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Catholics protest killings in Nigeria

Ajaokuta, Aluminium Smelter, coal mines lie idle as Fayemi leaves office

... As Pope leads 50 bishops to bury Benue slain priests, parishioners

ODINAKA ANUDU

James Kwen, Abuja

he Catholic faithful across Nigeria are embarking on peaceful protest over continued killings in the country today. The protest which holds simultaneously in all states and dioceses in Nigeria is not for Catholics alone but other ChrisContinues on page 4

MTN Nigeria forecasts strong performance ahead of IPO

Fayemi

N L-R: Ernest Ebi, former deputy governor, Central Bank of Nigeria (CBN)/chairman, Fidelity Bank plc; Gbenga Olaniyan, chairman/CEO, Olaniyan and Associates/Estatelinks, and Oluseyi Bickersteth, former chairman, KPMG Africa, at the 25th anniversary of Estatelinks in Lagos.

igeria’s minister of solid minerals development Kayode Fayemi will be leaving office any moment from now to pursue his governorship ambition in Ekiti State, but he is leaving behind a trail of moriContinues on page 4

DIPO OLADEHINDE

CBN sacks E-tranzact directors

FRANK ELEANYA

…EBITDA up 24% to N104bn in Q1 2018 …margins expand to 41.8% s the days of its potential listing draws closer, investors are already getting a taste of what to come as MTN Nigeria, forecasts strong financial performance in the coming Continues on page 4

Inside Negative trade growth slows Nigeria’s Q1 2018 GDP to 1.95% P. 2 Nigeria needs 5 Vice Presidents, six-year single term for Presidents P. 2 – Soludo

Over N11bn fraud perpetrated on its payment platform

he Central Bank of Nigeria (CBN) has asked the chief executive officer, Valentine Obi, and two executive directors, Sulivan Akala and Ike Eze of e-Tranzact an electronic payment platform, to resign, BusinessDay can reveal. The move also saw the immediate termination of the appointment of the chief technology officer (CTO), Richard Omoniyi and chief operating officer, Kehinde Segun. According to a source familiar with the matter, the management were asked to resign following allegations of N11 billion

fraud perpetrated through its platform. The CBN has appointed auditors from PricewaterhouseCoopers (PwC) and Ernst & Young to go through the books of e-Tranzact, sources told BusinessDay. The Economic and Financial Crimes Commission (EFCC), Lagos Zonal office, in April arrested Michael Osasogie Obasuyi, Managing Director, Platinum Multipurpose Cooperative Society Limited, for alleged offenses bordering on conspiracy, cybercrime and money laundering to the tune of N 11.498 billion. Obasuyi, who is also the Managing Director of Smartmicro Systems Limited, had written a petition in March 2018 to the

Commission against e-tranzact. However, in a twist, e-tranzact had also written a counterpetition against Smartmicro and Obasuyi, which led the Commission to begin investigations into the activities of Obasuyi. Smartmicro was alleged to have approached e-tranzact in 2012 for the deployment of bulk purchase solution called “Corporatepay” to facilitate payment of salaries of Delta State employees in microfinance banks. E-tranzact then allegedly configured an additional outbound fund transfer solution called “Fundgate” in 2017, which required Smartmicro to maintain a pre-funded settlement account with a first generation

bank for settlement of account it had initiated. However, the first generation bank, sometime in March 2018, revealed to e-tranzact that the settlement account was in debit to the tune N11, 498,944,038.29. Sources say Obasuyi, in his statement to the Commission, confessed to having committed the crime, stating that he created fraudulent and imaginary monies through the aid of Fundgate financial application from the company. The Commission, in the course of an investigation, has recovered a paper version of the programme called MicroSwitchServer1, which he allegedly used Continues on page 2

2 BUSINESS DAY NEWS

Negative trade growth slows Nigeria’s Q1 2018 GDP to 1.95% ... non-oil sector contribution declines as oil spikes BUNMI BAILEY & OLALEKAN IPELE

irst quarter 2018 GDP g row t h s l ow e d by 0.16 percent to 1.95 percent, compared to 2.11 percent expansion recorded in Q4 2017, according to the National Bureau of Statistics (NBS) GDP report released yesterday, contrary to continuous quarterly growth expectation of analysts. Analysts have attributed the decline to the fall in the contribution of the trade sector to GDP. The trade sector declined by -4.64 percent, falling from 2.07 percent in Q4 2017 to -2.57 percent in Q1 2018. Equally, the services sector growth fell by -0.57 percent from 0.10 percent in Q4 2017 to – 0.47 percent in Q1 2018. BusinessDay analysis of the NBS report shows that GDP grew year-on year by 2.87 percentage points to 1.95 percent in Q1 2018 from -0.91 percent in Q1 2017 when the country was still in recession. “Attention should be focused on the growth of the trade sector. It accounts for more than 50 percent of Nigeria’s total GDP. So long as this sector remains in the negative territory in terms of growth; our overall GDP growth is going to remain stunted. The sector’s contribution to GDP dropped from 2.07 percent in Q4 2017 to -2.57 percent in Q1 2018 which is why we have seen this slowed growth,” Ibrahim Tajudeem, Head of Research, Chapel hill Denham said on phone. “The industrial sector, a sub sector of the manufacturing sector is doing very well, reflecting the priority of the monetary policy authorities to ensure that manufacturers have access to Foreign Exchange to import raw material for their production. However, traders are not feeling the recovery yet. Bear in mind the 41 items are still under ban. Traders do not manufacture, they likely just buy and sell.” “The agricultural sector and the industrial sector grew by 3 percent and 6.86 percent respectively, had these growth rates been recorded by the trade sector, we would have seen a better GDP growth figure,” Tajudeem concluded.

Johnson Chukwu, CEO, Cowry asset management limited said that the slowing growth rate should be a major concern to the government and managers of the economy. Despite the decline, analysts are optimistic about the prospects of the economy since this is the fourth quarterly consecutive positive expansion Africa’s largest economy is witnessing since exiting recession in Q1, 2017, driven by increased oil production and prices. Further improvements in foreign exchange liquidity and a rebound in non-oil activity especially the manufacturing and agricultural sectors are also a contributing growth factor. Ayodeji Ebo, MD, of Lagosbased financial advisory, Afrinvest said, “On a year on year basis, we expect the economy to be upward steady. We have seen continuous stability in FX market, good business environment, manufacturing companies are improving, Purchasing Managers’ Index (PMI) has been improving etc. so on the back of these we expect positive momentum in Q3 to Q4.” Chukwu said that the econo-

Continued from page 1

to create and post the imaginary monies. He also admitted having diverted to his personal use the sum of N7, 519, 381, 202 out of the total sum of N11, 498,944,038.29. “Part of the money has been recovered,” sources told BusinessDay. The EFCC statement confirmed that the sums of N2,

my will improve but depends on the stability of the political environment as the country nears pre-election activities in Q3 and the budget implementation. Sector contribution to GDP is classed into the oil and non-oil sector. The Real growth of the oil sector increased by 30.37 percentage point’s year-on-year to 14.77 percent in Q1 2018 from 15.6 percent recorded in the corresponding quarter of 2017. On a Quarter-on-Quarter basis, the oil sector grew by 13.24 percent in Q1 2018. The oil sector contributed 9.61 percent to total real GDP in Q1 2018, up from 8.53 percent and 7.35 percent recorded in the Q1 2017 and Q4 2017, respectively “Nigeria’s Oil GDP was 14.77 percent in Q1 2018 compared to non-oil GDP of less than 1 percent. A testimony to the impact of higher oil price, we expect robust Oil GDP growth for the first three quarters of 2018, due to higher oil price and low base effect,”Jubril Kareen, energy analyst, Ecobank said in a tweet. The non-oil sector grew by 0.76 percent in real terms during the reference quarter. This

is higher by 0.04 percent point compared to the rate recorded same quarter of 2017 and 0.70 percent point lower than the fourth quarter of 2017. This sector was driven mainly by Agriculture (Crop production); other drivers were financial institutions and insurance, Manufacturing, Transportation and Storage and Information and Communication. In real terms, the Non-Oil sector contributed 90.39 percent to the nation’s GDP, lower than 91.47 percent recorded in the first quarter of 2017 and 92.65 percent recorded in the fourth quarter of 2017. In the 2018 budget, the government projected a growth rate of 3.5 percent but some analysts have said that with the current growth figure GDP recorded in Q1 2018, it might not be achievable. “With this 1.95 percent growth rate, I don’t think we will achieve the 2018 budget growth rate projection. The build up to the 2019 general elections may not allow us enjoy the full benefits of some of the economic policies but I see us ending around 2.2 or 2.3 percent,” Chukwu said

L-R: Emmanuel Ikazoboh, group chairman, Ecobank Transnational; Oscar Onyema, CEO, Nigerian Stock Exchange; UK Eke, GMD, FBN Holdings plc, and Anthony Okpanachi, CEO, Development Bank of Nigeria, at the Africa Development Bank annual general meeting at Busan, South Korea.

CBN sacks E-tranzact... 903,737,563.92, $37,992.87 and €18,538.09 found in Obasuyi’s accounts in various banks in the country were recovered. “However, several watchers are also thinking that CBN has not been fair to e-Tranzact because they were not the perpetrator of the fraud,” another source said. E-Tranzact CEO, Valentine Obi told BusinessDay in a phone conversation that “There is noth-

Tuesday 22 May 2018

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ing like that please.” BusinessDay also reached out to Africa Capital Alliance (ACA), one of the major shareholders in e-Tranzact, for a statement on the development. An ACA representative said the firm was not in the best position to respond. The Acting Director of Corporate Communications Department (CCD) at the CBN, Isaac Okorafor, said that he was unaware of the development when BusinessDay contacted him seeking a statement on the

report. Other FinTech sources tell BusinessDay that the CBN may have asked majority shareholders to take out the management of E-transact. The sources added that discussions are currently ongoing on a golden parachute - a compensation package for top executives who are terminated - pay package to compensate the founder/CEO and other top executives asked to resign.

Nigeria needs 5 Vice Presidents, sixyear single term for Presidents – Soludo ... would compound Nigeria’s problems, not restructuring -Stakeholders Iniobong Iwok with agency report

ormer Governor of Central Bank Charles Chukwuma Soludo, yesterday called for a single term of six years for the country’s presidents. Soludo who is a Professor of economics, made the call at the Alex Ekwueme Square, Awka, Anambra State, while speaking at the South East summit on restructuring Nigeria. He also suggested that the country should have five vice presidents, each representing a geopolitical zone. Pointing out those presidents should serve for a single term and the years of the term should be extended from four years to six years, Soludo said: “The tenure of office of the President shall be a single term of six years. “There shall be five Vice Presidents, one from each of the six geopolitical zones.” Soludo’s comments come as a reawakening of calls by notable Nigerians for the restructuring of the country. Also speaking at the summit was the President of the Ohaneze, John Nwodo, who called for equality in the affairs of the nation. The summit was attended by the Deputy Senate President, Ike Ekweremadu; former Minister of Information, Prof. Jerry Gana; Governor of Anambra State, Willie Obiano; Senator Enyinnaya Abaribe, former APGA Chairman, Victor Umeh; Emmanuel Iwuanyanwu and Niger Delta leader Edwin Clark, amongst others. But reacting to the suggestion by Soludo, some political stake holders in the country who spoke in separate telephone interview with Business day dismissed the former central bank Governor’s statement, noting that the suggestion was not the long term solution to the nation’s woes as it was meant to benefit some individuals. Leader of Pan Yoruba cultural organisations, Afenifere, Ruben Fasoranti said that what the organisation had been agitating for was a complete restructuring of the country. He said: “Six years single tenure may be ok, in this current system but for me restructuring is the solution.” Speaking in similar vein, the Lagos state chairman of Action Democratic Party, (ADP) Adewale Bolaji, said Soludo’s suggestion would only increase rivalries among the states in the regions that may be fighting to present candidates for the vice president position, stressing that Soludo’s suggestion was not restructuring but satisfying some individuals. He said: “ I don’t agree with him , that may be his opinion I think it is to satisfy some people, this would increase rancour among the Continues on page 4

Tuesday 22 May 2018

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BUSINESS DAY

NEWS The future of banking is digital - Temenos Exchange rate unification to move Nigeria to a more diversified economy - IMF ENDURANCE OKAFOR

emenos, the banking software company, in its fifth series on the future of retail banking disclosed that the future of banking is digital, as there is a significant shift in the strategic concerns of banking executives worldwide. “Technology is now the enabler, which will empower banks to build digital ecosystems and capitalize on the open banking opportunity. IT renovation is key to banks’ strategy and, indeed, their very existence; as they will need to redefine their business models in the new API economy,” David Arnott, Chief Executive Officer at Temenos, stated. The is based on the introduction of new digital technologies and the rise of the smartphone which has replaced post-financial crisis regulation as the drivers of strategic thinking at banks around the world. Therefore, Integrating open banking that allows apps to initiate payments and other financial transactions is core to adapting to the digital banking age. The report, conducted for Temenos by the Economist Intelligence Unit (EIU), offered a global investigation into the strategic concerns of retail banking executives. It revealed that 78 percent of bankers worldwide believe

that platformisation of banking will steer the market according to the in-depth survey released yesterday, May 21, 2018. A breakdown of the report shows that for the first time in its 5 year retail banking survey history, technology and digital are bigger trends than regulation, as product agility is now the top strategic priority for 52 percent of the survey respondents. Artificial intelligence (AI) was also becoming a key part of the new technology mix, but uncertainty however remains over the user experience, as compiled from the report. A further breakdown of the report revealed 71 percent of respondents are focusing their digital investment on cyber security, up from only 34 percent reported last year. “Banking has reached a watershed moment with changing customer behaviours, disruptive new technologies and a dramatic increase in competitors from within and outside of banking. The most enlightened banks understand that to become truly digital they need to update their systems front-to-back. This will fulfil their business need for product agility; they can offer the right products, over the right channel, and at the right time,” Arnott said. Although the impact of open banking and tighter security and data rules is not clear, according to the report, 71 percent are focusing their digital investment

on cyber security, only 17 percent are thinking about the risks from third-party relationships as a result of open banking. Temenos however advised that banks can take the fintechs on by building all-encompassing platforms that are seamless with other products and services, as digital investments are being directed to digital channel delivery capabilities such as mobile (cited by 54 percent of respondents), cloud-based technologies (48 percent), and in modernising front- and back-end systems (37percent). The future of retail banking as projected by Temenos might have already started rubbing off on Nigerian banks, considering the last National Bureau of Statistics (NBS) banking sector report for the first quarter of 2018, which had more digital transactions than the traditional banking. A total volume of over 457.2 million transactions valued at N32.48 trillion were recorded in Q1 2018 as data on electronic payment channels in the Nigeria banking sector. The report indicated Automated Teller Machine (ATM) transactions as being the dominant or the highest volume of transactions in the banking sector. It showed that 212.3million volume of ATM transactions valued at N1.568 trillion were recorded in the first quarter of this year.

Nigeria loses N1.493trn to lottery operators KEHINDE AKINTOLA, Abuja

igeria’s House of Representatives on Monday threatened to recommend revocation of licences of lottery operators over loss of N1.493 trillion revenue. Bello Maigari, acting executive secretary of National Lottery Trust Fund (NLTF), who spoke during an investigative public hearing held at the instance of House Committee on Inter-Governmental Affairs, said meagre sum of N7 billion was realised by the Fund over the past 13 years. Maigari, who cited lack of effective regulation in the industry as a major factor hindering improved revenue drive, said, “The Nigerian lottery market according to industry experts is the most attractive market in the whole of Africa. ”The industry is worth over N1.5 trillion as we speak. Lottery and gaming businesses have continued to flourish without proper regulation.”

While noting that lottery has significantly contributed to the gross domestic product of many countries across the continent, Maigari added that about 7.5 million to 22 million Nigerians engage in lottery and sport betting daily. “Records at our disposal indicate that cumulative returns of about five years stood at about 7.2 billion, and this is unacceptable in a nation with so much potential like Nigeria. “We’ve lost N1.43 trillion to defaulting lottery operators that refused to pay their remittances since the inception of the lottery gaming system,” he said. According to Maigari, “operators are expected to remit 20 percent of their earnings in the first five years and subsequent five years but thereafter they are expected to pay 27 percent. “But for 13 years now the operators have failed to adhere to relevant laws governing lottery operations in Nigeria.” In his remarks, Lanre Gba-

jabiamila, director-general of National Lottery Regulatory Commission (NLRC), admitted that the Commission had a lot of work to do in bringing the sector to an acceptable international pedestal. To achieve the feat, he harped on the need for immediate overhaul of the obsolete legislative framework on lottery in Nigeria. According to Gbajabiamila, President Buhari approved total number of 21 operators recommended by the Commission. ”A lot has been said from the speeches of the chairman and Mr Speaker, which I concur with, and we still have lots of work to do, as our laws are outdated and need to be re-jigged. ”We need this House, especially the committee to help us in updating the lottery and gaming laws, they are outdated and a lot of things are going on out there that need to be tapped into using enabling legislations.

Attack on journalists: Boroffice urges IGP to prosecute culprits YOMI AYELESO, Akure

enator representing Ondo North Senatorial District, Ajayi Boroffice, has called on the Inspector General of Police, Ibrahim Idris, and Ondo state commissioner of Police, Gbenga Adeyanju, to arrest and prosecute those that attacked some journalists during the Saturday’s All Progressives Congress (APC) state congress in Akure, the Ondo State capital. It would be recalled that political thugs attacked some journalists during a parallel state congress of the party in Akure. Boroffice stated this during

a solidarity visit to the members of NUJ Correspondents’ Chapel office on Monday in Akure, noting that the attacked was very crude, barbaric and uncalled for, considering the important roles journalists play in the society. He said: “I call on Inspector General of Police and Commissioner of Police in the state to investigate and bring to book those found culpable in the dastardly act. It is disheartening, embarrassing and suspicious that such attack could happen in the presence of security agents. “The journalists were merely doing their work to give fair and equal reportage to the faction

and by extension to enable member of public to know the outcome of the exercise. Every civilised society respect journalists even during the war because any society that shuns journalists is dead.” Boroffice, who is also chairman of Senate Committee on Science and Technology, said that his visit was to show solidarity and salute the courage and commitment of journalists despite the intimidation. He therefore urged all journalists to continue playing their statutory roles, saying time would come when they would operate without molestation.

ENDURANCE OKAFOR

nternational Monetary Fund (IMF), an organisation whose aim is to ensure the stability of the international monetary system, has urge Nigeria to scrap the multiple exchange rate in order to help move Africa’s largest economy to a more diversified state. The Washington-based organisation made this known through its representative in Nigeria at the Regional Economic Outlook held in Lagos yesterday, 21 May, 2018. “Full exchange rate unification would help reduce the parallel market premium in a sustainable manner and help Nigeria move towards a more diversified economy. This would be achieved through increased market confidence, reduce distortions and increased transparency, including in financial market reporting,” Amine Mati, Senior Resident Representative and Mission Chief for Nigeria Africa Department, IMF told BusinessDay. Multiple exchange rate and foreign exchange re-

strictions as explained by IMF, creates distortions in private and public decision making, discourage long-term investment, and provide opportunities for corruption. The organisation however applauded the recent progress made towards unifying some of the exchange rate windows and said it is very welcomed. The Investors’ & Exporters’ (I&E) FX window established by the Godwin Emefiele led CBN in April 2017 on the aftermath of the foreign exchange crisis that hit the country following the 2014 global crash in the prices of crude oil, topped the BusinessDay’s list of policies and ideas that impacted positively on the economy in general and Nigerians in particular in the year 2017. I&E, the new FX window for investors and exporters quickly lifted investor confidence in the foreign exchange market, improved price discovery, helped to attract dollar inflows from Foreign Portfolio Investors (FPIs), initiated the gradual re-introduction of

a liquid inter-bank market and boosted production capacity in the manufacturing sector. Meanwhile, Bismarck Rewane, MD of Financial Derivatives said a unified and flexible exchange rate can lead to a single exchange rate window. “When policy rigidity is eliminated in regards to exchange rate, it will increase both domestic and foreign investment, as a market driven exchange rate makes both exit and entry into the market an easy transaction which can restore investors’ confidence,” Rewane said in a telephone response. This is coming after the Presidential Enabling Business Environment Council (PEBEC) announced its 2018 ease of doing business outlook where it pointed out the implementation of a Single Window Platform (SWP) as one of its project it wish to achieve by the end of 2018. An analyst who preferred to be quoted anonymously however said it is above the pay grade of the PECEC, that it is the decision of the central bank of Nigeria.

4 BUSINESS DAY NEWS

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Catholics protest killings in Nigeria... Continued from page 1

tian denominations. This will be the first time the Church known for its perceived conservative disposition unlike other churches is embarking on a protest as the Church always take the dialogue approach to issues. The protest apart from being in response to the continued killings, particularly that of Christian minorities in the north, is in solidarity with the Catholic Diocese of Makurdi which today buries two priests and 17 Parishioners killed recently by armed Fulani herdsmen. Two priests of the Catholic Diocese of Makurdi, Rev. Fathers Joseph Gor and Felix Tyolaha were killed on the altar during early morning mass along with 17 parishioners at St. Ignatius Mission, Mbalom Gwer- East Local Government, Benue State late last month by armed Fulani herdsmen. Representative of Pope Francis to Nigeria (Papal Nuncio), Archbishop Antonio Guido is leading 50 Catholic Bishops to the mass burial of the two priests and the parishioners at the Se Suu Maria Pilgrimage Centre, Igbor, Benue State. Director of Communications, Catholic Diocese of Makurdi, Rev. Father Moses Iorapuu who disclosed this to newsmen said the date of the funeral which was chosen during the bishops’ conference in Rome co-

incided with the date the anti-open grazing law was passed by the Benue State House of Assembly. “The local church here (Benue) was under attack as the bishops were in a conference in Rome; so the Pope got primary information. “It was there the decision was taken with the local church and they fixed the burial for May 22. All the bishops agreed, the divine coincidence of this is that it was May 22, 2017 that the anti-open grazing bill was passed by the state assembly. “Exactly after one year, this is what we have to show; the priests and many others who were killed. The bishops will be here in their numbers but what they have done is to be sure that the burial has wider coverage and wider participation,” Iorapuu said. According to Iorapuu, all dioceses across the country have been directed to organise vigils at 10am on Tuesday, there will be a simultaneous ceremonies across the country as a mark of solidarity with the Makurdi diocese over those killed. “Some bishops will be leading ceremonies, others will be coming. The Pope’s representative in Nigeria will be present. The Abuja Archbishop, John Cardinal Onaiyekan, has also arranged that there should be a well-organised procession in Abuja,” he added. Meanwhile, John Cardinal Onaiyekan, Archbishop of the

Catholic Archdiocese of Abuja has convened a peace protest with the theme: “peaceful march and prayer for Nigeria.” Onaiyekan in a statement he personally signed said, “because of the barbaric killing of human beings in Nigeria, and erosion of the perception of life as sacred and in union with the Diocese of Makurdi, we want to express our deepest displeasure over the ugly happenings in our country and pray for the nation.” According to the statement, the protest commences at 10am and starts from National Christian (Ecumenical) Centre and ends at Our Lady, Queen of Nigeria Pro-Cathedral, Garki with Rosary procession, Mass, address to local and international media and benediction. “Priests will all be in Cassock, others will come in their Parish or group uniforms or black attire. Please wear shoes or sandals. Priests should also take note that white is the colour of vestment for mass. “We invite others who are not of the Catholic Faith to also join us. Let us make it a joint project. We must all peacefully fight for a better Nigeria. “Trouble makers should please keep-off. I want this March and prayer to be peaceful from the beginning to the end and to send a powerful message to the Government of our country and the rest of the world for positive change,” the Archbishop stated.

L-R: Ijeoma Anadozie, associate director, Nigeria, Association of International Certified Professional Accountants (CIMA); Badibanga Badi Promesse, regional vice president, CIMA; Ismaila Zakari, president, ICAN, and Razak Jaiyeola, vice president, ICAN, during the signing of MoU between CIMA and ICAN in Abuja, yesterday. Pic by Tunde Adeniyi

Ajaokuta, Aluminium Smelter, coal mines... Continued from page 1

bund Ajaokuta Steel Complex, troubled Aluminium Smelter Company of Nigeria (ALSCON) and coal mines that are lying idle. Fayemi had, in March this year, restated the federal government’s intention to concession the Ajaokuta Steel Complex, saying the country would no longer waste public funds on the complex. “Some people will say Ajaokuta is 98 per cent completed, or that it is 90 per cent completed, but if you probe further, you will discover that you would not get any response from the campaigners,’’ he said at an interactive session with newsmen in Abuja on March 8. At an earlier 2nd Nigeria Mining Week held in October 2017 in Abuja, he had disclosed government’s resolution of the conflict

relating to the ownership of Ajaokuta Complex with Global Steel Holdings Limited. However, the minister will likely leave office this May without a concession agreement for the steel complex considered as vital for Nigeria’s industrial development. According to the Manufacturers Association of Nigeria (MAN), the current state of Ajaokuta in Kogi State remains one key reason why many inputs and machinery are imported as, naturally, the complex could have provided a huge percent of manufacturing raw materials. BusinessDay checks show that Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal, manganese and limestone, among others. In a move that shocked economists and finance experts, the

federal government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the moribund Ajaokuta Steel Company, despite an earlier business case in the last administration showing that the complex could only work if properly privatised. Next on the list is the state of coal mines in Enugu. During a tour of African Foundries steel factory in Lagos in 2016, the company had appealed to the minister to allow it have access to iron ore and coal mines in the country, in line with its Backward Integration Programme. The company was particularly interested in the coal mines in Enugu from where it could access inputs and power directly. The company said the mines would solidly support beneficiation, pelletising and Directreduced iron (DRI) processes and power efficiency in the firm.

Tuesday 22 May 2018

Nigeria needs 5 Vice Presidents, six-year... Continued from page 2

people in the tribes who would be fighting to present candidate for Vice president the infighting would continue, more over this is not restructuring that we urgently want.” It was earlier reported that the Indigenous People of Biafra (IPOB) threatened to disrupt the summit on the grounds that Biafra is non-negotiable. The statement released by the

IPOB spokesman, Emma Powerful, in Enugu state read in parts: “All we want is referendum not restructuring; we want Biafra not Nigeria. “We have buried too many people; we have lost too many souls; we are pained by the innocent people that are still languishing in illegal detention all over Nigeria and we are enraged by the betrayal of those we call socio-political leaders. Only the total restoration of Biafra will suffice; anything else is mere waste of time.”

MTN Nigeria forecasts strong performance... Continued from page 1

five years, according to a May Pre-IPO presentation by the firm seen by BusinessDay. The largest subsidiary of MTN Group is forecasting upside to revenues from subscriber growth (due to population and mobile penetration increases), as well as Average Revenue per User (ARPU) upside from increase in data usage and economic expansion in Nigeria. Having recorded highest ARPU of $4.24 in the industry, MTN Nigeria had a strong net income of N32 billion in first quarter 2018 alone, compared to N81 billion recorded for the full year 2017 showing the company is in pole position for a positive year in 2018. In first quarter 2018, the presentationshowedthatMTNNigeriashowed stronger financial performance as revenues rose faster than costs. Despite recording a cost increase of 8 percent year on year to N145 billion in first quarter of 2018 compared to N134 billion in first quarter in 2017; the company recorded strong revenue growth of 15 percent to N249 billion in first quarter 2018 compared to N218 billion in Q1 2017. MTN Nigeria, who controls 57 percent of market share in the country also had an improved earnings before interest taxes, depreciation and amortisation (EBITDA) of N104 billion in Q1 2018 compared to N95 billion in Q4 2017, implying that MTN Nigeria had a stronger operating performance. EBITDA essentially is a way of evaluating a company’s performance without having to factor in financing decisions, accounting decisions or tax environments. Also, MTN Nigeria’s EBITDA margin which provides investors with a clear view of a company’s operating profitability and cash flow increased to 41.8 percent in first quarter 2018 compared to 40.3

percent in last quarter of 2017. In the first quarter of 2018, MTN Nigeria recorded Adjusted Cashflow Margin of 19 percent compared to full year 2017 of 16 percent showing how efficiently the company can convert sales to cash. Capital investment expenditure stood at N57 billion in Q1 2018 compared to N203 billion for full year 2017 showing the company’s strong commitment towards growth and expansion in the remaining months of 2018. Compared with its other competitors in the telecom sector, MTN Nigeria boasts of over 54.5 million subscribers as at first quarter 2018 and 14.1 million active data users. MTN Group has continued to make good progress with the preparations for the IPO and has been engaging with capital market regulators –the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE), sources tell BusinessDay. According to a valuation carried out by BusinessDay Research & Intelligence Unit (BRIU), which is the first major pre-IPO valuation attempted by a research firm using publicly available data, MTN Nigeria is forecasted to have values ranging from $8.56 billion to $10.88 billion. BRIU used various valuation methodologies including the discounted cash flow valuation (DCF) and relative valuation to estimate the Value of MTN Nigeria. MTN wants to achieve a “retail friendly” offer price for the IPO, it said in the pre-IPO document, of around N80 naira per share, the average price for shares listed on Nigeria’s bourse which would split its nominal value to 2 kobo from one naira. Analyst have said the share sale will go a long way in deepening the Nigerian financial market especially since the market has not recorded any initial public offers for two years since the January 2015 listing that saw the birth of Transcorp.

“We have a lot of projects that will employ thousands of people and bring billions of Naira investment into the country, but they cannot take off until there is an allocation of these mining sites,” Parduman Kurmar Gupta, the then chairman of the company, told Kayode Fayemi. However, stakeholders as the minister plans his exit say coal mines are still lying idle in Enugu, constituting a major waste to the economy. The Aluminium Smelter Company, located in Akwa Ibom State, is also not in operation due to the tussle between Bancorp Financial Investment Group Divino Corporation (BFIG), a consortium of U.S.-based Nigerian investors led by Reuben Jaja, and the United Company RUSAL, a Russian firm. Fayemi had earlier stated that the government was resolving this crisis, but as he plans his departure,

the plant is still under lock and key. “We need that resolved. Aluminium Smelter Company needs to be re-started so that we can get ingots for local roofing sheets manufacturers,” Oluyinka Kufile, chairman, Basic Metal, Iron and Steel Group of the Manufacturers Association of Nigeria (MAN), told BusinessDay earlier in an interview. The Federal Government launched a N30 billion mining fund in May 2017 and another N5 billion in August managed by the Bank of Industry (BoI) for artisanal and small –scale miners, but players have not been able to access the funds due to the stringent conditions attached to them, which involve presenting landed property and other liquidity assurances, players say. “We are not accessing it. Not one of us has accessed the fund,” Shehu Sani, president of Miners Association of Nigeria, told BusinessDay on the phone.

Tuesday 22 May 2018

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Stabilising Niger-Delta region remains key priority for Buhari - Kachikwu HARRISON EDEH & CYNTHIA EGBOBOH, Abuja

inister of state for petroleum, Emmanuel Ibe Kachikwu, on Monday said stabilising the Niger Delta remained a key priority to the Buhari’s administration. Kachikwu, at the ongoing Sustainability in the Extractive Industries Conference in Abuja, listed seven key priority areas the government was focusing on in the region geared towards ensuring long lasting stability in the Niger Delta. Kachkwu listed the projects to include: deploying the Niger Delta development programme; pursuing regular engagement in the Niger Delta; implementing; modular refinery initiative, implementing community based pipeline framework and elevating Nigeria gas flare commercialisation programme. The minister, represented by Isa Baba, director for oil services, Federal Ministry of Petroleum Resources, said, “Conflict in some instances can be attributed to scarcity of developmental project in the areas. The Niger Delta development is targeted at ensuring the realisation of such projects.” He pointed out that proj-

ects targeted at improving the standard of living in this area would be monitored, thus fostering completion, stressing that unemployment and underdevelopment were the issues causing conflict, as people are more likely to be restless. Speaking further on commercialisation of flared gas in the country, Kachikwu said: “The Nigerian gas flare is a market driven program that will provide an avenue for gas flare to economically utilised, the presence of this gas flare has adverse effect on the health of the individuals and community. He revealed further that the programme would allow for companies to utilise the wasted gases towards more productive means in the region. “It will provide job, reduce pollution in the environment and increase the standard of living,” he said. Other factors of the new developed policy and investment drive, he said were also targeted at addressing the high level of inadequacies experienced with extractive projects. “We are also developing a community based pipeline project that is targeted towards fostering community relation, while ensuring the protection of our resources and income,” he said.

5 NEWS

BUSINESS DAY

FG renews AfDB’s Nigerian Trust Edo to fill civil service vacancies with more technical manpower Fund for 10 years – Adesina

ederal Government has renewed its agreement with the African Development Bank (AfDB) on the Nigeria Trust Fund (NTF) for additional 10 years. President of the bank, Akinwumi Adesina, announced the renewal on Monday in Busan, South Korea, at the inaugural news conference of the bank’s 44th annual general meetings in the Asian country. Adesina said the development was communicated to the bank on Monday by the minister of finance, Kemi Adeosun, before the expiration of the NTF agreement in 2018. The Fund was created in 1976 by an agreement between the Bank Group and Nigeria as a self-sustaining revolving fund. It is meant to assist the development efforts of the bank’s low-income regional member countries, which economic and social conditions and prospects require concessional financing. Its initial capital of $80 million was replenished in 1981 with $71 million. In 2008, Nigeria and the bank agreed to a 10-year extension of the NTF. According to Adesina, the bank is evaluating the programme in appreciation of

Nigeria’s gesture in assisting many countries and people across Africa. On the theme of the meeting: ‘Accelerating Africa’s Industrialisation,’ the president said the right skills were needed by African countries to drive industrialisation. He urged Africa to invest in ICT, science and technology as well as make strong innovation to achieve knowledgebased economy. He called on African universities to make fundamental changes in their curricula to provide competent and specific skills needed by labour and key industries. “Insecurity arising from poverty and lack of employment in Africa must be addressed toward achieving rapid industrialisation on the continent,” he said. He said local governments and communities had fundamental roles to play in this aspect, adding that industrialisation, if not properly managed, could increase inequality. Adesina stressed the need for African governments to accelerate their economic growth through real industrial development, not just mere wage-based development.

do State governor, Godwin Obaseki, says the state is set to strengthen the civil service with the injection of new blood and more technical manpower through the ongoing recruitment exercise into the service. Obaseki said this when he received the 2017 Annual Report from the chairman, Edo State Civil Service Commission, Ekiuwa Inneh, at the Government House in Benin City on Monday. Noting that the state government would continue to prioritise recruitment of skilled hands to beef up the capacity of the civil service to respond to the demands of a fastchanging world, he commended the commission for aligning with the focus, in its latest advertisement to fill vacancies in the service. The state government is committed to building capacity of civil servants for optimal service delivery, noting that it plans to strengthen relationship with the State Civil Service Commission to

train workers in line with modern trends, he said. Plans have been concluded to digitalise the workings of the state civil service, as the deployment of equipment and upgrade of skill sets will allow for improved data analysis and information dissemination within the civil service structure, he said. He governor noted, “We are deploying technology in the State Civil Service to digitalize our human resources data for easy analysis. The state would fill vacant positions in the commission to address the needs of the commission and not on a routine basis.” Earlier, chairman of the Commission said its staff audit showed that as of December 31, 2017, the state had 2,822 staff comprising 1,660 males and 1,162 females, noting that there were 11,001 vacancies in the service. She expressed optimism that the report would assist government in planning how to move the Civil Service Commission forward.

6 BUSINESS DAY NEWS

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Tuesday 22 May 2018

Lagos’ Q1 monthly IGR averages N34bn … targets N50bn, as debts stand at N874bn JOSHUA BASSEY

ith an average of N34 billion earned monthly in the first quarter of 2018, Lagos State government is hopeful it will make the target of N50 billion with time. This is also as the debt profile of Nigeria’s biggest economy stood at N874.38 billion by end of 2017, making it one of the most heavily indebted sub nationals. The debts are made of 48 percent local and 52 percent foreign. The 2018 first quarter average IGR is an improvement on previous years’ earnings, which hovered around N22 billion, N24 billion and N30 billion, respectively, in 2015, 2016 and 2017. The state’s optimism about further improvement in the IGR as the year progresses is fuelled by what Akinyemi Ashade, the commissioner for finance, described as “ongoing reforms and growth in the state’s economy” driven by technology, which serve the dual purpose of convenience in tax payment/collection as well as plugging of leakages. “The target we set for ourselves is N50 billion, but we all know the kind of push backs we have experienced including people going to court and all that. Our commitment is not only in the immediate but also for the future of Lagos. We know it is a marathon; we will win some and lose some. But we remain committed towards

ensuring that we meet the target, we believe we would succeed in the target we set for ourselves,” Ashade told journalists, Monday, at a media briefing. The state government, according to Ashade, also received N327 million from the Federal Government as derivation since Lagos joined the league of oil producing states in 2017 “The state government has received a total of N327 million revenue, comprising N197 million and N130 million received in 2017, and first quarter of 2018, respectively. “There are also discussions ongoing with the Federal Government towards a refund for expenditure totalling N51 billion incurred by the state government on behalf of the Federal Government for infrastructure projects developments in the state. “We are optimistic of successful discussions that will result in the approval and payment of the amount owed to the state government by the Federal Government,” he said. On the state’s debts, he said the debt service charge to total revenue ratio, which stood at 17.61 percent, was within the World Bank threshold of 30 percent. He noted that state had continued to maintain a positive credit rating, however, adding that a downgrade of Nigeria’s sovereign rating would lead to a corresponding action on Lagos’ international drawing rights. “As Nigeria continues to

improve on its credit rating, we would be able to achieve better rating as we currently have because no amount of revenue generation, no amount of employment growth of Lagos State can make us surpass the sovereign rating,” he said. He said that the state government has taken some strategic steps to help Nigeria improve on its ratings including adhering to fiscal discipline, improved revenue generation, reforms in infrastructure development, transport and embedded power. Giving an update on the revised Land Use Charge (LUC), the commissioner said the state had continued to engage critical stakeholders in line with its tradition of inclusive governance, adding that a wide range of responses had been received. He said the extensive discussions led to several concessions on the LUC on property, adding that a revised bill to further amend the LUC law to incorporate the additional concessions was presently before the House of Assembly and would be passed soon. Besides, the commissioner said the government through the LUC Assessment Appeal Tribunal, received a total of 1,503 complaints, out of which 1,113 were successfully resolved administratively and through mediation, adding that an additional 263 property owners/ agents had their grievances resolved in the last two weeks and more still ongoing.

L-R: Banke Alawaye, CEO, Rock Salt Services; Reze Bonna, founder, Rezsolution; Papa Omotayo, founder, A White Space Creative Agency (AWCA)/creative director, Moe+art Architecture; Lekan Oladunwo, group head art, Insight Communications; Yoanna “pepper Chikezie,” founder, The Assembly Hub; Simi Esiri, founder/editor in chief, Schick Magazine; Adenike Ogunlesi, founder/CRO, Ruff ‘n’ Tumble; Fade Ogunro, executive TV producer/ founder, Bookings Africa; Michael Ugwu, general manger, Sony Music Africa/founder, FreeMe Digital, at the Level Up event for creative mentorship organised by The Assembly in Lagos.

Lufthansa’s Frankfurt-Lagos flight makes emergency landing over electrical fire IFEOMA OKEKE

ufthansa’s FrankfurtLagos flight with flight number LH569 on Sunday, precautionary diverted to TMR due to an unusual smell in the cabin as a result of electrical smoke. Passengers inside the aircraft alleged that there was an electrical fire on board on Sunday and the pilot made an emergency landing in southern Algeria. The passengers, mainly Nigerians, were still in Algiers when this report was

Melaye set to resume plenary Wike disagrees with Kukah on how OWEDE AGBAJILEKE, Abuja

fter about one month in police detention, the embattled chairman, Senate Committee on FCT, Dino Melaye, is set to resume plenary. Thelawmaker,whorepresents Kogi West Senatorial District and wasinpolicecustodyattheNational Hospital Abuja, was granted bail last week by a Lokoja High Court, havingbeenarrestedanddetained bythepolicesinceApril24,2018,on charges of gun running. But in a message on Monday, the controversial All Progressives Congress (APC) senator said he wouldcontinuetospeakthetruth. In a statement titled: ‘Thank you Nigerians,’ Melaye said he wouldcontinuetospeakthetruth, no matter whose ox was gored. “To my people, I promise you this and this only. I have taken my position, I will not hold back, I will not hold my peace, I will not be shut down, neither will I shut-up, not as long as injustice and falsehood continue to reign, as long as I will live, I will not bow to Baal,” the statement personally signed by the senator read. He commended his immediate constituency; Senate president, Bukola Saraki;speaker of the House of Representatives, Yakubu Dogara; federal lawmakers; Kogi State chapter of the Peoples Democratic Party (PDP); lawyers; leaders of the diplomatic corps as well as religious groups who stood by him during his ordeal. “I know many of you worry

about my safety and life in this new dispensation where life is no longer sacred in Nigeria. But do not be troubled. My bond of love for you, my good people, makes it impossible for me to consider my self-risk, safety, comfort or opportunity in my unflinching commitment to stand up for you, to stand upfortruthandifnecessarydiefor the truth and the emancipation of our people from the chains of poverty and oppression. “Though they raise spurious allegations against me, bear false witness against me, though they seektofrightenmeandluremeinto their bounty of evil, I will fear no foe. “Yes, my traducers and torturers wish that I keep quiet; though they seek to seal my lips, to silence my voice forever, I remain ever more resolute and committed. I am committed to this cause for which I am a politician; the cause ofthedowntrodden,tospeaktruth topowerandstandagainstoppression and injustice. On these issues therewillbenocompromise.Iowe no apologies and I tender none. “Like I have always said, you speak the truth, you die, you don’t speak the truth, you die. I have chosen to speak the truth, dead or alive. Rev. Martin Luther King Jnr., once said, “Cowardice asks the question - is it safe? Expediency asks the question - is it politics? Vanity asks the question - is it popular? But conscience asks the question - is it right? And there comesa time when one must take a position that is neither safe, nor politic, nor popular; but one must take it because it is right,” he said.

to react to threats, impunity IGNATIUS CHUKWU

overnor Nyesom Wike of Rivers State sprang to his feet and countered his special guest, the Bishop of Sokoko Catholic Diocese, Hassan Kukah, saying vehement ‘no’ to the cleric’s call for patience in a democracy. Wike said he cannot accept the recommendation in the face of impunity and clear attempts by his opponents to use federal might to overthrow him. The drama took place at the public lecture delivered on invitation by the Catholic cleric and known critic in Nigeria to mark Wike’s third year in office, which held at Obi Wali International Cultural Centre in Port Harcourt. Kukah had theorised that though democracy was not the best form of government, but urged Nigerians to show patients so that the inner structures, values and disciplines of democracy would take shape and help Nigeria to experience real democracy. He said putting civilian uniform on past military leaders would not make them democrats because those who spent many years of their active lives as soldiers imbibing single command systems of governance, and would hardly embrace democratic values of broad consensus approaches.

He however observed that unless democracy was prepared to heal the wounds in the land and solve the basic problems facing the people, it would not be respected as a form of government. Kukah seemed to trigger the volcano when he said his position was that unlike the Americans that handed the power of self-defence to the citizens, the Nigerian and British constitutions insisted on all weapons to reside with the sovereign who must defend the people through the security agencies. He called on Nigerians to continue to invest their confidence and support to the security agencies and trust them to protect the people. Wike, as chief host, who invested huge values to bring Kukah as lecturer and the professor, Ben Nwbueze, as chairman, rejected outright the recommendation of the man of God. He said the police escorted members of the All Progressives Congress (APC) in the state to shut down a Rivers State High Court on March 11, 2018, to stop an injunction. He called it attempt to overthrow his administration, saying if the people did not mobilise to reinstall the court, the hoodlums would have had their way and many Rivers citizens who had cases in that court would have been denied their rights.

filed in yesterday. According to the airline, “The Airbus A330 aircraft with 204 passengers on board has landed safely in TMR and is currently being examined by technicians. The safety of passengers and crew is Lufthansa‘s number one priority at all times. “Passengers will continue their journey to FRA today (May 21) with another Lufthansa aircraft sent from Germany. Lufthansa apologises for the inconvenience caused.” This incident is happening barely three months after the

airline had steep and sudden descent of the airplane that left passengers stomachs churning. The flight, which took off from Nigeria’s capital, Abuja, was said to have descended rapidly from 35,000 feet to 5,000 feet but did not give their source. Trouble started shortly after take-off when the plane descended so rapidly that passengers feared it was going to crash. A passenger, who was onboard, said the aircraft crew, however, declined to make a stop at a nearby airport in spite of pleas from passengers.

Benin River Port: Obaseki tours Edo waterways, assures investors of security, communal support … makes case for second Marine Police post at Osiomo River

s plans for the commencement of the Benin River Port Project reach advanced stages after preliminary work by the China Harbour Engineering Company (CHEC), Edo State governor, Godwin Obaseki, has assured investors that the state government will not relent in strengthening security on the waterways and ensuring communal support for projects in riverine areas. Obaseki said this after a three-and-half hour tour of riverine communities, including Gelegele, Kolokolo, Ajoke, Ajamogha, Koko, Abiala 1, Abiala 11, and Ologbo, in the state, at the weekend. He said the tour was in furtherance of the survey of the waterways around the state, which kicked off some weeks back and aimed at strengthening security to protect lives and properties on the waterways. The governor said more investors were interested in the project and would want to know how the Benin River Port project would connect the Benin Industrial Park, noting that the two areas were connected by water, even as enough provision was being made for road network. He said discussions with

investors and partners about the Benin River Port had reached a critical stage where critical issues were raised and addressed, noting, “Some of the issues have to do with the actual location of the Port vis-a-vis the extent of road network to connect the Port with other facilities like the Industrial Park.” He said, “We will not underestimate security on the waterways. Security is of prime importance to us as an administration, as we work to attract investors to the state. We will not relent in working very hard to create a conducive environment for investors to do business. “We have decided to establish a Marine police post in Gelegele. The construction for the post will commence soon as the design is ready. We will also have another Police post at Osiomo River. That is why we are at Ologbo to look for a suitable location for the post.” According to Obaseki, the state will leverage the huge economic potentials in water transportation, as the waterways offer the state a unique economic opportunity for transporting goods and people from one place to the other.

Tuesday 22 May 2018

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NEWS

Double tax compliance to GDP ratio to 50%, IMF tells Nigeria … private investment at 13% remains low HOPE MOSES-ASHIKE

nternational Monetary Fund (IMF), an arm of the World Bank Group tells Nigeria to double her tax compliance to GDP ratio from 25 percent to 50 percent. Amine Mati, head of IMF in Nigeria, said this in Lagos, at the presentation of the IMF Regional Economic Outlook for Africa titled: ‘Domestic Revenue Mobilisation and Private Investment.’ “If you look at all the various forms of taxation, you can take another look of property tax, then you can have tax administration and improving compliance. You know, in Nigeria, complying with many of the taxes is still very low. “We think that for the region, there needs to be 3 to 5 percent GDP growth. How do you get there? In Nigeria you can remove a lot of exemptions and expand income taxes. “Those are the types of measures that, as part of a comprehensive package, can make the

difference in increasing revenue mobilisation,” Mati said. He said Nigeria’s growth rate really needed to surpass its population growth to make a difference, saying, “Raising growth is really key for the challenges ahead in Nigeria and sub-Saharan Africa. For the region as a whole, we can say the average growth rate on a per capita base is low. “And a third of African countries, in 2017, with Nigeria as one of them, has seen a decline per capita GDP level. And we expect some of that to continue. To really make a difference, that trend needs to be reversed.” IMF said private investments, at about 13 percent in the region, remained too low, noting that the interesting characteristics were that nonresource countries had higher private investments. Oil prices have gone up and this is an opportunity for these countries to really use the opportunity provided by the pick up to initiate some reforms that

will encourage more private sector investments. Speaking at the event, Patience Oniha, director-general, Debt Management Office (DMO), explained that the decline in interest rate meant that there were about N200 billion out there in the market for private sector to invest in. “You will also notice that we are retiring some of the treasury bills as they mature. The main challenge I am giving to the private sector is that why is all these money still sitting where it shouldn’t be? Why has it not reached the private sector because that was the key objective of our strategy. “We borrow because there is revenue shortfall. The National Assembly passed the budget last week and we know it was higher than what the executive presented. So, as a debt manager what I am looking for is to see where the funding of that incremental size may come in from. Am I supposed to be borrowing to make up for that shortfall,” Oniha said.

the Governor of Kaduna State, Nasir Ahmad el-Rufai, over plans by other northern governors’ to imitate his ruinous path of sacking teachers in their state employment. “These reckless statements were reported by a number of national dailies on Friday, May 18, 2018. There is really no doubt that Nasir el-Rufai mistakes notoriety for popularity. The two are millennia apart. “Unfortunately, the governor of Kaduna State has decided not only to continue in his favourite past time of inflicting pains and sorrows wherever he goes, he is also bent on marketing such profound proclivity for mischief to his fellow governors. “We need to remind Governor El-Rufai that there is a limit that man can play God. By announcing that other northern state governors will replicate his callous and insensitive retrenchment of teachers and other cadre of workers in Kaduna State post-2019 election, El-Rufai has already declared his own election and those of the governors he is purportedly speaking for a fait accompli.

“Organised labour wishes to remind El-Rufai that he is not God, after all. He and other northern governors possess a voter card each. Citizens at the receiving end of their unpopular and de-humanising policies are in the majority. In 2019, we will ensure that the votes of the oppressed and victimised count all over Nigeria.” He said further, “While Nigerians continue to watch the open desecration of the rule of law, human rights, constitutionally guaranteed freedom and collective cum individual dignity in Kaduna State, we urge other northern governors especially those in the same political party as El-Rufai not to be deceived into copying his failed policies. “The truth is that the logjam that has trailed El-Rufai’s phony reform of the education sector in Kaduna State has overshadowed the public outcry that greeted his unjust sack of teachers and other cadre of workers. “We also urge President Muhammadu Buhari to call El-Rufai to order. A stitch in time might still save nine.”

tain diverse ecosystem and other organisms that benefit from our peculiar biological makeup.” He maintained that it was time to recognise the roles of local communities and local governments in driving government policies on the protection and preservation of our natural world. “Most times the disruptions recorded in biological communities result from the poor knowledge of the long term value of the balance in our ecosystem. “The current danger posed by human activities can be mitigated if more stakeholders are identified and carried along in the campaign to save the diverse, interconnection and harmonious relationship among the various animals, plants, the physical environ-

ment and other elements of the ecosystem,” he said. He described the theme for the 2018 celebration, ‘Celebrating 25 years of Action on Biodiversity,’ as germane, adding that the partnership with ProForest would enable the state properly manage and conserve the defining features of its biodiversity. He said the state government was working with the Federal Government to preserve the Okomu Forest Reserve, noting that the Okomu National Park is a national asset that must be promoted to boost tourism receipts for the state and the country at large. “The commemoration also demands that we synergise to protect wildlife and other elements of the ecosystem that benefit from conserving the environment,” he said.

2019: NLC vows to mobilise against El-Rufai JOSHUA BASSEY

igeria Labour Congress (NLC), an umbrella body for millions of Nigerian workers, is waiting for the 2019 general elections to pay Governor Nasir el-Rufai of Kaduna State, in his own coin in show of detest for the massive sack of teachers in Kaduna. The NLC is also warning other northern states’ government, especially those controlled by the ruling All Progressives Congress (APC) not to toe the path of El-Rufai and risk workers’ similar anger. El-Rufia, it would be recalled, sacked 22,000 teachers in Kaduna State’s employ, in 2017, dubbing them unqualified and incompetent. Ayuba Wabba, the NLC president in a statement titled “Joke Taken Too Far,” which he issued on Monday, said El-Rufai was travelling an ignoble path by seeking to get other northern state governments to also sack teachers in their employ. Wabba in the statement said: “It has been brought to our attention, statements credited to

Biological Diversity Day: Edo implores stakeholders to deepen awareness

do State governor, Godwin Obaseki, has implored environment activists, community leaders and local councils to deepen the crusade to preserve the pristine features in Nigeria’s forest belt, noting that more stakeholders are needed in the crusade for the protection of the country’s unique flora and fauna. The governor made the call on the occasion of the c o m m e m o rat i o n o f t h e World Biological Diversity Day marked every May 22, by the United Nations and its various organs. According to Obaseki, “On this day, it is important to stress the need to conserve nature and preserve the defining features of our pristine flora and fauna, not just for the sake of humans but to sus-

BUSINESSDAY

8 BUSINESS DAY NEWS TradeDepot secures $3m Series-A funding to digitise FMCG distribution in Africa HOPE MOSES-ASHIKE

radeDepot, the SaaS platform for FMCG distribution in Africa, has announced $3 million in funding. Partech’s recently launched Africa Fund led the Series-A round, expected to support the expansion of TradeDepot’s footprint in Nigeria and development in other countries. Since its founding in 2016, TradeDepot has successfully developed a 360° solution, integrating all participants in the trade value chain - manufacturers, distributors and retailers. The solution has quickly convinced first-rank FMCG companies, and has been deployed all over Nigeria in distributors’ warehouses. This first external funding round of investment will enable the team to drive aggressive product development and further deployment of the solution among FMCG companies and their customers. Through TradeDepot’s platform, small retailers have a real time view of all prices and discounts available from every major brand; they can directly order products, which are then delivered to them as the order is routed to the appropriate nearby depot. At the same time, manufacturers have full visibility over their distribution and can leverage the platform to optimise deliveries to their distributors, improve their pricing and have a direct channel towards their end-retailers. According to Onyekachi Izukanne, co-founder/CEO of TradeDepot, “This first external funding round was critical for us: we have proven that there is a strong demand for such a distribution platform among consumer goods companies and retailers in emerging markets, and we now wish to use these funds to support our growth strategy. “For a very long time, consumer goods distribution in emerging countries with millions of small and informal retailers at the end of the supply chain has been very poorly ad-

dressed by existing tech platforms. We want to change this status quo. In Nigeria alone, this $340 billion market loses more than $4 billion every year due to a lack of visibility and the resulting waste in logistics, making retailers in African countries subject to some of the highest product distribution costs in the world. “Our goal is to enable every convenience store in Africa to consistently receive their supplies at the best possible prices; to be the supply partner for Africa’s retail outlets.” On his part, Cyril Collon, general partner at Partech, said, “This is a game changer in the industry. We couldn’t be happier to have TradeDepot as the first investment of our African fund, as it characterises what we want to do in Africa in the coming years - support extraordinary entrepreneurs who leverage tech to solve panAfrican problems.” Furthermore, Tidjane Deme, general partner at Partech, noted, “At Partech, we are strong believers in tech platforms that digitise the huge informal markets that are present in Africa. TradeDepot is one of them: they are addressing the largest market in Africa, that is today 98 percent informal and 99 percent offline. The opportunity there is massive. “Partnering with TradeDepot was a no-brainer for us after the first meeting. We were fully convinced by the founders’ vision, their strong understanding of the market and their ambition to transform this industry. “The deep market experience of Kachi, Michael and Ruke has proven to be very efficient in their first two years of development, and we are extremely proud to come onboard and support them in this next phase of growth.” TradeDepot is an integrated SaaS platform for consumer goods distribution in emerging markets, founded by Michael Ukpong, Onyekachi Izukanne, Ruke Awaritefe in 2016, with a mission to build the engine of retail distribution in Africa.

Wike uncovers plot to assassinate him through accidental discharge IGNATIUS CHUKWU

overnor Nyesom Wike of Rivers State has raised another alarm, as he says he had got evidences that there was plot to assassinate him through what he called accidental discharge. Governor Wike also celebrated his recent court victory that stopped security agencies from searching his houses anywhere in Nigeria. He told the Christian community in Rivers State that the proof got to him Saturday, May 19, 2018. The governor spoke at a thanksgiving church service to mark his third year in office at the Winners Chapel in Port Harcourt. He did not give nor explained how the plotters planned to get him to a crowd and shoot him. The governor however said the plot would fail because he

had the churches and the Holy Spirit with him, saying, “We just got hint yesterday that they now want to use accidental discharge, but I said, no way. What is in me is greater than them.” He reminded the people that somebody once promised to get the state from him by blood or by crook, saying many plots were being hatched everyday against his administration. Listing his victories against those he called his enemies, he said there was once plot to orchestrate crisis in Rivers State so as to declare a state of emergency, and that the Federal Government refused to respond to his appeals for help to stop massive kidnapping and killings. He said the Christians prayed and the entire Nigeria was caught up in crisis such that the Federal Government removed their eyes from the state to face worse situations in other parts of the country.

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Tuesday 22 May 2018

$40bn investment over 10 years in Niger Delta not commensurate to developmental strides - panellists

… suggest review of project implementation modalities HARRISON EDEH & CYNTHIA EGBOBOH, Abuja

anellistsattheongoingSustainability in the Extractive Industries (SITEI) conference on Monday in Abuja were worried that investments worth about $40 billion expended in the Niger-Delta region was not commensurate to the level of development in the region. The panellists however suggested that the Federal Government review and possibly change institutional mechanisms for the implementation of the projects in Nigeria’s oil rich Niger Delta, which contributes largely to the revenue base of Nigeria. The region, located in Nigeria’s South South, is richly blessed with oil and gas resources, but has been bedevilled by various forms of agitationsandpoordevelopmental strides that have been largely attributedtopoorgovernancestructurein addressingkeyconcernsinthearea. Speaking at the first plenary session of the conference, with the theme: “Managing Conflict and Security in the Extractive Industries,” Charles Achodo, technical adviser to Nigeria’s minister of state for petroleum resources, while rais-

ing concern on poor impact of the huge sums invested in the region, suggested modality review of the projects in the region. According to Achodo, “Close to $40billioniswhathasbeeninvested by the Niger Delta Development Commission (NDDC), and the MinistryofNigerDeltainthatregion forthepast10years.Theseagencies forinstance,ifyoucheckthem,have close to about 11,000 contracts. The 11,000 contracts is mostly held by people from the region, yet the region is that way. You could also understandwearetheonesholding ourselves hostage. “You also go to the Ministry of Niger Delta, it is the same thing. There must be urgent review of the waywedoprojectsintheNiger-Delta sub-region. We have to change the strategy being adopted.” Making suggestions, he said, “Get organisations like Julius Berger and release those resources to them, I bet you they will deliver, provided that people in the region do not argue that that money should be given to them, for this is what is always causing the problem.” Achodo further suggested that, in the region also, there must be an attitudinal change on how

we address concerns on regional problem. Also, Kemi Aremu, a panellist at the session, said government had already come up with glorious policies, but had expressed worry about implementation of such policies. “The gas flaring issue is a major source of worry in the region. Despite government’s efforts to commercialise the gas flaring issues,thespeedislow,”Aremusaid. She suggested however that theFederalGovernmentmustput inapooloffundasa‘surety,’which would enable private investors go further deeper into gas flaring commercialisation investment options. “Government must put in the firstfootdownwithasuretypoolof fund to attract gas commercialisation investment into the sector. “Time is very key, and detoxification exercise in the region is imminent. The environment has been greatly polluted, and as a result many lives are threatened. The Federal Government must be able to take urgent steps. Most of thestepstakensofararesnailspeed. Thegovernmentmustspeedupactions in these areas,” she said. Ngozi Ochonogor-Ochibe,

women leader, Host Communities of Nigeria Producing Oil and Gas, DeltaStatechapter,alsosuggestedto thegovernmenttoutilisethereward ofthegasflaringfinestoaddressconcerns of the communities directly affected by the menace. She suggested to the Federal Government to ensure the host communities got 10 percent equity stake in the oil resources to ensure a deeper sense of belonging, which she argued would address some of the concerns of the region. Becoming a gas-based economy is at the heart of Nigeria’s government ‘7 big wins,’ which is a key driver geared towards enabling growth in Nigeria’s oil and gas resources sector. However,gasisstillbeingflared, althoughtheFederalGovernment’s gas commercialisation policy is kicking off at a snail speed, experts therefore want the Federal Government to put in a ‘surety’ investment to speed up investments in the gas sector. “Government’s targets of actualisation of the gas revolution plan wound ensure improved gas production, which currently stands at 5.2 billion cubic feet, but requires deeper investments to address concernsofgasflaring,”Aremusaid.

L-R: Oge Mochie, chief of staff to the minister of state for petroleum resources; Simbi Wabote, executive secretary, NCDMB; Bekeme Masade, SITEI convener/chief executive, CRS-in-Action; Omude Ochonogoro, guest speaker, and Chris Onosode, country director, Stakeholder Democracy Network, during the 7th Sustainability in the Extractive Industries (SITEI) Conference in Abuja, yesterday.

Osinbajo to meet over 11,000 GEEP MarketMoni loan beneficiaries in Kano ADEOLA AJAKAIYE, Kano

s part of activities lined up for his official visit to Kano State, Vice President Yemi Osinbajo will on May 24, meet with a section of the over 11,000 beneficiaries of the Federal Government Enterprise and Empowerment Programme(GEEP)MarketMoni in Kano, to assess the impact of the scheme. GEEP MarketMoni is a Federal Government Social Intervention Programme (SIP) that provides loans of up to N300,000 to segments of the society with the greatest difficulty accessing credit. The scheme is executed by the Bank of Industry (BoI), and it directly impacts traders, market women, artisans, and farmers in all 36 states of the country, and the Federal Capital Territory.

According to Toyin Adeniji, executive director of BoI, the programme is aimed at reinvigorating the economy at the base of the pyramid, the hotbed of Nigeria’s financially vulnerable. “GEEP MarketMoni is unprecedented in Nigeria’s history, granting interest-free credit facilities to existing microenterprises of market women and traders, artisans, enterprising youth and agricultural workers. It is critical to the Federal Government’s objective of inclusive growth,” Adeniji said. To benefit from the scheme, applicants just need to apply through their registered market associations and cooperatives, have a Bank Verification Number (BVN), and a mobile phone. The loans range from N10,000 to N300,000, tied to applicants’ BVNs, and are expected to be repaid within six months period without interest.

Uloma Ike, group head (microenterprise) of BoI, said over 11,861 people had benefited from the GEEP MarketMoni loan scheme and over N583 million had been disbursed so far in Kano State alone. “The beneficiaries and representatives of various market associations whose members have received loans will be able to interact with the Vice President, talk about the scheme and the impact of the loans on their businesses. It will also be an opportunity for the Vice President to experience first-hand, the impact of the programme which today has touched the lives of thousands of beneficiaries nationwide,” Ike said. “We are looking forward to a robust discussion with the Vice President at the upcoming MSME clinic in Kano. At the event, attending beneficiaries will receive their disbursement

certificates,” she said. Besides the Vice President, other dignitaries expected at the Kano event include the Governor of Kano State, Abdullahi Ganduje, and special adviser to the President on Social Investment Programmes, Maryam Uwais. The GEEP MarketMoni interactive session has been previously held in several states across the country. Two of the most recent are Onitsha, Anambra State on April 11, and Akure, Ondo State on May 3, 2018. In Anambra, over 2,000 traders and artisans met with the Vice President, the special adviser to the President on Social Investments, Maryam Uwais, and the minister of trade and investment, Okechukwu Enelamah. Topperforming GEEP beneficiaries in Anambra were selected to display their products at the exhibition grounds and interact with the Vice President.

Tuesday 22 May 2018

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Tuesday 22 May 2018

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Lame duck Senate & the advance of autocracy

MAZI SAM OHUABUNWA OFR sam@starteamconsult.com

ince the proclamation of the 8th Assembly, I have noticed a consistent effort to emasculate the National Assembly, particularly the Senate. First effort was the challenge to the power of the Senate to confirm certain executive appointments. Both the constitution and other extant laws gave powers to the Senate to approve, confirm or ratify certain appointments by the President. But we have seen some effort to deny this power of the Senate. The classical and subsisting case is the refusal of President Muhammadu Buhari to replace Ibrahim Magu as the Chairman of EFCC after the Senate rejected his nomination twice due to adverse reports from a sister security agency-DSS. Three years down the line, the President has ignored the Senate and has kept Magu on the job, effectively rendering the Senate irrelevant and impotent. Second, there has been an effort to deny the National Assembly the power to appropriate. The executive along with its cronies like Prof Itse Sagay have insisted that the National Assembly’s power is only limited to rubber stamping the budget submitted to it by the executive. It cannot add or remove. That argument almost stopped the signing of the 2017 Budget as the executive stubbornly stuck to its gun .In fact, perhaps encouraged by this erroneous view, President Buhari paid 496 million US

STRATEGY & POLICY

MA JOHNSON Johnson is a marine project management consultant and Chartered Engineer. He is a Fellow of the Institute of Marine Engineering, Science and Technology, UK.

n April 30, 2018, President Muhammadu Buhari (PMB) of Nigeria made history as the first African president to meet with United States of America’s President Donald J. Trump in Washington. Highlights of agreements reached during the visit include cooperation and collaboration between the two countries on security in which the USA confirmed the sale of twelve Super Tucano jets, including other military software and hardware required in the continued fight against terrorism in Nigeria. Nigeria however, lost the American market for sale of its crude oil. While the USA got a deal to sell agricultural produce to Nigeria. Nigeria is to create a level playing ground through removal of trade barrier while the USA under the principle of reciprocity is to provide aid to the tune of US$1 billion to Nigeria. Simply put, products from the

Dollars to the United States of America for the purchase of Tucano aircrafts without the approval of the National Assembly. This decidedly unconstitutional action was carried out brazenly. Nigerians were alarmed. The National Assembly was scandalized. Some Senators stated that the President should be called to order for this breach. There were suggestions on the need to proceed on impeachment notice to the President. The executive felt incensed and took very unusual steps to humiliate the Senate and the Senators who raised the issue of the constitutional infringement. Senator Mathew Urhoghide was attacked by sponsored thugs at Benin Airport for daring to ask that the constitutional provisions for spending the nation’s money without legislative approval be invoked. While individual senators were being targeted for punishment, a decision was taken to completely humiliate the Senate. A team of thugs was commissioned to spit on the faces of all the senators. They walked majestically into the chambers, took the mace, walked out from the chambers and drove away through the Aso Rock Villa gate of the National Assembly into safety. And that ended the entire story about constitutional infringement or impeachment. Emasculation and humiliation in double dose! Third, the power of the Senate to summon public officers to the senate has been variously challenged and it looks like the executive has succeeded in removing that power completely. Custom CG Hameed Ali was summoned severally, he refused to come, but showed up once or so and when he was requested to come dressed in his official uniform, he flatly refused to return to the Senate, and as we write, more than a year after, the guy continues to run the Customs, completely ignoring the senate and nothing has happened to him and

...it must be said that the National Assembly is such a critical democratic institution that any attempt to erode its power and influence is an attempt to diminish democracy and promote autocracy or dictatorship nothing may ever happen to him, given the apparent impotence of the Senate. The Senate invited Prof Itse Sagay and this law professor said he would not honour the invitation and he did not and nothing has happened as this senate has become completely powerless. It is therefore not such a great surprise that they have invited IGP Ibrahim Idris to the Senate three times to come and discuss the rapidly deteriorating security situation in Nigeria. Three times, Idris ignored the Senate, sending a deputy instead. I was really miffed by his third refusal, because two days before this, the leaders of the National Assembly had met with the President during which they complained about Idris’s intransigence. Thinking that it was a fence-mending meeting where the President appealed to them to get the 2018 passage passed, I had hoped that he would reciprocate by ordering Idris to honour the invitation. As it turned out, the President may never have talked to Idris or Idris may have ignored the President’s directive as he was wont to doing. For me this was the height of humiliation for the Senate. What did the senate do in response? Issue a lame statement saying Idris was an enemy of democracy and was not fit to hold public office in Nigeria. What does that come to? Idris is holding a critical public office right now as IGP. What would have happened to these apparently subdued senators if they had mustered the cour-

age to ask the President to remove Idris as IGP as a minimum. By this lame lamentation, it is clear that this Senate is completely emasculated and has become a lame duck. The lameness of this Senate got me almost shedding tears last week, when I saw the senate President sitting on the senate floor, yielding the Chair to his deputy as his complaint about a plot by the police to link him and the kwara State Governor to some incident of murder in Kwara State was being discussed. I felt sorry for him, the No 3 citizen of the country lamenting like a powerless baby. But tears actually rolled into my eyes, when one senator who was contributing to the debate on Saraki’s complaint, described how his police escort team was unceremoniously withdrawn in the middle of the night in Jos, as a reprisal for his criticizing IGP Idris for his repeated refusal to honour the Senate’s invitation. I cried, not for the Senator, nor for the Senate President. I cried for Nigeria. The question must then be asked, in whose interest is this deliberate effort to make the Nigerian Senate and by extension, the National Assembly impotent? For me, it is certainly not in the interest of democracy. The National Assembly is the essential governance institution that differentiates civilian democracy from military rule. It is set up to check executive recklessness and prevent the country from becoming a dictatorship. In Nigeria’s long history of military rule, it was always the independent legislature that was missing as both the executive and judiciary remained in operation, even if in some distorted forms. Yes, some Nigerians do have issues with the legislature- high pay, low productivity etc or with specific legislators for poor representation & sundry misdeamanours but it must be said that the National Assembly is such a critical democratic institution that any attempt

to erode its power and influence is an attempt to diminish democracy and promote autocracy or dictatorship. When an executive wants to begin to spend money without seeking legislative appropriation or appoint people to offices without any senate clearance or borrow money externally without any legislative endorsement, then we are on the road to impunity and dictatorship. I do not see how this can be in the interest of the ordinary Nigerian, because if it were, Nigerians would not have given their lives to return their nation from military rule to democracy. I know for sure that part of the reason for the onslaught on the National Assembly, particularly on the Senate is that the current leadership emerged against the wishes of the ruling partyAPC. And that’s why the executive has done everything possible to remove Saraki from office and to humiliate his supporters. Everybody knows why Senator Melaye is being dragged through the streets of Abuja and being taken to court in a stretcher- vengeance. But should an arm of government go out or allow another arm to be humiliated or destroyed just to get even with one or two members of that arm? Should we allow the baby to be thrown away with the supposedly dirty water? Must we destroy Nigeria’s hard-earned democracy to satisfy the ego of a few ‘gods’? But in all these, our politicians must learn the lessons that what goes round, comes round; that no condition is permanent and that whatever one sows, that he will also reap. But for the peace of Nigeria and the sustainability of our democracy, this siege on the National Assembly, particularly the Senate must be lifted now. And the Senate must wake up to assert its power with courage and check the emerging drift to dictatorship.

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Buhari’s visit to Trump: A missed opportunity? USA can come into Nigeria unhindered for an aid of only US$ 1 billion. In what form will the aid come into Nigeria and how will Nigeria pay back? Overall, some Nigerians say that PMB’s visit to the USA is not worth celebrating. But PMB got aid, food and sophisticated military equipment. So Buhari’s visit to Trump wasn’t a missed opportunity particularly to those in the government. If we are sincere to ourselves, we should not forget that in world affairs, it is known that Nigeria is a less developed, conflict-infested and raw material supplying country. The USA, on the other hand, is a developed and industrialized country. So, one would have expected the bilateral relationship between the two countries to be of more strategic importance to Nigeria than the USA. It would have been worthwhile if Nigeria designed its relations with the USA or any nation for that matter as a vehicle to systematically accomplish its economic and democratic development. Unfortunately, Nigeria’s history of failed efforts to develop as a nation since independence on 1 October 1960 is of grave concern. Currently, Nigeria faces several domestic challenges in security, economic and political spheres. Despite these challenges one may argue that Nigeria is still the “giant of Africa” bearing in mind its population, oil wealth, and political influence in the region. Some say that Nigeria’s domestic stability is poor with high unemployment and underemploy-

ment rates, and thus, it has lost its status as the “giant of Africa.”Whatever position is taken, Nigeria is expected to put its house in order by ensuring that the fight against terrorism, corruption and impunity is progressing rapidly in the positive direction at state and federal levels. This writer is of the view that it would have been in the interest of the USA that Nigeria, the most populous black nation in the world, become truly an economic giant and a democratically vibrant nation. When Nigeria assumes this hegemonic position, it would serve as a reference for regional security, stability and growth. It would have equally, been a thing of joy for Nigeria to maintain a strong and mutually beneficial bilateral relations with the world’s most powerful economy and democracy. So what is PMB’s trade policy towards the USA? Honestly, this writer does not know. What then is Trump’s Africa trade policy? Africa’s trade not a priority for Trump because of his “America first” policy. It is only African countries with stable polity and good governance, economic prosperity, technological advancement, moral authority as well as visionary leadership that may find it easier to influence Trump’s decisions in a bilateral relationship with the USA. So is the USA willing to trade with Nigeria? Yes, but certain conditions must be fulfilled. Those conditions are spelt out in the African Growth and Opportunity Act (AGOA). This is a USA trade legislation seeking to open markets to African exports

particularly fabrics, fashion and agricultural products duty free. Under the AGOA, Sub-Saharan African countries will take part with some technical assistance and support provided by the USA so that they can fully realize the gains of the Act. Sub-Saharan African countries will be eligible when they must have “shown progress made towards a market-based economy through removal of subsidies, price controls and privatization, respect for the rule of law, embracing general democratic principles, human and workers’ rights issues, and set a minimum age for child labour.” Such countries must also show progress in such areas as “elimination of barriers to US trade and investment; protection of intellectual property; efforts to combat corruption; policies to reduce poverty, increase availability of health care and educational opportunities.” Also, to be eligible, beneficiary countries should ensure that US national security and foreign policy interests are not undermined. The above stated conditionality can hardly be met by most African countries. For instance, Nigeria is not a marketbased economy as oil, education, health, and agriculture sectors amongst others are still enjoying subsidy. Overtime, most government officials (appointed and elected) have demonstrated contempt for the rule of law. Due process is not followed most times before withdrawing funds from either the federation account or excess crude accounts by the executive

arm of government. Political parties lack internal party democracy which is a disease to sustainable democracy as seen in the recently concluded ward congresses of the All Progressive Congress in a few states. Transparency and accountability are not common features of government institutions while child labour still exists in Nigeria. These are teething problems that Nigeria needs to address before earning respect from other countries in the international community. Trump takes AGOA’s eligibility requirements seriously. He has suspended the deal with Rwanda after finding that the country “unfairly” blocked US exports of used clothing while keeping that of Uganda, Kenya and Tanzania as they promised to reduce or eliminate import barriers. Nigeria’s domestic challenges are numerous but they can be overcome. Perhaps, this is the time for Nigeria to reconsider its stance on the African Continental Free Trade Area (AfCFTA) if it plans to export locally manufactured goods and agricultural products. Regional integration is critical to accelerating growth on the African Continent. The best way Nigeria can prove to the USA and the rest of the world that it can be a reliable global player is to show capacity to establish good governance, prevent corruption and promote human rights at home.

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Smart Lagos (3): Status, prospects & opportunities

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

he smart city vision of the state government was discussed extensively at a conference it sponsored during its “Lagos at 50” celebrations in May 2017.Themed “Towards a Smart City: Preparing for the next 50 years of prosperity”, it had as keynote speaker a top thinker on African issues, Oxford professor, Paul Collier. He had a more engaging definition of what a smart city is. “Smart does not mean elite. Smart means a city that works for everybody in it. A city that works means that ordinary people can become productive and so earn a decent living.” The envisioned smart city offers opportunities in transportation, ICT, tourism, hospitality, entertainment, and sports for excellence. The Lagos state government envisions the city to be the most attractive to live

GARBA SHEHU Garba Shehu is Senior Special Assistant to the President (Media & Publicity)

op opposition Peoples Democratic Party (PDP) memb ers have b e en granting press interviews and addressing zonal political rallies talking about “Changing the change” in next year’s general elections, without defining what exactly that means. As the governing All Progressives Congress (APC) gears up to celebrate the completion of three years of the Buhari government in the centre on May 29th, Nigerians need to be reminded of what the reversal of the achievements of this administration will amount to. The real meaning and cost of the “Changing the Change,” is that if they win the next election, they will not take us back to where we were in 2015, they will mostly reverse the progress the APC has brought to the nation. The main reason for the defeat of the PDP in 2015 was corruption. The present administration at the centre led by President Muhammadu Buhari has so far presented a corrupt-free image of itself. It has also succeeded in abolishing grand corruption at the top and as attested to by the American President, Donald Trump. The government has significantly brought down the level of corruption in the whole country. It has, however, warned over and again that corruption was fighting back. Many who are discerning

and do business in Africa. This is an exaggeration, of course. Even so, the government’s confidence is underpinned by what Mr Ambode dubbed an “urbanisation dividend” in a speech in February 2017.Despite its many deficiencies, and even before the authorities started making the needed effort to transform the city, which coincided with the birth of the country’s most recent democratic experiment in 1999, Lagos has always been attractive to Nigerians elsewhere. At 86 immigrants every hour, it has the highest inward migration rate of any city in the world. The Lagos Development Plan (2012-2025) embodies what the authorities hope to achieve over the next decade. The “smartness” in Lagos Smart City or Lagos, the smart city, is in seeing technology as an enabler for development, whether it is in the provision of infrastructure, security or investment incentives, with the goal being to make Lagos attractive to investors who would then create much needed jobs. There have been some laudable initiatives by the government with regard to transport infrastructure, like the completion of one of the phases of a city railway (albeit not yet operational), reform of the bus mass transit system, expansion and tolling of a key highway in conjunction with the private sector (at first) and so on. But

Lagos Innovates aims to facilitate access to “high quality workspaces and infrastructure”, “learning”, “early stage investment capital” and “investor and peer networks”. Bottomline, Lagos Innovates is “a set of programs aimed at making it easier to build a successful tech startup in Lagos”. the pace and reach of the government’s infrastructure programme are grossly inadequate. Strained finances are one reason why. True, the state government earns more revenue than other states. But the revenue is inadequate for the huge spending bill of needed development programmes. And the private sector has not always had a good experience with public-private partnership (PPP) projects with the state government. To fund its programmes, the government sometimes resorts to extreme means. Recently, the state government announced a land use charge that was considered hugely insensitive. Naturally, it was met with uproar from the general public. Consequently, the

state government had little choice but to revise the charges downwards. Even so, some grumbling remains. This also typifies what tends to happen when what are ordinarily acceptable infrastructure financing and maintenance measures – road tolling, for instance – are attempted. But the authorities are getting it right in other areas. Its support programme for technology entrepreneurs in the state is exemplary. In December 2017, the Lagos State government launched “Lagos Innovates” to support tech entrepreneurs. Through the programme, small and mediumsized enterprises (SMEs) would be provided the infrastructural support, training, capital and networks they need to succeed. The initiative copies similar models in Chile, India and Singapore. Targeted at tech entrepreneurs residing and working in Lagos whose businesses are less than three years old, Lagos Innovates aims to facilitate access to “high quality workspaces and infrastructure”, “learning”, “early stage investment capital” and “investor and peer networks”. Bottomline, Lagos Innovates is “a set of programs aimed at making it easier to build a successful tech startup in Lagos”. It is perhaps the greatest demonstration yet of the government’s recognition of the tech opportunity in Lagos. The initiative currently has

three major programmes. The first, “workspace vouchers”, would enable budding tech entrepreneurs secure funding support to acquire a workspace at one of the numerous innovation hubs in the city. For access, the tech entrepreneur need only apply online. The second, “hub loans”, provides capital to hub operators looking to expand or for those looking to invest in hubs. And the third, “events sponsorship”, provides support to enable tech entrepreneurs organize events to seek talent, publicize products and so on. Other programmes to be offered in due course, include “co-investments”, “program vouchers”, and “accelerator”. In early May 2018, Lagos Innovates will be sponsoring the “Secure Lagos Hackathon” event. Other upcoming events include “The Coworking Conference” in late July 2018. • The author, Dr Rafiq Raji, is an adjunct researcher of the NTUSBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation. This article was specifically written for the NTU-SBF Centre for African Studies

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The real price of “changing the change” (1) would have read this from President Buhari’s speech when he inaugurated the impressive new headquarters building of the Economic and Financial Crimes Commission (EFCC) a week ago. He narrated how and why he was overthrown as a military Head of State in the 80s. In that speech, he said not only was he kicked out because he fought corruption, the ones who took power freed all those that he had jailed, and whatever they stole was returned to them. He took their place in prison and stayed there without trial for 36 months, until that day when a journalist in Benin, now in Edo, broke the story that he had lost his mother. That was when he was allowed to go home. The real difference between the PDP and the current APC administration is that although they mouthed a flood of rhetoric against corruption, in fact rightfully lay the claim of founding the institutions now in the forefront of fighting corruption as a government, the EFCC and the Independent Corrupt Practices Commission, ICPC, they had intended to keep them as toys, or bulldogs which teeth had been removed. No, they never intended that the war against corruption would be taken this far. To change the change would mean that the teeth of the bulldog will be removed. It would then only bark but not bite. In this country, politics is often considered as synonym of

corruption. The previous government came under huge criticism for scandals like that discovered in arms procurements in the office of the National Security Adviser, NSA which transformed itself into a major source of funding of the PDP; NNPC crude oil thefts, broadband spectrum licensing scandal, oil subsidy scam and so many others but the present government has not faced any such corruption allegations. Although he said he was unafraid and would not bend, the President’s concern, and fear on the part of many is that if a corrupt leader takes over, it will be happy days all over again for former Oil Minister Diezani Allison-Maduekwe who has so far forfeited USD 153 million, N23.4 billion, and USD 4m and USD 5m in separate accounts. “Change the Change” would mean she will get the money back. So would the former Managing Director of the maritime agency, NIMASA get back GBP 578,080 seized from him and the Ikoyi apartment owners have back their USD43.4m; N23m and GBP 27,800. The hidden owner of the Lagos cash shop may then step forward to reclaim their N449.6 million; the ex-Naval Chiefs will have returned to them the already forfeited N1.8 billion; the Governors Forum paid back their N1.4 billion and the major oil marketers, from whom the EFCC has so far seized N328.9 billion will smile their ways to the bank. The banks themselves will equally join the party, happily get-

ting back N27.7 billion they “ate” from taxes they failed to remit; the scion of the Akinjides, Jumoke will have N650 million awarded to her while those scammers in INEC who coughed out N1 billion will equally get money back and charges standing against them in court may be dropped. But the happiest of them all will be Mrs. Jonathan, who will get the first priority when the refunds start coming for obvious reasons. The former First Lady would not anymore need lawyers to keep her mountain of gifts, counted in huge millions of dollars, billions of Naira, hotels and buildings. The list of people who oppose the Buhari government and yearning to ‘‘change the change’’ include a number of parliamentarians, policemen, customs officials, immigration officials, civil servants now rooting for other political parties, not leaving out those various businesses and platforms owned by these political parties directly or indirectly. The Buhari win in 2015, and the possibility of four more years have crumbled their dreams of endlessly looting the state and the growing list of achievements of the administration is not doing any good for them. “Change the change” means also that the biggest tax revolution since independence, the Voluntary Assets and Income Declaration Scheme (VAIDS) now being implemented, and about which many of our rich citizens are unhappy may be scrapped. A

recent report shows that there are four million new taxpayers, including companies and individuals, resulting in N700 billion increase in tax revenue in 2017. The early casualties of ‘‘changing the change’’ may include initiatives like the Whistle Blower policy by which the government is able to recover stolen or concealed assets through information provided by citizens. This has changed the ethical and moral tone of the business transaction space in the country. The whistle blower is entitled to between 2.5%-5.0% of amount recovered. Sometime last year, the Minister of Finance, Kemi Adeosun, told the world, “we are going after those who have stolen our money. We have put in place a very successful whistle-blower programme that is delivering results and allows those who report illicit activity to receive up to five per cent of any funds that we recover.” The response has been so fabulous that in just four months, it yielded N17bn, as revealed by the Acting Chairman of EFCC, Ibrahim Magu. Another formidable group unhappy with the change and wish it reversed are the importers of diesel and generators. Nigeria ranks as the second biggest importer of generators all over the world.

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Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

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GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan

Tuesday 22 May 2018

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Welcome the revised CAMA

igeria’s aspiration to improve the ease of doing business, which appeared to have been driven by the executive branch of government, has now received a significant boost from the legislature. The Senate on May 15 passed the revised CAMA, which when operational, will reform the business environment in many ways which are unprecedented. It is expected to improve on the reforms currently in place, by making business registration faster and more seamless. Achieving the CAMA amendment could be attributed to the National Assembly Business Environment Roundtable (NASSBER) which was created as a platform for the legislature and the private sector to engage, deliberate and take action on a framework that will improve Nigeria’s business environment through a review of relevant legislations and pro-

visions of the Constitution. It is a partnership between the National Assembly, Nigerian Economic Summit Group and Nigeria Bar Association’s Section on Business Law, supported by the defunct ENABLE II programme of the UK Department for International Development (UK-DfID). It is expected that this framework will support reforms designed to make Nigeria’s economy globally competitive, achieve inclusive growth and sustainability, create jobs, and cater to the wellbeing of Nigerians. It therefore became imperative to have an effective legal framework of company law, which is a critical building block of a modern and business friendly economy. A genuinely modern and effective legal framework can promote enterprise, enhance competitiveness and stimulate investment. Conversely, an ineffective or outdated framework can inhibit productivity and growth and undermine investor confidence. Nigeria ranks 145 out of

190 countries in the World Bank’s Ease of Doing Business ranking, which rates countries for the eas e at which one can open, conduct and perhaps close down businesses. The WBDB Index offers a useful and measurable assessment of economies around the world; and also s erves as a res ource for private sector and other stakeholders interested in investing in Nigeria. One of the indicators the WBDB team measures is the relative ease or difficulty in establishing and running a business in Nigeria. In this regard, Nigeria is ranked on the Starting a Business indicator as 130 out of 190 economies and for the first time was also recognized as one of the top ten (10) most improved economies in the world. This landmark reform by the Bukola Saraki-led Senate, coming 28 years after the passage of the original Companies and Allied Matters Act, will provide significant benefits to companies by reducing bureaucratic red

tape and making it easier to comply with regulatory obligations. Most of the changes are aimed at encouraging investments that will allow small businesses and startups thrive, lower costs and ease regulatory burdens. The present administration has given a lot of attention to improving Nigeria’s ease of doing business. The government indicated its seriousness by establishing the Presidential Enabling Business Environment Council )PEBEC), chaired by vice president Yemi Osinbajo. It is commendable that the legislature is now fully on board. Before the executive and legislature roll out the d r u m s t o b e g i n c e l e b ra tions, they must realise the w o rk i s n ’ t c o m p l e t e y e t . The House of Representatives need to also pass the bill and after assent by the President, there will be a sustained period of enlightenment campaign to secure th e buy-in of all critical stakeholders in the business and investment community.

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Tuesday 22 May 2018

BUSINESS

COMPANIES & MARKETS

DAY

LAPO boss seeks greater commitment to poverty alleviation in Nigeria

Pg. 14

Co m pa n y n e w s a n a ly s i s a n d i n s i g h t

Top five PFAs account for 64.84% of total pension contributions …as least 10 receives N418.46bn Modestus Anaesoronye

h e ra n k i ng o f Pension Fund Administrators (PFA) by total pension contributions show that top five received 64.84 percent of the total contributions as at the end of the fourth quarter 201, while the top 10 ranking PFAs accounted for 87.90 percent of the total contributions. Ina document made available by the Nation Pension Commission (PenCom), the bottom 5 and 10 PFAs received N77.98 billion and N418.46 billion contributions of their members, representing 1.70 percent and 9.14 percent of the total con-

tributions received as at the end of the fourth quarter of 2017 respectively. According to the Commission, the total monthly pension contribution made by contributors from both the public and private sectors into their RSAs was N4.49 trillion as at the end of fourth quarter, 2017. This shows an increase of N147.92 billion representing 3.41 percent over the total contributions as at the end of the previous quarter. A review of the aggregate total contribution shows that the Public sector contributed 51.20 percent of the total contributions, while the Private sector contributed the remaining 48.80 percent. However, during the fourth under review, the Public sector

contributed 51.39 percent of the total contributions received while the Private sector contributed 48.61 percent. In terms of scheme membership, the pension industry recorded a 1.46 percent growth in the scheme membership during the fourth quarter of 2017, moving from 7.78 million contributors at the end of the preced-

Shell safeguards 60,000 bpd with 900 community jobs Ignatius Chukwu

hell Petroleum Development Company (SPDC) says it has safeguarded 60,000 bpd of crude oil with 900 community jobs for pipelines surveillance in three clusters in the Land East Hub. The company said it is prepared to carry out a full roll-out of the system to all land areas based on the near zero incident free outcome of the pilot scheme. The declaration was made recently by Boniface Nongo, SPDC’s Wells Reservoir & Facilities Lead, Manager for the Land East Asset at the ‘Youth Summit for Land East Hub Host Communities (Rivers, Abia, Imo) in Port Harcourt, Rivers State capital. It was aimed at creating a sustainable environment for businesses to grow and to attract investors that would create jobs. So, when you are giving peace a chance, when you are creating peaceful environment, you are creating jobs. Nongo stood in for Sam Ezugworie, the Assets Manager for the area. The event was attended by about 70 youth leaders from the host communities of the Land East Asset who

were being made to learn the new ways of getting fulfilment in life to reduce violent tendencies by oil host youths. In an interview after his presentation, the Benue expert said the demand by some youth leaders for Shell to hand over surveillance contracts to community youths had just been approved, after a pilot scheme proved it more viable. Nongo said “Shell has already approved what we call enhanced surveilance strategy already pilotted in three clusters of Ukwa West, Agbada and Ikwerre cluster development boards where we work with the landlord community contractors to provide surveillance on our pipelines. We engage four persons per km, so two in the day and at night. That way, we were able to generate jobs for 900 persons in Imo and Agbeda communities. That has safeguarded over 60,000 bpd in the past eight months with near-zero incident. It is an affirmation that their suggestion has already been accepted.” He also said ‘Management has approved a go-forward plan that we should deploy to the whole land assets by July 2018. Our youths will be directly employed to oversee our assets. We hope that things

cannot happen except there is an insider. We now give them the responsibility to look over our assets. On what is in it for the community youths, Nongo said “We have deployed a system called the consequence managemnet system where you do not have an incident and get a bonus and stay (on the bonus) until when there is incident, you go back to zero. When there is repeated incidents, you can be challenged in the community and be removed. We pay them above minimum wage. We are getting value for that.” Explaining more, Evans Krukrubo, the community interface manager, who represented the GM External Relations, Igo Weli, said in an interview that it was not true that Shell jettisioned the community contract system at any point as peddled by some non-governmental organisations (NGOs). He said in some places where there were community surveillance contractors, vandalism still went on. He said Shell adjusted the strategies from area to area depending on their circumstance. He said Ogoni where Shell was no longer doing oil business has 350 community surveillance workers paid every month.

ing quarter to 7.89 million. The growth in the industry membership was driven by the Retirement Savings Account (RSA) Scheme, which had an increase of 113,347 contributors representing 1.47 percent. A breakdown of the RSA registrations indicates a 0.62 percent (21,306) increase in membership of the public sector over the

third quarter of the same year to stand at 3,478,867. Th i s f igu re re p re s e nt s 44.46 percent of the total RSA registration as at the fourth quarter of 2017, as shown in Table 3.2. The private sector shows a continuous dominance in RSA membership with 55.54 percent (4,345,044) of the total RSA registration as at the reporting period,

moving from 4,253,003 in the previous quarter. The sector also witnessed a growth of 2.16 percent (92,041) in the quarter under review. This can be attributed to the increase in the level of compliance by the private sector as a result of the various steps taken by the Commission to improve compliance and coverage, as well as marketing strategies of the PFAs.

Union Bank gets Business Continuity Management certification

nion Bank in compliance with International Business Continuity Management Systems (BCMS) standard has received a ISO 22301:2012 certification. The Bank was certified by the British Standards Institution (BSI) in partnership with local capacity building firm, Digital Jewels following its successful fulfillment of the rigorous requirements for this internationally recognised standard on Business Continuity Management Systems. In a statement by the International Organisation for Standardisation (ISO), the ISO 22301:2012 certification specifies requirements to plan, establish, implement, operate, monitor, review, maintain and continually improve a documented management system to prepare for, respond to and recover from disruptive events when they arise.

Compliance w ith the BCMS standard ensures efficient response when the organisation encounters threats. In order to achieve certification to the standard, an organisation must demonstrate clear commitment towards assessing both internal and external threats and vulnerabilities and prioritizing relevant risks while implementing preventive measures. Kandolo Kasongo, chief risk officer while commenting on the Bank’s recent certification, reiterated the Bank’s commitment to benchmarking its processes and operations against international best practices. According to him, “Our attainment of the new Business Continuity Management certification follows rigorous auditing of our internal processes. Therefore having successfully satisfied all the requirements for this international standard, we assure our valued customers of our

readiness to continue delivering quality banking services even in the face of significant disruptions.” He further stated that over the years, the Bank has focused on benchmarking its processes against global standards. In 2014, the Bank became the first Nigerian financial institution to be awarded the Payment Card Industry Data Security Standard, PCI DSS – Version 3.0 which it recently upgraded to PCI DSS Version It has also recently attained the ISO9001:2015 Quality Management Standard (QMS) and Information Security Management Standard ISO/ IEC 27001:2013. Attaining the BCMS standard highlights Union Bank’s commitment to its customers; to maintain effective measures for business continuity, risk management and resilience as it continues to deliver on its promise of being Nigeria’s most reliable and trusted banking partner.

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Tuesday 22 May 2018

COMPANIES & MARKETS LAPO boss seeks greater commitment to poverty alleviation in Nigeria Idris Umar Momoh

eading micro finance company, Lift Above Poverty Organization (LAPO) has reaffirmed the commitment of the company and its staff to the fight against poverty. Godwin Ehigiamusoe, who gave the charge at the 2018 staff awards ceremony held in Benin-City noted that the challenges of poverty in the country is enormous and requires the commitment of men and women to address its multi-faceted dimensions. Ehigiamusoe who said the organization currently has a staff strength of 7,150 added that a total of 407 staff were rewarded for their uncommon commitment and loyalty to the LAPO brand. While assuring that LAPO, the financial institution is poised to face challenge ahead urged them to make positive mark in their various responsibilities. “If you look at your right and left, the challenge of poverty is still enormous. Many people as we speak still go about hungry, many women and indeed parents watch their children dying because they cannot afford to provide the financial resources to meet medical services. “ Many of our children would have paid their ways through schools some of them have been at home for five, four to three years without anything to do, and therefore we see that

there is so much for us to do in the area of boosting businesses, health services. It is for that reason that in Benin we are capitalizing investing in very huge and sophisticated medical facility that would provide medical services and true outreach programmes to rural communities. “It is also to be an excellency Centre for cancer screening and treatment in Benin-City. So these are parts of many things we need to still do. What that, therefore means is that all of us and indeed many others

who will join as well must redouble our commitment to ensure that the task before us we are able to accomplish them”, he said. He said the staff are being recognized for twenty to ten years of unbroken services as well as excellence in service delivery awards Ehigiamusoe, who opined that the pro-poor financial institution has just begun as a development organization, however demanded for constant performance and commitment from the staff. “LAPO’s exponential growth over the years can be

attributed to the commitment of members of staff who go for and near to ensure that the economically active poor enjoy our unique financial products and social empowerment serivices. “Our people are our best ever asset. They beat the odds, they run with passion. They never rest until lives and businesses are enriched. They never rest until they see that our extensive footprints across Nigeria prompt our name-LAPO- to become a part of life changing conversations in many households”, he added.

L-R: Ben Langat, MD, FrieslandCampina WAMCO Nigeria Plc; Roel Van Neerbos, president, Consumer Dairy, Royal FrieslandCampina, The Netherlands; Jacobs Ajekigbe, chairman, Friesland Campina WAMCO, and Oyinkan Ade-Ajayi, non-executive director of the company at the 45th Pic by Pius Okeosisi annual general meeting of the company in Lagos.

Mutual Benefits Assurance pays N5.15bn in claims …to pay dividend to shareholders

utual Benefits Assurance Plc has released its audited accounts for the year ended December 31 2017, showing a significant increase in profit after tax to N1.02 billion from a loss position of N1.35 billion in 2016. The result also show a gross premium written growth of 16 percent from N12.14 billion in 2016 to N14.03 billion in the review year. Underwriting income also grew by 10 percent to N11.78 billion in 2017 versus the 2016 figure of N10.70 billion. Commenting on the re-

sults the Akin Ogunbiyi, chairman of the Company stated that, “Despite the tough business environment we have been able to bounce back to profitability and delight our shareholders.” Dividend of 2 kobo per share will be paid to our esteemed shareholders who have stood by us over the years”. The Net Claims paid by the Group in 2017 stood at N5.15 billion fromN3.35 billion in 2016, resulting in a 54 percent increase from the previous year. In a statement on the claims paid in the year ending December 2017, the

Managing Director, Segun Omosehin said “This is an attestation of our firm resolve to consistently honour our obligations to our esteemed customers while improving our claims administration processes and procedures.” The recently released 2018 first quarter financial results also show impressive performance compared to the same period last year. This shows a 27 percent increase in gross premium written of N4.75billion from N3.75 billion during the first quarter of 2017, and a 4.22 percent increase in net premium income from N3.71

billion in the first quarter of 2017 to N3.87 billion in the first quarter of 2018. Underwriting income also grew at 5.50 percent from N3.81 billion to N4.01 billion in the same period. While profit after tax for the quarter stood at N672 million from N655 million, representing a 2.60 percent growth. Mutual Benefits has in the last year embarked on a strategic roadmap geared at repositioning the Company to lead the insurance industry in growth, profitability, operational efficiencies and innovation come 2021.

BDCs, NFIU embark on capacity building for anti-money laundering, terrorist financing HOPE MOSES-ASHIKE

n compliance with the anti-money laundering and terrorist financing (AML/CFT) regulation, Bureaux De Change Operators of Nigeria and Nigeria Financial Intelligence Unit (NFIU) have embarked on a capacity building. The two institutions recently concluded a three-day joint training/sensitization programme on anti-money laundering and terrorist financing. The programme, attended by head offices/zonal secretariats staff of ABCON and key personalities from the NFIU was held at the ABCON Secretariat, in Ikeja Lagos. . Speaking to financial journalists at the end of the training, ABCON President, Aminu Gwadabe, said the anti-money laundering training is intended to familiarize Bureaux de Change (BDC) operators with the process of money laundering — the criminal business used to disguise the true origin and ownership of illegal cash — and the laws that make it a crime. The training, he said, will create awareness on the need to check money laundering and terrorist financing in this period of electioneering; ensure that BDCs are not used to launder funds by Politically Exposed Persons (PEPs). It will

also upscale BDCs’ compliance with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for Banks and Other Financial Institutions in Nigeria Regulations, 2013. Gwadabe explained that the NFIU is the arm of the global financial Intelligence Unit (FIU) and the joint training is part of the efforts of the Federal Government in combating money laundering, and financing of terrorist activities within the country. The training is in line with BDCs commitment to meeting their obligations towards the Financial Action Task Force (FATF) Recommendations. He said the core role of the FIU is that it serves as the country’s central agency for the collection, analysis and dissemination of information regarding money laundering and the financing of terrorism and the training was an opportunity to get more acquainted with the role of NFIU and have a better understanding on how to file their transaction reports to regulatory agencies. He said the trainings will enable BDCs to understand how to raise the Suspicious Transaction Reports (STRs) and Currency Transaction Reports (CTRs) to know when to submit such reports. He said these reports are raised by operators on suspicious activities of individuals and are submitted to Financial Intelligence Unit.

Phase3 telecom bags Beacon of ICT industry award

hase3 Telecom in recognition of its unfailing commitment to delivering world class connectivity and network solutions has bagged the fibre optic company of the year at the Beacon of ICT Awards 2018 for four consecutive years. The award does validate of the company’s unwavering dedication to top notch service provision and a laudable addition to its ever growing sea of prominent local and international accolades and acknowledgments. Stanley Jegede, chief executive officer, Phase3 Telecom says the award confirms the company’s inimitable approach to amplifying regional connectivity that put the customer’s need first. With a consistent drive to give access and enhance the availability of fast

and reliable internet to the unserved and underserved parts of Nigeria and the West Africa sub-region. According to him, “The company’s growing realization of its strategic insight and blueprint to limiting the current digital divide in Africa’s telecommunications industry is being validated by such honours and is certainly not taken for granted. “These praises are both humbling and encouraging of the fact that Phase3 is on the right course however must not rest on its oars as much is expected of it still” Jegede further said that Phase3’s network of strategic partners continues to allow it to extend its reach thus solidifying its space as an indigenous telecom service provider of repute and one of the broadband champions of Africa’s socio-economic development.

Tuesday 22 May 2018

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BUSINESS DAY

COMPANIES & MARKETS Shell’s joint venture on GMoU invests N14.86bn on host community Olusola Bello

s part of the plans to improve the economic lives of its host communities, Shell Petroleum Development Company (SPDC)has invested a total of N14.86 billion through its Joint venture on Global Memorandum of Understanding (GMoU) clusters in Rivers State. The communities are given a highly-valued opportunity to decide and implement projects and programmes that have a lasting impact on people’s lives. The funding, since the GMoU concept took off in 2006, has enabled the 19 clusters in Rivers State to embark on projects covering health, education, water and power supply improvement, sanitation and infrastructure development. “The GMoU initiative has opened a new and exciting chapter in the relationship between SPDC JV and communities and empowered the people at the grassroots to take charge of their own development,” said SPDC’s General Manager, External Relations, Igo Weli at a presentation of the 2018 Shell Nigeria Briefing Notes to journalists in Port Harcourt. Weli, who was represented by the Manager, Social Investment/ Social Performance Gloria Udoh, said the success of

the GMoU initiative proves what can be achieved when government, international oil companies, communities and NGOs work together for the common good. Under the terms of the GMoU, SPDC JV provides secure five-year funding for communities to implement development projects of their choice, which are managed by Cluster Development Boards (CDBs) under the guidance of mentoring NGOs. There are 37 active GMoU clusters in Rivers, Delta, Bayelsa and Abia states, which have been funded to the tune of more than N41 billion since 2006. GMoU clusters in Rivers State have recorded landmark achievements, including setting up a Community Health Insurance Scheme (CHIS) at Obio Cottage Hospital in Port Harcourt, where the average number of patients increased from about 600 to about 7,500 per month in 2017, making it one of the most utilised health facilities in the area. Other clusters have awarded foreign and Nigerian tertiary scholarships, set up transport schemes and built roads. In another social investment initiative in Rivers State, SPDC JV has trained more than 800 young men and women under the Shell LiveWIRE programme which was introduced in 2003 to help young entrepreneurs to convert their bright ideas into sustainable businesses,

creating wider employment and income opportunities for communities. SPDC JV also implements a robust health intervention scheme, supporting 10 hospitals in the state. In 2017, SPDC JV established Nigeria’s first centre of excellence in Marine Engineering and Offshore Technology at Rivers State University in Port Harcourt, which has commenced programmes leading to the award of Masters degrees in Marine Engineering (Power Plants), Naval Architecture and Offshore and Subsea Engineering. This and other educational interventions build on a pioneering scholarship programme that was introduced by SPDC since the 1950s. Weli added: “We’re proud of our extensive social investment footprints in Rivers State, which in some cases even stretch beyond the SPDC joint venture. For example, to mark Nigeria’s centenary anniversary, Shell exclusively donated a modern public library to the Port Harcourt Literary Society in November 2016 at a cost of N1.58 billion. While we will continue to work with government, communities and other stakeholders for the development of the Niger Delta, we strongly appeal for a conducive operating environment since this is only way we can do business and implement the needed social investment projects and programmes.”

Reliance Infosystems gets recognition for promoting cloud tech uptake MIKE OCHONMA

or its effort which has immensely contributed towards the promotion of cloud technology uptake in Nigeria, Reliance Infosystems was recently given an award as the ‘ICT Innovations Company of the Year’ by the Lagos chamber of Commerce and Industry at its 2018 Award night held in Lagos The Nigeria Communications Week Journal also awarded Reliance Infosystems as the 2018 ICT Business Integrator Company of the Year at its recently concluded awards. Commenting on the awards, Oghor Akpenyi, Business Transformation Director;

Reliance Infosystems said: “Today, Reliance Infosystems is assisting early adopters to win and lead with cloud technology. The commoditization philosophy of cloud that allows businesses to replace heavy investments in technology platforms with pay-as-youuse investment model helps businesses consolidate their resources on their core activities for maximum returns” On his part, Ken Ogujio, chief executive officer, Communications Week, noted that the award is attributed to the role which Reliance Infosystems is playing in creating integration possibilities between business platforms and consumer’s devices. According to Ogujio, “Reli-

ance Infosystems is heavily leveraging Microsoft IoT platforms to empower telecoms, logistics and smart cities.” Receiving the award, Olayemi Popoola, managing director, Reliance Infosystems; promised to extend similar integration to healthcare, education, transportation and B2B interplays. He said “This award is a recognition to the tremendous effort the team at Reliance is putting in delivering the best of services to our clients. I especially thank all our clients and all the people that voted, for their conﬁdence in us. Our clients and business partners are the reason for our consistent growth and success in our area of business.”

Business Event

L-R: Sam Jegede, Chief Executive Officer, Omokhoje Sam-Jegede & CO (Management Consultant) presenting Certificate toThe National Librarian, Prof. Lenrie Olatokunbo Aina during the Public Sector Management Course organised for The Nigeria National Library held at Administrative Staff College of Nigeria (ASCON) Badagry, Lagos

R-L: Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON); Adewunmi Adewale, national accountant, ABCON and an official of Nigeria Financial Intelligence Unit (NFIU) at the end of a three-day joint training/sensitization programme on anti-money laundering and terrorist financing organised by ABCON and NFIU at the ABCON Secretariat, in Ikeja, Lagos.

L-R: Wale Odufelo, DMD, Alpha Mead Group; Kunle Osilaja, group head, real estate, Ekobank Plc; Udo Okonjo, CEO/vice chair, Fine & Country West Africa; Femi Akintunde, GMD, Alpha mead , and Tokunbo Talabi, CEO, Superflux International, at The Nigerian FM Roundtble 2018 in Lagos

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Tuesday 22 May 2018

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Harvard Business Review

Opt out of that networking event

Rapid Code Deployment at Facebook 2: Last year, it took about 3.5 hours for an engineer’s code to be put into production at Facebook, down from 14 hours in 2016. This year, the company’s goal is two hours. + Don’t Work Too Many Hours 50-55: Research has shown that work engagement and skills connected with problem-solving decline when people work more than 50-55 hours a week. +

Doctors Say Health Care Is Too Expensive in the US 89%: About 89% of doctors surveyed in a University of Utah study said that they believed the cost of health care in the U.S. was too high. + Few Black Women Are Running Companies 1.3%: Black women represent 12.7% of the U.S. population, but just 1.3% of senior management and C-level executive positions at S&P 500 firms.

Tips & Talking Points

TALKING POINTS

Our Personality Roots 40-50%: Based on studies of twins, researchers have posited that about 40-50% of our personalities can be attributed to our genes. +

BUSINESS DAY

We’re all familiar with networking events. They start out as promising, careerboosting meetups, but tend to end with you in the corner talking to someone you already know. This scenario of being stuck in your comfort zone is challenging for introverts and extroverts alike. So how can you overcome it? The answer may be to stop trying to make new contacts at events. Here’s why: Mixers are limited to low-stakes conversations with people,

and we’re more likely to forge relationships by participating in shared activities. In order words, we need to look beyond social events to grow our networks. Opt for higher-stakes activities such as organizing charity events or playing in an amateur sports league. Look for hobbies that attract diverse people. You may find you’re better off sharing activities than schmoozing. (Adapted from “Go Ahead, Skip that Networking Event,” by David Burkus.)

Consider 0nline memos for board meetings A common issue in board governance is lacking the information to make strategic decisions. Netflix overcomes this with an online memo system that makes board communication between directors and employees more transparent, and meetings more efficient. The quarterly memos take a narrative format — they emphasize discussion within the document and enable the reader to access business performance, industry trends, among other company insights. By focusing on shared discussion over presentation, Netflix has allowed information to flow more freely between its board and the company’s day to day — ultimately allowing managers to face challenges with confidence. (Adapted from “How Netflix Redesigned Board Meetings,” by David Larcker and Brian Tayan.)

Set boundaries to work more productively with perfectionists

Invest in your global team to keep it engaged

CEOs should see shareholder activists as opportunities, not threats

If you have a perfectionist on your team, you may find that his rigid standards hinder p ro d u c t i vity and cause unwanted conflict. His inability to put the larger goal before the details can even result in missed deadlines. So how can you collaborate with perfectionist colleagues to be more productive as a team? Setting clear boundaries is one place to start. Perfectionists tend to send numerous emails detailing questions or helpful suggestions, especially when they are feeling over-

With global teams comes the potential for organizations to tap new markets and create relevant brand experiences for customers from different cultures. But in order to reap the benefits, your organization will need to ensure that global team members are integrated in the broader company. Keep in mind that employees who work away from headquarters must deal with a lack of access to their leaders, communicate in non-native languages, and accommodate the schedules of colleagues at the company’s center — all of which can make a global

Many companies view shareholder activists as a shortterm presence that will leave after turning a profit. Firms are also often wary of activist intervention because CEOinvestor tensions can arise early on and put constructive dialogue out of reach. Consider activists who push for the sale of firms and the removal of CEOs. However, research shows that the holding period of a median activist is over a year. Most importantly, firms should remember that activist shareholders are there to help undervalued companies boost their worth. If an activist does approach your firm, the best initial strategy is to be clear about strategic goals and bal-

whelmed. Don’t ignore the emails. Instead, try limiting your responses to one per day. Or you can decide not to respond to emails that a perfectionist colleague sends over the weekend. These boundaries will help both of you be more productive. (Adapted from “How to Collaborate with a Perfectionist,” Alice Boyes.)

team feel removed from the picture. Managers can remedy this by scheduling off-site meetings to bring all teams together. Try personally checking in with remote employees to develop crosscompany norms. You can even take a trip to visit global teams where they are. The effort will send the message that you care. (Adapted from “How to Keep a Global Team Engaged,” by Andy Molinsky.)

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

ance any input with your interests and those of other stakeholders. (Adapted from “What CEOs Get Wrong About Activist Investors,” by Frank Partnoy and Steven Davidoff Solomon.)

BUSINESS DAY

Tuesday 22 May 2018

Underage drinking: Guinness embarks on campaign to secure Nigeria’s future Stories by Daniel Obi Media Business Editor

here are serious concerns for underage (below 18 years) alcohol drinking globally. This is because of its effects on the society and the teens such as brain damage, assault and sexual activity among others. The concerns are genuine as Nigeria’s youth population, under 24 years accounts for 63 per cent of about 190 million Nigerians. This huge number represents a formidable bulge of untapped potential and opportunities, which well harnessed would guarantee the nation’s economic sustainability. Therefore, this population deserves the necessary help from government and corporate organizations to ensure that Nigeria’s posterity is preserved. This is why Guinness Nigeria, a member of Diageo group has embarked on a campaign tagged ‘Smashed’ to reveal the consequences of alcohol drinking on the underage and curtailing the trend. The Smashed Project is a live theatre/drama performance delivered to 14 – 17 year olds (SS1 – SS3 students) in government and private

schools across Lagos State by professional actors, along with follow-up interactive workshops. The initiative took into consideration the Nigerian culture by engaging young people in a safe and motivational learning environment, enabling them to understand the consequences of underage and binge drinking. Managing Director/Chief Executive Officer, Guinness Nigeria Plc,

Re-election of Badejo-Okusanya as APRA president honour to Nigeria, says Re-Ignite firm

he management of ReIgnite Public Affairs Limited congratulate Group Managing Director Yomi Badejo-Okusanya on his re-election as the President of African Public Relations Association (APRA) for two-year tenure at the just concluded 2018 annual conference of the association in Gaborone, Botswana. In a statement signed by the Executive Director/Chief Operating Officer of Re-Ignite Public

Okusanya

Affairs in Abuja, Franklyn Ginger-Eke, the management also commended the flagship firm in the group, CMC Connect BursonMarsteller for winning a competitive laurel of the Holmes Report’s continental SABRE Awards at the conference. Badejo-Okusanya‘s re-election by the delegates to the annual congress of member nations of Africa Public Relations Association is a show of confidence on the capacity and tremendous values he has brought to the association. His re-lection is also a mark of honor and recognition of Nigeria as one of the few nations propelling the frontiers of growth for the professional practice of public relations in Africa. Speaking on this outstanding feat, deputy director of Re-Ignite Public Affairs, Adetola Odusote who is also the Secretary General of the Public Relations Consultants Association of Nigeria, PRCAN, exalted the newly re-elected President. “YBO”, he said, “has done so much for PR profession not only in Nigeria but across Africa.

Peter Ndegwa, said that the company’s Underage Alcohol education programme is aimed at reducing the incidence of alcohol related harm amongst young people. “Between the ages of 14 and 17, young people are most vulnerable to different societal burdens such as peer pressure and the need to fit in; this sometimes causes them to make uninformed decisions ,” Ndegwa said.

According to him, schools are an important setting for interventions aimed at shaping behavior among youths because no other community or institution has as much continuous and intensive contact with young people. “And this is why Guinness Nigeria decided to implement the SMASHED programme in 28 government and private schools across Lagos state,” Ndegwa reiterated. He added: “In every country, Diageo works with reputable local organizations to deliver the SMASHED programme as our Diageo Marketing Code restricts us from engaging with persons under the legal purchase age of 18+. As a result, Guinness Nigeria did not interface directly with any of the schools during the implementation of the SMASHED programme as we partnered with Collingwood Learning and Rue 14 Studios in Nigeria to deliver the programme.” On her part, local implementing partner and Founder/Artistic Director, Rue 14 Studios, Keke Hammond, commended Guinness Nigeria for delivering such a unique initiative, which was at no cost to schools across Lagos during the 3-week tour of the pilot programme.

Modion Communications partners Leadway Assurance to provide cover for PhotoJournalists

odion Communications, an integrated marketing communication agency based in Lagos said it has partnered with Leadway Assurance, a principal player in the Nigerian insurance industry to provide personal accident insurance cover for all the 100 member of the Photo Journalists Association of Nigeria (PJAN). The partnership and presentation ceremony officially took place at the Modion Communications office in Maryland, Lagos, recently as part of the activities lined up towards celebrating the 40th birthday of the company’s Chief Executive Officer, Odion Aleobua. The Leadway Assurance personal accident insurance policy procured by Modion Communications for PJAN, assures the 100 members of the association a compensation package of up to N500,000 in the event of bodily injury solely and independently of any other cause by accident, violence, external and any visible means resulting in death or permanent disablement or temporary total disablement as well as up to N100,000 in medical expenses cover.

Plans for 2018 African Brand Congress, Leadership Merit Awards gather momentum DIPO OLADEHINDE

he African Brand Congress 2018 will be holding its annual edition of the African Brand Leadership Merits Awards in Lagos on May 31 aimed at celebrating leadership, innovations and creativity in Africa. The congress also will celebrate brilliant minds and institutions that are delivering positive change and shaping Africa’s future. Company CEOs, business managers from leading brands across

Africa are expected at the event according to Desmond Esorougwe Secretary Organising Committee of the event. He said the participants will find a full year’s worth of thought provoking, insightful and learn how branding operates in some of the world most successful businesses, the future trend in brand leadership and how to implement new brand strategy and technique in organizations. Esorougwe revealed that the event, an annual ‘Fiesta to Best Brains’ is behind most successful and sought after African Brands.

“It is meant to stimulate, motivate and excite the creative lobe of kind of thinking and exercise that we use in our workshop.” The Congress is designed to educate, engage and inspire brand managers and professionals in the pursuit of best practice in brand building and value creation. “ It is an appropriate platform for all b rand owners and industry players to discuss how brands in Africa can increase their g lobal c ompetitiveness”, he said. Businesses that have excelled would be recognised at the event with the theme ‘Africa is the Future of great brands” Epoch-making event which is liaising with relevant government and non-government agencies has been uplifted to a high international profile in order to ensure that participants get their money’s worth. The one day event provides the ideal opportunity for interaction among leading companies, keynote interactive discussion and quality up to date case studies from leading organizations who provides a close look at the improvement that the biggest companies in the market are currently implementing worldwide.

Tuesday 22 May 2018

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BUSINESS DAY

Marketing&Pr

Nigerian Railways Corp concessions assets for outdoor advertising purposes …Tranxeon wins bid, invites advertisers to platform for consumer engagement Daniel Obi

here is a new thinking in Nigeria’s railway system. Collaborating with the private sector, managers of the railways are giving the system a facelift through branding purposes. They are not only bringing new couches but they have incorporated interior and exterior outdoor advertising by top brands on the fixed and moving assets of the railway. This development, analysts believe will not only assist in decorating and beautifying the poor perceived Nigerian’s railway system but it will enhance its status, create traction to commuters who originally were not using trains and boost the system’s income. Outdoor advertising on railway assets is a new phenomenon in Nigeria as this development will change the outlook for trains and stations as how people perceive the system. How it started Last two years, management of NRC threw open the pitch to concession its fixed and mobile assets for outdoor advertising. Some outdoor advertising firms bided but Tranxeon Nigeria, a young Nigerian outdoor advertising agency won the bid. The concession is a major deal for Tranxeon and the young firm led by Ayomide Ogunjobi, who was a pioneer staff of Lagos State Signage and Advertisement Agency, LASAA and its Oyo counterpart, OYSAA promises to deliver value to the

concessioners and to advertisers through advertising on the Nigerian Railway corporation assets. Leveraging trains for consumer engagement Ayomide sees the new thinking to advertise on railway assets as novel. With confidence, he strongly believes that advertising on railway assets both internal and external trains and also in and outside the stations will deliver value to advertisers as the trains move within populated areas in Lagos and move from Lagos to Kano and Abuja to Kaduna. “Some people still think that when you refer to trains, you are talking of trains that people sit on top of the roof. There are two new trains now that have been deployed in Lagos. They are called Lagos Diesel Multiple Units. DMU come with factory fitted air conditioners , well

organised and cater to the working class of low earned strata of the society. The old trains are being faced out soon”, Ayomide said. For the Abuja new trains, they look good with ambience and comfort for the passengers. Abuja trains are designed with seats like in aeroplanes while Lagos trains have more spaces for easy drop off of passengers. He explained to BusinessDay that Lagos has two DMU trains with three human carriage couches each. Abuja has two trains with five and six couches respectively while Lagos- Kano train has 10 couches. “These are within Tranxeon purview for purpose of advertising”, he said. “For Lagos trains, we envisage that almost one million people can view advertisement on the couches daily. In the morning, the trains move from Ijoko in Abeokuta and

come down to Lagos through Apapa –Oshodi expressway. It passes through Alimosho with highest population in Lagos where people can see the advertisement. The number of people that pass through this route is amazing”, he said. According to him, the rail lines in Lagos is used by 22,000 commuters daily; and “we intend to park the train at either Oshodi or Ikeja Stations at least once a week. Oshodi boasts of one million commuters passing through daily while Ikeja boasts of not less than 500,000 commuters daily. “In addition to internal and external advertisement on the trains, we will be playing advertisers’ jingles inside the trains. Organisations who brand also have opportunity to put their marketers and promoters inside the train to engage the customers as they go. It is a comprehen-

sive consumer engagement package for advertisers”, Ayomide promised. Ayomide assured advertisers who are looking for demography of low to medium income earners, any mass product from FMCG, telecom for that population, that the train advertising is the hub. He said Abuja trains are boarded by the elitist class who travel on the trains to Kaduna.With advent of train advertising, he said some companies targeting those populations will get mileage. In Abuja, ministers and governors use the train principally because of ambience and insecurity. It goes to Kaduna from Abuja. It is precise and the timing is right as there are eight trips daily. Amount of people using train in the Abuja is multiplying, he said. Companies who take on interior and exterior advertisement of the trains have opportunity to allow their brands engage with commuters as long as they seat in the trains or the stations. This is enhanced with promoters in the same trains. According to him, clients are already making inquiry to occupy the limited space. “Some are on the final stage of signing the deal of coming on board” for World Cup and brands promotion. The partnership Ayomide did not disclose the sharing formular between NRC and Tranxeon but said it is win-win arrangement. It is a 10 year deal with initial three years first instance agreement. The new platform in the outdoor advertising space is likely to offer marketers who are always searching for new cost effective ways of engaging consumers, great opportunity.

Marketing: Lucozade brand sets Top 50 Brands Nigeria begins 2018 brands rating aside N200m airtime for consumers s a way of encouraging importance of brands, which has as the factors that go into the BSM SEYI JOHN SALAU

n line with its commitment of rewarding loyal consumers, Suntory Beverage and Food Nigeria Limited (SBFN), maker of Lucozade, has set aside N200million worth of Instant Airtime to reward consumers in the 3rd edition of its “Lucozade Under-the-Cap Airtime National Promotion”. Chinedum Okereke, Managing Director, SBFN, kicked off the 2018 Lucozade Airtime promotion recently in Lagos. According to him, the promo is an avenue for Suntory to rewards Lucozade consumers across the country. “We are proud to announce the return of the successful Lucozade Airtime Promotion for the third time since its launch in 2016. The promotion is an avenue for us to attain nationwide reach as far as rewarding

our consumers is concerned, and the modality of the promotion gives us a great opportunity to target millions of consumers,” said Okereke. Rosemary Akpo, Marketing Director, SBFN said the promo is important to Suntory because it creates an avenue to connect with target audience on a large scale. “The uniqueness of this promotion lies in the fact that every participant who sends in a valid code, stands a chance to win instant airtime, regardless of geographical location or mobile network,” said Akpo.

strong brand performance and healthy competition, Nigerian brand watchdog and rating agency, Top 50 Brands Nigeria has begun the process of measuring, scoring and selecting best 50 brands for 2018 in Nigeria. Top 50 Brands Nigeria is an annual selection, analysis, rating and celebration of top corporate brands that have consistently maintained leadership position in their categories and lived up to their brand promises. Although with different parameters for rating, Top 50 Brands Nigeria seems like a Nigeria’s version of the America’s Fortune 500 Companies measurement. Making the announcement for this year’s brand measurement process in Lagos, Top 50 Brands Chief Executive Officer, Taiwo Oluboyede said in a statment that one of the essence of the annual rating is to make brand owners appreciate the

now become the most valuable asset of their corporate entity and a major success factor to their businesses. “At this very important time in our nationhood, there is no overstatement of the important roles these brands play in our business space. They provide the much-needed jobs, goods and services, as responsible corporate citizens they pay tax, create wealth and also are socially responsible, with many interventions endearing them more to the people,” Oluboyede said. Oluboyede explained that Top 50 Brands Nigeria followed a set of parameters in measuring and evaluating the strength of brands, using the Brand Strength Measurement (BSM) Index, a model that tests brand’s ability to perform its promise to the consumers. He listed Brand Popularity, Category Leadership, Innovation, Quality Elements, Online Engagement, National Spread and Corporate Social Responsibility

model, adding that the outcome is a statement of the strength of brands in Nigeria. “The model shows how strong a brand is from the consumer point of view and in a way indicates its weakness. The 50 brands with the highest cumulative will be the top brands in Nigeria for the year,” Oluboyede said. He went further to state “that the first step to the model is the popularity evaluation, which is done with the top on the mind (TOM) survey, where respondents are asked relating to brands that easily come to their mind or which they can recall,” adding that “from this, hundreds of brands are harvested which are further subjected to the other factors” in the BSM model. “From experience, people often easily recall brands they relate with or have some form of affinity with. For a brand to stand a good chance in the annual ratings, it must have considerable mentions in the TOM survey,” Oluboyede said.

Managing

20 BUSINESS DAY

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Tuesday 22 May 2018

C002D5556

GOVERNMENT

BUSINESS DAY

BISI ADEGBUYI

BUSINESS

A seasoned Lawyer with huge business experience is the Post Master General of Nigeria

Interview with Public Sector Leaders

We will leverage on technological innovations to drive e-commerce, financial inclusion and diaspora remittances of over $20billion – Post Master General BISI ADEGBUYI, a seasoned Lawyer with huge business experience is the Post Master General of Nigeria. He spoke to BusinessDay crew of JOHN OSADOLOR, HARRISON EDEH and CYNTHIA EGBOBOH on wide range of ongoing reforms in the Nigerian Postal Service (NIPOST) and the mail delivery sector. The Post Master General stated that the NIPOST is leveraging on Technology and its offices across the country to facilitate e-commerce and financial inclusion. Excerpts:

alk us through your idea of a 21st Century NIPOST and your ongoing restructuring NIPOST fell short of the expectation of the 21st century postal administration and we decided to restructure its facilities. In the process, we created six commercial business units, and the financial service is one of the commercial units. Under the financial service, you have agency banking, remittances, mobile money and financial inclusion initiatives. In line with our determination to occupy the driver’s seat in financial service journey, we have come up with innovation and new game changing products that are aimed at deepening financial services. One of such is electronic money order. From time immemorial, we have been involved in money transfer that we call money order of old; but because of the destructive nature of technology although offering unbelievable opportunity for a better postal administration, we have to leverage on these opportunities to create electronic money order; domestic electronic money order through which money can be transferred within any part of Nigeria electronically. What are the challenges thus far? One of the major issues confronting this operation is poor addressing system. In that respect, we have commissioned young Nigerian experts to come up with solutions to work on address validation concern. There is need for addresses to be verified,

hence we came up with NIPOST address verification system. As a postal administration, NIPOST is

from the Federal Government of Nigeria ; we are going to make money from the verification process. There are billions of addresses to be verified as whoever wants an address to be verified must pay for it. Also, Telecom providers as they demand addresses of customers will pay as they give Sim cards, e-commerce transactions will also be enhanced via this development, and such services will be delivered and paid for. We would get involved in the National Cash Transfer scheme of the Federal Government. We at NIPOST are scattered all over the country and most people who use this medium are poor people in the rural areas where there are no banks. We have the bulk payment solutions in our offices across the country. Sixty to 65 percent of Nigerians are youths who do not engage in postal service because it is not attracted to them, hence we have come up with “Post YES” which means “Post Youth Engagement Strategy”, which will make post office attractive to the youths through digital operations like electronic stamp. So we think more of digital products that they can get and use with their phones.

When people send money from all over the world, they use Western Union Money Transfers, Money Gram which are limited to banking. But if the NIPOST is involved, we will not only reduce the cost but enlarge the reach. Those in the rural areas will not have to go to the urban areas to collect their money, and they could go to a nearby post office and collect their money

determined to leverage on new technology in order to compete favourably with other postal administrations in the world and subscribe to global best practice. When I became the Post Master General coming from the background of a politician and a businessman, I thought it would be necessary for me to use the post to create wealth and end poverty, but never knew that, that was the aim of the financial

inclusion policy of the government. I just set it as a mandate for myself; so I began to think on ways to actualize it? So we decided to leverage on ICT to create e-employment. So we embarked on projects sponsored by communication and world summit on information. In that respect, we will engage the services of young men and

women who can operate smart phone to become our address verification agents to verify address and each person will earn N100 to N150 per address verified that is the price for that initiative. The Central Bank of Nigeria has awarded NIPOST international money transfer operator license and NIPOST can play

in the remittances ecosystem where World Bank just reported that in 2017 Nigerians in Diaspora remitted $22,000 to Nigeria at 9.5% which is high in our opinion. When people send money from all over the world, they use Western Union Money Transfers, Money Gram which are limited to banking. But if the NIPOST is involved, we will not only reduce the cost but enlarge the reach. Those in the rural areas will not have to go to the urban areas to collect their money, and they could go to a nearby post office and collect their money. When are you starting the implementation of your plans? In the next one or two months, NIPOST will go live on remittances, money order, knowing that the greatest challenge of e-commerce is cost which is about 30%. If we can reduce that cost to a barest minimum, that will be good news for the operators. Currently, we are training our people, the technology is ready, and it is workable. Our intention is that each verification agent will be able to make more money than UBER’ driver

because as volume of the address they verify increase so will their income increase. When exactly is the starting date? We have not fixed a date for the proper launch of this initiative; we need to get the various stakeholders like the Central Bank of Nigeria (CBN), various financial institutions, Federal Road Safety Corp (FRSC) to key into it because they are inter-related and interwoven. The banking statutory responsibility of ‘Know Your Customers (KYC)’ requires the bank to know where their customers live and verify their addresses. You and I know what the position is, even the identity we are talking about will be meaningless, if it does not have a specific address. We have also identified technologies that we will leverage on to enable us verify identities also. We are going live with Ecobank within two weeks. Ecobank, Keystone Bank have fully bought into the initiative regarding agency banking. When the digital address system is ready, the protocard will be ready in the next one or two months, wherein anyone

can download NIPOST App on his phone and be given a digital address. We have succeeded in dividing Nigeria into 330 billion by 3 meters, which even comprise of under the waters address. The digital address encompasses states, local government, state codes and a unique identifier. We may have to ask individuals to pay a token for each address and such address paid to become the person’s own. It is the primary responsibility of the government to give address to its citizens and provide fundamental infrastructure. Are you partnering with any organization on these initiatives? We are partnering with Galaxy Backbone and advocating for collaboration of other private institutions to enhance our collection of data. As a businessman, you invest on where you will get money from. We don’t get subvention

How do you intend to train your Staff? Experts are currently training our staff on this electronic processes and new technology. Training is a continuous process and we will continue in the training process. We are going to have NIPOST e-commerce platforms to deal with locally produced goods. We are also signing a Memorandum of Association with the Bank of Agriculture (BoA) to make it easy to create access to products, different products, the possible price and where to get them and also help traders to sell their products. NIPOST should not be afraid of competition, and that is why we are surrendering our regulatory power. When they pass the Postal Reform Bill, NIPOST will cease to be regulatory authority for courier companies and that is a way of making us more competitive because the government will set up a new

regulatory authority, and it is the responsibility of government to get those that will drive it as it is done in other jurisdictions of the world. What type of NIPOST do you hope to see in the next few years? In the next 18 months with our various innovations, we hope to see a NIPOST that is not stagnant, static and a NIPOST that will satisfy customers, give reliable addresses to Nigerians, and a NIPOST that is globally competitive. As we speak today, we have more volume in terms of transactions and we charge at low prices because we have been subsidizing. So when we improve on our processes we should be able to break even in revenue. Let us into your thoughts on

the Postal Reform Bill The Postal Reform Bill is the commercialization of NIPOST, which the National Council on Privatization and Bureau of Public Service are driving. It is also to attract foreign and local investments into NIPOST. It also aims at bringing people from the private sector to collaborate with NIPOST. The bill will help us in harnessing the economic value of our real estate property that are scattered everywhere across the country. These are some of the benefits tied to the passage of the Postal Reform Bill and it will soon be going for the final reading. Is there any government funding? Funding is always a major challenge, but we are seeking and looking out for other means of raising fund.

BUSINESS DAY

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Tuesday 22 May 2018

Energy Report Oil & Gas

Power

Renewables

Environment

Industries boost production as Shell increased gas supply by 32% in 2017 OLUSOLA BELLO

s part of the efforts at enhancing Nigeria’s economic growth through optimisation of natural gas, Shell Nigeria Gas (SNG) up it gas supply in 2017 as it distributed an average of 41 MMscf/d of natural gas compared to 33 MMscf/d in 2016 to industries and factories around the country. The increase in supply volume in 2017 representing a 32% increase over gas sales in 2016 was due to an increase in new customers and less gas supply disruptions. SNG currently supplies natural gas to 90 industrial and commercial customers in the states where it operates, driving industrialisation and its positive chain effects in addition to direct internal generated revenues in these states. These benefits have led Bayelsa, Lagos and Ondo States to express interest for SNG to expand its distribution network into their states. Other states where it is very active are Ogun, Abia, and Rivers States Among its customers are four compressed natural gas

companies that make the gas available to other companies outside the SNG pipeline network. The company in fiscal year 2017 signed an agreement with an indigenous company, Shoreline Energy, to explore opportunities to market and distribute natural gas to wholesale and retail customers in Victoria

Island, Ikoyi, Lekki and Epe areas of Lagos. It will help finance and develop a transmission and distribution network from a 20-year gas concession, originally owned by Gasland Company, in which Shoreline took a 75% interest in 2005. The gas will be transmitted through the Escravos Lagos Pipeline System from

various producers in the western Niger Delta. At the end of 2017, executed a memorandum of understanding (MoU) with the Rivers State Government for the distribution of gas to industries in the Greater Port Harcourt area and its environs. The agreement is an opportunity to further promote gas as a more reliable,

cleaner and cost-effective alternative to liquid fuels in the Niger Delta. According to Osagie Okunbor, Shell in country chairman and managing director of Shell Petroleum Development Company(SPDC )continues to make progress in close collaboration with its joint venture partners and the Federal Government of Nigeria towards the objective of ending the continuous flaring of associated gas. Many of the new Shell facilities are designed to eliminate continuous flaring of associated gas. In parallel, a multi-year programme has been successfully implemented to install equipment for capturing associated gas from older facilities. As a result, flaring volume from it facilities was reduced by 90% between 2002 and 2016 and flaring intensity (flare divided by total hydrocarbon produced - tCO2e/t) decreased by 78% over the same period. Divestments also resulted in a further reduction. However, flaring from SPDC JV’s operations in 2017 increased by 61% compared to 2016 and flaring intensity also increased by 28% from the previous year. The increase in 2017 is partly attributed to the restart of certain SPDC JV facilities,

e.g. Forcados export terminal, that were offline for most of 2016. There are several SPDC JV facilities where flaring still takes place. Some only have non-routine operational flaring e.g. Soku, Bonny, Gbaran and Agbada because they have fully functional solutions to address routine flaring. Others have routine flaring and the SPDC JV has identified solutions by capturing the associated gas and commercialising it for the domestic market. The Bonny Associated Gas Solutions (AGS) facility was commissioned in 2016, while Adibawa and Otumara/ Saghara AGS projects came on stream in November and December of 2017 respectively. However, the planned start up dates for two gas gathering projects have historically been delayed due to lack of adequate joint venture funding. Nevertheless, with funding now restored, the projects are planned for completion in 2018-19. The remaining sites are located in remote areas with low volume flares. Since late 2016, SPDC has been working with third parties to develop small-scale projects to capture the associated gas from these remaining sites for domestic utilisation.

Nigeria must address constant power system collapses to boost economic productivity KELECHI EWUZIE Power sector in Nigeria continues to battle with the debilitating effect of perennial national electricity grid collapses that threaten economy development across the country. These collapses have in no small ways cost the Nigeria economy a sizeable amount of revenue. As recent as in March report indicated that Nigeria’s Power sector lost an estimated N1, 042,000,000 in just one day owing to system collapse occasioned by insufficient gas supply, distribution infrastructure, transmission infrastructure and water reserves. According to the report the loss was as a result of the shutting down of some gas turbines which led to insufficient gas supply, limitations in distribution and transmission infrastructure and water management

constraints in some of the hydro plants. Technically, transmission capacity is expected to double that of transmission, but in the Nigeria Electricity Supply Industry, distribution capacity is a far cry from the transmission capacity of about 7,000Megawatts (Mw). Smart Omo Omoragbon, Assistant General Manager, Operation of the Transmission Company of Nigeria ((TCN), only recently warned about the imminence of another system collapse as a result of the volume of idle power waiting for evacuation. Omoragbon observed that despite TCN’s existing capacity, load rejection from the DisCos, which causes high frequency and system collapses could still persist unless the DisCos are ready to distribute their loads. In February a report from the Power Advisory

Team, Office of the Vice President, stated that “despite Federal Government’s efforts to address the nation’s power crisis, as well as mitigate the constant system collapse by the grid, about seven generat-

Olusola Bello, Team lead, Analysts: Kelechi Ewuzie, Isaac Anyaogu, Graphics: Joel Samson.

ing plants produced zero megawatts of electricity.” “On February 20 2018, average power sent out was 3,835MWh/hour (down by 134MWh/h from the previous day) “1175MW was not generated due to unavail-

ability of gas”. “29MW was not generated due to unavailability of transmission infrastructure, while 969MW was not generated due to high frequency resulting from unavailability of distribution infrastructure” the source said Those who know in the power sector insist that the solution to tackling the incident of incessant system collapse is for adequate investment to be made in order to stabilise the grid. They also observed that another solution to power system collapse is reduction in tripping of critical tie lines by having a well maintained transmission line trace as well as properly coordinated and discriminative line protection schemes. Ayodele Oni said replacement of vandalised sky wires that expose the lines to lightning strikes and replacement of obso-

lete transmission equipment to reduce the incidence of equipment failure to the barest minimum is vital to resolve the problem. It will be recalled that after the collapse in February, Babatunde Fashola, Minister of Power, Works and Housing insisted that the Federal Government was working hard to fix the power sector, stressing that despite the country’s electricity challenges, Nigeria was still exporting power to Republics of Benin, Niger and Togo. Fashola, observe that in terms of population as a function of energy need of a country, “Niger is running on 80MW; Republic of Togo, 200MW, less than Abuja; Ghana is about 3,000MW installed capacity and they are not producing all of that. Lagos alone is getting 1,200MW; one state, half of another country. So we must understand the dynamics of electricity use.”

Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378; +234-8036534708

Tuesday 22 May 2018

C002D5556

BUSINESS DAY

Energy Report

Lack of political will to deregulate, bane of Nigeria’s downstream sector - Olawore OBAFEMI OLAWORE, a former executive secretary, Major Oil Marketers Association of Nigeria (MOMAN) an elite petroleum products trading group, is retiring after over 35 years in the oil and gas sector. As he plans for another career in the agric sector, he tells BusinessDay’s ISAAC ANYAOGU, how deregulation can solve Nigeria’s petroleum product supply hiccups. What would you say are the organisation’s biggest accomplishments yet? e have been able to set up an association which is a force to reckon with in sector. We started from scratch and have set up some standards, not yet to the level we want, but we have set up some standards; standards in terms of corporate behaviour, in terms of dispute resolution among our various members and what the market perceives as value. The perception of the market is that there are some good traders and bad ones; we believe that among the players, the association that I work for is considered among the good ones. Right from inception, there is no serious government policy that doesn’t have our input. We state our views as strongly as we can, sometimes they are heard, and sometimes they are not. But that is the nature of life, you can’t win all the time. We believe that our core objective, even though we have not achieved it, we are working towards it and one day we shall achieve. Our objectively, principally is to have a free market, no government interference, except providing regulatory framework to govern behaviour. Even without anti-trust law, my association members have been able to internally, avoid collusion,

especially in the area of product price fixing. We do not discuss prices in any of our meetings, we discuss operational matters only. Nobody can accuse us of colluding to cheat, it is one of our cardinal principles not to fix prices. We have developed standards for our retail outlets and I daresay, they compare with the best in the world in terms of quality and aesthetics. We would have done more had we met our objective of deregulation. We have been instrumental to what has been achieved in terms of performance of the Petroleum Product Pricing Regulatory Agency (PPPRA), Petroleum Equalisation Fund (PEF), Department of Petroleum Resources (DPR) and such similar government agencies. We have been instrumental in setting up the pricing template and all associated practices like petroleum support fund and other things. NNPC is still doing the bulk of importation, what is MOMAN doing to break this cycle, as it brings its own problems? I think instead of crucifying the NNPC for being the sole importer, they should be commended. How did we get to this point? Between January – July 1999 NNPC didn’t bring in one litre of petrol. During the tail end of General Abdulsalami Abubakar’s regime, there was deregulation and

Obafemi Olawore

we were the ones bringing in the products. When things went haywire and civil government came, we were still doing major importation, at a point we were doing 70% and NNPC was doing 30%. It went to 60-40, meanwhile government was paying subsidies. Remember our agreement with government was that we would be paid subsidy at the end of 45 days of importing the product but now, it got to point where marketers having borrowed money to import, stayed for several months, at a point we stayed for two years, without getting paid.

This is discouraging because banks are always charging their interest, always on your neck looking for their money and if government doesn’t pay, where do you get the money? I need to correct a notion, subsidy is not free money, people think it is free money. Those businessmen that came into importation with the sole aim of getting free money have all gone, they couldn’t stay, because they came to see what is happening make money and go, the real players are still there and are being hold billions of naira.

What is the current debt after the last reconciliation? It is in the neighbourhood of $2billion dollars and because they are being owed, marketers are not importing and because the market must be satisfied, NNPC has to import. Their primary objective is to make product available and they have their means to collect their money. A lot of marketers are heavily indebted to banks, what are your bankers saying? I said at a forum some time ago that for many of the marketers especially the small ones, the only thing you find in their bags are anti-hypertensive drugs. The Asset Management Corporation of Nigeria (AMCON) has seized their tank farms because they borrowed money to build them and import products but government is not paying. So they cannot pay their banks and their banks have resorted to using other ways to collect their money. What is the government saying about resolving this debt, what kind of engagements are you having with? We have had several meetings with government at the highest level; we have been promised that after the reconciliation exercise we will be paid. But the reconciliation exercise appears to be an unending one. It started during the tail end of the government of former president Jonathan, when the

current government came in, we did reconciliation again, now we have done another one but no one is paying. The banks are on us, AMCON is on us, it is a very terrible situation. What is the way out? Deregulate and get a strong regulator. It should happen. We started thinking about deregulation right from the administration of President Babangida but any attempt to increase fuel prices is a feeble attempt to deregulate, the political will is not there. Other countries have deregulated and it didn’t take them two years. Ghana has deregulated, they came to Nigeria to study the PPPRA model and they have gone back and they are doing fine. Commendably, MOMAN has helped to clear tankers from Apapa road, how did you achieve this? MOMAN’s style is engagement with all the parties, we have a good understanding with the National Association of Road Transport Owners (NARTO), the Petroleum Tanker Drivers (PTD) and various groups. We engaged them and they listened to us. One major thing that has also helped is that there is product. Other stakeholders including the Navy have helped too. We have had meeting with Federal Road Safety Commission (FRSC) and that is why you see some civil approach towards the treatment of these tanker drivers.

‘Urban dwellers must include Solar Energy as part of energy supply mix’ OLUSOLA BELLO

sing Solar Energy as part of an effective energy mix option for critical and basic household needs would go a long way in solving the problems associated with irregular supply of electricity to residential consumers. This is because while power supply remains a major issue in the country, residents in urban communities lead the park in the adoption of very expensive and climate-damaging option for generating power compared to solar energy solutions which are cheaper, safer and an environmental friendlier option in the energy supply mix. According to Olufemi Ashipa, vice president, Lumos Nigeria adaptation of

Solar Energy would help solve to a very large extent, the Nigerian energy crisis that currently needs immediate scalable solutions. “Data shows that 61% of Micro SMEs in Nigeria spend between N500 to N1000 per day on fuel and as many as 85% of micro and small businesses rely on generators for the supply of electricity. As a result, it is critical to note that the explosion in generator sales is driven by urban Nigeria and not the rural areas and the bottom line is, we spend a lot more in trying to solve our power issues”, Ashipa said. Olufemi Ashipa who spoke at the Solar future Nigeria 2018 conference said: “With 60m generators in Nigeria, mostly held in the urban environments, Nigeria’s electricity sector continues to lose N24 billion monthly to the electricity-

generator market. Yet if we carefully look through the issues surrounding power in Nigeria, we would understand better that solar power solutions can solve half of the problems we currently face in the sector”, he added. He argued that with Lumos Nigeria committed to improving the quality of life of Nigerians, through access to reliable, accessible electricity, it is plausible to state that solar solutions can best solve half of the problems we have in the sector in a sustained and affordable manner. However, he believes that Nigerians need to unlearn the way they approach solar power generation for optimised results. “The first principle of solar power is for people to first understand what it can or cannot do. If we remember clearly the revolution in the banking

system through the credit and debit cards years ago, it took a while for people to trust the system. After a while, we became used to the system. This is the same for solar solutions, although it is more complex considering the fact that consumers wonder why they should pay for the sun that is free,” Ashipa stated. He noted further that; “even though most solar solutions come with an initial financial commitment, users can save more in the medium and long-term compared to the cost of running generators; reducing drastically the average monthly spend on electricity. Our energy consumption paradigm must shift to understanding the fact that we can actually do more with less as we learn to make choices. We can better understand this if we carefully calculate the amount

of power we consume daily. This would become clear to us to realize if we really do need to switch on every appliance at the same time.” In ensuring that more Nigerians get the opportunity to access and benefit from its unique mobile solar electricity solution known as the Y’ello Box, Lumos Nigeria recently launched a price reduction window on its Lumos Solar Power Systems for prospective consumers across the country. The move is also aimed at empowering more small business owners and households to lead an improved quality of life and run profitable enterprise through the adoption of cleaner, affordable, noiseless and environment-friendly solar power generation system, “one Y’ello box at a time”. The initiative will also afford new subscribers the opportunity to join Lumos

Nigeria’s league of over 90,000 subscribers for only N20,000 set up fee, which has bundled into it, one full month of mobile electricity subscription; previously, that would have come at a cost of N36,500. The Lumos Y’ello Box Mobile Solar Electricity Service, which comes with a 5-year after-sales repair service on the solar panel and the indoor display unit (IDU) provides smart, reliable, accessible and affordable electricity through convenient payment plans, using airtime from mobile phones to pay for the service. To benefit from the price reduction, small business owners and individuals can walk into participating MTN stores to join the Lumos Mobile Electricity Service with just an initial payment of N20, 000 inclusive of a onemonth subscription.

BUSINESS DAY

C002D5556

Tuesday 22 May 2018

Markets + Finance ‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

FirstBank Plc: Resurrection of the King lender …Efficiency improves as NPLs drops to record low …Declares dividend of N8.97 bn in 2017 BALA AUGIE

esurrection was when Jesus Christ woke from the dead on the third day after being crucified on the cross of Calvary, according to Apostle Paul in 1 Corinthian 15. The son of man had to die to make atonement or reparations for the sins, follies and inequities of humanity, so that we can have an eternal life. This is not a bible class or the preaching of a fresher from the school of theology. However, there is a thin line between spiritualism and the corporate world. One lender that has awakened from the slumber and surmounted the headwinds caused by exposure to the oil and gas is FirstBank Nigeria Holdings (FBN Holdings) Plc. One of the largest lenders

in Africa’s most populous nation and largest economy, through an excellent risk management strategy, saw Non Performing Loans (NPLs) decline to 21.50 percent in the first quarter of (Q1) 2018 from 26.0 percent the previous year. Impairment charge otherwise known as loan loss expenses declined by 12.1 percent to N25.3 billion on the back of improving risk governance. Cost of risk (COR) declined to 4.5 percent in Q1 2018 from 4.80 percent the previous year, reflecting improvement in assets quality. FBN Holdings Plc has diversified risk assets base across strategic business line and groups while contemporaneously maintaining effective profiling and management of the loan book portfolio. Analysts are of the view are upbeat about future

earnings of FBN Holdings Plc as a gradual improvement in the economy will pave the way for customers owing the lender to pay back interest on money borrowed. If interest on loans are repaid expeditiously, future profit will spike hence resulting in a higher return on investment for shareholders. The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017. An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s lenders. FBN Holdings Plc’s in-

Urum Kalu Eke, managing director, FBN Holdings Plc

vestment in latest technology with a view to achieving cost optimisation has yielded fruit as total operating expenses grew by 1.20 percent to N56.05 billion in the period under review, which is lower than the 12.10 percent May inflation figure. Regulatory costs otherwise known as AMCON charge constitute 14.3 percent of operating expenses in Q1 2018. However, cost to income ratio (CIR) increased to 56.10 percent in the period under review from 53.30 percent the previous year. Gross loans and advances dipped by 4 percent to N1.90 trillion in Q1 2018 from N2.0 trillion the previous year, driven by moderated risk asset creation. Gross earnings fell slightly by 1.60 percent to N138.9 billion in the period under review, on the back of declining yields on investment securities. Interest income declined marginally by 3.40 percent to N110.9 billion in Q1 2018 from N114.10 billion the previous year, due to the constrained lending environment as well as lower yields in treasury assets. Non-interest income increased by 2.5 percent to N24.8 billion as the lender

continues make efforts in diversifying from traditional banking activities, and sustained contributions from non-commercial banking businesses. As a result of the declining asset yield and volume in Q1 2018, interest margin fell to 7.20 percent in the period under review from 8.20 percent the previous year. FBN Holdings capital adequacy ratio of 18.0 percent and liquidity ratio of 54.80 percent in the period under review are well above the regulatory limit of the 15 percent and 30 percent regulatory limit. The Nigerian lender rewarded its shareholders with a total dividend of 25 kobo per share on every N0.50 ordinary shares. This translates to total dividend of N8.97 billion. First Bank’s profit growth was the best among peers in 2017 First Bank Nigeria Holdings (FBN Holdings) Plc’s profit growth was the best among peers in 2017, thanks to lower impairments, cost curtailments, and income from short term government securities. FBN Holdings’ profit after tax surged by 226.80 percent to N40.11 billion in December 2017, the fastest bottom

BD MARKETS + FINANCE (Business Team lead: PATRICK ATUANYA - Analysts: BALA AUGIE and LOLADE AKINMURELE)

line growth in five years. See Chart. This compares with the year on year (YOY) profit growth of Zenith Bank, (37.23 percent); United Bank for Africa (UBA), (8.75 percent); Guaranty Trust Bank (GTBank) Plc, (28.86 percent); Fidelity Bank Plc, (93.72 percent); Stanbic IBTC Holdings Plc, (69.63 percent); and Sterling Bank Plc; (65.03 percent), as shown in their 2017 audited financial statement. On the flip side, Access Bank Plc recorded a 13.22 percent drop in net income, First City Monument Bank Plc, (-34.43 percent); and Wema Bank Plc, (-11.91 percent). This means only three out of 10 banks under our coverage recorded a profit at the bottom lines (profit), signaling the gradual economic recovery is beginning to show face in their numbers. For the year ended December 2017, after tax profits for the 10 lenders that have reported results spiked by 44.28 percent to N693.92 billion from N478.19 billion the previous year (2016). For the full year period ending 2016 the 10 banks saw their profits increase by 21 percent, while there was a 12.32 percent decline in profits in 2015 a period when the sudden drop in crude oil prices from above a $100 per barrel to near $40 forced banks with heavy exposure to the sector to write off loans that began to go bad. The unprecedented growth at the bottom line (profit) means these lenders have surmounted some of the issues that undermined earnings in the crisis period as a gradual economic recovery helped bolster earnings since customers are paying back some the money borrowed. Also, some lenders have taken a haircut in 2016 on Non-Per for ming L oans (NPLs), a proactive strategy that validated their risk management strategy. Between 2014 and 2015, the number of banks with NPL ratio in excess of the 5 percent threshold rose from 3 to 8.

BDTECH

BUSINESS DAY

Tuesday 22 May 2018

In association with

iSON technologies, Oracle advocate cloud computing security JUMOKE AKIYODE LAWANSON

SON technologies and Oracle have urged organisations to adopt cloud computing security for business transformation. The companies made the call at an event themed: ‘Modernizing Security on the Cloud’. The event highlighted the need for organisations to implement and manage consistent security policies across hybrid data centers and explained that data security has become an increasing concern now that cloud storage has become more common. Commenting on the need for organisations to guard against threats, vulnerabilities and fraud events in the cloud, Hamilton Iyoha, pre sales consultant IT security at Oracle, CISM said, ‘’ With each passing day, organisations are being exposed to an evergrowing list of threats, configuration oversights, vulnerabilities and fraud events. Visibility to risks and real-time attacks, and the ability to rapidly respond will be among your key success metrics in 2018. In order to contain these threats and have a visibility into the security posture of your applica-

L-R: Tayo Odunowo; marketing communications manager, Infinix, Jay Liu; country manager, Infinix, David Adeleke (Davido); Nigerian music artiste and Asa Asika; Davido’s manager, at the contract signing and unveiling of Davido as the new brand ambassador for Infinix Mobile, held in Lagos recently.

tions across multiple cloud platform and on-premise, you need an Identity Centric and intelligent Security Operation Center (Identity SOC). Oracle is proud to introduce to you the Industry’s first identity-centric framework

for security operation centers known as Oracle Identity SOC.” Sharook Hussain, vice president sales & Bus Dev. iSON, ME & Africa, further outlined the importance of cloud security saying “Enterprises

today are exposed to a growing volume of threats, both in scale and sophistication, with increasing regulatory norms being enforced upon them. It is essential for companies to ensure confidentiality, integrity and

availability of vital information and data through a robust information security framework. iSON’s Cyber Security Services follow a holistic approach in responding to multidimensional cyber security risks and providing total visibility and intelligence on new developments within business infrastructures, applications, data and people. We offer total Security solution aligned tightly with Oracle and committed to the Middle East and African region.” Cloud computing has the potential to improve the way businesses and IT operate by offering fast, flexible, scalable and cost efficient methods of operating. Companies however need to minimise risks associated with cloud computing by adopting standards and procedures to protect systems data and funds. iSON Technologies’ Next Generation Intelligent Identity Security Operations Center, which will combine advanced technology to ensure proper security of data and swift identification of threats will allow a complete turn-around for businesses, ensuring implementation of consistent security policies.

WIITSoN at Confab seeks improved policy to address digital divide in Nigeria PETER OLUKA

s portals to essential services move on online, people without digital skills or internet access risk further social and economic exclusion, speakers at the fourth Women in Information Technology Society (WIITSoN) conference have said. WIITSoN formerly known as Nigeria Women in Information Technology (NIWIIT) is an advocacy group under the Nigeria Computer Society (NCS) that focuses on bridging digital divide among women and girl-child across Nigeria. Re-echoing the pronounced inequalities in digital skills which have been documented in both developing and developed countries, Philip Shai-

bu, the Deputy Governor of Edo State, described the Conference theme; ‘Skills for a Connected World: Closing Gender Digital Divides’, as apt and relevant to discussing way forward on bridging the divides. Shaibu said that considering the fact that the world is becoming universally connected, with an estimated 95 percent of the global population living in an area covered by at least a basic 2G mobile-cellular network, African women should be supported to key into the emerging technological trends. The Deputy Governor represented by the SSA, Women, Health and Sports, Sabina Chikere, said the government has passion to empower the people, especially the girl-child which metamorphosis to women empowerment. This, the Deputy Governor, informed the decision of the State to

leverage technologies in training and retraining ladies who recently returned from Libya and re-integrate them to the society. “It is important we have realised there is a gap and we shall make efforts to bridge that gap. That is one of the things WIITSoN is trying to do. We need to come out; we have the capacity to do it. I just want to encourage WIITSoN because Edo State Government is interested in partnering with you on this matter. We have to leverage technology to transform the lives of our people, especially in mentoring them to embrace digital economy. “As a State on our part will not relent on encouraging women participation in technology, because that is the way. We do need skills to be relevant in the digital world. It will not be out of place to have our female taking after the likes

of Steve Jobs (late); Mark Zuckerberg; Bill Gates; Michael Dell and others who are trail blazers. Ibukun Odusote, the Permanent Secretary (Political Affairs), Office of the Secretary to the Federation, stressed the importance of creating enabling environment for the girlchild to develop confidence in the digital economy. She identified women are the backbones of Africa’s digital development, but require modern skills to thrive. “Let our children mirror us technologically. Artificial intelligence, robotics, machine learning, amongst others are the trending topics. Unfortunately, we still have women or mothers who are yet to appreciate the relevance of the emerging trends in the lives of our young girls. We need to speedily address that”, she said.

In a keynote address, Yuwa Naps, Director, Edo State Information Technology and Communication Technology Agency, said womenfolk must embrace digital productive tools to better their worth. She asserted that women must enmesh themselves with modern (digital) skills, transferring the knowledge to their children as means to enhance their capacity and relevance in modern work place. “Your smartphone is not just for selifes, rather an ‘office’. Your Facebook wall is your modern (online) shop; engage in productive gossips. IT/ICT tools are not for luxury- you can monitor your children and your home remotely”, Naps added. Peter Oluka is the Editor of TechEconomy.

BUSINESS DAY

Tuesday 22 May 2018

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

The relationship between technology and CSR for organisations in Africa The times companies viewed corporate social responsibility (CSR) programmes as burdensome have passed, Jumoke Akiyode-Lawanson writes that today, businesses around the world, spurred by technologically inclined consumers as well as a rising generation of more socially conscious business leaders, are making CSR a priority, embedding it into their operations and using it to attract and keep talent.

o these companies the desire to be known for doing good and giving back drives their core business strategy as opposed to merely donating to worthy causes. The corporate social responsibility stories that make headlines are large-scale, organisation-wide efforts and some of them are really remarkable. In the next five years, Google plans to give $1 billion in grants and 1 million employee volunteer hours, IBM’s travel programme sends their best employees to developing nations to use their talents on pro-bono assignments, Patagonia’s Action Works initiative supports grassroots environmental activism by pairing individual volunteers with non-profits in their communities, and Microsoft gavenon-profits $1.2 billion in services and software last year. The above named companies have made remarkable success because they started to look at CSR as a creative opportunity to fundamentally strengthen their businesses while contributing to society at the same time. They view CSR as central to their overall strategies, helping them to creatively address key business issues. Because of their scale, these corporate programmes have a deep and obvious impact on the planet. But they can have a staggering effect on a smaller scale too. This year, the technology landscape in Nigeria witnessed a major shift, one that will further improve the practice of CSR in Africa, as Tek Experts and Microsoft joined forces to establish a Customer Service and Support (CSS) centre in Lagos. Tek Experts debut in Nigeria follows the successful establishment of similar centres in other global locations. From the time of its launch, the company strongly expressed commitment to supporting talented individuals around the world and providing them with long and rewarding careers with partners such as Microsoft Nigeria. Speaking on the commitment of the company to investing in people, Yaniv Natan, founder of Tek Experts, said: “We are delighted to collaborate with Microsoft in developing talent that will improve the technology landscape in Nigeria and leverage the skills and expertise of Nigerians to provide great levels of service to customers as we have done in other locations around the world. We are committed to investing in the region and the people, and to raising the profile of Nigeria as an exceptional lo-

Yaniv Natan, founder, Tek Experts

cation for technical talent.” Elsewhere in Cameroon, just one person and 20 computers were enough to transform the future of the several youths in the country. Yembe Nfor, a young man from Cameroon with a vision for bringing technology to his country had a dream, he wanted a space where people in his city could access the internet. Several factors, however, stood between Yembe and his desire, economic development in Cameroon is slow, in part because of a lack of access to technology. Just 18 percent of its 24 million citizens have access to the internet, and even fewer own a personal computer. Without technological resources, young people in Yembe’s country—and more than 60 percent of Cameroonians who are under the age of 25—struggle to get the education they need to provide skilled labour to employers and better their lives. A chance meeting through a mutual friend introduced Execs In The Know co-founders, Chad and Susan McDaniel to Yembe Nfor, and his story and vision inspired them so much, they asked him to

share his message with their children. His vision for these Digital Spaces inspired Chad and Susan, and they started exploring the EITK community for a corporate partner that could bring his ideas to life. They shared his story with Aileen Allkins, Microsoft corporate vice president, Customer Service and Support. Aileen reached out to her network and contacted Tek Experts, which uses an expert workforce to provide business and IT outsourcing services. The company pledged their support: Tek Experts would donate 20 laptops to Yembe’s Digital Spaces project. In addition, Susan would bring her expertise to Digital Spaces as a board member. Yembe has worked very hard to change the trajectory of Cameroon’s future, and his efforts have made an impact. In 2017, he was awarded a Mandela Washington Fellowship, which brings promising leaders in sub-Saharan Africa to the US to study at a college or university. After their education ends, Fellows like Yembe return to their home countries and receive continued professional development support.

Speaking on the link between a company’s values and its CSR strategy, Raymond Murray, global marketing director, Tek Experts, said, “The most successful CSR programs are inextricably linked to organisations’ core values. “Tek Experts built its business on offering exceptional career and development opportunities to our employees around the world and whenwe heard Yembe’s story, we really wanted to help.” As the likes of Tek Experts and Microsoft consolidate their CSR activities in Africa and on the global stage, it is worthy of note thatcommitting to socially responsible practices is not just about addressing challenges, there are also huge opportunities. Unlike corporate philanthropy, the rewards of real CSR go way beyond reputational risk mitigation or a getting out a good PR story, it involves a deliberate attempt at making impact, building trust and credibility. For tech companies, especially at a time when brand trust is becoming increasingly difficult to earn, successful CSR today must be meaningful,relevant and transparent at heart.

GBAM deepens competition in Nigeria’s lottery industry ... introduces social media gaming JUMOKE AKIYODE-LAWANSON

BAM, a new and innovative lottery and gaming company is positioned to further drive competition in Nigeria’s lottery and gaming eco-system as it launched its new website with multifunctional features which allows customers to play, win and engage with the brand via social media. The newly licensed lottery company says its new website and innovative offering that give customers the opportunity to engage and play on Facebook, Twitter, Instagram and YouTube simplifies gaming with success to simple scratch cards in paper form or online (www.gbam.ng), whilst seamlessly replacing the grueling experience of betting and waiting on games, or having to pick lucky numbers. In a press statement from the Gbam corporate headquarters in Lagos, Segun Macaulay, chief sales officer, explained that ‘’through the GBAM website, players have access to an exciting array of game themes in: food, fashion, and sports; with denominations from N100 Jade, N200 Emerald, N500 ruby, to N1,000 diamond cards. Each card denomination and game theme has a jackpot prize which is 10,000 times the value of a card’s denomination. For example, the N100 jade games has a jackpot of N1,000,000 in cash, while the N1,000 diamond games has N10,000,000 as its jackpot.” Macaulay said that there are other cash prizes in each game theme asides the jackpot and players can win these as well. “A player can win same value of the card played, double the value of the card, five times the value of the card, ten times the value of the card, fifty times the value of the card, five hundred times the value of the card, one thousand times the value of the card and up to the jackpot of ten thousand times the value of the card,” he said. Up to N7 billion cash is expected to be won by GBAM players annually. Another appealing benefit to customers is that as long as you scratch their card, there is something for you. To compensate those who may not hit the big winnings, GBAM has other exciting offers in partnership with some other Nigerian brands. Players will be able to get N1,000 off their next ride on Taxify; or get up to 10 percent discount from any CityDia store; or also get free food items at SPAR retail store. The quintessential GBAM experience is that anybody above 18years can play and anybody can win on GBAM. According to GBAM, its newly launched website is easy to use; offers an excellent array of games to select from, can be played using mobile phones, with a user-friendly interface and it operates within legal regulations. GBAM, with its explicit pay off “Just Like That” represents unequalled gaming and winning experience. The company is licensed by the Nigerian Lottery Commission (NLRC) and Lagos State Lottery Board (LSLB).

BUSINESS DAY

Tuesday 22 May 2018

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Perfect storm: ageing boardrooms meet restless millennial workforce STEPHEN ONYEKWELU

oardrooms are ageing and a new workforce is emerging comprising people born between 1980 – 2000, who are known for their gipsy-like tendencies of wanting to be constantly in motion, changing positions and companies. Experts suggest the average age of the youngest boardroom of a medium to big size company is 48 years. Otherwise, the average age of boardrooms in big Nigerian companies is about 60 years old. What this points to is the need for many companies to refresh its workforce by injecting some new blood, which abound, into the mix. “An ageing workforce calls for succession planning amid technological and digital transformations, which are changing the way we live and work” Ben Afudego, West Africa advisory leader at Ernst and Young

(EY), said at the inaugural human resource directors breakfast meant to find solutions to contemporary Nigerian talent management challenges. “New key performance indicators (KPIs) would be needed to capture the new trends at the workplace. The workplace of the future begins now” Afudego said. In the United States, 25 percent of workers already belong to millennial generation, while in India that percentage has already doubled. In fact, it is expected that by the year 2020, 50 percent of the global workforce will be in the hands of millennials. In addition to being more numerous, millennials will also be more valuable and the generation will work long to support a significantly larger generation as life expectancy increases. It means companies have to be deliberate in attracting and retaining this ubiquitous new generation in their workforce. This is important because corporate directors say age is a big factor than race or gender in

achieving diversity of thought in the boardroom. Yet, boards of the biggest Nigerian companies are actually getting older. The EY human resource directors’ breakfast themed “Workforce disruption: creating a better world working world” strove to drive home the global understanding that businesses are now about teams that are diverse, collaborative and global. And the workplace place of tomorrow will seamlessly integrate technology, nature and design. To achieve these, millennials have a great role to play. “Seventy-four percent of EY staff is millennial. This comes with unique challenges. For instance, this generation consists of digital natives, who want flexible work hours and environment” Roderick Wolfenden, Africa Advisory Leader at EY said at the HR Breakfast. “EY’s new vision statement is ‘building a better working world’ and we are committed to this in practice” Wolfenden said. Millennials have been transform-

ing the workplace for the past decade or so, emerging on the scene with new attitudes and striking characteristics that inspired excitement and resentment from previous generations. “Our brand is synonymous with innovation because it is a nest of very young restless millennials. Our philosophy is inspired by the belief that intelligence is evenly distributed but opportunity is not. Millennials are hungry and ambitious. We provide outlets for this massive flow of energy” Taiwo Judah Ajayi, the global senior director of people at Andela, a tech incubator for startups said at the EY HR directors’ breakfast. For the first time in history, we see five generations of employees working together under the same roof. But traditionalists are leaving, and Baby Boomers are looking towards their retirement ventures, taking years of experience with them. Generation X are replacing them, slowly moving up in the hierarchy, but the bulk of the people on the ground, the do-ers, are millennials.

Students of Caleb British International School, Lekki Lagos, anticipating Fun Day in commemoration of Children’s Day.

Nigeria will be better with Alumni support-UI DVC AKINREMI FEYISIPO, Ibadan

lumni of Nigeria’s public varsities have been called upon to assist and support in meeting infrastructure and funding needs of their Alma Mata. Adeyinka Aderinto, the Deputy Vice Chancellor (Academic) of the University of Ibadan, who made this call, said world class universities attained their present statuses owing largely to the contributions of their alumni in infrastructural development, endowments and funding.

He said if alumni wakes up to their responsibilities, Nigerian varsities will be better. Aderinto made the call when the set of 1998 graduates of the Department of Sociology, University of Ibadan presented the sum of five hundred thousand naira to the 54-year old Department for upgrading the postgraduate classroom as part of activities lined up to mark the 20th anniversary of their graduation. Aderinto a Professor who led four other members of the set Wole Atere, Gbenga Adediji and Niyi Bello to make the presentation urged graduates of Nigerian uni-

versities to return to their schools and assist in the delivery of quality education to modern learners. “The likes of Havard, Yale, London School Economics did not get to their present world class positions by joke. They benefit largely from the support of their alumni. We cannot sit back and watch our institutions go into state of disrepair without plough back to where we were made. We promise to make this annual contribution as long as we live and we hope to rally more people to support Ibadan Sociology.” Ifeanyi Onyeonoru, the head of department, Sociology, while

thanking the 1998 set for their support to the department promised that the fund will be used judiciously to uplift the postgraduate classroom. Onyeonoru noted that Nigerians give money in churches and mosques but not to public institutions urged for a change in behaviour. Olanrewaju Olutayo, a professor of Development studies, challenged those who have been insensitive to the needs of their former schools to wake up to give back to their schools to enrich the standards of education similar to that which they enjoyed.

Saraki commissions 8 blocks classrooms in Kwara SIKIRAT SHEHU, Ilorin

bubakar Bukola Saraki, the Senate President, has commissioned eightblocks of classrooms at Mandate Junior Secondary School. He equally distributed instructional materials during the brief but colourful ceremony held in the school premises at Adeta, Ilorin the state capital. Saraki had through the Universal Basic Education Commission (UBEC) attracted the project to the beneficiary basic school. Speaking through the Director General, Abubakar Bukola Saraki (ABS) Mandate Office, Musa Abdullahi, Saraki said the gesture was aimed at enhancing conducive learning environment for both the pupils and their teachers and also in continuation of his intervention in the education sector and in fulfilment of his promises to the people. He expressed optimism that the commissioning of the project as well as the distribution of instructional materials would go a long way in ensuring the growth and development of educational institutions in the state, particularly at the basic level. “This block of eight classrooms that is being delivered, to be accompanied with distribution of instructional materials to further aid learning, is a clear testimony of the priority placed on “total education” by the Senate President. “While the block of classrooms will add to the infrastructural development of the school and provide the students with conducive learning environment, the added materials will provide the students with useful learning aid for their all round development. “The Senate President believes that our educated youths are the leaders of tomorrow and gestures such as this will no doubt put the Ilorin community in the forefront of academic pursuit. “This is the reason why the Senate President has devoted huge resources through his constituency office to education programmes. “The recent payment of JAMB fees for applicants and sponsoring of examination for Arabic students in the state is a course that Saraki is very committed to and will continue to do more on this front to uplift the educational pursuit of the people, especially those who cannot afford it due to no fault of theirs. “During the 2018 WAEC registration, the Senate President paid WAEC fees for 554 students. He also paid school fees for 47 indigent students of Kwara State Polytechnic”, Abdullahi said. In her remarks, the Principal of the School, A.H. Shuaib, applauded the Senate President for his kind gesture.

BUSINESS DAY

C002D5556

EDUCATION

Tuesday 22 May 2018

HUMAN CAPITAL

‘We’ve set up students’ support unit to help indigent, physically challenged students’ Igbekele Amos Ajibefun, professor of Agricultural Economics, is the Vice Chancellor of Ondo State Government-owned Adekunle Ajasin University, Akungba Akoko. In this interview with BusinessDay’s ‘Yomi Ayeleso, he spoke on the hike in fees payable. Excerpts: I will like you to start with a review of the situation after the students’ protests over the increase in school fees.

hank you ver y much; the protests didn’t take us unaware. They happened as expected. Anywhere there is increase in fees, even if it is a marginal increase, students will expectedly protest. So, the students went to protest in Akure, the seat of government of Ondo State. And the government listened to them. In fact, the government invited the leadership of the students’ union, as well as the Management of the University, and the Chairman of the Governing Council, for deliberations on the issue. It was discussed and ways of reducing the fees were tabled and deliberated. With the intervention of the Governor, the fees payable by the students were drastically reduced. After the reduction, the students’ leadership took it back to their Congress where it was decided to accept the reduction, having seen the commitment of government to reduce the fees by almost 50 percent. The students immediately commenced registration for the new academic session. Now the University is settled and students are registering for the new academic session. Activities are now going on well and peacefully on campus.

The management pledged to provide some support to the students in coping with the payment of the new fees. How about that, sir? With the increase in school fees, the University Governing Council approved some financial support to assist the students to cope with payment of the new fees. These include introduction of loan scheme; scholarship scheme as well as expansion of the existing, Work-Study Scheme, in addition to other forms of support. Just last week, a new office, Students’ Support Centre was created under the Vice Chancellor’s Office, with a Coordinator appointed to coordinate the activities of the office. A Committee has also been set up to work out the modalities and criteria for the implementation of all forms of financial support to the students. One of the categories of students to get support from the University is the physically challenged students. The application forms for financial support for this category of students are already out. The University will support the physically challenged students with as much as 50% of their school fees. Another area of financial support for students is the provision of scholarships for brilliant students, as it is done all over the world. This will promote academic excellence, as students will compete for the scholarships. There will be criteria to determine who ben-

Since coming on board, I have built on the solid foundation I met on ground. The University has continued to make steady progress in all areas. In terms of infrastructural development, the University has progressed. When one moves round the campus, you will come across over ten huge projects that have been completed since my arrival in January 2015. And we have over eight other projects that are ongoing and at different comple-

tion stages. Two of the projects nearing completion are the Faculties of Arts and Education buildings. These are gigantic projects that are well over 90 percent completion. So, in terms of infrastructural development, the University is making commendable progress. The University is working on generation of its electricity supply through solar power. The University is trying to establish four Megawatt solar power project on campus. Once this is achieved, the challenges associated with epileptic electricity supply in the University will be over, and this will save the university huge amount of money on diesel and purchase and maintenance of generating sets. Akungba has been without public electricity supply for years. The University had recently established its radio station, Radio AAUA 90.3 FM, which was commissioned in December 2017. The radio station is a big addition to infrastructural development in the University, and this will enhance the academic programmes of the University as well as socioeconomic life of the University host communities. Some members of our academic staff have been to Auburn University for courses and trainings on the basis of the collaboration between the Institutions. So in terms of partnership and staff development, we are making good progress.

The University has also made progress in terms of academic programme accreditation. There was a major NUC accreditation exercise in the University in November 2015, when 26 programmes of the University were visited for accreditation. At the end of the exercise, the University had excellent performance with 25 out of the total 26 programmes having full accreditation and only one with interim accreditation. That was a commendable outcome. In the year 2017, we had another major accreditation visit with the same success story. What more should the university community expect in the years ahead? The University Community should expect more progress and better things in the years ahead. I also have the belief that once we have a peaceful campus, better things will continue to roll in. For instance, the University is moving in the direction of expanding the academic horizon more. We are coming up with new academic programmes within the next few months. I think they are part of developments that will promote the University. We are already in touch with some well-to-do individuals who can support the University in terms of financing the new programmes. We are also in touch with some international organizations and some of them have already shown interest.

between product culture and customer experience culture. But employees were forgotten! Yet the stakes are the same for HR. More than ever, HR has to adapt its approach to match the expectations and diversity of its employees. It’s not just about meeting a company’s expectations. You have to understand employee expectations if you don’t want to risk losing high-profile talent.” The next big challenge that the digital revolution throws up for HR Managers is its gradual obliteration of the so-called work structure. Now, more than ever, communication happens in real time, talent pool has become highly mobile and the flow of ideas, freed up by technology, is no longer linear. This has not only transformed lifestyle, it has also turned the approach to work on its head. As leading HR company, Morgan Phillips, notes; “Working environments

have moved on from a time when work was performed according to a fixed schedule and always in an office. More often than laptops, it is tablets and smartphones which accompany us everywhere and offer us an increased and previously unheard of level of control and autonomy in the way we organize work.” This, surely, makes on-the-desk and by-the-counter HR Management obsolete. There is also the challenge of talent acquisition, which is being exacerbated by the fact that as jobs and skills change, driven by the digital revolution, finding and recruiting the right people has become more difficult than ever for HR. According to Deloitte, talent acquisition is now the third-most-important challenge companies face, with 81 percent of respondents calling it important or very important. Closely related to this is the

challenge of talent retention, which has become one of the biggest headaches of HR managers who, lacking the tools for effective people analytics cannot fully understand staff talent factors nor leverage the requisite tools for employee engagement. However, the biggest challenge thrown up by the digital revolution on HRM is an existential one. As Enrique Rubio, an HR Specialist at Inter-American Development Bank, rightly notes; “HR has been historically slow to understand and respond to business demands. And, although the digital transformation of everything in the world is unstoppable and obvious, HR is not waking up and getting on the bandwagon as quickly as it needs to.” Tunde Oyadiran is a Human Resource expert. Continues on www.businessdayonline.com

Igbekele Amos Ajibefun

efits from the scheme, but I can tell you that the main criterion will be academic performance. The Committee set up to attend to all that has to do with students’ loans, scholarships and other forms of financial support is already working on detailed criteria for selecting beneficiaries for the available support schemes. What have you done to boost the rating of AAUA locally and internationally since you came on board as VC?

HRM gets boost through digital tools TUNDE OYADIRAN

ith the digital revolution in overdrive, everything is changing, and fast. Nowhere is this change more obvious, nay significant, than in the workplace. So much so, that Deloitte, one of the world’s leading professional services network and a major authority on human capital trends, has called for a complete overhaul of the rules of Human Resources Management (HRM). “Organizations face a radically shifting context for the workforce, the workplace, and the world of work, Deloitte argued in its 2017 report on HRM, aptly titled Rewriting the rules for the digital age. “These shifts have changed the rules for nearly every organizational people practice, from learning to management

to the definition of work itself,” it added. However, it is one thing to appreciate that the digital revolution has fundamentally changed HRM, it is another to understand what exactly that change means. To understand the impact of the digital revolution on HRM, it is imperative to, first of all, contextualize the fundamentals of HRM. It comes down to two main parts: Personnel and Organizational goals. Traditionally, the marriage of these two parts have been officiated by a group of human resource managers whose size and skill sets were often limited, largely inadequate and too slow in responding to internal and external dynamics. Now, with virtually every organization’s workforce becoming more digital, more global, automation-savvy and social media proficient, only a digitized HRM can keep

up with the pace of radically changing personnel expectations. The same goes for driving organizational goals in an age where companies are evolving faster than ever and becoming more nimble in their strategy and operations. With the fundamentals of HRM, Personnel and Organizational Goals, changing at such a rapid pace, the initial and most obvious effects of the rapid change are of course the struggles of HR managers and organizational leaders to cope. For example, not many are attuned to the fact that employees increasingly do not just want a career, they want an experience and they want to be engaged in their work and their company. Sabine Lauria, a leading scholar in HRM, provides one of the best analogies for this: “The digital revolution started impacting companies through customer service as it created new connections

Tuesday 22 May 2018

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BUSINESS DAY

In association with

Infrastructure Maintenance With TUNDE OBILEYE

Enabling positive experiences

Land Use Charge: Lagos yields more ground, engages estate firms for proper valuation …as NIESV marks 2018 estate week CHUKA UROKO

n addition to the recent 50 percent reduction in charges, Lagos State government has also engaged estate surveyors and valuers to carryout enumeration and valuation of all real estate assets in the state in line with its determination to fairly implement the controversial Land Use Charge (LUC). This involves counting of buildings, visitation of individual units, capturing of details and getting data for the government. After the exercise, the valuers are supposed to value the assets and make presentation to the government. This is done in the hope that it will calm frayed nerves and assuage contending forces against the LUC. A major cause of the protest that greeted the LUC when it was introduced in February this year was what was seen by many as government’s arbitrary, improper and unprofessional property valuation which saw property values raised to as high as 400 percent. Property owners, individuals and even professional bodies protested the introduction and implementation of the charge, describing it as both insensitive and punitive. Rogba Orimalade, chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV) Lagos branch, who

disclosed the engagement of estate firms by the state government last Wednesday at a press conference to announce the 2018 Estate Week, commended the state government for the move which, he said, would help to rest the issue of property not being valued properly. “The exercise is currently ongoing and the state government has given a very short timeline to the valuers to get the job done and submit report”, Orimalade said, appealing to Lagos residents to open their doors to the valuers because the exercise is for their benefit. He disclosed that the institution will be forwarding a technical report to the state government by next week, stating their position on the LUC. The report, he said, captures the key foundations of the law and also advised the government on the best way to amend the law. “We have consulted with the state government to look at the protest against the Land Use Charge, not from the angle that people do not want to pay taxes, but from the angle that people want to pay taxes that are fair,” he said. According to him, the protest against the LUC was due to lack of clarity around the formula used in computing the charges. “For us at NIESV, the formula used in computing the charges was clear but the challenges were in the

interpretation. Is it right to tax unimproved property or property with just a fence?” he queried. He noted that the formula used in computing the charge has been used in other countries even in Africa. “Our position is that government has the right to come up with property tax and it also has the right to determine how the tax should be assessed. Though we agree with all of this, they are not enough; ours is to tell government of a fairer way of arriving at the rates. The NIESV Lagos State branch is a very vibrant institution with enviable track record. Orimalade pointed out that the institution, under him, is trying to rebrand the branch by changing its public perception. He added that the branch is also trying to upgrade and totally revitalise its website just as it is perfecting plans to launch a new website during their Estate Week. “We came in at a time when the institution was not given due recognition in terms of public acceptability. As a result, we created an action document with five key areas including branding, public enlightenment, membership expansion, strategic engagement and training,” he said. The branch, according to him, has created a resource center and an e-library, which they are yet to furnish

but will be launched during the Estate Week. “It is going to be an 11-seater e-library where trainings can be done on weekly basis. This will differ from the usual trainings but it will encompass specialist trainings that can only be gotten abroad. Noting that builders in developed countries presently make use of technologies such as robots and drones that capture the efficiency of everything done on construction sites, he stated, that the resource center will be bringing in people that will teach members the application of such technologies. This, he said, means that people will not need to go abroad for such trainings and, at the end of the day, companies will save foreign exchange that ought to have be spent on training and building capacity among staff. “The center will enable us to not only build capacity among our members, but also better the society because we are going to open it up to involve multi-discipline programmes. He said that the Estate Week will involve visiting schools that are offering Estate Management and some media houses among other events. He further revealed that they will be hosting the national conference in March, 2019 and it’s going to be the biggest gathering of the players in the real estate industry.

orld Facility Management Day was celebrated a week ago with the theme ‘Enabling Positive Experiences’. The idea, I believe, was to highlight the impact of facilities management on the various aspects of life in recreational, residential and corporate landscapes that has made the involvement of FM practitioners worthwhile. Despite the challenges, even in Nigeria where a lot of awareness is still needed, the excitement of these positive experiences drives the determination to go to the next level. To emphasize the role of FM in today’s world, I remember how a difficult job at a client’s facility was handled to ensure exceptional customerexperiences when not much was expected at the time. There was chaos all around due to the lack of effective and efficient system to deal with the day-to-day operations and the needs of the end-users of the facility. Being a new residential development, it is fair to say that some of the challenges were not unexpected, however the approach to dealing with the issues required a well thought out plan that would yield immediate positive results. The issues faced by the tenants were multi-dimensional in nature, ranging from electrical, plumbing, roof leakages, faulty door-locks, power, security etc. The estate was developed with the upscale market in mind and this made the whole situation even more difficult to accept. The first step taken was to acknowledge that the issues exist and to reassure the tenants that solutions would be provided as quickly as possible. An assessment of the problems and the extent to which each one impacted the end users individually and collectively was done to determine short, medium and long term solutions. A system was designed and immediately put in place to capture, deal and resolve the challenges in order of priority. For instance, all the door locks were replaced to prevent further complaints. In the case of security, a visitor’s record book was introduced to process visitors entering and ex-

iting the estate. Identification cards were also introduced to monitor domestic staff movement in and around the estate including identifying strangers. Major issues such as electrical, plumbing and roof leakages were handled by experts with proven record of accomplishment. With roof leakages, the short term solution was to identify areas of leakage or possible leakage and apply roofing felt for extra protection to repel water until the roof was replaced. The result of our actions was a renewed confidence and trust in the maintenance team by the tenants who started to appreciate the effort and improvement to their living conditions. Whilst all the problems were not immediately fixed, there was a sense of belief that a plan had been put in place to find solutions. The lessons learned included having a communication plan to disseminate information as required and in good time by engaging the end users. Another lesson learned was to ensure only knowledgeable and competent personnel were engaged to provide FM services, providing training where necessary. Having a well thought-out system to ensure planned and preventative maintenance service was critical to delivering superior service delivery. Going forward, a shared vision amongst all stakeholders is important to integrate end user’s individual expectations and approach of the FM team. This gives a chance to discuss shortcomings, strengths and difficulties with the stakeholders particularly end-users. Another step to be taken is the promotion of positive culture change which creates a belief that goals can and will be accomplished when people work together. When there is a positive culture, multiple solutions are sought for every challenge. This positive culture provides the basis for moving forward towards greater accomplishments.

Obileye is a UK-trained lawyer and CEO, Great Heights Property and Facilities Management Limited Email: Tundeobileye@greatheightslimited.com

BUSINESS DAY

Tuesday 22 May 2018

The Margaret: Nigeria’s first all-female real estate development Stories by CHUKA UROKO

n an industry where w o m e n re p re s e nt only 33 percent of professionals, the idea of a development where all the designers are female professionals excites interest and also throws a bit of a challenge to budding female built environment professionals. This simply underscores a shift in mindset among investors and developers in an environment where traditional and cultural beliefs often transcend western education and socio-economic accomplishments. This apparent shift is what saw Okwi Onuzo, critically acclaimed female architect, work in collaboration with London-based Landscape Architect, Moji Adeniran and Sicily-based interior architect, Martina Pardo to design and produce an iconic development known as The Margaret. This has sparked a revolution in Ikoyi’s Banana Island and represents one of the very few truly luxury developments owing, perhaps, to the female-dominance which brings about an increased attention to detail. The Margaret is an apt name for this modernEnglish residential enclave which draws inspiration from the values of Margaret Thatcher, former British Prime Minister fondly referred to as the ‘Iron lady’. In spite of its hard exterior which is fashioned out of concrete, glass and steel, this development harbours much softer interior of hand-polished wood, natural Carrara marble and other organic materials that

reflect features extremely pertinent to women. This is to be expected from an all-star female team of architects, engineers and designers which betrays Gilead Global, the developers of the project as being on a mission to close the gender equality gap in the fields of construction and architecture in Nigeria. “The goal is not just about filling in the blanks but really about the meaningful inclusion of Women in senior decision-making positions on major real estate projects such as this. It is about slowly transforming the institutional culture and the mind-set that Women should be relegated to the backseat when it comes to such projects”, Ololade Babalola, coFounder of Gilead Global, explained to BusinessDay. Women make up 49 percent of the Nigerian population and one out of every four women in Sub-Saharan Africa is a Nigerian. This represents enormous human resources potential, which can be harnessed to increase economic productivity but the disparities in job opportunities between men and women have never been starker.

The development of The Margaret marks the beginning of closing the existing gap. The development itself is a stunning collection of four and five-bedroom townhouses located in Banana Island, Ikoyi. Over the last two decades, Ikoyi has witnessed massive growth and transformation, growing from an old, sleepy, residential area into a modern, mixed-use community. Its streets have moved from being lined with colonial duplexes with expansive gardens to displaying some of the most ambitious office complexes and high-rise residences. Nestled in the heart of Ikoyiis the gated fortress known as Banana Island, Nigeria’s most affluent neighbourhood. Its beautifully tarred roads and picturesque green areas make it the destination of choice for multi-millionaires both at home and abroad looking for the security, serenity and service which the estate offers. The townhouses are now up for sale off-plan. The development will offer residents a botanical oasis of peace amidst the surrounding hustle and bustle of Lagos. Gardens

and communal areas will be maintained by UK-based New Era Gardens making sure residents don’t have to worry about forgetting to prune or water the plants. Its inter iors feature an earthy palette with an abundance of natural light seeping through the oversized French windows. Each townhouse and penthouse have their own private “vitality” swimming pool, which would also be maintained by the facility managers present on site. Residents will also have access to a Private Home Cinema, where they would be able to watch current box-office movies from the comfort of their home. The townhouses come starting at a price tag of N280million ($800,000). The penthouses are not up for sale at this time and construction is set to commence in the coming weeks. For the very few who are able to afford it, residents of The Margaret, will have access to the most luxurious of amenities such as private gardens and courtyards, individual “vitality” swimming pools for each residence, high ceilings, hand finished brass fixtures, a private home cinema for all residents, yoga classes, 24hr concierge and valet parking.

Investment opportunity in hospitality sector as Rovic seeks investors …52-room hotel up for grabs, 10% annual ROI assured

or savvy investors, especially the patient ones who have long term view of the market, the hospitality sector is now a compelling investment destination and, increasingly, offering opportunities. The hotel sector in Nigeria is deeply dependent on the fortunes of the oil sector, just like the prime office space and high end residential properties. This means that the improvement that has been seen in oil price signposts increase in demand and a rise in room occupancy rate. As at January this year, room occupancy stood at 48.5 percent with a pickup to 64 percent by February which compares favourably to the February 2017 occupancy rate of 56 percent. This is a reflection of pickup in the wider economy, meaning that investors may not have a long time to wait for returns. In the Abuja real estate sub-market, an investment opportunity is beckoning as a 52-room state-of-the-art hotel in a prime location is up for grabs and Rovic Hotels and Resort Limited, a firm established with the aim of building a profitable hospitality investment portfolio for stakeholders, is perfecting plans to acquire the hotel from a bank. The current value of the hotel is N1.6 billion, but the bank is currently asking for N500 million as the forced or distressed sale value. Rovic is seeking for 200 investors with a minimum commitment of N1 million investment each into this project, assuring that this initial investment of N200 million will trigger the negotiations on the acquisition of the hotel.

The company is assuring prospective investors that with its experience in managing hotels which dates back to 2007, their investment will be in good hands. Rovic has managed a 20-room hotel in Kebbi under the trading name ‘Real Suites’. The current portfolio of hotel investments being managed by the company includes four hotels in Kebbi and two in Nasarawa. The six hotels now have a cumulative 120 rooms and other facilities. Authorities if the company assures further that this experience will be leveraged in undertaking and managing the current project. The purpose of any investment is to get returns and Rovic says investors in this hotel will earn a 10percent yearly dividend on their investment as well as a yearly 10 percent capital appreciation on their investment. This will be paid at the point of divestment by any investor as from the end of the second year. The hotel, which has a minimum of two years lock up period for investors, also assures on security of investment. A trust deed will be executed to secure investors’ interest in the hotel while a special purpose company will be established and vested with the ownership interest in the hotel.

Understanding benefits of implementing facilities management using PPP model

he use of Public Private Partnership (PPP) has become recognized globally as an effective option for implementing public infrastructure and providing services, and all this comes with immense benefits. In economic growth and development considerations, infrastructure is everything. It is the engine that drives any economy and that is why emerging economies like Nigeria need to scale up their infrastructure investment and development to drive their economy to growth. In all, power or electricity is critical and, according to Femi Akintunde, GMD, Alpha Mead Group, Nigeria has a pathetic case when compared to even African countries. Ghana, for in-

stance, has a population of 28 million but has installed electricity capacity of 82kW per one thousand people. The country has GPD per capital of $1,513 and life expectancy rate of 62 years. South Africa, another African country, has a population of 57 million; installed electricity capacity of 885 kW per one thousand people; GPD per capital of $5,273; and a life expectancy rate of 73 years. These contrast sharply with what obtains in Nigeria. The country which prides itself as the giant of Africa, has a population of 180 million; installed electricity capacity of 36.45kW per one thousand people; GPD per capital of $2,178, a life expectancy rate of 53 years on the average. “This becomes all the

more disappointing when compared to the United Kingdom which has a population of just 65 million, but installed electricity capacity of 1500kW per one thousand people; GPD per capital of $40,000 and a life expectancy rate of 82 years”, said Akintunde, who spoke at this year’s edition of FM Roundtable organised by Alpha Mead to mark 2018 World Facilities Management Day. Therefore, involving private sector operators in public assets development and maintenance makes a lot of sense particularly if that involves large complex infrastructure projects that require highlyskilled workers and a significant capital outlay to execute. Experts recommend that as emerging PPP markets

evolve, it is vital to utilize the knowledge and experience from mature PPP markets in order to benefit from lessons learned and embed best practice. However, “across Africa, PPP model has become increasingly critical as a funding and operational mechanism for social infrastructure such as hospitals and schools or economic infrastructure including ports, railways, roads and airports”, Chidi Izuwah, acting director general/ CEO, infrastructure concession regulatory commission (ICRC), revealed. “PPPs have been a growing and an increasingly important part of public sector investment in infrastructure and service”, added Izuwah who also spoke at the FM

Roundtable. Bringing private capital into the development and maintenance of public infrastructure helps both government and public assets in a number of ways and, in the opinion of Aliko Dangote, the President/CEO, Dangote Group, private sector operators should intervene in infrastructure development in order to relieve the government of the burden of building same and at the same time to enable it to provide other needs of the people. A major benefit of implementing FM services through PPP model is the whole life cost consideration given to the assets. PPP facilitates whole life cost approach that takes account not only of the cost of constructing and

maintaining the building but also the optimization of operational efficiency. The model provides access to private sector expertise. It allows the public sector to benefit from the introduction of private sector technology and innovation, thus providing services to the public through improved FM processes. The public sector, naturally, is characterized by obsolete systems and processes that impede productivity and output. A suitably structured PPP projects have the potential to deliver better value for money compared with that of equivalent services procured conventionally. It ensures structured and comprehensive risk management approach.

Tuesday 22 May 2018

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BUSINESS DAY

STRATEGYBRIEFING

Tuesday 22 May 2018

IDEAS THAT POWER HIGH PERFORMANCE

Nigerian companies rarely have strategy

onsidering the more than 70,000 management books on the subject according to Kiechel, strategy is an issue of great interest to business. No enterprise can survive without a strategy. You’re probably acquainted with the stories of companies like HiTv and Konga of late. Sad as those cases may be they clearly illustrate the fact that Nigerian companies as with their counterparts elsewhere still struggle with the understanding of what strategy really is. So what makes a decision strategic? How do you determine whether some set of decisions constitutes a strategy? And why does strategy matter? I speak to thousands of business executives in Africa annually on the subject of strategy and the unfortunate truth remains that Nigerian business leaders still have a hard time distinguishing strategy and operational effectiveness. Some that seem to make strategic moves struggle with operational effectiveness which apparently impedes the effectiveness of the strategy. Many others confuse operational effectiveness with strategy and wonder why their efforts did not pay

off. As usual they blame their failure on the Nigerian circumstances. Before you run off and endorse that idea let me quickly remind you that the very purpose of strategy is to master the environment. Is is it the job of the strategist? Famed British banker and financier, Nathan Rothschild affirmed this when he said, ‘great fortunes are made when cannon balls fall in the harbour not when the violin play in the ballroom’. Strategy is a serious thing. It is the act of a general in the battle front. If you can imagine how the President of a nation will look at a General who excuses loosing a battle to harsh battle field, you will understand what it looks like when a business general blames his failure on external issues. This is serious because businesses that ought to create jobs, pay taxes and develop the economy are failing everyday and who knows which will follow tomorrow. After all from outside everything seemed okay with Konga but here we are now. So I will like to provide a working definition of strategy but first let me clarify some dark issues around strategy. First, strategy can not make you the best. I know this will

come as a shock since many executives are simply trying to be the best. The focus on being the best is a pretty dangerous one since by the way that’s something impossible. Superior performing companies do not compete to be the best. Their strategic focus is rather on being unique. Providing a unique set of values to target segment of the market. Consider Netflix, Reed Hastings did not start out trying to be the best video on demand company. Instead the competitive strategy employed by the company was to deliver movies to the consumer in the easiest, most cost effective and convenient way possible. That’s seeking a unique position, not trying to be the best. You see, the drive to be the best locks companies in on competing on the same dimensions and nothing kills a company faster than that. Competing on the same dimensions means targeting the same group of customers and trying to create the same values to satisfy the same set of needs through the same channels at the same or slightly different price points. That’s strategic myopia and the path to corporate suicide. Don’t try to beat your competition on the same dimension es-

pecially if you’re trying to take on a well established business with a robust financial base. Blockbuster LLC, though began operations before Netflix began competing with Netflix on thesame dimension in 2004 because at this time they understood Netflix has become a threat to their business, they paid for that costly mistake by filling for bankruptcy in 2010 Next is that operational effectiveness is not the same as strategy. Operational effectiveness means adopting industry best practices and using the latest technology. Now the best this can do for you is improve short term results. Operational effectiveness also include reorganisation. Reorganisation involves adjustmens in the legal, operational, ownership and other structures of a company for the purposes of making it more profitable or organising it better to suit it’s circumstances. But if your strategy needs adjustment or you don’t even have a strategy at all, improving

your operations is even a faster way to fail. Sadly this just doesn’t register in the mind of many executives. In the case of Kodak, they opted to reorganisation in the face of digital photography threat- a total of seven reorganisations in ten years! That didn’t save them and you will be unwise to follow thesame route. Thesame thing goes for operational efficiency. You see this when firms turn to overhead cost reduction programs. What this means is to do the wrong thing more efficiently. Again that’s suicidal. Operational effectiveness and efficiency may improve short term results, but the real danger is that it turns the firms focus away from outside where the real issues are to inwards, and make them even more blind to the need for strategic adjustment. Strategy is not about improving operations, it’s about being unique and distint.

Brian Reuben(@brianoreuben) is an advisor on strategy and leadership. He regularly conducts keynote presentations and senior executive workshops with companies around the world on strategy and leadership. He heads BusinessDay Training Was this article helpful? Share your thoughts with us on Facebook @bdtraininglive or email us on trainings@businessdayonline.com

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Politics & Policy Tuesday 22 May 2018

C002D5556

BUSINESS DAY

Is Tinubu’s political influence waning? Last Saturday’s state congress of the ruling All Progressives Congress (APC) produced two factions of the party in Lagos State which was unprecedented since the emergence of the Fourth Republic, Iniobong Iwok, examines the issues and asks if it was an indication of a receding political influence of Bola Ahmed Tinubu.

erhaps, regarded as one of the greatest politicians and political strategists of this generation, Bola Ahmed Tinubu, national leader of the All Progressives Congress (APC), has illuminated the political space in the country since the Third Republic. Beginning his political career in 1992 on the platform of the Social Democratic Party (SDP) joining the faction led by the late Shehu Musa Yar’ Adua, he was elected to represent Lagos West Senatorial district in the botched Third Republic. He also was very much around during the power play in the June 12, 1993 presidential election. Tinubu became a founding member of the National Democratic Coalition (NADECO) along with several other activists and democrats. They fought for the restoration of democracy in the country, a fight that drove him and some others on exile in other to escape the military brutality. His political breakthrough came at the dawn of the Fourth Republic in 1999 when he was elected the governor of Lagos State on the platform of the Alliance for Democracy (AD). Since then, Tinubu has dictated the political space in Lagos and indeed the South West geo-political zone of Nigeria. Surviving the ‘tsunami’ which swept away almost all the governors of the southwest states in 2003, he was re-elected for another four year-term. During this period, he was on collision course with the People’s Democratic Party (PDP)-controlled Federal Government headed by Olusegun Obasanjo. The crux of the matter was the creation of 37 Local Council Development Areas (LCDA) which the then government tagged as illegal and withheld federal allocations to Lagos State throughout his remaining part of his tenure as governor from the point the impasse started. In 2011, Tinubu led the Action Congress of Nigeria (ACN) to sweep the southwest states from the hands of the then ruling People’s Democratic Party, (PDP) except Ondo State. Perhaps, his greatest political achievement was the leading of four major opposition parties into a merger that metamorphosed into the APC, which produced the current government at the centre, having defeated the then ruling PDP in a historic presidential election in 2015. Since 2003, Tinubu has single-handed installed over 90 percent of political holders, starting from the ward level to the representatives of the state at the National Assembly. His word is law in the ‘City of Excellence’ and he tolerated no challenge. Some politicians who had in the past few years challenged him have since been consigned to the dustbin of history, politically. Their political careers ended abruptly. Tinubu’s influence in politics received a massive boost after the APC he midwived became the ruling party at the centre. He could determine who became what in the party, at least, to a large extent. Up till last Saturday, Tinubu was seen as a thin-god in Lagos. However, while his political profile continues to rise, there are some politicians who have seriously begun

Tinubu

Oki

to question the enormous powers he wields and have determined to boldly ask why? Some of his former political associates have also taken steps to demystify Tinubu’s supposedly over-bearing political influence. Observers say that signs of the challenge Tinubu is receiving now began to show when factions began to emerge at the national level of the party, with some members being tagged “Abuja Boys” and “Home Boys”. Until now, parallel congresses in Lagos were never contemplated let alone a possibility. But today, anger and discontent appeared to have run deep and wide that factional state executive that emerged last Saturday is led by the former Director General of the Akinwunmi Ambode 2015 Governorship Campaign Organisation and the out-going Vice Chairman central of the party, Fouad Oki. Speaking after the factionalised state congress, Oki accused the Tinubu-led faction of manipulating the ward and local congresses to favour some individuals and holding the congress in 20 local government and the 37 LCDAs which was against the electoral law and guidelines for the congress, stressing that several members of their faction were marginalised beginning from the ward congress. “The congress held at Airport Hotel is the only legitimate one. I’m not aware of any parallel congress; what we did here was the election of one party, the APC. This is a coalition of different groups, namely; Justice Forum, the Mandate and United Group,” he said. “We asked them that election must be conducted in only recognised 20 local government areas and they said no it must be 57 and we said ok, and we saw the consequences; people have been killed in the last LG congress. They said we want to do state congress and we said no, you cannot do that when there are issues pending from the last Local government exercise. And when they are electing the national delegates they reverted to the 20 local governments, why did they do that if they know they are not wrong. “The people that were sent from Abuja were chased away with teargas. We made several attempts to do reconciliation but it was met with brick wall, it is only the NEC of the party that can resolve this,” Oki further said. Talking tough, Oki said he was committed

to reconciling all aggrieved members and reposition the party in the state, adding that the era of impunity was over. “Under our watch, internal democracy will be strictly adhered to with a deliberate policy to return ‘real’ power to the people. No more imposition, no more impunity. Every member of this party can from this moment, consider him or herself, an equal shareholder in our common destiny. I enjoin all well-meaning Nigerians of goodwill, to embrace and support this new Executive Committee in this quest for a new APC. In particular, I reach out to our old members who for one reason or the other are deeply aggrieved to please be rest assured that a new dawn is here,” he said. According to him, the congress conducted by his faction was the duly recognised one which was carried out in the 20 local government areas in Lagos, which he said was in accordance with the electoral law and constitution of the country, adding that INEC was in attendance and had certified the congress legal. “The constitution and electoral law recognise 20 LGAs in Lagos and that is where we had our congress, it is illegal for anybody to hold congress outside what the law says and that is what they did; holding congresses in 20 LGAs 37 LCDAs in Lagos which is illegal”. “The way and manner our congresses were conducted is indeed tribute to the resilience

The constitution and electoral law recognise 20 LGAs in Lagos and that is where we had our congress, it is illegal for anybody to hold congress outside what the law says and that is what they did; holding congresses in 20 LGAs 37 LCDAs in Lagos which is illegal

of the democratic temper of respecters of the rule of law, sticklers to the Constitution and guidelines for the conduct of the Congresses,” he further said. According to him, “The thrust of this assignment therefore, is to rebuild and rekindle the progressive energy of our members with the freedom to choose their leaders, fair play, equity and justice as the principle to move the party forward. Let me assure you great members and leaders of our party, that by the grace of God and with all hands on deck, we shall take the party to greater height transparently, without let or fear or favour. We have hit the ground running and we are determined for genuine reconciliation of all members.” But the newly elected state chairman of the Tinubu- led faction, Tunde Balogun said in an interview with newsmen that whichever congress held outside the party office was null and void; adding that only congress held in the secretariat of the party was legitimate. “This is the only recognised congress in the state any individual or group holding congress outside this venue is null and void, you can see the presence of officials from the headquarters of the party and INEC,” Balogun said. Since the Fourth Republic when Tinubu emerged as the political leader in the state, his decisions and actions have largely gone unchallenged; he dictated and decided who held key public offices and party positions. But if what happened last Saturday is anything to go by, it means that Tinubu political relevance is now in question and it also goes to suggest crumbling political empire of the Jagaban, a political juggernaut. Analysing the situation, David Bayesha, a senior advocate of Nigeria (SAN), said it was natural that long time political dominance is challenged eventually, adding that with the renewed political consciousness, people were seeking opportunity to express themselves. “Well nothing lasts forever; people are looking for self expression too, even the dominant influence of America in world politics is been reduced. Personalities with such political power should be looking for such because the people are now becoming conscious; they want to express themselves that is what is playing out. But again, we need to ask the question, can they survive on the current reality? This is what we should consider, people would fight for independence but how far they would go is left to be seen,” Bayesha said. Bolaji Oshinowo, a politician and former secretary of Labour Party (LP) in Lagos, noted that the challenge of Tinubu was expected with time, stressing that politics had evolved over the years from the era of imposition of people on the party which is no more fashionable as a brand of politics. “Politic is evolving; you don’t continue to do things same way for years. People are getting wiser that is what is happening. Fine, he made these people, but they are professionals today; his brand of politics is expiring; he has lost out in Ondo, Ekiti, and some other states in South West,” Oshinowo said.

BUSINESS DAY

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Tuesday 22 May 2018

Live @ The Stock Exchange Top Gainers/Losers as at Monday21 May 2018 GAINERS Company

Market Statistics as at Monday 21May 2018

LOSERS Opening

Closing

Change

Company

Opening

Closing

Change

N38.75

N40.65

1.9

FLOURMILL

N34.95

N34

-0.95

N123.2

N123.7

0.5

GUARANTY

N44

N43.5

-0.5

N50

N50.5

0.5

STANBIC

N48.95

N48.5

-0.45

ETI

N20.6

N21

0.4

FBNH

N11.05

N10.75

-0.3

UACN

N15.5

N15.85

0.35

OANDO

N8.25

-0.25

UNILEVER

ASI (Points)

40,425.07

DEALS (Numbers)

4,052.00

VOLUME (Numbers)

271,274,775.00

VALUE (N billion)

2.303

MARKET CAP (N Trn

14.643

Foreigners stage impressive return to Nigerian stock market Stories by Iheanyi Nwachukwu

oreign stock buyers showed impressive return to Nigerian equities market accounting for 57.74percent of transaction in April against 42.26percent by domestic investors. From January to April this year, the cumulative transactions in equities were valued at N1.091trillion according to Nigerian Stock Exchange (NSE) data obtained from about 98percent of active Dealing Members of the Exchange. Out of the said value of stocks traded in four months to April, transactions worth N504.35billion were by foreign investors while transactions valued at N586.85billion were done by domestic investors. In April alone, stocks valued at N212.23billion

were traded –foreign investors (N122.53billion) and domestic investors (N89.70billion). In first four months of 2018, returns from Nigerian equities market stood positive at 7.91percent. Likewise, the value of listed

equities rose to record high of N14.95trillion as at April 30, from N13.62trillion on January 2, 2018; representing an increase of about N1.33trillion. While outlook for the stock market in the nearterm remains largely positive,

Stock Exchange lifts suspension on trading in Ikeja Hotel shares

he Nigerian Stock Exchange (NSE) notified its dealing members on Monday May 21, 2018 that the suspension of trading in the shares of Ikeja Hotel Plc has been lifted. The Nigerian Bourse had in its market bulletin of November 10, 2016 notified dealing members of the suspension of trading in the shares of Ikeja Hotel Plc. The share price had remained at N1.78kobo while shares outstanding are 2,078,796,399 units. The lifting of the suspension of trading in the shares of the company follows approval by the Quotations Committee of the National Council of The Exchange on Friday May 11, 2018, according to a circular signed by God-

stime Iwenekhai, Head, Listings Regulation Department, NSE. Dealing Members will recall that the new board members of Ikeja Hotel Plc had on Friday May 18, 2018 provided a status update to the market at a “Facts Behind the Restructuring” event. At the event, the board of directors of Ikeja Hotel Plc led by led by Anthony Idigbe assured

investors its immediate readiness to complete the forensic audit on the company and its investee companies, Capital Hotels Plc and Tourist Company of Nigeria Consequently, trading in the shares of the Company has resumed on The Exchange. The Securities and Exchange Commission (SEC) has been notified of this development.

impressive first-quarter (Q1) 2018 earnings helped trigger bargain hunting in mid-cap stocks, which buoyed stocks performance in April. On monthly basis, the Nigerian Stock Exchange polls trading figures from major custodians and market op-

erators on their Foreign Portfolio Investment (FPI) flows. The total transactions at the nation’s bourse decreased by 22.11percent, from N272.48 billion recorded in March 2018 to N212.23 billion (about $70 million) in April 2018. Foreign investors outperformed domestic investors by 15.48percent in April 2018. Total domestic transactions reduced by 36.05percent from N140.27 billion in March to N89.70 billion in April 2018. Foreign transactions also reduced by 7.32percent from N132.21 billion to N122.53 billion within the same period. There was a 7.79percent decrease in foreign inflows from N69.71 billion in March 2018 to N64.28 billion in April 2018. Foreign outflows also reduced by 6.8percent from N62.50 billion to N58.25 billion within the same period. Though there is still a higher participation by insti-

tutional investors over their retail counterparts, but the institutional composition of the domestic market reduced by 49.04percent, from N91.27 billion in March to N46.51 billion in April 2018; while the retail composition also decreased by 11.86percent from N49 billion to N43.19 billion within the same period. BusinessDay trend watch revealed many stocks that helped sustain the record N1.33trillion gain in four months to April 2018. They include Cement Company of Northern Nigeria Plc (115.3percent), Unity Bank Plc (88.7percent), Skye Bank Plc (68percent), Caverton Offshore Support Group Plc (86percent), NEM Insurance Plc (68.7percent), Wema Bank Plc (61.5percent) and FCMB Group Plc (66.9percent) –all these stocks surpassed the NSE ASI recording returns in excess of 60 percent.

$1bn inflows into Malaysian stocks said at risk of being wiped-out

he gains in Malaysian equities since Mahathir Mohamed’s shock election win have not stopped an exodus of foreign money from gathering pace - with this year’s almost $1billion of overseas inflows into the market at risk of being wiped out, according to Bloomberg report. The nation’s stock market had a volatile start following a three-day holiday for the election, before the benchmark inched up 0.4 percent for the week. But alongside that advance, overseas investors have been taking flight, selling $625million of stocks

last week, Malaysia’s biggest stock outflow since August 2013, according to data from Bursa Malaysia Bhd., the nation’s stock exchange. “The main transactions are being done by the local funds to support the market along with retail investors,” Danny Wong Teck Meng, chief executive officer at Areca Capital Sdn. said by phone in Kuala Lumpur. “The local guys are much more confident for the prospect of the country than foreigners.” Mahathir’s attempt to soothe investor jitters has not staunched the flows. The new prime minister introduced a

team of five advisers well-known in official and business circles in Malaysia and intensified efforts to seek evidence of wrongdoing at the 1MDB sovereign fund. Foreign inflows had dwindled to just $10.3 million as of Friday, down from $937.8 million on April 30, the data show. The Bursa Malaysia Consumer Product Index rallied 7.9 percent last week to a record after the government said it would effectively remove a consumption tax effective June 1. The gauge rose as much as 1 percent Monday, while the FTSE Bursa Malaysia KLCI Index climbed 0.6 percent.

Tuesday 22 May 2018

BUSINESS DAY

Tuesday 22 May 2018

BUSINESS DAY

THE BIG HEART DIGEST In association with Delta State Micro, Small and Medium Enterprises Developement Agency (DEMSMA)

Okowa not ready to abandon any project •Assures of quick returns on investment

•Urges industrialists to invest in Delta State

MERCY ENOCH, Asaba

elta State Governor, Ifeanyi Okowa, is confident that the various developmental projects embarked upon by his administration would stand the test of time but he wants the people of the state to be part of the monitoring of the projects just as he allayed fear over project abandonment. The projects are numerous to mention ranging from infrastructural projects including 193 roads, building of markets and schools as well as entrepreneurship and vocational centres, upgrading of technical/vocational schools, reconstructing of secondary schools and even establishing more. Others are constructing of storm water drain to tackle flooding and its effects, construction of regional water schemes, constructing of fish feed mills, constructing of garri processing centres, multi-billion dollar refinery through Public Private Partnership (PPP), establishment of agro-industrial parks amongst others. Across the nation, history reveals projects that are abandoned once the initiator bows out of office as his successor often comes in and refuses to continue with the projects. Gov Okowa seems to be different as he continued where his predecessor, Emmanuel Uduaghan stopped by completing the projects he (Uduaghan) started. Now,

MERCY ENOCH, Asaba

Delta State Governor, Ifeanyi Okowa (l), and Hostcom State chairman, Delta State Chapter, Gabriel Isibeluo, during a courtesy call on the governor, by the chairman and exco of Hostcom in government house Asaba.

he wants the people to believe his word that the numerous projects embarked upon by his administration must be completed. “We will not abandon any project”, he assured. He gave the assurance during the empowerment programme organized by the member representing Okpe Constituency and Speaker of the Delta State House of Assembly, Sheriff Oborevwori at Osubi, Okpe Local Government Area of the state. “We are aware of the numerous projects going on in different parts of the state, for every project that we set out to execute, we will complete it, we will not abandon any project because, every project is as a result of well thought out process, I am passionate about the development of the state.”, he stressed. Okowa also clarified why his administration embarked

on massive construction of roads across the state, asserting, “road is very important for the development of any community.” The governor however believes that monitoring of projects being executed by his administration should be collective as the projects should stand the test of time. He was addressing members of the Host Communities of Nigeria Producing Oil and Gas (HOSTCOM) led by Gabriel Isibeluo, an engineer, when they paid him a courtesy call at Government House, Asaba. Okowa expressed confidence that the contractors handling the different projects are capable of delivering projects in line with job specifications. While urging Deltans to freely reach him or his aides if they notice any project being executed shoddily, just

Editorial coordinator’s corner:

as he described HOSTCOM “Delta State is a peaceful as a voice to the various oil state, any investor coming this producing communities or way will have a lot of skilled communities that are im- labour because our people value education a lot, we also pacted by oil. The state government, he have unskilled labourers to said, would continue to part- feed the Labour needs of the ner with HOSTCOM, hop- companies, as we are sure ing that the body would be they will have quick returns involved in the monitoring of on their investments, “ the the projects. “We have a lot of Governor said. He went on, “we are trying projects across the state and I want to see my projects done to scale up the employment rightly”, the governor insisted. of our youths in the state and On the other hand, the any meaningful venture that governor has urged industrial- can take out our youths from ists to utilize opportunities of the streets will be welcomed.” Gov Okowa disclosed that quick returns on their investments to do business in Delta his administration embarked on different programmes to State. Raw materials for the equip the youths of the state manufacturing of different to be entrepreneurs, observproducts abound in the state, ing that the population of he said, adding that apart from the country was growing at the fact that the state is peace- an alarming rates and efforts should be made to proactively ful and conducive for business activities, skilled and unskilled work to ensure that it did not (A) REVENUE lead to crisis in the country. labour are readily available in S/N and Sources Approved % Guinness He commended the oil gas rich state. said this when Baba 2017 Budget Plc forAppropriation Nigeria adding a new He Savage, chairman Guinbrand of beer to its stock and tunde I Internally Generated urged the company to meet ness Nigeria PLC, led manageRevenue 70,165,959,503 23.83 with its social responsibilities ment of the company to pay and also, create more job ophimIi a courtesy visit at GovernStatutory Allocation portunities for the youths. ment House annex, Warri. Including Mineral

Understanding Delta’s 2018 fiscal direction:

Review of 2017 budget IGNATIUS CHUKWU

his is the conclusion of the budget of Delta State in 2018 which is aimed at moving the economy of the state forward. The review is aimed at helping the citizens and investors understand the fiscal policies of the Ifeanyi Okowa administration for effective citizenship. Review of the preformance of 2017 budget (January – September) Mr Speaker, a review

Hope alive for Delta Youths: Job creation scheme to be sustained

(A) REVENUE S/N Sources I Internally Generated Revenue Ii Statutory Allocation Including Mineral Revenue Derivation Iii Value Added Tax Iv Other Capital Receipts Total of the 2017 approved budget shows that the budget size was based (B) EXPENDITURE S/N Details

Approved 2017 Budget

% Appropriation

70,165,959,503

23.83

148,939,012,121

50.58

10,515,786,230

3.57

294,457,040,472

100.00

64,836,282,623

22.02

on revenue projections from the State’s Fiscal Strategy Paper (FSP),

Approved 2017 Budget

% Appropriation

Iii Iv

Revenue Derivation

Value Added Tax

I Ii

50.58

10,515,786,230

3.57

294,457,040,472

100.00

Other Capital Receipts

Total (B) EXPENDITURE S/N Details

148,939,012,121

64,836,282,623

22.02

Approved 2017 Budget

% Appropriation

Recurrent Expenditure

158,013,660,828

57.16

Total

294,457,040,472

100.00

Capital Expenditure

which is a key element in the Medium Term Economic Framework (MTEF) and annual budget process that determines the aggregate resources available to

136,443,379,649. 42.84

fund the Government’s projects and programmes from a fiscally sustainable perspective. The profile of the 2017 budget is as follows:

elta State Governor, Ifeanyi Okowa has said that efforts are on ground for a legislation that would establish the Job and Wealth Creation Programme initiated by his administration, to be sustained beyond the current tenure. There is also hope that the STEP and YAGEP Business Fair/ Exhibition which maiden edition held last December specifically for STEPrenuers and YAGEPrenuers, would now be an annual event as process is being put in place by the Office of the Chief Job Creation Officer for the 2018 edition of the event. Already, the governor said the state executive council last week Tuesday, began the finetunning of the process to commence the 4th cycle of the Skills Training and Entreprenuership Programme (STEP) and Youth Agricultural Entreprenuers Programme (YAGEP), considering the success stories of the first and second cycles which had caused World Bank State Employment and Expenditure for Result (SEEFOR) to have a level of confidence that has led to it partnering with the state government in funding the 3rd cycle of the programme. Okowa made the disclosure during the induction ceremony of the 745 beneficiaries of the STEP and YAGEP 3rd cycle 2017/2018 at Orchid Hotel, Asaba, Wednesday last week. “I am truly very excited that I have had this opportunity to talk with you. And because we are confident that you will do well, we are already starting the process of a 4th cycle.” He explained that the state’s executive council would by this Tuesday, give approval for the fourth cycle. According to him, there are new introduction in this 4th cycle because communities, religious bodies and other persons would be involved. He added: “We are also looking forward to engaging those who have been trained even before now but they have not had opportunity to start their own lives. Such people, he said the state would take them up and have them go through refresher course and then establish them. “We will not relent in our efforts to continually engage the youths of the state in such a manner that would keep hope alive in these very difficult times. But by God’s grace, the difficult times are getting over. Delta State is getting more peaceful and our youths are getting more fruitful and we would not dash their hopes. We will work with them in partnership to ensure that we will bring meaning to their lives and that those who bite their fingers would not bite their fingers anymore”, He asserted.

Tuesday 22 May 2018

BUSINESS DAY

Tuesday 22 May 2018

BUSINESS DAY

Tuesday 22 May 2018

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BUSINESS DAY

FINANCIAL TIMES Stocks gain as US and China pull back from trade war

American politics: The ‘herbal tea party’ stirs up Democrats Page A4

Page A3

World Business Newspaper

US states move to close carried interest loophole Private equity group Blackstone says it faces higher tax bills if proposals become law MARK VANDEVELDE AND LINDSAY FORTADO

rivate equity group Blackstone has warned investors that it faces a growing risk of significantly higher tax bills because of efforts by US states to end a lucrative tax break that Washington lobbyists have fought hard to preserve. A California proposal to levy state tax on carried interest — the share of investment profits that hedge fund and private equity managers are paid as an incentive to hit higher returns — faces its second key legislative hurdle this week. Under federal law, carried interest is taxed as a capital gain, rather than as personal income, enabling hedge fund and private equity executives to pay lower tax rates on some of their earnings than salaried workers. California would eliminate that tax break by levying extra state tax to make up the difference. The carried interest tax break, worth billions of dollars, has become emblematic of a tax system that campaigners criticise for favouring the rich while many ordinary Americans struggle with rising costs and stagnant incomes. Last year’s sweeping federal tax reform bill did not change the status quo — something that was seen as a victory for industry lobbyists. Lawmakers in New York — the only state with more hedge fund managers than California — have introduced legislation to curb the tax break, which could raise nearly $1.1bn annually for the state, according to Governor Andrew Cuomo. To avoid an exodus of fund managers, the proposed New York tax increases would be delayed until similar proposals pass in Connecticut, New Jersey, Massachusetts and Pennsylvania. All told, at least 10 jurisdictions are considering such a move, according to the Hedge Clippers, a group campaigning to end favourable tax treatment of carried interest.

“To some of these states, a few billion dollars is a lot of money,” said Morris Pearl, the chair of the Patriotic Millionaires, which is working with the Hedge Clippers in campaigning in favour of the legislation. “Whereas at the federal level, it doesn’t really move the needle, but it’s just an issue of fairness.” Blackstone has long told investors that its tax rate “could increase significantly” if it abandoned the partnership structure that allows it to pay less tax on carried interest. In a regulatory filing earlier this month, it added new language flagging the draft California law and stating that several states were giving “heightened consideration” to a carried interest levy. Blackstone cited the federal tax cuts signed into law last year by President Donald Trump as the impetus for the state initiatives. The new federal law cut the tax bills of many wealthy Americans while failing to change the treatment of carried interest, despite its being a loophole Mr Trump criticised for allowing hedge fund and private equity managers to “make a fortune” and “pay no tax”, which he called “ridiculous”. The American Investment Council, the lobby group for the private equity industry, said it “strongly opposes” proposals that seek to change the tax treatment of carried interest capital gains to ordinary income. “We also oppose efforts in states to enact punitive additional state taxes on carried interest capital gains,” the group said. “Private equity is responsible for pumping hundreds of billions of dollars into the US economy and strengthening thousands of businesses each year in all 50 states. Raising taxes on carried interest capital gains would remove a key incentive for entrepreneurial risk-taking.” The Managed Funds Association, an industry group that represents hedge funds, has spent $27.8m in its lobbying efforts on issues including carried interest since 2007, according to data compiled by Hedge Clippers from Senate lobbying disclosures.

US sets out demands for new nuclear treaty with Iran Pompeo says Tehran must withdraw from Yemen and Syria and curb missile development

KATRINA MANSON

he US would seek a new international treaty with Iran to re-establish full diplomatic ties and waive all sanctions if Tehran gave up its “malign behaviours”, said Secretary of State Mike Pompeo. The US would demand a dozen concessions to secure such a treaty, including Iran withdrawing from Syria and Yemen, admitting the true scope of its former nuclear programme, releasing US and allied hostages and halting development of nuclear-capable missiles. Mr Pompeo described the US demands as “very basic requirements” that were not “unreason-

able”. But analysts said they were so far-reaching that it would be hard if not impossible for Tehran to agree to them. Mr Pompeo said that in return, the US would end sanctions against Iran, re-establish full diplomatic and commercial relations, allow Iran access to advanced technology and support the modernisation and re-integration of Iran into the international economic system. “A treaty is our preferred way to go,” said Mr Pompeo. He added that he wanted to enlist bipartisan support from Congress to codify any deal into US law, unlike the 2015 nuclear deal negotiated by Continues on page A2

Blackstone, headed by Stephen Schwarzman, warned about the impact of state tax law changes in a regulatory filing © Bloomberg

Trump defends China trade detente Administration accused of giving in to Beijing in pursuit of quick deal SHAWN DONNAN

resident Donald Trump has fired back at critics of his weekend trade deal with China, saying it would bring down Chinese barriers to US goods “for the first time” and be a boon to US farmers who had been worried about becoming collateral damage in a trade war. US Treasury secretary Steven Mnuchin on Sunday said that the US was putting tariffs and its trade war with China “on hold” after Beijing agreed to do what it could to increase imports of US farm products and energy. The move has prompted criticism that the administration was too intent on cutting a quick deal and had given in too easily to Beijing. On Monday, Marco Rubio, the Republican senator, warned: “If we are desperate for a deal #China is going to kill us in negotiations.” Mr Trump, who has portrayed himself as the first American president to take on China over trade, focused his ire on the Democratic criticism,

which has come largely from Senate minority leader Chuck Schumer. “I ask Senator Chuck Schumer, why didn’t President Obama & the Democrats do something about Trade with China, including Theft of Intellectual Property etc.? They did NOTHING! With that being said, Chuck & I have long agreed on this issue! Fair Trade, plus, with China will happen!” the president tweeted. He also linked the deal to his upcoming summit with North Korea’s Kim Jong Un, urging Beijing to respect international sanctions and maintain the pressure on Pyongyang. “China must continue to be strong & tight on the Border of North Korea until a deal is made,” he said. “The word is that recently the Border has become much more porous and more has been filtering in. I want this to happen, and North Korea to be VERY successful, but only after signing!” The president sought to appease US farmers, who had been worried that they would be collateral damage in any trade war between the

world’s two largest economies, with Beijing threatening to slap tariffs on soyabeans, pork and other agricultural imports. “China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products — would be one of the best things to happen to our farmers in many years!” he said. “On China, Barriers and Tariffs to come down for first time.” In fact, China agreed to drop a substantial number of barriers to trade as part of its 2001 accession to the World Trade Organization, although critics say it has failed to follow through on many commitments. Mr Trump’s Monday morning retorts also came amid continuing signs of a divide in his administration over how best to deal with China and as senior officials said much work remained to be done to nail down a deal. In a statement that appeared to be at odds with Mr Mnuchin’s hopeful message on Sunday, US trade representative Robert Lighthizer, a longtime China hawk, warned that the US wanted substantial change in China.

Facebook’s Mark Zuckerberg agrees to have EU hearing live-streamed Members of parliament had balked at prospect of closed-door session on use of data ALIYA RAM AND CAMILLA HODGSON

ark Zuckerberg will face his second public grilling over Facebook’s use of personal data this week, after bowing to pressure from European members of parliament to live-stream a hearing on Tuesday. Antonio Tajani, president of the European Parliament, said in a tweet on Monday that a meeting with Mr Zuckerberg would be publicised after MEPs revolted against plans to keep it private. “I have personally discussed with Facebook chief executive Mr Zuckerberg the possibility of webstreaming [our] meeting with him,” the tweet said. “I am glad to announce that he has accepted this new request.” Facebook has been engulfed in a scandal after revelations that the data of up to 87m of its users were passed to Cambridge Analytica, a UK analytics company, without explicit consent.

Mr Zuckerberg testified before the US Congress in a two-day hearing last month but has rebuffed calls to give evidence in the UK, sending the company’s chief technology officer in his stead. MPs criticised Facebook’s responses to its queries last week, saying Mr Zuckerberg was free to testify via video link if he was unwilling to appear in person. However, the Facebook founder agreed last week to give evidence in Brussels, which is on the cusp of introducing tough new rules on data protection. European officials are expected to revisit questions about the company’s data protection arrangements and ask how the social network tackles hate speech and disinformation. Up to 2.7m EU citizens may have had their Facebook profile information shared with Cambridge Analytica. The European Parliament’s Conference of Presidents format gives attendees the chance to ask only one

question with one possible followup. Mr Zuckerberg will meet leaders of the European Parliament’s main political groups, at least seven MEPs and Claude Moraes, the UK Labour MEP who chairs the civil liberties committee. Mr Zuckerberg’s US testimony was seen as a success for the company. Facebook saw its share price jump after he deftly sidestepped criticism about the company’s business model and approach to protecting user privacy. British MPs have collected evidence from various other people linked to the events, including the whistleblower Christopher Wylie whose evidence triggered the scandal. This week the General Data Protection Regulation will come into effect across the EU and alter how companies can collect, store and delete data. The rules will raise the bar for consent and introduce fines up to €20m or 4 per cent of annual turnover for companies that fail to comply.

BUSINESS DAY

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Tuesday 22 May 2018

NATIONAL

How ‘HRTech’ spreads feel-good vibes around the office New services claim to democratise rewards, but can they improve the annual appraisal? EMMA JACOBS

ndrew Goodman has overhauled how employee rewards are doled out at his company. Instead of rewarding only a small group of high-performers, Openlink, a trading and financial

risk technology company, decided to redistribute the same budget. Hundreds of his 900-strong workforce can now receive a spot award (on top of their annual bonuses). What is more, decisions about who receives the awards are no longer in the hands of managers alone.

Now everyone has a say — and praise is published for all to see. “It recognis es folks who wouldn’t get much recognition,” says Mr Goodman, Openlink’s head of human resources. Staff were hesitant at first because they were not used to praising

peers publicly. Now the scheme is popular. “People enjoy gratitude,” he says. Employees do not only like the small rewards, he says, but also the public messages of praise that accompany them, deployed by a service called Bonusly, a software program that encourages employees to reward their peers for good work.

US sets out demands for new nuclear treaty...

Italian assets hit hard by political risk over new government

Continued from page A1 the Obama administration, which Congress overwhelmingly opposed and which was treated solely as an “agreement”. As he announced America’s new Iran strategy in his first major foreign policy speech on Monday, Mr Pompeo said the US would “apply unprecedented financial pressure on the regime” unless it met American demands. “They may end up being the strongest sanctions in history by the time we are complete,” he said. Recent sanctions were just the beginning, he added. Mr Pompeo said the US would also “crush” Iranian operatives and Hizbollah proxies operating around the world. Donald Trump fulfilled an election pledge earlier this month when he withdrew from the multi-party nuclear agreement, which promised Iran limited sanctions relief in exchange for mothballing its nuclear programme. He has since reimposed sanctions against Tehran that are likely to deter European companies from investing in Iran, despite EU efforts to protect companies from the impact of the measures. “As President Trump said two weeks ago, he is ready, willing and able to negotiate a new deal. But the deal is not the objective,” said Mr Pompeo, adding the goal was to protect the American people. He called on European countries alongside a list of 12 other US allies including Australia, India, Japan and Saudi Arabia, to support the US strategy and squeeze Iran. “I ask that America’s allies join us in calling for the Iranian government to act more responsibly,” he said. Experts were sceptical of the strategy, claiming it made unreasonable demands and that the US was unable to deliver on its threat to squeeze Iran. “It’s completely unrealistic and a total pipe dream — he’s asking for unilateral surrender by the Islamic Republic of Iran,” said Barbara Slavin, Iran expert at the Atlantic Council. Ms Slavin said the US was also “delusional” to believe it could spearhead the toughest sanctions regime ever against Iran given it lacked global support for its policy both from European partners and China. Mr Pompeo acknowledged his demands might seem “unrealistic” but claimed what the US was pursuing was the global consensus before the 2015 deal. Washington is aware of how upset Europeans are with the Trump administration for reimposing sanctions that target their companies and for abandoning a deal they spent months trying to save.

Each month, every member of staff receives points that they can award to teammates. The points can then be redeemed for Amazon vouchers, Starbucks cards or donations to charities. They come with a public message of praise and — with the aid of a hashtag — can be tied to a company value, such as #teamwork or #learning.

Heavy trading as populist parties prepare to take power with little known candidate for PM

KATE ALLEN, PHILIP STAFFORD AND CHLOE CORNISH

Why Blankfein should not stay on as Goldman chairman Bank succession under way as rival Citi carries out similar debate over top jobs PATRICK JENKINS

loyd Blankfein seems reluctant to surrender the reins of Goldman Sachs. After 12 years as chairman and chief executive of the sharpest-clawed of Wall Street’s financial beasts, that is not surprising. The job gives him huge influence politically and across the business world. He basks in the glow of a share price that is 50 per cent higher than when he took over. And he earns an annual $24m for his trouble. Mr Blankfein has been working on a succession plan — lining up Goldman’s president David Solomon to be the next chief executive. But we do not know for sure when a handover might take place. (December has been mooted.) And we also do not know whether both the chairman and chief executive roles will transfer. Senior figures at the bank believe Mr Blankfein may propose splitting his job and staying

on as chairman, at least until next year when Goldman will celebrate its 150th anniversary. A board meeting in June may decide the way forward, insiders say. This would go against the US norm, mimicking to an extent the European tradition of a split function. But it would transgress European best practice, codified for example in the UK, that frowns on chief executives moving to chairman roles and overseeing their successor. Over at Wall Street rival Citigroup, a mirror-image debate has been festering over the top jobs. Mike O’Neill, the bank’s chairman, is due to step down by the year-end and has suggested that Mike Corbat, chief executive, might himself take on the extra role of chairman, reuniting the posts and signalling business as usual. The jobs were split at Citi back in 2012, reflecting the problems the bank was in. It had needed a $45bn

bailout from the US government in the crisis and spent the next few years shrinking drastically and dealing with a litany of scandal. Mr Corbat can argue with some justification that huge progress has been made and that emergency governance arrangements need no longer apply. He would like to be in the same category as Morgan Stanley and Bank of America, whose chiefs have taken on the chairman role, too, after their own rehabilitations. Or Goldman and JPMorgan, where Mr Blankfein and Jamie Dimon have been longtime CEO-chairmen. At the same time, Mr Corbat would rather distance himself from the only other big bank with a split role. Wells Fargo, where the 2016 fake accounts scandal led to the abrupt departure of John Stumpf, the old chairman-CEO, now has Betsy Duke, a former Federal Reserve governor, as chair, and Tim Sloan as chief executive.

International community considers response as Maduro digs in US ponders further sanctions against Venezuela after election criticised as a sham GIDEON LONG

he result was never in doubt: Nicolás Maduro won Sunday’s presidential election in Venezuela by a mile, thanks to a tried-and-tested mixture of coercion, propaganda and possibly outright fraud. What is far less predictable is what happens next. With Mr Maduro seemingly intent on clinging to power for another six years, the onus is on the international community to come up with a response to his increasingly authoritarian rule, disregard for even the most basic tenets of democracy and the drastically deteriorating humanitarian situation in Venezuela. The US says it is considering further sanctions against Caracas including, possibly, against its oil industry. Speaking in Buenos Aires at the weekend US Deputy secretary of state John Sullivan acknowledged that would be “a very significant step”

but that it was on the table. “We’ve heard threats of oil sanctions for so long that it’s easy to conclude this is mere sabre-rattling, but now that the elections are over . . . this threat needs to be taken seriously,” said Geoff Ramsey, assistant director for Venezuela at the Washington Office on Latin America. Analysts say Washington is unlikely to choose “the nuclear option” of imposing a full embargo on Venezuelan oil exports, not least because the Opec nation’s output is falling so quickly that it is becoming less and less relevant as a supplier. Although Venezuela was the world’s fourth-largest exporter of crude to the US last year, sales hit their lowest level in almost three decades and are continuing to fall. “The US almost doesn’t need to impose an oil embargo. We’re imposing a self-embargo of our own in the form of rapidly falling production,” said Luis Pedro España, a Caracas-

based political scientist. Aside from oil, the US and the EU might re-visit their sanctions against individuals close to the Maduro regime. But such measures have only a limited impact and could prove counter-productive. “As these lists expand, and more people are added, more and more officials in power will lose their incentive to split from Maduro,” Mr Ramsey argued. “Why risk supporting a transition when you could end up in a jail cell in Miami?” Mr Maduro faces threats to his rule from inside Venezuela that are likely to increase following the election. Although he won easily, in part by suggesting to poor, hungry voters that if they backed him they would receive “prizes” and one-off cash bonuses, turnout was sharply down from his election victory in 2013. Even if the official results are to be believed, he garnered only 5.8m votes compared with 7.6m then.

talian bond and equity markets were hit hard in heavy trading volumes on Monday as investors prepared for heightened political uncertainty as the country’s nascent coalition between populist parties was set to form a government. Luigi Di Maio, the leader of the anti-establishment Five Star Movement, and Matteo Salvini, the head of the far-right League, were due to meet the Italian president on Monday to secure his approval for their alliance to govern Italy. Giuseppe Conte, a little-known 53-year-old professor who specialises in public administration law and has hardly any political experience, has emerged as the frontrunner to be prime minister for the alliance, according to Italian media. The hectic trading volumes on Italian debt and equity markets seen late last week took hold again on Monday as investors reacted to the rising prospect of the anti-euro parties taking political power. Nicola Mai, sovereign credit analyst at Pimco, said the coming weeks would see a stand-off between Italian politicians and the markets, as the nascent coalition government tested investors’ tolerance for its policies. The market sell-off had “obviously been a factor” in the populist parties’ retreat from some of the more radical policies set out in a draft coalition agreement leaked last week, which sparked the ongoing bout of market turbulence, he said. “The key constraint is going to be the market, which will react to how confrontational the government will be with the EU,” Mr Mai said. “There could be some volatility but as reality hits their promises will have to be reined in.” The 10-year bond yield rose 10 basis points to 2.316 per cent, taking its total rise in the past two weeks to 53.7bp. The premium over equivalent German debt — a widely watched indicator of eurozone political stress — hit 180bp, its highest level since last July. Rating agency Fitch warned on Monday that the populist coalition posed a risk to Italy’s credit profile. Political risk had been “a key factor in our downgrade” of Italy to BBB last year, Fitch said in a statement on Monday that highlighted “fiscal loosening and potential damage to confidence” as key factors it would be watching in the coming months. “This is blood-letting now,” said James Athey, senior investment manager at Aberdeen Standard Investments who has been short selling Italian debt since February.

Tuesday 22 May 2018

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BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Stocks gain as US and China pull back from trade war Dow Jones Industrial Average at two-month high but Italy misses out on rally MICHAEL HUNTER AND STEPHEN SMITH

hat you need to know • US-China trade war truce bolsters most equities • S&P 500 joins rally with 0.5% gains at Wall Street opening bell • Italy misses out as anti-establishment coalition moves nearer power • Benchmark Italian bond yield touches 2.3%, a level last seen in July 2017 • London’s FTSE 100 touches new record intraday high above 7,800 points • Turkish lira stands out as emerging market currencies hit by stronger dollar • Euro falls to its lowest level since November “With tensions between China and the US now in at least temporary abeyance, markets should react positively to a situation which had threatened to derail the synchronised global economic recovery,” said Richard Hunter, head of markets at Interactive Investor. “Meanwhile, the political wrangling in Italy and the concomitant possibility of major financial engineering which could put the country on a collision course with the ECB is something of a drag on sentiment.” Hot topics The plight of Italian assets is a reminder of the vulnerability of markets to political disruption as wider sentiment improves on news that the trade dispute between the US and China is easing. Italy’s stocks are missing out and its bonds are being sold with the prospect of a meeting between populist coalition partners, and the president bringing the anti-establishment Five Star and League parties closer to

government. Elsewhere, the risk-on mood was helping equities to make gains with the S&P 500 gaining 0.8 per cent in early Wall Street trading while the Dow Jones Industrial Average hit a two-month high, rising 1.4 per cent. A brisk sell-off in Italy’s bonds, known as BTPs, is sending the yield on benchmark 10-year paper back up to 2.36 per cent, higher by over 14 basis points on the day to levels last seen in the summer of 2017. At the start of last week before the coalition proposals were published, the yield stood at 1.894 per cent. The selling is lifting the premium investors demand for Italian benchmark debt over its German equivalent, which is seen as Europe’s safest, to over 170 basis points and the widest in seven months. Sentiment toward BTPs is not being helped by talk that the incoming government could issue “ mini-BoTs ” — small euro-denominated, non-interest bearing Treasury bills to finance looser fiscal policy. Milan’s FTSE MIB is down 1.6 per cent. There is also pressure on the euro amid a wider trend for a stronger dollar. The shared currency was falling by as much as 0.5 per cent at one point, its weakest since November, before recovering to stand just 0.1 per cent softer at $1.1763. Equities Wider sentiment improved after US Treasury secretary Steven Mnuchin said Washington had halted plans to impose tariffs on up to $150bn of imports. “We’re putting the trade war on hold,” Mr Mnuchin said in a television interview on Sunday.

Italian bond sell-off continues as populists set to rule Five Star and League prepare for government as investors brace for turbulence KATE ALLEN

talian bond yields have taken another step upwards, with the 10year paper posting a double-digit basis point rise for the second trading day in a row. The 10-year yield hit 2.362 per cent on Monday according to data from Thomson Reuters, up 14 basis points since Friday’s close. After four successive days of sharp increases it is now trading at levels last seen in March 2017, having risen by 58 basis points in the past two weeks. Investors are bracing for heightened political uncertainty as the country’s populist parties prepare to form a government. Luigi Di Maio, the leader of the anti-establishment Five Star Movement, and Matteo Salvini, the head of the far-right League, are due to meet the Italian president on Monday to secure his approval for their alliance to govern Italy. Investors have experienced a “dawning reality that this is not a positive market scenario”, said James Athey, a senior investment manager at Aberdeen Standard Investments who has been underweight Italian debt since February.

He suggested that much of the selling comes from investors who had bought into Italian debt to enjoy the “carry trade” - the higher yields available in the Italian market compared to other European debt markets - and had been wrongfooted by the sharp upward moves in yields, which triggered the ceilings at which they must sell out. “People [were] saying that [Italian bonds] were cheap relative to Spain or credit spreads,” Mr Athey said. “But that was the 2017 zeitgeist - since January we have seen that liquidity has changed but Italian bonds have been slow to catch up.” Simon Bell, a portolio manager at Legal & General Investment Management who has also been underweight Italian debt for some time, said that the selling could go on for “a bit longer” as “we still think there are people out there with positions they are not comfortable with”. Investors were experiencing a “reassessment of the carry trade” which “people had bought into quite strongly in the past year or so”, he said, in part due to the European Central Bank’s cautious and gradual approach to unwinding its quantitative easing programme of bond-buying. QE has widely been seen as supportive to bond prices.

US Treasury secretary Steven Mnuchin, left, and Chinese vice premier Wang Yang, right, at a meeting in 2017. Mr Mnuchin said on Sunday that Washington was putting its trade war with China ‘on hold’ © AFP

Takeda says Shire deal will boost resilience against price pressures Christophe Weber says focus on orphan drugs will help combined group in ‘tougher’ environment SARAH NEVILLE

ake da Phar maceutical’s £46bn acquisition of rare diseases specialist Shire will strengthen the Japanese group’s focus on innovative medicines and make it more “resilient” to pricing pressures in the US, its chief executive has said. Speaking after President Donald Trump launched an initiative to lower drug costs this month, Christophe Weber said he was convinced that the US would remain “a pro-innovation market”, but added: “It will be a more demanding market, like many other countries — like Japan, as an example — where price and reimbursement will be more stringent.” The planned takeover of Shire, Mr Weber said, had been designed “in a way” that meant the combined company “would be very resilient and prepared for an environment which will become tougher”. The Japanese drugmaker has said it expects roughly 50 per cent of its sales to be in the US, assuming the acquisition goes ahead. In 2017, the US accounted for 66 per cent of Shire’s $15bn sales. The Dublin-based drugmaker has annual operating profits of $6bn versus Takeda’s $2bn, while sales at its rare diseases division grew 10

per cent in the first quarter of 2018, to more than $2.7bn, with a margin contribution of 48 per cent. Mr Weber emphasised that Takeda, too, had a substantial focus on so-called orphan drugs in its pipeline. “About 30 per cent of our programmes have an orphan drug designation,” he said. He pointed to “an R&D model which focuses on highly innovative medicines, because highly innovative medicines will secure better reimbursement and price”. This approach could involve disposing of non-core or poorly performing assets. The list of potential candidates was “quite long, when you combine” the Takeda and Shire portfolios, he added. Some Takeda investors have expressed concerns at the high level of debt that the company is taking on to fund the deal: about five times earnings before interest, tax, depreciation and amortisation. However, Mr Weber emphasised that it could meet its commitment to reduce these debt levels to two times ebitda within three to five years without the need for disposals, describing these as “a safety net”, should the company decide it wanted “to deleverage faster, or more”. As Takeda seeks to win the sup-

port of both companies’ shareholders, the chief executive claimed to scent “a shift . . . We are starting to see very much more support.” He added that he was “very confident” the necessary level of backing from both sides would be achieved. The drugmaker has been able to overcome two specific concerns by disclosing that the combined company would have a listing in New York, as well as Tokyo, and would maintain its dividend policy, despite the new share issuance necessary to fund the deal. Takeda’s aggressive pursuit of Shire has been widely seen as reflecting Mr Weber’s mission to propel the company into the ranks of the world’s top drugmakers. Three years ago, the Frenchman became the first foreign chief executive to run what is one of Japan’s flagship companies. However, he insisted: “I don’t see my role as to push something to the board, it’s more bringing the facts, having a very open debate about what it looks like, what are the pluses and minuses . . . and let the board come to its conclusion.” He added: “Our mindset is to . . . be very clear about what can go wrong, the downside, so be very eyes open, but it’s also important to move forward.”

Dow back above 25k as blue chips rally on China trade truce PAN KWAN YUK

he Dow Jones Industrial Average climbed back above 25,000 for the first time in two months on Monday, as the trade war truce between China and US triggered a sharp rally in blue chip stocks. The Dow jumped as much as 1.3 per cent to 25,030.48 within minutes of opening trade. The move - the biggest intraday rise in over two weeks - takes the index to its highest level in over nine weeks. The gains were led by Caterpillar and Boeing, up 3.3 per cent and 2.5 per cent respectively.

Intel, United Technologies and 3M - three other stocks that have been knocked back by the tit for tat tariff threats that were being traded between US and China - tacked on between 2.1 and 1.6 per cent. The Dow was also boosted by General Electric. Shares in the industrial conglomerate are 2.8 per cent higher after it struck a $11.1bn deal to merge its transportation unit with Wabtec. Industrials also drove the gains on the S&P 500. The sector is up 1.1 per cent and helped push the benchmark S&P 500 to a 0.8 per cent advance. Within this, tractor

maker Deere & Co., which had been hurt by worries that Beijing’s threat to impose tariffs on soyabeans and other agricultural products would hurt US farm income, was 2 per cent higher. Steel stocks - which had surged following the Trump administration’s proposed tariffs on steel and aluminium imports in March - gave back some of their recent gains however. US Steel was down 3.3. per cent, AK Steel dropped 3.2 per cent and Nucor traded 1 per cent lower. The Nasdaq Composite rose 0.9 per cent.

BUSINESS DAY

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Tuesday 22 May 2018

ANALYSIS General Electric to combine transport unit with Wabtec in $11.1bn deal Industrials group sells assets to shore up balance sheet and simplify structure ED CROOKS AND ERIC PLATT

American politics: The ‘herbal tea party’ stirs up Democrats As it prepares for midterms, the party faces a schism between its establishment and its left flank COURTNEY WEAVER

t was 12 days before her primary in Texas’s seventh district when first-time candidate Laura Moser got the message: a powerful Democratic political action committee wanted her out of the race. A tall and gangly progressive activist, Ms Moser was one of seven Democratic candidates vying to take on Republican incumbent John Culberson in the district, which cuts across the Houston metropolitan area. Worried that Ms Moser would win the nomination, the Democratic Congressional Campaign Committee in February published a memo that outlined the sorts of character attacks the Republicans were sure to make against Ms Moser. It also took the unusual step in a party primary of endorsing one of her more moderate opponents, Lizzie Pannill Fletcher. “[Laura Moser] is a Washington insider, who begrudgingly moved to Houston to run for Congress,” the DCCC said, citing an article Ms Moser wrote for Washingtonian magazine when she said she would rather have her tooth pulled without anaesthesia than move to Paris, Texas, a 25,000-person town more than 300 miles north of Houston. “Unfortunately, Laura Moser’s outright disgust for life in Texas disqualifies her as a general election candidate, and would rob voters of their opportunity to flip Texas’s seventh in November,” a DCCC spokesperson said in a statement to the Texas Tribune. If the move was intended to knock Ms Moser out of the race for Congress, it has had the opposite effect. In the March primary, Ms Moser won 24.3 per cent of the vote — a close second to Ms Fletcher’s 29.3 per cent, propelling the two women to a run-off that is set to take place on Tuesday. The race is important not just for Texas, where Democrats are hoping to win at least three House seats from the Republicans, but it also strikes at the heart of the dilemma facing the opposition Democratic party as it prepares for a crucial election year. The establishment in Washington is pushing aggressively for the sorts of centrist candidates it believes have a chance of winning in November’s midterms. But much of the party’s energy is on the left flank, which is still smarting from the 2016 presidential primary when the Democratic National Committee was seen to be actively backing Hillary Clinton over Bernie Sanders, the Vermont senator. In some circles, the progressive activists have earned the nickname the “herbal tea party” — a reference to the Republicans’ own insurgency during the 2010 midterms, which helped Republicans take back the House, and nudged the party to the right, arguably paving the way for Donald Trump. Ms Moser rejects the notion that

she and other progressive activists represent a fringe of the party. While the DCCC and other Democratic groups had portrayed her and other progressives as too “risky” to win their general election races, putting forward milquetoast, centrist candidates for the party had proven not to be a winning strategy either. “I think it’s risky not to stand for anything, to kind of give people a nothing-burger and expect them to feel full afterwards,” she says. “I know you don’t get what you want all the time. But you have to let people know where you stand. You don’t surrender the fort before anyone’s marched on it . . . We’re always letting the other party define the terms of the argument.” Even as Democrats predict a “blue wave” in November spurred by strong opposition to Mr Trump, which could help them take back the House, some in the party worry that stories like Ms Moser’s could stir resentment among the party’s base, particularly young voters, who feel that the Democratic leadership is once again out of step with its supporters. “The problem is you can’t superimpose your views on voters from Washington,” Howard Dean, a 2004 Democratic presidential candidate, says, referring to the DCCC’s memo. Even if Ms Fletcher, the committee’s preferred candidate, does win on Tuesday, there is sure to be a backlash, adds Mr Dean, who founded Democracy for America — one of the country’s leading progressive groups. “Voters do not like to be told what to do by the political class.” While it was important, he says, for Democrats to win all the races in which they are competitive in November and take back the House of Representatives, “the way to do that is not to issue edicts and push people out of the race publicly”. To take back the House in November, Democrats must flip 24 Republican seats. According to the Cook Political Report, 30 seats held by Republicans are classed as the most competitive, where either party could win, compared with just three for Democrats. In the seven special elections for US House seats since Mr Trump became president, Democratic candidates have outperformed the Cook Political Report’s partisan voting index by six to 12 points, and even taken seats in the case of Conor Lamb in Pennsylvania and Doug Jones in the Alabama senate race. Centrist Democrats argue that the special election and recent primary results support the theory that moderate candidates are beating progressives. In the party’s Ohio gubernatorial primary, Richard Cordray, a staid bureaucrat who led the Consumer Financial Protection Bureau, trounced liberal populist Dennis Kucinich. Five

of the seven congressional candidates backed in the Democratic primaries by Mr Sanders’ Our Revolution have lost their races; six of the seven congressional candidates backed by the DCCC have won. “In Washington at least there continues to be this massive conflation between resistance energy and this demand for Sanders-style policy,” says Matt Bennett, a strategist who worked in Bill Clinton’s White House. “Those two things are not the same. The same reason you’re seeing these gargantuan turnouts is because the resistance to Trump is strong and vital and huge. But these aren’t people demanding that Democrats all sound like [Sanders].” For some progressive activists, winning a primary is not necessarily the objective. The presence of such candidates in the race could help to push other Democratic candidates to the left, especially when it comes to issues such as universal healthcare or free college tuition. “These are conversations that wouldn’t happen if you didn’t have [a progressive in the race],” says Melissa Byrne, a former staff member for Bernie Sanders. “[The Democratic party’s] job isn’t to support the person who has an easy win.” At times, the schism has turned ugly. Last November, Democracy for America attacked Ralph Northam, the then Democratic candidate for Virginia governor, days before the election, accusing him of not doing enough to stand up for immigrants and other minorities. While Mr Northam went on to win his race, the move outraged many in the party. “My sense is that groups like DFA want to be the ‘herbal tea party’,” says Mr Bennett, the Democratic strategist. “They want to be feared inside our party like the Tea party has been or was in the Republican party and the way to do that is to make examples of people and not care about the outcomes.” Mr Dean calls the DFA’s attack “juvenile” but declined to speak more about his views on its current activities, citing “the interests of family unity”. (His brother Jim currently runs the organisation.) In Texas, DFA has been active in supporting Ms Moser, while in the New York governor’s race it has backed actress Cynthia Nixon’s challenge to unseat the current governor and fellow Democrat, Andrew Cuomo, who was once seen as one of the party’s potential 2020 presidential candidates. While most polls show a substantial lead for Mr Cuomo over Ms Nixon, the actress’s endorsement by the Working Families party has spurred speculation that she could mount a third-party run in the general election. That has raised concerns among some Democratic leaders that she could act as a spoiler, handing the election to Mr Cuomo’s Republican opponent.

eneral Electric has agreed to combine its transportation unit with Wabtec, the maker of passenger and freight locomotives, in a $11.1bn deal that provides the US blue-chip company with a $2.9bn cash infusion. The transaction is part of planned asset disposals worth about $20bn by the industrials group as it seeks to shore up its balance sheet and simplify its business structure. The asset sales are expected to bring in between $5bn and $10bn this year. GE will take a 50.1 per cent stake in the combined company as part of its deal with Wabtec, which traces its roots to 1869 and is worth about $9bn. The disposal strategy is being driven by John Flannery, who took over as chief executive last August with the aim of simplifying GE’s structure. He has argued that under his predecessors Jack Welch and Jeff Immelt, GE became too sprawling and complex, and has said he intends to focus on just three core divisions: aviation, healthcare and the power industry. The company is at work on a number of other transactions. ABB is buying GE’s industrial solutions business, which makes electrical equipment, for $2.6bn. GE announced last month the sale of a healthcare technology business to Veritas Capital for $1.05bn. It is selling its lighting businesses, with Chinese groups including MLS and Foshan Electrical and Lighting reported to be interested, according to Reuters. Two aviation businesses are also up for sale, the company has said. GE has suffered a severe squeeze on its cash flows because of the weakness of its power equipment division and its operations serving the oil and gas industry, forcing it to cut its dividend last year. Raising cash from selling businesses helps ease that problem. The transport division, which also provides equipment for the mining industry, has suffered a difficult couple of years. Its profits dropped 16 per cent in 2016 and a further 34 per cent last year. But the most recent

quarter showed an upturn, with profit up 37 per cent at $130m for the three months to March. “We are seeing growth in rail traffic and recent promising orders for new and modernised locomotives from . . . international railroads, and are confident in the compelling longterm opportunities and synergies before us,” said Rafael Santana, chief executive of GE Transportation. Mr Santana will become president and chief executive of Wabtec’s freight division. Wabtec chairman Albert Neupaver was reappointed as the executive chairman of the locomotive manufacturer, and chief executive Raymond Betler will continue to lead the company. The number of locomotives sold in the quarter dropped sharply to 60, from 157 in the equivalent period of 2017, as a result “continuing challenging market conditions” in North America, the company said in its quarterly filing to the Securities and Exchange Commission. However, the slow sales were offset by increased activity in servicing and supplying parts for older equipment. Questions have been raised over the long-term future of GE’s transport business, which makes diesel locomotives, given global pressure for rail electrification. GE last year clashed with India over a $2.6bn locomotive contract, when the country’s new railway minister Piyush Goyal said he wanted its rail network to become fully electrified. The deal with Wabtec is expected to be completed early in 2019. The train manufacturer has received financing commitments to fund its $2.9bn cash payment to GE, which it expected to eventually bankroll with longer term debt. Wabtec said it was “committed to maintaining a strong investment grade credit rating profile”. GE estimated the deal created a tax benefit of $1.1bn for the combined company, which it included in the $11.1bn deal value. Morgan Stanley and Dyal Co acted as financial advisers to GE. Goldman Sachs advised Wabtec.

Abramovich UK visa application still being considered, officials say Russian owner of Chelsea football club is subject to extra procedural checks GEORGE PARKER

oman Abramovich, the Russian oligarch and owner of Chelsea football club, has not had his UK visa application rejected but it is still being considered, according to British officials briefed on the issue. Mr Abramovich’s investor visa is thought to have expired in early April and his application for renewal is undergoing extra procedural checks because he is applying from Russia, not from the UK. Downing Street declined to comment on Mr Abramovich’s case, but Theresa May’s spokesman said extra checks were being carried out on people applying for investor visas. The spokesman said there had been an 84 per cent fall in the number of investor visa applications after reforms were introduced in 2014-15 where extra checks were introduced to make sure funds “had not been

obtained unlawfully”. Mrs May’s spokesman added: “Further checks are being made on investors who came to the UK through this route before the reforms were introduced.” Asked whether Mr Abramovich had been affected by these additional checks, Mrs May’s spokesman said: “We don’t discuss individual cases.” Russia said on Monday the nonrenewal of Roman Abramovich’s UK visa could be linked with London’s unfriendly stance towards Russian business. Dmitry Peskov, Russian president Vladimir Putin’s spokesman, said he had no information on the visa issue. “I can’t say anything, I don’t have this information. Indeed, there have been such reports. I’ve said already: our business has faced various manifestations of unfair and unfriendly treatment,” he told reporters on a conference call as reported by local newswire Interfax.

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NEWS YOU CAN TRUST I TUESDAY 22 MAY 2018

Insight How lack of auto-component industry stalls Nigeria’s new auto assembly plants

n 2013 when the then government of former President Goodluck Jonathan came up with the ambitious 10 year National Automotive Industrial Development Plan (2013-2023) policy measures aimed at reviving the moribund automotive assembly plants, every Nigerian including those in the Diaspora and indeed the Original Equipment Manufacturers (OEMs) welcomed the move. The 2013 new national automotive policy had Ngozi Okonjo-Iweala, the then Minister of Finance and Olusegun Aganga, former Minister of Industry, Trade and Investment some of the best brains in government and two of the major key drivers of the amended version of the previous one introduced in August 1993. Its major thrust is to encourage local manufacturing of automobiles by offering protection/incentives to potential and existing local investors, while at the same time discouraging importation by raising the bar against all those who will rather export to Nigeria. On the other hand, the move triggered reactions and divergent opinions from many industry players. While some welcomed the development as one that would once again bring back the idle auto assembly plant back on track to assemble cheap and affordable vehicles to meet the needs of the goring middle class, others argue that the announcement was made without proper consultations. These schools of thought a favoured that the time is ripe enough to bring back the assembly plants to its lost glory of the 1970s and 1980s, also reasoned that for Nigeria’s automotive assembly plants to bounce back, there is the urgent need to revive and establish more automotive component clusters. With adequate attention on establishing more automotive component clusters that will produce auto parts and accessories such as clutch cables, wipers, windscreens, brake pads and linings, lubricants amongst oth-

ers, an estimated 40 percent of local content would have gone into the local assembly of vehicles and cheap to buy. There are reports that yearly, not less than 20 million vehicle batteries are imported into Nigeria from China and other parts of the world. This is simply because, successive government have failed in their responsibility to make the local components industries work. Imagine the number of jobs these would have created if this number of batteries is made locally as was the case before things fell apart. In one of the auto component firms located on the Eastern part of Nigeria, checks by BusinessDay reveal that, there are an estimated five thousand direct and indirect Nigerians could be working inside the assembly plants including other spin-off ancillary businesses springing up within the vicinity. This is one what just one component automaker can do alone in an economy where there are over 50 of such companies as captured by the NADDC. It would be recalled that presidential approval for the policy was given on December 30, 1992 and later endorsed by the transitional council on August 10, 1993, followed by the formal launch of the policy document on August 23, 1993. The document provided for the establish-

ment of the National Automotive Council as a parastatal of the Federal Ministry of Industry (now called National Automotive Design and Development Council, NADDC). Act No. 84 of August 25, 1993 backed up the establishment of the council. Simply put, the thrust

a view to enhancing the industry’s contribution to the national economy, especially in the areas of transportation of people and goods. Among other imperatives, the elements of the objective included: provision of automotive vehicles for urban and

With adequate attention on establishing more automotive component clusters that will produce auto parts and accessories such as clutch cables, wipers, windscreens, brake pads and linings, lubricants amongst others, an estimated 40 percent of local content would have gone into the local assembly of vehicles and cheap to buy of the national automotive policy was to ensure the survival, growth of the Nigerian automotive industry using local, human and material resources. This is with

human areas. Accelerated technological development of the economy, increased employment opportunities for Nigerians, conservation of scarce foreign exchange and es-

tablishment of integrated Automotive Industry in Nigeria. Other positive elements included standardisation and rationalisation of the lo cal au t o m o t i v e i n d u s t r y , increased private sector participation in the establishment of the auto industry, technology acquisition; and creating conducive operational environment through the introduction of appropriate fiscal policy and monetary incentives. In any part of the world, for every country that is committed and desirous of making meaningful impact on producing vehicles locally for local consumption and even for export, common sense demands that the already built auto plants should be encouraged to start with spare parts production. The collapse of the c ou nt r y ’s au to m o t i ve c o m p o n e nt s p a r t s o r spare parts has made the running and maintenance cost of vehicles by the low income and the middle class very expensive because of nonproduction of such basic elements locally. As it is presently, it will be very expensive to produce cars in Nigeria for now because every single part is sourced from outside. The Federal Government has failed on many attempts to check the influx of grey imports into the country. The uncontrolled importation of

these spare parts has also made it impossible for those that made attempts to produce components parts locally to survive. P re s e nt l y , t h e g re y market for ageing and rickety automobiles made worse by the proliferation of over 1000 poorly ma n n e d i l l e g a l e nt r y points by the authorities’ concerned accounts for a larger percentage of the country’s auto market. Indeed, if the Federal Government gives the right and serious attention to the auto sector and pursue the policy with the utmost rigour Nigerian will see the difference in four years. Concerned industry followers have at various for a called the setting up technical schools to address the manpower problem and issue of quacking in the auto sector. Few years ago, the only quoted transport company on the Nigerian Stock Exchange donated luxury buses for technical teaching in mechanical engineering departments of Imo State University (IMSU), University of Nigeria (UNN), Federal Polytechnic Nekede and the Lagos State University (LASU). For these groups of people, they believed that when this part is followed religiously, the auto sector will move faster with the utmost speed it requires in no distant future. The issue of manpower must be addressed by ensuring the setting up of technical schools like in some African countries like Ghana, Angola, Rwanda, Kenya and Benin Republic that is not as large economically and in terms of manpower and population size. In some countries with viable automotive manufacturing base, courses are offered in automotive engineering with topics from mechanical and electrical engineering combined together to expand and create research areas related to automobiles, aimed at improving the lives of world citizens and lead to an environmentally friendly, sustainable mode of transportation. This should be the new direction that Nigeria must embrace and must do so to its logical end.

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