration and also streamline plans in the realisation of the Asian country’s Belt and Road Initiative in Nigeria. The event was attended by top members of the Chinese government’s delegation to Nigeria as well as top functionaries from the Edo State government, among others. Governor Obaseki has had a robust partnership with the Chinese government, which crystallised in the attraction of bigticket projects from China to Edo State as well as the handling of these projects by reputable Chinese companies. The projects include the Benin Industrial Park and Free Trade Zone as well as the construction of the Benin River Port, which is to be handled by China Harbour Engineering

Company Limited (CHEC). Th e 1 0 0 0 b p d B e n i n Modular Refinery is also to be built by a Chinese consortium, which includes Peiyang Chemical Company Limited (PCC), SINOPEC and others. According to Obaseki, the Edo government is deeply connected with the Belt and Road Initiative, and is happy that the initiative will be implemented from 2019. The state government is excited about the prospects and has made initial commitment for some of the projects she is developing in partnership with Chinese partners to ensure their quick realisation, he said. A c o n su lat e o f f i c ia l commended the governor and the Chinese Ambassador to Nigeria, Zhou Pingjian, for gracing the event, noting that the initiative was being implemented after President Muhammadu Buhari met with Chinese President, Xi Jinping, in Beijing, to agree on stronger ties between both countries. According to him, “2019 is the first year of the implementation of the outcomes of the Beijing Summit of the Forum on ChinaAfrica Cooperation. The Summit, according to the official, “launches eight major initiatives including industrial promotion, infrastructure connectivity, trade facilitation, green development, capacity building, healthcare, people-to-people exchange and peace and security.”

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Tuesday 22 January 2019

FIABCI canvasses enabling environment for foreign investment in real estate market CHUKA UROKO

he International Real Estate Federation (FIABCI), Nigerian chapter, has canvassed enabling environment in Nigeria for foreign investment inflow into the country’s real estate market. Theworldwiderealestateorganisation with membership in 65 countries, 100 professional associations, 65 academicinstitutionsand3,000individual members, represents the world’s real estate professions through its special consultative status with the Economic and Social Council (ECOSOC) of the United Nations Organisation. Adeniji Adele, president of the Nigerian chapter, emphasised in a statement in Lagos on Monday that “the only way foreign investments could penetrate the Nigerian real estate market is by ensuring that an enabling environment for such funds

to thrive is created.” This underscores the need for ease of doing business in the country. Adele explained that this need informed their choice of ‘Ease of Doing Real Estate Business’ as theme for their Business Forum and Award Ceremony already scheduled for tomorrow in Lagos. The event, which will be chaired by Oba Otudeko, chairman, Honeywell Group, will have Gbolahan Lawal, Lagos State commissioner for housing, as special guest of honour. Other personalities expected at the event are the FIABCI World president, Assen Makedonov, immediate past president, Farook Mahmood; Flavio Gonzaga Nunes, and Jumoke Oduwole, senior special adviser to the Vice President on Industry, Trade and Investment, as special guests Adele said the award categories were in affordable housing, hotel,

retail, sustainable development, mixed use, residential housing, both mid-rise and high-rise, office and industrial development among others. Winners will qualify to participate in the ‘FIABCI World Prix d’Excellence Awards’ to be organized by FIABCI International. According to Adele, awardees will be examined by an international panel made up of top real estate professionals and experts. This, therefore, represents an outstanding achievement and bestows upon the winners the right to use the exclusive award logo and also give winners access to unique international platforms for their projects and companies via the vast FIABCI network. It is expected that the awards will draw attention to those iconic projects and also recognize landmark achievements. They will provide an avenue for awardees to showcase

their properties globally. Asides the awards, the Nigerian Property Scorecard will be unveiled at this event. “This scorecard is an outcome of the continued collaboration between the Centre for International Private Enterprise (CIPE) and the International Real Property Foundation (IRPF). The scorecard will reveal the current Nigerian property market conditions in a bid to identify the key areas for reform,” he explained. Continuing, he said, “As markets mature and professionals are nurtured, better investments will be introduced into right property types needed in the country and the GDP of the country will improve; FIABCINIGERIA is in a position to bring together all the major stakeholders in the real estate industry to offer solutions and also to meet the ever increasing demand for affordable housing within cities.”

L-R: Jabo Stephen, director, Hydro-Geophysics, Nigeria Hydrological Services (NIHSA); Clement Nze, director-general, Nigeria Hydrological Services (NIHSA); Gourcy Laurence, expert, International Atomic Energy Agency (IAEA), Vienna, Austria, and Kracht Oliver, during the International Water Availability Enhancement Workshop organised by NIHSA in Abuja, yesterday. NAN

Lagos out with new guidelines on siting of petrol, gas stations

Nigeria aims for sub-100 ranking in 2020 World Bank Ease of Doing Business report

... CCTVs now compulsory

JOSHUA BASSEY

agos State government has lifted the embargo it slammed on the construction of petrol stations in the state. The government has also released new guidelines for the siting of petrol stations and gas plants on highways and major streets, all aimed at ensuring the safety of persons and property. Lagos, Nigeria’s commercial hub has had major fire disasters at gas and petrol stations resulting in heavy casualties over the years, forcing it in April 2017 to place an embargo on indiscriminate siting of such facilities in the state. Under the new guideline, a person seeking to open a petrol station on the highway would require a land size of 2500sqm of land and above and must be 2.0km away from existing station on same side of the road. Also, the facility must have changing room, air com-

pressor, lube bay, car wash, convenience store, offices, toilets (minimum of three each for male, female and one each for disabled male and female, fast food/restaurant, fire-fighting equipment, CCTV, nine pumps, 18 nozzles maximum, minimum of four underground tanks and maximum capacity underground tanks of 45,000 litres, security while e-banking facility is optional. Rotimi Ogunleye, commissioner for physical planning and urban development, at a press conference on Monday, said Governor Akinwunmi Ambode had approved the immediate lifting of the embargo. He said the governor also approved the implementation of a reviewed guideline detailing the requirements to be met by persons or group(s) to obtain the planning permits for petrol station and gas plants in the state. “By this approval, the state government seeks to ensure safe and orderly siting, opera-

tion and management of petrol stations and gas plants for the overall safety of Lagosians. The earlier embargo was to check the proliferation of petrol stations and gas plants and their consequence on safety of lives and property. “The government was also concerned about improving the aesthetics value and the efficiency of operation in the planning, building control and urban regeneration of the state,” Ogunleye said, adding that with the reviewed guidelines, investors intending to embark on developments of this nature and existing operators were expected to comply with the provisions of the reviewed templates. The commissioner urged investors to apply for planning information from the ministry before embarking on any developments in order to have firsthand information about the kind of development that could be done in a specific area of the state.

ENDURANCE OKAFOR

residential Enabling Business Environment Council (PEBEC) has announced a goal to move Nigeria into the top-100 on the 2020 World Bank Doing Business Index (DBI). This was made known at the 10th Presidential Quarterly Business Forum, which held in Abuja last week. The Forum was attended by leadingmembersoftheorganised private sector and other key stakeholders, and had seven ministers, including industry, trade and investment, finance, budget and national planning and power, works and housing present to share detailed progress reports with representatives. The DBI is an annual ranking that objectively assesses prevailing business climate conditions across 190 countries based on 10 Ease of Doing Business (EoDB) indicators. The Index offers comparative insights based on private sector validation of reforms delivered in the two largest commercial cities in countries with a population higher than 100 million, and the report consequently features Lagos and Kano states for Nigeria.

The World Bank has reported an improvement in Nigeria’s Distance to Frontier (DTF) score by more than 11 basis points over the past 3 years. This means that Nigeria has improved its business regulations as captured by the doing business indicators, and is narrowing the gap with global regulatory best practice. This success has been driven by the implementation of over 140 reforms by PEBEC over the period, which also resulted in the country moving up 24 places in the rankings. Speaking on the sub-100 target, Jumoke Oduwole, secretary of the PEBEC and senior special assistant to the President on Industry, Trade and Investment, said, “We know it is bold, but we are quite clear on what our mandate is and are motivated by the impact we know these reforms will have on the lives of Nigerians.” Since its establishment in 2016, PEBEC in collaboration with MDAs and other public and private sector partners, has systematically worked to remove bureaucratic bottlenecks faced by businesses in Nigeria. The Council has focused on reducing the time, cost and pro-

cedures of doing business, and some of its successful reforms include the ability of stakeholders to reserve a business name within 4-hours and complete the registration of a company within 24 hours online; apply for and receive approval of a visaon-arrival electronically within 48hrs; file and pay all federal taxes online; and access specialised small claims commercial courts in Lagos and Kano states, to mention a few. The World Bank also reported in 2018 that 32 states improved in their EoDB environment led by Kaduna, Enugu, Abia, Lagos and Anambra. Oduwole stated, “This year, we intend to strengthen the collaboration with MDAs and partners to consolidate and build on the work done. We will be pursuing the implementation of much-neededlegislativereforms, specifically the passage of the CAMA and Omnibus Bills; the expansion of the regulatory reform program started with NAFDAC and NAICOM to include other regulators; the establishment of a National Trading Platform for ports; and the concession of our major international airports.

Tuesday 22 January 2019

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Will the presidential debates make any difference?

Mazi Sam Ohuabunwa OFR, FPSN sam@starteamconsult.com

igeria is an interesting country. I believe we all know it, even if we are also good at denying reality. The more you look, the less you see. Things don’t always turn out to be what they were intended to be. What works elsewhere may not always work here. The police announces that it has abolished check points on the highways, yet you travel around the country and you find many police checkpoints situated one pole apart especially in the East of Nigeria, and you complain and write about it, nothing happens. A military commander consistently loses his men in battle and after claiming that the enemy has been degraded and decimated, you find that the enemy has gone nowhere

STRATEGY & POLICY

MA JOHNSON Johnson is an eclectic researcher, writer and columnist whose articles cover maritime, defence, technology and public policy issues and other areas of human interests. He is a member of the BusinessDay Editorial Advisory Board)

ilful disobedience of law and order didn’t start today. It started many centuries ago. Since the time of the first Adam in the Garden of Eden, man has been disobeying lawful orders. So, why do we expect any mortal to obey the constitution of a country? Rather than rule by the law, which according to Plato, is the supreme instrument for the moral salvation of the society, those in the government disregard the due process of law. The desire of many incumbent political office holders especially presidents and state governors not to relinquish power peacefully and constitutionally, and failing which

prompting the governor of a state to shed tears on television and the guy is left on his seat and perhaps expecting a promotion. A serving governor is caught on tape accepting bribes from a contractor and nobody says anything because the governor is part of ‘us’ where as a petition against the Chief Justice of Nigeria ( CJN) is written on the 9th of January, investigated on the 10th and charges preferred on the 11th. In Nigeria you are a thief when you belong to the opposition party but your sins are forgiven and you become a saint as soon you cross over to the ruling party as openly declared by the ruling party chairman and the people hail him: Osho Baba! Nigeria is truly an exciting country. You make promises, some written in manifestos and when you win elections, you flatly deny them and the people hail you: Sai Baba! You continue to perform poorly but your popularity grows and people threaten to commit suicide if you do not remain in office! That is the country we now live in. A country where a presidential candidate refused to participate in an election debate and it seemed to be of no consequence as he went on to win comfortably. Now we are in another electoral season. Promises are being made. Who believes the promises? And will anybody be held responsible

‘

Nigerians choose their leaders mostly on mundane considerationsethnicity, religion, relationship and short term gains, including ‘stomach infrastructure’. To make up one’s mind using the above mundane criteria does not require a TV debate. Once people have made their choices based on the enumerated mundane issues, their minds are closed

’

for keeping or not keeping promises? So very often, rather than ask hard and searching questions to our political contestants and seek verifiable answers we prefer to

listen to music and dance often swallowing line, hook and sinker all the propaganda that spew from campaign organizations. That is the country we live in. Another round of presidential debates has started across the nation. Governorship or gubernatorial debates are blazing in state capitals and one presidential debate happened last week end. The presidential candidates of the two leading parties failed to show up. Atiku had said he would not participate if Buhari was not going to participate. And so both of them failed to show up. My question is: “will there be any consequence for not participating and ignoring millions of Nigerians who watched the debate”? I have my doubt if there will be any adverse consequence, because it happened before and nothing happened. My next question is: “will the debate make any difference to the electoral fortunes of those candidates - Moghalu, Durotoye and Ezekwesili who actively participated in the debate?” That would be the expectation in a normal country, given the stellar performances of the three candidates, but not in Nigeria. Indeed it is doubtful if there would be any difference even if Atiku and Buhari had participated in the debate. How many people will have changed their minds about any candidate because of the debate? Very few! Why?

Nigerians choose their leaders mostly on mundane considerationsethnicity, religion, relationship and short term gains, including ‘stomach infrastructure’. To make up one’s mind using the above mundane criteria does not require a TV debate. Once people have made their choices based on the enumerated mundane issues, their minds are closed. They ask no questions, they interrogate no assumptions. Tell them their chosen candidate does not have WAEC certificate, they tell you that it does not matter even if he did not go to school. Tell them their preferred candidate is corrupt, then they retort, ‘who is not corrupt’ or ask ‘is he more corrupt that the other candidates’? Tell them their preferred candidates are too old and they ask if they are older than Obasanjo who wanted to go for the third term. That is the kind of real debate that goes on in Nigeria. I salute the Nigerian Election Debate Group (NEDG) and the Broadcasting Organization of Nigeria (BON) for their effort to help us change how we make our electoral choices from mundane to substantial. I believe that someday we may arrive there. But for this 2019, no dice; minds are already made up, debate or no debate. I wish I could be proven wrong! Send reactions to: comment@businessday.ng

Political succession: Nota do-or-die affair they try to impose their anointed in their place is a threat to democracy. When it comes to politics of succession, particularly in Africa, many ugly and shameful events do occur. In Nigeria, for example, we have seen massive rigging of election results, tenure elongation, imposition of councillors,local government chairmen, governors and presidents on the people. Anything contrary to laid down democratic process is caused by the politics of succession. One wonders why presidents and state governors are reluctant to leave office honourably. It’s not because of national interest. It’s due to easy access to national resources. So, everything must be done by political office holders at state and federal levels to manipulate the entire political succession process, even contrary to the position of their political parties as we witness in the polity today. This is so because political parties have become tools of manipulation in the hands of state governors and presidents. Politics have turned to warfare across the country. The desperation to either occupy or retain political offices have always led to deadly encounters at political party rallies as we witnessed recently in Lagos and other states. It was a show of shame at the Lagos APC gubernatorial campaign rally as hoodlums attacked

party members and journalists when the Lagos State Governor, Akinwumi Ambode, was delivering a speech. It shows the kind of politics we play in the country, and that the safety of anyone cannot be guaranteed even in an area where the governor is standing with all his security operatives. Political succession shouldn’t be a do or die affair. As we approach the 2019 general elections, the world is watching political events as they unfold in Nigeria. The appointment of Amina Bala Zakari, Independent National Electoral Commission’s (INEC’s) Commissioner, as the head of the 2019 Presidential Election Collation Centre is controversial. The situation is such that whenever Amina Zakari is mentioned, her name is a red flag at INEC. Mention her name, and the blood pressure of politicians in the opposition will rise. But the President insists that she is the only one qualified to do the job. The sudden removal of the Chief Justice of Nigeria (CJN), Walter Onnoghen, over false asset declaration is a fatal and devastating blow on democracy in Nigeria. The removal of the CJN from office has been politicised with South-South governors saying that Onnoghen should not appear before the Code of Conduct Tribunal. Niger Delta militants have threatened to blow up oil installations in the Niger Delta. The All Progressives Party (APC) have decreed that “CJN Onnoghen must face trial.” Anyway, a battery of lawyers including Senior

Advocates of Nigeria (SANs) are ready to defend the CJN. With profound respect, the removal of the CJN from office without due process, is a wilful disobedience and flagrant disregard of the rule of law. Why trivialize the rule of law by not taking the outcome of the investigation on the CJN through the National Judicial Council? A scripture in the Book of Ecclesiastes says that “to everything there is a time.” Asset declaration by any government official is a necessity by law. There is a time to remove the CJN. Those in the government may argue that this is the best time to remove him. Removing the CJN from office now is not appropriate. His removal from office can be done later when elections are over. Unless there are other mysterious reasons why the removal of the CJN has to be immediate. At a time when election is just less than a month, Nigeria should have a CJN in office. That is why Nigerians, especially those in the opposition are saying that the forthcoming elections will be massively rigged by the APC. Well, those who predicted that the 2019general elections will witness mass rigging may not be far from the truth considering developments in the INEC and sudden removal of the CJN. The CJN’s removal has given room for various theories to thrive. Prophets have also prophesied that presidential elections will be inconclusive. Democracy has suffered terribly

in the hands of our political leaders. Almost everyone in the government is a “law” with barely any legal responsibility for their acts or omissions. If democracy was to thrive in Nigeria, it has to be operated on peaceful political succession, with strict adherence to the rule of law, not the rule of men. Political succession is a very sensitive matter in Nigeria as it is crucial for renewal of voters’ confidence. And it should therefore be handled with great care and caution. If any leader wants to remain office as permitted by the constitution, it should be done with all sense of decency. There is no need to manipulate the entire political process in the name of fighting corruption. Nigerians want democracy- a government of the people elected by the people. They reject “choice less democracy” in its entirety. Democracy is meant to be representative government. Nigerians are tired of having those who didn’t win election parading themselves as representatives of the people in government. The race for any political office is not to the swift in the year 2019. This year’s election will be conclusive but it would be for those who have the character and competence to occupy elected and appointed offices. Nigeria, shine and rise. Send reactions to: comment@businessday.ng

Tuesday 22 January 2019

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Deal with Onnoghen matter after the polls

Rafiq Raji “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

n January, Walter Onnoghen, Nigeria’s chief justice, was served with charges for failing to declare certain domestic foreign currenc y accounts. Ordinarily, such matters would be handled by the National Judicial Council, the watchdog for judges, before further steps are taken, if at all. At least, so it was thought. Arguments have been

raised since then suggesting that may not necessarily be the case when the allegations are criminal or in the judge’s personal capacity. In any case, that is a matter for the legal system to resolve. Considering how crucial the upcoming elections are, and the important role the judiciary would likely play in them, many wonder if the beleaguered judge is not being hounded out of office to make way for someone more acceptable to the Muhammadu Buhari administration. Like the president, the next in line to the embattled chief justice is a Northern Muslim. Mr Onnoghen is a Christian southerner. There is precedence for these concerns. The chiefs of the army, air force, intelligence, police, customs, immigration, electoral commission, to mention a few, are Northern Muslims. President Buhari was not quick to appoint Mr Onnoghen to the top of the judicial pro-

‘ It is hard to justify any

benefit to the polity from clearly attempting to remove the most senior judicial officer in the land, who would be a key adjudicator in election disputes, just a month to the polls. In fact, the action has the potential of heightening regional tensions

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fession. He did so only after tremendous pressure. Recent events suggest the matter was likely never put to rest. That is even as Mr Buhari was reportedly caught

unawares by the development. To be clear, no one is above the law. The chief justice can be petitioned, charged and prosecuted. And there is an abundance of laws and process to ensure he faces the music should he be found culpable. But a development that could potentially lead to the resignation of the chief justice or his removal just a month to the polls is very suspicious indeed. Still, it must be borne in mind that senior judges have been prosecuted in other jurisdictions. A more recent and perhaps most relevant example is the case of Philomena Mwilu, the deputy chief justice of Kenya, who is currently under prosecution for corruption. In her case, she appeared in court as scheduled in the full glare of cameras before later securing reprieve over the jurisdiction of the lower court which docked her. Thus, there is nothing wrong with the chief justice appearing before the Code of Conduct Tri-

bunal or any other legal venue. For the avoidance of doubt, the complications in respect of this matter relate to the timing and due-process of the law. It is hard to justify any benefit to the polity from clearly attempting to remove the most senior judicial officer in the land, who would be a key adjudicator in election disputes, just a month to the polls. In fact, the action has the potential of heightening regional tensions. Incidentally, the president might have been done a great disservice. The outcry by the main opposition party that he desires a dictatorship and a return of northern hegemony has been given greater credence by this recent event. Now that the legal due-process has been put back on track, the advocacy now is that whatever action is to be taken be deferred till after the polls.

Send reactions to: comment@businessday.ng

Risk identification framework: A guide to taking an important step in your risk management journey Yemi Adesanya (FCA) Yemi Adesanya (FCA) is a risk & control manager in financial services

hen Mr. Olufemi became an Inter switch Financial Inclusion Agent, he may not have foreseen that a few months later, he would be crying out about serious bodily injury from assault and threats to his life by angry customers whom he owed about N2 million. Mr. Olufemi operated a Quick teller Pay point shop, and his business plan did not include borrowing from customers. Customers could come to his shop to withdraw cash from their accounts domiciled in any of the nation’s banks. They would use their bank-issued debit cards on the Interswitch-issued Point of Sales Terminal in his shop, and once his account with his bank was credited for the amount the customer wished to withdraw, he would pay cash to the customer from sales proceeds of his store or from cash kept on hand for this purpose. But “the best-laid plans of mice and men often go awry”. A malfunctioning POS Terminal, which would debit the customers’ accounts without crediting his, got him on the wrong side of customers, some of who physically assaulted him. Risk crystalized in a slightly different hue on December 5, 2018at a Robbinsville New Jersey fulfillment center operated by Amazon. com, where a Bear Repellant was accidentally discharged within a contained area of the ware house facility. According to news reports

quoting the Get Bear Smart Society, the bear pepper spray is a “nonlethal repellent that causes a bear’s mucous membranes to swell, making it hard for the animal to see or breathe, giving its victim an opportunity to flee. It has a similar effect on humans.” In the reported Amazon.com incident, a machine accidentally punctured a 9-ounce bear repellent can, releasing concentrated Capsaican, the major ingredient in pepper spray, exposing employees and leaving about 80 of them with various kinds of breathing difficulties, with one in a critical condition. The Nigerian vice presidential debate hash tag #2019Debatewhich trended on the Nigerian Twittersphereon December 14, 2018 ordinarily had little to do with Guinness Nigeria, or Terragon Group, a data and marketing technology firm and Guinness’s @GuinessNGR Twitter account handler. But in what appeared to have been an erroneous slip of partisan passion unto the client’s handle, @GuinessNGR replied to a tweet by a member of Nigeria’s President’s media Team: “Shut up you dirty mouth goat”. Shortly after, Terragon Group tendered an unreserved apology from the company’s official handle, but those 6 words were already out, retweeted, screen-grabbed, shared, and re-blogged by countless other platforms, and forever in the public domain. News cycle quickly moved onto more interesting matters, but could the slip have been worse for Guinness? Who knows the implication for Terragon? This was again a risk incident with a totally different tag. Risk is everywhere around us, including in the path of courageous entrepreneurs venturing to fulfil myriads of human needs. Entrepreneurship is a quest for benefit

realization through risk optimization, but not everyone pays attention to the risk side of the equation. In creating and selling products or offering services that cater to specific market opportunities, risk must be managed or benefits may not be realised. Although many organisations have some semblance of risk management, it is not often as rigorous as their risk contexts require. Highly regulated industries may be a step ahead in attention to risk management, but no business can thrive under neglect of risk. The regulatory environment and the nature of the industry’s risk profile often keeps financial institutions constantly thinking about and managing risks, but outside such stringently regulated sectors, and especially in small and medium scale enterprises, risk management is often not the centre of attention. This often resultsin preventable risk events befalling unprepared organisations, resulting in avoidable losses. THE RISK OF NOT IDENTIFYING RISK Risk is defined as the effect of uncertainty on objectives, or the possibility that an event will occur and adversely affect the achievement of objectives. Whether in business as a marketing agency or a school, in the e-commerce or hospitality business, or as newspaper publishing house, risk is lurking whether the organization is risk aware or not. Managing risks requires organizations to identify their risks, analyse and evaluate likelihood and impact, quantify risk exposures, determine disposition to identified risks, formulate and execute risk mitigation strategies, control and response plans, and monitor to ensure that all these processes function effectively. All of these should be done within a clearly articulated mission, strategy and risk appetite.

Recognizing that risk abounds in an endeavor is only the first step. A business’s objective setting, at various organizational levels, should be followed by risk assessment – a systematic process for identifying, analysing and evaluating events that can affect the achievement of organizational objectives. Such events can be identified in the external environment (e.g., economic trends, regulatory landscape, competition, and events with physical impact such as natural disasters, robberies etc) and within an organization’s internal environment (e.g. people, process, and infrastructure). When these events intersect with an organization’s objectives - or can be predicted to do so - they become risks. Risk Identification is the process of generating a comprehensive list of risks based on events, with the goal of understanding possible impediments to the achievement of business objectives. For example, if your organization was outsourcing the management of its social media handles to an agent, a possible risk event may be the use of the handle for unauthorized purposes, erroneously or otherwise, resulting in reputational fallouts. To start risk-managing the process so that risk would not exceed the organisation’s defined tolerance, sufficient time would need to be set aside to identify as many risks as possible that can derail the achievement of business objectives regarding this public relation function. Risk affects organizational context through diverse mechanisms. An understanding of both the context and mechanism will strengthen the risk management process. The following is a framework which considers the interaction of the risk context and mechanism to provide insights required for holistic risk

identification. RISK MECHANISM Think of risk mechanisms as the processes by which risks can crystalize. These are the avenues through which uncertainties can arise and the process by which uncertainties affect the risk context. How could risk affect the SOICriDe, your risk context? Risk mechanism can fall under the following: • Assumptions: Uncertainties can arise due to the validity of crucial assumptions. For example, Mr. Olufemi’s financial inclusion shop could have assumed that the switch company would always credit the business account every time a customer made a withdrawal, or that customers would understand and wait for the financial institution to reverse erroneous debits to their accounts. In reality, these assumptions were not always valid. Moreover, achievement of certain performance expectations depends on the validity of some assumptions. In Amazon’s case, the successful fulfilment of the Bear Repellant depends on not dischargingit within its warehouse facilities. Amazon’s Workplace Safety objectives also depend on not having vasoconstrictors discharge within its premises. The risk identification procedure should therefore question the different assumptions on which the organisation’s risk context functions, and the situations that can threaten the validity of these assumptions. Useful questions to ask here are: What must go right to achieve our objectives? What are the barriers to our success?What could go wrong? How could we fail? Note: the rest of this article continues in the online edition of Business Day @ https://businessday.ng

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Tuesday 22 January 2019

Ease of doing business in Nigeria

espite the harsh economic conditions in the country, there appears to be progress in one area of the economy at least: The ease of doing business. In 2015, Nigeria ranked 170th in World Bank’s ease of doing business. However, by 2017, Nigeria’s ranking has improved considerably to 145th. However, despite the improvement, multinational companies operating in Nigeria and other businesses do not seem to share that optimism as they continue to close shop and leave Nigeria in droves with all of them citing the harsh business environment. The shut-down of Procter & Gamble’s $300 million consumer goods plant in Agbara in July 2018 reflects the challenges of doing business in Nigeria. In 2014, P&G set up a diaper line in Agbara, Ogun State, tapped as biggest US non-oil investment in Nigeria. Four years down the line, the company packed up, cit-

ing unusually harsh operating business environment. But P&G is not alone. According to Manufacturers Association of Nigeria, about 272 manufacturing plants were shut down across the country in 2016 alone. Truth is : There has been near collapse of infrastructure in Nigeria and it is hurting businesses badly. For instance, many businesses now groan under intense pain due to overhead costs incurred in providing alternative infrastructure like power. According to data from the Manufacturers Association of Nigeria, manufacturers have spent N212.85 billion on alternative energy sources between the second half of 2016 and the first half of 2018. This is over 100 percent higher than what was incurred in the previous four halves. Other challenges faced by companies operating in Nigeria are bad network of roads, rising logistics cost, multiplicity of taxes, high cost of funds and poor sales resulting from a stunted economy. The roads across the country make it difficult for businesses to operate smoothly and

efficiently. What is more, the three tiers of government in Nigeria are more interested in competing to impose multiple taxes on businesses than fixing the roads. Manufacturers als o told BusinessDay that lo gistics costs have risen by 50 to 100 percent in the last two years, owing to poor state of roads and lack of a good transport system. Equally, tax experts have put the number of taxes payable by businesses across the country at 54 as against 37 in 2014. President of the National Cashew Association of Nigeria, told BusinessDay that exporters shipping out 1,700 tons of cashew per day in 2014 now manage to ship between 100 and 250 tons. A reduction in export and sales increases cost per unit of product and raises inventory. There is yet no respite in sight for low-c o st-s e eking manufacturers who would have seen their logistics costs fall had GE not exited a railway contract linking Apapa ports to Lagos mainland. The combined administrative and distribution expenses

of 24 largest manufacturers quoted on the floor of the bourse were up 7.59 percent to N196.61 billion between September 2017 and 2018, albeit lower than November inflation figure. Manufacturers were unable to sell goods worth N149.23 billion in the first half of 2018 after producing goods worth N4.6 trillion. Manufacturers are also not finding b orrowing easy as interest rate charged them by banks in the first half of 2018 stood at 22.9 percent, 0.25 percentage point higher than 22.65 percent recorded in the same half of 2017. Then in the midst of all these challenges, the government adds capriciousness, callousness and an extortionist’s attitude in dealing with businesses. South Africa’s MTN Group Ltd, Africa’s largest telecommunications provider is currently in the process of resolving its stand-off with the Nigerian authorities following the CBN’s laughable order on them to cough out $10.1 billion in alleged unpaid taxes and illegal repatriation.

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Tuesday 22 January 2019

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Konga,Visa partner to add value offerings in e-Commerce sector Pg. 14

C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

PRIVATE EQUITY

Nigerian insurer gets new investor OLUFIKAYO OWOEYE

dvance Finance and Investment Group (AFIG), an African Private Equity fund manager, has acquired a 29.9% stake in NEM Insurance Plc. This transaction makes AFIG the largest shareholder in the Nigerian insurer. NEM’s share price was up some 9.7 percent to close at N2.48 Friday, returning 40.91 percent in last one year. With a market capitalisation of N13 billion, 29.9 percent of NEM is worth N3.8 billion. CardinalStone Partners Limited and Koya Kuti Solicitors acted as Financial and Legal advisers respectively for NEM Insurance while PWC and Banwo & Ighodalo were transactional advisers to AFIG Funds. Kelechi Okoro, Director of

Investment at AFIG Funds acknowledged the positive trajectory of the Insurance company and the confidence it has in its management. “Through our engagement with NEM Insurance over the last several years, we have had the opportunity to observe its solid trajectory and to develop confidence in the management team’s ability to seize growth opportunities in the increasingly competitive landscape.” The Group Managing Director, Tope Smart, noted that the partnership with AFIG is the the outcome of several years of positive engagement, as well as a thorough internal strategic process to identify and engage the best long-term institutional partner for the company. It would be recalled that an investor in the insurance company, VFD Group recently agreed to sell a significant block of its stake in NEM Insurance Plc.

L-R: Chinenye Anekwe, business development manager Northern Region, Solar Sister Nigeria; Olasimbo Sojinrin, country manager, and Chioma Ome, training manager, Solar Sister Nigeria, during a dinner in honour of its entrepreneurs from 21 states across the country in Abuja. Pic by Tunde Adeniyi.

N.E.M. Insurance Plc is a major player in the insurance industry providing both general and non-life insurance cover.

Advance Finance and Investment Group, AFIG, is a private equity management firm and currently has two

funds under its management, the Atlantic Coast Regional Funds, and AFIG Fund 2. The AFIG Fund 2 is invested in

diverse sectors across, West, Central and East Africa. The fund is registered in Mauritius and Head quartered in Senegal.

INVESTMENT BANKING

APPOINTMENTS

Ecobank appoints former SEC Afrinvest expects Nigerian DG as Non-Executive Director economy to grow by 2.5% in 2019 HOPE MOSES-ASHIKE

OLUWASEGUN OLAKOYENIKAN

cobank Transna tional Incorporated (ETI) Plc, the Lomébased parent company of the Ecobank Group, has appointed the former Director General (DG) of Securities and Exchange Commission (SEC), Arunma Oteh, to its Board of Directors as a Non-Executive Director. The appointment was made known in a press release sent to the Nigerian Stock Exchange (NSE) Friday in compliance with The Exchange rules. Oteh, who holds a Master’s degree in Business Administration from Harvard Business School and a First Class Honours Bachelor of Science Degree from the University of Nigeria, Nsukka, served as the DG of SEC from 2010 to 2015. During this period, she led the rebuilding of the Nigerian capital markets after the global financial crisis and served on Nigeria’s Economic Management team. The former SEC boss later joined the World Bank as Treasurer from 2015 to 2018 where she led a team that managed the World Bank’s $200 billion debt portfolio as well as an as-

set portfolio of $200 billion for the global lender and 65 central banks and other public sector clients. She was also responsible for an extensive public sector financial advisory business and back office operations, administering payments of over $7 trillion. Prior to her appointment at SEC Nigeria, Oteh worked at the Africa Development Bank for 17 years in a variety of roles including Group Vice President, Corporate Services (2006 to 2009) and Group Treasurer (2001 to 2006). She also served on the Board of the Nigerian Pension Commission, the World Economic Forum Agenda Council on Institutional Governance, and the Africa Advisory Council for World Women’s Banking. In 2011, in recognition of her contribution to the economic development of Nigeria and role in transforming the Nigerian capital markets, she was awarded the Officer of the Order of the Niger (OON) National Honor. In 2014, she was named the Africa Investor Capital Market Personality of the Year and in 2016 received the New African Woman Aw a r d i n Fi n a n c e a n d Banking. In 2018, she was

honored as the Ai Global Institutional Investment Personality of the Year. E T I re s u l t s f o r n i n e months ended September 2018 show the lender grew revenue by 1 percent to N418.66 billion from N413.71 billion in the same period in 2017. Post-tax profit rose by 31 percent to N75.72 billion from N57.95 billion recorded a year earlier. However, shareholders equity fell 8 percent to N529.31 billion as at September 30, 2018 from N553.75 billion recorded at the end of the same period in 2017. Shares of ETI extended their Thursday gain, rising by 1.45 percent to close at N14.00 per share after the close of business on Friday. Ecobank is a full-service bank providing wholesale, retail, investment and transaction banking services and products to governments, financial institutions, multinationals, international organizations, medium, small and micro businesses and individuals. ETI has presence in 36 African countries including Ghana, South Africa, Guinea, Guinea Bissau, Kenya, Liberia, Malawi and Nigeria. It was incorporated in 1985 and listed on the NSE in 2006.

frinvest (West Africa) Limited is projecting Nigeria’s real Gross Domestic Product (GDP) to grow by 2.5 percent in 2019 from 1.9 percent in 2018, driven by improvement in oil production, a recovery in agriculture and sustained positive performance in services. The company on Thursday unveiled its 2019 outlook for the Nigerian Economic and Financial Markets in a report titled, ‘On the Precipice’. The firm’s 2019 growth expectations are linked to the outcome of the general elections. It modelled three scenarios to capture different effects, including base scenario, pessimistic case and optimistic scenario. The base case assumes that President Buhari wins the election, there is policy continuity, and not much else changes. Here economy is expected to growth by 2.5 percent. The optimistic case is that regardless of the winner, the government implements reforms to attract investment. The firm here expects growth to continue at its underwhelming pace of sub 2.0 percent. The Pessimistic case assumes that political risks intensify and leads to continued violence in the Middle-Belt, North-East and the Niger-Delta. Under this case the firm forecast GDP to slightly expand at 2.7 percent in 2019, expecting a faster pace of growth in the medium-term. The main risks

to the projections remain poor implementation of reforms and the lack of political will to followthrough on proposed plans. “We see the 2019 general elections as an opportunity to press the reset button and set the country on a path of sustainable growth and prosperity. 2018 may have delivered some positives but growth remains far below long-term levels of 6 – 7 percent. Furthermore, unemployment and underemployment numbers have gone up, Nigeria has been named the poverty capital of the world and there are elevated security threats across regions”, Ike Chioke, group managing director of Afrinvest West Africa said. The investment banking firm expects inflation to remain elevated at double-digit levels but notes that the inflation trajectory remains largely unclear for various reasons. The biggest downside risk it foresees is supply shocks. These will come from an adjustment of petrol and electricity prices as well as continued insecurity in the food planting Middle-Belt. In its opinion, the impact of the new minimum wage will be moderate as funding remains unclear due to weak government finances. This will likely cause implementation to suffer, especially at the subnational level. The direction of inflation was positive for most of 2018 as there was a deceleration to a 30-month low of 11.1 percent in July 2018 (January 2018: 15.1%). This disinflation was mainly driven by a high base and continued exchange rate stability.

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

This year, the firm expects sustained positive current account balances due to stable remittances, expectation of stable oil production at around 2.1mb/d and stable oil prices at US$60.0. However, the current account balance to GDP is expected to slightly moderate due to slower growth in trade surplus. According to Chioke, in 2019, the currency faces a downside risk. Foreign capital flows may remain constrained due to both political risk and elevated interest rate in advanced economies. This will heavily impact Nigeria’s external position and weaken external reserves accretion. However, the CBN has guided towards a tight monetary policy stance which should help attract capital inflows. Afrinvest also expects a stable current account surplus to support reserves accretion, if oil production remains steady at 2.1mb/d as expected, and oil prices remain above US$50.00/b. “Overall, we believe the exchange rate will remain stable, especially in H1:2019, since the CBN has ample reserves for interventions. However, we note that pressures on the currency will intensify in H2:2019. Hence, we may see a depreciation in the currency to N401.00/US$1.00, mirroring the rate of 12-month non-deliverable forwards quoted on Bloomberg. We note that the likely emergence of a new CBN governor by mid-2018 may result in a new exchange rate policy”,Chioke said at a press conference in Lagos.

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Tuesday 22 January 2019

Business Event

CONSUMER SERVICES

1000 rural communities benefits from China government launch of Access to Satellite TV OYIN AMINU, ABUJA

o fewer than 1,000 villages in Nigeria have benefited from the Satellite TV for 10,000 African villages by ChinaAfrica Cooperation to help Nigeria meet the International Telecommunications Union’s (ITU’s) demand for African countries to achieve digital migration of TV industry before the year 2020. Speaking to journalists at the launch in Kpaduma Village, a suburb of the Federal Capital Territory, the Chief Executive Officer, StarTimes Nigeria, the implementing agency, Justin Zhang said the launch is one of the major programme to strengthen the the bilateral relationship between China, Nigeria and By-extension Africa. Zhang said during the course of the project, a lot of jobs was created as many Nigerians from various villages have were trained on how to recharge, operate and provide the required maintenance support for all the products installed, with a plan to make some of them dealers as time goes on. “We are all here today because of the promise made by Chinese President Xi Jinping, that China would implement access to satellite TV for ten thousand villages across Africa, as one of the major cooperation programs to boost cooperation between China and Africa. “Out of the 10,000 Villages, Nigeria alone will get 1,000 and StarTimes is playing a great role as the contractor for this project across all the African

countries that will benefit. “Some of the work we have done in the villages include installation of 2 solar power projector TVs for the community, 1 32’ digital TV set with solar system, 20 Satellite dish and decoders where they can watch more than 100 international and local channels. The 2 solar powered projector TVs and 32’ digital TV are for public use and free of charge,”said Zhang Speaking at the flag-off, the Minister of Information and Culture, Lai Mohammed said the project will undoubtedly strengthen the already very cordial China-Nigeria relations, saying it will complement the ongoing efforts of the Buhari Administration to democratize access to information and entertainment in the country. He noted that the 1,000 villages project could not have come at a better time than now as the general elections are just a little over one month. “ In just a little over one month, Nigerians will be voting in the 2019 general elections. They need access to information now, more than at any other time, to know about the over 70 political parties that will be participating in the elections as well as about their various candidates,” said mohammed He implore the implementing agency of project, StarTimes, to expedite the installation of the satellite TV systems in the selected villages ahead of the elections, adding that it would no doubt go a long way in making it easier for Nigerians to make the right choice of candidates to vote for during the elections.

“In addition, access to information will no doubt have a positive effect on the lives of people in our rural communities. After all, it is said that information is power,” said Mohammed The Chinese Ambassador to Nigeria, Zhou Pingjian expressed China’s willingness to continue to bring projects that will better the lot of Nigerians and Africans at large, and assured that the friendship between China and Nigeria will be preserved via infrastructural projects that will uplift the people of the local communities who need it the most. He further said who pledged the commitment of China to implementing the outcome of the FOCAC, said Nigeria and China are working closely to ensure access to information through television and satellite technology. “StarTimes is now working to ensure access and besides access, China and Nigeria are also working very closely on TV and on Satellite. We are building the Made-in-Nigeria TV sets,” he said. On December 4th, 2015, Chinese President Xi Jinping announced at the Johannesburg Summit of the Forum on China-Africa Cooperation that China would implement satellite TV programs for 10 thousand African villages. The project, known as “Access to Satellite TV for 10,000 African Villages”, as part of China-Africa cooperation programs and is aimed at enabling African families in rural areas to have access to the digital signal with high-quality images and rich TV programs, with Startimes Nigeria as the implementing agency

HEALTH

Godwin Obaseki, governor, Edo State (l), Yemi Osinbajo, vice president, during the inauguration of TraderMoni at Oba Market, in Benin, Edo State.

L-R: Femi Adelusi, vice president, International Advertising Association, Nigeria Chapter; Tunde Asekun, account director, Dijo Communications; Ahmed Abdullahi, team lead, Future Brand Idol; and Theodore Nyingifa, MD, Without a Box PR, at the launch of the Future Brand Idol Initiative in Lagos.

PharmAccess, BOI partner Delta State to revitalize 25 defunct healthcare facilities

ith over 500,000 enrollees, and increasing under the Delta State Contributory Health Commission, there is a great dearth of health facilities available to provide services to some of these enrollees, especially in the rural and hard to reach areas where majority of the poor resides. To address this problem, the Executive Governor of Delta State approved the renovation of over 100 Primary Healthcare Centers by the Local Governments. However, borne out of the pragmatism of the governor and understanding the need to partner with the private sector, the State also commenced on the implementation of the Access to Finance Framework that engenders a Public-Private Partnership as a panacea to quality service delivery at the Primary Healthcare level. In November 2017, Governor Okowa approved the implementation of a scheme that birthed a solid partnership between the State Government, through the Delta State Contributory Health Commission, the Bank of Industry, financial institutions and PharmAccess Foundation. The scheme is a framework that supports the outsourcing of defunct and abandoned healthcare facilities to the private sector to revitalize and provide services to the enrollees of the health insurance scheme especially in the rural areas. In addition, through a matching fund arrangement between the Bank of Industry and the State Government, the private sector players would have access to loans with concessionaryinterestratestorenovate these facilities. The Medical Credit Fund of the PharmAccess Foundation would also provide partial guarantees to the lenders on the loans they avail to the private sector players in addition to business development support to ensure sustainability.

The facilities would also be quality assured through the adoption of the SafeCare methodology of the PharmAccess Foundation. Over the next year, several stakeholder meetings resulted in the selection of reputable private sector players to take over 25 defunct health facilities that have been built and abandoned for long. This culminated in a handover ceremonyheldon14January,inAsaba, Delta State where MoUs to renovate, operate and transfer agreements were signed between the State, private sector, PharmAccess Foundation, Bank of Industry and commercial banks. Chaired by the chairman of the board of the Delta State Contributory Commission,OlorogunIsaacApkoveta withthedirectorgeneralofthecommission,BenNkechika,thechairmanofthe Local Government Chairmen, Delta State Chapter, Itiako Ikpokpo and the representative of the commissioner for Health, Ononye. Olorogun Apkoveta said “there are several health centres in different communities that have not been put to use, with this agreement, the private sector will take over the running of the centres, equip them to standard and ensure that they are operational 24 hours for our people who have enrolled in the contributory health insurance scheme”. The DG DSCHC, Ben Nkechika, stated that innovation which led to the signing of the agreement was very important “to achieve the desired milestone.” He noted that, with the agreements, the private sector will have access to funds at a single digit interest loan from the Bank of Industry to fix and run the abandoned health centres. “This innovative product will ensure availability of 24 hours quality healthcare services across Delta for the state Contributory Health Scheme, ensure continuity of healthcare services during strikes and other industrial

disputes, as well as more healthcare service options for residents of Delta State,” he explained. Njide Ndili, the country director of the PharmAccess Foundation stated that “the Medical Credit Fund is focused on developing innovative models to include the private sector to maximize efficiency and access to existing Primary Healthcare Centers anchored on health insurance”. She added that the Access to Finance scheme was very important to make funds available to the private sector who will partner with the Delta State government in achieving quality and affordable healthcare for Deltans through the contributory health insurance scheme. Olamide Okulaja, the director advocacy and communications at the PharmAccess Foundation appreciated the pragmatic approach of the governor in solving the issues which plagued the Primary Healthcare level in the country. He further stated that with less than 5,000 out of over 24,000 PHCs functional in the country, this framework may represent a veritable way of providing a vibrant supply side to the several demand-side activities springing up across the country including the State Health Insurance Schemes and the implementation of the Basic Health Care Provision Fund. Chairman of Association of Local Government of Nigeria, Delta State, Itiako Ikpokpo commended Okowa’s administration for its commitment to providing affordable health care for Deltans, disclosing that the governor had earlier approved for renovation, 107 health centres across the State. “We are direct beneficiaries of this project because, primary healthcare is the function of the local government,” he said, assuring that all the local government chairmen will work for the programme to succeed.

L-R: Solomon Adeleke, guest speaker/council member, Institute of Charted Accountant of Nigeria (ICAN); Oni Olalere, chairman ikeja district society (DSICAN); Comfort Eyitayo, 2nd deputy vice president of ICAN; and Okeowo Oderinde, former chairman of ICAN, Ikeja District, during the ICAN›s 2019 Members Forum in Lagos. NAN

L-R: Yewande Sadiku, executive secretary, Nigerian Investment Promotion Commission; Mary Uduk, acting director-general, Securities and Exchange Commission (SEC), Henry Rolands, acting commissioner, corporate services, SEC, and Reginald Karausa, acting executive commissioner, legal and enforcement, SEC, during a meeting between Nigerian Investment Promotion Commission and SEC in Abuja at the weekend. NAN

Tuesday 22 January 2019

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Traditional media miss out as below-theline firms enjoy political campaign wave Stories by Daniel Obi Media Business Editor

nlike in the events leading to 2015 elections when multi-billion Naira campaign messages passed through the traditional media, it is now really different for the abovethe-line media in the political campaign for the forthcoming 2019 elections. With the belief that the 2019 elections will be similar to 2015 when PDP and APC, two leading parties spent about N4 billion in adverts on traditional media alone, various media organisations had positioned for such business, but they are facing disappointment. A report by Compliance and Content Monitoring Limited, CCM, a technology player in media monitoring in Nigeria had put 2015 presidential elections media advertising spend by PDP and APC on Abovethe-Line communication platforms at N3.23 billion. The body said then that it monitored the two prominent parties’ presidential election campaigns be-

tween December 2014 and March 2015 and based its report on campaigns on radio, television, press and billboard across the country. But this time, the traditional media seem to be losing out as belowthe-line operators are reaping the campaign funds. Above-The- Line (ATL) advertising is where mass media such as television, radio, print and internet are used to promote messages. The messages are targeted at wider audience. On the other hand, Below- theline (BTL) advertising involves one

to one, distribution of pamphlets and banners usually on the roads. Assessing the trend, Kayode Oluwasona, former president of Association of Advertising Agencies of Nigeria, AAAN agreed that campaign funds are not going to ATL media and to agencies who are professionals. “The politicians are rationalising expenditure as they are employing list cost producers and printers for their jobs but what they are getting is disappointing quality of campaign materials.”

He regrets that the politicians are not deriving value for the little they are spending because they are not using professionals in their communication. Tola Bademosi, the CEO of BD Consult, a top PR firm based in Lagos, said that the politicians have changed game pattern with more involvement of grassroots mobilisation. He said for instance, APC strategy this time is door to door approach and funds are moving to those agencies handling this area. “People have realised that this election will be different unlike in the past. It is more of one on one. With this, it will be difficult to calculate actually how much will be spent on political campaigns in 2019”, Bademosi said. In 2015, CCM report showed that N1.62 billion was spent on television, N243.4 million on radio. Total spent on press was N1.16 billion while Out of Home media platform had a share of N206 million. CCM had analysed over 260 broadcast media (Radio and Television), 48 print (Newspapers and Magazines) and over 1,000 outdoor billboards across the country.

Presidential debate: Media executives describe absence of Buhari, Atiku as disappointing, disrespect to Nigerians

he refusal of presidential candidates of especially the APC and PDP, President Muhammadu Buhari and Atiku Abubakar respectively to attend the Presidential debate last weekend to articulate their socio-economic road map for the challenging Nigerian economy has continued to generate concerns. The non-participation of the major contenders for the president position in the forthcoming elections at the presidential interactive debate has really denied Nigerians the opportunity to know how the candidates want to approach the economic management and which projects are priorities. Media executives who assessed the development described the absence as really sad. In his view, Bolaji Okusaga, managing consultant of Precise, a reputation management firm said the most crucial part of campaign cycle is debate. “Without debate, how will the electorate be able to tell which programmes are germane and which ones are not. The absence of the leading contenders shows disrespect for the Nigerian electorate.” Tola Badesmosi, the CEO of BD Consult said “it is so disappointing and disheartening that Atiku could not show up for the debate to tell Nigerians the jobs he intends to

create and Buhari should also have honoured the invitation to share his ideas.” According to Charles Igbinidu CEO of CFO & Associates, the nonparticipation of Buhari and Atiku really shows the low importance of debates in elections in Nigeria. The absence of the major contenders is a “reflection of the fact that the debate doesn’t make any real impact on the voting decisions of Nigerians. If the contenders felt that not attending would have a negative effect on their chances at the polls, they would dare not stay away. “Unfortunately, most Nigerians still do not base their choice of candidates on what contestants stand

for but on primordial sentiments and pecuniary interests. It is very unfortunate”, Igbinidu said. Similarly, Lanre Arogundade, Director, International Press Center said although debates may not swing voters whose minds are already made up on those they would vote for, the two candidates who have been labelled major contenders and wear such toga should have shown respect to the electorate by turning up. “If they had respect for the organisers they would have shown that by writing the organisers long before now, either to state that they would not be participating. “To give the impression of participation and refusing to do so in

Buhari

Atiku

the last minute smacks of contempt for the people they want to lead and disrespect for the organisers”, Arogundade said. Also commenting, Kayode Ebatamehi of Bluebird Communication described the absence of the APC and PDP candidates as clearly a missed opportunity. “They failed to take advantage of a veritable platform to sell themselves to the voters.” Another Nigerian top media executive, Mike Nzeagwu said the absence of the APC and PDP candidates at the debate underlines the culture of impunity what the elite, especially those in power have held as part of their mantle of leadership for years. He called for the change of this mind-set. “The Nigerian electorate should be wise enough and use their votes to change the old order for a more progressive order. The future belongs to the youth and until we make a clean break from the corrupt, uneducated, uninformed yester-years leaders, Nigeria will not move forward”, Nzeagwu said. According to reports, Atiku said he declined to participate because Buhari did not show up. On the other hand, Buhari had claimed his NTA interview earlier was an interaction with Nigerians similar to the debate. However, Atiku was said to have challenged Buhari to another presidential debate before the elections.

Political adverts: APCON expresses worry over breach of vetting regulations

dvertising Practitioners Council of Nigeria (APCON) has expressed fears that there may be repetition of hoard of hate speeches and unwholesome advertisements as politicians push and become eager to win in the forthcoming 2019 elections. The advertising regulatory body said it has already observed with dismay, the growing incidences of exposure and broadcast of political campaign advertisements which are in breach of the extant regulations. In a statement signed by APCON’s CEO, Ijedi Iyoha, the body reminded sponsors of political campaign advertisements in the various media platforms that it is unlawful to expose, broadcast any advertisements which do not have the approval of APCON. “For the avoidance of doubt, the purpose of pre-exposure approval by Advertising Standard Panel of APCON is to prevent exposure to the public of advertisement which may misinform, mislead or offend the public, disparage or malign competitors or provoke unwholesome consequences such as violence.” It said that extant regulations require that political campaigns advertisements are focused on issues and devoid of attack on personalities or disparaging references to opponents. The body therefore warned that henceforth, any advertisement that is exposed without ASP approval will be blanked or stopped from further broadcast or publication without recourse to the advertiser. In anticipation of the commencement of the 2019 general election, APCON had late last year organised a forum on the forthcoming 2019 general elections and hate speeches in Abuja where stakeholders discussed critical issues around the management of electioneering campaign communications At the forum on Political Communication, the stakeholders called for campaign communications to be fair and truthful enough to aid democratic choice by the electorate and devoid of any traits that could precipitate violent conflicts. In his paper titled, “Trends and Consequences of Smear Political Campaigns” the Group Managing Director of SO&U Group, Udeme Ufot said “smear campaigns utilize unverifiable rumours and distortions, half-truths and even outright lies. Even when the facts are seen to lack substance, the targets reputation, in most cases, is often already tarnished before the truth is known. Often such targets are typically forced to focus on correcting the false or erroneous impression rather than the real issue.” He cited that when political campaigns are not issue based, there is a strong tendency to dwell on theatrics, verbal assaults and character assassination. Contrasting this with more sophisticated environments, where political campaigns often combine the three prong approach of advocacy, contrast and attack, he stressed that “their campaigns are more professionally packaged to associate the candidate with salient issues and subjects the electorate holds dear.”

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Tuesday 22 January 2019

The evolution of broadcasting in Africa Joseph Hundah

frica’s OTT market is poised for growth and it’s all being driven by the need for superior customer experience Television has captured the imagination of audiences since its inception over 75 years ago. But as technology evolved, so have audience needs and expectations. In an era of instant gratification, the television industry in Africa has reached an inflection point. Digital satellite services (DTH) are no longer a viable option due to a number of commercial challenges such as the high cost of content acquisition and significant levels of piracy. In 2018 we were seeing the rise of new broadcasting business models such as OTT (Over The Top) and video-ondemand services, where film or TV content is streamed via the internet. In fact, according to [i]IHS Markit, the number of households that stream OTT services in the Sub-Saharan African region alone grew 21.8 percent between 2010 and 2017, while TV households grew with a compound annual growth rate (CAGR) of 3.6 percent, during the same period. A pioneering milestone that needed to be in place in order for this transition to take place was the deployment of ubiquitous high speed con-

nectivity across the continent. To put this into perspective, the [ii]2018 Digital report, released by global digital agencies We Are Social and Hootsuite, revealed that Africa has seen the fastest growth rates in internet penetration, with the number of internet users across the continent increasing by more than 20% compared to 2017. To foster an ecosystem of innovation enabled by increased connectivity, Kwesé partnered with sister company Liquid Telecom and other mobile network operators to supply connectivity for customers to have access to Kwesé iflix and Play. Although the writing could be on the wall for traditional broadcasting, superior user satisfaction remains at the core of business operations, now with the promise of diverse distribution platforms and lower costs of delivery. We are now seeing three predominant trends that are driving the evolution of television in Africa. Customer experience is now more personalised, innovation is helping to close the digital divide and curated consideration is building Africa’s content economy. Variety is the spice of life: personalising the customer experience Today, user experience has transitioned into a personal encounter. This trend has been echoed across a number of industries. For example, if you look at the photography

industry, 50 years ago a family portrait was an event and 20 years ago film costs and development made photos a focus for special occasions. Today with the rise of the smart phone and selfies, a person takes an average of 150 photos a month. The television industry is experiencing a similar trajectory where it is moving away from cinemas to homes, personal computers and now to the pocket via the smartphone. Content consumption is now a personal choice and broadcasters are responding by offering greater content quality and diversity. For example, through Kwesé Iflix (an Econet Media-owned

mobile video-on-demand sports and entertainment platform) customers could watch the FIFA World Cup on their smartphone anywhere in Africa. It was evident that consumers were fully embracing the combination of live sport and entertainment, all in one app. Over 100 million minutes were streamed, making it the single largest live mobile streaming event ever to take place in our Africa over 30 days. Necessity is the mother of innovation: the show must go on Despite a hunger for next generation entertainment value, Africa has experienced a number of access barriers,

partly because the continent is largely unbanked with little access to credit cards for secure online payments and also due to accessibility to worldclass services. In order to feed this demand, businesses are looking towards innovation in the form of trusted platforms, compelling content and secure payments. Previously, there were only two models of streaming video-on-demand services available to the African market. The big international players with a focus on western entertainment, and the smaller platforms that host an array of local content. Kwesé iflix found a niche in a third offering. By expanding on the traditional video-on-demand model it introduced new, engaging, localised programming and features, providing a onestop-shop for all generations’ preferences. From a platform perspective, it was also vital to create a marketplace where customers and content creators can take advantage of the network effects present in most platform business models such as Facebook or YouTube. With over 70% of African markets unbanked, connecting in different ways to traditional content platforms will be the key as Africa’s broadcast ecosystem continues to evolve. Curating to the heart’s content: where curated consideration is building Africa’s content economy

The challenge with today’s digital era is the tug of war between well curated, convenient pay services and free services that offer less value. We have to believe that when given a reasonable choice to acknowledge the value of shows that they are fans of, most people will choose to do so legally. The challenge to the industry is to provide that reasonable choice. For example, previously we bemoaned the low quality of Nollywood content, but this is becoming less important as the compelling nature of content and storytelling shines through a selection of innovative service models, with clear improvements in production standards Having recognised the importance of carrying local content, Econet Media will also establish its own content creation hub offering across its Kwesé Free Sports, Kwesé iflix and Kwesé Play platforms. With a presence in 11 markets, we realise the importance of original local content as Africa’s broadcast industry evolves into the future. Additionally, as we transition towards digital services, we will grant loyal Kwesé TV subscribers complimentary access to Kwesé iflix for 12 months. Taking these trends into consideration, we hope to make a significant shift in the continent’s complex and competitive media industry. Hundah, President and Group CEO of Econet Media

Media experts offer reasons for high cost of newsprint Content App launched, promises free Daniel Obi

ike an endangered species, the traditional print media in Nigeria seem to be moving from one challenge to the other, all aimed at ensuring its extinction. From low readership leading to reduced circulation, lower advertising revenue, and some print journalists migrating to online platforms, it now faces another hurdle: high cost of newsprint. It is a puzzle however, that the price of newsprint used in producing newspapers is soaring in a digital age, when it should actually be falling. Late last year, a tonne of newsprint sold for about $875 against $550 and about $200 in 2014. This is happening when a number of readers are turning to online for content, as many news organisations move to online platforms. When the exchange rate of the naira was 170 to a dollar, the price of newsprint per tone was moving from $200 to $470 a tonne. Late last year, it moved to $875 per tonne but in 2017 it was about $550 per ton. The

price movement is the reflection of both the exchange rate movement and the increase in demand. Since then, the value of the naira has continued to fall. The local currency now trades at 160 to the dollar at the parallel market, which has further raised the prices at which newsprint is imported. Analysts offer some reasons on this trend, arguing that it’s happening because internet penetration is still low in Africa. In emerging markets, including Nigeria, they point out that internet penetration, though growing, is still low. According to figures from the Nigerian Communication Commission (NCC) internet users in the country

are currently 103 million. The National Population Commission put the latest estimate of Nigeria’s population at 198 million, which translates to an internet penetration rate of 61 percent. Further, the analysts note that while the number of Nigerian internet users is growing, a large number of both internet and non-internet populace still rely on newspapers for credible information. This therefore accounts for the use of large quantity of newsprints to produce newspapers for content in Africa’s most populous nation. Unfortunately, according to a media analyst, who works in one of the leading newspapers in Nigeria, and prefers anonymity, these newsprints are imported. Nigeria is largely an import-dependent economy and newsprint is one of the products imported mainly from economies such Finland and Sweden, where internet penetration is about 90 percent. In these markets, the use of newsprint may not be as high as in emerging economies.

football betting tips, other features

ocial media platform is getting exciting, busier and interesting with introduction of more Online information platforms as the world experiences dynamic changes. But one factor, credibility separates the several online information platforms. It is this credibility and reliability that latest online information App, Scooper, which recently launched its presence in the Nigerian market said it has as its hallmark. At the launch, the officials said the platform brings more quality and in-depth content to its readers. It has promised to be more than just news. “Scooper aggregates latest new stories and fun contents from the world and presents to its readers. The readers have the option to read the content on Scooper platform or go the original producers of the content through Scooper platform. Speaking at the launch, Nancy Nwachukwu, Head of the marketing team said Scooper also has a team that produces original and credible content for readers. It also part-

L-R; Nancy Nwachukwu, head, Marketing Communications, Scooper (Nigeria); Jason Du, deputy operations manager, Scooper; Adedotun Adegbite, Business Development Manager, Scooper; Elvis Subor, Marketing Specialist, Scooper.

ners dependable writers, verify information before publishing. She said Scooper’s in-house commentators give readers real time account of selected football matches across major competitions around the world. “Users of the App can also enjoy free football betting tips for matches across all top football leagues. Also speaking, Mike Adedo-

tun, Head of Business Development said that Scooper App which is available for download on Google Play Store has other offers such as personalised news feed, which allows its online users to explore an up-todate news of various categories such as sports, politics, lifestyle, opinion articles, entertainment and human interest and business stories.

Tuesday 22 January 2018

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ENERGY INTELLIGENCE Investments

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Oil&Gas

NNPC raising $3.3bn from OML 13 to fund cash call arrears ISAAC ANYAOGU

he Nigerian National Petroleum Corporation (NNPC) is seeking to raise $3.15 billion through developing the 416 million barrels of reserves from the Oil Mining Licence (OML) 13 field located in Akwa Ibom which will go towards funding cash call debts. In addition, the corporation is also seeking to raise about $2.3billion in financing from third parties including joint venture partners to help cover the cost of its share in oil production common called cash call, a Reuters report said Friday. OML 13, a field which the NNPC persuaded President Muhammed Buhari to recover from its operators in 2016 citing non compliance with the provision of the Petroleum Act on payment of signature bonus and irregular award, is currently operated by Sterling Energy and Exploration Production Limited, an Indian group on behalf of NPDC. The NNPC announced exit from cash call arrears from January last year, a debt burden that rose to $6.7bn, by reaching an agreement with IOCs to trim down the amount to $5.1bn knocking off $1.6bn. By the terms of the agreement, Nigeria will repay the $5.1bn over the course of

five years but it has struggled to fulfil this obligation. Relative production stability has been achieved because the Federal Government agreed to continue receiving royalties, taxes and profit from its equity share of JV oil and gas production while the cost of operation is deducted upfront.

The NNPC said it had paid $993.7 million up to September in arrears owed to its joint ventures with multinational oil companies by September, and still had to make up payments of $3.95 billion, according to Reuters report. Between January and July this year, the Federal Government paid

the sum of N591.3 billion as cash call repayment to five International Oil Companies (IOCs) including ExxonMobil, Chevron, Shell, Total and Eni. According to the Nigerian Bureau of Statistics (NBS) data, the Federal Government paid N60.350bn in January, N82.8bn in February and N94.4bn in March. For the months of

April and May, it paid N68.5bn and N60.38bn respectively. The month of July recorded the highest payment of N130.7bn. This has helped Nigeria raise production to over 1.7million barrels per day according to Ibe Kachikwu, minister of state Petroleum Resources.

Poland’s largest oil refiner buying more Nigeria cargoes in March DIPO OLADEHINDE

oland’s largest oil refiner, state-run PKN Orlen is scheduled to buy Nigeria’s Bonny light oil in March, a deal which will be Africa biggest oil producing country’s second export to Poland. According to Bloomberg Intelligence, Poland-based oil firm Orlen will buy 120,000t of Bonny Light oil in March and is also expected to receive the same amount in January. Orlen is also expected to get 130,000 tons of crude oil from Angola in March as the Polish oil refiner and petrol retailer PKN Orlen intensify plans to decrease its reliance on Russian oil supply. This newest addition of buyer for Nigeria comes on the heels of the country’s crude grades having it tough finding buyers. Reuters reported that Nigeria

crude oil was offered at its highest levels in almost a year last week ending 18 December, citing cheaper freight rates and shorter supply of competing grades such as Libyan crude. Recall last year, Nigerian crude struggled to find buyers as Nigerian

cargoes were slow with an overhang of close to 20 unsold cargoes from the 58-strong October loading programme, while the November programme, the largest in six months, saw fairly muted demand in a period oil surged towards $84 per barrel, the highest in 2018 as a

result of output shortfalls in Iran, currently being sanctioned by the United States. Traders noted that major grades such as Bonny Light and Qua Iboe was offered as high as $2 a barrel above dated Brent, their strongest since March last year. In recent years, Poland has been trying to diversify its oil supplies to reduce its reliance on Russian oil imports. Last year, it bought its first ever Nigerian crude oil of 130,000-ton cargo which arrived in mid-October. Daniel Obajtek, CEO PKN of Orlen told Reuters last year that PKN Orlen is exploring Nigerian oil as its new source of supply. “If tests confirm the assumed yields structure and margins, further oil supplies from Nigeria will be a viable option.” “The deteriorating quality of Russia’s Urals also played a part in PKN seeking new suppliers,” Obajtek

told Reuters. Poland has been trying to diversify its oil supplies to reduce its reliance on Russian oil imports. Last year, Poland reduced the share of its imports of Russian oil to the lowest level since 2005, according to a report by Poland’s central bank from May 2018. Yet the bid for energy independence came at higher import costs for Poland, because Russian oil prices averaged $59.70 a barrel in December 2017, compared to $60.20 per barrel for oil from Kazakhstan and $65.60 per barrel for U.S. oil, the central bank’s report showed. With the above developments, PKN Orlen is now beginning to intensify efforts to receive cargoes from other new destinations, and it is negotiating medium- and longterm supply deals with many parties, including Nigeria.

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Tuesday 22 January 2018

ENERGY INTELLIGENCE Oil/Gas

Oil rally slows possibility of urgent economic reforms in Nigeria

DIPO OLADEHINE

STEPHEN ONYEKWELU

igeria’s economy managers have cause to worry as Brent crude price per barrel hovers around the $60 dollar mark. Benchmark Brent crude price has rallied from its 02 January low of $54.91 to $60.90 as at 17 January, 8:20 local time and down to $60.50 at 17:00. It ended at $62.70 on 18 January. It has on average hovered around $60 mark since 10 January, according to data obtained from NASDAQ, an American stock market. Benchmark crude oil price for Nigeria’s 2019 budget is $60 per barrel. An oil price rally would have signalled good tidings for Africa’s biggest crude producer but this will be delusory because higher oil prices mean Nigeria is losing time to ditch its bloated subsidy regime, which has created a black hole in the countries public finances and requires low oil prices to make government muster the necessary political will to design and implement urgent pro-market policies in the downstream oil and gas sector, such as deregulating it. Lower oil prices often force the Nigerian government to undertake painful necessary reforms. This scenario played out in 2016 when oil prices fell below $40 per barrel in the first three months of that year. Low oil prices cut revenue in half. The situation was further worsened by the destruction of oil and gas infrastructure by Niger Delta militants whose campaign shut in a quarter of Nigeria’s oil production. Nigeria has budgeted $1 billion to sustain the subsidy regime in the 2019 budget. “Higher crude oil price will affect the price of petroleum products in the international market, which means Nigeria will pay more to subsidise the import of petrol” Diran Fawibe, chief executive officer of International Energy Servies Limited said on a phone interview.

Oil subsidy or under recovery as the Nigerian National Petroleum Corporation (NNPC) prefers to call it, has been rising astronomically within the last 24 months. A recent BusinessDay investigation found that between 2006 – 2015, the NNPC claimed N170.60 billion as under-recoveries while it claimed N632.20 billion in twos alone (2017 and 2018), a 217 percent jump. “Until we are self-sufficient in refining crude oil, we will continue to have the subsidy. A subsidy is simply the difference between the landing cost and pump price. Dangote refinery may change the narrative when it comes on stream” Fawibe said. In the past, Organisation of Petroleum Exporting Countries (OPEC) cuts were effective to rein excess production and shore up oil prices. But the influence of OPEC as a cartel is waning and now needs non-members buy-in to exert influence. The threat of United States

shale production could also derail any cuts meant to raise oil prices. “The rise and fall in oil prices last year points to the volatility inherent in the oil and gas industry. So, the rise in oil price should not distract the government from paying attention to the necessary economic reforms needed to steer Nigeria away from over-dependence on oil” Adeoye Adefulu, an energy partner at Lagos-based Odujinrin and Adefulu law practice. “In addition, to have sustainable growth in the downstream oil and gas sector, the subsidy regime needs to be scrapped because it funds consumption, with finances that could be used to develop social infrastructure and services such as education and hospitals” Adefulu added. Analysts cite the wasteful subsidies on petrol as being responsible for value destruction in the downstream sector, locking out foreign participation because a price pet makes supply uncompetitive.

Power

DisCos have metered 45% of electricity customers – NERC ISAAC ANYAOGU

he Nigerian Electricity Regulatory Commission (NERC) has said that 45 percent of customers have been provided meters by the electricity distribution companies (DisCos). In the regulator’s third quarter report for 2018, it said metering gap for end-use customers still remains a key challenge facing the electricity industry as the records of the Commission indicate that, of the 8,310,408 registered electricity customers, only 3,704,302 (about 45%) have been metered as at the end of the third quarter of 2018. “Thus, the majority of customers (~ 55%) are still on estimated billing thus contributing to customer apathy towards payment for electricity,” NERC said. Metering is a key issue for electricity customers in Nigeria who accuse the DisCos of denying them meters so that they inflict fraudulent billings on them for

Nigeria’s crude oil loading to hit 1.9 million bpd in February

electricity consumption. In third quarter of 2018, the eleven DisCos received a total of 128,791 complaints from consumers and metering and billing issues accounted for 68,749 or 53 percent of total complaints according to NERC. However, the in comparison to the second quarter of 2018, the population of registered customers increased by 4.2% while the metered customers increased

by a relatively higher proportion of 4.4%. NERC said the observed increase in registered customers was a consequence of the on-going enumeration exercise by DisCos, which has helped DisCos to properly register individuals who had previously consumed electricity through illegal connection to the networks. It also found that only Abuja, Benin and Port Harcourt DisCos had metered more than 50% of their customers as at the end of September 2018. The Commission said it is intensifying its monitoring of DisCos’ implementation of and compliance to the provisions of the MAP regulations in order to fast-track meter roll-out and close the metering gap in NESI within three (3) years. While not rejecting the MAP regulation, the DisCos have adopted a wait and see attitude towards the regulation. Local meter manufacturers have said the DisCos have not kicked against the regulation but they have not exactly showed excitement.

igeria is set to witness oil exports rise and may hit highest in seven months in February as a result of supply of several larger grades coming back online after a series of pipeline outages in the last couple of months. According to data compiled from Bloomberg terminal, loadings of Nigerian crude will rise to 1.92 million bpd in February from 1.86 million bpd recorded in January 2018.Data from the terminal also revealed that February crude oil loading will be the largest program since July last year of 1.99 million bpd. Further breakdown of Nigeria’s loading program revealed British – Dutch oil and gas firm Shell who loaded from Bonga, Bonny, EA and forcardos recorded the largest loading program of 644,000 bpd in February 2018 compared to 586,000 bpd in January 2018 followed by Exxon with Erha, Qua Iboe, and Yoho oil fields who recorded 407,000 bpd in February compared to 429,000 bpd in January. Also, America’s multinational oil firm Chevron recorded an increase from 388,000 bpd in January 2018 to 389,000 bpd in February 2018 thanks to its oil fields in Agbami, Escravos and Pennington while French oil

major Total recorded 207,000 bpd crude oil loading in February compared to 279,000 bpd in January 2018 with its Akpo, Amenam and Usan oil fields. Italian’s ENI also recorded an increase in crude oil loading of 135,000 bpd in February compared to 132,000 bpd in January with Abo, Brass and Okono fields while Addax petroleum with Antan and Akwori oil fields would not be having any crude oil loading in February compare to 51,600 bpd recorded in January 2018. Data from Bloomberg terminal did not take into consideration extra cargo of new grade Egina from Total which announced that Egina deepwater oilfield had achieved first oil production, helping push Nigeria’s oil output beyond 2.09 million barrels per day in December. The French oil major said the field, located in around 1,600 meters of water depths, 150 kilometers off the coast of Nigeria, started up production on December 29, 2018. At plateau, the Egina field will produce 200,000 barrels of oil per day, which represents about 10 per cent of Nigeria’s production, according to a statement on its website. Last week reports emerged that European refiners are turning to Nigerian crude oil grades following a drop in exports from Iran after the United States’ sanctions on the second-biggest producer in the Organization of Petroleum Exporting Countries (OPEC). According to Reuters, a shortage of distillate-rich crudes in the Mediterranean caused by the dip in Iranian exports has redirected some supply of the likes of Urals, Azeri or CPC away from northwest Europe giving way for Nigeria’s crude oil

Tuesday 22 January 2018

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BUSINESS DAY

Market

Iponri market in Lagos gets 24/7 independent power Stories by ISAAC ANYAOGU

raders at Abibat Mogaji Model Market Iponri in Lagos will enjoy uninterrupted power supply as the Rural Electrification Agency (REA) under the ministry of Power and charged with ramping electricity access in rural areas has taken the Federal Government Energising Economies scheme to the market. It is expected that Iponri traders will join others in Sura, to enjoy stable off-grid power without recourse to deafening generators after the project was inspected on January 19 by Babatunde Fashola, minister of Power, Works and Housing. Fashola said the Micro, Small Medium Enterprise (MSME) operators are the engine of growth in any economy, are hard working and the government’s ease of doing business targets them specifically. “First, we understand that energy is an important component of their businesses. They pay between N2,000 to N5,000 just for supply of energy. Now the solution we have brought for them has reduced that cost.” The minister also that the initiative was part of the Federal government’s resolve in ensuring an inclusive government. “The other thing is that we are now implementing also the policy that no government before us was committed to developing energy

through mini grid. “So, Iponri, for example is now being powered by solar, it is also renewable. For those who asked, where is renewable policy? Come and see it in Iponri. It is in Sabongeri and it is still also coming up in many other markets. “You will have heard that from the shop owners that they now have the right and privilege to choose between the solar and the grid because they have both. “There are traces of where the grids and generators were and you have heard from some of them saying that they have left their generators behind because they are too noisy and were too unhealthy because there are carbon emissions. Damilola Ogunbiyi , Managing Director of Rural Electrification

Agency (REA), said the mini-grid currently served 450 shops out of 1700 shops at Iponri. Ogunbiyi also said that the shops were in different tiers depending on their level of consumption on the solar hybrid power system which has 700kw capacity. The Iponri market is being electrified by high capacity solar standalone systems installed across the market with an on-site state-of-theart customer service shop managed by a private sector developer, Iponri Market Energy Solutions Limited run by Resource Energy. Iponri market is a shopping complex located in Surulere, Lagos. Businesses in Iponri market are mainly souvenir shops, electronic products, tailoring services, financial services and printing services and over 450

shops will benefit in the scheme. Iponri market, Lagos is one of many phase 1 markets under FG’s Energizing Economies Initiative which aims to provide constant and reliable power to economic clusters across the country. The project is billed to be replicated in about 300 market clusters across the country. The 450 shops in Iponri market benefiting from the programme are currently metered and energized. IMESL has set up and manages a customer service shop which has an extensive remote sensing network. The government has said over 200,000 small businesses will enjoy 24 hours power delivery through the initiative starting with the completion of one of the pilot projects, the Sura Shopping Market Complex. The complex which has 1,047

shops has been metered and energized, leading to the decommissioning of over 700 generators and a 15% increase in occupancy rate REA said. Ogunbiyi in a recent press conference said these off-grid solutions arise to find a solution to the challenge of inadequate power which is haemorrhaging small business in Nigeria. The project will be executed in Sura Shopping Complex in Lagos, Sabon Gari Market in Kano and Ariaria market in Abia State. The customers buy power at N50 per kilowatt hour rather than N32 DisCos are compelled to sell. The projects are constructed by the private sector with the government agency merely providing enabling environment, says Ayang Ogbe, director of promotions at the REA.

Babatunde Fashola, minister of Power, Works and Housing, acknowledging cheers from Iponri market women. How to be a Nigerian hero – give them power.

REA releases N1.9bn grant for rural projects

he Rural Electrification Agency (REA) will give local operators the sum of N1.952 billion in grants to execute 26 private sector off-grid projects in rural areas, the agency has said. Last week it signed agreement with local developers saying the grant would be funded from its fund. REA maintains a Rural Electrification Fund with the objective of delivering more equitable access to electricity across regions, maximize the economic, social and environmental benefits of rural electrification subsidies, promoting expansion of the grid and development of off-grid electrification and stimulate innovative approaches to rural electrification. A report on its website, published by Daily Trust quoted the Damilola Ogunbiyi, the managing director of REA the project would create over 400 jobs, providing clean, safe and reliable electricity to over 43,000 households and businesses. It will also reduce greenhouse carbon emissions annually by over 5,000 metric tons. According to the report, The REF covers off-grid projects comprising Solar Home Systems (SHS), Mini Grid and Under the Grid projects. Some of the

developers said they could deploy the energy solution within three weeks in Kebbi and Ogun State as they were already at the sites.

Among the 109 bidders, 35 moved to the next stage while 26 were successful, a record showed. The project has 12 mini-grid projects

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

The REF funds comes from any surplus appropriated pursuant to the EPSR Act 2005 (section 53), any fines obtained by NERC pursuant to the EPSR Act 2005 and any donations, gifts, or loans made by International Agencies, State Governments, the Federal Government, local communities, businesses, etc. Other sources for replenishing the fund includes contribution that may be made pursuant to the EPSR Act 2005, and interest and other benefits accrued to the Fund (REF), monies appropriated by the National Assembly / Special Intervention fund and percentage of the annual turnover of the licensee’s as may be determined by the Commission. Recall that in 2017 REA said it has secured $350 million from the World Bank for the purpose of rural electrification out of which $150m will go into funding the mini grid projects. Courtesy of the World Bank’s Nigeria Electrification Project (NEP) to be implemented by REA after its approval in April and the developers with N956.9 million 2018, key mini grid projects are expected grants. About N995.6m grant was awarded to serve 200,000 households and 50,000 to 14 other developers for the Solar Home local enterprises across Niger, Plateau, Systems (SHS) projects Kaduna and Rivers states.

Feedback: 07037817378, 08137433034, 08135447789

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

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Tuesday 22 January 2019

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Tuesday 22 January 2019

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Robots, artificial intelligence, machine learning: Game changers for future banking operations – Stanbic IBTC Wole Adesiyan, head, business transformation, Stanbic IBTC Bank PLC, spoke to Jumoke Akiyode-Lawanson, ICT editor, BusinessDay, on the future of banking in Nigeria, Stanbic IBTC Bank’s recent deployment of robots, artificial intelligence otherwise known as AI, its notable impact on the bank’s operations in enhancing efficiency and improving the overall customer experience. Excerpts. What factors triggered Stanbic IBTC Bank’s interest in the adoption of robots? e wanted new. We wanted speed. We wanted efficiency and accuracy. Also, constantly raising the bar is a key value for us at Stanbic IBTC and leading the implementation of all the possible applications of Artificial Intelligence in Nigeria was a good way to raise the bar.The Robots have been in operation for about three months now. Tell us about the first set of robots deployed and the operations they are powering. How exactly are they making banking more seamless? Beyond the creation of our go-to girl, SAMI, for front office engagements, the BlueBots were designed and deployed to reduce human or manual intervention, eliminate errors and reduce cost of processing in our reconciliation processes. Reconciliation turnaround time has been reduced to 1 minute 30 seconds. Other functions include anti-money laundering check - a regulatory requirement for account opening; credit risk management system check – also a regulatory requirement for availing credit to borrowing clients; cheque confirmation - dissemination of cheque data to specific business units to make confirmation faster, reduce returned cheques due to dishonored cheque report and improve client experience; and treasury bills/bonds fee processing - to manage fee posting for booked treasury bills/bonds to eliminate errors that may lead to income reversal from income account. What do you consider as the outstanding features of the Stanbic IBTC robots for which the bank is investing in its deployment? The robots can be deployed across a variety of departments within the bank while exhibiting various groundbreaking features. Take for instance, our operational center located at Ilupeju, Lagos; we

Wole Adesiyan

deployed the robots to expedite account origination and servicing for anti-money laundering transactions with a reduction in turnaround time. The robots also facilitate processing as well as clearing for inward cheque confirmation. Some outstanding features of the BlueBots are its ability to execute web scrapping and web data extraction; launch web browsers; log into secured web pages with its own username and password; populate Microsoft Excel templates and route as instructed. Others include its capability to launch Microsoft Outlook, read, compose and send emails; download files and upload files to different platform and execute predefine actions with the help of a scheduler. Will the deployment of robots to drive your services be limited to Lagos? What plans do you have to cover other locations? The BlueBots manage middle and back office activities, which are not limited to a geographical location. The aim is to ensure the robots are deployed across all possible workable locations across Nigeria which would improve our service quality to all our customers regardless of the location from which they are banking with us. What is the short, medium and long term cost implication of devel-

oping and deploying these robots? Beyond the investments in our people, these robots have come at zero cost to the organisation. We owe this success to the ingenuity and creativity of our colleagues. Don’t get me wrong, this is not to say we are not investing in state-of-the-art information and communications technologies or technological innovations, which of course we are constantly doing and heavily too. We remain one of the most innovative and forward thinking financial services organisation in the country and Africa at large. Has Stanbic IBTC partnered with other cutting edge tech companies in executing this project? No. This was a project developed and deployed strictly by an in-house team with support from Standard Bank South Africa. What feedback can you share since the tools were deployed in service? The introduction of robots is proving to be a game changer in our operations by bringing improved operational efficiencies, shorter resolution times, enhanced data security and improved data handling. When should we hope to see robots or other devices powered by artificial intelligence welcoming customers to Stanbic IBTC branch-

es, and even serving as tellers? Stanbic IBTC is the bank of the future and the bank of the future is now and I can assure you that this is closer than you think. How are the robots protected against external interference by humans and other factors that may hinder their performance or breach the security? Ensuring the security and integrity of our system is at the core of every solution and application we deploy in offering impeccable services to our valued customers at Stanbic IBTC Bank. Therefore, we pride ourselves on the high level security that is provided by our in-house teams to the applications and solutions developed and deployed. Robots and such other devices are known to reduce the need for human interface and by extension affect the employment of people. One survey stated that financial institutions worldwide would save $1 trillion in projected cost savings from adoption of AI. Have you taken this factor into account? Definitely, we believe in preparing for the future without ignoring our environment and the culture of our people. Here in Nigeria, the average individual still desires human interaction when dealing with anything as sensitive as money. Maintaining a hybrid bank structure will keep us ahead of the curve. We also encourage our colleagues through learning and development to prepare for a future that includes Artificial Intelligence and Robotics Process Automation. If a machine can do your job, prepare for a better one. The deployment of the robots signals the continuation of new wave of disruptive digitization and innovation being applied by Stanbic IBTC, taking into account the launching of a fully digital self-service branch, chatbot, innovation lab, virtual banking and personal teller machines. What next are we expecting from your stable? Innovation to redefine and improve how we serve our customers

is what drives us. We can only say this to our stakeholders - fasten your seatbelts and enjoy the ride. Augusto & Co, in its 2018 Consumer Digital Banking Satisfaction Index Report, rated Stanbic IBTC Bank as the Best Digital Bank in Nigeria. How do you react to this assessment? This is very positive feedback that shows that we are setting the example. However, it is also showing us that a standard has been set and we need to constantly raise the bar in providing customer satisfaction, digitally or otherwise. Fintechs are steadily encroaching into conventional banking and using AI as backbone. Should this be a source of concern to banks? Any bank that has plans for continued relevance will invest in Artificial Intelligence, Big Data and Machine Learning to ensure that the customers of today and the future are catered to. There is no room for banking as usual anymore, it is important to change the game while you still can. So, should fintechs be a source of concern to banks? No. Instead, Banks should learn from these fintechs and create avenues for partnership where necessary. In today’s banking industry, some of the key issues are around customer service, risk management, efficiency and regulatory compliance. How are these issues addressed with the use of robotics in your operations? AI has increasingly refined and elevated the ability of machines to study data in order to detect patterns that then allow our systems to organise information, identify relationships, make predictions and detect anomalies. Robotics and AI have also helped to enormously improve the quality of service to customers and also our back end operations; from providing information on demand to customers to ensuring a significant reduction in manual intervention as well as eliminating errors which the robots are able to identify effortlessly.

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Plans underway for first ever information management university – Oyewole Stories by JUMOKE AKIYODE-LAWANSON

yedokun Oyewole, president and chairman of Institute of Information Management (IIM), has disclosed plans for the commissioning of the first ever Information Management University “The International University of Information Management (IUIM) - USA www.iuimedu.oline”. Oyewole said that the global project and initiative of the Records and Information Management Awareness (RIMA) Foundation shall be executed in collaboration with the Institute of Information Management (IIM), Africa. “Official presentation of IUIM will take place during the first-ever founders day ceremony slated for 12th of May 2019. We sincerely cherish all the moments that we shared with you during the year. It means everything to us that you remain confident

From Left: Oyedokun Ayodeji Oyewole, president /chairman Governing Council, Institute of Information Management, Oseni Kolawole, director training – Institute of Information Management; Abdur-Raheem Adebayo Shittu, minister of communications, Federal Republic of Nigeria; and Adeniyi Adesanya, special adviser/consultant on political matters and Government administration, Office of the Governor Okemosan Abeokuta Ogun State and Akanbi Titilola Taiwo; CEO Busicon Nigeria Ltd. during the panel Session at the 2018 Institute of Information Management national summit, induction, and investiture ceremony in Abuja, Nigeria recently.

in our leadership ability to provide you with experience that transcends beyond membership,” he said in a New Year message to members of the Institute. Reviewing the past year, Oyewole said that at the beginning of 2018, IIM Africa set milestones aimed

at developing, propagating and creating the necessary awareness concerning the information management industry across the globe, coupled with activities aimed at playing a deeper role in the lives and career of the members, providing more value wherever they

can and offering greater impact wherever they must. “Embarking on this cause through the year has brought many memorable moments that we have been very honored to share with you. “Among these landmarks, achievements include the successful hosting of IIM ac-

tivities and induction in four new locations (United State, Akwa-Ibom, Ghana, and South Africa) coupled with hosting at other old locations (Lagos, United Kingdom, Port-Harcourt, and Abuja). It is also worth mentioning that our great institute has been officially registered to operate in the United States of America and South Africa in 2018, while that of the United Kingdom and Ghana has reached advanced stages,” Oyedokun said. “We are also proud to mention the fact that in 2018 we hosted the RIMA Foundation Awards, aimed at promoting the Information Management Industry and organizational excellence through the pursuit of excellence, efficiency, and efficacy. RIMA Awards is the only emerging leader and largest Enterprise Content/Document Management and Security Awards in Nigeria and Africa, recognised symbols of excellence and innovation in the management of business information and security”, he added.

Konga, Visa collaborate to drive value offerings in e-commerce

onga, popular ecommerce company has partnered with Visa, global leader in digital payments to drive e-commerce efficiency with seamless payment experience for customers. The partnership will see Konga leveraging the delivery of Visa’s digital and secure payments solutions across key segments of the Konga Groups’ business portfolio both online and offline. The company revealed that among the many exciting benefits of this partnership, shoppers who use the KongaPay app will be issued a digital Visa card which will enable them to make payments everywhere Visa is accepted. In addition, users of the KongaPay app will be able to pay digitally at the time of delivery of their items by simply scanning the Quick Response (QR) code provided by Kxpress delivery agents – a development that will lend further ease and convenience to the

payment process and elevate standards in the ecommerce sector. “Partnerships are key for us at Visa, as we constantly look for new opportunities to ensure that more people have access to unique payment experiences that are seamless, fast and secure. We are extremely delighted to unveil this strategic partnership with Konga which

is positioned to further simplify the payment process and raise standards in the Nigerian e-commerce sector,” said Kemi Okusanya, general manager, Visa West Africa. “When it comes to making e-commerce transactions, people are continuously looking for the most convenient and secure ways to pay for products

and also use several payment platforms when they travel to other parts of the world. What we have done with this partnership is to incentivize the process and provide more value to customers who pay with Visa,” Okusanya added. On his part, Nick Imudia, co-chief executive officer (CEO), Konga Group, disclosed that the partner-

ship with Visa holds immense potential for e-commerce in Nigeria, owing to the numerous opportunities it offers to revolutionise the payment process and optimise offerings in the sector. “With this partnership, we are bound to witness a digitally-driven and effortless payment experience for all classes of customers on the Konga platforms – online shoppers, visitors to our offline stores nationwide, merchants, third-party clients and other stakeholders. This development is not only momentous in view of its far-reaching implications for the growth of ecommerce in Nigeria, but one that will go a long way to boost customer experience and confidence in the sector,” Imudia said. “Our excitement knows no bounds, especially in view of the many benefits this strategic partnership will unfold for our customers and millions of Nigerians in the days and weeks ahead,” he added.

Flutterwave, Visa launch GetBarter App for local and international payments

lutterwave, a global payment solutions business based in Africa has partnered with Visa to launch GetBarter, an application that allows consumers and merchants to make and accept payments locally and internationally. The GetBarter app is a lifestyle payment solution that operates globally with an initial user base in Nigeria, Kenya, Ghana and South Africa. Visa cardholders will be able to initiate payments within the app and make online and mobile payments by attaching their card details to their GetBarter app profile while non-card carriers can generate a virtual Visa card upon registration. The app also enables Visa users to receive money from any Visa card account either domestic or international. This means that app users can receive money from family and friends from any Visa card directly into their GetBarter app Wallet. Additionally, GetBarter users can carry out business transactions, pay bills and initiate payments to thousands of merchants anywhere Visa is accepted globally. Speaking on the launch, Olugbenga Agboola, CEO, Flutterwave, said; “For us, we have simplified digital payments so that more Africans can be included in the payment revolution. This is evident in the design of the app, which primarily helps users manage their finances and earn endless benefits from more than 25,000 merchants including Uber, Flywire, and Wakanow.” Speaking on the partnership, Otto Williams, vice president, strategic partnerships, fintech and ventures at Visa, said; “This collaboration with Flutterwave delivers on our strategy of aligning with innovative partners on solutions that help to include more people and businesses in the formal financial system. It brings us a step closer to ensuring that more Africans can access secure, convenient and affordable payments and other financial services, and use them to meet every day needs and long-term goals.” Founded in May 2016, Flutterwave has processed over 60 million transactions, ensuring that African businesses carry out transactions with modern payment infrastructure that is connected to the global economy. The company has recorded impressive clientele consisting of financial institutions, airlines, government institutions, and global technology giants.

Tuesday 22 January 2019

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EDUCATION

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Human Capital

Nigeria’s universities play catch-up as knowledge economy accelerates KELECHI EWUZIE

iger ian universities, the first of which was founded in 1948, battle with several militating factors such as quality of lecturers, leadership failures, infrastructure gaps and funding. These have led to Nigerian universities ranking poorly among peers in the global academic community. The most critical indicator in university ranking is quality and quantity of research. “Owing to a consternation of factors chief of which are poor research capacity of staff in the Nigerian university system and the non-salutary research environment, we can hardly move to the top of league tables if these challenges persist” Peter Okebukola, former executive secretary of the National Universities Commission (NUC) had told BusinessDay in an earlier interview. Another strong reason why Nigerian universities rate poorly is due to the dwindling international staff and students. Many Nigerian universities have sparse international students or none at all. International staff is also scanty. The poor resourcing of Nigerian universities accounts in large part for international students and staff

L-R: Winners from the UNICAF Essay Competition with their prizes; Emmanuel Famokun, 2nd runner up winner, Folashade Shodipo 1st Prize Winner and Chekwube first runner up.

not coming to study and to teach respectively. The issue of security also plays a scary role for the international staff and student. Other challenges facing higher institutions of learning in Nigeria include the absence of infrastructure on campus for learning and an industrial backbone for internships. “Unfortunately, the industrial backbone has been very

weak and the entire economy has been run as one big consumer market, dominated by imports from all over the world, especially China. As such, there are no outlets to practice these theories. Secondly, the institutions themselves need to be upgraded, both for the human ware as well as the soft and hardware, to enable the students study in a 21st Century” said Oyewusi

Ibidapo Obe, professor of Systems Engineering, educational administrator and former vice chancellor of the University of Lagos, in an emailed note. “We have started to have some “in-breeding” in our University System. This is anti-innovation and progress. The quality of lecturers in our institutions needs an urgent audit,” Obe added.

UNICAF Nigeria enhances higher education learning, award prizes to essay competition winners

NIC AF Niger ia as part of its contribution to the development of higher education system in Nigeria has awarded prizes to the three winners of the essay competition ‘Higher Education of international quality shaping the leaders of tomorrow in Nigeria and in Africa in Lagos. Folashade Shodipo, a diction and phonetics teacher from Iyana-Ipaja, who won a full scholarship to pursue a Master’s of Business Administration with UNICAF University, plus a monetary reward of N100, 000 in cash says the UNICAF Scholarship Programme is helping enhance the higher education system in Nigeria. Shodipo while speaking to journalists at the prize pres entation ceremony

held at UNICAF office in Lagos said the award is one of the best ways for Nigerians to get access to higher education through online study, because it is all encompassing and the teaching personnel is qualified and experienced,” According to, “University education in Nigeria is getting more expensive every year, so UNICAF serves as a credible, flexible and affordable choice. More institutions should copy this beautiful idea, so that more African people have access to low cost, credible higher education”. Chekwube Okeke, a college teacher from Lagos and First runner up won a full scholarship to pursue a Professional Development Short Course with UNICAF University, plus N50, 000 in cash.

He said “The younger generation should not give up on higher education because of how expensive it has become, but they should strive hard to increase their knowledge and skills. Information is now at their fingertips, they should search online for education opportunities because knowledge is power”. Okeke while commending UNICAF for the rare opportunity given to him, urged the Nigerian government to help in establishing more online providers of higher learning, adding that higher education should become more practical, pragmatic and less theoretical. Emmanuel Babatope Famokun, a Communications Consultant in Lagos and Second runner-up said that UNICAF has really in-

spired him with the concept of quality higher education made available online, and not confined within the four walls of a classroom. He advised fellow Nigerians to “tap into higher education opportunities available through the Internet to get empowered and exposed to many other nationalities and cultures.” Emmanuel won a full scholarship to pursue a Professional Development Short Course with UNICAF University. The UNICAF Scholarship Programme has offered so far scholarships to eligible individuals in Africa and the rest of the world worth more than 90 million USD and has helped change more than 15 thousand lives, through international quality higher education.

According to Okebukola, Nigerian universities can still play a significant role in the fourth industrial revolution in a number of ways, when care is taken to deal develop the sector. The first direction is in research capacity building. “There is need to run annual, intensive, capacity-building (training) workshops on contemporary research techniques, for cohorts of science teachers” Okebukola said. Access to university education has been challenged due to limited carrying capacity. One way of dealing with this is to embark on massive upgrading of physical facilities in existing universities to take at least additional 1, 000 students per year. This will involve more classrooms, hostels, laboratories, workshops, libraries and offices. In this light, staff recruitment is to be undertaken in the quantity and quality to match the annual growth in student enrolment. With successful scaling of NUC due diligence on the expanded facilities and increased human resources, carrying capacity is increased to 1000. The university can, thereafter, proceed to enroll additional 1000 students during the next admission season. In ten years, a typical university would have added about 10,000 students to its baseline stock. In terms of cost per

university, this option translates to an annual average of N1.6 billion for building, equipment and staffing. In ten years, each university will require at least N10.6 billion for the expansion project. “The long and short of the story is that if we desire 10 percent annual increase in enrolment in the nation’s 141 public and private universities, we will require N1,494.6 billion (about N1.5 trillion) in ten years.” Okebukola said. Of this sum, the 40 federal universities will require N424 billion while the 40 State universities will require the same amount. The remaining N646.6 billion will have to be sourced by private universities from their proprietors. Isaac Adeyemi, former vice chancellor, Bells University, Otta Ogun State told BusinessDay that the growth potential of education in Nigeria especially the tertiary level is stifled by inability to faithfully implement national policy provisions. Adeyemi observed that this failure in policy implementation has resulted in products from the school system at all levels coming out in poor state. According to him, “Facilities in public schools are in deplorable condition and the down tooling of lecturers in public universities by ASUU is a pointer to this.”

Obi, Akinrinade to attend Bassey Andah annual lecture

ormer governor of Anambra State and vice presidential candidate of the People Democratic Party (PDP), Peter Obi; Sola Akinrinade, provost Anti-Corruption Academy of Nigeria (ACAN) would be among top dignitaries to grace the 20th edition of Bassey Andah Memorial lecture in Calabar, Cross River State. The event scheduled to hold on Saturday, January 26, 2019 is an annual lecture instituted by the Bassey Andah Foundation in honour of late Bassey Andah, a

renowned anthropologist, archaeologist, historian, Africanist scholar and researcher. According to the organisers, “The lecture has the theme “Corruption and the development of Nigeria” and will take place at the University of Calabar International Conference Centre. The memorial lecture would feature eminent guest speakers including Peter Obi and will also draw participants from both public and private sectors and representatives of the international community.

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Tuesday 22 January 2019

EDUCATION Challenges with raising 21st century children

OYIN EGBEYEMI

oday’s world is very interesting, to say the least. People who were alive and active 50 – 100 years ago would probably not have imagined the level of dynamism that we now experience. Everything has evolved, and is continuously changing at a fast pace. However, could the focus on parenting and raising children have been left behind in this evolutionary era? Are parents of today struggling? Or do we still need to instil some elements of traditional upbringing? These questions are very important to ponder over due to many factors that influence parenting in the 21st century. Things have inevitably

changed in the world and even within our local context. It would be difficult not to struggle if we do not pay close attention and take whatever necessary action we need to in order to keep up with the times. Generation X (those born around the 60s/70s) and some millennials (those born around the 80s/90s) in an average stable Nigerian home would recall many elements of simplicity in their upbringing. The typical routine for a child is: wake up, have breakfast, go to school, return home, have lunch (interchangeable with returning home depending on the school programme), play for a while, do homework, have dinner, sleep…. repeat and then on weekends, play, play and PLAY. Even though this routine is somewhat similar to what children of today undergo, if we take each element of it, we would notice that the way we do things has changed to a large extent. Simplicity would not always suffice. So what makes the difference?

Technological, economical and social shifts (amongst others), individually and in combination with one another, have influenced our environment such that we have to continuously adapt to a new way of doing things. Technology: We live in a global environment where the influence of technology has really taken a huge role in everyday tasks. Technology is gradually becoming the foundation of everyday activities from waking up in the morning to banking. Even the way that we communicate and consume information is not the same as it used to be. It is also important to remember that children of the current generation are digital natives, so they do not even understand the concept of a world without technology. Therefore teaching and interacting with them also has to move in line with this, especially if we are trying to raise them to stand out amongst their peers (especially those in the developing and developed world). What makes

it challenging is that the teachers and parents of these “advanced” children are digital converts, so they really have to ensure that they are ahead of the children in terms of technological skills and implementation. Economics: In the recent years, the Nigerian economy has experienced some hardship, with the price of oil plummeting, foreign exchange rising and inflation rates also rising. Unemployment has been looming around and entrepreneurs are suffering because the business environment is not particularly encouraging. This has therefore had many effects on the disposable income and lifestyles of Nigerians. The traditional concept of men going to work and women staying at home to take care of the children is nearing extinction because even when women are not willing to, they have to work and earn a salary in order to support their homes. One income earner in most households is not enough. This has led to many difficulties with

Loyola Jesuit, Deeper Life School emerge winners of AMCE competitions KELECHI EWUZIE

oyola Jesuit College, Abuja and Deeper Life School, Akure have emerged first and second place winners respectively of the National Mathematics Tournament Competition in which over 200 schools across the country participated. The competition organised by Mathematics for Life Foundation is one of the activities adopted by the foundation for

the promotion and advocacy of the study of mathematics in Nigeria. Omoniyi Osuntunyi, President of Mathematics for Life Foundation while speaking at the event held at Eko Hotel in Lagos said the foundation’s mission is about making statement that will drive desire for more students to study and embrace the numerous benefits of Mathematics and the socio-economic impact it offers. “We at Mathematics for Life Foundation are interested in

building capacity for students in Nigeria to be exceptional in the field of Mathematics and able to compete shoulder to shoulder with students from the developed nations”, he said. Earlier, Olabisi Ugbebor, a university lecturer and first Nigerian female professor of mathematics in her presentation titled ‘The mathematics of election choices, voting and outcomes urged Nigerians to vote in the forthcoming general elections according to socio-economic issues put

forward by candidates and not parties. Ugbebor whose presentation was part of the activities to mark the 2019 mathematics conference and exhibition organised by the Mathematics for Life Foundation observes that it’s disheartening that Nigeria’s voting patterns in general elections over the years since political independence in 1960 up till now are similar. She further opines that the electorate are always boxed into a corner by making fixated choice of who to vote for only between two major dominant political parties irrespective of their performance or what they could do to better the lives of the generality of the people. High points of the 2019 mathematics conference and exhibition was the presentation of prizes to Kingsley Igbokwe, a final year law student from University of Nigeria, Nsukka who won the National essay competition. Igbokwe’s entry on the topic ‘the effect of Free and Fair election on Nation building was adjudge the best was presented was a cash prize of N100, 000. There was also National Merit award presentation to the outing performance in the 2018 WAEC and UTME.

taking care of children as parents now spend many hours at work and are left with little or no time to spend with their children. It takes great effort and commitment to break out of this mould and dedicate enough time to grooming children. Social: Our social environment has also evolved. Inevitably, technology has a great impact on this area. As a result of the various media through which we consume information (social media, the internet, television etc), I think that children now have a lot of access to information that directly impacts their behaviour and interactions with people around them. The caution with this is that there might be a conflict between the information that they consume and reality. So they have a very broad perception of the world. However, when actually find themselves in real life situations, they might struggle even when interacting with people because they are consuming all these various media within the confines of their little social

bubbles and this for some is literally their own bedrooms (because consuming media today can be done on a mobile phone whilst lying down on your bed). They do not actually go out into the world physically to live these experiences that they see on their television and phone screens. I think that some effort should be made to get children away from these screens and have them interact with it other physically, so that they build stronger physical connections with people. As much as these various environmental factors pose some difficulty in the way that we bring up our children today, I think that, as educators, adults and mentors, we should try to make an effort to help groom children around us the best ways we can whilst being conscious of applying a good balance of traditional and contemporary methods. Oyin Egbeyemi is an executive administrator at The Foreshore School, Ikoyi, Lagos.

CKF promotes STEM education for next generation female students KELECHI EWUZIE

hristopher Kolade Foundation (CKF) as part of its effort to promote the technology proficiencies of girls in State public schools and motivate even more girls towards exploring the exciting world of science and technology will host the second edition of Girls Only’ science and technology fair in Lagos. Omobola Lana, CKF managing consultant says that through the SHE Initiative, possibilities are ignited, confidence is inspired, skills are developed and dreams are birthed, adding that it is an absolute privilege to be part of the girls’ transformative journey. According to her, “Every child should have a fair chance at the breadth of opportunities that life affords, and should not be inhibited by their socio-economic background or gender. Our partners are making it possible for us to narrow the gap for girls”. The event scheduled for Wednesday January 23rd, 2019 at Harbour Point Victoria Island, Lagos will showcase projects of SHE Initiative participants from 10 Lagos State Public Schools; a speaker panel of successful women in science, a speaker panel of girls in the SHE

Initiative programme and keynotes by Onyeche Tifase, managing director/CEO Siemens Nigeria and Michelle Obatoyinbo, general manager, Deep Water Operations, Chevron Nigeria. Since 2016, the SHE Initiative has offered over 400 girls in Lagos State public schools unique opportunities to experience science and technology in relatable, interactive and fun ways. Girls are immersed in a variety of hands on learning activities designed to broaden their knowledge of the fields of science and technology, engage them in enquiry, stir their intellectual curiosity, build their confidence, apprise them of female role models in the field, and equip them with demonstrable skills in targeted areas of science and technology. Ethics, leadership and remedial education are important components of the SHE learning agenda which is delivered through residential science camps, in-school clubs, holiday camps and single-gender science fairs. SHE Fair 2.0 is made possible through the generous donation of Zenith Bank, as well as SystemSpecs, Kenna Partners, Arian Capital Management, Julius Berger, KPMG, Coronation Capital, Fountain of Life Church, and Abdulai, Taiwo & Co.

Tuesday 22 January 2019

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Davos 2019

What a football shirt tells us about globalization 4.0 Peter Vanham

t was an eye-watering deal. Starting in the 2017-2018 season, Japanese internet service provider Rakuten became the main global sponsor of FC Barcelona for a record €55 million per year. Only one other company, kit provider Nike, also had its logo on the iconic shirts of the “blaugrana”. They made a powerful pair of global sponsors. But the two companies may never have been around together, had Rakuten’s digital globalization begun 50 years earlier, or Nike’s Phil Knight started importing shoes in 2017 instead of 1964. To understand why, we need to look at the state of globalization when Nike was founded, and contrast it with today. When Phil Knight started Blue Ribbon Sports in 1964 the company that seven years later would become Nike - it wasn’t as easy to buy a product from abroad as it is today. China was an agricultural economy that produced barely any exports. Its rise as “the factory of the world” - let alone as the home of tech platforms - was decades away. And it wasn’t just China that wasn’t globalized. As a percentage of global GDP, trade stood at approximately the same level as a century earlier. Worldwide, less than one out of ten dollars of added value came from trade. The US was further ahead than most advanced economies, as many countries were still recovering from the Second World War, but the overall picture was one of local production. The early days of globalization explain Nike’s first business model. After being impressed by the running shoes of Japanese sports company Onitsuka Tiger, Knight offered to distribute the Japanese shoes in the US. Tiger would produce the shoes in Japan, and Knight would arrange the logistics, distribution and marketing in return for any profits. It was global trade and arbitration in its simplest form. In the 50 years since, there

have been many structural changes to the global economy, as well as to Nike. The company stopped being a Onitsuka distributor just a few years into the joint venture, and produced its own line of shoes instead. Nike is now the largest sports company in the world, and its supply chain model with suppliers and distributors in dozens of countries is the norm for global companies. This is the modern global supply chain. Your sneakers may be designed in Portland, Oregon (home to Nike’s headquarters). The raw materials may be sourced from a dozen or so countries - wherever they are best and cheapest. The shoes may be produced in Viet Nam or Indonesia. Their regional distribution may be handled in, say, Belgium. And the sale takes place in your local shoe shop in Germany. As global trade gained in importance, tariffs dropped, and such globalized supply chains became the norm, not just for Nike, but for most multinationals. Trade now stands at close to a quarter of global GDP - its highest level ever and despite a recent surge in more protectionist governments, new trade deals ensuring the physical flow of goods

across borders still are signed every month. Yet if trade is to get another boost, it’s more likely to take a different form than the global supply chain. It could come from digital trade, carried out by companies like Rakuten. Rakuten was founded in 1997 as an online shopping mall or “ichiba”. Much like Amazon in the US, Alibaba or JD.com in China, Flipkart in India or Zalando in Germany, it engaged in plain ecommerce. You could order a product online and have it delivered to your home. In just a couple of years, it became the largest e-tailer in Japan, with 95 million customers. (Japan’s entire population is 127 million.) But e-commerce stopped being a domestic play a long time ago, and so did Rakuten. After a period in which it focused mostly on Japanese sourcing and sales, Rakuten started international expansion in 2010. It bought similar e-commerce platforms in France, Germany, Brazil, Malaysia and other countries. By 2018, it claimed 1.2 billion users across 28 countries. It started to diversify to other verticals, including chat apps, e-book platforms and online content production.

It is in this light that we should see global sponsor deals such as Rakuten’s with FC Barcelona. E-commerce is increasingly happening across borders, with consumers buying goods direct from a manufacturer in another country. At the same time, e-commerce is also expanding in the virtual realm, where digital goods can be bought and sold everywhere in the world, no matter their origin. This is the new face of globalization. To be successful at it, global recognition is key. When Rakuten signed its deal with FC Barcelona in 2016, it said it did so as “an important part of its plans for global expansion”. No wonder. According to a McKinsey report that year, “approximately 12% of the global goods trade [was by then] conducted via international ecommerce”. That number has likely risen fast in the years since (no recent estimates exist). With more than four billion people now estimated to be online worldwide, and millions added every month, it seems a foregone conclusion that digital trade in all its forms will continue to rise for many years to come. It is true as much for Rakuten in the US

or Europe, where it sells Japanese products direct to consumers, as for Alibaba, Amazon and other e-commerce players. Just how this trade will happen, and how much of it will take place in the future, remains to be seen. No international organization currently has up-to-date, or even historical, statistics on digital globalization. However, there is a broad differentiation in digital trade: - Digitally ordered and physically delivered, as with sneakers or football shirts - Digitally ordered and digitally delivered, as with ebooks or IT consulting tasks What is certain is that the world has rapidly changed in the last 50 years. In 1964, Phil Knight could build a successful company by buying Japanese-made running shoes in bulk and selling them in the US. Today, any consumer can go to Rakuten.com in the US and buy Japanese-made Onitsuka Tiger shoes direct. The business model that worked in the 1960s likely wouldn’t work today. This doesn’t mean, of course, that Nike’s globalization model is out of date. As a matter of fact, the same company that would undercut Phil Knight if he started today is helping Phil Knight’s successors sell their products in Japan and around the world. Go to Rakuten.co.jp, and you can buy Nike sneakers direct in Japan. And of course, Nike has its own global ecommerce store. Perhaps it’s not all that odd, after all, that both companies in harmony decided to sponsor the then-most popular football club in the world on social media. Yet they should beware. Today’s winner can become tomorrow’s runnerup. Ask Barcelona. In 2018, a year after it launched the Rakuten-Nike shirt, it lost its place as most popular online club to Real Madrid. Digital globalization is huge, growing and certainly still changing. • Vanham is media lead at the World Economic Forum

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Tuesday 22 January 2019

Davos 2019

How play can help Africa’s kids develop skills for the future

lobalization and technological advances are rapidly changing economies and societies around the world, transforming how we learn, live and work. This “information age” or “Fourth Industrial Revolution” is characterized by developments in robotics and machine learning; the internet and means of communication and accessing information; and transport and engineering. These advances are not automatically benefiting everyone. The skills needed to thrive in the 21st century are not the same as they were in the 20th century. To harness the opportunities and tackle the challenges of the Fourth Industrial Revolution, our children need to develop a breadth of skills. These skills include more than just functional literacy, numeracy and general knowledge; they extend to physical, social, cognitive, creative and emotional skills - particularly creativity, problemsolving, critical thinking and collaboration. Yet we currently have a global learning crisis. World leaders have made commitments to “ensure inclusive and equitable quality education and promote lifelong learning opportunities for all” by 2030. However, the statistics show we are way off track in achieving this goal. Here are some of them: • More than a staggering 600 million, or close to 60% of all children and adolescents, are not able to read or do basic maths.

• Despite progress in education enrolment rates, there are still 260 million children out of school globally. • Of those in school, 400 million will leave before they turn 12, and more than 800 million (50% of children in developing countries) will end their secondary schooling with no recognizable qualifications for the modern workforce. • Education systems are struggling to support children to learn the breadth of skills they need. This learning crisis is acute in Africa, in particular in the subSaharan region. While primary school enrolment rates have increased from 60% to 80% in the past 20 years, on average less than 20% of primary school students in the region pass the minimum level of proficiency in reading and mathematics, compared to more than 50% of students in Latin America and even higher numbers in East Asia. Subsequently, 88% of all children and adolescents in subSaharan Africa will not be able to read proficiently by the time they are of age to complete primary and lower secondary education. By 2055, Africa will be home to 1 billion children, an estimated 40% of the global total. The importance of investing in African children’s development and learning cannot be overstated. Education has the potential to be a great equalizer, but it too frequently separates the haves from the have-nots. Unless we can identify ways to accelerate learning for those currently left

behind, many individuals and countries across the region will likely find themselves unable to benefit from the Fourth Industrial Revolution. We urgently need a skills revolution, especially across Africa, to address this global learning crisis. Although the current situation illustrates the scale of the challenge facing many African nations, countries can “leapfrog” inequality, harnessing innovation to accelerate educational progress. There are some encouraging commitments and signs of progress. At the regional level, African governments have agreed a bold vision for an “integrated, prosperous and peaceful Africa”, called Agenda 2063. It states that Africa’s human capital will be fully developed as its most precious resource, through sustained investments in education. This is supported by the Continental Education Strategy for Africa (CESA) 20162025, which places an emphasis on improved skills development, albeit only with a focus on technical and vocational education and training (TVET), and science and engineering at present. There is a big variation in how far countries are going to adjust their education policies and systems towards a greater focus on 21st-century skills, as this interactive map illustrates. Overall, there needs to be a much greater focus on this across Africa. Skills such as creativity and collaboration have less to do with what is being taught and more to do with how children

learn. Therefore, school systems need to evolve beyond traditional teaching methods to support the development of these skills. Advances in brain science and innovative teaching methods have expanded our knowledge of how students learn effectively. We know that children’s brains are most efficient at incorporating new information through exploration, play and interactions with caring adults. To redefine how our children learn and to empower them for the future, we must stop overlooking a powerful part of the solution: learning through play. In play, we learn to create, collaborate and solve problems in ways that bolster traditional and critical subject learning in schools. For example: • Rwanda, working with Right to Play, has integrated play-based learning into its curriculum, and is developing relevant teacher training and resources. • In Tanzania and Uganda, BRAC has established Play Labs for pre-primary-aged children, which are showing that children develop social skills and a love for learning through play-based approaches. • In Kenya, Kidogo has developed a play-based social franchise daycare approach to increase the opportunities for quality childcare. Early learning is a key area of investment needed to leapfrog the skills gap. Similarly, South Africa’s Department of Basic Education has

been working with the LEGO Foundation, UNICEF and partners to train teachers to adopt play-based approaches in the classroom to support key skills development. Using a simple tool called “Six Bricks”, children have gained confidence in expressing themselves, as well as critical thinking and reflection skills. Acknowledging that skills development does not just happen in the classroom, the South African government has also been implementing efforts to bolster parents and caregivers to support their children’s skills development. These issues will be explored at the Africa Continental Conference on Play-Based Learning in South Africa from 25-27 February 2019. It will be hosted by the South African Department of Basic Education, in partnership with UNICEF, the Association for Development of Education in Africa (ADEA) and the LEGO Foundation. Government representatives and key stakeholders from across the continent will come together to discuss how play can be a critical tool to support children’s development, and how to incorporate learning-through-play approaches into their national systems, to help achieve the African Union’s Continental Education Strategy and Agenda 2063. “Education is the most powerful weapon we can use to change the world”, said Nelson Mandela. When we add play to education, it becomes the most powerful weapon to equip children for a changing world.

Tuesday 22 January 2019

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Features The story of decline and recovery of the economy Bisi Daniels

t was an expectant morning at the Banquet Hall of the State House, Abuja, as the Economic Management Team (EMT) engaged representatives of the private sector from all over the country on the economy at the 10th Presidential Quarterly Business Forum. “We didn’t know you have done so much,” Chief (Mrs.) Nike Akande, the President of the Lagos Chamber of Commerce and Industry and honorary life Vice-President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, said. Six minsters had taken turns to brief the leaders of the Organized Private Sector in a manner that told the story of the economy and addressed contemporary issues. They were Budget and National Planning Minister Udoma Udo Udoma; Finance Minister Zainab Ahmed; Minister of Agriculture, Audu Ogbeh; Industry, Trade and Investment Minister Okechuku Enelamah; Works, Power and Housing Minister Babatunde Fashola; and Suleiman Adamu, Water Resources Minister. With sharp drop in oil revenue from N4076 bn in 2014 to N1439bn in 2016, and low savings to fall back on, the economy was heavily challenged with exchange rate instability, declining reserves, soaring inflation from 8.2 per cent in 2014 to 18.5 per cent in 2016. There were also challenges at the sub-national level. GDP growth slowed down to 2.11 per cent in the fourth quarter of 2015, and continued to decline through 2016 resulting in the recession. According to Udoma, the EMT responded with a strategic Federal budget in 2016 budget, and the Economic Recovery and Growth Plan to stem the slide. The key fiscal priorities under the ERGP include enhancing revenue generation, collection and monitoring; fiscal consolidation by optimising priority capital and recurrent expenditure; optimising management of both domestic and global fiscal risks; and increased coordination of fiscal, macroeconomic, monetary and trade policies Expectedly, there was an urgent need to shore up rev-

enue. The measures undertaken included engagement with communities in the Niger Delta to stop shut-in of oil production; transition from Joint Venture Cash Calls to a new cost recovery funding mechanism; Executive Order on remittances of GOEs operating surplus; and the introduction of the Voluntary Assets and Income Declaration Scheme (VAIDS) resulting in the number of tax payers rising from 13 to 19 million. Alongside those were measures to improve public finance efficiency with the implementation of the Treasury Single Account; a whistle blowing policy; establishment of Efficiency Unit to cut costs and block leakages; and the Integrated Payroll Personnel System (IPPIS) implemented across MDAs to enhance efficiency and eliminate unjustified payroll entries, etc. In line with the ERGP, Government increased Capital expenditure dramatically in the annual budgets At the subnational level, a fiscal sustainability plan with the states was adopted. Acknowledging the role of industrialisation and the importance of the private sector in reviving the economy, the FG stepped up the implementation of the Nigeria Industrial Revolution Plan with the establishment of the Nigeria Industrial Policy and Competitiveness Advisory Council, comprised of the government and private sector representatives at the highest level. It serves as a vehicle for partnering with the private sector on the industrialization agenda and on infrastructure development. On agriculture sectoral initiatives were undertaken. The Anchor Borrower’s scheme by the Central Bank of Nigeria kicked off resulting in massive cereal production and reduction of imports. Over N120.6 billion has so far been disbursed to more than 800,000 farmers. Eleven fertilizer blending plants with a capacity of 2.1 million metric tons were revitalized, and a Special Presidential Committee on key commodities set up. To address poverty, the Federal Government introduced the N500 billion Social Investment Programme. It includes the N-Power, Home Grown School Feeding, and Conditional Cash Transfer,

among others meant to assist petty traders, university graduates, NCE holders and other less-privileged Nigerians. Results The ministers listed the gains of the recovery process as: • Growth of Real GDP at 1.81% in Q3 2018, up from 1.50% in Q2 2018 and 1.17% in the corresponding quarter in 2017. The performance was driven by the non-oil sector which grew by 2.32% in Q3 2018, representing the strongest growth in the sector for 12 consecutive quarters since Q4 2015. • The Services Sector, continued to strengthen in Q3 2018, recording its best performance over 10 quarters, growing by 2.64 per cent, compared to 2.12 per cent in Q2 2018 and a contraction of -2.66 per cent in Q3 2017. • The drag to GDP growth in 2018, they explained, was largely due to a contraction in the Crude oil and Gas sectors and a slowdown in the agriculture sector, which was affected by temporary production and security challenges in the North East and North Central Zones as well as incidence of flooding. • Foreign exchange market trends show stability with convergence between the interbank rate (NIFEX) and NAFEX over the past 12 months • Decline of inflation rate below ERGP target of 12.4 per cent for 2018 • $2.86 billion capital importation in the third quarter of 2018, a 56.7 percent, increase compared to the corresponding period in 2016. They attributed the recent outflow caused by portfolio investors in response to developments in the external environment § Sustained accretion to external reserves, which recovered from US$28.57bn in May 2015 to US$42.92bn by mid-Dec 2018 • Purchasing Manager’s Index (PMI), a key indicator in assessing the health of the manufacturing sector, in the month of Dec. 2018 stood at 61.1 index points, indicating expansion in the sector for the twenty-first consecutive month

• Under the Social Investment Programme, 1,378,804 loans successfully disbursed in the Govt. Enterprise & Empowerment Programme (GEEP), with 1,061,592 loans under the TraderMoni Scheme • Under the Conditional Cash Transfer scheme, 297,973 people were supported with transfers of ₦5,000 in 217 LGAs across 20 states, while 2,530 community facilitators were trained • 9.3 million school children were fed under the Home-Grown School Feeding Programme in 49,000 schools across 24 states; and 96,972 catering staff were engaged; and • 500,000 graduates benefitted from the N-Power Programme Udoma described the results as the building of momentum. “Although the Real GDP growth is still low, it’s a movement in the right direction, especially with regard to the non-oil sector performance,” he said. “We are focused on diversification of the economy, in partnership with the private sector.” Mrs. Ahmed added that target fiscal outcomes will be achieved through accelerating the recovery in GDP growth and stemming inflationary pressures; increasing oil and non-oil revenues to finance priority capital and recurrent expenditures; enhancing fiscal consolidation to rebuild fiscal buffers and increase financial resilience against fiscal shocks; and prioritising investments in critical infrastructure and human capital development. Fashola The ministers also detailed out other achievements recorded so far. On power, Fashola said: “The administration has methodically and diligently identified both the quick wins to deliver and the teething but avoidable challenges in the transmission and distribution networks to correct them. “We have taken bold steps to nipping the challenges in the bud. The notable projects that had dragged for too long are now being completed and commissioned and to increase speed in performance, our administration has introduced

the Power Sector Recovery Programme through which funds are being injected into the sector and new strategies evolved to strengthen existing policies in order to achieve our objective of incremental, stable and uninterruptable Power supply. “Also, in order to have a robust Nigerian Electricity Supply Industry (NESI) and by also exporting electricity to neighbouring African countries, the Discos have been mandated to meter all their customers. Attainment of this feat will make NESI a key player in the West African Power Pool (WAPP).” Among the projects expected to increase power supply soon from the current 7,000MW are the 40 MW Kashimbilla Power in Taraba And Benue;700mw Zungeru Hydropower Plant and the 215MW Kaduna Power Plant, 2x60mva Substation & 2x1.5mltrs Ago Tanks and the Afam III Fast Power. Enelamah The reforms his ministry is leading include improvement in the ease of doing business targeted at achieving a sub100 World Bank ranking this year; and the establishment of Nigerian Industrial Policy & Competitiveness Council, which aims to increase the contribution of the manufacturing sector to GDP by 250 per cent over a five-year period, and establish Nigeria as the manufacturing hub for West Africa, by implementing initiatives aimed at accelerating industrialization by leveraging private sector expertise and capital; as well as reforms of the automotive sector towards making the country the automotive hub in West Africa; and the building of special economic zones. He said, “In accordance with the Economic Recovery & Growth Plan, which identifies the development of special economic zones as a major strategic tool to accelerate the implementation of the Nigeria Industrial Revolution Plan, Project Made in Nigeria for Exports (MINE) was envisioned by the Ministry and the Nigeria Export Processing Zone Authority to develop

SEZs to world class standards and position Nigeria as the pre-eminent manufacturing hub in sub-Saharan Africa and become a major exporter of made-in-Nigeria goods and services regionally and globally. Among other objectives, the project seeks to aid structural transformation of the Nigerian economy by increasing the manufacturing sector’s contribution to GDP to 20 per cent by 2025; contribute to sustainable inclusive growth by creating 1.5 million new direct manufacturing jobs in the initial phase of Project MINE; and increase and diversify foreign exchange earnings to at least US$30bn annually by 2025, by increasing manufacturing sector exports. Other reforms include the creation of the Nigerian Office for Trade Negotiation; improved access to financing for Medium and Small- Scale Enterprises and the delivery of technology-enabled solutions to ease business for MSMEs; as well as the mordinisation of intellectual property Registries (Commercial Law Department Reforms) He said between January 2015 and October 2018, the Bank of Industry disbursed a total of N487.5 billion to 3,334 large, medium and small enterprises. Adamu He disclosed that his ministry inherited 116 major ongoing and abandoned projects on assumption of office in 2015: They included 38 projects on irrigation and drainage, 27 dams and 37. He said with the deployment of resources towards completing and commissioning all the high and medium priority projects 11 projects have been completed and commissioned, while six are ready for commissioning. “We also plan to complete many more water supply, dam and irrigation projects including 7 water supply projects, and 13 dams and irrigation projects between now and 2020.”’ Private sector participants who spoke at the interactive session expressed appreciation for the information shared and reminded the EMT of lingering problems such as multiple taxation. Dr. Yemi Dipeolu, Special Adviser to the President for Economic Matters in the Office of the Vice-President, who closed the session with a vote of thanks described it as engaging and commended members of the organized private sector for their presence and consistency. “We continue to take your views and advice seriously,” he assured them on behalf of the EMT, headed by Vice President Yemi Osinbajo.

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Delta Airlines announces $5.1bn pre-tax income for year 2018 Stories by IFEOMA OKEKE

elta Ailines has reported full year adjusted pre-tax income of 5.1 billion dollars, a 137 million dollar decrease relative to 2017 as the company overcame approximately 90 percent of the $2 billion increase in fuel expense. Full year adjusted earnings per share were $5.65 , up 19 percent compared to the prior year as the company recognised benefits from tax reform and a four percent lower share count. Adjusted pre-tax income for the December quarter 2018 was $1.2 billion driven by over $700 million of revenue growth, allowing the company to fully recapture the $508 million increase in adjusted fuel expense and produce an 11 percent adjusted pre-tax margin. Adjusted earnings per share increased by 42 percent year over year to $1.30 . “Year 2018 was a successful year for Delta with record operational reliability, increasing customer satisfaction, and solid financial results in the face of higher fuel costs. Delta people

are the foundation of our success and I am honoured to recognize their efforts with $1.3 billion in profit sharing for 2018,” Ed Bastian, Delta’s chief executive officer said. “As we move into 2019, we expect to drive double-digit earnings growth through higher revenues, maintaining a cost trajectory below inflation, and the modest benefit from lower fuel costs. Margin expansion is a business imperative and we remain confident in our full-year earnings guidance of six dollars to seven dollars per share.” Delta’s adjusted operating revenue of $10.7 billion for the December quarter improved 7.5 percent, or 747 million dollars versus the prior year. Total unit revenues excluding refinery sales (TRASM, adjusted) increased 3.2 percent during the period driven by healthy leisure and corporate demand offsetting an approximately 0.5 point headwind from unfavourable foreign exchange rates. For the full year, adjusted operating revenue grew to nearly 44 billion dollars, up eight percent versus prior year on an increasingly diverse revenue base, with 52 percent of

revenues from premium products and non-ticket sources. Premium product ticket revenues increased 14 percent along with double-digit percentage increases from cargo, loyalty, and Maintenance, Repair and Overhaul revenue. “Delta’s strong brand momentum was evident across the business with positive unit revenue growth in all geographic entities for the full year, a record revenue premium to the industry, and double-digit revenue growth from premium products and non-ticket sources,” Glen Hauenstein, Delta’s president said. “Our March quarter adjusted unit revenue growth is expected to be flat to up two percent including impacts from the timing of Easter, increasing currency headwinds, and the ongoing government shutdown.” Cost Performance Total adjusted operating

expenses for the December quarter increased 803 million dollars versus the prior year quarter, with more than half of the increase driven by higher fuel prices and profit sharing. CASM-Ex was down 0.5 percent for the December quarter 2018 compared to the prior year period, the strongest cost performance for the year. For the full year, CASM-Ex increased 1.4 percent, marking an important inflection in the company’s cost trajectory with increasing benefits from efficiency initiatives, Delta’s fleet transformation and strong performance from operating units. Adjusted fuel expense increased 508 million dollars, or 27 percent, relative to December quarter 2017. Delta’s adjusted fuel price per gallon for the December quarter was 2.42 dollars which includes a 16 cent headwind from the Monroe refinery and inven-

tory pre-purchases. For the full year, adjusted fuel expense increased 2.1 billion dollars, or 29 percent versus prior year. Adjusted non-operating expense for the quarter improved by 258 million dollars versus the prior year, driven primarily by pension expense favourability and the DAL Global Services transaction. For the full year, adjusted non-operating expense improved by 360 million dollars versus the prior year. “In 2018, we successfully returned to our long-term target of keeping non-fuel unit cost growth below two percent, with December quarter non-fuel unit costs declining 0.5 percent,” Paul Jacobson, Delta’s chief financial officer said. “With solid momentum from our fleet transformation and One Delta efforts, we have confidence in our path to one percent non-fuel unit cost

growth in 2019.” Cash Flow and Shareholder Returns Delta generated 1.3 billion dollars of adjusted operating cash flow and 45 million dollars of free cash flow during the quarter. For the full year, Delta generated 6.9 billion dollars of adjusted operating cash flow and 2.3 billion dollars of free cash flow. The company invested 4.7 billion dollars into the business in 2018 including 1.3 billion dollars in the December quarter. This enabled delivery of 68 new aircraft in 2018, including five Airbus A350s and four Airbus A220s. The company’s on-going fleet transformation is driving higher customer satisfaction, premium seat growth, and improved cost efficiency. During the December quarter, Delta returned 563 million dollars to shareholders, comprised of 325 million dollars of share repurchases and 238 million dollars in dividends. For the full year, Delta returned 2.5 billion dollars to shareholders, comprised of 1.6 billion dollars of share repurchases and 909 dollars million in dividends.

SAHCO enhances operations with state-of-the-art ground support equipment

kyway Aviation Handling Company (SAHCO) Plc, one of the country’s leading ground handling companies in Nigeria, has enhanced its operations with the acquisition of state-of-the-art ground handling equipment. The equipment, which was unveiled at its Engineering and Maintenance Workshop in the Air Force Base at the Murtala Muhammed Airport (MMA), Lagos, the company said was over one billion naira. With the acquisition and use of the equipment, the Ground Handling company, which recently enlisted on the floor of the Nigerian Stock

Exchange (NSE), has further cemented its position as the leading ground handling company in West and Central African Regions. Speaking at the commissioning of the event, Basil Agboarumi, the managing director of SAHCO, said that apart from the machines unveiled, some other equipment were currently at Onne Port in Port Harcourt awaiting final clearance. Some of the equipment commissioned by SAHCO included Ground Power Units (GPU), Load Banks, Tow bars, Tyre Removal Machines and 10 new engines for ground operations.

Agboarumi emphasised that SAHCO was already changing the face of aviation Ground Handling services in Nigeria with its latest acquisition, stressing that the company would consistently offer its clients the best of services anywhere in the country. He added that with the regularly upgrade and investment on equipment, SAHCO would be a force to reckon with in global aviation industry. Agboarumi said: “As a Ground Handling company, we want to ensure that we do ground handling to the highest industry standards. We understand we need to deploy equipment that will make our

clients happy and we also know that we have to partner with our clients. “Apart from these that are commissioned today, some of our other equipment are still coming to Lagos from Port Harcourt. They are presently awaiting clearance from the port. SAHCO is moving towards making the right impacts in the industry. We always want to operate safe and efficient ground handling operations for our clients.” Also commenting at the event, Toyin Oriowo, assistant general manager, Maintenance and Engineering, said that the equipment acquired were some of the major machines

in the global aviation industry. He i n s i s t e d t h a t t h e equipment came with safety devices that prevent damages to the machines or aircraft, stressing that the GPU had a capacity of 140KVA, while a major aircraft highest capacity was 90KVA. He said: “What we are commissioning today is the latest technology in town with lots of safety devices to prevent damages to either the equipment or the aircraft.” The tow bars can handle Airbus A320, Boeing 737, A330, A340-200/300, A350, B767, B777, B787 and IL96. Others were DC10/MD 11, L10 11, A340-500/600 and

B747. According to him, the equipment, which was manufactured in France came with training for its technical personnel. SAHCO is an aviation ground handling company that is involved in Passenger Handling, Ramp Handling, Cargo services and Warehousing, Aviation security services, Ground Support Maintenance services, Crew Bus and Executive Lounge Services and other related Ground Handling Services while ensuring that Ground Handling assignments is carried out in an efficient, speedy and safe manner by deploying appropriate tools.

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Wapic Nigeria Plc: Investment in growth strategy underpins underwriting profit BALA AUGIE

first glimpse at Wa p i c I n s u rance Plc’s third quarter financial statement shows the insurer has been spending less on operating and management expenses to generate each unit of premium income, thanks to technological improvements in administration and distribution. Despite the lingering apathy for Insurance by the Nigerian populace, driven largely by cultural & religious beliefs, Wapic remains resilient, recording a compounded annual growth rate (CAGR) of 19.61 percent in gross premium Income (GPI) since 2014, according to Markers and Finance calculations Double digit growth in premium income Wapic Insurance’s gross premium written (GPW) increased by 28.04 percent to N10.09 billion in September

2018 from N7.81 billion in the previous year, this compares with an increase of 22.91 percent, 12.87 percent and 21.67 percent to N6.45 billion ,N5.67 billion, and N4.66 billion in the 2017, 2016, and 2015 periods. Gross premium income (GPI) followed the same growth trajectory as it grew by 18.40 percent to N8.62 billion in September 2018, from N3.52 billion recorded in the corresponding period of 2014. Net premium income (NPI) rose by 26.97 percent to N5.46 billion in the period under review from N2.14 billion recorded in 2014. NPI has been growing at CAGR of 20.61 percent since 2014. This meant Wapic has b e en grow ing re venue steadily even amid the economic recession of 2016 brought by a precipitous drop in crude oil price and a severe dollar scarcity that crippled many businesses. Net underwriting income was up 31.90 percent to N6.45

billion in the period under review as against N4.89 billion the previous year despite an 8.62 percent increase in reinsurance expenses. “Our nine months’ financial performance is reflective of the focused implementation of our growth objectives across all business lines,” said Yinka Adekoya, Managing Director WAPIC Insurance Plc. “Our ongoing digitization efforts and first-in-class customer experience offering will open up new opportunities which we believe will ensure the continued creation of sustainable value to all our stakeholders,’’ said Adekoya. Experts have commended the stellar performance of the underwriting firm given the tough and unpredictable environment companies operate in, which is why the insurance Industry remains small and fragmented compared to other Sub Saharan African countries like Morocco, Kenya, and South Africa. The total annual Gross Premium Income of all the insurance companies operating in the country amounts to 0.60 percent of GDP, this compares with a typical 7.0 percent in developed markets, according to a recent report by Coronation Merchant Bank. Despite the enormous challenges, there abound opportunities. With a low penetration rate and 1 percent of a population of 180 million holding any form of policy, the opportunities in the Nigerian market are enormous. This means insurers have more risk to undertake because a lot of people are going to need a cover. Moreover, the country is blessed with young populations that crave for consumption. However, the recent sluggish economic growth, dwindling purchasing power among consumers, decrepit infrastructure, emerging markets sell off due to political risk in Turkey, Brazil, and South Africa, could cast a cloud on future premium income. Nigerians are getting

poorer by the minutes, while unemployment rates are rising amid growing population, which means they do not have the money to take an insurance cover. According to a recent World Bank data, 92.10 percent of Nigerians live at below $5.50 a day. The reality is that most people cannot afford to buy a packet of Spaghetti or proteins. Nigeria with a population of 180 million people has 87 million people, nearly half its population, in extreme poverty; as high inflation environment continues to erode discretionary income. Investment in growth strategy underpins underwriting profit Wapic insurance’s underwriting profit increased to N1.37 billion in September 2018, from N626 million recorded in 2016 when an economic downturn resulted in spiraling claims expenses. Improved underwriting results can be attributed to appropriate pricing, reduction in management expenses, and the process of implementation of solvency 11. Wapic Insurance has been spending less on operating expenses to generate each unit of revenue as operating expenses ratio (Opex ratio) fell to 67.12 percent in September 2018 from an all time high of 99.15 percent in 2016. Total operating or management expenses have been growing at a slow pace, which validates management and board of directors’ cost control mechanism. Total operating expenses increased by 7.19 percent to N3.50 billion in the period under review, this compares with an increase of 23.15 percent and 30.13 percent in 2016 and 2015 periods. Underwriting expenses were up 35.14 percent to N2.0 billion the period under review as against N1.50 billion recorded the previous year. Underwriting expenses ratio rose to 37.15 percent in September 2018 from 34.95 percent the previous year. Wapic Insurance total net claims expenses were

BD BD MARKETS MARKETS + + FINANCE FINANCE Analysts: Analysts: BALA BALA AUGIE AUGIE

up 48.82 percent to N3.11 billion in September 2018 from N2.09 billion as at September 2017. Claims ratio increased to 57.45 percent in the period under review from 48.25 percent as at September 2017 as the company continues to honour obligation to policy holders. Wapic Insurance’s total assets were up 22.22 percent to N34.97 billion in September 2018 from N28.60 billion as at September 2017; driven primarily by 130 percent and 175 percent surge in reinsurance assets and cash and cash equivalent to N3.60 billion and N4.80 billion in the period under review. Total liabilities grew by 59.77 percent to N17 billion

in the period under review from N10.64 billion the previous year. The growth in total liabilities was largely driven by a 49.85 percent and 124.13 increase in insurance contract liabilities and other payables to N10.70 billion and N3.25 billion in the period under review. Wapic is steadfast in maintaining its growth momentum as it has introduced new products into the market, with a view to magnifying its revenue income stream. With an excellent risk m a n a g e m e n t s t ra t e g y , proved reserve, a strong capital base to take on more risk, the Nigerian insurer is poise to magnify shareholder’s earnings.

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Tuesday 22 January 2019

Infrastructure Maintenance With Tunde Obileye

Why Nigeria has one of world’s lowest mortgage to GDP rate Endurance Okafor

ith the highest population in Africa, Nigeria has more than 17 million housing units deficit. According to the Association of Housing Corporation of Nigeria (AHCN), an umbrella organization for all federal and state housing agencies, more than 90 percent of new homes use funds from personal savings for incremental construction. A key culprit for this situation is mortgage rates. Typical mortgage interest rates in Nigeria range between 7-10 percent for Federal Mortgage Bank of Nigeria (FMBN) and between 15-25 percent for commercial mortgage institutions, making it one of the highest in the world. The rate could also go higher without sufficient capacity to derisk investment. For instance, a mortgage of N25million at 15 percent per annum interest rate means repayment of N37.9 million in interest only over the 15 year period, which is even more than the principal itself. The trick here is that at 15 percent interest rate, it takes a lender approximately 7 years to recover the N25million it lent you. That is about 6 years if the interest rate is 20 percent. In advanced economies, the mortgage industry makes significant contribution to economic development with single digit interest rates. Nigeria’s roaring inflation rate and the attendant high mortgage rate dampen housing demand and blunt developers’ investment appetite. This is why Nigeria has one of the world’s lowest mortgage to Gross Domestic Product (GDP) rate of about 0.6 percent, which lags behind Ghana’s 2 percent, South Africa’s 30 percent and crawls after the U.S and UK rates of 60 percent

and 70 percent respectively. In the last 41 years of its existence, FMBN said it has so far disbursed N193.4 billion to 18,935 Nigerian workers. Property analysts polled in a BusinessDay survey link the poor performance of Nigeria’s mortgage industry to legal, economic and socio-cultural factors coupled with lack of advocacy, as studies have shown that only one out of may be 15 adults in the country understand what mortgage means. Other factors that have dogged the housing sector in the country can be linked to high cost of construction, a chaotic exchange rate system which sends the cost of building materials through the roof. This therefore means that long term and patient capital is priority for driving the housing sector that has contracted for 11 consecutive quarters till Q3 2018. The recent figures compiled from National Bureau of Statistics (NBS) shows that Nigeria’s property

sector was among the least attractive sectors as it was only able to attract N710.2 billion in the third quarter of 2018 as against the N744.56 billion and N784.2 billion it got in Q2 and Q1 in 2018 respectively. Way forward Nigeria is yet to realize its real estate sector’s potential, considering it was only able to contribute 6.50 percent to the country’s GDP in Q3 2018 as against its 6.83 percent it contributed in the second quarter of last year, and the 5.63 percent contribution it reported in the preceding quarter. Whereas in South Africa, the region’s most industrialised and second largest economy after Nigeria, its real estate sector contributes about 30 percent to GDP, and in the UK, the property industry contributes about 70 percent. Solving the sector challenges as compiled from industry experts will entail collaboration between the

private and public sector, with the government creating an enabling environment in terms of policies, legal, economic and investment of long term capital in the industry. Meanwhile, in solving the data and information challenge which experts say could attract more foreign investors into the sector, the Real Estate Developers’ Association of Nigeria (REDAN) in collaboration with the Central Bank of Nigeria, the Federal Ministry of Power, Works and Housing, and other stakeholders established the National Real Estate Data Collation and Management Programme (NRE-DCMP) in February 2018, to make available data about the sector. For example, the often quoted 17 million housing deficit has remained unchanged for over a decade despite the fact that the average population growth rate of the country stands at about 3 percent per annum. The place to start, for Nigeria, will be to first get its data right.

Infrastructure, toll gate top Lekki residents demands from Osinbajo, Sanwu-Olu CHUKA UROKO

he residents of the many estates in Lekki at the weekend made a litany of demands from Vice President Yemi Osinbajo and Babajide Sanwo-Olu, the Lagos State governorship candidate on the All Progressives Congress (APC) platform. The residents, under the aegis of Lekki Estates Residents and Stakeholders ssociation (LERSA), made the demands at a Town Hall Meeting for Political Candidates which the association organized. They described Lekki as a peculiar environment. “This is the only environment in the whole of Lagos where you have to pay to go out and pay again to return to your house”, James Emadoye, LERSA president noted. I”t is also the only environment where you can hardly count up to 10 public schools; no health centres unless you travel about 40 kilonetres to Ogombo to get a health facility. Apart from Lekki Scheme 1, there is no public water supply in this environment, yet

we pay our taxes to the government because we see ourselves as partners in progress with government”, Emadoye added. Lekki is a burgeoning enclave in Lagos and is touted as the fastest growing residential destination in Nigeria. Apart from Lekki schemes 1 and 2, which are government schemes, the rest of the settlements are private estates and Emadoye disclosed that there were 77 identified estate making up LERSA.”Lekki stretches from 1004 Estate to Epe”, he informed. Apart from their request to enjoy what residents in other parts of Lagos enjoyed such as good public school and transportation (Bus Rapid Transit, BRT), the residents also requested to be allowed to be paying a flat toll of N5000 per car per year at the toll gate, stressing that the incoming government in the state should even consider cancelling the payment of the toll by the residents since they suffer a great deal on the expressway which is still largely uncompleted at only 30 kilometres. Flooding is another major chal-

lenge facing the residents and this is even besides high energy cost each resident has to bear. “The least each resident here spends on diesel to power his generator is N150,000 per month which is unacceptable”, Emadoye emphasized. He stressed the urgent need for alternative routes to be constructed, explaining that by the time all the developments planned for that axis including the Dangote Refinery, the airport, dry seaport, fertilizer and petrochemical industries, came on stream, the traffic situation on the expressway would be worse. “Apapa would be a child’s play if this happens and if, for any reason, a Dangote truck breaks down on the expressway, the chaos will be unimaginable and the residents won’t get home that day”, he said. Responding, Sanwu-Olu assured the residents that, if he wins the up-coming governorship election in the state, he will provide more infrastructure, especially roads, for the sprawling peninsula. He also pledged that, alternatively,

his government would build a bridge that would start from Freedom Road and terminate at Ilubrin near Third Mainland Bridge.His deputy, Obafemi Hamzat, and Vice President Yemi Osinbajo were also at the meeting. The new roads or bridge infrastructure, he explained, was to ensure that residents who wanted to connect to the mainland would not necessarily have to pass through Ozumba Mbadiwe Street or the Ikoyi Link Bridge. The alternative route or the bridge would also decongest the Lekki-Epe Expressway, reduce travel time and save the quality man-hour spent on the expressway on daily basis. The governorship candidate was, however, diplomatic on the challenge posed by the Toll Gate at the Admiralty Plaza on the expressway, pointing out that the Lekki Epe Expressway was a product of public private partnership (PPP) arrangement which became necessary because of government’s lean resources was hardly enough to run the government and provide needed infrastructure.

Revisiting issue of maintenance

s we begin this New Year in earnest, I thought it will be a good idea to revisit the concept of maintenance vis-a -vis the work of facilities managers. Maintenance problems are never easy and explain the reason developed societies are constantly seeking ways to improve on the mechanism of maintenance. The greatest challenge facing both private and public sector facilities managers is how to make corporate management team and/ or clients appreciate their value and contributions to the bottomline of these organisations and/or clients. Furthermore, in this part of the world, it is still a struggle to define an acceptable level of maintenance despite the huge expenditure on infrastructure. In today’s global economic climate, there is constant pressure on facilities management practitioners to justify spending as management attempts to cut cost. This issue is and remains critical to any form of success that facilities managers can lay claim to. Until this issue is resolved, the rate of success stories will remain low. For most facilities management practitioners that I know, facilities management (FM) is not their first choice of career, but rather one of chance and as a result do not take pride in the profession. This has led to a lack of confidence and desire to develop their knowledge base. What most facilities managers see is the receiving and handling of complaints and doing fire- fighting work. With the scope of FM work increasingly getting bigger, this makes it more complex as the opportunity to have a solid grasp of facilities management methodologies become more difficult. You often find that work no one wants to do is almost certainly assigned to the facilities management department. Regrettably, many organizations and people still do not appreciate and recognize the full potential of facilities management. It is viewed in many quarters as a laborious discipline that only spends money and reactive in nature to malfunctions. The practice of facilities management is often misunderstood by most people as simply dealing with building repair and cleaning when in fact these tasks are only a fraction of the responsibilities of facilities managers. It can be quite frustrating trying to explain the architecture and engineering behind facilities management. In conclusion, it is time for all stakeholders to stretch their thinking about the full benefits of value-based facilities management. In particular, for facilities management practitioners to further enhance their performance and organizations/clients to appreciate the strategic relevance and importance to businesses. Together, we can raise the facilities management profession to be recognized and respected as a value-add discipline. Obileye is a UK-trained lawyer and CEO, Great Heights Property and Facilities Management Limited Email: tundeobileye@greatheightslimited.com

Tuesday 22 January 2019

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BUSINESS DAY

‘We will drive growth by executing more aggressive strategies for aggregates and ready-mix concrete’ As part of plans to strengthen and deepen its foothold in Nigeria, Lafarge Africa, a member of LafargeHolcim, the global leader in building materials and solutions, says it has evolved strategies that will further develop its desire to be at the forefront of sustainable construction solutions and innovation. At the centre of these strategies is its plan to offer rights issue which includes raising N90 billion and restructuring its outstanding short term $315 million shareholder loans. In this interview, MICHEL PUCHERCOS, the company’s CEO, offers insights on these ambitious plans. Expectations of a strong market, favourable pricing in Nigeria coupled with gains from logistic and commercial initiatives will sustain market share going forward and also ensure the growth of our business. Lafarge Africa’s turnaround plan in South Africa, focused on cost containment, commercial transformation and industrial stabilization, is expected to restore profitability.

our major plan now is to raise N89.2 billion in 2019 through a Rights Issue. What are the immediate and long-term benefits of this move, coming on the heels of your N131.7 billion Rights Issue concluded in Q1 2018? Last March, Lafarge Africa successfully raised N131.7 billion by way of Rights Issue, which is the largest Rights Issue by size raised in Nigeria so far. In order to further deleverage the balance sheet, our shareholders at an Extraordinary General Meeting on September 25, 2018 approved a resolution to raise additional capital by way of a Rights Issue of 90billion. The successful conclusion of the Rights Issue will help to strengthen profitability and put the company in readiness for all its planned capacity expansion in Nigeria. The company foresees a stable pricing environment and favourable economic conditions in its Nigeria market while its South African operations are undergoing a turnaround plan that has begun to yield results. What will you consider the mid to long-term prospects of the building industry and the value of Lafarge solutions to the players in the industry? LafargeHolcim’s new Strategy 2022 – Building for Growth – aims to drive profitable growth and simplify the business to deliver resilient returns and attractive value to stakeholders. In full view of the trends in our industry and marketplace, we have developed a strategy that plays to our unique strengths as a company and will shift gears towards growth of the top and bottom line over the

Puchercos

next five years. The ‘Building for Growth’ Strategy has four pillars including Growth, Simplification & Performance, Financial Strength and Vision & People. At Lafarge Africa, we have clearly outlined targets under each pillar that will ensure we deliver the promised growth to stakeholders. We will drive Growth by executing more aggressive strategies for Aggregates and Ready-mix Concrete alongside our existing strong cement business. The value driver Simplification & Performance will create a cost disciplined operating model and a corporate-light structure. Financial Strength will ensure disciplined value creation through maintaining an investment grade credit rating. The value driver Vision & People further develops the values of trust and integrity, the

commitment to Health & Safety and the desire to be at the forefront of sustainable construction solutions and innovation. How does Lafarge plan to achieve profitability given the challenging business environment? Interestingly, there has been a rise in demand for cement in Nigeria since the start of 2018. In order to benefit from this emerging resurgence in demand for cement we are working at increasing local sourcing of critical materials to lower the foreign exchange component of our operational costs. We have also commenced the roll out of a new route to market initiative which has begun to positively impact our logistics operations.

We are aware that there was a plan to increase the installed capacity of the Ashaka cement plant. Is that plan still in place? The plan to expand the installed production capacity of Ashaka cement plant is still alive and the Scheme of Arrangement which was approved by the shareholders last year is another step towards the realization of this plan. This expansion in capacity is focused on supporting our growth ambitions by meeting increased market demand and servicing our customers better with high-quality products. However, pending when all preparatory steps are concluded for the additional production line, work to debottle-neck the existing plant to increase its production capacity by 200,000 metric tonnes per annum has commenced. It is also important for our shareholders and investors to note that the expansion of the cement production capacity of the Mfamosing plant in Calabar to 5.8 million metric tons per annum has contributed significantly to Lafarge Africa’s capacity expansion and footprint in Nigeria. How has the use of alternative fuels to support energy requirements of your op-

erations in Ewekoro impacted your business and how do you hope to consolidate on this at other plants? Lafarge is pioneering the use of alternative fuels in cement production in Nigeria. This deliberate effort at energy optimization helps us decrease our dependency on gas and at the same time reduce the CO2 impact of our operations. An increase in the use of alternative fuels can help reduce disruptions to production due to natural gas supply issues and is also beneficial to the environment. What we are doing is unique in Nigeria and we recently emerged the Best Company in Clean and Affordable Energy in the2018 Sustainability Enterprise and Responsibility Awards (SERAS)CSR Africa Awards in recognition of our efforts. What are some of the plans you have in place for Lafarge Africa going forward? Looking forward, the company sees domestic consumption of cement being buoyed by government’s infrastructure spending. Working with our dedicated research centre in Lyon, we have expanded our product range to include premium technical cement for large scale constructions such as roads and bridges as well as specially formulated cement that satisfies the needs of block makers in terms of usefulness for everyday building projects. In Nigeria, we are committed to delivering sustainable strong performance, with the aim of improving operating EBITDA margin. And for the South African operations, we are looking to deliver on cost optimization and commercial excellence initiatives to sustain performance in 2019 and beyond.

Environment stakeholders charge religious groups, individuals to conserve land, nature CHUKA UROKO

orried by the impending environmental crisis caused by increasing rate of carbon monoxide pollution of the atmosphere, environmentalists have called on Nigerians, including religious groups, to put in efforts towards conserving the environment. According to them, Nigerians need to reduce the rate at which human activities are provoking unprecedented climate change. Muhtari Aminu-Kano, director general of Nigerian Conservation Foundation (NCF), said in Lagos last week at the 17th Chief S. L. Edu Memorial Lecture, that the world environment was in crisis as shown by several reports by the United Nations (UN), World Bank and even President Trump’s government, who is not a strong believer in manmade climate change. Aminu kano warned that there would be serious global crisis, if we do not address climate change within the

next 12 years by reducing the level of carbon-dioxide emission, saying that Nigeria had the highest rate of deforestation in the world. “Climate change is already affecting us in Nigeria and we have other environmental crisis that is compounding the climate change. We are dredging our wetlands, burning our savannahs, polluting and cutting our forest and killing our wild lives at a rapid pace. Nigeria loses 400,000 hectares of forest every year. Right now, we have only 4 percent of our original forest left while 96 percent is gone,” he said. Aminu kano pointed out the need to re-green Nigeria, adding that we need to do something towards environmental conservation at the level of government, companies, NGOs and individuals. Martin Palmer, the guest speaker, who spoke on the topic ‘A Quiet Revolution: Faith and the Environment,’ said that religious groups play key role in sustaining communities around the world. “The role of religious groups in

environmental conservation is that government and business keep changing but religion remains the same; God created human being not just to look after its fellow human beings, but also to look after the whole of the planet. We need to rediscover ourselves because we were given responsibility at creation to look after the whole of the creation”, Palmer said. He said that the role of faiths and the sacred in conservation efforts makes it surprising that the secular and semi scientific conversation and environment movements have taken so long to become alert to the partnership the need to have with the faiths. Palmer believed that religion, which ought to be the most powerful member of environmental movement, is still slow in playing its role in preservation of the environment in Nigeria. “We believe that as a result of today’s advocacy lecture and the work NCF is doing in Nigeria, that role of religion in conservation in Nigeria will become a light to the rest of the world,” he added.

Pointing out that the preserved areas in Nigeria are not well preserved, Palmer attributed that to lack of sufficient funding from government to support environmental conservation. “We should not make the mistake of thinking that the only place to conserve is the national parks. We need to conserve where we live, lands and farms that we have. The religious groups that are the major land owners – 8 percent of habitable land is owned by religious groups, need to conserve those lands. Every church and mosque should have trees around them. They are the fourth largest investing group in the world and they invest in environmental and sustainable development,” Palmer advised. Earlier, Izoma Philip Asiodu, president, Board of Trustees of NCF, who said that NCF has since 38 years of its existence, championed the cause of nature conservation and biodiversity in Nigeria, disclosed that the foundation got the ministry of environment to agree on a percentage of Federal Government revenue that must be

devoted to ecology. Wondering how much of this ecology fund has gone into real ecological project, Asiodu further disclosed that NCF started discussing with the government on the need for Nigeria to attend, subscribe to all the international laws on conservation of environment, years back during Shehu Shagari administration. Asiodu said that in 1988, the government announced that Nigeria must return 25 percent forest cover but sadly, “not one square kilometer of forest has been built till date”. “NCF’s operations have through the cooperation of local and international partners and sponsors, federal and states’ ministries of environment, government departments and agencies, recorded major landmark in the initiation and promotion of nature conservation nationwide. We have projects spread across Nigeria that focus on conservation action, research; environmental education and awareness and policy and advocacy,” Asiodu explained.

BUSINESS DAY

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Tips & Talking Points Equip your global team to turn down bribes

TALKING POINTS In the Dark 600 million: In sub-Saharan Africa, about 600 million people live without electrical power. +

WeWork, Rising 370%: WeWork grew its “enterprise” (companies with over 1,000 employees) customer segment by 370% in the past year. + Love and Money $2.5 billion: The dating market, including matchmaking websites and apps, is worth $2.5 billion.

ommercial bribes are illegal in many countries, but members of your global team may still encounter officials who demand them. To handle these sensitive situations, prepare people to respond. Often a bribe isn’t about money — it’s about respect. So empower managers on the ground to say, “I can’t give you a bribe, but what I can do is ... “ You might offer the official or their staff members a chance to participate in high-level decisions about your company’s commitment to the local community. Or you could talk about the official’s desired legacy and promise to publicly highlight their

involvement in a mutually beneficial way. And be realistic about the costs of saying no to a bribe request. Could it lead to delays in delivery (if a customs official refuses to release goods at the border until he gets a kickback)? To failing to win a contract (if a minister expects a 10% cut of the procurement deal)? When needed, adjust cost and timing estimates so that your company can pursue its goals in an ethical, sustainable way. (Adapted from “How Managers Should Respond When Bribes Are Business as Usual,” by David Montero.)

Are you doing enough to retain your best employees?

Figure out which data skills you need for your job

ata and analytics are increasingly important to how we do our jobs. But how do you know which data skills to learn (or brush up on)? To figure this out, think about two factors: the amount of time it will take to learn a certain skill and how useful it will be in your role. For example, data visualization might be relevant and useful to your job, and it’s generally straightforward to learn (at least the basics). Focus on skills that are useful and aren’t time-consuming to

Make sure everyone feels welcome at casual Networking events

Media Frenzy 1 in 5: In the last 15 years, 1 in 5 American newspapers has shuttered. + Virtual Reality 43%: A 2017 Gallup report on the state of the American workplace revealed that 43% of employees work remotely. +

Tuesday 22 January 2019

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acquire; these will have the most immediate payoff for your career. Think carefully about skills that would be useful but would take a lot of time and effort to learn. You’d have to prioritize them ahead of other activities, so you’d need to be sure they’re worth the investment. And the skills that are easy to learn but not that useful? Skip them. (Adapted from “Prioritize Which Data Skills Your Company Needs With This 2×2 Matrix,” by Chris Littlewood.)

Ev e r y ma na g e r knows it’s important to keep their best people. But when retention issues crop up, it’s easy to want to blame anyone but yourself. Instead of pointing the finger, think long and hard about why your employees may be thinking of leaving and what’s needed to increase their engagement. Consider the possibility that you, or other leaders, are contributing to the problem. Don’t rely on your gut, though — collect some data. For instance, quick “pulse surveys” can be useful for keeping tabs on how employees feel about their jobs, and the job that management is doing. You might hear

some uncomfortable truths when you ask for their opinions, but don’t get defensive. Be open to listening and to changing how you manage based on what people say. The good news is that, if you signal to employees that you’re willing to make meaningful changes, some of them will feel supported and inclined to stay.

(Adapted from “Don’t Let Lazy Managers Drive Away Your Top Performers,” by Mark C. Bolino and Anthony C. Klotz.)

t’s not uncommon for people on a team to get together outside of work hours. These unplanned, informal events can be useful ways to connect, share information and even make decisions. But they can also exclude some team members, even if it’s unintentional. As a manager, you can make sure everyone feels welcome at these kinds of events. Start by learning your employees’ preferences around social gatherings, including dietary restrictions and activities that make them feel comfortable. For example, make sure that not all events center around alcohol, so people who don’t drink aren’t excluded. When you’re thinking about future events, plan some gatherings during the day or over lunch, so those who can’t stay late don’t miss out. And then pay attention to how often the team meets informally and who’s showing up. These details will help you figure out who isn’t coming, and reach out to invite them when necessary. (Adapted from “How Managers Can Make Casual Networking Events More Inclusive,” by Ruchika Tulshyan.)

Think of delegating as a chance to teach your employees

or many managers, the hardest part of delegating is trusting that a task will be done well. But it becomes easier when you think of it as a chance to train your staff — not just get rid of some work. The next time you need to delegate something, start by determining who on your team is ready to handle more responsibility. Then create simple tasks to help them learn the skills they’ll need. If you’d like someone to take over running a weekly meeting, for instance, have them practice each part of the process: One week, they can create an agenda, which

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

you’ll review. The next, they can watch you run the meeting, with plenty of chances to ask questions. Eventually they’ll be ready to try running the meeting themselves, after which you can offer feedback. This kind of teaching can be timeconsuming, but it will go a long way toward preparing your team for more-complex work.

(Adapted from “How to Stop Delegating and Start Teaching,” by Art Markman.)

Tuesday 22 January 2019

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BUSINESS DAY

Live @ The Exchanges Top Gainers/Losers as at Monday 21 January 2019 GAINERS Company

LOSERS Opening

Closing

CCNN

N25.1

N26.9

1.8

NEM

N2.48

N2.6

0.12

FCMB

N1.76

N1.83

0.07

DANGCEM

UBA

N7.3

N7.35

0.05

N0.56

N0.61

0.05

LINKASSURE

Market Statistics as at Monday 21January 2019

Change

Company

Opening

Closing

Change

SEPLAT

N576

N530

-46

MOBIL

N188

N180

-8

N194.9

N190

-4.9

WAPCO

N12.8

N12.4

-0.4

ETRANZACT

N3.56

N3.25

-0.31

ASI (Points)

30,732.72

DEALS (Numbers)

3,874.00

VOLUME (Numbers) VALUE (N billion)

5.531

MARKET CAP (N Trn

11.460

Nigerian stock market opens week on a negative note … Seplat, Mobil, Dangote Cement top basket of 18 laggards Stories by Iheanyi Nwachukwu

igerian stock market was unable to sustain last week’s rally following a record 0.88percent decline recorded by the All Share Index (ASI). At the sound of closing gong on Monday January 21, only 14 stocks gained as against 18 losers. The year-to-date (YtD) returns currently stands at -2.22 percent. The Nigerian Stock Exchange All Share Index closed lower at 30,732.72 point, from a high 31,005.17 points last Friday while the value of listed stocks decreased by about N102billion from last Friday level of N11.562trillion to N11.460trillion.

L-R: Adeshina Emmanuel, director, investment promotion, Nigerian Investment Promotion Commission; Yewande Sadiku, executive secretary NIPC; Mary Uduk, acting director general, Securities and Exchange Commission and Henry Rolands, acting commissioner, corporate services, SEC during a meeting between NIPC and SEC in Abuja .

In 3,874 deals, stock traders exchanged 499,211,855 units valued

at N5.531billion. Diamond Bank Plc, GTBank Plc, Zenith Bank Plc, NEM Insur-

NSE, Afrinvest launch factor equity indices to optimise investors’ returns

he Nigerian Stock Exchange (NSE), a multi-asset exchange & index provider, and Afrinvest Securities Limited, a leading capital market research and securities execution platform have launched two new factor indices: the NSE-Afrinvest Banking Value Index (NSE-Afr BVI) and NSE-Afrinvest High Dividend Yield Index (NSE-Afr HDYI). The indices became available realtime on both NSE and Afrinvest WA websites from Monday January 21, 2019. NSE-Afr BVI and NSEAfr HDYI were designed in response to requests for applicable benchmarks for measuring value in banking stocks and high dividend stocks listed on the Exchange. The NSEAfr BVI and the NSE-Afr HDYI as with all other NSE indices will align with the NSE’s Index committee’s governance standards. Guidelines and methodologies for the indices are publicly available on the website of NSE and Afrinvest.

They will serve as tools for investment managers and corporate treasuries seeking appropriate benchmarks to evaluate the performance of their portfolios to a segment of the banking sector or high dividend orientation as applicable. The indices can also be used as the performance target in index-replicating financial products such as Exchange Traded Funds and Derivatives. On the launch of the indices, the Chief Executive Officerof the Exchange, Oscar N. Onyema, re-

Oscar N. Onyema, CEO, Nigerian Stock Exchange

marked, “In view of rising demand for financial products that adequately meet the needs of market participants, particularly investors, the Exchange is pleased to collaborate with Afrinvest West Africa on these novel index strategies. The indices consider the fundamentals of underlying securities. We commend Afrinvest for its product innovation and for leveraging the Exchange’s Index calculation and management expertise”. “The Exchange is committed to driving sustainability of our marketplace and supporting investable product creation endeavours by stakeholders to enhance the depth of the market. We will continue to welcome innovative solutions to identifiable gaps in the capital market”. Ike Chioke, Group Managing Director, Afrinvest West Africa, also said “Afrinvest West Africa is proud and excited at the rollout of the new indices in collaboration with The Nigerian Stock Exchange.

ance Plc, FBN Holdings were actively traded stocks on the Bourse.

Seplat recorded the highest decline, from N576 to N530, down by N46 or 7.99percent. Mobil Oil Nigeria Plc followed after declining from N188 to N180, losing N8 or 4.26percent; while Dangote Cement Plc lost N4.9 or 2.51percent, from N194.9 to N190. The share price of Lafarge Africa Plc declined from N12.8 to N12.4, losing 40kobo or 3.13percent. On the advancers’ league, Cement Company of Northern Nigeria Plc recorded highest gain after rising from N25.1 to N26.9, up by N1.8 or 7.17percent; NEM Insurance Plc followed after rising from N2.48 to N2.6, up by N12 or 4.84percent; while FCMB Group Plc advanced from N1.76 to N1.83, up 7kobo or 3.98percent.

NSE hosts maiden climate finance accelerator workshop

499,211,855.00

he Nigerian Stock Exchange (NSE) will today host the opening plenary of the Climate Finance Accelerator (CFA) workshop in Lagos. The CFA is an innovative international initiative supported by the UK Government and other international donors. Its aim is to accelerate the transformation of Nationally Determined Contributions (NDCs) into Climate Investments Plans supported by pipelines of bankable projects needed to attract investment at scale from the private sector. The January 2019 workshop in Lagos will bring together policy makers, project developers and financial experts across four days, starting with the Opening Plenary at The NSE, to collaborate on the financing of individual projects that will help deliver the Nigerian NDC. With the much-valued support of the Nigeria Economic Summit Group

(NESG), since October 2018, CFA have been engaging with private sector companies interested in undertaking ambitious low carbon development projects, with a view to creating a mature pipeline of bankable projects contributing to Nigeria´s NDC and strengthening the climate finance capacities of public and private sector institutions. There are about thirty projects submitted in response to a Call for Proposal process and have a strong portfolio of twelve projects to take through the CFA workshop. Leading thought leaders expected to speak at the event include, Kyari Bukar, former Chair of NESG, Minister of Environment, Suleiman Hassan Zarma, Laure Beaufils, Deputy British High Commissioner, Lagos, Chris Dodwell (Ricardo Energy & Environment), Bola Adeeko, Head, Shared Services, NSE, Olumide Lala, Climate Bonds Initiative, United Kingdom amongst others.

SEC, NIPC collaborate to attract investors

n a bid to further boost the economy, the Securities and Exchange Commission (SEC) is partnering with relevant government agencies and the private sector to attract more investments to the country. Mary Uduk, Acting Director General of the SEC stated this in Abuja when she received the Executive Secretary of the Nigerian Investment Promotion Commission (NIPC), Yewande Sidiku in Abuja. Uduk said that it is in furtherance of its objectives of attracting more investors to the capital market that the SEC is poised to revitalize the commodities exchange market among other initiatives. “There are opportunities in the Commodities market and we need to scale up participation in that regard to attract investors. And we will require the collaboration of the NIPC in that regard as the direct investors you are seeking to attract “Various opportunities abound in the capital market for both individuals and government and that is why we are exploring avenues to attract states to come to the market and raise funds for infrastructural projects. We are happy to partner with you to make the market and the country richer and better” Uduk said. In her remarks, the NIPC Executive Secretary, Yewande Sidiku said the Commission is committed to ensuring that the nation has the required business climate to attract both foreign investors and Nigerians in the diaspora. She said the Commission is visiting different states to explore investment opportunities and also looking at some investments that were started by states but are now moribund and find ways to revitalize them. “There are many investment opportunities in the states and what we have done now is to design a platform for profiling such investment opportunities.

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Tuesday 22 January 2019

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Live @ the Stock exchange Prices for Securities Traded as of Monday 21 January 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 161,996.64 5.60 0.89 177 8,186,171 UNITED BANK FOR AFRICA PLC 251,365.75 7.35 0.68 144 6,067,031 675,024.62 21.50 -0.23 464 26,107,648 ZENITH BANK PLC 785 40,360,850 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 262,035.64 7.30 -1.37 210 15,965,610 210 15,965,610 995 56,326,460 BUILDING MATERIALS DANGOTE CEMENT PLC 3,237,696.41 190.00 -2.51 24 43,862 LAFARGE AFRICA PLC. 107,550.51 12.40 -3.12 67 825,629 91 869,491 91 869,491 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 311,875.62 530.00 -7.99 23 30,887 23 30,887 23 30,887 1,109 57,226,838 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 15,876.20 5.95 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 78,220.62 82.00 - 7 8,636 PRESCO PLC 62,000.00 62.00 - 8 18,736 15 27,372 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,530.00 0.51 6.25 25 746,486 25 746,486 40 773,858 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 820.66 0.31 - 0 0 JOHN HOLT PLC. 186.79 0.48 - 1 1,800 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 49,590.55 1.22 -3.94 79 4,334,647 U A C N PLC. 25,355.41 8.80 - 37 338,175 117 4,674,622 117 4,674,622 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 37,488.00 28.40 - 13 25,463 165.00 6.60 - 0 0 ROADS NIG PLC. 13 25,463 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,287.35 1.65 - 6 82,853 6 82,853 19 108,316 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,135.72 1.55 - 6 142,259 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 155,517.18 71.00 - 11 46,781 INTERNATIONAL BREWERIES PLC. 260,024.82 30.25 - 12 49,650 NIGERIAN BREW. PLC. 647,749.07 81.00 - 78 1,054,795 107 1,293,485 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 32,750.00 6.55 -2.29 38 565,392 DANGOTE SUGAR REFINERY PLC 174,000.00 14.50 - 33 96,318 FLOUR MILLS NIG. PLC. 79,752.38 19.45 - 45 177,110 9,833.45 1.24 - 13 294,250 HONEYWELL FLOUR MILL PLC MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 703.89 3.95 - 1 500 NASCON ALLIED INDUSTRIES PLC 47,689.89 18.00 - 10 79,071 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 140 1,212,641 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,782.02 10.00 - 11 33,406 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 - 19 17,464 30 50,870 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,586.43 4.40 -2.22 28 362,874 28 362,874 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 47,050.15 11.85 - 34 173,990 UNILEVER NIGERIA PLC. 212,565.20 37.00 - 17 35,604 51 209,594 356 3,129,464 BANKING DIAMOND BANK PLC 48,173.61 2.08 -0.95 173 239,356,027 ECOBANK TRANSNATIONAL INCORPORATED 256,893.72 14.00 - 54 5,165,884 FIDELITY BANK PLC 58,529.09 2.02 0.50 78 9,563,724 GUARANTY TRUST BANK PLC. 932,968.38 31.70 -0.78 603 119,345,743 JAIZ BANK PLC 15,616.05 0.53 6.00 12 1,662,175 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 59,020.36 2.05 1.99 269 2,344,475 UNION BANK NIG.PLC. 196,565.08 6.75 - 28 134,515 UNITY BANK PLC 10,169.72 0.87 -4.40 10 261,793 WEMA BANK PLC. 23,530.42 0.61 -1.61 19 1,088,210 1,246 378,922,546 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 100 AIICO INSURANCE PLC. 4,366.03 0.63 - 13 444,534 AXAMANSARD INSURANCE PLC 19,530.00 1.86 - 5 8,836 CONSOLIDATED HALLMARK INSURANCE PLC 2,660.00 0.38 - 1 100 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 2 4,580 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 GUINEA INSURANCE PLC. 1,412.20 0.23 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 8 268,000 LAW UNION AND ROCK INS. PLC. 2,148.17 0.50 - 0 0 LINKAGE ASSURANCE PLC 4,880.00 0.61 8.93 7 222,500 MUTUAL BENEFITS ASSURANCE PLC. 1,600.00 0.20 -4.76 15 3,195,506 NEM INSURANCE PLC 13,729.31 2.60 4.84 97 21,156,984 NIGER INSURANCE PLC 1,857.48 0.24 - 7 272,105 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 1 49,643 REGENCY ASSURANCE PLC 1,467.13 0.22 - 2 59,000 SOVEREIGN TRUST INSURANCE PLC 2,001.80 0.24 -7.69 17 4,942,923 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 100 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 100,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 5,000 VERITAS KAPITAL ASSURANCE PLC 3,050.67 0.22 - 1 10,000 WAPIC INSURANCE PLC 5,620.75 0.42 5.00 32 1,055,342

212 31,795,253 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,338.49 1.46 - 2 11,500 2 11,500 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 2,719.14 0.24 -7.69 3 350,100 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 3 350,100 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,060.00 4.03 0.75 32 669,705 36,173.46 6.15 -4.65 45 635,089 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 36,238.96 1.83 3.98 120 7,535,214 1,389.25 0.27 7.41 13 1,264,607 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 481,305.99 47.00 - 17 49,475 17,880.00 2.98 -1.32 115 4,828,412 UNITED CAPITAL PLC 342 14,982,502 1,805 426,061,901 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 3 33,290 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 959.35 0.27 - 7 195,845 10 229,135 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 7,425.00 4.95 - 0 0 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 14,350.52 12.00 - 24 425,335 2,401.00 2.45 - 7 208,510 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,272.44 0.67 - 16 297,845 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 47 931,690 57 1,160,825 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 381.11 0.77 - 1 5,931 TRIPPLE GEE AND COMPANY PLC. 1 5,931 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 0 0 E-TRANZACT INTERNATIONAL PLC 13,650.00 3.25 -8.71 1 100,000 1 100,000 2 105,931 BUILDING MATERIALS BERGER PAINTS PLC 2,246.13 7.75 - 8 61,316 22,050.00 31.50 - 5 65,734 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 353,560.18 26.90 7.17 105 1,376,316 FIRST ALUMINIUM NIGERIA PLC 654.21 0.31 - 2 200 313.43 0.59 - 0 0 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 120 1,503,566 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,170.38 1.80 - 7 155,600 7 155,600 PACKAGING/CONTAINERS BETA GLASS PLC. 27,498.46 55.00 - 5 22,900 GREIF NIGERIA PLC 388.02 9.10 - 0 0 5 22,900 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 20 1 20 133 1,682,086 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 0 0 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 13 525,651 13 525,651 INTEGRATED OIL AND GAS SERVICES OANDO PLC 54,698.21 4.40 -1.12 72 2,481,669 72 2,481,669 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 -4.26 20 88,565 CONOIL PLC 16,134.39 23.25 - 7 4,551 ETERNA PLC. 5,673.03 4.35 -2.25 12 170,112 FORTE OIL PLC. 39,074.43 30.00 - 61 483,325 MRS OIL NIGERIA PLC. 7,055.81 23.15 - 1 240 TOTAL NIGERIA PLC. 66,206.76 195.00 - 12 16,872 113 763,665 198 3,770,985 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 19,988.83 2.05 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 1 3,000 1 3,000 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,593.79 4.40 - 6 51,300 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 1 3,000 7 54,300 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,159.77 1.52 - 3 37,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 46,362.46 6.10 - 1 100 4 37,100 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 LEARN AFRICA PLC 941.17 1.22 - 2 21,000

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Tuesday 22 January 2019

Odunayo Oyasiji

Case Review

Societe Generale Favouriser LE Development DU Commerce ET DE L’ Industrie EN France V. Societe Generale Bank (Nigeria) Limited (1997) Lpelr-Sc.126/1994

hat to note: This matter was decided in 1997 by the Supreme Court. This matter deals with contractual capacity of incorporated companies and pre-incorporation contract. It also addresses the issue of the position of Companies and Allied Matters Act on pre-incorporation contract. Fact Dr. Abubakar Sola Saraki, Dr. E.A. Ikoni, Mr N.A.B. Kotoye and Societe General Favouriser Le Development du Commerce et de L’industrie en France (hereinafter referred to as the appellant) agreed in 1976 to form a bank in Nigeria. The bank is to be known as Socete Generale Bank (Nigeria) Limited. A written agreement to this effect was executed by all the parties on July 7, 1976. The parties in the agreement were referred to as “founders” of the bank to be incorporated in Nigeria. Article 11 of the agreement which deals with situation whereby dispute arises between the parties provides that “If any difference or dispute shall arise between the parties as to the construction of the agreement or as to any matter or thing of whatsoever nature arising thereunder, or in connection thereunder, or in connection therewith, such dispute or difference, shall be referred to the Arbitration and final decision of a person to be agreed between the Parties or failing Agreement within 14 days (fourteen) after either party has given to the other a written request to concur in the appointment of an Arbitrator, a person to be appointed on the request of either party by the President of the International Chambers of Commerce in Paris according to its rule.” In December 1976, the proposed bank was successfully incorporated under Companies Act 1968. The July 7, 1976 agreement between the parties was ratified at the meeting of the Board of Directors of the newly incorporated bank - Societe Generale Bank (Nigeria) Limited (later referred to as the respondent). The appellant acted as the managers to the new bank. The relationship between the appellant and the respondent went sour and the respondent terminated the management arrangement with the appellant. The respondent also instituted an action at High Court of Lagos State against the appellant in 1989. After being served the processes in the matter, the appellant brought a summons requesting the court to stay further

proceedings in the matter on the basis of the article 11 of the 1976 agreement between the parties that was ratified by the board of directors of the bank after its incorporation. The said article 11 is to the effect that all disputes between the parties are first to be referred to arbitration. The High Court ruled in favour of the appellant. The respondent then appealed to the Court of Appeal and the appeal was allowed. The appellant being dissatisfied with the outcome then appealed to the Supreme Court. Issues for determination The appellant came up with the issues below for the determination of the appeal“Whether S. 6 of the Interpretation Act (Cap. 192) is not overridden by the express provisions of S. 624 and S. 626 of CAMA so as to make S.72 of CAMA have retrospective application. Whether by the ordinary, plain and natural meaning of S. 624 and S. 626 of CAMA, S.72 in Part A of CAMA does not make the ratification of the agreement binding on the respondent despite the respondent’s formation and registration prior to the commencement of CAMA. Whether S.72 of CAMA does not apply to the respondent Company so as to make the Agreement binding on the respondent, notwithstanding that the respondent’s action which was filed in December, 1989 was pending when CAMA first came into effect on January 2, 1990.” The respondent submit-

ted the issues below for determination“Whether the Supreme Court ought to decline jurisdiction to examine the effect, if any, of section 72, 624, and 626 of the Companies and Allied Matters Act; (Cap. 59, Laws of The Federation of Nigeria, 1990) on the 7th July 1976, “Technical Management Agreement” that forms “the crux” – issue in contention in the appellant’s appeal on the grounds that contrary to the erroneous assumption which the court below made, the subject – “Agreement” is not a “preincorporation contract” (within the true and proper judicial meaning of the term) of the kind to which those sections of the Act could possibly apply: (whether retrospectively or prospectively, or at all. Question number two (2) Whether upon the true and proper legal construction of the “natural, ordinary and plain meaning” of the words used in sections 72, 624, 626, and 651 of the Companies and Allied Matters Act, which did not come into force until 2nd January, 1990, vis-a-vis section 6 of the Interpretation Act. It is the express and unambiguous intention of the Legislature that the Companies and Allied Matters Act may apply retrospectively to bind the respondent to the terms of an “Arbitration Clause” in a 1976 agreement by its 1977 act of purported “ratification” of the same, notwithstanding the “presumption against retrospectivity”,and the “accrued rights” acquired by the respondent in spent “legal proceedings” by virtue of the

law as it stood at the time the respondent’s “cause of action” arose/was enforced in December, 1989 before the Companies and Allied Matters Act went into force and effect.” Arguments/Submissions The appellant argued that the Court of Appeal was wrong to have held that the 1976 agreement between the parties is a mere pre-incorporation contract even after it has been ratified after the incorporation of the bank. They submitted that the ratified agreement has attained a new status after its ratification and is binding on the company. The respondent on the other hand submitted that 1976 agreement is not binding because it is a pre-incorporation contract. It was stated that the five authorities both in Nigeria and UK shows that a company is not bound by pre-incorporation contract entered into by its promoters even if it is later ratified. Judgement On pre-incorporation contract, the court held that “The intention of the legislature in enacting sections 72(i), 624(i), and 626 of CAMA is quite clear. It is relevant to re-emphasis that the rule of construction of statute is to adhere to the ordinary meaning of the words used according to the intent of the legislature. The provisions of sections 624(i) and 626 make it abundantly clear that existing companies who wish to ratify pre-incorporation contract agreements could do so because the Act (CAMA) ap-

plied to them. In section 650(i), the interpretation of words used in part A of CAMA, “Company or existing company means: “a company formed and registered under this Act or, as the case may be, formed and registered in Nigeria before and in existence on the commencement of this Act”. This amplifies what I have said above that existing companies could, under the provisions of CAMA, ratify pre-incorporation contract agreements which their promoters entered into before incorporation.” On the common law position on the contractual capacity of a company, it was stated that “At Common Law, a preincorporation contract was not binding on the company because there was no principal on behalf of whom an agent could have contracted. The company was not permitted to ratify or adopt it, and it could not, after incorporation, enforce the contract, nor sue, e.g. for damages for breach of contract” With regards to the application of the Companies and Allied Matters Act to pre-incorporation contract, the court held that “Since Section 624( 1) (b) applies section 72( 1) to all companies existing at the time CAMA came into force and the respondent was one of such existing companies, and since it is a matter of general practice that companies, immediately after their incorporation, ratify contracts made on their behalf before incorporation, the law must intend that section 72(1) would apply to pre-incorporation contracts already ratified by existing companies as well as to such contracts yet to be ratified. In my respectful view this is the only logical and reasonable construction to be placed on section 72(1) when read along with section 624(1)(b). If it were to be otherwise, the law maker would have provided that in the case of existing companies section 72(1) would only apply to pre-incorporation contracts that may subsequently be ratified.” Conclusion I will conclude with the words of Ogundare JSC where he stated that “any contract or other transaction purporting to be entered into by Societe Generale Bank (Nigeria) Limited or by any person on behalf of the company prior to its formation and ratified by the company after its formation, the company shall become bound by and entitled to the benefit therefore as if it has been in existence at the date of such contract or other transaction and had been a party thereto”

Tuesday 22 January 2019

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NEWS Aba’s N120bn shoe industry booms despite... Continued from page 1 produced by more than 80,000 leather makers in Aba each week. With 48 million pairs produced each year at an average price of N2,500 a pair, the industry is said to be worth up to N120 billion.

Traders from West African neighbours storm the industrial city every week to buy different product designs, just as Southern African schools are beginning to place orders directly from the shoemakers. Canadians, Europeans and the Chinese are also in the party, placing orders themselves directly or through their Nigerian proxies, BusinessDay was told in Aba. “We are already struggling to meet demand,” said Ken Anyanwu, secretary, Association of Leather and Allied Industrialists of Nigeria (ALAN), who produced shoes for the Nigerian Armed Forces in 2016. The business is already online, with the likes of Gada Africa, Jiji.ng and abanaijamade.com.ng, among others, handling marketing and distribution of those shoes, including belts and trunk boxes, after online orders are taken. Online shops take 20 to 50 percent cuts from sellers, BusinessDay gathered from the shoemakers. “We have built partnership with local and some international logistics handling companies,” said Ben Chiobi, a retired air vice marshal, who founded the newly-birthed Gada Africa. Chiobi said this was to ensure that every product people order would be taken to them conformably. The Aba leather industry is made up of shoes, trunk boxes and belts. It provides employment for tens of thousands, with many specialising in different stages, such as designing,

patterning, cutting, skiving, stitching, peeling and finishing. It is made up of clusters such as Powerline, Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, and Ochendo Industrial Market, comprising input suppliers, among others. However, the industry is in thriving in chaos as the majority of shoemakers in the industrial city are poorly structured and are not registered at the Corporate Affairs Commission. Exports are made informally, making tracking and planning difficult. Their machines are crude and much of their work is still done by

L-R: Garba Mohammed Tambari, emir of Maradun, Zamfara State; Mansur Ahmed, group executive director, government and strategic relations, Dangote Industries Limited, representing the chairman, Aliko Dangote Foundation; Sirajo Madugu, councillor, Maradun South; a beneficiary; Musa Bala, programmes operations manager, Aliko Dangote Foundation, and Robert Coleman, project director, Dangote Rice, at the presentation of food materials by Aliko Dangote Foundation to Internally Displaced Persons (IDPs) in Maradun, Zamfara State, yesterday.

Annual gathering of global business and political ... Continued from page 1

must draw on the spirit of Davos to build the future, in a constructive, collaborative way.”

According to Klaus Schwab, the gathering’s founder, “Unfortunately, the rise of populism has been fuelled by a public discourse that does not sufficiently address, and more often confounds the substantive differences and implications of two related concepts, globalisation and globalism, even if the two terms refer to the same phenomenon of global connectivity and global cooperation.” He argues that the answer to the challenge of globalisation cannot be found in “closing economies, or fuel protectionist and nationalistic

sentiments. Rather it calls for restoring a compact between citizens and their leaders in the public and private sectors that makes them feel secure enough at home to open up to the world at large.” This year, six inspiring young leaders, including Mohammed Hassan from Kenya as well as a refugee from Iraq who campaigns for peace, have been selected as co-chairs and will join the Microsoft CEO Satya Nadella to steer discussions at the gathering. Many of the national delegations began to arrive Davos last night and national flags are taking prime spots along the Promenade, the main artery behind the main congress venue of the meetings, and not many will miss the impos-

DisCos on edge over Tesla’s entry into Nigeria’s ... Continued from page 2

we’ll update you if that changes”. But a source close to Tesla said DisCos have been making enquiries from the company about its plan after the story was published. The company’s Nigerian office has been fielding calls from DisCos, many of the calls borne out of both curiosity and paranoia. This has forced Tesla to reassure them that it was not necessarily coming to deepen their woes but to offer benefits to underserved customers. Many Nigerians are, however,

human labour. The more advanced shoemakers in Lagos are mostly foreigners, who design their shoes abroad and then import Completely Knocked Down shoes back to the country for finishing. “This is where the problem lies. We in Aba have no good machines,” Anyanwu of ALAIN said. “The Bank of Industry has done its best by giving some of us N300,000 each, but it takes $250,000 to $750,000 to set up a standard shoe factory. So, what can N300,000 do when the industry is capitalintensive?” he asked. He said this is why the majority of Aba shoemakers are not meet-

ing demands and are overworking themselves once orders are placed. “It is a problem already for us because if a customer comes and we can’t meet demand, he will go elsewhere. The industry needs retooling,” he said. Nigeria and Ethiopia have things in common in terms of leather. Ethiopia is home to 56 million cattle, which provide ready raw materials to shoemakers. But Nigeria, with more shoemakers, has 131 million cattle, goats and sheep, according to the Federal Ministry of Agriculture (2011 figures). Ethiopia is the second most populous (with 105 million people) after Nigeria with almost 200 million people. Another hitch is that Aba shoemakers import animal skins from

excited about the prospect of Tesla’s entry into the country’s broken electricity sector. Many see it as a breath of fresh air as can be deduced from engagements with the story on social media networks. Many also expressed fears about the business environment capable of forcing the company out of Nigeria even as it did Richard Branson. Analysts say a positive for the power sector is that Tesla’s entry may just provide the right push needed to compel the DisCos to do actual work on improving their

China and many parts of Africa and Europe. “What happens is that the tanneries in Kano and Kaduna process animal skins and sell them as leather in the global market, earning foreign exchange,” said Chinatu Nwagbara, coordinator, Made-in-Aba Project, who produced shoes for former President Olusegun Obasanjo in 2016. “So we go to China and other countries to buy. Sometimes, we buy our products and re-import,” he said. More investments are going to Ethiopia. Between October and December 2016, Ethiopia attracted over $500 million in FDI to the shoe and leather industry. About 124 investors willing to invest $3.5 billion indicated interest to swell the export-oriented shoe market, according to the Ethiopian Investment Commission (EIC). Ethiopia exported $33.7 million worth of footwear products mainly to the United States in 2015, one million lower than the preceding year. Through the African Growth and Opportunity Act (AGOA), the US-Africa trade law that allows dutyfree and quota-free access into the US market, Ethiopia shoe exports jumped from $630,000 to nearly $7 million between 2011 and 2012, a more than tenfold increase, according to statistics from USAID. The Abia State government said in 2016 that Huajian Group in Ethiopia, which made shoes for Ivanka Trump, wife of US president, would be coming to Aba. In September 2017, Sherry Zhang, general manager of Huajian Shoes in Addis Ababa, told BusinessDay in the Ethiopian capital that the company was still interested in setting up a shoe factory in Aba, southeast Nigeria. But this has not happened since. However, a new set of machines have been imported by a new investor in Aba, who plans to modernise the industry, BusinessDay was told.

FG’s 5m agric jobs target suspect as previous... ing pavilion of South Africa whose president, Cyril Ramaphosa, will be one of those flying Africa’s flag to Davos this year. Another prominent leader expected in Davos is the new Ethiopian Prime Minister Abiy Ahmed who has caught the imagination of a tired world with his breath-taking reform of his country, and Jair Bolsonaro, the controversial president of Brazil who will address the forum later this afternoon. Prime Minister Abiy will have a one-on-one tomorrow where the 42-year-old leader will speak about his reform which is beginning to open up Ethiopia to the world. As was the case last year, Nigeria’s President Muhammadu Buhari will be missing at the gathering.

distribution systems and get better at collecting electricity bills. Between October and December last year, Nigeria’s 11 electricity distribution companies collected from consumers only 65 percent of the value of electricity sold but remitted back to other operators only 33 percent of what they collected, according to the third quarter report released by NERC. In monetary terms, total billing to electricity consumers by the 11 DisCos was N172.9 billion, but only a total collection of N106.7 billion, representing 65.5 percent of billing, was recorded.

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month since July 2017. “We have been informed that disbursement of funds to affected persons should commence at the first quarter of 2019,” Adetunji Oredipe, task team leader, FADAMA Project, said in an emailed response to BusinessDay. The Ministry of Agriculture, which is meant to disburse the funds, has so far been unable to account for the FADAMA grants meant for almost 6,000 agropreneurs. Analysts doubt that the same Federal Government that has found it difficult to disburse approximately N11 billion, out of which the World Bank has reportedly committed N9 billion, will be able to create 5 million jobs based on another $1.1 billion (N396 billion) loan. For the analysts, the government’s declaration that it would create 5 million jobs in the agric sector is aimed to garner political goodwill and nothing more. While launching the “Green Imperatives”, an agricultural initiative, last week, Vice President Yemi Osinbajo had said, “We cannot bring our nation out of poverty without investment in agriculture. Also, the sheer number of young people coming of age will not only need to be fed but employed. They want dignified jobs with decent pay.” Ironically, part of the conditions for the 5,916 expectant

FADAMA agropreneurs was to stay in agriculture and not take up any other employment for three years. These young Nigerians, on account of their ‘contract’ with government, cannot take up employment yet and are also unable to receive the grants meant for them to go into commercial agriculture. In Taraba State, Bala Ahmed (not real name) told BusinessDay he leased 1.5 hectares of land for a period of three years to cultivate tuber crops, precisely yam and cassava. Even after submitting his business plan, which has since been verified by FADAMA staff, he has been unable to cultivate anything due to lack of funds. In an interview, Ahmed said he was surfing the internet in search of job opportunities when he came across the FADAMA advert calling for applications to the programme. Since then, he has neither got a job nor the grant promised even after his investments and commitments towards it. “I have invested a lot of time and money and remained unemployed, while expecting a grant to become an agropreneur,” he said. He expressed hope that “the federal government of Nigeria has not scammed” the prospective beneficiaries, claiming a huge percentage, if not all of the fund, was released by the World Bank and the government has refused to disburse it.

BUSINESS DAY

www.

DAVID IBIDAPO

ig er ian p olitics seems to be both an amazing and a confusing space as the electorate often seem not sure of what and who they want. Going back in history, since the advent of democracy we have had Nigerians complain

about their dissatisfaction with various regimes in power, which has ding-donged between the People’s Democratic Party (PDP) and the All Progressive Congress (APC). The upcoming 2019 general elections have also been predicted by various political and economic analysts to be a fight between the PDP and APC. As a matter of fact, the Economist Intelligence Unit (EIU) predicted greater chances for the PDP represented by former vice president Atiku Abubakar, winning the 2019 presidential elections. However, we can recall that the PDP and APC aren’t the only political parties that exist in the Nigerian political space. The question then is why Nigerians cannot discard parties with a history of policy, promise and agenda disappointments and give other parties and candidates the opportunity to prove

their worth. Logically, it is expected that when one thing fails, we try another. It is evident that transforming Nigeria into a land flowing with milk and honey has failed so far under the watch of the PDP and APC. Evidently, we can draw conclusions from the behaviour of economic and fiscal indicators which show the economic health of a nation. To highlight but a few, Nigeria has witnessed constant devaluation of her currency, persistent inflation, non-diversification of the economy, giving room for the adverse effect of shocks in the volatile oil market, slow growth in major sectors of the economy, poor infrastructure and security instability. Majorly, the PDP led administration in 16 years before the emergence of the APC led administration had been tagged with the sickness of a corrupt

government amongst other things. Meanwhile the currently led APC administration, which vowed to fight corruption and build a better economy, is seen to have failed in its fight and caused a blight in the economy. Many political pundits say that neutral parties such as the YPP and ANPP lack national structure as well as the fund to create significant awareness, thereby reducing their chances of winning in the upcoming general elections. The pundits say that one way that these outsider parties can get a foot in the door is by strategic alliances with other parties as was the case of ACN and CPC which gave Buhari the competitive muscle to win the 2015 presidential elections. Meanwhile, the ignorance of much of the electorate is a major factor lowering the chances of other political parties. The apparent inability of Nigerians

Kwara 2019: PDP signs pact on power shift to Kwara North 2023 SIKIRAT SHEHU, Ilorin, Akure

enate President, Bukola Saraki and stakeholders of the party in Kwara State have signed a pact with traditional and political leaders from the northern part of the state, agreeing to a shift of power to the north by 2023. By implication, the par t y’s gub ernator ial candidate, AbdulRazaq Atunwa will spend only one term if the party wins the forthcoming election on March 2, 2018. Kola Shittu, the state chairman of the party and Suleiman Abubakar, professor of political science and director general of

PDP, campaign disclosed this Sunday night at a press briefing in Ilorin, the state capital. Abubakar, who read the communiqué issued at the end of the meeting, indicated that traditional rulers from the zone as well as the Emir of Ilorin, Ibrahim Sulu-Gambari witnessed and endorsed the Memorandum of Understanding (MoU). It was also agreed at the meeting that Kwara north will produce the Secretary to the State Government (SSG) and Speaker if the PDP wins the 2019 election in the state. The text of the communiqué reads: “About an hour ago, the PDP Kwara

State leadership just completed a meeting with Leaders of Thought from the Kwara North Senatorial District. The meeting was also attended by leaders of the party across the state. “The sole purpose of the meeting was for us to have an understanding on specific terms on issues bordering on power shift, cohesion, giving sense of belonging and inclusiveness to our people across all the three senatorial districts. “The conclusion of the meeting is that there will be power shift to Kwara North in 2023. Also, the positions of Speaker of the Kwara State House of Assembly and Secretary to Kwara State Government

have been zoned to Kwara North in the post-May 2019 government. “The understanding has been committed to writing and signed by all key stakeholders present. “The stakeholders present at the meeting include National Leader of PDP, Abubakar Bukola Saraki; Governor Abdulfatai Ahmed, gubernatorial candidate of the party, Rt. Hon. Rasak Atunwa, speaker of the State House of Assembly, Alli Ahmed, director-general of the Mandate 2019, Prof. Abubakar Sulaimon, Chairman of the party, Kola Shittu and other leaders of the party in the three senatorial districts.”

2019: Unite and vote out bad leaders, Tunde Bakare urges Nigerians INIOBONG IWOK

head of the forthcoming general election, Tunde Bakare, senior pastor of the Latter Rain Assembly, has urged Nigerians to unite and vote for credible leaders, asking them also to be mindful of desperate politicians who may intend to destabilise the country for selfish interest. Pastor Bakare made the call in his ‘state of the nation’ broadcast tagged: ‘The Prophetic Portrait of Nigeria in Her later Days,’ Sunday. He urged Nigerians to put the country first and approach the current matter involving the Chief Justice of Nigeria (CJN), Justice Walter Onnoghen, without bias, in the

Tuesday 22 January 2019

Nigerians remain faithful disciples of APC and PDP despite past failures

NATIONAL DISCOURSE

interest of justice and accountability, stressing that Nigeria of his dream was such that no one should be above the law. “We urge citizens to ensure they make responsible choices, in order to install credible leadership that would pilot the affairs of the country. Fellow Nigerians, beyond the elections, this is what our nation needs: a uniting force that can rally our diverse strengths around a common narrative, towards a common objective, to achieve a common vision, Nigeria of our dream,” Bakare said. Speaking further, Bakare called for a peaceful conduct of the forth-coming general election, promising to work with patriotic Nigerians and set

up a Commission on National reconciliation, reintegration and restructuring which would work with the presidency and the National and State Houses of Assembly towards restructuring a united Nigeria. According to him, “It is in this regard that I look forward to a Presidential Commission on National Reconciliation, Reintegration and Restructuring, a team of incorruptible Nigerians of unquestionable integrity and bridge-building antecedents, endowed with wisdom and judgment, driven by unshaken faith in the essence and possibilities of the Nigerian nation, who can work with the presidency and the National and State Assemblies

towards restructuring a united Nigeria.” “For those who care to know, I belong to ‘Team Restructuring.’ Convening such a team has been the nature of my contributions to our nation in the past decade. It was why, in 2009, I brought together a company of nobles, for what we then called ‘The Dialogue of the Nobles,’ to begin to shape the future of our nation; it was why, in 2010, propelled by a God-given vision, I was privileged to convene a coalition of nation builders that became the Save Nigeria Group (SNG), a group that rose to the occasion at critical junctures and jolted this nation back to its senses,” he recalled.

to analyse the effect of their decisions on the welfare of the Nigerian economy in the long run has driven them into making decisions based on the popularity of political parties. What is most surprising is the fact that despite 16 years of perceived disappointing results by the PDP and four years of the same by the APC, most electorates still consider a change of government to PDP, while to some consider a continuation of the current government. The question remains what these parties will do differently from earlier performances, given the same godfathers, corrupt politicians shuffling between the parties, and weak institutions upon which their foundations rest. Furthermore, can we afford to risk a totally new government with no experience on how to rule the country, other than promises of a better Nigeria?

PDP ready to rescue Lagos, offers visionary leadership - Busari INIOBONG IWOK

emisi Busari, deputy governorship candidate of the People’s Democratic Party (PDP) in Lagos State, has said that the party was ready to rescue the state from the grip of the ruling All Progressives Congress (APC), saying that the party and its gubernatorial candidate had a robust plan on how to rescue and transform the state. Busari, a lawyer, who has spent over three decades in legal and corporate practice, said that having made the decision to be the running mate to the governorship candidate, Jimi Agbaje, she hoped to bring her vast experience and contacts to bear upon assuming office as deputy governor of the state. She spoke in a radio programme weekend, stating that decision-making would be a joint responsibility if they got into power as she had forged a workable partnership with her principal towards transforming the fortunes of the state. According to her, I believe in the objectives and plans of the platform upon which I am running, which was why I accepted the offer anyway. I believe that the ticket can actually impact governance in Lagos because we have the ideas. The PDP would rescue Lagos and we are determined

to do that. We (Agbaje and I) have our heads and minds in the right places. Governance is all about capability, you have the right kind of morality to support what you want to do. She stated that the PDPled government, when voted into office, would prioritise the domestication of the Freedom of Information Act in order to foster accountability in governance, adding that the education sector would equally be accorded the needed priority and attention. “A couple of things have come to agitate my mind and one of such is education. Education is what impacts everything that we do as a people and that is something that I am passionate about. This is because we live in a knowledge-driven economy,” she said. Busari stated that a blueprint had been developed by the party to ensure that pupils in state-owned primary and secondary schools in the state enjoyed the same access to education, irrespective of religious or ethnic affiliations. On the issue of state police, Busari stated that when fully operational, all segments of the state would be brought into the conversation with a view to having a police system that would earn the respect and trust of residents.

Tuesday 22 January 2019

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BUSINESS DAY

Post-secondary education: Building a generation of problem-solvers STEPHEN ONYEKWELU

igeria needs to produce graduates with 21st century skills needed to drive innovation and enterprise. For the country, a vibrant artisanal educational system, which is also known as Technical Vocational Education and Training (TVET), must become a critical component of its post-secondary education system. The country’s bloating youth unemployment, worsening poverty rate, declining life expectancy and deteriorating quality of life could be traced to a post-secondary education system that is developing a generation of consumers in place of one that can solve Nigeria’s pressing social and economic problems. In this context, many well-educated young Nigerians compete for limited number of prestigious full-time jobs, rather than apply for less desirable employment options. Many choose to remain out of work in the hope of securing better jobs. The World Economic Forum ranked 130 countries on their Human Capital Development Index in 2017, and Nigeria ranked 114, among the lowest 20 globally, showing the country’s human capital is poorly prepared for competition in a fastchanging global economy. Africa’s most populous country ranked lower than Rwanda, which was 71st on the list; Ghana, which squared 72nd; Cameroon, with 73rd position; Mauritius with 74th position, and South Africa, which posted 87th. Only Ethiopia ranked worse than Nigeria at 127th. The leaders of the Index are generally economies with a longstanding commitment to their people’s educational attainment and that have deployed broad share of their workforce in skill-intensive occupations across a broad range of sectors. Nigeria’s post-secondary education tends to emphasise acquisition of certificates, rather than competence. Yet, the ability to solve social and economic problems is what

creates businesses and businesses create jobs. Creating jobs is the number one task for the Nigerian economy and its managers in 2019. This needs to be embedded in the curriculum design and delivery at all levels of education, particularly the post-secondary phase, experts say. This follows from the latest unemployment figures released by the National Bureau of Statistics, which says that Nigeria nurses a high 23 percent unemployment rate. Youth unemployment is worrisome, but even more worrisome is the fact that only a few of them would ever access the so-called tertiary education. The numbers for this will be presented below. First, youth unemployment figures are scary. The National Bureau of Statistics, in its data, defines a youth as anyone between the ages of 15 and 34. They make up almost 50 percent of the active labour force or one out of every two persons in the country that is of working age and is actively searching for job. In absolute numbers, there are 44 million youths in the active labour force of 90 million. But only 19.73 million, representing 45 percent of

the active youth labour force, are in full time employment. The NBS defines full-time employment as anyone who works for more than 40 hours a week, which means that person is fully engaged at work for at least eight hours from Monday to Friday, which are the normal working days. The other 55 percent of youths in the active labour force are basically hustling. The data show 11.36 million youths, about 26 percent, work anywhere between 20 hours to 39 hours in a week or less than eight hours in a day. Another six million (14 percent) of youths in the active labour force work less than 20 hours a day while seven million youths, representing 16 percent of the active labour force, are sitting at home doing nothing, despite the fact that they are actively searching for job. The situation may worsen if nothing is done urgently. Nigeria’s population is projected to exceed 300 million by 2050. Fifty percent of Nigeria’s in-school children are not learning because they cannot read and write; 63 percent of them living in the rural areas cannot read and around 83 percent of children in

lowest economic quartile cannot read at all, according to the Strategic Plan Education Development 2016 designed by the Federal Ministry of Education. A nation’s productivity is directly linked to the economic activities of its citizens. With growth of communications technology, expansions brought by the World Wide Web and the influence of globalisation, movement of labour across national boundaries is taken for granted. A country either exports high quality artisanal workforce (plumbers, technicians and bricklayers) or it is forced to import same. Nigeria already imports high quality artisanal labour from neighbouring Benin Republic, Togo and Ghana. Again, this is a function of the quality of post-secondary education, which goes beyond attending a college of education, polytechnic or university. Besides, over 1.5 million candidates who apply annually for the Unified Tertiary Matriculation Examination, only 800, 000 have a chance of being admitted in any of Nigeria’s tertiary institutions of learning because this is about the number

universities, polytechnics, and colleges of education put together can absorb. A dynamic TVET develops problem solvers, who would build Small and Medium Enterprises (SME), which drive real growth in an emerging economy such as Nigeria’s. However, that role will be better played when the sector is equipped with relevant competencies and skills it needs to function effectively. In other words, the SME sector must have the capacity and dynamism demanded by the realities of the modern world. The boisterous nature of its members and their abundant energies are necessary but hardly sufficient condition for an effective delivery of its role in the economy. Furthermore, the development of highly specialised fields such as software developers, engineers, medical doctors, scientists and other forms of expertise, can be achieved through infrastructure and personnel audit of tertiary education institutions, for immediate upgrade. Those who survive the tortuous process of acquiring knowledge from Nigeria’s tertiary institutions vote with their feet by departing to places such as Canada, the United Kingdom and United States of America. Nigeria’s universities face a number of challenges. First is the issue of deteriorating infrastructure and where students can practice theories learnt in the classrooms. Unfortunately the industrial backbone has been weak and the entire economy has been run as one big consumer market dominated by imports from all over the world especially China. Hence there are no outlets to practice these theories. Secondly, the institutions themselves need to be upgraded both for the human ware as well as the soft and hardware to enable the students study in a 21st Century learning environment. ‘In-breeding’ is creeping into the university system. This is anti-innovation and progress. The quality of lecturers in the tertiary institutions need urgent audit.

Alleged N2.2bn fraud: Obanikoro testifies against Fayose INNOCENT ODOH, Abuja

former Minister of State for Defence, Musiliu Obanikoro, on Monday, January 21, 2018, told Justice Mojisola Olatoregun of the Federal High Court sitting in Ikoyi, Lagos how in 2014, he gave various sums of money to a former governor of Ekiti State, Ayodele Fayose, who is being prosecuted for an alleged N2.2 billion fraud. A statement issued on Monday by the EFCC Acting spokesman, Tony Orilade, said Fayose was arraigned along with his company, Spotless Investment Limited, on October 22, 2018 on an 11-count charge bordering on fraud and money laundering to the tune of N2.2 billion. He is facing trial in connection with N1.299 billion and $5.3 million out of

the N4.65 billion slush funds allegedly shared by the Office of the National Security Adviser (ONSA), through a former Minister of State for Defence, Musiliu Obanikoro, the statement said. Fayose pleaded “not guilty” to the charges and was granted bail in the sum of N50 million with one surety in like sum. Obanikoro was led in evidence by the prosecuting counsel, Rotimi Jacobs, SAN. He said: “In June 2014, when we were approaching the gubernatorial election in Ekiti State, I received a call from Mr. Fayose wanting to know if therewasanymessagefromtheofficeof thethenNationalSecurityAdviser,NSA, Col. Sambo Dansuki (retd). But I said ‘no’ and promised to get back to him. “I later confirmed to him that a message had come from the Office

of the NSA. “Prior to that time, I had a responsibility of maintaining the account for the security of Lagos State.” In his further evidence, the former Minister confirmed receiving a sum of N200 million on June 5, 2014 and another sum of N2 billion on June 16, 2014 out of the imprest from the ONSA. When asked what he did with the money, he said: “I called Mr. Fayose to ask him how he wanted the money to be remitted. “Mr. Fayose told me that I should change the dollars into naira. “I actually wanted to say that Diamond Bank should remit the naira equivalent to their Bank in Ekiti. “But the manager said they could not do that in Ekiti because they did not have such capacity. “On June 17, 2014, a sum of N560

million was transferred to him. “I instructed the bank manager to bring the money to Akure, and it was brought through the private wing of Ikeja, Lagos Airport. “The money was loaded into two aircraft. “Mr. Fayose had earlier informed me about Mr. Biodun Agbele, whom he described as his contact person to take delivery of the money. “Then, I sent Mr. Agbele and the Bank manager to Spotless Hotel in Ekiti.” He also told the court that there was a phone conversation on another occasion to deliver another huge sum of money to Mr. Fayose three days to the Ekiti State election. He added that: “The money, again, was from the NSA imprest. “There is a young man called

Kareem Taiwo, who was working for the government on security issues. “He was the one I told that we had a very serious security issue in Lagos around that time. “But I don’t think I want to divulge the reason for the security account through which the monies were issued.” When he was asked if he wrote a statement with the EFCC, he answered in the affirmative, saying, “Yes, I was outside the country for about one year. I was in the United States of America, USA. “That is why I reported to the EFCC directly to avoid embarrassment when I returned home”. Justice Olatoregun adjourned the matter to February 4, 5 and 6, 2019 for cross-examination of the witness, the statement added.

Tuesday 22 January 2019

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China’s economy grows at slowest annual rate since 1990

Fourth-quarter GDP figure slips to 6.4% as trade war hits consumer sentiment Gabriel Wildau and Emily Feng

hina’s economic growth dropped to its slowest annual rate since 1990 as the US trade war and policy decisions in Beijing hit consumer sentiment and capital expenditure. Growth for the full year was 6.6 per cent, down from 6.8 per cent in 2017, the lowest level since the country faced international sanctions after the Tiananmen Square massacre. Gross domestic product growth fell to 6.4 per cent in the fourth quarter, the lowest level since the global financial crisis. Growth has now slowed for three consecutive quarters, prompting concern among investors that the country could drag down the global economy. China has adopted a series of fiscal and monetary stimulus measures since July that have failed to reverse the deceleration. Last week, the finance ministry outlined plans for additional tax cuts. Markets across Asia-Pacific remained positive after the news, but most closed off their highest levels of the day. Mainland China’s CSI 300 closed up 0.6 per cent, with Hong Kong’s Hang Seng up 0.4 per cent.

The Topix in Tokyo was 0.6 per cent higher and Sydney’s S&P/ASX 200 rose 0.2 per cent. US tariffs on Chinese exports have not directly inflicted major damage on the country’s GDP, according to the data. But economists and corporate executives say the trade conflict has taken a heavy toll on sentiment, leading to a slowdown in consumer spending and capital expenditure. “Aggregate data continue to portray a relatively benign picture that seems increasingly inconsistent with a sense of growing economic malaise and souring business, consumer and investor sentiment,” said Eswar Prasad, professor at Cornell University and former China head at the International Monetary Fund. Growth of retail sales, a gauge of consumer spending, ticked up in December to 8.2 per cent but remains near the 18-year low of 8.1 per cent touched in November. Ning Jizhe, director of China’s statistics bureau, on Monday sought to project confidence, noting that growth in China was still far higher than in the US, EU and Japan. But he also acknowledged the trade war hit. “US-China trade friction indeed has an impact on economic performance . . . but we have overcome the

Democrat Kamala Harris joins 2020 presidential race Senator enters an increasingly crowded field of contenders to challenge Donald Trump

Pan Kwan Yuk

enator Kamala Harris has become the latest Democrat to toss her hat into the ring for the 2020 presidential race, joining an increasingly crowded field of contenders to challenge President Donald Trump. “I am running for president of the United States,” the California lawmaker said on ABC’s Good Morning America. “I’m very excited about it.” In a separate video that was released on social media at the same time as her TV appearance, Ms Harris also called on her supporters to join with her to “claim our future.” “The future of our country depends on you and millions of others lifting our voices to fight for our American values,” she said. “That’s why I’m running for president of the United States. “I’m running to lift those voices, to bring our voices together.” The daughter of Indian and Jamaican immigrants, Ms Harris is the first woman of Asian heritage and the first African American woman to announce a run for the White House in 2020. The 54-year old former California attorney-general joins Senator Kirsten Gillibrand of New York and Senator Elizabeth Warren of Massachusetts, who both announced exploratory committees for the Democratic nomination earlier this month. Julian Castro, former Housing and Urban Development secretary under Barack Obama, Tulsi Gabbard, a congresswoman from Hawaii, and John Delaney, a congressman from Maryland, have also said they will join the race for the White House. Other possible contenders include former vice-president Joe

Biden and Beto O’Rourke, the congressman from Texas who staged an unsuccessful but unexpectedly competitive bid to unseat Republican senator Ted Cruz in November. Ms Harris, who made her announcement on Martin Luther King Jr. Day, said earlier this month that she believes America is “absolutely” ready for a woman of colour to be president. “When people are waking up in the middle of the night with the thing that has been weighing on them . . . they aren’t waking up thinking that thought through the lens of the party with which they’re registered to vote,” she said at the time. “When they wake up thinking that thought, they are not thinking it through some demographic upholster.” “When they wake up thinking that thought, it usually has to do with one of very few things: It usually has to do with their personal health, about their children or their parents,” she said. “Can I get a job? Keep a job? Pay the bills by the end of the month? Retire with dignity?” “The vast majority of us have so much more in common than what separates us,” she added. An Oakland, California native, Ms Harris is a graduate of the historically black Howard University, according to her Senate website. She received her law degree from the University of California, Hasting and began her career in the Alameda County District Attorney’s Office. From 2004 to 2010, Ms Harris served as District Attorney of the City and County of San Francisco. After that she was elected as the first African-American and first woman to serve as California’s attorneygeneral, a position she held from 2011 to 2017.

overall influence,” he said. Beyond the trade war, analysts said the deterioration in economic expansion was at least partly selfinflicted. Beijing’s campaign to control financial risk by weaning the economy off its reliance on debt-fuelled stimulus contributed to a sharp slowdown in infrastructure spending, while also

reducing access to credit for privately owned companies. A parallel effort to strengthen enforcement of environmental regulations fell heavily on private groups as well. Economists expect Beijing to ramp up stimulus measures in the coming months, including additional cuts to banks’ required reserve ratio. But experts also warn that previous

rounds of heavy stimulus have left policymakers with less flexibility to loosen credit, which would further swell the economy’s debt burden. “China’s economy is muddling through: slowing, but not realizing the worst fears about downside risks to the global outlook,” William Adams, senior economist at PNC Financial Services, wrote on Monday.

US bank CEO pay rises at faster pace than average worker Record profitability is not shared evenly among industry’s leaders and their underlings Laura Noonan and Robert Armstrong

verage pay at America’s top six banks is rising at a significantly lower rate than the increase enjoyed by some of their chief executives, as the spoils of Wall Street’s record profitability are shared unevenly between the industry’s elite and their underlings. Analysis by the Financial Times shows that pay per employee at JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo, Citigroup and Morgan Stanley rose by just over 3 per cent last year. Morgan Stanley has already published data showing that James Gorman, chief executive, was awarded a 7 per cent pay rise— to a total package of $29m — in a year when pay for his 60,300 workers fell by an average of almost 2 per cent to just over $292,000. More than 85 per cent of the 2,700 staff added by Morgan Stanley in 2018 were hired in the second half of the year, and therefore would have been paid less than half their normal salary. The bank said Mr Gorman was assessed and paid based on his and Morgan Stanley’s performance, including “record revenues and earnings and a return on equity of 11.8 per cent”. At JPMorgan Chase, chief executive Jamie Dimon was granted a 5 per cent increase last year — bringing his total package to around $31m. His 256,000 staff enjoyed the highest average pay rise on Wall Street, at 4.4 per cent.

In regulatory documents announcing these pay packages, both banks cited 2018’s strong financial performance, as well as the chief executives’ individual performance. Total net income for the top six banks, adjusting for tax reform, rose 18 per cent to $119bn in 2018. But the standout profits did not lead to big pay increases for most of the million people who work across the six institutions. Average pay at Goldman Sachs fell almost 3 per cent, while workers at Bank of America and Citigroup both got average raises of around 2.2 per cent and Wells Fargo’s staff got just over 4.1 per cent more a head. Final pay numbers are set at the end of the year, when banks decide how much extra to put into the bonus pot from the fourth quarter. Those decisions came against a backdrop of a sharp fall in fourth quarter trading revenues, increased fears of recession and trade wars. They also coincided with the beginning of the US government shutdown that Mr Dimon warned could reduce the first quarter’s growth rate to zero. Citigroup was the most forthright about its decision to batten down the hatches in the fourth quarter by trimming $300m from its pay bill in the final three months of the year, with finance boss John Gerspach saying that while some of the cuts were planned, others were a reaction to “market conditions”. Goldman’s bonus allocations — which were announced to em-

ployees on Thursday — were expected to be hit hard by the 1MDB scandal which has left the bank facing lawsuits for billions over its role in helping the Malaysian state fund raise $6.5bn. Mike Mayo, banks analyst at Wells Fargo, said it made sense that even though profits rose in 2018 increased competition from low cost entrants meant that “banks have no choice but to get more efficient and compensation is part of that”. He added that some banks were cutting staff costs by “re-pyramiding, involving less senior managers and flattening structures”. The figures include the whole of the banking groups, but most of the volatility is in their corporate and investment banks where bonuses make up a far larger portion of total pay. A senior investment banking executive said his division had been largely insulated from cost cuts because it had done well and there was competition for talent in the market. In advisory, where JPMorgan, Goldman, Morgan Stanley and Citigroup all posted big gains, he said his bank “paid where client relationships had an impact . . . we paid our star performers even if they didn’t have a great year”. In debt capital markets, where revenues fell for most banks, people had been “extremely well paid” in previous years and were paid less this year. In the securities business, fixed income traders did worst.

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FT IMF flags trade war threat and warns of global economic slowdown

China’s private sector struggles for funding as growth slows

Fund revises down growth forecasts to 3.5% this year and 3.6% in 2020

Beijing’s policy moves have left companies that are key to economic output worried

Chris Giles

Tom Mitchell, Xinning Liu and Gabriel Wildau

he global economy is weakening faster than expected with risks increasing from trade wars and volatility in financial markets, the IMF said on Monday ahead of the start of this year’s World Economic Forum in Davos. Revising down its main economic forecasts, the fund said the global economy was likely to slow from 3.7 per cent growth in 2018, to 3.5 per cent in 2019 and 3.6 per cent in 2020. The new estimates are 0.2 percentage points and 0.1 percentage point respectively below the IMF’s most recent forecasts in October. In just three months, these represent a significant shift for the global economic outlook and come as a result of weak data in Europe and Asia coupled with growing fears for the future. The report paints a fragile picture of the world economy at a time when leaders have become more focused on domestic matters and calls for greater international co-operation to give business more confidence to invest in the future. Gita Gopinath, the new chief economist of the IMF, said: “The cyclical forces that propelled broad-based global growth since the second half of 2017 may be weakening somewhat faster than we expected in October.” “While this does not mean we are staring at a major downturn, it is important to take stock of the many rising risks,” she added. Financial market turbulence was highlighting the risks from global trade tensions that have created uncertainty for business around the world, said Ms Gopinath. Investment has suffered and there are threats to global supply chains. Also on Monday the UN’s trade and development agency said that global foreign direct investment fell 19 per cent last year to $1.2tn as a result of US President Donald Trump’s tax reforms. One specific risk highlighted by the IMF was that Britain would exit the EU without a negotiated agreement, a so-called no-deal Brexit. The fund said this outcome was a “rising possibility” that could have negative spillovers across Europe. As China on Monday reported its weakest growth since 1990, the IMF predicted that the slowdown could be steeper than currently expected, which Ms Gopinath said could “trigger abrupt sell-offs in financial and commodity markets as was the case in 2015-16”. The fund also expressed concern about the budgetary position of Italy, which is also suffering from weakness in its banking sector. “A protracted period of elevated [Italian bond] yields would put further stress on Italian banks, weigh on economic activity and worsen debt dynamics,” the IMF said in the report. The IMF called on countries to resolve trade tensions and for a smooth Brexit, all of which are more difficult because the US and UK administrations will be absent from the gathering at the Swiss ski resort of Davos due to mounting domestic crises. “The main policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilising an already slowing global economy,” said Ms Gopinath.

Tuesday 22 January 2019

Theresa May on Brexit collision course with MPs PM fails to adjust red lines and tells cabinet she will try again to fix Irish backstop Henry Mance, Arthur Beesley and Jim Brunsden

heresa May is on a collision course with Britain’s parliament after the prime minister refused to compromise to secure a Brexit deal on the eve of a deadline set by MPs for information about next steps. A week after suffering the worst parliamentary defeat by a British government in modern history, Mrs May will not lay out a substantive “plan B” for leaving the EU, despite parliament’s demands that she stop running down the clock. Instead, she will tell MPs on Monday that she is still working to ease Eurosceptics’ concerns about the Irish border. She is expected to meet MPs, business leaders and trade unions this week, but has so far refused to rule out a no-deal Brexit or to keep Britain in an EU customs union, key compromises that could have won her the support of Labour MPs. Her rigid approach is likely to embolden MPs who want to take control of the process by amending parliamentary procedure. “It’s Groundhog Day,” said Stephen Doughty, a Labour MP who backs a second Brexit referendum. Two attempts to break the Brexit deadlock failed to gather support over the weekend. Liam Fox, the trade secretary, suggested that an “agreement with Ireland” could replace the so-called backstop, the contentious insurance policy to avoid Irish border checks, which Eurosceptics fear will trap the UK in a customs union with the EU. But the Irish government dismissed the idea, saying “Ireland

negotiates as part of the group of 27 European nations.” EU officials said that a bilateral Ireland-UK treaty could not cover crucial governance issues for the bloc’s external border or address areas of exclusive EU competence. Mrs May told cabinet ministers on a conference call on Sunday that she planned to do something about the backstop but did not specify what. Meanwhile, a separate proposal discussed in Conservative circles, for Mrs May to offer to step down after Brexit — in return for Eurosceptics supporting her withdrawal deal with the EU — failed to excite Tory MPs. One said it would not compensate for the flaws in her deal, another that it would not win over a “game-changing” number of rebels. Mrs May’s Brexit deal was defeated by a margin of 230 in the House of Commons on Tuesday, meaning that she must win over more than 100 MPs to pass it. By focusing on the backstop, she is again wooing Conservative and Democratic Unionist Eurosceptics, rather than moderate Labour MPs. In response, Lucy Powell, a Labour MP who backs single market membership, said that Mrs May had “made many strategic errors over last couple of years, but doubling down on plan A to get Brexit over the line will end up being the worst”. Over the weekend, Jacob ReesMogg, a key Tory Eurosceptic, raised the prospect of backing Mrs May’s deal, saying it “would be better than not leaving at all”. With just 68 days before Brexit is scheduled to take place on March 29, the UK government also has the challenge of passing major pieces of legislation, moving ahead with

hundreds of ministerial orders, and agreeing to roll over dozens of trade deals in case of a no-deal Brexit. Keir Starmer, Labour’s shadow Brexit secretary, said it was “inevitable” that the exit date would need to be pushed back. On Monday MPs from across the House of Commons will back moves to force the government’s hand, in what could be one of the most significant constitutional moments in recent British history. No vote is expected until January 29. One move, led by former Conservative minister Nick Boles, would seek to block a no-deal Brexit— by giving backbench MPs greater power to put forward primary legislation. Another, by former Conservative attorney-general Dominic Grieve, would allow opposition parties to determine what is debated by MPs, a power that has to date been largely reserved to the government. Independent MP Frank Field has put forward an amendment to allow MPs to show their support for one of seven different options. These include: changes to the Irish backstop, the insurance policy designed to avoid a hard Irish border; no deal Brexit; an extension of the two yearlong Article 50 divorce process from the EU; a Canada-style free trade agreement; Norwegian-style membership of the single market; a second referendum; and membership of a customs union. It is unlikely that any of those options enjoys majority support among MPs. Mr Field, who voted for Brexit, said, “Reaching out to 650 MPs is quite arduous and a very lengthy process [for the prime minister]. Why not let us reach out to her?” But trade secretary Mr Fox told the BBC that he was opposed to so-called indicative votes.

Russia hails Tshisekedi as Congo election winner Kremlin backs president-elect despite controversy over result Henry Foy

ussia has hailed Felix Tshisekedi as the winner of a controversial presidential election in the Democratic Republic of Congo, despite evidence that suggests the result was fraudulent. Congo’s constitutional court this weekend upheld the election’s announced results, dismissing claims by Martin Fayulu, an opposition candidate who had deemed the original result an “electoral coup”.

The ruling came after an analysis of leaked data by the Financial Times indicated Mr Fayulu had won with nearly 60 per cent of the vote, putting Mr Tshisekedi a distant second on 19 per cent. “We consider the elections as a milestone in the political life of the DRC. This is the first in the history of the country the peaceful transfer of power as a result of the popular will,” Russia’s foreign ministry said in a statement. “We count on constructive

co-operation with the new leadership of the Democratic Republic of the Congo in the interests of strengthening traditional friendship and partnership between our countries, deepening RussianCongolese co-operation in the political, trade-economic and humanitarian spheres,” it added. Moscow has significantly deepened its diplomatic relations with African countries in recent years, as part of a foreign policy pivot away from western countries.

in Nan, the chief executive of a Beijing-based manufacturer, needs to borrow at least Rmb5m ($740,000) to expand production of his company’s air purifiers and air conditioners. But because his company lacks an equivalent amount of collateral in property and other assets, Chinese banks were willing to lend only Rmb2m. “We didn’t have any more collateral to offer so [bank financing] was a dead end,” Mr Qin told the Financial Times. “We borrowed bridge financing from private channels at interest rates as high as 3 per cent a month [or 36 per cent a year] but paid back the money quickly.” He said he was now exploring “all possible channels” of additional funding, including private equity firms. Mr Qin’s grievances, which he recently aired on social media, are increasingly common among private sector companies in the world’s second-largest economy, which have been hit by a squeeze on lending as Beijing has worked to reduce the economy’s dependence on debt-fuelled stimulus. If their complaints are not addressed, the consequences could be disastrous for Chinese officials as they try to avoid a precipitous deceleration in economic growth, which last year slowed to a 28-year low of 6.6 per cent, according to data released on Monday. Non-state companies, including foreign-invested enterprises, account for more than half of total economic output in China, and anywhere between 50 and 90 per cent of tax revenues, spending on research and development, urban employment and exports. But according to official bank data cited by Nicholas Lardy in The State Strikes Back, his most recent book on the Chinese economy, in 2016 they received just 11 per cent of new loans issued by the official bank sector, while more than 80 per cent flowed to state-owned enterprises. In 2012, the year before President Xi Jinping assumed power, private sector companies and SOEs received, respectively, 52 per cent and 32 per cent of new loans — with the remainder going to collectively owned groups and other companies that do not fit clearly into state or private. This imbalance, as well as Mr Xi’s enthusiasm for ever bigger, stronger SOEs and his repeated admonishments that the Communist party is the “ruler of all”, have demoralised many private sector entrepreneurs and other proponents of bolder economic reforms. Until recently, privately owned companies in China could survive by tapping funds from the country’s enormous shadow banking sector. But shadow financing began to dry up as Chinese officials, led by Vice-Premier Liu He, ramped up a campaign to stabilise debt at nonfinancial companies, which is estimated at about 300 per cent of GDP.

Tuesday 22 January 2019

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Qatar offers support to Lebanon’s battered bond market Doha plans to buy $500m of sovereign debt to ease one of world’s biggest Chloe Cornish and Simeon Kerr

atar plans to buy $500m worth of Lebanese sovereign bonds in an effort to boost the troubled economy of a country that is often caught between regional rivals seeking to expand their influence. Sheikh Mohammed bin Abdulrahman Al Thani, Qatar’s foreign affairs minister, announced the plan on Monday, according to Qatar’s state-run news agency. It did not give further details as to whether Qatar planned to buy foreign-currency bonds or local-currency debt. A crucible for the Middle East’s political and sectarian troubles, Lebanon is a focus of a regional proxy war between Gulf rivals Saudi Arabia and the United Arab Emirates on one side and Qatar and Iran on the other. Tehran backs the powerful Lebanese Hizbollah Islamist movement, and Beirut’s traditional supporter, Riyadh, has been frustrated at its failure to limit Hezbollah’s clout. Prices on the latest Lebanese 10year eurobond rose slightly in trading following the first positive headline Beirut has enjoyed for months, from about 73 cents on the dollar to 75 cents. But the price of Lebanon’s two-year debt dropped, pushing yields to a new high of 14.5 per cent, indicating that investors still saw high risks in the shorter term. Yields rise when prices fall. Lebanon has the world’s thirdlargest debt-to-GDP ratio at more than 150 per cent, and a monetary system that relies on constant injections of outside capital. Next year, Beirut is projected to spend more than half its fiscal revenue on debt servicing, raising questions over the sustainability of its debt burden. Doha’s decision to invest in Lebanese debt came after Qatari ruler Sheikh Tamim bin Hamad Al Thani met Lebanese president Michel Aoun

on Sunday, reported Qatar’s state news agency, when he visited Beirut for the Arab League economics summit hosted by Lebanon. Markets were spooked earlier this month by confusion over whether or not Beirut was planning a debt restructuring. Politicians scrambled to reassure investors that their money was safe. Beirut has already received pledges of foreign support. International donors pledged $11bn of soft loans for Lebanese infrastructure development last spring, with the lending to be contingent on evidence that Beirut was tackling fiscal reforms to bring down its deficit. But Beirut’s leaders have failed to form a government due to months of acrimonious political jockeying, meaning no projects can be signed off on and the loans remain inaccessible. The most recent political stumbling block has been blamed on Hizbollah. The Saudi-UAE axis, locked in proxy battles with Iran, has become increasingly concerned about Hezbollah’s expanding role in domestic and regional politics, accusing the group of facilitating Iran’s interference across the Arab world. This has taken a toll on Lebanon’s relations with Gulf countries. Riyadh and Abu Dhabi have discouraged their nationals from visiting Lebanon in recent years, curtailing foreign investment from the Gulf. The ban is expected to be lifted once a new government is formed in Beirut. In November 2017, Lebanon’s prime minister Saad Hariri was detained during a visit to Riyadh and temporarily resigned. Qatar’s regional rivals, Saudi Arabia and the UAE, in 2017 led a trade and travel embargo on Doha, accusing it of supporting Islamist extremism. Doha, which denies the charges, has used its hydrocarbon riches to open new trade routes and continue preparations for its hosting of the Fifa World Cup in 2022.

Newmont’s incoming CEO defends $10bn Goldcorp deal Henry Sanderson

he incoming chief executive of the world’s largest gold miner says he’s confident Newmont Mining will be able to maintain profitable gold production at 6m to 7m ounces a year for “a couple of decades” following its $10bn acquisition of Goldcorp. Tom Palmer, who is set to replace Gary Goldberg as Newmon CEO later this year following the closure of the deal, said there was an opportunity to find more gold at Goldcorp’s mines in Mexico, Argentina and Canada. “We see a real value proposition in this acquisition in bringing Newmont’s exploration expertise to bear on these assets,” Mr Palmer told the Financial Times. “We see real opportunity to leverage our technology and expertise in that space.” Shares in Colorado-based Newmont have fallen 9 per cent since it announced the deal to acquire Vancouver-based Goldcorp last Monday. Mr Palmer, who previously worked at Rio Tinto, said Newmont had sent its “best and brightest” to do due diligence on Goldcorp’s assets.

Mr Palmer signalled out the potential for adding gold at Goldcorp’s remote Cerro Negro mine in Argentina as well as its Penasquito mine in northern Mexico. Goldcorp bought Cerro Negro for $3.6bn in 2010 but had to write down the project by $2.3bn in 2015. The mine is located 600 meters above sea level in southern Argentina. “When we look at Cerro Negro we see the opportunity to bring some of Newmont’s operational expertise to bear, we are quite excited about the exploration around that region,” he said. In Canada, Goldcorp’s Musselwhite mine below Lake Opapimiskan also has potential, Mr Palmer said. The Musselwhite mine includes some 17,500 hectares of mine claims and leases in the North Cariboo Greenstone belt, according to Goldcorp. Mr Palmer, currently chief operating officer at Newmont, was recruited by Mr Goldberg to join Newmont in November 2014. They first met when they both worked for Rio Tinto. Still, Mr Palmer said the miner would not chase growth “for growth’s sake.”

Pension scams cost thousands of investors more than £200m

Business and individuals suffer as 24 companies are closed down, says government agency Josephine Cumb

housands of investors and business have lost more than £200m to pension scams operated by a number of companies that were later shut down by authorities, according to government figures. The Insolvency Service said on Monday that, since 2015, it has requested authorities to close down 24 companies that have been involved in “pension misuse”, which included convincing people to transfer their retirement pots to risky, unregulated investments. Eight company directors have been disqualified in the time, the government agency said. Victims of the pension misuse typically received unsolicited calls from a company offering them an opportunity to invest their fund in financial vehicles

promising high returns. Pension cash was then placed into investments such as storage units, which were not regulated and did not deliver on the promised returns. The service estimated that, in the same timespan, close to 3,750 victims, including individuals and businesses, had transferred about £202m in pension cash to the 24 companies that were later closed down. In one case, four directors of companies involved in the misuse of £57m worth of pension funds were banned for 34 years. “Government continues to work closely with the Insolvency Service [which is] working to clamp down on rogue companies targeting vulnerable people,” said Kelly Tolhurst, the UK minister for small businesses. The update comes weeks after a ban on unsolicited calls about pensions came into effect.

Victims of pension scams last year lost an average of £91,000 each to fraudsters, the agency said, using ScamSmart campaign research, with common tactics used, such as cold or unsolicited calls, offers of free pension reviews and promises of high rates of return. “It is horrifying that thousands of retirement savers have fallen victim to cruel retirement scams in recent years,” said Tom Selby, senior analyst with AJ Bell, which provides online investment platforms and stockbroker services. “Although it is good news that a number of the companies involved have now been wound up, this is likely to be the tip of the iceberg when it comes to pension fraud,” Mr Selby said. “Some victims will be unaware they have been duped for months or even years, while others will simply be too ashamed to come forward and report what has happened.”

Stocks to watch: Henkel, William Hill, Kingfisher, Hammerson Daily Mail at risk from rising newsprint costs and stalled events growth, says Citigroup Bryce Elder

enkel was the Stoxx 600’s sharpest faller after the German chemical and consumer goods group warned it would be investing an extra €300m annually from 2019 to fund product development and digital initiatives. As a consequence, Henkel guided for an operating margin of between 16 per cent and 17 per cent this year rather than the 18 per cent expected by the consensus. The warning also provided preliminary details of Henkel’s 2018 results showing adjusted earnings up 1 per cent at €3.5bn, which was slightly weaker than expected. Analysts welcomed the move to address long-term underinvestment in consumer products such as Persil and Schwarzkopf but questioned whether the revival plan was enough when a weakening auto market was putting pressure on the adhesives division, which provides about half of group sales. “Chronically weak performance in Beauty persists, to which the answer appears to be another relaunch, rather than more radical action . . . While there is plenty of bad news in the valuation at this level, this update

does nothing to restore confidence in management, nor their command of the numbers and outlook.” Jefferies William Hill retreated after announcing a full-year adjusted operating profit of about £234m, down 20 per cent year on year but in the middle of a target range provided in November. The bookmaker said underlying profit growth was 4 per cent after excluding the impact of online measures to encourage responsible gambling, US expansion and a disposal in Australia. Analysts anticipated no change to 2019 consensus expectations, which imply a further drop in earnings of about 40 per cent. “Some faith is required to believe in a pick-up in 2020,” said Peel Hunt. “The valuation is sufficiently attractive to encourage investors to take the plunge and look through 2019 to 2020, when we expect to see growth restored.” Sellside stories RBC downgraded Kingfisher, the B&Q and Castorama owner, to “underperform” from “sector perform” with a 200p target price. “Our work suggests that Kingfisher’s issues in France are partly structural and partly execution related. We think it will take time for price cuts and new ranges to resonate with custom-

ers. The macro and housing backdrop remains unsupportive in the UK and France and our earnings forecasts are over 10 per cent below consensus.” RBC Castorama had been struggling in France because of a weak digital offering and a poor perception among consumers about the value for money of its wares, RBC said. Its analysis also suggested that while Castorama has more stores than rival Leroy Merlin in high population areas, the latter’s focus on lower-income neighbourhoods means it has greater exposure to faster growing populations. JPMorgan Cazenove downgraded Hammerson, Capital & Regional, Klépierre and Shaftesbury to “neutral” from “overweight” in a European property sector review. A deterioration in UK retail newsflow over Christmas and the new year suggested buyers of shopping centres would increasingly incorporate expectations of falling rents into their forecasts, said JPMorgan. “We have struggled against sentiment for two years with overweight calls on European retail companies due to our expectations of earnings-per-share growth, solid performance metrics and what we have viewed as overly pessimistic share prices. However we throw in the towel,” the broker said.

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Tuesday 22 January 2019

ANALYSIS RBI governor under fire over government payout plan New chief at centre of storm over bank’s independence a month after taking charge Simon Mundy and Amy Kazmin

I Debt machine: are risks piling up in leveraged loans?

In the first in a series, regulators fear that looser lending standards for lowly rated companies could precipitate the next downturn Joe Rennison and Colby Smith

ith 18.7m followers and a roster of fans that includes the Kardashians and Naomi Campbell, the Instagram page of beauty company Anastasia Beverly Hills offers crafty demonstrations of how to use its products to get the perfect eyebrows and lips. In one image, a model has a tiny heart carved into her manicured eyebrow. The successful social media account is more than a marketing tool, however, for the cosmetics business owned by Romanianborn billionaire Anastasia Soare. It was also listed as one of the company’s “general intangible” assets in documents for a $650m loan to fund a partial buyout by private equity firm TPG Capital, according to people familiar with the deal. Even more striking than the eyebrow-raising collateral, the loan came with few of the investor protections that were once standard in loan documents, such as the ability to potentially move assets out of the reach of lenders. Such provisions have been criticised for undermining investors’ claims on a company’s collateral in the event of financial problems — even an Instagram account. Anastasia Beverly Hills and TPG declined to comment. Anastasia Beverly Hills is one of the many companies that have sought cheap financing in recent years through the so-called leveraged loan market, where credit is typically extended to lowly rated, more indebted companies and which has overshadowed the much better known high-yield bond market as a source of financing. The leveraged loan market has exploded since the financial crisis, doubling in size over the past decade to $1.2tn, according to data from LCD, a division of S&P Global Market Intelligence. With investors of all different types eager for higher returns, companies have been able to borrow money on increasingly favourable terms, giving them greater flexibility should they run into trouble. Anastasia Beverly Hills’s loan is not the most egregious example, but it is indicative of a market that has eviscerated traditional investor protections and made looser lending standards common. The shift has prompted a rising chorus of voices to warn that the deterioration in underwriting standards could amplify the next downturn. “All the ingredients are there within this sector of the market for there to be meaningful problems when the economic slowdown does occur,” says Dan Ivascyn, chief investment officer for Pimco, one of the world’s largest asset managers. Looser lending standards are less important while the economy is robust and the likelihood of companies defaulting is low. But concerns

over slowing growth are mounting, and a flash of market turbulence sent leveraged loan prices sliding in December. Although the market has since stabilised, the tumble was arguably a dry run for what could happen in a recession — which some analysts and fund managers say could be within the next couple of years. The bout of uncertainty has sparked more scrutiny of the leveraged loan market, with organisations such as the Federal Reserve, IMF and the Bank for International Settlements all sounding the alarm about the potential broader risks to the economy. “If we have a downturn in the economy, there are a lot of firms that will go bankrupt, I think, because of this debt,” Janet Yellen, the former chair of the Federal Reserve, warned last year. “It would probably worsen a downturn.” When the global financial crisis erupted in 2008, central banks around the world slashed interest rates and bought trillions of dollars worth of bonds, pushing yields down. That forced investors to look elsewhere for higher returns. One beneficiary was the leveraged loan market. Loans had performed relatively well throughout the financial crisis, and investors were attracted by the fact that the debt is backed by assets, unlike the unsecured bond market. The high-yield bond market — often called “junk” and a traditional source of funding for riskier companies — has also grown, increasingly favouring larger deals. But the balance has gradually tipped toward the leveraged loan market, where many smaller, lower-rated companies that might struggle to issue in the junk bond market, have been able to find suitors. Loan issuance has edged past that of the junk bond market as a result. In December 2015, as the US economy continued its recovery, leveraged loans received another boost; the Fed began to raise interest rates. One of the attractions of investing in loans instead of junk bonds is that the interest rate paid to investors fluctuates in line with benchmark rates. As the Fed embarked on raising rates, loans became an attractive way to take advantage. But the combination of rampant investor demand and companies willing to take on more debt has led to a gradual deterioration in lending standards. For a third of all loans issued in 2018, leverage levels crept above six times, according to LCD, exceeding guidance put out by the Office of the Comptroller of the Currency in 2013, an independent bureau of the US Treasury. So-called financial maintenance covenants — things that would limit the amount of leverage a company could take on, or mandate thresholds for the amount of cash they needed on hand to pay interest on their loans — have close to disappeared. More than 80 per cent of the market is now

deemed “cov-lite”, according to LCD, meaning financial maintenance protections have been removed. But the loosening of lending standards did not stop there. Neiman Marcus, the department store, and its thriving Munich-based online retailer MyTheresa, which sells pricey garb from designers such as Versace and Balmain, is a case in point. Since Neiman Marcus bought MyTheresa in 2014, MyTheresa’s sales have nearly tripled. That’s why creditors to Neiman Marcus were aggrieved when its owners — private equity firm Ares Management and the Canada Pension Plan Investment Board — in September transferred MyTheresa to Neiman’s parent company. This potentially put the assets of MyTheresa out of reach of Neiman’s creditors just before the parent company announced it would need to restructure its nearly $5bn in debt. One of the attractions of investing in loans instead of high-yield bonds is precisely that the debt sits higher up the capital structure, being repaid first if problems arise and giving investors a claim on assets if things turn sour. Creditors were especially unimpressed by the decision taken by Ares and CPPIB to strip out such a valuable asset as MyTheresa, given concerns about Neiman’s solvency. “You have allowed, or have turned a blind eye to the sponsors’ not-sosubtle, sleight of hand machinations to lure creditors into a false negotiation meant only to perpetuate their self-serving enrichment scheme,” wrote Daniel Kamensky of Marble Ridge Capital in a letter to the parent company’s board just prior to filing a lawsuit in December. In a statement to the Financial Times, Neimen Marcus refutes Mr Kamensky’s claims. “This distribution was expressly permitted by the company’s credit documents . . . The company is not in default and has never been in default. There is no reason to believe we will be in default in the future. The company is not insolvent and the organisational change to MyTheresa did not change that.” Neiman Marcus is not alone in pursuing this tactic. Of the top 20 private equity-sponsored loan deals in 2018 approximately 80 per cent contained a loophole that could see loan investors’ claim on collateral diluted, according to Covenant Review, a credit research group. Documents underpinning a loan to ailing PetSmart, which sells food and other products for household animals, allowed its private equity backers, BC Partners, nearly “unlimited flexibility”, according to Ian Walker of Covenant Review. Not only did PetSmart move valuable assets out of reach of loan holders in June, it also paid a dividend to a holding company controlled by BC Partners. PetSmart is now embroiled in a lawsuit about the legality of the move with its lenders. BC Partners declined to comment. PetSmart did not respond to a request for comment.

ndia’s new central bank governor was terse when asked whether his institution was poised to transfer Rs400bn ($5.7bn) to Prime Minister Narendra Modi’s government to help New Delhi dress up its accounts before the financial year ends in March. When the Reserve Bank of India comes to a decision, Shaktikanta Das told a recent press conference, “you will come to know about it”. A month on from a sudden dramatic change at the helm of India’s central bank, the institution’s payouts to the government and discussion over how much it should hold in capital has become a touchstone in a broader debate over its economic role — and independence. “The issue is a litmus test. Is this an independent central bank or is it not?” said Saurabh Mukherjea, founder of Marcellus Investment Managers. For months, New Delhi had been pressing the RBI for more generous payouts from its profitable operations to the treasury — a friction point that led to the abrupt resignation of former governor Urjit Patel on December 10.

nymity. “This money is lying dead in central bank coffers.” But others warn that an erosion of the RBI’s independence, or even a widespread perception of this, could undermine India’s long-term macroeconomic stability. The proposals for a special capital transfer come as New Delhi is pressing the RBI to ease restrictions on new lending by the 11 weakest of India’s 21 state-controlled banks, limits that had been intended to tackle a slow-burning bad loan crisis. Mr Das has already yielded to a government nudge to ease bank loan restructuring terms for small businesses. “You can question whether these demands are reasonable or unreasonable, but he’s definitely playing more to the tune of the finance ministry,” Reuben Abraham, chief executive of the IDFC Institute think-tank, said of Mr Das. Like most central banks, the RBI earns profits on its bond holdings and on currency movements. Some of these profits are transferred each year to the government — as dividends — while some are retained by the bank as protection against contingencies. But Mr Modi’s administration believes RBI’s capital has risen to an

Shaktikanta Das, India’s new central bank governor remains tight lipped on whether RBI will transfer funds to Modi’s government © Reuters

His successor, Mr Das is now widely expected to deliver an interim dividend far higher than last year’s estimated $1.5bn — to help New Delhi meet this year’s deficit target, after a shortfall in revenues from the new goods and service tax. Yet that could be just a prelude to a more generous payout. An expert committee, comprising current and former members of the RBI and the finance ministry, is now deliberating whether the RBI should transfer what New Delhi sees as its “excess capital”, potentially delivering the government a one-time windfall worth tens of billions of dollars. Given the perceptions of a central bank increasingly under New Delhi’s diktat, a sudden large-scale capital transfer to the government could “raise alarm”, said Sasha Riser-Kositsky, an analyst at Eurasia Group. “If it were just this one isolated issue, investors might be more willing to give the government the benefit of the doubt,” he said. “But that context matters.” In New Delhi, government officials say taking the accumulated capital from years of profitable RBI operations is a legitimate means of strengthening public finances, which would facilitate more public spending without increasing the government’s market borrowings. “Why should we borrow?” said one official, who requested ano-

excessive level and could be more usefully deployed. In a recent article, Arvind Subramanian, the government’s former chief economic adviser, argued that of the RBI’s total capital of Rs10.5tn, between Rs5.3tn and Rs7.3tn ($75bn-$104bn) was “excess” and that some of it could be transferred to the treasury. Others contend the central bank’s balance sheet has been artificially inflated by the rupee’s persistent depreciation, which has boosted the value of the central bank’s estimated $400bn in foreign exchange holdings in local currency terms. Analysts say it is this mark-tomarket accounting for the RBI’s foreign currency holdings that accounts for what New Delhi deems the central bank’s “excess profits”. The value of these reserves could also decline if the rupee appreciates. Raghuram Rajan, Mr Patel’s predecessor as RBI governor, has also warned that the RBI’s strong capital position is key to its prized triple-A credit rating, which would allow it to borrow in a crisis. “Relying on the country rating would give us very high-cost financing,” he said. The debate over a special capital transfer has a particular resonance given its timing, just ahead of national elections. Critics fear the administration wants the RBI funds to enable generous spending promises.

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INSIGHT/INNOVATION There is no better time for economic reforms

OGHO OKITI Dr. Okiti is the president, Time Economics Ltd @ Dr_Okiti 081.7153.0058

istinguished guests, ladies and gentlemen, it is with great pleasure that I welcome you to the 2019 Nigeria Economic Outlook Conference (NEOC). The NEOC is designed as an agenda-setting conference that seeks to bring together the finest business and economic minds to discuss issues relating to Nigeria’s long-term growth, trade, investment and productivity. The NEOC, rather than take a narrow view of providing some sort of forecast or mere outlook for the year, is a platform for the building of a coalition of ideas towards Nigeria’s longterm prosperity. Therefore, it seeks to provide continuous understanding of Nigeria, Africa and global economic progress, and what these mean for growth and jobs in the country. This year’s theme “Reforms, Investments, Jobs” is both a recognition and urgent cry that the current legal and economic policy architecture is not likely to deliver prosperity

PROPHYLAXIS

AYULI JEMIDE Ayuli Jemide is Founder and Lead Partner of Detail Commercial Solicitors. An entrepreneur, public speaker and writer. Email: AJ@ayulijemide.org Twitter: @JemideAyuli

he drumbeats for the Nigerian elections seem to be sounding even louder and the frenzy increasing ahead of February 16th 2019. Any true and committed Nigerian should be talking about nothing else but elections at this time. We have seen the presidential debates come and go – the highpoint being the absence of the president and the consequential walk out by the presidential candidate of the People Democratic Party, Atiku Abubakar. Atiku’s reason for excusing himself after being at the venue ahead of 7pm was that the debate hinged on the issues that affect the country and if the man at the helm is not available then it would be a candidates’ debate instead of a presidential debate. We have seen former President Olusegun Obasanjo issue a statement questioning the independence of the Independent National Electoral Commission. In his words the ex-president said: ‘’The track record of the present INEC is fairly sordid and all men and women of goodwill and believers

for majority of Nigerians in the medium to long term. In this context, therefore, there is no better time to discuss reforms than now. Policy reforms are powerful for economic progress and prosperity. The sum of the world’s progress is the cumulative economic policies implemented. It’s the same in the advanced countries of the world, and China and India provides the most recent examples of the potency of sets of economic reforms towards lowering the rate of poverty, raising standard of living, and driving innovation. In Nigeria as well, there is evidence that economic reforms can drive progress and reduce economic distortion. The Pension Acts is a good example of this. Indeed, between 2003 and 2007, economic reforms that include the fiscal oil price rule, establishment of the independence of the Central Bank of Nigeria (CBN), and the improvements in the country’s debt management process through the Debt Management Office (DMO) have all contributed to Nigeria’s economic stability and budgetary planning and execution. However, as a whole, our reform efforts tend to be weak and half-baked, late, inconsistently implemented, and few and far in between. We must therefore master how to conduct reforms, and provide a continuous mechanism for doing so. Distinguished guests, ladies and gentlemen, this year and the next few years are very pivotal ones for Nigeria. There are three key socio economic data of 2018 that suggest they are. First, In June 2018, a Brookings report found that Nigeria has overtaken India to become the country with the largest population of people living in extreme poverty. The report claims that Nigeria has 87 million people in

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Policy reforms are powerful for economic progress and prosperity. The sum of the world’s progress is the cumulative economic policies implemented

extreme poverty category and that this number is increasing by 6 people every minute. The report concluded that the rise in Nigeria’s poverty is driven by three parameters – low economic growth, high inequality, and population growth. Second, in November, also in 2018, the National Bureau of Statistics (NBS) released the latest available report on Nigeria’s unemployment. The report showed two staggering conclusions. One is that unemployment increased from 18.8% in Q3 2017 to 23.1% in Q3 2018, up by 5 percentage points just in a year. The second is that the labour force expanded by about 15 million in three years between 2015 and 2018. For instance, the labour force increased from 75.9 million in Q3 2015 to 90.5 million in Q3 2018. Third, the 2018 Demographic Health Survey (DHS) by the United Nations Children Fund (UNICEF) and the Nigerian government report also show that the population of out of school

children in Nigeria has risen from 10.5 million to 13.2 million. As we deliberate here today, I leave you something to ponder on. While Nigeria sometimes spends up to N1.5 trillion Naira on fuel subsidies, it also spends about 6% of its annual budget on education. Now, in the start of this speech, I mentioned that the NEOC is a platform for the coalition of ideas for Nigeria’s economic prosperity. Let me add that this will not be possible without a conference of partnerships. NEOC 2019 is enjoying unprecedented collaboration. Our speakers are very generous with their time, despite that we have paid no fees, nor given honorarium to them. We also have a number of thought and media partners that have helped in very incredible ways to get us to this point. They include Proshare, BusinessDay, Peter Bauer and Asoko Insight. Finally, we have partners that have put down their resources. I would like to thank United Capital for their immense support, and a number of friends that do not want their names mentioned who have supported this conference. Your support reinforces our belief that ultimate success is built on strong and enduring partnerships. In conclusion, it is my hope that the conversations we will have here today will deepen the discussion of economic issues in Nigeria and serve as a call to action to kick start sustainable long-term economic growth in the country. •Note: This is a modified version of the opening remarks made at the Nigeria Economic Outlook Conference (NEOC) 2019 held last week Tuesday 15th January 2019 at the Eko Hotel and Suites, Lagos.

INEC guidelines, elections and questions in democracy must be prepared for the worse from INEC and their encouragers’’. The ExPresident also said ‘’Amina Zakari has become too controversial a figure to be able to give assurance of free, fair and credible elections’’. Amidst all the campaign rallies and debates INEC has released the Guidelines for the 2019 Elections dated 12th January 2019, which is available on the INEC website. Go to ‘’Resources’’ and on the drop down click ‘’Downloads’’. Some political parties are still not entirely satisfied with some of the provisions in the Guidelines. Like the ex-President, these coalition of parties are clearly calling out INEC and insisting that some of the provisions are designed to help the ruling party rig the elections, an allegation which the INEC Chairman denies vehemently. As the 2019 Election guidelines stand today (unless anything changes) the election process shall be that the Smart Card Reader is mandatory so any person intending to vote shall be verified to be the same person on the register of voters by use of the smart card reader. There are however several exceptions

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The budget for elections was 143 billion naira of which 27.5 billion was for technology .Given the budget for technology, voters wonder why we cannot simply have elections where the smart card readers are used for authentication without exception

to this general rule in the accreditation process and this is where it gets a bit sticky. The first exception is ‘’where the voters PVC is read by the smart card reader but his/ her fingerprint is not authenticated’’. In such a case the voter would be requested to thumbprint the appropriate box in the Register of Voters and provide his phone number in the appropriate box. Such a voter shall then be allowed to accredit and vote. The second exception is ‘’where the voters PVC is read but shows the details of another person, rather than the details of the cardholder as printed on the PVC’’. In such a case, the voter shall be allowed to confirm that the details of the voter in the Register of Voters correspond to those on the PVC. If the Polling officer is satisfied that the holder of the card is on the register of voters, then his phone number shall be recorded in the appropriate box and he shall proceed to accreditation and voting. It is important to note that according to the guidelines voters who fall into these two exceptions shall only be ‘’issued ballot papers after consultation with the Polling Agents’’ who are the party representatives at each polling unit. Another important issue to note is the question of what happens in the event of a sustained malfunction of the smart card reader. In such a case the INEC officers are supposed to request for a new smart card reader and suspend voting until a new card reader is made available. The INEC officers are supposed to inform voters of the situation. Where a replacement smart card reader is not available by 2pm the accreditation and voting shall continue the following day. One of the most important points to note from a voter standpoint is that the guidelines are clear that at the close of voting the votes will be collated and the scores entered in the

requisite forms. The results must be pasted at the polling unit once it has been collated. Voters are advised to wait behind to see the collation and pasting at your polling booth. Away from the process on election day, there are still many questions for INEC. The budget for elections was 143 billion naira of which 27.5 billion was for technology.Given the budget for technology, voters wonder why we cannot simply have elections where the smart card readers are used for authentication without exception. After all, INEC has had 4 years to plan for more credible elections? Should we not have extra card readers handy at all the polling units to plan for any failures? Someone I was having a conversation with recently put this very succinctly when he likened the use of a card reader to drawing cash from an ATM machine. He said the failure rates at ATM machines is very negligible and anyone whose card does not work simply cannot draw cash. There is also the issue of uncollected PVC’s. Can INEC publish the total number of uncollected PVC’s on a state by state basis? Should this not be updated weekly and published for people to see? There have also been complains about difficulty in collection of PVC’s. Some people have been told that their PVC’s are not available for collection despite having a collection slip. Lastly, the big elephant in the room remains the issue of Amina Zakari who is said to be related to the President and has been designated as collation officer for the 2019 elections. Would the call from an ex-President, Olusegun Obasanjo make the INEC chairman change his mind? As citizens it is exciting to watch debates, listen to election jingles, be a social media e-ratand more. However, when all is said and done, we must not shirk our civic responsibility to cast our votes. Go out there and use your PVC in a responsible manner.

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