BusinessDay 22 Jun 2020

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news you can trust I ** monDAY 22 june 2020 I vol. 19, no 589

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Global gas glut leaves Nigeria’s LNG unsold, threatens N80bn dividend N D

NGUS may 28 2025 578.69

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Tech startups risk higher interest rates on debt amid raging FX crisis ...Interswitch may delay IPO indefinitely

DIPO OLADEHINDE

FRANK ELEANYA

ividend accruable to cash-strapped Nigeria from Liquefied Natural Gas (LNG) is under threat, a development that might adversely affect its Economic Sustainability Plan to improve crumbling infrastructure and poor services in Africa’s largest economy.

In Nigeria, the natural gas sector is oriented towards the export market, which is determined by economic fundamentals as against a regulated domestic regime, with LNG being the major revenue earner for the country in the gas industry.

However, the global LNG Continues on page 31

igeria’s deepening foreign exchange crisis could see start-ups in the tech ecosystem that plan to Continues on page 31

Inside

Dangote Cement sustains 54,000 jobs in 4 African countries P. 30

L-R: Yinka Sanni, chief executive, Stanbic IBTC Holdings plc; Basil Omiyi, chairman, Stanbic IBTC Holdings plc, and Demola Sogunle, chief executive, Stanbic IBTC Bank plc, at the 8th annual general meeting of Stanbic IBTC Holdings plc.

Manufacturers suffer drop in profit as Covid-19 underpins P. 30 bleak outlook

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FG inaugurates National Savings Strategy workgroup SEGUN ADAMS

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n order to lift the Nigerian equity markets, galvanise new start-ups and expand existing projects, the Federal Government of Nigeria has inaugurated the National Savings Strategy (NSS) workgroup, emphasising that there should be deliberate provision of nairabased risk capital.

Speaking at the occasion of the inauguration in Abuja weekend, Zainab Ahmed, minister of finance, budget and national planning, stressed the urgent task of diversifying the economy and deepening of the capital market.

On the NSS initiative, she said: “The Capital Market Masterplan proposed the NSS as one of the key initiatives to drive capital formation and investment necessary to support entrepreneurs and enterprise development in the urgent task of diversifying the economy and deepening of the Capital Market.

“To lift the equity markets, galvanise new start-ups and expand existing projects, there should be deliberate provision of nairabased risk capital. In essence, nurturing, growing and channelling domestic savings to fund the creation of new enterprises will result in rapid economic growth, diversification of the economy, accelerated job creation and increased productivity and output of

the Nigerian economy,” she stated.

According to Ahmed, efforts are ongoing to review the Masterplan to align the assumptions and projections with current realities.

“This is indeed a very important step in redefining the road map for stakeholder participation in the Nigerian capital market.

“My expectation when the review is concluded is that we would have a strategic document that provides a clear pathway that would enable the Nigeria’s capital market achieve the goal to be Africa’s largest, deepest and most liquid capital market contributing not only to Nigeria’s socio-economic development but also serve as a global financial hub offering opportunities to other parts of Africa.”

Aside from commending Mary Uduk, acting director-general, Securities and Exchange Commission (SEC), and her team, chairman Capital Market Masterplan Implementation Committee (CAMMIC), as well as the members of CAMMIC chaired

by Olutola Mobolurin, members designate of the National Savings Strategy (NSS) Working Group, other stakeholders in the Nigerian financial sector, for their dedication and commitment to the implementation of the Nigerian Capital Market Masterplan so far, the Honourable Minister also highlighted the terms of reference of the working group.

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“Consequently, the terms of reference of the working group we are inaugurating today include: To study the NSS paper and advice the federal government on the feasibility of the proposals and/or with recommended changes; to advise on ways and means of mobilising and channelling corporate and individual savings to accelerate domestic capital formation to support entrepreneurs and enterprise development in the urgent task of diversifying the economy and the deepening of the capital market; to draft a National Working Paper that outlines a detailed roadmap on the implementation of the National Savings Scheme to be submitted for approval by the Federal Executive Council; and to engage all relevant stakeholders and carry out any relevant activity towards the actualisation of the mandate of the working group.

She also emphasised that the members of the working group have been carefully selected to ensure a rich combination of skill, experience and competence necessary to deliver on the task at hand. “I am, therefore, very confident in your abilities, individually and collectively, and charge you to go about the discharge of this national assignment with the spirit of patriotism, bringing to bear your professional pedigree and expertise towards achieving the desired results.”

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Commemorating ‘June 12’ without telling its true story is empty symbolism global Perspectives

OLU FASAN

I

n June 2018, President Buhari declared that “Democracy Day” would no longer be May 29, but June 12. This was to immortalise June 12, 1993 when the freest presidential election in Nigeria’s history was annulled by the then military dictator, General Ibrahim Babangida.

But the decision was a mere symbolic gesture, because ‘June 12’ lacks a true story behind it.

How many Nigerians really know anything about the annulment of the presidential election beyond the fact that it happened. How many people, apart from those directly involved in the annulment, know the behind-the scenes shenanigans that led to the momentous decision? How many Nigerians know the inside story of this epochal event called “June 12”?

Think of any significant commemorative event in any civilised country, the citizens are fully enlightened about the grand narratives of what they are commemorating. In fact, for any historic event that is deemed worth celebrating with a public holiday, there would be official inquiries and reports on it; there would be books and historical documents available on it. But nothing of substance has been done about the June 12 annulment to enrich Nigeria’s collective history.

Yet, the truth is that without an inquiry to expose the inside story of the annulment, e.g., why it really happened and what the roles different individuals played in it, declaring June 12 as Democracy Day is a meaningless symbolic gesture that simply creates an annual jamboree for the politicians and activists to get on the moral high horse and pontificate about democracy even though most of them were complicit in the chain

of events leading up to the annulment, and in the subsequent failure to reverse the annulment.

Unfortunately, the politicians have appropriated the June 12 commemoration as if it’s about them. But ‘June 12’ should not be about the politicians.

Indeed, while Chief MKO Abiola, the presumed winner of the annulled election, deserved recognition for paying the supreme price with his life, ‘June 12’ should not be about him. The truth is that the politicians knew or should have known what they were letting themselves in for when they opportunistically played along with the undemocratic antics of General Babangida, also known as Maradona or Machiavelli.

As JF Kennedy famously said: “Those who foolishly sought power by riding the back of the tiger ended up inside.”

Think of the events leading up to the June 12 presidential election. Before it was held, Babangida cancelled the results of the presidential primaries of the 23 political parties and banned all the presidential aspirants, including prominent people like Major-General Shehu Musa Yar’ Adua and Olu Falae, from contesting. Then, he disbanded all the 23 parties and created two, the National Republican Convention (NRC) and the Social Democratic Party (SDP). What’s more, his regime drafted the constitutions of the two parties and appointed administrators for them.

Now, which self-respecting politician would not see through this chicanery?

Which democratic politician would not balk at an election based on such utterly anti-democratic actions? The truth is that the June 12 election came with a warning: caveat emptor – buyer beware! But the self-interested and opportunistic politicians deliberately ignored the danger signs and decided to ride the back of the tiger!

Which is why ‘June 12’ should not be about the opportunistic and perfidious politicians. Rather it should be about ordinary Nigerians who voted in that election, and were deceived and betrayed by General Babangida. Once Babangida called the election, he entered into a contract with the Nigerian people; by annulling the election, he breached that contract!

In a statement issued on June 23, annulling the election, the Babangida

regime said: “In view of the spirit of litigation pending in various courts, the government is compelled to annul the election to protect our legal system and the judiciary from being ridiculed and politicised”. It said it wanted “to rescue the judiciary from intra-voyaging.” But who really believes that Babangida annulled the election to save the judiciary?

As the renowned jurist Akinola Aguda rightly said, the reasons given were “flippant and ridiculous to the extreme.”

Understandably, the annulment sent shock waves across the world. I was a magazine publisher in London during the June 12 saga, and was thus an active watcher of the events. The British government strongly condemned the annulment but came short of calling for its reversal. As Baroness Lynda Chalker, Britain’s Overseas Development Minister, told the House of Lords, “We have been very careful not to be prescriptive in our approach. We have not offered to devise or broker political solutions to Nigeria’s problems”, adding that “Nigeria must decide its own future.”

In July 1993, Gordon Wilson, then President of the UK chapter of the Nigerian-British Chamber of Commerce, undertook a 12-day visit to Nigeria, and met General Babangida. On his return to London, Wilson told members of the chamber: “I stressed to him the British Government’s disappointment over the annulled presidential election of June 12 and he (Babangida) said: ‘Well, yes, so would they. Very sad about it but we had special reasons at the last minute for taking the actions, which were imperative’. He would not be specific. I did not expect him to.” However, Wilson said that as Babangida ushered him to his car, he told him: “Sir, I believe this would be the last time that I should meet you in your position as Head of State”, and he said “Yes, Gord, you’re correct.”

Of course, General Babangida “stepped aside” on August 26, 1993.

He created a face-saving contraption called “Interim National Government” and named Chief Ernest Shonekan, then Chairman of the Transitional Council and Head of Government, as head of the interim government. But, with General Sani Abacha as Minister of Defence, the interim government was dead on arrival. On November 17, 1993,

‘

Yet, this is beyond individual ambitions, whether soldiers’ or politicians.

It is about the collective psyche of a nation. If “June 12” is to be immortalised and celebrated every year, it’s not enough simply to say the annulment happened

Abacha seized power from Shonekan and restored military rule.

With Abacha in charge and running a Gestapo-style regime, many of the political activists fled to London. But the activists were frustrated and deeply disappointed with the UK government for refusing to impose stringent sanctions, including oil embargo and trade sanctions, on Nigeria.

When I interviewed Baroness Chalker at the House of Lords in June 1995, she told me that imposing sanctions on Nigeria, apart from withdrawal of military assistance, would “harm the interests or the livelihoods of ordinary Nigerians”, adding: “In talking to Wole Soyinka the other day, he made it absolutely clear to me that we should go on helping the people of Nigeria.”

Of course, it was wrong to expect Britain to help Nigeria solve its self-inflicted problems. In 1995, General Oladipo Diya, Abacha’s deputy, said in an interview. “June 12 was a reality. Abiola actually won the election. But General Babangida should be held responsible”.

He continued. “Babangida didn’t consult anybody. I was the 8th or 9th in the hierarchy. Babangida won’t say he called us to discuss the annulment.” Then, he added: “If Babangida’s son had contested that election, he would have annulled it because he didn’t want to go.”

But if the Abacha regime agreed that Abiola actually won the election, as Diya said, why did they hand power to him but rather arrested and charged him with treason when he declared himself president? Of course, this was about power and just as the politicians acted without morality, Abacha felt no obligation to act morally.

Yet, this is beyond individual ambitions, whether soldiers’ or politicians.

It is about the collective psyche of a nation. If “June 12” is to be immortalised and celebrated every year, it’s not enough simply to say the annulment happened. The true story of why it happened and the roles that different individuals played in it should be exposed and documented for posterity.

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

COVID-19 & reopening for business – key considerations for the Board (1)

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ith the ease of lockdown in most countries across the world, many businesses are having to consider re-opening for business. For countries like Nigeria that are still dealing with containing the virus, the decision to re-open has to be balanced against the need to protect the health and safety of employees, clients and customers. The economic cost of lockdown and other restrictions has no doubt hit hard on individuals, businesses, communities and some have said this could cause further harm beyond the threat to health and life that COVID-19 presents.

Management and Boards will now have to make decisions about when, where, and how to reopen their companies. These will include the process of opening offices, stores, factories, and warehouses and planning for the resumption of business activities such as non-essential travel and customer/client meetings. Beyond the challenges of adapting to what the new norms of business may be—from workplaces and public transportation to consumer behaviour and the accelerated adoption of technology— companies will need to find a way to reconcile the protection of the physical health of individuals with the financial health of the Company and the broader economy.

The continued uncertainty that businesses

face may be paralyzing for some executives and Boards, not to mention employees. The lack of clear guidance from the government, the wide range of possible scenarios, and the magnitude of the risk make the decision to reopen business particularly challenging. Yet all business decisions are a balancing act of actions based on limited information and a range of risks. And, to help Boards think through these challenges, the National Association of Corporate Directors offers some guidance on what Directors, working with their senior management, should consider in taking the decision to reopen.

For many companies, the question about reopening is around when, rather than whether, to reopen. While principally driven by health concerns, the urgency around reopening will affect the analysis the Board and Management use to reach the final decision. Understanding that urgency and what needs to happen now as opposed to what could be delayed to a later date, are important considerations as Boards think about the path forward. Boards will want to revisit pre-COVID-19 strategic decisions and assumptions and consider whether current initiatives, such as digital transformation, should be accelerated to help ensure success in the COVID-19 world.

What are the financial implications of remaining closed or virtual only versus opening now, www.businessday.ng

versus opening in the next three months, versus opening later? Is the Company’s industry or business model such that the reopening costs are high and would create risk if the decision to reopen is reversed? For example, the airline industry, where airplanes will need to be made flight ready again, staffed, and deployed to begin flying. These activities require a significant financial investment upfront in order to reopen.

Another question the Board should ask is if reopening allows the Company to quickly resume revenue generation and strengthen financial position. Is there clear evidence that customers in the Company’s industry are ready to spend again and would reopening better allow the Company to meet this pent-up demand? How does the crisis impact corporate strategy going forward? Will reopening allow the Company resume critical functions and strategic initiatives that were stalled or slowed down because of the lockdown?

The Board should also consider the Company’s relationship with customers, suppliers, and other business partners such as joint ventures or portfolio companies as well as what key competitors are doing.

Equally critical is to gauge workforce sentiment. How well has Management communicated with employees during the lockdown?

The Board should encourage Management to

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Bisi Adeyemi

communicate the idea of reopening to the workforce and receive feedback from employees in this regard. Many employees would like to go back to the office given the challenges (mostly infrastructure deficiencies in a country like Nigeria) of working from home, just as many are concerned about their health and safety at the workplace and from commuting.

Note: The rest of this article continues in the online edition of Business Day @https:// businessdayonline.com/ Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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An empty seat for Koleade Adeniji Abayomi, SAN; OON ‘ May his soul rest Bashorun J.K Randle

K

ole and I shared a common love of books and I remain eternally grateful that he was an avid reader of all my books: “The Godfather Never Sleeps”, “God Does Not Live in Los Angeles Anymore...? “, “Who is Fooling Who?”, “The Natives Are Friendly?”, “The Duke and The Soul Princess” and my twenty other books. Sadly, Kole did not get round to signing off his Foreword to my new book: “MISCARRIAGE OF INJUSTICE” before he embarked on his fateful trip to London on board British Airways on 15th March 2020. For legal reasons we cannot speculate on the number of passengers who were infected with the Corona Virus on that flight and whether he was a victim.

The book is a factual account (no holds barred) of my thirty -four years at Peat, Marwick, Mitchell/KPMG and my afterlife with no gratuity and no pension but with my reputation and integrity intact. To God Almighty be

the glory.

Various chapters are devoted to the roles played by my erstwhile Nigerian partners/detractors. Not much is revealed about the tactics and manoeuvring of KPMG International or the opportunism of the defunct Arthur Andersen (of the Enron scandal) nor the predatory subterfuge by Akintola Williams /Deloitte and Touché – perhaps a case of partner poaching / defection.

However, I have dedicated chapters to: − Trespass on my land at Park View Estate, Ikoyi, Lagos by Ooni of Ife − Demolition of Chief J. K. Randle Memorial Hall, Onikan, Lagos − Demolition of Dr. J.K. Randle Swimming Pool, Onikan, Lagos − Threatened demolition of my residence at Victoria Island, Lagos − General Murtala Muhammed; General Olusegun Obasanjo and General T. Y. Danjuma − Unpaid fees for professional services by Union Bank of Nigeria Plc. − Shares/investment in Meridien Equity Bank of Nigeria / “swallowed”

by Access Bank Plc − Grant Advertising Nigeria Limited versus McCann-Ericson/ Roger Harris − Unpaid fees for professional services to Equator Exploration Nigeria Limited / Oando Plc − Sofgen Limited/ Alex Dembitz − Eko Hotels Limited Gold Medal Lectures − Transgression against me by Zenith Bank Plc (Receivership of Allied Energy/ CAMAC/ERIN) − IHS Plc/PricewaterhouseCoopers (PwC)/J.K. Randle Professional Services − Mutual Benefits Assurance Plc / Etsu Properties Limited − KPMG versus XKPMG (My Deposition) − Abacha Loot – from the begin-

ning to date − Countertrade – $1.5 billion abandoned in the Escrow Account since 1984 − Forensic Audit of Nigerian National Petroleum Corporation / Shell Production Development Company BONGA Project − Forensic Audit of Nigerian National Petroleum Corporation/Joint Venture Cash Calls. − Reserve Additional Bonus (Class Action against SHELL on behalf of Nigeria) − General Ibrahim Badamasi Babangida; Major-General Olaseinde Ishola-Williams; and Bashorun M. K.O. Abiola − Justice (Mrs) Olabisi Akinlade − Justice (Mrs) Bola OkikioluIghile − The amazing Justice (Mrs.) O.O. Goodluck of Abuja High Court (She is indeed the divinely appointed justice of good luck!!) − Nigeria’s External and Domestic Debts (1978 to date) − Debt Forgiveness Fiasco and The Paris Club Refund Scandal − Nigeria’s $100 Billion Abandoned Projects − Chief (Dr.) Kole Abayomi --the ultimate “Omo Awo” and “ Omoluabi Pataki” − The Symbolism and Witticism of Chief (Dr.) Kole Abayomi − Robyn Hinson-Jones (ConsulGeneral, Embassy of The United States of America) and the involvement of her spouse in KPMG Nigeria − Forensic Audit of Nigerian Airspace Management Authority (NAMA) − Forensic Audit of Nigerian Ports Authority (NPA) − Michael Rake (Mike the Rake) of KPMG − Jeffrey Archer (author of “Twist in the Tale”) and the plagiarism of J. K. Randle’s book/Major-General James

in peace. His seat on earth may be empty but another one awaits him in heaven. As for those he left behind, we must remain connected because we still exist

J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services.

Email: jkrandleintuk@gmail.com

Why luxury brands should do online retail at this time

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ne cannot overemphasise the importance of going digital for the luxury sector at this time with a drop in sales, physical retail stores have not been opened for more than four months as the pandemic has forced people to stay at home. And so, the quickest and easiest way for luxury brands to reach out to customers is online.

First, let’s look at the place of the internet in the luxury sector. The luxury sector has not fully embraced the internet. They are unsure of what future the internet holds for their businesses. However, in the same way, when printing was introduced in the 15th Century, the internet has created a shift in marketing. Before now, the argument by industry analysts has been that the internet was not created for luxury as luxury ceases to be evident on it. They also believe the internet is not for luxury niche companies but largescale or mass-market brands.

These explain why the luxury industry has been cautious in its relationship with the world wide web since it was launched. One could say the industry was conservative in its approach to the use of the internet. Also, the industry was fearful it will dilute its brand essence. This was a form of culture shock for the luxury industry that typically thinks long term and rarely acts under pressure. Luxury brands

are more concerned about the sustainability of their brand reputation than anything else which has been the staying power behind their pricing.

However, with the fast-changing times, luxury brand managers have realised they need to tap into the positive sides of the internet. They realised that there is a revolution going on with the worldwide web. Hence some luxury brands are tapping into some of the positive values of the internet.

The current reality of COVID-19 pandemic means the luxury industry has no choice but to fully embrace online retail. The internet is useful for many reasons. First, it is useful for brand awareness. The Internet can boost awareness of a brand without increasing brand penetration. What this means is that luxury brands need not worry that their brand value would be watered down or that their brand will become an all-comers affair.

The Internet is great for their brand presence.

It increases their brand’s visibility and places it in the subconsciousness of the consumer.

Simply put, it increases your popularity without making it easy for everyone to buy your product. It means only those who can afford the brand can buy it.

Therefore, when a luxury brand combines the brand-building potential of the internet with its physical retail store, what it translates www.businessday.ng

LUXE THOUGHTS

to is a great brand asset.

Second, luxury brands must know that online presence or having an e-store often doesn’t translate to direct sales. The foremost use of the internet is for communication. It is a great place to communicate important information about your brand. It will make the general public, even though they are not your main target, to be aware of your brand values. The Internet is a good avenue to announce new things about your brand i.e. new product, store opening, new advert campaign and more. More importantly, the internet may not translate to direct sales, but it influences purchasing decisions as consumers search for information about a brand first online. The reviews and any information available online will influence their decision to buy the product or not.

Third, the internet is a brilliant way for luxury brands to increase their service levels.

Service here refers to concierge, hotlines, help desk to get information about how they need to use a product they just purchased or if there is a need for return or replacement.

The internet allows a luxury brand to engage directly with the consumers by providing information on which store currently stocks the product the client needs. It also enables immediate feedback from clients.

Furthermore, as the origin of the word

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Oluleye’s (late Minister of Finance of Nigeria) court action There are painful lessons to be learnt: We have to separate the superfluous from the essence. Somehow, we have to find solace in the midst of our crisis and grief, and kneel before the Almighty to thank Him for giving us Chief (Dr.) Koleade Adeniji Abayomi SAN to remind us that every life has a spiritual dimension that must be addressed and fulfilled.

His rewards on earth were his charming wife, his highly accomplished children/grandchildren, loyal friends and the national honour “OON” (Order of The Niger). As he lay on his death (hospital) bed, his last words to his darling wife on Wednesday 1st April 2020, evening, were as follows: “I love you. Thanks for your care.

God will bless you and our children.

Nothing will happen to you. I am ready.

I am at peace. You know I have too many ailments. It is time to rest from them all.

Keep the family going. You will be alright.”

May his soul rest in peace. His seat on earth may be empty but another one awaits him in heaven. As for those he left behind, we must remain connected because we still exist.

“Love, hope, fear, faith – these make humanity. These are its sign and note and character.” – Robert Browning “In the end, we will not remember the words of our enemies, but the silence of our friends.” – Martin Luther King

FUNKE OSAE-BROWN

internet shows, “inter” and “net”, it is a way communities and networks grow and interact online. Therefore, what a luxury brand needs are not a community of many people who like its page on Facebook, Instagram or Twitter, but to build a loyal community of connoisseurs and get them up the commitment ladder by organising local selective events and physical meetings. And so, a luxury brand must always remember that its survival is in its differentiation from any other kind of business.

Finally, luxury brands should leverage the ability of the internet to communicate images. Since the luxury industry is about dreams, and dreams are made of images, the internet is just the perfect platform to sell these dreams through images.

Funke is the publisher of The Luxury Reporter magazine.

Funkeadetutu@gmail.com

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Nigerian capital market: Pandemic, performance and palliative

Timi Olubiyi

A

cross the world, the impact of the novel coronavirus is still severe despite the ease of lockdown for economic reasons. The uncertainty continues to heighten and no economy is spared from the fall-out from the COVID-19 outbreak.

Many African capital markets are bearish, Namibia, South Africa, Mauritius, Egypt, Morocco, Kenya, Ghana, Malawi, and a few others. In Nigeria, the first quarter of the year 2020 in terms of performance closed in the red with a negative return of (20.65 percent), as against a negative return of (1.24 percent) in the first quarter of 2019. The market capitalisation of the Nigerian Stock Exchange (NSE), which represents the market value of all listed companies, lost about N2 trillion in the first quarter of 2020.

However, surprisingly the performance of the stock market in April 2020 was positive. The market performed with a gain of 8.08 percent to close the month of April at 23,021.01 points, from an opening level of 21,300.47 points at the beginning of the month. In terms of market capitalisation for the period, the value was up by N896 billion as at April 30, 2020, from an opening value of N11.101 trillion on April 1, 2020, to close at N11.997 trillion. In May 2020, the market’s month-on-month performance closed at 9.76 percent as against +8.08 percent gain recorded in April 2020. The performance hinged higher due to investors bargain hunting even though most of the trades

were executed remotely.

This surprising feat in Nigeria particularly during the COVID-19 pandemic could be attributed to smart investors bargain hunting and the release of good end-of-theyear financial results by some of the listed companies along with improved dividend declarations in recent time.

During this period some of the companies that released their financials are MTN Nigeria Communications Plc, Vitafoam Nigeria Plc, Dangote Cement Plc, Julius Berger Nigeria Plc, Nigerian Breweries Plc, Zenith Bank Plc, Transcorp Hotels Plc, United Bank for Africa Plc, Transnational Corporation of Nigeria Plc, Guaranty Trust Bank Plc, Stanbic IBTC Holdings Plc, Access Bank Plc, Fidelity Bank Plc, Sterling Bank Plc, Seplat Petroleum Development Company Plc, 11 Plc, Dangote Sugar Plc, BUA cement Plc Total Plc, Airtel Plc Nestle Nigeria Plc, First Bank, Okomu Oil Plc, and BOC Gases Plc. Nonetheless, the increasing number in the incidences of coronavirus (COVID-19) in Nigeria has been a huge concern, it could signal weak economic data, decline productivity, and falling consumption rate, which might even affect the overall outputs and performance of the economy eventually. This projection is largely due to the global negative impact of coronavirus (COVID-19) pandemic on the economy, the weak inflow of foreign portfolio investments, high uncertainty in the economy, and owing to intense selling pressure occasioned by investors’ apathy in the capital market.

Already the COVID-19 outbreak has forced a slow or halt in the physical operations of some businesses and that could heighten in the coming months.

The Nigerian Stock Exchange has been operational through remote trading with technology playing a significant role in the operations. Likewise, companies have also adopted effective usage of technology to work remotely and mitigate the risk of total business shut down. With the cur-

rent realities, the next normal way to carry on business activities effectively in the meantime is through remote communications. Technology has the potential to still improve business efficiency and also improve transactions for businesses to perform, while this COVID-19 disruption persists. The big question is the internet data bundle cheap to sustain this efficiency? Agreeably, this is a different argument which is out of the context of this article.

Nonetheless, despite the promotion of technology adoption to ease business transactions in the meantime, the outbreak of the novel coronavirus (COVID-19) so far in Nigeria has been a bad indicator of economic performance and the capital market as a whole. The level at which the coronavirus spreads exponentially can result in damage to consumption, purchasing power and services, and even investment decisions among investors.

Consequently, if the spread is not curtailed within a reasonable period, it might harm the inflow of foreign direct investments, imports and export trades, manufacturing, tourism, health, hospitality, services, travels and more than likely it might disrupt or crash the economic forecasts and revenue estimates of many businesses particularly SMEs in the country. This pandemic might eventually impact negatively on the performance of the Nigerian Stock Exchange (NSE) and that of many of the listed companies, given the high uncertainty around production, services, and demands if the COVID-19 continues to spread.

Rather than see the market perpetually closing on negative notes, adequate government policy response is recommended to immediately cushion the effect of the pandemic. Though it is still too early to measure the full economic impact of COVID-19 on the capital market in Nigeria, however, the early signs do not look good. Regulators in the capital market, as a matter of urgency need to propose to the government, direct policy responses to cushion the effect of the COVID-19. This is impera-

‘

Rather than see the market perpetually closing on negative notes, adequate government policy response is recommended to immediately cushion the effect of the pandemic.

Though it is still too early to measure the full economic impact of COVID-19 on the capital market in Nigeria, however, the early signs do not look good

tive because most of the SMEs and companies listed have experienced supply chain disruption and depressing investment climate. Therefore, government intervention or palliative is required for their sustainability.

As part of an effort to reduce the negative impact of COVID-19 in the country, especially the disruption of regular activities and economic instability the capital market and the market operators can be assisted by the government. The suspension of the proposed July 1, 2020, increase in electricity tariffs across the country by the electricity distribution companies (Discos) is recommended to ease the negative impact of COVID-19.

That said, the policy responses by the Nigerian government can further be reviewed to accommodate fiscal palliative measures and economic stimulatory measures targeted at the capital market to ameliorate the impact on the economy especially to save businesses, professionals and capital market operators. Measures such as tax deferrals, tax holidays from States, and Federal Inland Revenue Services (FIRS), reduction in interest rates on all Central Bank of Nigeria (CBN). intervention facilities and relaxation of the stringent requirements is advised. Further to this, the approval of extension on moratorium on Federal Government funded loans, through Bank of Industry (BOI), Bank of Agriculture (BOA), and Nigeria ExportImport Bank (NEXIM Bank). Nigeria Communication Commission can be considered.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Olubiyi is an Entrepreneurship and Small Business Management expert. He is a prolific investment coach, Chartered Member of the Chartered Institute for Securities & Investment (CISI) and a financial literacy specialist. He can be reached on the twitter handle @drtimiolubiyi and via email: drtimiolubiyi@gmail.com,for any questions, reactions, and comments.

Poka-Yoke – fool proofing your brand for excellence

I

n Management, Poka-Yoke is the act of error proofing a process through great design to prevent error from its use. Most mistakes in the workplace, most errors in production or customer dissatisfaction shouldn’t have happened in the first place, if there was Poka-Yoke in their design and delivery process. Take for example; most elevators are equipped with sensors that prevent the doors from closing if there is something or somebody in the way. They also beep and refuse to run if they exceed the weight limit. This prevents accidents. It’s cheaper to deliver prevention than cure- or to appraise than cure.

Growing up, in my household, we all loved to go to school but disliked going to church at that time (maybe because of the type of church my parents attended). So, my parents imposed a rule, if you didn’t go to church on a Sunday, all of your school uniforms would be soaked the morning after. This meant that you wouldn’t be going to school that Monday. This prevented us from staying away from church. This saved my curious mind from atheism. That’s Poka-Yoke!

A spell check function is on your word editor software and now also on your phone. These days, your Gmail won’t send right away after you click “send” if the body of your email says, “find attached” but there is no attachment of a document. Rather it prompts you. Both the spell check and that Gmail feature are put there to prevent you from sounding dumb and unpro-

fessional too. Poka-Yoke actually means “fool proofing” in Japanese. The question is, how are you helping your team or even customers from being foolish around your brand?

We all know a travel mug or children’s water bottles that the user is required to press and hold a button in order to drink from them.

The producer put this mechanism there as it prevents the contents from leaking or spilling out when the user is not drinking from the container. All these are inbuilt functions in the system to prevent failure or misuse. What’s yours?

There are three quality costs (prevention cost, appraisal cost and failure cost). Their degree of cost to an organisation is also in that rising order. So, it is wise to prevent and appraise than to rework or lose credibility if your product, people or brand lose credibility in the eyes of the customer. In other words, if you don’t have time or money to do it well, then you’d need more money to apologise and even do it again. The smart alternative to rework is to ensure it doesn’t even fail the first time by making it failure proof. It is less costly. But, yes, all forms of quality management. But that of poor quality is costlier.

Phil Crosby popularised the concept of the cost of poor quality, advocated prevention over inspection and “zero defects,” and defined quality as conformance to specification (project produces what it was created to produce).

Defining requirements or ensuring continuous www.businessday.ng

flow is good but not strictly part of error proofing. Coined in the 1960s in Japan, Poka-Yoke means “Fool- Proofing”. It is a tool used to avoid inadvertent errors. The main premise of the tool is to ensure that proper conditions are placed for every process step such that there is no room for the occurrence of defects while executing. In other cases, it serves as a detector and it helps to eliminate the defects as early as possible.

Poka-Yoke is a vital tool in lean and excellent manufacturing since it helps the people and work processes work in the right fashion for the very first time. It helps to eliminate defects out of the processes and the products.

Furthermore, it improves the quality and reliability of outputs. It is worthy to note that it does mitigate both the mechanical as well as human errors from the work processes and products.

To deliver on the culture of Poka-Yoke, consider these concepts: Benchmarking, mentorship and evaluation: One important part of operational excellence is your habit of being open-minded to feedback, new ideas and willingness to learn from the best. Never let a crisis go to waste.

Find out why it happened and get to the bottom of it by incrementally asking why. Also, what you are going through, some brands have passed through and are better. Find out how by benchmarking against them. Benchmark against the best. Most innovation will come

https://www.facebook.com/businessdayng

EIZU UWAOMA outside of your organisation. Benchmarking yourself to a competitor, or to popular businesses outside of your sector, helps you gain insights that allow you to evolve your strategy.

Comparing and benchmarking your efforts to the best helps you identify efficient practices, understand your level and possible weaknesses of your current position.

Quality tracking by the 7 quality tools: How do you gauge how well you are doing? What’s your “performeter”? Essentially, it is pertinent to track performance and quality in business; this will keep business operations and performance levels afloat. With humans, it’s easier through MPRs. But how about products and production processes?

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Uwaoma is a start-up, corporate restructuring and strategy consultant. contacteizu@gmail.com

@Businessdayng

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BUSINESS DAY

Monday 22 June 2020

EDITORIAL Frank Aigbogun

Replicating successes in telecom, others in key sectors

editor Patrick Atuanya

…FG needs to change philosophy, imbibe propelling principles

Publisher/Editor-in-chief

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

A

mong successful and celebrated economies of the world, a number of factors are noticeable in the success stories of these economies in terms of economic size and growth, purchasing power parity and human development index (HDI) among other critical measures.

These factors revolve around a clear economic philosophy, political will to act, competent leadership, acknowledging the role of the private sector and smart regulation.

Unfortunately, Nigeria seems to be starved of these foundational elements and it is amply reflected in miserable economic indicators such as sluggish GDP growth, high inflation rate, poor HDI, bleeding stock market performance, shallow capital market, investment-starved sectors, high unemployment rate and high poverty rate.

However, the success stories of some Nigerian industries like telecommunications, pensions and cement show that all hopes are not lost for the country. The onus lies with the Nigerian authorities to replicate these successes in other

key sectors of the economy.

The Nigeria telecommunication industry, for example, had a clear mandate and avoided half-hearted deregulations. Unlike the oil and power sectors where the government is both an operator and a regulator at the same time, the telecoms industry had the private sector as operators and the Nigerian Communications Commission (NCC) as the regulatory authority. No wonder the sector has attracted Foreign Direct Investments (FDI) like MTN, Airtel, etc.

The sub-sector, after exiting recession in Q1 2018, has recorded remarkable growth in GDP since then.

In 2019, for instance, the sub-sector grew at 11.41 percent, outperforming the information and communication sector growth of 11.08 percent and GDP growth of 2.27 percent.

It is the same story for the Nigeria pension industry. The industry is currently the second largest in Africa with assets under management to the tune of N10.22 trillion as at December 31, 2019, showing an increase of 18.28 percent from N8.64 trillion at the end of December 2018. South Africa, however, leads the chart.

Dave Uduanu, CEO, Sigma Pensions Limited, explained at BusinessDay’s digital dialogues last week

that the tailwinds of that landmark achievement for Nigeria were honesty of purpose and shielding from political influence and interference in critical decision makings. He added that regulators and rule setters should be the smartest people in the room because, essentially, they write the rules and superintend over them.

The industry has now become a major source of domestic borrowing for the federal government. As at December 2019, for instance, the government had borrowed about 71 percent from the fund in form of bonds and treasury bills.

The cement industry isn’t left out in the success stories. Statistics shows that Nigeria has the largest demand for cement in sub-Saharan Africa and about 95 percent of the inputs for cement production are sourced locally.

Nigeria, at some point, imported cement but the story changed when industry players began to look inwards, utilising Nigeria’s gas, limestone, coal and other input materials for manufacturing cement. The sector has also attracted FDI like Lafarge playing actively in the industry.

We are of the view that these successes can be replicated in other sectors of the economy. But that,

essentially, demands strong political will, good regulations, deregulations and a clear mandate from the government to the private sector.

It is pertinent to note that, since the 2016 recession, most sectors of the economy have struggled to grow and very few have triggered the snailpaced GDP growth of barely 2 percent recorded so far.

Without equivocation, we believe that the COVID-19 pandemic provides Nigeria a chance to reimagine and reawaken its strategies for growth. The country is starved of good policies. The economy is still largely government-driven despite its negligible contribution to GDP. Regulations that stifle sectoral operation and performance are still prevalent.

We advise that the federal government must change its philosophy, look inwards and imbibe principles that will propel the country comprehensively and progressively, else the national economy will keep playing catch-up to global development.

For us, the importance of a competent leader cannot be over-emphasised, hence, we call for a more credible democratic process. We support the view that leaders must be selected based on their competencies.

Anything otherwise is balderdash.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

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• Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

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BUSINESS DAY

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Monday 22 June 2020

BUSINESS DAY

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BUSINESS DAY

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Monday 22 June 2020

BUSINESS DAY

In Association With

The genius of Amazon

ARace Balkan andbetrayal social change

The pandemic has shown that Amazon is essential—but vulnerable

The power of protest and the legacy of George Floyd

Jeff Bezos’s vision of a world shopping online is coming true faster than ever. But the job of running Amazon hasn’t got any easier

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N THE SUMMER of 1995 Jeff Bezos was a skinny obsessive working in a basement alongside his wife, packing paperbacks into boxes.

Today, 25 years on, he is perhaps the 21st century’s most important tycoon: a muscle-ripped divorcé who finances space missions and newspapers for fun, and who receives adulation from Warren Buffett and abuse from Donald Trump. Amazon, his firm, is no longer just a bookseller but a digital conglomerate worth $1.3trn that consumers love, politicians love to hate, and investors and rivals have learned never to bet against.

Now the pandemic has fuelled a digital surge that shows how important Amazon is to ordinary life in America and Europe, because of its crucial role in e-commerce, logistics and cloud computing (see article). In response to the crisis, Mr Bezos has put aside his sidehustles and returned to day-to-day management. Superficially it could not be a better time, but the world’s fourth-most-valuable firm faces problems: a fraying social contract, financial bloating and re-energised competition.

The digital surge began with online “pantry-loading” as consumers bulk-ordered toilet rolls and pasta. Amazon’s first-quarter sales rose by 26% year on year.

When stimulus cheques arrived in mid-April Americans let rip on a broader range of goods. Two rivals, eBay and Costco, say online activity accelerated in May. There has been a scramble to meet demand, with Mr Bezos doing daily inventory checks once again. Amazon has hired 175,000 staff, equipped its people with 34m gloves, and leased 12 new cargo aircraft, bringing its fleet to 82. Undergirding the e-commerce surge is an infrastructure of cloud computing and payments systems. Amazon owns a chunk of that, too, through AWS, its cloud arm, which saw first-quarter sales rise by 33%.

One question is whether the digital surge will subside. Shops are reopening, even if customers have to pay at tills shielded by Perspex.

Yet the signs are that some of the

boom will last, because it has involved not just the same people doing more of the same. A new cohort has taken to shopping online. In America “silver” customers in their 60s have set up digital-payment accounts. Many physical retailers have suffered fatal damage. Dozens have defaulted or are on the brink, including J Crew and Neiman Marcus. In the past year the shares of warehousing firms, which thrive on e-commerce, have outperformed those of shopping-mall landlords by 48 percentage points.

All this might appear to fit the script Mr Bezos has written over the years in his letters to shareholders, which are now pored over by investors as meticulously as those of Mr Buffett. He argues that Amazon is in a perpetual virtuous circle in which it spends money to win market share and expands into adjacent industries. From books it leapt to e-commerce, then opened its cloud and logistics arms to third-party retailers, making them vast new businesses in their own right. Customers are kept loyal by perks such as Prime, a subscription service, and Alexa, a voice-assistant. By this account, the new digital surge confirms Amazon’s inexorable rise. That is the view on Wall Street, where Amazon’s shares reached an all-time high on June 17th.

Yet from his ranch in west Texas,

Mr Bezos has to wrestle with those tricky problems. Start with the fraying social contract. Some common criticisms of Amazon are simply misguided. Unlike, say, Google in search, it is not a monopoly. Last year Amazon had a 40% share of American e-commerce and 6% of all retail sales. There is little evidence that it kills jobs. Studies of the “Amazon effect” suggest that new warehouse and delivery jobs offset the decline in shop assistants, and the firm’s minimum hourly wage of $15 in America is above the median for the retail trade.

But Amazon’s strategy does imply huge creative disruption in the jobs market even as the economy reels. In addition, viral outbreaks at its warehouses have reignited fears about working conditions: 13 American state attorneys-general have voiced concern. And Amazon’s role as a digital jack-of-alltrades creates conflicts of interest.

Does its platform, for example, treat third-party sellers on equal terms with its own products? Congress and the EU are investigating this. And how comfortable should other firms be about giving their sensitive data to AWS given that it is part of a larger conglomerate which competes with them?

Amazon’s second problem is bloating. As Mr Bezos has expanded into industry after industry, his

firm has gone from being assetlight to having a balance-sheet heavier than a Soviet tractor factory. Today it has $104bn of plant, including leased assets, not far off the $119bn of its old-economy rival, Walmart. As a result, returns excluding AWS are puny and the pandemic is squeezing margins in e-commerce further. Mr Bezos says the firm can become more than the sum of its parts by harvesting data and selling ads and subscriptions.

So far investors have taken this on trust. But the weak e-commerce margins make it harder for Amazon to spin off AWS. This would get regulators off its back and liberate AWS, but would deprive Amazon of the money-machine that funds everything else.

Mr Bezos’s last worry is competition. He has long said that he watches customers, not competitors, but he must have noticed how his rivals have been energised by the pandemic. Digital sales at Walmart, Target and Costco probably doubled or more in April, year on year. Independent digital firms are thriving. If you create a stockmarket clone of Amazon lookalikes, including Shopify, Netflix and UPS, it has outperformed Amazon this year. In much of the world regional competitors rule, not Amazon; among them are MercadoLibre in Latin America, Jio in India and Shopee in South-East Asia. China is dominated by Alibaba, JD.com and brash new contenders like Pinduoduo.

Imitation is the sincerest form of capitalism The world’s most admired business is thus left having to solve several puzzles. If Amazon raises wages to placate politicians in a populist era, it will lose its lowcost edge. If it spins off AWS to please regulators, the rump will be financially fragile. And if it raises prices to satisfy shareholders its new competitors will win market share. Twenty-five years on, Mr Bezos’s vision of a world that shops, watches and reads online is coming true faster than ever. But the job of running Amazon has become no easier, even if it no longer involves packing boxes.

Don’t waste a rich chance for social reform

G

EORGE FLOYD was not famous. He was killed not in the capital of the United States, but on a street corner in its 46th-largest city. Yet in death he has suddenly become the keystone of a movement that has seized all of America. Still more remarkably, he has inspired protests abroad, from Brazil to Indonesia, and France to Australia. His legacy is the rich promise of social reform.

It is too precious to waste.

The focus is rightly on America (see article). The protests there, in big cities and tiny towns far from the coasts, may be the most widespread in the country’s long history of marching. After an outburst of rage following Mr Floyd’s death, the demonstrations have,

as we hoped last week, been overwhelmingly peaceful. They have drawn in ordinary Americans of all races. That has confounded those who, like President Donald Trump, thought they could be exploited to forge an electoral strategy based on the threat of anarchy. What began as a protest against police violence against African-Americans has led to an examination of racism in all its forms. wThe marches outside America are harder to define (see article).

In Mexico and South Africa the target is mainly police violence.

In Brazil, where three-quarters of the 6,220 people killed by police in 2018 were black, race is a factor too. Australians are talking about the treatment of aboriginals. Some Europeans, used to condemning America over race, are realising that they have a problem closer to home. Angela Merkel has asked Continues on page 17

Monday 22 June 2020

BUSINESS DAY

17

In Association With

Politics and the pandemic

Britain has the wrong government for the covid crisis It has played a bad hand badly

T

HERE WAS a lot going on in Britain in early March. London staged an EnglandWales rugby match on March 7th, which the prime minister attended along with a crowd of 81,000; on March 11th Liverpool played Atletico Madrid, in front of a crowd of 52,000 fans, including 3,000 from Spain; 252,000 punters went to the Cheltenham Festival, one of the country’s poshest steeplechase meetings, which ended on March 13th.

As Britons were getting together to amuse themselves and infect each other, Europe was shutting down. Borders were closing, public gatherings being banned. Italy went into full lockdown on March 9th, Denmark on March 11th, Spain on March 14th and France on March 17th.

Britain followed only on March 23rd.

Putting in place sweeping restrictions on everyday life was a difficult decision, fraught with uncertainty. Yet the delay is just one example of the government’s tardiness. Britain has been slow to increase testing, identify a contact-tracing app, stop visits to care homes, ban big public events, provide its health workers with personal protective equipment (PPE), and require people to wear face coverings on public transport.

As this wave of the disease ebbs, Britons are wondering how they came to have the highest overall death rate of any country in the rich world, and why leaving lockdown is proving so difficult.

The evidence so far suggests that the British government played a bad hand badly. The country was always going to struggle. The virus took off in London, an international hub.

Britain has a high proportion of ethnic-minority people, who are especially vulnerable to the disease. And Britons are somewhat overweight, which exacerbates the impact of the infection.

Britain has got some things right. Its researchers have been in the forefront of the race to find drugs and create vaccines against the disease. On June 16th a trial by Oxford University, the first to identify a life-saving medicine, showed that a cheap steroid can reduce mortality among the sickest patients by a third. A swift reorganisation of the National Health Service

put paid to fears that it would be overwhelmed. But the government has wasted the most precious commodity in a crisis: time. In a federal system, like America’s, the central government’s failings can be mitigated by state and local authorities.

In a centralised system, they cannot.

Hindsight is a fine thing, and offers a clarity that is absent in the blizzard of events. Yet it is now plain that Britain’s scientists initially argued for the wrong approach: accepting that the disease would spread through the population, while protecting the vulnerable and the health service.

Neil Ferguson, an epidemiologist at Imperial College London, estimates that had Britain locked down a week earlier, at least half of the 50,000-or-so lives that have been lost would have been saved. This is more Britons than have died in any event since the second world war.

In retrospect, the government should have probed the scientists’ advice more deeply.

Some of it was questionable. The received wisdom that people would tire of social distancing, and that shutting down early would mean loosening early too, was just a hunch. Even after the evidence changed, and it became clear the country was heading for catastrophe, the government was slow to impose the sort of lockdown seen across Europe.

Yet you do not need hindsight to identify other mistakes. Delays in fixing PPE supply chains, promoting face coverings and increasing testing capacity were

clearly errors at the time. Despite the urging of the country’s scientists and the World Health Organisation, by the middle of April Britain was still carrying out just 12,000 tests a day, compared with 44,000 in Italy and 51,000 in Germany. Because most testing was reserved for hospitals, care homes struggled to find out which of their residents and staff were infected. Competition for PPE was fierce, so they also struggled to get the kit they needed to protect their workers.

The government is not solely to blame. The pandemic made new demands on the system.

Some crucial bits of machinery did not work. The publicly owned company which supplies the health service with PPE failed. Public Health England, which was responsible for testing and tracing, failed. But there was a failure of leadership, too.

When systems break it is the government’s job to mend them; when the evidence argues for drastic measures ministers need to take them.

Britain is still living with the consequences. The spread of the virus and the devastation it has wrought have made leaving lockdown difficult, as shown by the halting return of pupils to school. Only five year-groups have gone back, many parents are choosing to keep their children at home, and the government has abandoned an earlier ambition to get more in. The “world-beating” contact-tracing system still lacks its app, which is not due to arrive until winter.

Slow progress at suppressing the virus will have grave economic

consequences, too.

These shortcomings have claimed many victims. Among them is public trust. Britain went into this crisis with a powerful sense of unity and goodwill towards the government. Now Britons think worse of their government’s performance during the crisis than do the citizens of any of 22 countries polled by YouGov, aside from Mexico. That reflects the government’s mistakes and its hypocrisy, after the prime minister’s main adviser broke its own rules about when to travel—and kept his job. While the world waits for a vaccine this lack of trust will make managing the disease a lot harder.

The painful conclusion is that Britain has the wrong sort of government for a pandemic—and, in Boris Johnson, the wrong sort of prime minister. Elected in December with the slogan of “Get Brexit Done”, he did not pay covid-19 enough attention. Ministers were chosen on ideological grounds; talented candidates with the wrong views were left out in the cold. Mr Johnson got the top job because he is a brilliant campaigner and a charismatic entertainer with whom the Conservative Party fell in love.

Beating the coronavirus calls for attention to detail, consistency and implementation, but they are not his forte.

The pandemic has many lessons for the government, which the inevitable public inquiry will surely clarify. Here is one for voters: when choosing a person or party to vote for, do not underestimate the importance of ordinary, decent competence.

The power of protest and the legacy of George Floyd Continued from page 16

Germans to take the chance to “sweep outside their own front doors”. Several countries are agonising over public monuments (see leader).

It is hard to know why the spark caught today and not before. Nobody marched in Paris in 2014 after Eric Garner was filmed being choked to death by officers on Staten Island—then again, hardly anyone marched in New York, either. Perhaps the sheer ubiquity of social media means that enough people have this time been confronted with the evidence of their own eyes.

The pandemic has surely played a part, by cooping people up and creating a shared experience, even as it has nonetheless singled out racial minorities for infection and hardship (see Lexington).

The scale of the protests has something to do with Mr Trump, too. When Mr Garner was killed, America had a president who could bring together the nation at moments of racial tension, and a Justice Department that baby-sat recalcitrant police departments.

Today they have a man who sets out to sow division.

But most fundamentally, and most happily, the protest reflects a rising rejection of racism itself. The share of Americans who see racial discrimination in their country as a big problem has risen from 51% in January 2015 to 76% now. A YouGov poll last week found that 52% of Britons think British society is fairly or very racist, a big rise from similar polls in the past. In 2018, 77% of the French thought France needed to fight racism, up from 59% in 2002. Pew Research found last year that in most countries healthy majorities welcome racial diversity.

America is both a country and an idea. When the two do not match, non-Americans notice more than when an injustice is perpetrated in, say, Mexico or Russia. And wrapped up in that idea of America is a conviction that progress is possible.

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Monday 22 June 2020

BUSINESS DAY

COMPANIES&MARKETS EQUITIES

Local investors take charge as foreign investors remain cautious amid FX scarcity OLUFIKAYO OWOEYE

R

enewed positive sentiments in the global space dominated markets in the month of May as investors’ optimism for a speedy economic recovery continues to support appetite for risky assets. This is also coming on the heels of ease in lockdown and gradual reopening of economic activities.

In Nigeria, domestic investors took the driving seat at the nation’s equities market in the month of May as they took positions in cheap and dividend-paying bellwether stocks.

On the other hand, foreign investors who are unable to move their funds from the country due to FX scarcity rolled their money back into the equities market.

In the month of May, total value of transactions executed by domestic Investors out performed transactions executed by Foreign Investors by 40percent.

According to data released by the Nigeria Stock Exchange, total transac-

tions executed between May and April revealed that total domestic transactions increas e d 11.15percent from N75.49billion in April to N83.91 billion in May 2020. However, total foreign transactions decreased by 33.73percent from N53.18 billion in April to N35.24 billion in April Total transactions at the nation’s bourse reduced 7.40percent to N119.5billion,

the lowest year-to-date, from N128.67billion recorded in April. The performance in May when compared to the performance in May 2019 decreased 46.12percent Domestic retail investors marginally outperformed Institutional Investors by 0.56percent. A comparison of domestic transactions in May and April 2020 revealed that retail transactions increased 4.38percent from

N40.42 billion in April 2020 to N42.19 billion in May 2020.

Similarly, the institutional composition of the domestic market increased by 18.96percent from N35.07 billion in April 2020 to N41.72 billion in May 2020.

This is due to excess liquidity from OMO maturities that found their way into the equities market due to the new CBN policy banning in-

dividuals and non-banking corporates from the high yield OMO market.

“The recent rally is not fundamentally driven, what we have seen is more from investments that cannot exit the Nigerian market due to the backlog of FX demands, also maturing debt instruments found their way into the equity market rather than being rolled over at very low-interest rates, Ayo

L-R: Yomi Awoyemi; Abiodun Osiyemi, president, Rotary Club of Lagos; Olajide Razack, Representing Lagos State Government, and Bridget Uko, secretary, Rotary Club of Lagos, at the Rotary Club of Lagos, District 9110 Donated Personal Protective Equipment worth N2.5millon to Lagos State Government to fight the COVID 19 pandemic.

Ogunmola, a Lagos-based stockbroker said.

According to him, last month saw a positive comeback in major markets across the globe due to interventions from Monetary authorities across the globe.

“We saw that reflected in Nigeria across the board.

What was fueling the rise in asset prices is Central Banks’ liquidity. The amount of liquidity pumped into the system by the U.S Federal Reserve between March and April has gotten to about $3 trillion. They pumped in about $3 trillion into buying a range of assets such as US Government bonds, U.Sbacked mortgage securities, and even investment-grade corporate bonds,” he said.

“So, the liquidity helped assets to climb upwards.

Whatever obtains within the U.S market usually tends to happen across the globe.

The U.S makes up about 40percent of the global stock market capitalisation. So, the U.S direction tends to sway the global market either upwards or downwards.

Therefore, because the U.S market has been bullish, the Nigerian market was also bullish.” he added.

Old Mutual partners LASG to drive virtual Royal Electronics deepens advocacy learning across schools in Lagos state for usage of facemasks in Lagos TECHNOLOGY

MODESTUS ANAESORONYE

F

ollowing the introduction of virtual learning by the Lagos State Ministry of Education in response to the shutdown of schools due to COVID-19 pandemic, Old Mutual has announced comprehensive material and financial support for the initiative to fast track the adoption of virtual learning especially amongst children from vulnerable communities across the state.

The support comes at an appropriate time when the global pandemic has accelerated the need to adopt virtual learning to enable students stay on track with their education.

The firm, which is the Nigerian subsidiary of the panAfrican insurance firm and global financial services provider, Old Mutual Limited, says is committed to partnering with the state across the education ecosystem through digital and some traditional means of education, which include support for Math on the Ministry’s digital platform ‘Roducate’ to providing radio sets for more traditional forms of engagement.

In addition, the firm will be

launching a financial education series for teachers across Lagos state public schools to boost their capacity to impart financial literacy for students and to help them build financial security for themselves.

The leading insurer revealed this partnership when members of its Executive Management Team, including the managing director, Old Mutual Nigeria Life Assurance Company Limited, Olusegun Omosehin; the managing Director, Old Mutual General Insurance Company Nigeria Limited, Olalekan Oyinlade; executive head, Marketing, Old Mutual Nigeria, Alero Ladipo, met with Lagos State’s Commissioner for Education, Folashade Adefisayo at the Ministry’s Secretariat in Lagos.

In her remark, Adefisayo said; “We have adopted virtual classes including leveraging mass media platforms like radio and television as well as popular digital platforms to ensure that school children even in the remote areas learn while schools are shut.

“We appreciate the ingenious support from Old Mutual Nigeria to sustain the government activities around education in the state. These supports mean a lot because we are very

excited that people, organisations and groups are now supporting the government to drive virtual learning and push simple devices to as many of our students as possible.

“With this singular act by Old Mutual, a child is going to learn, grow, and will never forget Old Mutual and those who made his or her education a reality,” Adefisayo said.

Also commenting on the support, Segun Omosehin, managing director, Old Mutual Nigeria Life Assurance Company Limited said; “For us, it is a fulfillment of one of the values we hold very dear at Old Mutual. As an institution, there are five pillars of responsibilities; one of which is the responsibility to our people and the community where we operate. This step is in alignment with these principles that are very dear to us. We are happy to partner with the Lagos State Government, particularly in the quest to drive virtual learning among school children.

“The Lagos State Government has been very proactive in providing education, and as an organisation, we understand that the children have a chance at a better future when provided with requisite and global standard learnings at a very early age”.

www.businessday.ng

…distributes facemasks to communities in Lagos State IFEOMA OKEKE

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oyal Electronics Group has introduced the Royal Mask-Up Lagos, a corporate social responsibility program developed to advocate for the continued wearing of facemasks in public spaces as the fight against COVID19 continues.

Speaking during the kick-off of the Royal Mask-Up Lagos, Fab Uzor – Executive Director, Corporate Services – SIMS Nigeria Limited acknowledged that there is a spike of new cases of corona virus and deaths recorded in Nigeria, adding that the Presidential Task Force on COVID-19 is already complaining that they are running out of bed spaces because guidelines are not been adhered to.

He said: “This is part of our Corporate Social Responsibility, (CSR). This is going to be a continuous programme.

In the past we had also supported some orphanages, we have reached out to the less privileged in the communities.

We do this every quarter and having figured that this is what is strategic for the community

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at this time, we want to play our part. This is why we are trying to see how we can also support the government in reaching out to people and curbing the menace of COVID-19.

Also speaking at the event, Rajesh Raja – Head of Sales Operations - SIMS Nigeria Limited said he was worried that after the lockdown eased, Lagosians began to gather together again and the crowd was getting really much and people were no longer wearing the facemask.

Raja said it is with this knowledge that Royal Electronics decided to take this up as a CSR project to distribute the facemasks, adding that with the distribution of masks, people will understand the importance for their safety and the safety of their families and the community as a whole.

Kshitis Kumar, National Sales Manager (Retail) - SIMS Nigeria Limited, said with this CSR project, Royal Electronics is not focused on any particular community but on making people aware of the importance of putting on their facemasks in various communities.

“We make sure that every@Businessdayng

one is aware. In all our digital centres, the moment customers come in, we take great precautions. Customers need products but need to buy such products in a very conducive and safe atmosphere.

“In spite of all the challenges, we make sure people are safe. In our digital centres, we make sure you have the same atmosphere you have at home.

Most people are depressed now, so we are telling them that we are fighting this together.

We are spreading awareness,” Kumar assured.

Mercy Eke, the Brand Ambassador, Royal Electronics commended the company for making this awareness a reality, urging people to always put on their facemasks.

Eke stressed that the responsibility lies with everyone.

“If I get the virus, my gate keeper can get it, my housekeeper can get it. If we adhere to the guidelines of wearing our face masks and washing our hands regularly, we can come out of this menace together. So that is why we are here to help people who can’t afford the face mask to get it.

Monday 22 June 2020

BUSINESS DAY

19

INTERVIEW Nobody knows when Covid 19 will be over - Egberongbe DR EGBERONGBE MUBIN is a Senior Registrar and Associate Fellow of the Faculty of Radiology of the West African College of Surgeons. He is a member of the Nigerian Society of Interventional Radiology, and Radiology Society of North America. He also holds a diploma in Leadership and Management in Health from the University of Washington, USA. Presently working for the Lagos University Teaching Hospital (LUTH) Idi Araba, he shares his views on the Covid 19 pandemic with TELIAT SULE; Excepts:

W

hat is your view on this pandemic; its similarities and differences with previously known viruses such as Ebola, SARS, MERS, etc?

The novel coronavirus pandemic is a one-of-the-rare extraordinary worldwide health events that have tested the limits of medical science in the 21st century. The closest similitude is the Spanish Influenza pandemic of 1918-1920 in which an estimated 50-100 million people died worldwide.

In fact, it is a respiratory disease just like influenza and can spread in asymptomatic people in the same way. Coronaviruses are a large family of enveloped RNA viruses that mostly infect birds and mammals. SARS and MERS viruses which have caused smaller epidemics of 2003 and 2008 are also coronaviruses. As long mankind exists, sporadic infectious disease outbreaks will keep occurring as viruses and bacteria are essential components of the biological ecosystem. It is up to us as humans to explore the boundaries of science and tech to protect ourselves and livelihoods as well.

How has Nigeria fared so far in the handling covid 19 pandemics?

Nigeria hasn’t fared badly to be honest, but there are things we did either late or did not do well or have not yet done at all. For a country with a weak health system, and even weaker social support system for its citizens, it was always going to be a big challenge to manage an epidemic of this scale. Despite the fact we are by far the largest population on the continent, the north African nations and South Africa have more cases. Our mortality rate amongst the infected also hovers around 2.5-3% which also average globally. Some European nations with advanced health systems have mortalities as high as 10% for Spain, 13 % Italy and 15% for the UK. Among nations, we are not faring badly.

Are there things Nigeria ought to have done better in the management of this pandemic? What are they and why do you think those measures would have made the difference?

There are several things we could have done better. Closing the borders was about 3-4 weeks later than should have been. International travel is the major backbone of any pandemic. Curtailing travel should be a major component of any national response. Also, the level of awareness of the populace was grossly inadequate. Mass media campaigns and sensitization using social media and local com-

cially and it will not be fair to point accusing fingers at anyone without evidence. A lab made virus can also be identified by virologists but we should be concentrating efforts on curtailing the spread; we can do thorough investigations later.

Dr Egberongbe Mubin, Lagos University Teaching Hospital (LUTH)

munity influencers such as clerics and traditional leaders would have been useful. Lockdown was not effective as the populace did not fully appreciate the enormity of the disease. So, sacrificing their livelihoods for a disease they don’t understand was doubtful. Medically speaking, our greatest blunder was the slow pace in testing. You can’t pick the virus except through testing the people. What makes Covid19 very contagious is the ability to be spread by a person who is asymptomatic. This means he is clinically stable with no complaints yet he has the virus and spreads it to his contacts. Unlike Ebola which is though quite deadly, killing one in four patients but usually spread by mostly sick patients. It is easy for people to avoid a person already sick and showing symptoms but Covid 19 can spread among healthy individuals which means you can’t rely on symptoms to pick patients.

It would be too late. Aggressive testing was the sure way to capture as many would-be carriers as possible. This is an area we are still very much behind. World Health Organization sent a clear message to all countries in mid-March: test, test, and test. The more tests that are conducted, the easier it becomes to track the spread of the virus and reduce transmission.

For effective comparison, Ghana has done over 250,000 tests while we are at about 71,000 tests.

South Africa has done 920,000 while the US has over 21 million tests as at June 7, 2020. Lastly, aside the federal government, many state governments need to step up the game. A pandemic is not the avenue to play politics, soothe egos, embezzle monies, or favour any part of the country. As we can see Covid 19 does not care if you www.businessday.ng

are black, Caucasian, rich, poor or famous. Reports of mysterious deaths in the north should be very worrisome. Though we are yet to get official confirmation, initial evidences point towards Covid19 as a contributory factor. If this is the case then we are grossly underreporting the cases we have in Nigeria. We may have six to ten times the official figures in reality.

Based on the figures on positive cases, active cases, discharged and deaths from Covid 19, when do you think the curve will flatten?

It is difficult for anyone to say when the curve will flatten or when it will be over. We can say we have brought this under control. We may experience surges and periods of lull in cases but we don’t yet know a lot about this virus. What is clear is that if we keep doing the right things, and commit all resources needed to this fight we will overcome this. China, South Korea, Germany and Taiwan are good examples of the nations in which the spread has been managed significantly.

There are rumours making the round that the Covid 19 was made in a lab. What is your view on this claim?

As scientists we don’t entertain rumours. We all have to realize that this pandemic was inevitable.

Ebola, SARS and MERS were all forewarnings. The extent we interact with nature as humans have reached unprecedented levels.

People have pets of various kinds and eat various things. There have been plagues, pandemics and epidemics at various times in history.

In any case, all the major economic powers have also suffered finan-

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What can you say about Nigeria’s preparedness for addressing virus of this nature?

Ebola served as a good forewarning for Nigeria. It was after Ebola that the federal government established the Nigeria Centre for Disease Control (NCDC) we have today. Lagos also strengthened IDH in Yaba after Ebola. However, we are very much behind in preparedness for this pandemic. Well trained and skilled manpower is the main backbone of any strong health system. Unfortunately, we have started to export doctors and other health workers like crude oil. This is largely due to poor remuneration and career growth. Underfunding of the health sector has been sustained by every government in this country like it is a deliberate government policy.

We hope this experience will raise the consciousness of government at all levels to protect its citizens.

We need more standard hospitals, extensive community health services, an effective health insurance, happy and satisfied healthcare workers.

What medical gadgets are usually found in a Covid 19 treatment centre? What is the relevance of each gadget?

Covid 19 patient may be asymptomatic, have mild to moderate symptoms or severely sick. A typical Covid 19 centre has different sections for patients depending on the level of symptoms. Essentially all health workers involved are adequately protected with personal protective equipment.

This includes facemasks(N95), faceshields, hazmat suits, boots and gloves. These are very important. Oxygen tanks and ventilators are two critical tools to sustain patients with respiratory distress.

Other necessary gadgets include diagnostic machines like mobile X-ray, vital signs monitor, a decent ICU unit and a standard nearby laboratory. Patients should also feel at home in a conducive atmosphere. Reports of patients escaping from centres and protests are quite appalling.

So many drugs have made the news headlines as efficacious in treating Covid 19.

What can you say about all these drugs?

Drug research is a very delicate topic that we must understand well. Yes, various drugs have been touted for Covid 19 but early research results are not encouraging.

Chloroquine and zinc combination appeared promising because it @Businessdayng

stopped viral replication in laboratory testing. However, clinical testing with patients was less fruitful.

Other drugs like remdesevir and Aluvia have also been tried. However, we should be careful of claims of cure without thorough testing.

Any drug should have established and proven pharmacokinetics and pharmacodynamics of disease control. We first establish a theory in which a drug works. Then, lab tests are conducted. The next stage is to do animal testing in which you induce the disease in a mammal and observe the response.

Then, human testing can follow.

Randomised, multicentre, double blinded control trials are the gold standard for testing any drug. Until then claims are claims. The only established fact yet is that high immunity levels benefit the patient.

So, immune boosters like vitamins and supplements will be useful to support treatment. Natural immune boosting fruits, vegetables and herbs may also help. Vaccines also been tested but we have to wait for another 8-15 months for any proven to be approved.

Why is it that orthodox medicine practitioners and herbal medicine experts are always at logger head? Most times, when the latter announce herbal cure for a disease, the former seem to always counter them. Why are the two professions not complementary in Nigeria as it is countries like India and China?

I do not agree that herbal medicine and orthodox medicine are antagonistic per say. All drugs have botanical and biochemical roots. The problem lies in that we are yet to develop our local herbs to meet international standards and testing. We have to carefully research and isolate active ingredients and chemicals with specific goals. Research is key. The herbal medicine should be reproducible anywhere and not personalized and must be ready to be assessed empirically. Medicine should be medicine anywhere and anytime because it is science. It has nothing to do with voodoo or occult powers. Our pharmacological and pharmacognosy specialists have a lot of work to do.

When do you think this pandemic will be over?

Covid 19 may be well controlled and curtailed in another 6-12 months with minimal threat to everyone just like SARS of 2003 but nobody knows when it will be over.

Or it may become endemic like the flu virus have become with us since 1920. Only God knows all. If any lesson should be learned from this pandemic, it is that we humans still have a lot to learn.

20

Monday 22 June 2020

BUSINESS DAY

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

Stocks

Currencies

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Rates + Bonds

Economics

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Week Ahead

Watchlist

These 3 oil companies are yet to recover from 2016 economic recession

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After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

5 consecutive years as the oil company recorded a whopping 83.63% decline in PAT from NGN14.79B in 2016 to NGN2.42B in 2019. The decline can be traced to the consistent growth in cost and slightly weaker revenue. The oil firm recorded a cost to income ratio of 59% in 2016 as compared to a cost to income ratio of 72% in 2019, as revenue marginally dropped by 0.02%.

Conoil despite recording a 64.38%

growth in revenue between 2016 and 2019, has seen a 30% drop in its profit after tax within the same period. In 2018 the company recorded a cost to income ratio of 85%, between 2016 and 2019 the company has seen cost of sales grow by 77.82% compared to revenue which grew by 64%.

MRS after posting a record profit of NGN1.46B in 2016, MRS has recorded accumulated losses of NGN2.3B in the last two years. In

2017 profit dropped by 5.23% to NGN1.38B but in 2018 and 2019 the company recorded losses of – NGN1.2B and –NGN1.1B respectively. The company saw a revenue drop of 41% between 2016 and 2019 which weighed heavily on the company’s profitability. The company recorded company tax credit of almost NGN3B between 2017 and 2019 but it wasn’t enough to prevent the company from making a loss in 2018 and 2019.

Nigerian could suffer its 7th stagflation since 1960 later this year BALA AUGIE AND IFEANYI JOHN

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igeria is expected to enter a technical stagflation at some point in Q3 this year after the recently passed 2020 national budget shows that economic growth is expected to contract by 4.4 percent and inflation rate is expected to rise to 14.13 percent this year. This will be the 7th time since 1960 that the Nigerian economic downturn will be accompanied by rising inflation in the country.

A country is defined to enter a technical stagflation when it suffers persistent high inflation combined with high unemployment and stagnant demand for 2 consecutive economic quarters. Typically, an economic recession is accompanied by a decline in inflation not an increase.

Whenever a recession occurs during a period of increase in inflation, it is referred to as a stagflation.

The Nigerian economy has previ-

SHORT TAKES N312m

BALA AUGIE AND IFEANYI JOHN ince the economic recession about 4 years ago, 8 of the biggest oil and gas companies listed on the Nigerian Stock Exchange have seen their aggregate profits bounce back from a loss position of N39.1 billion in 2016 to an accumulated profit position of N110.1 billion in 2019. But while things have been rosy for some, others have felt the thorns of higher inflation, exchange rate devaluation, weaker oil prices, and slow economic growth.

Among the 8 companies, only 5 have seen their profitability soar beyond 2016 levels, and about three oil companies are yet to recover to their 2016 levels 3 years into Nigeria’s economic recovery.

The three oil companies yet to see their profits bounce back to 2016 levels are Total, Conoil, and MRS. With the economy expected to tumble into another recession later in 2020, analysts worry that things may quickly become uglier for these companies if management does not figure out a way to turn things around speedily.

Since 2016 Total Nigeria has seen its profit after tax declined for three

P.E

ously entered a technical recession 6 times in the last 60 years and could be on its way to another later this year. The first economic downturn recorded was in 1966 when the economy contracted by 4.2 percent and inflation rose to 9.6 percent from 4.1 percent the previous year. The economy entered a depression and continued to contract between 1966 and 1968 as the country struggled to contain its first civil war.

The second economic downturn period was in 1975 when an oil price crash triggered an economic contraction of 5.2 percent and caused inflation to rise from 12.6 percent to 33.9 percent according to data obtained from the world bank. The economy contracted again in 1978 by 5.7 percent while inflation rose from 15 percent the previous year to 21.7 percent in 1978.

In 1981, the economy again entered another depression phase which continued to 1984. In 1981, the economy contracted by 13.1 percent while inflation jumped to 20.8 percent from 9.9 percent.

Again between 1993 and 1995, the economy contracted. At the start of the contraction in 1993, the economic growth declined to -2.03 percent while inflation moved from 44.5 percent to 57.1 percent in 1993.

The sixth stagflation was recorded in 2016 when the economy contracted by 1.61 percent while inflation moved from 9 percent to 15.67 percent.

In the last eight months, inflation has risen every month consecutively, reaching 12.34 percent while the government is now forecasting inflation could rise to 14.13 percent in 2020 while the economy will contract by 4.42 percent. This signals Nigeria could easily be on its way to its 2Nd stagflation in just 4 years, even though numerous analysts are still erroneously calling it just an economic recession.

Nigeria’s economy took a downturn after an oil price crash triggered by a global health pandemic and an oil supply glut caused oil prices to fall rapidly, hurting the commodity dependent country.

The fall in crude oil prices and citywide lockdowns caused the International Monetary Fund (IMF) to forecast that Nigeria will see her economy contract by 3.4 percent in 2020 a sharp reversal from the 2.9 percent growth IMF had earlier forecasted will occur in 2020 in its October 2019 report.

However, the Nigerian government is taking a more pessimistic stance, forecasting that the economy could contract by as much as 4.42 percent in its revised 2020 budget.

In a press statement by the Federal Minister of Finance, Zainab Ahmed earlier in May, the Minister said that the Federal Government expects that without a fiscal stimulus, the economy will contract by 4.42 percent in its best case scenario and contract by 8.9 percent in its worst case scenario. The Minister also stated that she was hopeful that with a fiscal stimulus package in place, the Nigerian economy may contract by only 0.59 percent in 2020 but went ahead to budget assuming a 4.42 contraction in the economy in 2020.

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early.

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Monday 22 June 2020

BUSINESS DAY

21

Live @ The Exchanges Market Statistics as at Friday 19 June, 2020

Top Gainers/Losers as at Friday 19 June, 2020 LOSERS

GAINERS

Company

Company

Opening

Closing

Change

BUACEMENT

N41.4

N44

2.6

DANGCEM

Opening

Closing

Change

N139

N130

-9

ASI (Points) DEALS (Numbers)

TOTAL

N96.1

N97.5

1.4

OKOMUOIL

N67

N64

-3

MTNN

N115.5

N116.1

0.6

GUINNESS

N17.5

N17

-0.5

VOLUME (Numbers)

WAPCO

N11

N11.2

0.2

UACN

N7.2

N7

-0.2

VALUE (N billion)

FBNH

N5.1

N5.3

0.2

DANGSUGAR

N14.5

N14.3

-0.2

MARKET CAP (N Trn)

24,826.75 3,695.00 174,676,912.00 2.010

Global market indicators FTSE 100 Index 6,292.60GBP +68.53+1.10%

Nikkei 225 22,478.79JPY +123.33+0.55%

S&P 500 Index 3,129.70USD +14.36+0.46%

Deutsche Boerse AG German Stock Index DAX 12,330.76EUR +49.23+0.40%

Generic 1st ‘DM’ Future 26,084.00USD +185.00+0.71%

Shanghai Stock Exchange Composite Index 2,967.63CNY +28.32+0.96%

12.9512

Large cap stocks drive market to negative close T

NSE records positive growth in market turnover

...down by 1.41 percent week-on-week ...Investors book N186bn loss Stories by Iheanyi Nwachukwu

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igeria stock m a r k e t closed the last trading day of the week on a negative note fuelled by increased sell pressure on stocks like Dangote Cement Plc, Okomu Oil Palm Plc, Guinness Nigeria Plc, Dangote Sugar Refinery Plc and UACN Plc. Analysts had anticipated Friday’s bearish close amidst weak investors’ sentiment.

With this development the index posted negative returns in four of the five trading sessions in this week ended June 19.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased by -0.43 percent. In the review trading week, stock market dipped by -1.41percent; while month-to-date (MtD), it has decreased by -1.75 percent. The market’s negative return year-to-

date (YtD) stood higher at 7.51percent.

The NSE ASI decreased to 24,826.75 points while the value of listed stocks decreased to N12.951trillion as against week open high of 25,182.67 points and N13.137 trillion respectively. Investors booked about N186billion loss.

Dangote Cement Plc recorded the highest de-

cline on Friday after its share decreased from N139 to N130, losing N9 or 6.47percent. In 3,695 deals, investors exchanged 174,676,912 units valued at N2.010billion.

“The market was largely dominated by the bears during the week, as a number of mid/large cap stocks closed the week lower”, said equity research ana-

lysts at Lagos-based Vetiva Securities.

With the consistent declines recorded in the review trading week, the analysts anticipate a rebound in the new week “on the back of cheap valuations of a number of fundamentally sound stocks, in the absence of any external shock that can again weaken investors’ confidence”.

he Nigerian Stock Exchange (NSE) recorded 11 percent increase on the average daily turnover as at last Wednesday June 17, 2020 when compared to the same period in 2019 recording N3.93billion and N3.52 billion respectively.

Significant growth has also been recorded in the Premium Board category with a 28.6percent increase in volume traded up from 50.04 million in 2019 to 64.39 million in 2020.

The Nigerian Stock Exchange (NSE) opened strong in 2020, becoming the best performing equities in the world by mid-January with gains of 10.4percent year-todate (YtD) and recording one of its best January returns at 7.5percent.

However, the momentum slowed as the COVID-19 pandemic spread across the world between February and March, which led to unprecedented panic in global financial markets due to economic uncertainty.

Despite the volatility in the market, NSE has displayed remarkable resilience amidst the pandemic, with increased investors’ confidence as reflected in the performance of the various asset classes NSE provides.

On the equities side, t h e A l l S h a re I n d e x i s outperforming comparable A f r i ca n E xc ha ng e s a n d

stood at -7.16 percent YtD as at June 18, 2020, while capitalisation in the fixed income market has risen by 13.5percent to N14.66trillion from N12.92trillion as at the end of 2019 as a result of increased listing activity from the Federal Government and Nigerian corporates.

Some notable listings in the private sector include the Dangote N100 billion bond; FBNQuest Merchant N5 billion bond; the Primero BRT Secur itisation SP V Plc’s N16.5 billion bond; the Flour Mills of Nigeria’s N7.5 billion and N12.5 billion bonds ; Golden Guinea B re w e r i e s Pl c ’s P r i vat e Placement amounting to N1.2 billion. O n the government side, the FGN Savings Bonds valued at N206.307 million, 5.131 per cent and N78.672 million of 4.131 per cent on April 3, 2020, were listed, as well as the Federal Government Bonds of N55 billion, N65 billion and N40 billion.

NSE continues to reap the benefits of its investments in business innovation and digitization made over the years. Since the activation of its Business Continuity Plan on 23 March 2020, NSE has sustained remote working and trading with no downtimes. Dealing Member Firms have been equipped to trade leveraging FIX Protocol and Virtual Private Networks provided by The Exchange.

result in any change to the current business strategy for any of the assets nor will it affect the way in which the Seplat Group commercially operates. Therefore, the operatorship of the asset remains with Seplat under the Joint Operating Agreement (JOA), as the transfer to an affiliate of Seplat under the terms of the JOA is permitted.

Rationale for the transfer of assets The transfer of OMLs 4, 38 and 41 out of Seplat Plc into Seplat West results in seven (7) wholly owned subsidiaries - Newton Energy Limited; Seplat Petroleum Development Company UK Limited;

Seplat East Onshore Limited; Seplat East Swamp Company Limited; Seplat Gas Company Limited; Eland Oil and Gas Limited and Seplat West Limited, with no operating oil and gas assets directly held in the Holding Company.

The new structure of the Seplat Group is consistent with Seplat’s efforts to simplify its structure and designed towards segregating the businesses of the Group in a more efficient manner thereby reducing risk, cost and complexity. This is also expected to result in a simplified management and reporting framework for the Seplat Group.

Seplat Petroleum transfers OMLs 4, 38 and 41 to Seplat West Limited Iheanyi Nwachukwu

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eplat Petroleum Development Company Plc, a leading Nigerian indigenous oil and gas company dual listed on the Nigerian Stock Exchange and London Stock Exchange has announced the completion of transfer of the business activities and assets of OMLs 4, 38 and 41 from the Holding Company to its wholly owned Subsidiary Seplat West Limited.

The outcome of the transfer will not, in anyway, result in loss of tax revenue to the Government or an extinguish-

ment of liabilities, Seplat Petroleum Development Company Plc said in a statement at the Nigerian Stock Exchange (NSE) signed by its Company Secretary/Chief Governance Compliance Officer, Edith Onwuchekwa.

Similarly, the company noted that the transfer of the business activities and assets of OMLs 4, 38 and 41 will not diminish shareholder value in (and returns from) Seplat as a listed company, Following regulatory and partner approvals, the transfer is effective January 1, 2020. This Intra-Group transfer has been planned for some time and will not www.businessday.ng

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Monday 22 June 2020

BUSINESS DAY

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How to create sustainable differentiation in a competitive market The Solid Wealth Messenger

Grace Agada

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ifferentiation is the ability to create a recognizable difference that makes a brand more attractive to consumers than its competition. It is a unique element that makes a business more valuable in the marketplace than all the other options available to consumers. There are many ways a brand can differentiate itself. But regardless of how a brand chooses to differentiate, all differentiation boils down to two things. First is differentiation that can be linked to a product. And second is differentiation that can be linked to services. Product differentiation is the weakest type of differentiation. And given time and chance, all product-related differentiation will fail.

They will fail because they are short-lived, perishable, and can be replicated, and copied. Research shows that even the most sophisticated new product feature can be replicated within three to six months. Product differentiation is thus unsustainable and can easily lead to commoditization and here is why. Anyone can replicate a product given the right resources and information. And because it takes a number of people to create a product useful information can leak from any source. The only kind of differentiation that will stand the test of time is service differentiation. Service differentiation is the most sustainable type of differentiation because it is built around a person or group of people. Human beings are the most difficult thing to replicate.

The problem however is that most businesses know little about the humans they serve and more about the product they create.

They create misfit products and provide services that carry little relevance to consumers. Technology has made this even worse because some business owners now think that technology is the answer to sustainable differentiation. Technology is not the answer it is only an enabler of true differentiation.

And its effectiveness is determined by the people behind the technology. Amazon is a perfect example of a company that uses technology to support great service differentia-

tion. Amazon is the highest-rated company in the American Customer Satisfaction Index. It has invested millions in technology that helps them meet and exceed customers’ expectations. Its oneclick ordering process is about as convenient as it gets. Its order confirmation and tracking services are easy to access and usable by even the most inexperienced computer user. The key point here is that Amazon uses technology as a tool to deliver great service, not as an end in itself. Similarly, if you look at the major banks in Nigeria for example you will observe that they all have internet banking or mobile apps. But the experience the end-user gets when they interact with the different banks is different. The same technology but different experiences and outcome.

What differentiates one bank from the other is not technology but the humans behind the technology.

There are two key human factors that differentiate one bank from the other. These two key factors are reliability and responsiveness. Reliability means being dependable and delivering on commitments. Responsiveness means being eager to help, offer a number of options, and demonstrate flexibility. Because reliability and responsiveness are facilitated by human beings the experience is not the same across banks. Again, the key lesson to learn here is this. The service part of your business holds the key to sustainable differentiation. So, if you think you are in a commoditized market, a product-based business or that technology can give you sustainable differentiation. You need to think again. You can’t build sustainable differentiation based on a tool or prod-

ucts alone. And being a low price brand is also not the answer.

Product differentiation at best create transactional short-term relationships. To build lasting relationships businesses must create service-based relationships and solve problems that are relevant to consumers.

So how can Businesses create sustainable differentiation?

To create sustainable differentiation businesses, must focus on creating three things. First, they must create a holistic ecosystem of Value that aligns with their customer’s value chain. Second, they must create a strong Personality or people strategy around these values. Third, they must establish a Unique service Delivery process that differentiates them from the competition. Let’s look at each of these three points in detail.

First is creating a holistic ecosystem of value. Your current business can do more to meet customer’s needs than it is doing right now. Creating a holistic system of value means understanding the customer’s pain and innovating solutions that remove those pains. The more your customers have to look elsewhere to get the help that they need.

The higher the chances you will lose them to competitors. Creating a holistic system of value is all about understanding the full needs of consumers, providing what you can provide. And collaborating with other businesses to provide what is left. This is important for your business because it increases the rate of stickiness and makes it painful for customers to disconnect with your brand. Without a holistic system of value, you leave room for competitors to snatch away your most

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If you look at the major banks in Nigeria for example you will observe that they all have internet banking or mobile apps. But the experience the enduser gets when they interact with the different banks is different

valuable customers.

Next, you need to create a strong personality around the value you have created so customers can connect with the person or people behind the brand.

The days for soulless brands with no human connections are almost over. Customers want to connect with people solving their problems. And businesses must strategize ways to make this happen. Creating a strong personality behind a brand is not only beneficial for consumers but it also helps businesses create strong emotional bonds with customers that improve loyalty, reduce complaints, and create die-hard fans.

Next is a unique service delivery process. Creating and delivering excellent service takes hard work and operational efficiency.

It requires explicitly defining what customers want. Measuring how well you deliver on customer requirements and hiring the type of people who are suited to providing good service. The biggest winner in the 21st century is this.

Businesses that focus on excellent service delivery because excellent service delivery leaves indelible marks in the heart of customers.

Thus, making it hard for them to detach from a brand. Building a strong relationship with consumers that is full of positive emotional equity is the only way to sustain a business long-term.

Creating sustainable differentiation is a daunting task. It requires commitment and the determination to be superior in excellent service delivery. Unlike popular belief sustainable differentiation has little to do with your business idea, your business model, products, or sophisticated technologies. It has everything to do with the quality of the humans behind a brand, the quality of their execution, and the quality of their service delivery. This is the only way to create differentiation that is hard to replicate.

Grace Agada is a Multiple Business Revenue Expert. She helps Brick and Mortar businesses solve limited Revenue Problems. She also helps them transition from industrial age thinking to digital age agility. Grace helps B2C Businesses Create Multiple Channels of Revenue in their business. She makes each channel independently profitable and Scale them using technology.

There are three kinds of value Grace brings to B2C businesses. First, she helps them expand revenue and profit so they can thrive through generations of Crisis. Second, she future proof their businesses by connecting today’s revenue structure to tomorrow’s revenue system. Third, she uses a Collaborative Value innovation Process to help businesses dominate the market and Gain Market Share. If you want to create technology-enabled multiple streams of income in your business, Grace is your most helpful Advisor.

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Tuesday 22 June 2020

BUSINESS DAY

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abujacitybusiness Comprehensive coverage of Nation’s capital

AEDC/AQUIVIS launch Smart High-Tension Fault detector to reinforce grid stability, management HARRISON EDEH, Abuja

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buja Electricity Distribution Company ,AEDC and Aquivis Technologies Limited, a leading Company in Africa’s energy sector have announced the deployment of a smart high-tension overhead line fault circuit locator in Nigeria ,a step which is key in ensuring grid and feeder management and stability while enabling easier fault detection.

This smart grid outage management solution deployed for the Abuja Electricity Distribution Company (AEDC) which is first of its kind in Nigeria is a pilot for AEDC seeks to address the long time it takes to repair faulty high tension circuits and prolonged outages such as the 11KV and 33KV overhead feeders The solution has been deployed in countries like United States of America,

Canada, United Kingdom and Scotland, United Arab Emirates as well as South Africa.

Industry players said the solution could not have come at a better time than now in the NigerianElectricitySupplyIndustry (NESI) when customers are becoming increasingly concerned about the service delivery in the sector, especially in the area of feeder-grid management where outages trigger the loss of power supply to numerous customers of different categories including homes, offices, medical and educational facilities which are just beginning to recover from the debilitating effects of the COVID-19 pandemic.

Oyebode Fadipe, the General Manager Corporate Communications of AEDC in a statement said this step has demonstrated the company’s continued commitment to the reinforcement of her distribution network and the improvementofitsservicestocustomers.

Troops destroy Boko Haram tactical C command centre in Sambisa Godsgift Onyedinefu, Abuja

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he Nigerian Military says it’s Air Task Force (ATF) of Operation Lafiya Dole has destroyed a Boko Haram Tactical Command Centre and killed some of their fighters at Yuwe in the Sambisa Forest area of Borno State.

John Enenche, Coordinator of Defence Media Operations (DMO) who disclosed this in a statement in abuja, said the new feat is in continuation of air interdiction missions being conducted under the subsidiary Operation Long Reach to unhinge the leadership of the Boko Haram Terrorists in the North East.

Enenche said the operation was executed on 17 June

after series of Intelligence, Surveillance and Reconnaissance (ISR) missions observed significant presence of BHTs in the settlement.

The Coordinator said the ISR also established that a prominent compound with solar panel-mounted rooftop and a large tree in the middle with a nearby flag-mounted sentry post was being used by the BHTs to coordinate their operations in the area.

“Nigerian Air Force (NAF) fighter jets dispatched by the ATF to take out the Command Centre took turns in attacking the location scoring accurate hits, leading to the destruction of the Centre and surrounding structures as well as the neutralization of several fighters”, Enenche said.

Wukari Varsity VC, Kundiri bags NEYIF award Nathaniel Gbaoron, Jalingo

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he Vice-Chancellor, Federal University, Wukari, Taraba State, Abubakar Kundiri has been honoured with an outstanding performance award by the North-East Youth Initiative Forum (NEYIF) for repositioning the institution since he took it over in March 2016.

The Institution was one of the12universitiesestablishedby theFederal Government during the administration of President Goodluck Jonathan in 2011.

A statement from the Institution said the North-East Initiative Forum, which emerged in response to regional efforts to combat the wave of insurgency and politically-motivated vio-

lence by some youths chose to celebrate Kundiri because of his impact on the host community and provision of employment opportunities for youths within a few years at the helm of affairs.

Kundiri’s achievements, according to the statement, include, upholding the principle of Federal Character in admissions and appointments, proper placementofstaff,establishment of Faculties of Medicine, Law, Engineering and Education, as well as ongoing construction of School of Post-Graduate Studies, Computer Based Test (CBT) Centre, Professorial Office Complex, Faculty of Humanity, Lecture Theatre, Fire Service Complex, Convocation Complex, six-kilometre road network inside the university premises. www.businessday.ng

Julius Berger records 37% turn over increase in 2019 James Kwen, Abuja

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igeria’s leading and legacy engineering construction company, Julius Berger Nigeria Plc, closed the 2019 financial year with great success, achieving an increase in turnover of 37% and an extraordinarily high cash flow and increase in profitability.

Managing Director of Julius Berger Nigeria Plc, Lars Richter disclosed this at 2020 Annual General Meeting (AGM) of Company which concided with its 50 years of incorporation in Nigeria, anchored virtually in Abuja and joined by participants in Lagos.

Richter attributed the success recorded to powerful operational performance

in which Julius Berger increasingly modernized its human resource structures and systems, invested in new equipment and advanced its work while maintaining top standards for quality and record-breaking HSE performance and achievements as well as identifying and exploring opportunities for diversification of its business.

He commended the highperforming subsidiaries of the Julius Berger Plc Group, such as Abumet Nigeria Limited which expanded on its product portfolio, with the development of an insulated glass production line, under the brand EVONIG GLASS and Julius Berger Services Nigeria Limited (the company’s maritime subsidiary at the Warri Port) which launched a cooperation agreement for a liner service between

Northern Europe and Warri Port as well as Julius Berger’s furniture facility, AFP, which worked to expand its market share with the opening of its showroom in Lagos, Nigeria’s commercial and business capital.

Richter listed projects the company successfully acquired in 2019 to include Office of the National Security Adviser, New HQ Abuja; New Technology Building, Abuja; rehabilitation of Control Towers at Tin Can Island Port and Lagos Port Complex, Apapa; International Worship Centre, Uyo, Main Contract scoped at 9,000 m2 with a capacity holding for roughly 5,500 visitors; and construction of Rumuokoro, Garrison, Artillery flyovers in Port Harcourt The Managing Director said other major and ongo-

ing projects of the company include works for the delivery of the Abuja-KadunaZaria-Kano Road where a partial handing over was implemented on December 19, 2019, in section 2 (10 km on the southbound) and on February 6, 2020, in section 3 (7.4 km on the northbound); the Second Niger Bridge where Julius Berger is working day and night to ensure timely project completion and where the last pile cap across the Niger was placed, only a few weeks ago; the Lagos-Shagamu Expressway where work continues to progress steadily; the BodoBonny Road, a key priority project where progress continues to be achieved daily and the road at Bodo has nearly been completed and the main structure of the AFA bridge is, indeed, completed.

Julius Berger Executive Director Corporate Development, Tobias Meletschus; Board Director, Engr. Jafaru Damulak; and Board Director, Sheik Musa Goni at the company’s virtual Annual General Meeting anchored from Abuja last Thursday

ITF to commence implementation of reviewed vision James Kwen, Abuja

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he Industrial Training Fund (ITF) has concluded arrangements to commence the implemention of the second phase of its plan, which is christened: ITF Reviewed Vision: Strategies for Mandate Actualization, in a quest to improve its service delivery and facilitate the actualization of its mandate.

Unveiling the Plan during an engagement with top Management of the Fund, ITF Director-General, Joseph Ari said the plan that is ‘100% homegrown’ was targeted at rectifying the pitfalls that were observed in the implementation of the first phase.

Ari disclosed that the plan, which implementation will

commence immediately and terminate in 2024, will focus on nine key areas of the Fund’s activities namely: Direct Training Services, Revenue Generation and Sustainable Funding, Resource Utilization, Special Intervention Programmes, Human Capital Development, Students’ Industrial Work Experience Scheme (SIWES), Research and Development, Automation of Business Processes and other Programmes/Services.

Under the Direct Training Services, which is the core mandate of the ITF, Ari said the Fund would focus on Curriculum Development, E-Learning, Consultancy Services, Standardization and Certification, Re-engineering Business Development Support (BDS) Services for

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Micro, Small and Medium Enterprises (MSMEs), Technical and Vocational Skills Programmes, Certification of Apprentices, Technicians and Craftsmen as well as Performance and Productivity Improvement Training, while training programmes will be developed for the Maritime and Oil and Gas sectors that were hitherto not given priority attention by the Fund.

In response to the COVID-19, the ITF Boss said the Fund will develop and implement selected training programmes at no cost to the organisations just as all ITF facilities across the country will be fumigated while face masks and hand sanitizers will be procured for all staff among other COVID-19 interventions. @Businessdayng

To ensure that requisite infrastructure is in place for the expected rise in activities, he said: “the ITF has concluded arrangements for the procurement of three additional mobile training units and will establish vocational wings in our Area Offices in Awka, Maiduguri, Port Harcourt, Akure, Gusau and Minna, which will train Nigerians in needed trades in their locale”.

According to him: “efforts will also be stepped up towards repositioning the Centre for Excellence in Jos for effective service delivery.

In this regard, we will accelerate processes to acquire the Jossy Royal Hotel, which acquisition has already been approved by the Federal Executive Council.”

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Monday 22 June 2020

BUSINESS DAY

real sector watch

Manufacturers hit by naira volatility as input costs spike Gbemi Faminu

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igerian manufacturers say weakness of the naira against the dollar is hitting hard on them as costs of imported raw materials rise amid the spread of the deadly COVID-19.

Naira exchanges for dollar at between N440/$ and N450/$ today as against N360/$ in February—before the pandemic became disastrous. The spread of COVID-19 has impacted oil prices negatively with major buyers like China cutting purchases.

The situation is hitting hard on Nigeria, which relies majorly on crude oil for the majority of foreign inflows and revenue. Consequently, local manufacturers who need dollars to import inputs are spending 25 percent more money to buy their raw and packaging materials as well as machineries.

Anthony Ajulo, executive director, Colton Group of companies, a manufacturing outfit, in a telephone conversation with BusinessDay, said that in the course of resuming business operations, activities had been slow and cumbersome, especially

in terms of access to raw materials.

“Getting raw materials has become more difficult than before due to the pandemic,” Ajulo said. “There has been an upward review of prices by almost 30 percent and some of these suppliers have not fully resumed, making the process slower,” he further said.

“In addition, the naira devaluation has caused a form of imbalance. Now, one dollar goes for N388

officially and it is not even available. In the black market, it goes for N450 to a dollar, which is on the high side,” Ajulo said.

He affirmed that due to the scarcity of dollars and the increase in the price of raw materials, cost of production was rising, affecting the company’s revenue negatively.

Johnson Obasi, CEO, Johnsfrank Global Resources Nigeria Limited, an Ababased PPE producer, in a

telephone interview, also confirmed the increase in prices of raw materials, which was hurting revenue and profits. Obasi said buyers were not ready to succumb to paying higher prices for the goods.

“Aba flourishes on the importation of fabrics.

However, since the pandemic started, there has been a supply shortage, and this has resulted in artificial scarcity of raw materials, causing a hike in the price

of these materials,” he said.

“Initially, the raw materials were readily available but when supply was cut, the prices increased as the sellers claimed that import restriction, high exchange rate and high demand affected the prices. We as producers have no choice, ” Obasi added.

After weeks of lockdown and supply cuts, local manufacturers are experiencing higher production cost, which is further affecting

their businesses negatively.

Prior to the outbreak of the pandemic, the manufacturers had been able to import raw materials without hitches despite an unstable foreign exchange rate regime. They had managed to run on self-provided electricity while cutting costs.

However, in the past two to three months, international supply of raw materials and machines has been on the decline, leaving many manufacturers stranded. Some have managed the situation by sourcing for raw materials locally, but not all inputs can be found locally, manufacturers say.

In a recent report entitled, ‘Economic Impact of COVID-19 and Policy Responses in Sub-Saharan Africa,’ Africa’s Pulse said, “The COVID-19 pandemic has taken a toll on human life and brought major disruption to economic activity across the world.”

The report said the global economy was falling into recession as industrial production, investment, retail sales, and services production contracted sharply in China in the first quarter of 2020.

“Contractions of a similar magnitude are expected to follow in other countries,” the report further said.

Abia community seeks govt support to sustain production of ‘Akwete’ GODFREY OFURUM, Aba

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he people of Akwete in Ukwa East Local Government Area of Abia State have appealed to the federal and state governments to support women weavers in the community to sustain their unique hand-made cloth known as ‘Akwa Akwete’ (Akwete cloth).

They argue that the cost of thread, which is their main raw material, has gone up astronomically, thereby increasing their cost of production.

They appeal to the federal government to, in the meantime, encourage local production of quality threads, especially cotton

and silk threads, to enable them access quality raw materials at affordable rates.

They observe that the sustenance of the art of weaving would reduce unemployment and improve the economy of the locals, state and country at large.

Christian Uwaezuoke, secretary, Joint Council of Akwete, comprising UmuIhueze, Amakam and Umueze autonomous communities, explained that the only time weavers in the community experienced government support was during the administration of Governor Sam Mbakwe of the old Imo State.

According to him, “The late Mbakwe, the then governor of old Imo state, from where Abia, Ebonyi and www.businessday.ng

the present-day Imo were carved out, through his wife, recognised the creative ingenuity and contributions of Akwete women weavers to the development of Imo state.

“Part of his programme was to encourage local industries. He visited Akwete women and one of the questions proposed during the visit was how government can assist them,” he said.

Mbakwe donated N50,000, which led to the setting up of the Women Weaving Cooperative Society Centre, which also serves as their showroom, Uwaezuoke said.

He stated that Uzoma Abonta, member, representing Ukwa East and Ukwa West in the House of Rep-

resentatives, recently reroofed the building as an honour to his late mother, Rosalind Abonta, who was the pioneer leader of the women.

“Beyond that, all subsequent governments have not done anything to support women weavers in the Akwete.

“There was a time Akwete women weavers hosted a team from the Raw Materials Research and Development Council, who said they were in the community to understudy the cloth production and know how they could help boost its marketability. But after that visit, nobody heard from them. It is over three years now, but nothing has been done.

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“Also, some time ago, some youths came to understudy it and know how to leverage its marketability through linking some companies overseas, but after that nothing came out of it.

“The original piece of this cloth is showcased in the British Museum in London, where it is showcasing Nigeria and black man’s contributions to civilisation.

“Government takes our women to showcase their products at trade fairs, but after every event, nothing comes out of it. Our women also participated at FESTAC 77.

“This cloth industry has made some contributions to economic development.

Meanwhile, government is talking about local content @Businessdayng

policy, looking inwards, but nothing is happening,” he argued.

Helen Ebere, president, Akwete Cooperative Women/Weavers Association, urged government to help them source silk and cotton thread at cheaper rates.

“They can help us access loans that will enable us engage more hands to weave.

This is a gift God gave to us.

We’re not good traders, the only thing we do and know is to weave and we love it,” she said.

Patience Okere, a weaver, who said she started the art of weaving at the age of 12, explained that the art was inborn in every female child born in Akwete and appealed to government to assist them.

Monday 22 June 2020

BUSINESS DAY

Start-Up Digest

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In association with

Jide Ayegbusi: Providing educational information for parents Josephine Okojie

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ide Ayegbusi is the founder of Edusko Africa, a start-up business that connects parents and students with good and affordable private schools across Africa.

The organisation also assists parents in making informed choices on their wards’ education ranging from elementary to tertiary institutions.

Lack of adequate information in the country’s educational sector for parents inspired Jide to establish Edusko in 2015.

“There is limited information about schools, and parents have had to make this important decision on hearsay, shallow neighbour referrals and Google search,” Jide says.

“With over 80,000 private schools in the country, it is very difficult for parents to choose the right school for their children,” the young entrepreneur says.

Jide started his business in 2015 with N500, 000 which he got from his personal savings.

According to him, the business started generating revenue after the first six

months of its establishment, stating that the business has grown tremendously owing to the highly motivated team he works with.

The psychology graduate believes that the major challenge confronting his business is getting schools to share their information with him.

He says that all that is fast changing now as Edusko is getting a lot of referrals from schools that are already on board with them.

“At the moment, we have listed about 4,000 schools, and more than 5,000 parents have directly been referred to our partner schools. We are currently in over 30 states in Nigeria and over 10 regions in Ghana,” Jide discloses.

Funding is another major challenge Jide says has limited his business expansion plans.

“Funding was also a major challenge. Edusko was bootstrapped with a very lean budget and this affected our scaling speed,” he laments.

Jide urges the government to improve the country’s ease of doing business so that businesses, especially startups, can be profitable, adding that Nigeria ought to have a better business environment than South-Africa because

Jide Ayegbusi

of its population and large economic size.

The psychologist-turnedentrepreneur called on the government to grant tax incentives to small businesses and provide adequate financing to increase their survival rate.

“Start-ups should also be given enough tax holidays, maybe 10 years, so that they can grow without any hindrance,” he recommends.

Jide says that Africa’s educational technology market is currently worth about $16 billion and expected to grow by 21 percent.

He tells Start-Up Digest that his organisation is working on improving its value proposition to clearly differentiate itself and tap from the vast potential in the educational tech market in Africa.

As a result, Jide has continued to remain in business

despite coming on board when the country recorded recession, stressing that Edusko remains the only player in the industry known by parents to have built an unbiased platform.

He explains that the educational sector is very crucial in Nigeria’s quest for diversification, stating that the country should invest 26 percent of its annual budget to the sector to diversify the economy. He stresses that the place of education can never be ignored.

“We have data of some of the finest schools across the globe. We have reached out to many of these schools and we have not been turned down because they could see value in what we are offering them,” he says.

“Many of these schools have been profiled on Edusko already. We are also reviewing some of the proposals we have received from the schools that have reached out to partner with us for student recruitment in Nigeria,” he adds.

When asked about his advice to other entrepreneurs, Jide says that entrepreneurship is not about starting a business and making profit but about solving problems.

He further says that every

entrepreneur should always think of solutions to problems they have identified in their society and work with a quality team to achieve objectives.

“Entrepreneurship, for me, is not just about starting a business and making money, it’s about problem-solving,” he says.

“Opportunities for business success abound where there are many problems to be solve—like we have in Africa,” he adds.

“Think of a solution to one of these problems that are worth solving and solve it. I also think that business success depends on the quality of team-building it. So it’s advisable to find individuals who share your passion and have necessary skills to help you fill the gaps,” Jide says.

He tells Start-Up Digest that he plans to make over 20,000 private schools in the country easily accessible.

He likewise plans to have physical presence in other African countries and ensure his business becomes a household name across Africa.

Last year, the startup made it to the top 10 finalists at the Seedstars World event in Lagos.

How Philips created Finlig to help students learn, earn Odinaka Anudu

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he effect of the Covid19 may not all be bad news after all, with the likes of Olajide Philips, a techpreneur, bringing hope through his novel app, Finlig, an online school of learning and earning.

Philips, currently the chief executive of Pitxh Forth Solutions, took it as a burden to train young people on WhatsApp on different digital skills during the lockdown.

Such skills include graphic design, 3D animation, whiteboard, and use of the smart phone, among others.

“As time went on, the number of students grew to 700 people across 9 different WhatsApp groups,” he says.

“After a while, it was becoming so stressful and demanding. People were joining from different states in Nigeria and outside Nigeria. One day, precisely May 20th, I was on my couch thinking of how to help stu-

dents that are currently at home due to Covid-19. Then the Holy Spirit dropped the idea of Finlig into my mind,” he says.

He was instructed to build a school portal and put all those training on the website and let everyone have access to them anywhere and anytime. And that was all,” he explains.

Speaking on his expertise, the entrepreneur says passion for information technology prompted him to get trained as a web developer, artificial intelligent expert, digital marketer, business coach, content developer and creative designer.

The tech expert says he holds an IBM certification, a diploma in music technology, a first degree in Business Management and Theology, as well as a master’s degree in Leadership and Theology.

Explaining how he built Finlig, he says, “Since I already have the knowledge of website development and graphic designing, it took me less than seven days to www.businessday.ng

complete the website and put all the tutorials together after which I got a friend who assisted with the application.”

On what stands the app out, he explains that Finlig is one of world’s best digital platforms that enable people to learn over 20 digital skills that are marketable for just less than $4 (N1000), saying that all skills

are learnt from the smart phone, making it easy for those on- the-go.

He further explains that Finlig’s is unique because its trainings are affordable.

Its ability to leverage smart phone makes it special and provides an avenue for students to earn.

“They can buy data as well as attend all the courses. Earning, however, is

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made possible by inviting friends to come and learn on the platform,” he says.

“Nigerian students currently at home due to Covid-19 can get positively busy with something worthwhile than wasting precious time on social media.”

Explaining the project’s contribution to Nigerian economy, he says, “It’s all about empowering Nigerian youths with digital skills that make them globally relevant.”

Speaking on challenges, he says, currently, the only challenge he encounters is distrust from people on social media.

“People still can’t believe this is true, that we are teaching over 20 digital skills for just N1,000 and on smart phone. But with time we will overcome this,” he says.

On Post-Covid aspirations to clients, he explains that his vision is to make the online school available for all Nigerian students in senior secondary.

On the future of his inno@Businessdayng

vation, Philips says, “Finlig is an idea that hopes to reach all African countries and spread to nations of the world. We had three students from UK who joined one of the classes during the lockdown. So the future is good and by God’s grace, we are there already.

We have other features we are rolling out under Finlig umbrella such online store, Fintech and other amazing features.”

The tech expert advises budding entrepreneurs in Nigeria not give up on their dreams no matter how long they take. The entrepreneur says he has been in IT industry since 2013 and has never quit despite several setbacks.

Philips is hopeful of some form of support from government at all levels and would wish that the Federal Government make Internet service available for all— like other developed countries. “I believe that if that is sorted, our digital idea will reach the world from Nigeria,” he adds.

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Monday 22 June 2020

BUSINESS DAY

news Dangote Cement sustains 54,000 jobs in 4 African countries

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resident of Dangote Group, Aliko Dangote, has said that despite the challenging economic situation in 2019, Dangote Cement was able to sustain 54,000 jobs in four African countries, where the company has its operations. The countries are Nigeria, Ethiopia, Senegal, and South Africa.

The business mogul told shareholders at the company’s 11th Annual General Meeting in Lagos that more jobs would be created as the company intensifies export of clinker to other neighbouring countries from Nigeria.

“According to our 2019 socioeconomic impact assessment study specifically on our operations in Nigeria, Ethiopia, Senegal, and South Africa, we sustained 54,005 jobs (direct, indirect, induced) in these four markets in the year under review,” he said.

Dangote Group is the highest employer of labour in

Nigeria outside the Federal Government, and with its refinery project coming up, the company will have more than 100,000 Nigerians under its employment.

Recently, Godwin Emefiele, governor of Central Bank of Nigeria (CBN), while lauding Dangote’s investment drive, said he was excited with the progress made at Dangote Refinery and Petrochemical plant so far, and that when it becomes operational, the refinery and petrochemical plant would increase its workforce from the current 34,000 to over 70,000.

Briefing shareholders at the 11th Annual General Meeting (AGM) held in Lagos last week, Dangote told the shareholders that the year 2019 was a strong year given the tough business environment across most of its operating geographies, disclosing that the Group recorded volumes of 23.7 million metric tonnes and revenues of N891.7 billion.

“We recorded a strong EBITDA margin of 44.3 percent. As a result of this performance, the Board has recommended for your approval a dividend of N16.00 per ordinary 50 kobo share,” he said.

Speaking on the local Nigerian operations, he said, “Nigeria’s cement market grew slightly in 2019. We estimate that total market consumption was up between 2-3 percent on the 20.7Mt estimated in 2018.”

Dangote explained that the modest performance was in spite of the fact that the market generally was impacted negatively by the disruptions related to the 2019 election cycles, heavy rains and the loss in land export volumes due to the border closure.

“Dangote Cement’s Nigerian operations remained at 14.1Mt in 2019, including export sales of 0.45Mt. Domestic sales in Nigeria were nearly 13.7Mt, compared to 13.4Mt in

2019. This implies a 2 percent growth mirroring the estimated GDP growth for the year. However, land exports reduced to 0.45Mt from 0.7Mt for the full year owing to the border closure in the last few months of 2019,” Dangote said. “The Bag of Goodies promotion, launched in July, drove strong increases in our Nigerian volumes in the third quarter.”

He said the innovative marketing effort enabled the company to maintain its market share despite the 4.5Mt new capacity which came into the market during the year.

He alluded to the new feat

by Dangote Cement in commencing export of clinker via shipping from the Apapa and Onne ports to West and Central Africa, adding that the management was encouraged by the performance of its offshore operations.

Dangote noted that panAfrican operations sold 9.44Mt of cement in 2019, up 0.8 percent on the 9.37Mt sold in 2018.

COVID-19 heightens need for virtual, contactless cargo-clearing process in Nigerian ports

… Long cargo dwell-time, safety issues rising over manual inspection AMAKA ANAGOR-EWUZIE

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ocial distancing measures necessitated by the outbreak of coronavirus (COVID-19) have brought to the fore the urgent need to fully digitalise Nigerian ports by deploying functional scanning machines and single window platform for cargo inspection.

The current 100 percent physical inspection of cargo in the presence of cargo owner is causing longer dwell time of containers and creating backlog of uncleared goods at the nation’s seaports. This has continued to worsen the inefficiency of the port system as most terminals currently suffer 90 percent yard occupancy (congestion) due to the delay in taking delivery of containers. Importers are thereby compelled to pay heavy demurrage and storage rent to shipping companies and terminal operators.

“We must have a port that is contactless and paperless.

We need the Nigerian Ports Authority (NPA), Customs, freight forwarders and service providers to transact business online,” Hassan Bello, executive secretary of the Nigerian Shippers Council (NSC), said recently during a webinar session.

Digitalisation of the ports would make them more efficient and competitive, Bello said, calling for the establishment of a virtual port and elimination of ports that depend on manual operations with all the freight forwarders going to the port when things could be done online.

“We have to sharpen our terms of trade and there are four vital legislations that we have to push out including arrival and departure of ships, responsibility of terminal operators for transparency, and electronic bill of lading, which will make it mandatory for people to transact online,” he said.

PSHAN, Aig-Imoukhuede kick off design phase of PHC adoption programme ANTHONIA OBOKOH

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new initiative geared towards significantly improving Nigeria’s healthcare system at the grassroots level has been unveiled by Aigboje Aig-Imoukhuede, renowned

L-R: Ayomipo Wey, company secretary/legal adviser; David Wright, managing director; Awuneba Ajumogobia, chairperson, Board of Directors, and Bolarin Okunowo, non-executive director, all of Chemical and Allied Products plc, at the annual general meeting of the company in Lagos, weekend.

Manufacturers suffer drop in profit as Covid-19 underpins bleak outlook BALA AUGIE

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evenues of listed manufacturers were nearly flattish while profit slumped as coronavirus pandemic caused disruption to business across almost all sectors of the economy.

The largest manufacturers on the floor of the Nigerian Stock Exchange saw combined net income fall by 1.47 percent to N116.62 billion in March 2020 from N118.37 billion the previous year, based on data gathered

by BusinessDay. Revenues grew by a mere 2.48 percent to N1.11 trillion as at March 2020, as border closure, slow construction

activities and weak consumer sentiments continue to underpin bleak outlook.

Business conditions in the Nigerian manufacturing sector have been untenable over the past decade, which is one of the reasons for high unemployment as companies downsize workforce to stay afloat.

The industry was knocked sideways and into contraction territory by impact of Covid-19. Difficulties in obtaining raw materials, shipping delays and closed borders have led to the sharpest contractions.

Also, consumer spending has been further dealt a severe blow due to the lockdown, compounding the woes of firms that may not find it www.businessday.ng

easy passing on rising input cost-in form of higher price to consumers.

“There were restrictions on raw materials from other countries during the lockdown. Brewers will be the hardest hit as there are no markets for their products.

No weekend entertainment and if this continues they may be forced to retrench workers,” Ambrose Oruche, acting director-general, Manufacturers Association of Nigeria, said. “While government has announced that it will give incentive to pharmaceutical firms, gas price has gone up.

They have to challenge with products from China.” Oruche said companies need bailout or grant for those that have

not been doing business for a while so that they do not have to sack workers. He also advocated lower duties on imported raw materials so as to reduce cost of production.

The Purchasing Managers Index (PMI) data released by the Central Bank of Nigeria (CBN) for the month of May showed significantly weakened activity levels. Manufacturing PMI declined from 51.1 in March to 42.4 in May, the lowest level since September 2016.

As a result of the impact of Covid-19 on an already fragile environment, the International Monetary Fund (IMF) estimates that Nigeria’s economy will contract by 3.40 percent this year.

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banker and co-founder of Access Bank, in collaboration with the Private Sector Health Alliance of Nigeria (PSHAN).

The innovative strategy, in furtherance of a vision from an earlier stakeholders’ roundtable, entails delivering one Primary Healthcare Centre (PHC) in each of Nigeria’s 774 local government areas (LGAs) at global standards.

@Businessdayng

Under this private sectordriven initiative, universal health access will be provided for low-income citizens residing in rural and urban areas through the Adopt-a-Health Facility Programme (ADHFP).

ADHFP, according to a release issued by Sonny Nwarisi, CEO of PSHAN, will be sponsored by a group of angel investors and other institutions.

“These ‘Angels’ will each take responsibility for one or more PHCs – they will build and operate the PHCs for the period of adoption under strict rules and guidelines,” Nwarisi said. “The ADHFP is a multi-impact initiative with everal benefits including saving lives, improvement in health outcomes, job creation, and gender empowerment.”

Meanwhile, AigImoukhuede and PSHAN recently initiated the ADHFP design phase which will be handled by Vesta Healthcare Partners, a global healthcare consultancy firm.

Monday 22 June 2020

BUSINESS DAY

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news Tech startups risk higher interest rates...

Continued from page 1

raise foreign debt paying more on interest, according

to some leaders who spoke to BusinessDay on Monday.

Nigeria’s economy has been reeling partly from scarcity in foreign exchange due to the collapse in international oil prices. BusinessDay reported on Monday that oil exports account for over 80 percent of dollar inflows into Nigeria making it the largest source of the greenback into the country.

Although the CBN has weakened the official rate to N360 from N306 and allowed the rate at which investors and exporters bought dollars to weaken to N380/$, the naira still trades 20 percent weaker in the parallel market.

The disparity between the FX rates in the country has deterred foreign portfolio inflows, another main source of dollars into the economy.

For the Nigerian tech community where foreign investments account for over 90 percent of funding sources, this is a big problem.

“Currency devaluation is a big problem for start-up valuations,” Adedeji Olowe, CEO of Trium Networks, a Nigerian-based venture capital, told BusinessDay. “The valuations are usually anchored on revenue projections. Usually, valuations are multiples of EBITDA and when the underlying revenue is anchored on naira and naira goes into freefall against the USD, then the valuation goes down with it,” Olowe said.

In 2016, Interswitch went through a similar situation.

The company was going to IPO at $1 billion where the USD was pegged at N200 until the recession set in and naira went down as much as N510/USD. The payment company’s valuation tanked to a little over $400m and it had to pull it.

“Exactly the same problem has happened to the same Interswitch this year as well; they delayed their IPO from late last year, now that naira has tanked again, the listing may not happen,” Olowe said.

Nigerian tech start-ups closed the biggest funding on the African continent in 2019 raising $377 million, more than twice what they did in 2018. Startups like OPay and Interswitch led the leaders’ table as investors poured in capital in the space. While 2020 has only gone half way and has seen a few startup investments, the impact of the COVID-19 has dampened investors’ appetite in the space. Part of the challenge is the unwieldy exchange rate regime in Nigeria which has created uncertainties in foreign investors. To be sure, foreign investors contribute over 90 percent of the fund-

ing that has come to the tech ecosystem so far.

“This is one of the key reasons we have to identify and support ventures that create value that can be consumed internationally in addition to saturating our local market,” said Tomi Davies, co-founder of Lagos Angels Network and president, Africa Business Angels Network (ABAN).

Collins Onuegbu, a director at Lagos Angels Network and executive vice chairman, Signal Alliance, told BusinessDay that the impact of the exchange rate would be more on startups whose products are local and priced in naira. For this category of startups, the current exchange rate at over N400 means that the fundamentals of their valuation would likely change.

“There are those that the pandemic has made their model risky; investors will be cautious with such startups,” Onuegbu said. “But COVID-19 pandemic also creates new opportunities that may favour some startups. For such companies, you may be surprised that valuations may favour them. But in all, an investor at this point must be evaluating deals on a caseby-case basis.”

Apart from assessing the startups as individual risk, there is also the contraction in the economy as a result of the pandemic. Onuegbu sees this affecting the majority of tech companies in Nigeria.

He said that most startups would not be able to escape the negative impact. The fast growth that helps startup valuation will in lots of cases be halted by this economic contraction.

“And for those who have previously raised money, to keep foreign investors happy, who would do all to prevent a down valuation, the founders would be under tremendous pressure to jack up revenue.

And in a recession, where will this come from? Expect many to end up with high blood pressure,” said Olowe.

Abiola Olajide, founder of Kiakia, a digital lending platform, sees light at the end of the tunnel before the end of the year. He pointed to the fact that the market has known stability over the last four years.

“There are a lot of macroeconomic factors and indicators which still point to imminent stability within the forex market,” Olajide said.

“Our manufacturing sector is growing and so also is the agricultural sector. The Dangote refinery is almost completed.

The fertiliser aspect is done. All of these will help ease pressure on the naira. In the interim, raising foreign debt or equity will mean tech startups have to pay more in interest and generate higher IRR in order to deliver value on the cash.” www.businessday.ng

L-R: Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC); Timipre Sylva, minister of state for petroleum resources; Hope Uzodnma, governor, Imo State, and some management staff of SEPLAT Petroleum Development Company plc during the ground-breaking ceremony of Emergency/Infectious Disease Hospital, a part of the Oil and Gas Industry Intervention against COVID-19, at Orlu, Imo State. NAN

Global gas glut leaves Nigeria’s LNG...

Continued from page 1

market is under threat due to the coronavirus pandemic that has forced demand to collapse. Due to the pandemic, buyers who are obligated to take cargoes under long-term contracts are postponing the delivery of the products they don’t have an immediate need for. This is compounded by the extremely low prices which have forced traders to keep the LNG in terminal tanks, thereby creating the highest inventories at European import facilities. This is going to further compound the fiscal crisis faced by Nigeria as the LNG has been a major source of revenue and foreign exchange earnings for the government.

The Federal Government earned $3.102 billion from its 49 percent stake in NLNG between 2015 and 2018 – other shareholders of NLNG include Shell (25.6 percent), Total (15 percent) and Eni (10.4 percent). A breakdown of the dividend earnings showed that the Federal Government pocketed $904.498 million in 2018 compared to $798.140 million in 2017.

It earned $356.126 million in 2016 compared to $1.043 billion in 2015. Overall, the Federal Government has so far earned $17.407 billion as dividend from the company in the last 15 years beginning from 2004.

However, the slump in demand for LNG has come at a time when Nigeria, one of the world’s top LNG producers, sorely needs revenues to stimulate its struggling economy and increase its depleting foreign exchange reserves.

Nigeria LNG exports around 300 cargoes of liq-

uefied natural gas annually from the Bonny plant, representing about 40 percent of global LNG supplies.

NLNG’s 6-train LNG facility, which has been in operation since 1999, has delivered over 4,700 LNG cargoes around the world and has continued to send out tankers of the product.

But NLNG Ltd is reporting that it cannot sell its LNG while commodity tracking firm, Kpler, has also disclosed that about half of the world’s LNG vessels, currently deemed floating storage, are heavily loaded with Nigeria’s gas. Also, LNG prices at their lowest in years have forced traders to keep LNG on the tankers waiting for demand to improve.

“This means that dividends from LNG are also not forthcoming,” according to Nigeria’s Economic Sustainability Plan. “In effect, our major sources of foreign exchange have dried up. This means that our external reserves get little or nothing by way of augmentation.”

Ademuyiwa Adegun, an Abuja-based gas commercial advisor, said lower NLG prices and unsold oil cargoes pose risk to major gas exporting countries like Nigeria which might translate to lower revenue.

“Due to the sharp fall in oil prices, spread between oil-indexed long-term LNG contracts and spot contracts has considerably reduced which will make it challenging for most LNG producers to meet revenue targets,” Adegun said.

Already, the Federal Government has reduced expected revenue from its NLNG dividend by 35 percent to N80.3 billion ($207 million), according to an addendum to the 2020-2021

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Medium Term Framework and Fiscal Strategy Paper (MTEF/FSP).

“A rapid decline in gas demand is affecting the financing of capital-intensive new liquefaction projects, leading to inordinate delays and capex reductions,” Adegun said.

But the potentials remain.

“Although they are making a loss now, the majority of the other partners are long-time investors in the gas market and are fully aware of the potentials and investments,” Niyi Awodeyi, CEO at Subterra Energy Resources Limited, said.

The energy crisis faced by Nigeria, one of the oldest and biggest suppliers of LNG to Europe, highlights the challenges that all other producers are facing in the pandemic era, which primarily have to do with lower prices and oversupply. Furthermore, the low prices and weaker demand caused buyers to take a wait-and-see approach to long-term supply contracts, according to analysts.

But prices are not set to improve in the summer, according to Manas Satapathy, managing director for energy at Accenture.

“The worst is yet to come, we will likely see super low prices in late June, July, August,” Satapathy told Bloomberg.

Yearly dividend NLNG pays the government has been a saving grace in difficult times. Insulated from Nigeria’s harsh business climate, unpredictable political games and unfavourable investments conditions, the company has been run profitably and has also raised funds for its projects from a combination of shareholders’ loans, internally generated revenue and third-party loans.

Not only has NLNG fully @Businessdayng

paid without default the $5.45 billion taken from its shareholders to build its six existing LNG trains, the firm has also paid as much as $36 billion to its shareholders as dividends over the years, in addition to paying joint venture (JV) gas suppliers $28 billion for feed gas.

In tweets to celebrate its 31st anniversary last month, NLNG said it has also paid $17 billion in dividends to the Federal Government through the NNPC and also generated $108 billion in revenue.

Last month, shareholders of Nigeria LNG Ltd signed the Engineering, Procurement and Construction (EPC) contract for Train 7, its major gas expansion plan.

The Train 7 project aims to increase the company’s production capacity from 22 mtpa to about 30 mtpa, and will form part of the investment of over $10 billion, including the upstream scope of the LNG value chain, according to the company.

Nigeria Liquefied Natural Gas Ltd is run in a unique way that is different from other public assets as it is owned partly by the government and partly by the private sector.

It is, however, run exclusively by the latter, earning it plaudits along the way for its operational success. Nevertheless, there are challenges.

Despite being Africa’s biggest oil exporter, Nigeria is among the world’s poorest countries, with 87 million of its 200 million people living on less than $1.50 a day. Economic growth is stagnant at about 2 percent, below the country’s population growth rate of about 2.6 percent.

“Nigeria desperately needs its glory days of higher NLNG dividends to survive the economic implication of the coronavirus pandemic,” Awodeyi said.

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Monday 22 June 2020

BUSINESS DAY

NEWS

COVID-19 shatters growth in African Hotel Development - MD W Hospitality Group ADEOLA AJAKAIYE, in Kano

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frican Hotel Development had returned to growth at the start of 2020, with more than 78,000 rooms in 408 hotels in the pipeline, according to the 12th annual survey by W Hospitality Group, acknowledged as the industry’s most authoritative source. However, the COVID-19 outbreak is now shattering the dreams of Africa’s hotel industry.

W Hospitality Group’s managing director, Trevor Ward, says the growth of the chains’ presence in Africa has been a very positive story since we started this analysis in 2009, noting that it was quite clear from the numbers that the chains, the developers, the investors, and the company continue to believe in the opportunities that Africa presents in the hotel and tourism industry.

He notes however that the industry has been devastated by the impact of COVID-19, possibly more so than most other economic sectors, mainly because of the almost total shutdown of borders and of the aviation sector – no flights mean no guest.

“With that background, we see a slowdown in pipeline growth in 2020, as we all get to grips with the new reality. With so many of the players locked down, fewer deals will be signed, and it is inevitable that some of the planned openings in 2020 will be delayed, due to closed or slower-paced construction sites, restrictions on funding, and a lack of market demand.

According to our latest data,

there are 90 hotels with 17,000 rooms scheduled to open in 2020, but we estimate that at least half of these will be delayed, bringing the actualisation rate down to no more than 40%.”

“This year’s African Hotel Chain Development Pipeline survey covers 35 international and regional hotel contributors across the 54 countries in North and sub-Saharan Africa and in the Indian Ocean islands.

It reveals a 3.6% increase in the 2019 pipeline. Most encouraging was a record 68 chain hotels opening last year, fully 75% of those which were scheduled to open, with 11,000 rooms. That performance was substantially up from the 39% of those scheduled to open in 2018 actually doing so. Accor performed particularly well; it opened 18 hotels last year with almost 3,500 rooms in its various brands, ranging from Ibis to Fairmont,” Wards explained.

He added that findings of the 2020 Pipeline report, together with a mid-year update, will be discussed in depth at Bench Events’ new virtual conference, Africa Tomorrow (www.Africa-Tomorrow.com), to be held on 21st July.

“This event is complementary to the Africa Hotel Investment Forum (AHIF), the leading hospitality investment conference in Africa, which has in previous years connected business leaders to serious investors, driving funds into tourism projects, infrastructure, and hotel development across the continent.

FG to release land mandates addressing herders, farmers’ conflicts - Presidency TONY AILEMEN, Abuja

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residency at the weekend said the Federal Government would soon roll out a new policy that would address conflicts, especially those between farmers and herders.

The country had in recent times witnessed regular clashes between farmers and herders over grazing rights that had ravaged several communities, destroyed farmlands, their produce and threatened the food sustainability programme of the government.

The crises provoked the establishment of security outfits and self-help community policing efforts to address the incessant killings, rapes and kidnappings by suspected people believed to be Fulani herdsmen.

Presidential spokesman, Garba Shehu, stated this on Friday in a statement reacting to the United Kingdom, UK AllParty Parliamentary Group on International Religious Freedom report on Nigeria.

Presidency however rejected the group’s report on Nigeria, which acknowledged the existence of persecution of Chris-

tians in the country.

Shehu said the Federal Government was addressing factors that had led to conflicts, including “addressing through Joint Federal and State Governments programmes, access to arable farmland - with land mandated both for farmers and herders. The federal government will issue detailed measures regarding this plan and its rollout in the coming weeks.”

The Presidency noted that the country had gone through several years of conflicts and tensions over both access to everdecreasing arable and farmland due to a rapidly rising population, temperatures and desertification through global warming.

The Presidency however on behalf of Nigeria thanked members of the UK All-Party Parliamentary Group on International Religious Freedom or Belief for their report, launched a few days ago.

It noted that although it was difficult reading, the statement also acknowledges the importance of accurate, unbiased, depoliticised and truthful information when it came to understanding the realities and addressing the challenges for those of faith in Nigeria.

Presidency described some

of the criticism on which the report was based as “dubious,” adding, “when uncritical attention is afforded to critics with dubious intentions, it only becomes harder for both the government and people of Nigeria to engage in constructive dialogue to resolve our differences, and uphold what is enshrined in our Constitution and laws: that everyone has the right to freedom of thought, conscience and religion.

“It is clear for all to see that there have, for generations in Nigeria, been tensions between our major religions, Christianity and Islam - and between herders and farmers - both for access to everdecreasing arable and farmland due to a rapidly rising population, temperatures and desertification through global warming.

“Exacerbating those tensions, our nation has also been in recent times and focused within the northern states - subject to vicious and criminal attacks by the terror group Boko Haram.”

According to the Presidency, Nigeria’s military have pushed back the terrorists and largely reduced their capacity over the last five years compared to the previous decade.

“Boko Haram have targeted Christians and Churches specifically because they know it drives forward religious and land tensions already existent in the country. Similarly, they attack mosques and Muslims in order to issue the threat: radicalise, or become targets yourselves.

“In the months and years ahead, our President who is Muslim and our Vice President who is an evangelical Christian pastor are irrevocably committed to addressing these multiple and long-term challenges for today’s and future generations.

Presidency listed other measures to address the conflicts to include continuing and increasing Nigeria’s efforts alongside our allies to fully defeat and finally finish Boko Haram, in order to bring security to the north of the country.

“Continuing to seek, negotiate for, and secure the return of all those held hostage and in captivity by the terrorists, regardless of the religious faith or belief.

“Uniting our nation through dialogue organised around respect for difference in religion.

Such a programme is already underway under the leadership of the Vice President, Pastor Yemi Osinbajo.

Obaseki, by providence, has created a mass movement for liberation of Edo people - group

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n Edo socio-cultural group, Esan Club 30, says it will stand shoulder to shoulder with the state governor, Godwin Obaseki, for the continuity of his performance and consolidation of good governance in the state.

In a statement signed by the chairman, Francis Oriakhi, and three officials on behalf of other members of the group, the PortHarcourt-based group described Governor Obaseki as a man of scalable intellect and a man of class with a dignified personality, adding, “It would be distasteful or out of mischief for anyone not to notice and acknowledge the even-handedness of the governor as well as the equitable distribution of infrastructural amenities in the state.”

The group said it followed with sadness and great trepidation, the unfortunate, unnecessary, unsavoury, avoidable but lingering spat between the sitting and duly elected governor of the state, Godwin Obaseki and a former governor and suspended National Chairman of the All Progressives Congress (APC), Adams Oshiomhole.

They said the scenario was uncalled for, detestable, potentially destabilising, very offensive and definitely not

representative of the values of Edo people and were incompatible with the foremost status of our dear state.

Esan Club 30 further praised Governor Obaseki development strides and inclusive politics, noting, “For Esan people, he has undoubtedly addressed and redressed the developmental anomalies and the nonrepresentation in government suffered by our people during the Oshiomhole administration.

The portent of the disqualification of a sitting and a performing governor by the NWC of the APC is the sizzling and inordinate desire of an emerging godfather who thinks that his word should be law. A society that elevates men above the law creates entropy in its polity.

“For Esan people, and looking at the bigger picture, the question that readily comes to mind would be: Is someone, somewhere trying to emasculate Edo Central Senatorial Zone from the governance tripod of our state? It is trite, as this juncture to emphasize that Obaseki is a brand who has by providence created a mass movement for the liberation of Edo people, for good governance, transparency, equity and for accountability.” www.businessday.ng

L-R: Martin Mabutho, chief customer officer, MultiChoice Nigeria; Tosin Adefeko, founder, managing partner, AT3 Resources; Seyi Adeoye, chief executive officer, Pierrine Consulting, and Feyi Olubodun, founder/managing partner, Open Squares, during the ranking of Nigeria’s Best Brands hosted by Open Squares and MultiChoice Nigeria in Lagos.

COVID-19: Economy can’t afford another lockdown - OPS JOSHUA BASSEY

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he organised private sector (OPS) says reimposition of lockdown in Nigeria’s economic nerve centre of Lagos, will cut the economy deeper and instantly trigger mass layoffs of workers by employers who are barely struggling to keep businesses afloat amid continuing partial restrictions on their operations.

Timothy Olawale, directorgeneral, Nigeria Employers’ Consultative Association (NECA), spoke with BusinessDay on Friday amid speculations that the Lagos State government may be considering the imposition of a fresh lockdown due to the continuing spike in the number of COVID-19 infections in the state.

As of June 18, 2020, Lagos still topped the chart of the COVID-19

… amid speculations in Lagos pandemic in Nigeria, recording 280 new infections which pushed its total confirmed cases to 7,896 with 1,382 recoveries and 108 deaths. Bed spaces at the various isolation centres in the state are now posing a challenge to the government as the figure continues to spike.

The state governor, Babajide Sanwo-Olu recently hinted that the government would not hesitate to re-lock the state if the situation calls for it.

But the organised business community believes that a fresh lockdown would deeply hurt the economy.

“One can understand why the government could be thinking of re-locking Lagos. People have been generally careless about the guidelines and protocols to stay safe. The facemasks are not

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being worn as expected, social and physical distancing is not being observed. As a result, the state has continued to record increased infections and deaths from COVID-19 and the government may want to have a rethink.

“But it would be a serious setback for the economy. As we speak, businesses are struggling because of the limitations they still face,” said Olawale.

The DG added that some factories have been unable to run their normal shifts as a result of the 10 pm to 4 am curfew in addition to the difficulty they encounter transporting their products because of the interstate movement restrictions.

“Even though the government allows exemptions, but the security personnel have turned our highways into venture; they @Businessdayng

don’t allow products to move on the highways without collecting money,” said Olawale.

The NECA DG warned that the reposition of a lockdown amid the difficulties would trigger mass layoffs by employers who have only managed to hold their staff with the hope things would improve soon.

Olawale argued that rather than re-imposing a lockdown, the government should enforce the COVID-19 guidelines and protocols to limit the spread of the disease.

“Enforcement of the guidelines and protocols has been very weak. What we would advise the government to do now is enforcement and not re-imposition of a lockdown because that would have dire consequences for the national economy,” Olawale argued.

Monday 22 June 2020

BUSINESS DAY

NEWS

Calls heighten for passage of Economic Stimulus Bill as job losses escalate

At 50th AGM, Julius Berger looks to future with hope … as company marks Golden Jubilee of incorporation in Nigeria SEGUN ADAMS

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ulius Berger Nigeria plc says the outlook for the company’s business remains reasonably hopeful.

At the company’s 50th Annual General Meeting held last Thursday, Lars Richter, its managing director, said Julius Berger continues to be in a strong position to succeed.

“Strengthening Julius Berger’s core construction business, client mix and the group’s subsidiaries as well as diversification with a greater balance of private sector projects will act as a support to shore up opportunities beyond the company’s core business. In the public sector, focus will remain on successfully executing projects of national priority,” Richter said.

“Our reputation for reliability and record of success provides clients strong assurance that no matter the requirement, Julius Berger will always deliver. Through the introduction of new and efficient technologies, we continue to be unmatched in our ability to pioneer time and cost-saving construction methodologies that add value.

“Our quality sets the bar in Nigeria and ISO Certification demonstrates that our Quality Management Systems support consistency

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JAMES KWEN, Abuja

and excellence in operations.

Julius Berger’s resources, the strongest of which are its highly skilled staff, remain unmatched in the Nigerian construction sector,” he said.

Richter observed that this year marks Julius Berger’s golden jubilee, that is, 50th anniversary of its incorporation as a Nigerian company.

“This year, we celebrate five decades of achievement…and each of these five decades has been a building block to our success and growth,” he said.

The virtual meeting, which was anchored from the company’s head office in Abuja and directed by Mutiu Sunmonu, chairman, had Ernest Chukwudi Ebi and Gladys Talabi, both Board members, as well as other shareholders and stakeholders participating from the company’s facility in Lagos.

Going down memory lane, Richter recalled that Julius Berger arrived Nigeria as a Special Project Vehicle in 1965 for the construction of the Eko Bridge in Lagos, and was formally incorporated as a Nigerian company in February 1970. Since then, Julius Berger has relentlessly worked with best international quality and top-notch engineering standards to become the country’s leading domestic construction company, he said.

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he surge in job losses in Nigeria due to the adverse effects of COVID-19 pandemic is indicative of how the Economic Stimulus Bill 2020, initiated to prevent this quagmire, is relevance, as the National Assembly delays on its enactment.

The ‘Emergency Economic Stimulus Bill 2020’ was introduced and passed by the House of Representatives on the same day on March 24, to particularly address some of the foreseeable job losses in the country, already battling high level of unemployment.

Unfortunately, that bill has not been concurred by the Senate, and would also need to go through the Presidential assent before its implementation.

Sponsored by speaker of the House, Femi Gbajabi-

amila, and his deputy, Ahmed Wase, principal officers and other members of the House of Representatives, the Bill sought to Provide Relief on Corporate Tax Liability, Suspension of Import Duty on Selected Goods and Deferral of Residential Mortgage Obligations to the Federal Mortgage Bank of Nigeria for a fixed term to protect jobs and alleviate the financial burden on citizens in response to the economic downturn occasioned by the outbreak of COVID-19.

The purpose of the legislation is to provide temporary relief to companies and individuals to alleviate the adverse financial consequences of a slowdown in economic activities brought on by the outbreak of the COVID-19 disease in Nigeria.

This was targeted at protecting the employment status of Nigerians who might

otherwise become unemployed as a consequence of management decision to retrench personnel in response to the prevailing economic realities.

Considering the level of optimism with which the Economic Stimulus Bill was embraced on its introduction at the lower legislative chamber, there are now concerns on the slow progress and whether the lawmakers understand its importance.

Elijah Agaku, a taxation economist, says the Bill should be a wakeup call for the executive arm of government to do something about tax rebate to enable companies stay afloat and maintain employment.

Agaku observes that the pandemic has caused massive unemployment such that people who were hitherto gainfully employed have been disengaged, hence no

money to pay employees, but tax rebate would have addressed companies financial constraint.

“Before the Bill came, there were perceived objectives that needed to be achieved if the Bill has been concurred by Senate and assented to by the President.

One of such objectives is to protect jobs, and this way affects the economy positively.

“But hence the Bill has not reached that stage; it therefore means that the anticipated objective has not been achieved so it is a gross failure. There is therefore need for this Bill to be approved as it has to do with the campaign promises of the government.

It could be recalled that during campaign and at the inception of the administration, unemployment was a key issue to be addressed and they have not done something on it,” he notes.

Private sector driven economy will deliver value, strengthen democratic structures – LCCI GBEMI FAMINU

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s Nigeria celebrates 21 years of uninterrupted democratic ruling, the Lagos Chamber of Commerce and Industry (LCCI) in its congratulatory message, reiterates the need for a thriving private sector driven economy that will strengthen the country’s democratic structures while delivering value to the economy.

In a statement signed by Muda Yusuf, director- general, LCCI, the chambers congratulated the government on exercising uninterrupted democracy while also commending the military for its loyalty. However, it stated that economic milestones and democratic values are yet to reflect in the Nigerian system.

Consequentially, the LCCI urges the government to prioritise economic growth and development by improving private sector involvement and also revamp the policy, regulatory and institutional frameworks for better business and democratic structures.

“A strong and virile economy is critical for a sustainable democracy. Worsening poverty poses a great deal of risk to the democratic

process and the security of the nation,” according to the statement.

In a 4-year review (20152019), the chambers with proof of data highlights the shortfalls in the country’s economy showing significant declines in the GDP growth rate, Foreign Direct Investment (FDI), public debt, exchange rate, as well as the surge in the unemployment rate, poverty rate, among other economic indicators.

The chamber also notes that despite the high rate of business activities, the business environment is saddled with challenges hindering growth and expansion possibilities, which has affected commercial activities of the private sector as well as the inflow of FDI into the country fuelling unemployment and poverty. This, according to the National Bureau of Statistics (NBS), stood at 23 percent and 40 percent in 2018 and 2019, respectively.

Referring to the global competitiveness ranking, the chamber says the marginal improvement recorded for Nigeria emphasises the need for much greater efforts to improve the competitiveness of the business environment.

L-R: Tope Smart, GMD/CEO, NEM Insurance plc; Fidelis Ayebae, chairman, and Olajumoke Philip-Akede, company secretary, during the company’s 50th annual general meeting in Lagos.

WAEC Aug/Sept 2020 PIN available on Remita, Improved varieties: FG commences distribution as examination body announces sales of cotton seedlings to farmers in Nasarawa MARK MAYAH

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www.businessday.ng

rospective private candidates of the 2020 West African Senior School Certificate Examination (WASSCE) – Second Series (Aug/Sept WAEC GCE) across Nigeria can now conveniently purchase their registration PINs on Remita’s website and pay through any of the multiple channels available including their debit card, internet banking, USSD and mobile wallet.

This statement was disclosed recently as the West African Examinations Council (WAEC) formally announced the commencement of the sale of WASSCE registration PINs, from June 10 to July 31, 2020.

To enjoy this service, intending candidates are to visit the Remita website, select “Buy WAEC PIN”, fill all required fields and choose their preferred payment channel.

They can also pay at agent

locations and bank branches where they would present their Remita Retrieval Reference (RRR).

Once payment is completed, the exam registration PIN is delivered to the candidate’s email and also displayed on the Remita payment receipt sent to the same email. The candidate is then expected to proceed to WAEC’s website to complete registration with the obtained PIN. “We have consistently provided easy and flexible payment solutions for our customers in all strata of the economy. Prospective candidates of the August/September WAEC Examination for Private Candidates can begin and complete payments on their internet-enabled computers or mobile phones using the Remita webpage with multiple payment options that would help them complete their registration in good time,” said David Okeme.

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SOLOMON ATTAH, Lafia

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he Federal Government has commenced the distribution of bags of improved varieties of cotton seedlings to farmers that can be harvested in 90 days in order to attract textile industries to Nasarawa State.

State coordinator, Raw Materials Research and Development Council (RMRDC), Zakari Musa Eladoga, stated this at the occasion to flag off the distribution of the cotton seedlings in Lafia.

Eladoga said the initiative was first to boost cotton production in the country, describing cotton as a viable raw material that had high potential for revenue generation and economic empowerment.

According to Eladoga, it is the Federal Government’s desire to make the country one of the highest producers of cotton in the world.

“We want Nasarawa State @Businessdayng

to become a cotton producing states in Nigeria, as it is a good raw material for the production of clothes which will attract textile industries to the state.

“It is our duty to distribute varieties of seedlings to farmers during cropping season to boost agricultural production in the country.

“We have distributed cotton seedlings to farmers in the past and this particular seedlings are improved varieties of cotton that can be harvested within 90 days,” he said.

He therefore called on farmers to make good use of the opportunity given them in order to attract textile industries to the state.

In his remark, Allananah Otaki, commissioner for agriculture and water resources in the state, expressed gratitude to the Federal Government for the initiative, saying the provision of the inputs would go a long way in improving agricultural production in the state.

34 BUSINESS DAY

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Monday 22 June 2020

FINANCIAL TIMES

World Business Newspaper

Trump relaunches campaign before reduced crowd in Tulsa President stages his first major rally since the US went in to lockdown because of pandemic LAUREN FEDOR

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onald Trump took aim at the media, Joe Biden and “the radical left” before a smaller than expected crowd in Tulsa, Oklahoma on Saturday, as he tried to relaunch an election campaign stalled by the coronavirus crisis.

The president weighed in to the racial injustice debate by claiming the destruction of some statues during Black Lives Matter protests were a sign of things to come if the Democrats won the White House in November.

“The unhinged leftwing mob is trying to vandalise our history, desecrating our monuments, our beautiful monuments, tear down our statues and punish, cancel and persecute anyone who does not conform to their demands for absolute and total control — we’re not conforming,” he said to roars from the crowd.

“They want to demolish our heritage so they can impose their new oppressive regime in its place. They want to defund and dissolve our police departments. Think of that.”

The Trump campaign had expected some 19,000 people to crowd the city’s BOK Center arena, even though the number of coronavirus cases in Tulsa has spiked since the start of the month and the head of the city’s health department had warned the rally posed a huge risk.

“We have never had an empty seat, and we certainly won’t in Oklahoma,” the US president told reporters at the White House earlier this week.

The president’s re-election team had also anticipated thousands of supporters would fill an outdoor “overflow” area where Mr Trump and US vice-president Mike Pence would address the crowd.

But the arena was far from full on

US President Donald Trump reacts as he takes the stage at his first re-election campaign rally in several months in the midst of the coronavirus disease outbreak © REUTERS

Saturday night, and the campaign cancelled the outdoor events, blaming “radical protesters” outside the venue and a “relentless onslaught from the media”.

Tim Murtaugh, the Trump campaign’s communications director, said the president was rallying with “thousands of energetic supporters”.

“Sadly, protesters interfered with supporters, even blocking access to the metal detectors, which prevented people from entering the rally. Radical protesters, coupled with a relentless onslaught from the media, attempted to frighten off the president’s supporters. We are proud of the thousands who stuck it out,” Mr Murtaugh added.

Mr Trump called supporters inside the arena “warriors” as he slammed protesters who had taken

to the streets after George Floyd was killed by police in Minneapolis, and burnished his “law and order” credentials.

The president said Congress should pass a law banning the burning of the American flag, with violators sent to prison for one year. The US Supreme Court ruled in 1989 that Americans had the right to burn flags under the First Amendment to the Constitution, which protects the right to free speech.

“I stand before you today to declare that the silent majority is stronger than ever before,” Mr Trump said, adding: “Five months from now, we are going to defeat Sleepy Joe Biden.”

The Trump campaign was criticised for originally planning the rally for June 19 — the anniversary of the end of slavery — and in Tulsa, scene

of a racist massacre in 1921. It was also accused of risking a spike in coronavirus cases.

The president has slipped in opinion polls in recent weeks, as an increasing number of Americans disapprove of his handling of the coronavirus pandemic. He has also come under criticism from both Democrats and Republicans for his response to the widespread protests following Floyd’s death last month.

A Fox News poll this week gave Mr Biden, the former vice-president who will be the Democratic party’s presidential nominee, a 12-point lead over Mr Trump nationwide, while a Quinnipiac survey put the former vice-president eight points ahead of the incumbent.

Mr Trump attacked Mr Biden repeatedly on Saturday night, saying the

former vice-president was a “helpless puppet of the radical left”.

“He’s not radical left. I don’t think he knows what he is any more,” the president added.

Mr Trump defended his handling of the coronavirus crisis, saying he “did a phenomenal job” with the pandemic. He claimed he had asked officials to reduce the number of Covid-19 tests because “when you do testing to that extent, you’re going to find more cases”.

“I said to my people, slow the testing down,” the president added.

Mr Trump was joined at Saturday’s rally by many of his high-profile allies, including Republican senators, congressmen and local officials. Mr Pence addressed the arena before the president but left to travel back to Washington DC before Mr Trump took the stage.

Nigel Farage, the head of the UK Brexit party, also attended the rally, despite a ban preventing people from the UK, Ireland and other European countries from travelling to the US due to the coronavirus. A spokesperson for the US department of homeland security said Mr Farage’s visit had been deemed “in the national interest”.

Earlier on Saturday, Mr Trump’s re-election campaign confirmed that six staffers had tested positive for Covid-19 ahead of the Tulsa rally.

Mr Murtaugh said campaign staff were tested for coronavirus before events “per safety protocols”.

“Six members of the advance team tested positive out of hundreds of tests performed, and quarantine procedures were immediately implemented,” Mr Murtaugh said. “No Covid-positive staffers or anyone in immediate contact will be at today’s rally or near attendees and elected officials.”

Egypt threatens military action in Libya if Turkish-backed forces seize Sirte President Sisi’s belligerent rhetoric underlines concern over strategic port and any deal between Ankara and Moscow HEBA SALEH

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gypt’s leader Abdel Fattah al-Sisi has threatened to intervene militarily in neighbouring Libya if Turkish-backed forces capture Sirte, a strategic port and gateway to important oil terminals.

The warning adds to tensions in the war-torn, oil-exporting north African country that has become a proxy battleground for regional and international powers. Weapons and mercenaries have poured in to all sides, stymieing UN efforts to forge a negotiated settlement and ensure compliance with an arms embargo.

In televised remarks after inspecting military units at an army base near the border with Libya, Mr Sisi warned that the fall of Sirte or the inland Jufra air base would be a “red line” for Egypt.

Any Egyptian action in Libya would “have international legitimacy” because it would be selfdefence against “threats from terrorist militias and mercenaries”, he told soldiers.

“If the Libyan people . . . asked us to intervene, this would be a signal to the world that Egypt and Libya are one country, one interest,” he added.

Egypt does not want a single Turk to cross the line into eastern Libya Ziad Akl, Director of North African Studies at the Al Ahram Centre for Political and Strategic Studies Cairo backs Khalifa Haftar, the eastern military strongman whose 14-month offensive to seize Libya’s capital Tripoli was thwarted largely because Ankara helped his opponents. Gen Haftar had to pull back from Tripoli’s outskirts after Turkish drones inflicted losses on the battlewww.businessday.ng

field. The drones were used to back up militias aligned with the UN-recognised Government of National Accord.

Mr Sisi also said hostilities should cease on current battle lines and called for “talks and negotiations” to reach a solution to the crisis.

The president’s tough talk is “a message to Turkey that there are regional powers opposed to its intervention in Libya”, according to Ziad Akl, director of north African studies at Al-Ahram Centre for Political and Strategic Studies, an Egyptian think-tank.

“The aim is deterrence; Egypt does not want a single Turk to cross the line into eastern Libya,” he said. “It wants to relaunch negotiations. If Egypt intervenes, I think the last option would be boots on the ground.”

Mr Sisi urged Libyan tribal leaders attending his address on

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Saturday to send their youths to Egypt where “we would train them, prepare them and arm them”. Cairo has also asked for an Arab League foreign ministers meeting to be held on Monday to discuss Libya.

Egypt has been alarmed by the intervention of Turkey, which it considers a regional foe because of its support for the Muslim Brotherhood group, which Mr Sisi ousted from power in Egypt in 2013.

Another concern for Cairo — and the main reason it has supported Gen Haftar — has been weapons and armed religious extremists pouring across its western border from mostly lawless Libya, Mr Akl said.

Turkey has sent its GNA allies weaponry including drones and anti-aircraft batteries. It has also dispatched military advisers, personnel to operate the drones and Syrian mercenaries to beef up @Businessdayng

anti-Haftar forces.

Gen Haftar’s side has benefited from extensive arms transfers and diplomatic support from the UAE, Egypt, Russia and France. Moscow has supplied mercenaries and stationed sophisticated fighter jets in Libya after Gen Haftar’s defeats, in a warning to the Turks to limit their advance to north-west Libya.

Analysts say a ceasefire in Libya will depend on whether Russia and Turkey can reach an agreement first. Mr Sisi’s belligerent tone might reflect concern that Russia would accept a takeover of Sirte, said Wolfram Lacher, senior associate at the German Institute for International and Security Affairs.

“Threatening intervention is also a way for Egypt to get back into the game to prove it is still a relevant actor and prevent Turkey and Russia from dividing it up between themselves,” he said.

Monday 22 June 2020

BUSINESS DAY

35

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Wall Street erases gains as Apple store closures spook investors

Move offsets solid week for global markets as stimulus measures outweighed concern over new infections PHILIP STAFFORD, HARRY DEMPSEY AND HUDSON LOCKETT

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S equities had a cautious end to the week as fresh optimism about the outlook for the economy was tempered by concerns over the rising number of coronavirus cases.

Morning gains were erased after Apple said it will close again some US stores in states where local cases of the virus are increasing. The S&P closed down 0.6 per cent while the tech-heavy Nasdaq Composite finished flat.

The falls stalled growing momentum in equities markets this week following last week’s jitters.

The MSCI World index of developed market equities rose 3.2 per cent this week as investors were fortified by the US Federal Reserve’s actions to support the economy.

Earlier optimism was reflected in Europe, where markets closed before the Apple news emerged.

The composite Stoxx 600 index rose 0.6 per cent. London’s FTSE 100 was the standout riser, closing up 1.1 per cent after better than expected British retail sales numbers and news that the government had downgraded its coronavirus alert level.

However, many investors warn that equities have become overvalued compared with projected corporate earnings, and the economic recovery from the pandemic will become increasingly difficult in the months ahead.

“In the next few weeks, the easy part of a post-Covid-19 recovery will be over and by then credit and equity will be far more expensive,” said Sebastien Galy, strategist at Nordea Asset Management. “The question beyond this is whether authorities have managed to stabilise long-term growth expectations which drive many long-term and

Apple said it will close again some US stores in states such as Florida where local cases of coronavirus are increasing © AP

short-term behaviours.”

The gains came despite renewed fears about upticks in Covid-19 infections. The US on Thursday recorded its largest one-day increase in coronavirus cases since early May, raising uncertainty over the prospect of a swift economic recovery. The jump of 27,000 infections was fuelled by a record number of new cases in California, Florida, Arizona and South Carolina.

The Tips yield — often seen as a measure of the real government borrowing costs — for 5-year government debt hit a record low of minus 0.733 per cent, according to data from Tradeweb. A falling Tips yield is an indication investors are worried about the prospects for economic growth.

Chinese officials have also been grappling with a spate of new Covid-19 cases in Beijing. Authorities reported another 25 cases in

the city by the end of Thursday, taking the tally for the latest outbreak to 183.

These developments were offset by a potential step towards easing geopolitical tensions between the US and China. Reports of meetings between officials from the two countries in Hawaii suggested their preliminary trade deal was intact.

“It shows both sides are willing to step back from the brink, which is positive for markets,” said Andy Maynard, a trader at China Renaissance. But he added there was “no new catalyst in the market” capable of pushing equity prices higher.

Investors have batted off fears that new outbreaks would set back economic recovery against a backdrop of liquidity pumped into financial markets by central banks, the potential easing of US-

China tensions and the reopening of economies.

“It is more likely that despite occasional local outbreaks leading to pauses in reopening in some states and potentially to local shutdowns, the overall trend of easing restrictions will continue,” said analysts at Bank of America, who predict European stocks will rise 15 per cent by November.

The UK pound had its worst week in a month against the dollar, after falling below $1.24. Traders focused on the economic damage to the UK from a severe coronavirus outbreak and the prospect of less quantitative easing from the Bank of England going forward, according to analysts at MUFG. Sluggish economic recovery is not the only factor threatening to derail the bull run, analysts said. An increase in bankruptcies, permanent unemployment and renewed

geopolitical friction in Asia-Pacific could reverse the positive sentiment in markets.

Stocks in Asia struggled for direction on Friday. Tokyo’s benchmark Topix index was flat while Hong Kong’s Hang Seng rose 0.8 per cent. South Korea’s Kospi gained 0.4 per cent and mainland China’s CSI 300 index gained 1.3 per cent.

Oil prices were supported by a report citing two of the largest commodity traders saying that crude demand was recovering rapidly this month and pledges by two producers to compensate for overproduction in May to comply with quotas set by Opec and its allies.

Brent crude, the international benchmark, rose 1.3 per cent to $42.05 a barrel, while West Texas Intermediate, the US marker, climbed 1.9 per cent to $39.57 a barrel.

US corporate borrowing costs sink to record low Yield on investment-grade bond index drops after strong demand from foreign investors JOE RENNISON

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oreign investors have flocked back into US corporate bonds after a brief exodus, helping push the yield on higher-quality debt to a new record low.

Purchases of US corporate debt by foreign investors almost doubled in April to $11.6bn, from $6.5bn in March, according to the most recent government data available. The figures mark a dramatic reversal of a retreat that totalled more than $20bn in February, when fears over the spread of coronavirus began to circulate through markets.

Bankers and US fund managers say that foreign investors have continued to pile in throughout May and June, providing a crucial source of support for US companies that have raised vast amounts of debt to see them through the economic downturn.

That demand comes alongside unprecedented monetary easing efforts from the US Federal Reserve, helping push an index of investment-grade bond yields to a new all-time low of 2.23 per cent on Thursday, according to Ice Data Services.

Before the severity of the viral outbreak dawned on markets, the previous low had been 2.26 www.businessday.ng

per cent in February. Yields peaked at 4.7 per cent in March.

Despite that steep fall in yields, the returns on offer in the US corporate bond market still exceed other markets around the world, especially for longerdated debt which is harder to come by outside America.

“Anecdotally, we are seeing tremendous flows from overseas, particularly in Asia and particularly for longer-dated bonds where investors can maximise yield,” said Andrew Karp, global head of investment-grade debt capital markets at Bank of America Securities.

The increase in demand is

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driven in part by a significant fall in the cost of hedging, or converting US dollar-denominated debt back into other currencies. As the Fed has slashed US interest rates as part of its “massive stimulus”, the cost of entering into derivatives contracts has also dropped, bringing down the cost of hedging currency risk “dramatically”, said Logan Miller, a credit strategist at Wells Fargo Securities.

In January, the cost of hedging a dollar bond back into Japanese yen shaved roughly 2 percentage points off its yield, according to Wells data. That took the all-in return down to @Businessdayng

about 0.4 per cent — roughly the same as that which was on offer from local bonds.

Now, after a swift fall in hedging costs to just 0.6 percentage points, the all-in return stands at over 1 per cent, or roughly twice the local Japanese corporate bond index for shorter-dated bonds. For longer-dated bonds, the return rises to 2.5 per cent.

These differences have narrowed a little recently, as yields on US corporate bonds have dropped. But analysts said that demand from foreigners was likely to stay strong, as hedging costs were unlikely to rise as long as the Fed held rates near zero.

Company IN FOCUS

BUSINESS DAY Monday 22 June 2020 www.businessday.ng

Microsoft: Imagining a Digital-First Nigeria SEGUN ADAMS

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s the countries slowly reopen after strict lockdowns to slow the coronavirus pandemic, there has been an increasing shift in focus to the benefits that “going digital” can offer countries, organizations and individuals.

The Fourth Industrial Revolution is taking an exponential leap, according to experts.

Across the world, businesses and countries are thinking in a new direction, making strategic turns and aligning their processes to fit a new reality forced by the pandemic outbreak.

Beyond the health crisis, gains in automating processes, machine learning, cloud computing etc. are now clear as the application of the aforementioned in areas like health, education and governance can accelerate inclusive growth and create new opportunities for all.

In a recently published Microsoft position paper, digital transformation is presented as a means for social and economic development in Nigeria, and as an opportunity for every Nigerian citizen and business to achieve more. Commenting on the paper, Nigeria’s Minister of Communications and Digital Economy, Isa Ali Ibrahim (Pantami) said: “In recognising the need to focus on digitalisation of the economy as a way to foster inclusivity, growth and skills development for job creation as well as the significant benefits in enabling government, citizens, and businesses to achieve more, we are working with Microsoft to leverage their technological expertise to enable the transformation that will allow our country to take part in the $11.5 trillion global digital economy.”

Diversifying Digitally The World Bank last year said digital economy is expected to grow from 15.5% of world GDP in 2016 to 25% in less than a decade, a pace of growth faster than the world’s economy.

However, the bank said Nigeria has remained on the sidelines.

Recent decline in oil revenue has reignited a push for economic diversification. In today’s digital world, there are new possibilities in data.

Speaking with BusinessDay on Friday, Akin Banuso, Country General Manager at Microsoft said in Nigeria’s quest to diversify from oil, the country can look to the digital space to create new jobs and services that can be exported without suffering a brain drain.

Economists have pointed to India’s ICT revolution as the bedrock of the economic progress it is enjoying today.

Source: World Bank

By investing in digital education and in technology, India equipped its youth with skills that were in demand in western countries like the US. The country was able to enjoy greater dollar inflow and a more valuable service sector.

Today, India has its own “silicon valley” in Bangalore with the IT industry worth at least $50 billion according to some estimates.

Banuso also pointed out benefits in the education sector, where today, many students are unable to continue learning due to the pandemic that forced the closure of schools.

He said Microsoft is currently working with the Nigerian Communications Commission (NCC) on providing low-cost data to rural communities to facilitate students’ learning and support internet accessibility.

According to the World Bank, while Nigeria is uniquely positioned to reap the benefits of the digital economy, minimal fixed broadband infrastructure and connectivity in rural areas is leaving a significant number of the most marginalized segments of the population without Internet access.

Given Nigeria’s doctor-topopulation ratio, Banuso said telemedicine will afford the country the opportunity to allow more people to benefit from the healthcare system and improve the efficiency of service delivery.

For instance, asides diagnosis and consultations, telemedicine will allow data to be sent from one point and analyzed in another, with results sent back in real time, he said.

A digital Nigeria would also improve accountability in the public and private sectors, help lower cost of Nigeria’s bureaucracy and improve citizen’s engagement with their leaders in the grassroots and across tiers.

Tailwinds for Progress To drive cloud adoption in the country which would catalyse the digital transformation of public institutions, Microsoft has laid out recommendations, which include: 1. To sustain the traction of a cloud-first policy and other digital transformation initiatives, Government efforts to increase digital and cloud capabilities of the public service are important. The Government should amplify communications of its

‘‘

A digital Nigeria would also improve accountability in the public and private sectors, help lower cost of Nigeria’s bureaucracy and improve citizen’s engagement with their leaders in the grassroots and across tiers

‘‘

Transforming Nigeria using technologies will require developing a digital ecosystem, infrastructural enhancements in the policy and regulatory environment, education sector and national security commitment and support of ICT policies within an enabling environment 2. Build digital and AI capacity through the creation of AI knowledge centres across the country as well as the enhancement of scientific research on AI adoption 3. Government must optimise its data ecosystem through the development of multi-domain open data repositories that will enhance citizen interaction and amplify the country’s emergency response infrastructure.

4. Government should ensure technology adoption barriers like costs are fair to all socioeconomic groups and offer support and provision of digital applications in sectors such as

education and healthcare.

5. To implement the NITDA’s e-Government Interoperability Framework across the public sector. This provides uniform standards to follow in ICT adoption that will optimise the government’s role in driving sustainable development.

6. Adapt the national education curriculum and delivery methods to align with 4IR and develop digital and non-digital skills such as critical thinking.

7. The passage of data protection laws unique to the Nigerian context that aligns with cutting-edge technologies, is technology-neutral and balances innovation with protection.

Driving digital inclusion and ensuring the digital security and privacy of citizens Technology’s power lies in its ability to empower people regardless of background, gender, religion or race, yet barriers of access to technologies continue to persist which in turn keeps adoption of technology low.

Inclusiveness brings down the cost of governance for government and improves social good among the citizens. Additionally, the adoption of responsible management practices and guidelines will optimise transformation initiatives and enhance benefits realisation for social inclusion.

As data protection, security and privacy are the key concerns holding back widespread adoption of emerging technologies in the country, it is therefore vital that Nigeria builds data protection laws and frameworks that regulate behaviour while ensuring the right to privacy for every individual.

Transforming Nigeria using technologies will require developing a digital ecosystem, infrastructural enhancements in the policy and regulatory environment, education sector and national security.

According to Banuso, there is a fair amount of work to be done, but it is a shared responsibility between governments, private sector organizations and other interested stakeholders.

About Microsoft Digitalization support for Nigeria, Africa Microsoft is involved in a number of initiatives to promote the digitalization of Nigeria, and Africa.

Microsoft’s Africa Development Center, with a location in Nigeria and Kenya, is one of seven around the world.

Microsoft is changing the digital economy narrative positively with programs and initiative such as Accelerate Lab, Imagine Cup, AfDB Code for Employment, Gigi Girls, Leap etc.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.