BusinessDay 22 May 2019

Enaise Okonedo elevated to full professor

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naise Okonedo, dean of the Lagos Business School (LBS), has been elevated to the position of full professor.

Okonedo, who has been dean of LBS since 2009, is a Fellow of the Institute of Chartered

Accountants of Nigeria (FCA) and holds an MBA from IESE Business School, Barcelona, and a Doctorate in Business Administration from International School of Management (ISM), Paris.

Since then, she has refocused

the school’s vision from addressing the Nigerian business environment to addressing Africa and emerging markets, through a new research agenda, new programme structure and forging international alliances.

Under Okonedo’s leadership,

LBS established two additional research centres in 2013: the Centre for Research in Leadership and Ethics (CRLE), and the Centre for Competitiveness and Strategy (CCS). Both centres provide valuable knowledge Continues on page 34

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These are the reforms needed to jump-start Nigeria’s ailing economy T E

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NGUS apr 29 2020 362.41

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CBN moves to restrict banks’ appetite for FG securities

… holds MPR at 13.5% … to enact regulation for consumer credit and mortgage business

DAVID IBIDAPO & OLUFIKAYO OWOEYE

HOPE MOSES-ASHIKE & MICHAEL ANI, Lagos, ONYINYE NWACHUKWU, Abuja

vident in the recently released First Quarter (Q1) Gross Domestic Product (GDP) report is the weak state of the Nigerian economy which has barely grown above 2 percent since its recovery from recession in the second quarter of 2017.

The poor performance shows the need for market-moving reforms across sectors upon the swearing-in of President Muhammadu Buhari for a second term of four years in order to improve economic growth and development.

According to the GDP report released by the National BuContinues on page 4

Top 25 CEOs & Next Bulls Awards winners – See Inside

he Central Bank of Nigeria (CBN) is set to roll out a comprehensive framework that would discourage the current high appetite by commercial lenders for government securities and encourage increased credit flow to the poorly-served productive sectors of the economy.

CBN governor, Godwin EmeContinues on page 4

Inside Nigerian applicants lament long appointment dates for US visas P. 2 Pearl Uzokwe, director, governance and sustainability, Sahara Group; Olajumoke Ajayi, managing director, Asharami Energy (a Sahara Group Upstream Company), and Manuela Saragosa, presenter of Business Daily on the British Broadcasting Corporation (BBC) World Service, during an interview session on Sahara’s upstream operations and sustainability initiatives at the BBC studios in London.

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BUSINESS DAY

news Relief for airlines as 11,000bpd modular refinery starts aviation fuel production in July

L-R: Namory Camara, managing director, Private Investment Promotion Agency, Guinea; Ibijoke Faborode, head of agritech advisory, West Africa, and Emmanuel Ijewere, vice president, Nigeria Agribusiness Group (NABG)/chairman, Bestfood Farms, at the UK-West African Agritech Summit organised by the UK Department of International Trade in Lagos.

Pic by Pius Okeosisi

…to also produce PMS, LPG, others . .aviation fuel takes 40% of airlines’ revenue, depends on forex OLUSOLA BELLO & IFEOMA OKEKE

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iger Delta Exploration and Production plc, an indigenous oil company and marginal field operator, says its upgraded 11,000 barrels per day capacity modular refinery will go into full production in July this year with Jet A fuel as one the additions to its production.

If the plan carries through, it will come as great relief to airlines operating in the country, which currently spend 40 percent of their revenue on aviation fuel. Nigeria will also be able to conserve a huge portion of the foreign exchange currently spent in the importation of aviation fuel into the country.

Nigeria consumes over 400 million litres of aviation fuel yearly and in 2016 was the second-largest importer of aviation fuel in the world, according to Layi Fatona, managing director, Niger Delta Exploration and Production plc.

Fatona, who disclosed this at the monthly technical meeting of the Nigeria Association of Petroleum Explorationists (NAPE) in Lagos, did not disclose the exact volume of Jet A fuel that would be produced from his company’s

refinery. He, however, said a significant volume of the product would be produced to help the Nigeria aviation industry and the country to earn some foreign exchange.

The Niger Delta Exploration and Production modular refinery located in Ogbele, Rivers State, was initially structured to refine 1,000 barrels per day of Automotive Gas Oil (AGO) or diesel. But having done that for some time, its promoters decided to scale up its production capacity to 11,000 barrels to accommodate more production lines for other products.

The company said it is expanding its investment in the midstream of the oil and gas sector by increasing its refining capacity from initial 1,000 barrels per day of diesel production to 11,000 per day capacity for the production of several other petroleum products.

Adebanji Ola, communications manager, Arik Air, who said he was not aware of the development, added that it would be a game changer and a big relief for the aviation sector if it succeeds.

•Continues online at www.businessday.ng

MTN to complete payment of N330bn SIM infraction fine by May 31 Jumoke Akiyode-Lawanson

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he Federal Government of Nigeria is expecting MTN’s final tranche payment of N55 billion to complete N330 billion SIM infraction fine by May 31, 2019.

So far, the telco has made a total payment of N275 billion out of the N330 billion fined by the Nigerian Communications Commission (NCC) in 2015 for failing to disconnect over 5 million improperly registered SIM cards.

According to NCC, the telecoms company was fined for “infraction of the provision of the NCC Telephone Subscribers Registration Regulations 2011; for failure to disconnect 5.2 million improperlyregistered Subscriber Identification Modules (SIM) lines within the prescribed deadline, because these lines had economic activities on them without proper registration”.

MTN’s N1.04 trillion fine was reduced to N330 billion after negotiations with the Federal Government, and

there was an agreement for the fine to be paid in six tranches after the initial N50 billion paid in “goodwill”, as part of the conditions for continued negotiations.

In June 2016, MTN Nigeria paid the first instalment of N30 billion to the NCC. This was in addition to the goodwill payment, which brought the total amount paid by MTN to N80 billion.

On March 31, 2017, another N30 billion was paid into the NCC’s Treasury Single Account (TSA) with the Central Bank of Nigeria (CBN).

Thereafter, subsequent payments of N55 billion were made on December 31, 2018 and March 31, 2019. The final payment is due on May 31, 2019, to complete the N330 billion fine imposed on the telco.

Part of the fallout of the negotiated terms of payment of the fine is the listing of MTN on the Nigerian Stock Exchange (NSE), and this has been done, as the company listed by introduction on Thursday, May 16.

•Continues online at www.businessday.ng www.businessday.ng

Nigerian applicants lament long appointment dates for US visas ...over suspension of drop-box OBINNA EMELIKE & IFEOMA OKEKE

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arely a week after the Embassy and Consulate of the United States of America in Nigeria suspended the interview waiver “Drop Box”, application for the US visa has taken a tougher turn, especially with applicants getting long visa appointment dates.

The US Embassy and Consulate in Nigeria suspended the “Drop Box” application process effective May 14, 2019, stating that “all applicants in Nigeria seeking a nonimmigrant visa to the United States must apply online, and will be required to appear in-person at the US Embassy in Abuja or US Consulate General in Lagos to submit their application for review”.

While the suspension has meant that Nigerian applicants seeking visa reissuance under the B1/B2, F, M, L and H visa classes are no longer guaranteed visas across the

above classes, these applicants are even faced with a much tougher challenge of getting favourable visa appointment dates.

Some applicants who were at the Embassy and Consulate recently noted that their visa appointmentsdateswerestretched months after their planned trip to the US, which implies that the event or programme they seek visa to attend in the US would havecomeandgonebeforetheir appointment is due.

An applicant who requested to remain anonymous noted that he was given eight months appointment for a visa he needs for an internship programme in October.

The intrigue for him is that the event would have taken place months before the visa appointment in January 2020.

The long appointment dates are not good for applicants who have genuine reasons to seek visas, said Bankole Bernard, president, National Association of Nige-

ria Travel Agencies (NANTA).

Bernard believes that instead of giving applicants unrealistic dates, it was better to inform them when to apply and avert the apprehension that comes with the thought of missing a trip or business appointment in the US because of visa, which could be denied at the interview too.

For him, the US treatment to Nigerians on the visa issue is not fair because Nigerians go to America to spend their money forholiday,education,business, corporate/training purposes, among others. He insisted that there are better mechanisms the US Embassy and Consulate can device rather than making people go through the long wait for appointment.

Citing the example of the Rwanda-South Africa visa imbroglio, he said the US Embassy and Consulate in Nigeria should look for a win-win platform for the applicants and the visa issuing authority.

“If you can recall, recently

Rwandans applied to South Africa to attend a show in South Africa and the South African HighCommissiondeniedthem visa and they said to themselves that they were going to boycott all South African events, companies and products. South Africa had to call them back to a meeting. I believe that when we start to take some stand as these,theywilltakeusseriously,” Bernard said.

Maurice Ocheme, a travel and immigration expert, said the suspension of drop-box was a deliberate move by the US to limit Nigerians that get visa.

“They want to look good so they can claim they did not reject people visa. For diplomatic cases, if you reject visa, you have to give evidence of how.

So, what they want to do is to reduce the number of people that apply so that nobody is going to accuse them of rejecting visa,” Ocheme said.

•Continues online at www.businessday.ng

Oil sector’s first quarter 2019 contraction points to turbulent economic times ahead ...investors see no clarity in sector STEPHEN ONYEKWELU

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he contraction in Nigeria’s oil and gas sector in the first quarter of 2019 is evidence of lack of new investments and capital inflows to the sector, according to industry experts. This points to turbulent economic times ahead as it challenges some assumptions underlying the country’s 2019 budget.

Real GDP growth in the oil sector contracted by -2.40

percent (year-on-year) in the three months ending March 2019, indicating a decrease by 16.43 percent points relative to the rate recorded in the corresponding quarter of 2018, according to data from the National Bureau of Statistics (NBS), Nigeria’s state-funded statistical agency.

Growth decreased by -0.79 percent points when compared to the three months ending December 2018, which was -1.62 percent. Quarter-onquarter, the oil sector recorded

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a growth rate of 11.60 percent in Q1 2019. The sector contributed 9.14 percent to total real GDP in Q1 2019, down from 9.55 percent recorded in the corresponding period of 2018 but up compared to 7.06 percent recorded in the preceding quarter.

The Nigerian oil and gas industry is currently experiencing declining reserves owing to reduced exploration due to the absence of clear fiscal policy, experts have continually said. This has retarded @Businessdayng

investments flows into the sector. Militancy in the Niger Delta, Nigeria’s major oil producing area, has caused much concern also. The sector suffers from an investment gap of $100 billion and in the last two years, according to Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, the sector has drawn in $40 billion, which represents 40 percent of the total gap.

•Continues online at www.businessday.ng

Wednesday 22 May 2019

BUSINESS DAY

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news These are the reforms needed to jump...

Continued from page 1

reau of statistics (NBS) on

Monday, the Nigerian economy expanded at a slower rate in Q1, 2019 by 2.01 percent, 0.37 percentagepointslowerthanthe 2.34percentrecordedinQ42018.

Analysis of the report reveals that the slowdown in the growth of the Nigerian economy was a resultant effect of contractions in both the oil and non-oil sectors of the economy.

The oil sector of the economy shrunk by -2.40 percent in Q1 2019, while growth in the non-oil sector slowed to 2.47 percent, against 2.70 percent in the previous quarter (Q4).

Achieving the targets set in Nigeria’s Economic Recovery and Growth Plan (ERGP) now seems almost impossible when benchmarked against the current state of the economy, necessitating a change of direction by the Federal Government.

Analysts have, therefore, pointed out that upon swearing-in of President Buhari on May 29, the administration must carry out reforms in the oil and gas sector, financial sector, public administration, health and education, manufacturing and agriculture sectors to put a halt to rising unemployment, insecurity and hopelessness among young Nigerians.

Passage of PIB and policy framework on asset security The oil and gas sector of the Nigeria economy, according to the Q1 2019 GDP report, maintained its trend in the negative after the sub-sector entered into a recession in the second quarter of 2018 against a growth by 14.02 percent in Q1 2018.

While the sector showed signs of improvements in Q3 andQ42018,itworsenedfurther in Q1 2019 with a negative yearon-year growth of -2.40 percent.

Amongst factors contributing to the poor performance of the sector are issues surrounding the Petroleum Industry Bill (PIB) which is yet to be passed.

“One of the challenges

around the sector is the lack of certainty about the prospect for reforms in the industry,” said Omotola Abimbola, research analyst at Chapel Hill Denham. “We have a PIB which hasn’t been passed for over a decade after becoming a public subject of discourse.”

This has hindered lot of oil and gas majors who are interested in investing in Nigeria who seek “a clear policy direction before they can commit capital into the sector”, Omotola said.

In an attempt to restructure the oil and gas sector of the economy, the PIB was drafted in 2007 to address salient points around unbundling and commercialisation of the Nigerian National Petroleum Corporation (NNPC), transformation of the existing joint ventures between multinational oil companies and the NNPC, deregulation of the downstream sector, creation of new regulatory bodies and introduction of a new fiscal regime that sought to increase overall government take.

However, the reality today is that the PIB is still being patiently anticipated by the industry with cries to various past administrations on the need to pass the bill.

Meanwhile, the sector has struggled to produce above 2.0 million barrels per day, maintaining average daily oil production at 1.96 mbpd as recorded in the Q1 2019 GDP report.

Amongst other factors, the need to create policy framework around the security of assets within the industry especially in Niger Delta has been raised to solve the industry’s production deficit.

“We have begun recording more cases of vandalism in the Niger Delta of pipelines and oil and gas-related infrastructure,” Omotola told BusinessDay. Sale of public enterprises, rationalisation of overheads and recurrent expenditure Public administration, av-

CBN moves to restrict banks’ appetite...

Continued from page 1

fiele, said this on Tuesday

as he announced the apex bank’s monetary policy committee (MPC) decision to hold all benchmark lending parameters, including the Monetary Policy Rate (MPR) at 13.5 percent; Cash Reserve Ratio (CRR) at 22.5 percent; Liquidity Ratio at 30 percent, as well as asymmetric corridor of +200/-500 basis point around the MPR. Responding to questions at a press briefing in Abuja, Emefiele admitted that the MPC was signalling to the banks against the growing appetite for government securities which continues to crowd out the private sector seen as the engine of growth.

“The truth is that according to our own regulation, there is a particular minimum percentage of government securities

that the banks must invest in to remain liquid, but again, we haveobservedunfortunatelyincreasinglythatbanksratherthan focusingongrantingcredittothe private sector tend to direct their focus mainly in buying government securities,” Emefiele said.

“The Monetary Policy Committee has frowned on that, and has directed the management of the CBN to put in place policies or regulations that will restrict the banks from unlimited access to government securities,” he said.

The decision taken after the two-day meeting of the MPC in Abuja comes at a time when the apex bank appears to be in a dilemma of an inflation uptick amid fragile economic growth.

According to figures from the National Bureau of Statistics (NBS), inflation rose for the first time in 2019 to 11.37 percent in April, from 11.25 www.businessday.ng

L-R: Amaechi Okobi, group head, corporate communications, Access Bank plc; Victor Etuokwu, executive director, retail banking, Access Bank, and Barbara Zing, general manager, academy, Fifth Chukker, at a press conference to announce 2019 Access Bank Fifth Chukker UNICEF Charity Shield Polo Tournament in Lagos, yesterday. Pic

by Olawale Amoo

ing contracted some 14 percent in the first three months of 2019, emerged the worstperforming sector in Africa’s largest economy, according to data released by the NBS. The sector maintained its negative growth trajectory to record its biggest slump since previous five quarters.

“I am not surprised the public administration sector is still in recession. Gross inefficiencies to ably allocate resources, manage funds and redistribute income, financial recklessness and corruption are literally killing the sector day-by-day,” Noah Ojewoye, a Lagos-based political economist, told BusinessDay. In the bid to restore growth as contained in the county’s ERGP, privatisation of selected public enterprises, assets and fiscal consolidation through cost-cutting measures such as rationalisation of overheads andrecurrentexpenditure,were some strategies outlined by the Federal Government to achieve its target growth in 2020.

“While the sale of public enterprises will put some revenue in the pockets of the government and cut down significantly cost excesses, it will also see private individuals run it better, hence translate into growth in the economy,” said an analyst

who pleaded anonymity.

Reforms needed in the manufacturing sector Q1 2019 figures released show that the manufacturing sector emerged the fifth worst performing with 0.81 percent expansion. Significant slowdown in the sector can be attributed to election uncertainty during the period, decrepit infrastructure, tough operating environment and worsening economic indices.

Of the 14 sub-sectors in this sector, motor vehicles & assembly with 13 percent expansion appreciated the most, trailed by plastic and rubber products at 4.36 percent, and cement and non-metallic.

One of the broad objectives of the ERGP is to restore growth by focusing on economic diversification, with a particular focus on agriculture, energy, and MSME-led growth in industry, manufacturing, and key services by leveraging science and technology.

Nigeria’s manufacturing sector has been highly susceptible to the harsh economic conditions since it contracted by 4.38 percent in Q3 2016, largely due to difficulty in accessing foreign exchange for importing intermediate goods and raw materials, and falling consumer demand.

This contraction is as a result

of infrastructural bottlenecks and an uncompetitive business environment.

The government said it intends to accelerate implementation of the National Industrial Revolution Plan (NIRP) through Special Economic Zones (SEZs), with focus on priority sectors to generate jobs, promote exports, boost growth and upgrade skills to create 1.5 million jobs by 2020. Sadly, little has been seen in this regard.

Emeka Eze, an economist, said the government must address the state of infrastructure and simplify the operating environment. He said banks must be encouraged to lend to manufacturers at friendly interest rates.

“A revitalised manufacturing sector will create jobs, stimulate foreign exchange earnings and grow micro, small and medium enterprises (MSMEs). The involvement of small businesses in the service sector is a major lever for economic recovery,” he said.

Although there have been some positives since the launch of Presidential Enabling Business Environment Council (PEBEC), more still needs to be done if the target to elevate Nigeria above the 100 rank in the World Bank’s Doing Business Report by 2020.

Reforms needed in health and education Healthcare still remains a major challenge to the administration with the despicable state of public health facilities across the country, coupled with the migration of health practitioners in droves to other parts of the world that have better remuneration and health facilities.

A recent report by the United Nations Children Fund (UNICEF) places Nigeria in the 11th position in the global ranking where new-born babies die due to lack of assistance during delivery, poverty, conflict and weak institutions.

According to the ERGP document of the Federal Government, it plans to improve accessibility, affordability, and quality of healthcare by rolling out the National Health Insurance Scheme across the entire country.

The WHO recommends 1 doctor to 600 patients, but sadly, Nigeria has 1:4,000.

Data from the Federal Ministry of Health show that there are currently an estimated 45,000 doctors in the country.

Lanre Oguntoyinbo, a medical doctor said no fewer than 155,000 additional doctors at the ratio of one doctor to

percent in March.

“It is important and expedient that we do this because this country badly needs growth and for us to achieve growth, those whose primary responsibility it is to provide credit, who act at intermediaries in providing credit and are called catalysts to economic growth, must be seen to perform that responsibility,” Emefiele said.

Data on the domestic economy, according to Emefiele, suggest some fragility in output growth during the second quarter of 2019 with improved output expected for the rest of the year.

“The decision by the committee, to me, is like a historical backwardness. The economy is growing at a very slow pace at 2.01 percent.

For four years, we have seen growth in the GDP well below the population growth,” said Bismarck Rewane, managing director/CEO, Financial De-

rivatives Company Limited.

Razia Khan, Africa chief economist at Standard Chartered Bank, London, told BusinessDay that ‘further discussions’bytheCBNwiththebanks might increase their appetite for consumer credit extension.

Emefiele also worried that output growth remains well below the economy’s potential indicating the existence of spare capacity for noninflationary growth, an opportunity he said should be explored.

Reacting to the move, Rewane said, “Setting up a policy that will limit banks from investing in financial securities will mean that Nigeria has moved from a situation of moral suasion to moral bullying.”

Recent NBS data showed that banking sector credit to the economy declined 2.9 percent from N15.6 trillion in Q3 2018 to N15.1 trillion in Q4 2018. Similarly, the number of customers borrowing

from commercial banks also headed south.

In 2017, which is the latest data released by the statistical agency, the number of customers borrowing from banks stood at 2.3 million, a 23 percent decline from the 3 million figure in 2014.

“We do not expect any restrictions imposed by the CBN to have a disproportionate impact on market yields, driving them higher. Instead, we expect to see a gradual recovery in private sector credit, but only after legacy issues in the banking sector have been addressed,” Khan said.

Emefiele admitted that banks have always resisted creating credit to the private sector for fear of past experience with bad loans, and therefore the MPC directed the management to think out what it called “an administrative, legal, regulatory framework” to ensure that some of the credit risks

that are associated with granting loans to the private sector which ultimately results in non-performing loans (NPLs) should be mitigated.

Banks NPLs averaged 9-10 percent, higher than the 5 percent threshold but lower than the 15 percent recorded a year or two ago.

Khan said the CBN’s next steps, which promise to speed up the recovery of delinquent loans, will be closely watched.

“Also of interest – given greater use of the investor and exporters I&E FX rate for reporting purposes, will be what happens to some banks’ need for additional capital. While this issue was not addressed in the CBN press conference, it remains a likely precursor to any meaningful improvement in credit growth. Cue the next wave of capital raising from Nigerian financial institutions,” Khan added.

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Wednesday 22 May 2019

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NEWS

IATA may not accredit travel agents without NCAA’s registration certificate IFEOMA OKEKE

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igeria Civil Aviation Authority (NCAA) says it has directed the International Air Transport Association (IATA) nottoaccreditanyagencywithout its Certificate of Registration.

Also,theauthorityhasstressed that any travel agency operating in Nigeria and is yet to register with the NCAA is clearly violating extant Nigeria Civil Aviation Regulations.

InastatementsentTuesdayby SamAdurogboye,generalmanager,publicrelations,NCAA,saidthe controversy in certain quarters of absence of legislation concerning the registration of travel agencies was misguided.

“For the avoidance of doubt, the Nigeria Civil Aviation Regulations (Nig.CARs) confers power

on NCAA to register and issue certificates to travel agencieswithout which no travel agency shall operate in Nigeria.

“Part 18.9.1 (iii) of (Nig.CARs) unequivocally and incontrovertibly states that no person shall undertake the business of travel agency in Nigeria without obtaining a Certificate or License issued by the NCAA. “As a corollary to this, Part 18.9.4.1 of the Nigeria Civil Aviation Regulations (NCARs) 2015 states that all travel agencies shall register with the Authority after fulfilling the necessary requirements specified in IS18.9.1.2 (iii) to these regulations.

“The Civil Aviation Act. 2006, Part IX, Section 30 (4) (a) inter-alia empowers the Authority to regulate, supervise and monitor the activities of Travel and other Avia-

tion Agents operating in Nigeria.

“To join the IATA BSP, Part 18.9.4.2. of the NCARs states that All registered Travel Agencies shall join and trade on IATA BSP Platform,” the statement read.

It is important to note that the fulfilment of the aforementioned regulation Part 18.9.4.1 is a mandatory requirement for IATA to accept a travel agency on its BSP platform, he said, adding that it is afterregistrationthatatravelagent can commence business on the IATA BSP platform.

He assured that the NCAA was therefore taking steps to instil sanity into the operations of travel agencies in Nigeria, adding that the authority would be collaborating with IATA to provide a robust regulatory oversight on thissectorofaviationdownstream operations.

Smile Telecoms appoints new GCEO, Ahmad Farroukh … as Irene Charnley appointed deputy chairman Jonathan Aderoju

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hmad Farroukh, Smile’s group executive director, operations, has been appointed as Group CEO, and Irene Charnley, founder of Smile, as deputy chairman.

Smile Telecoms, a pan-African telecoms group with operations in Nigeria, Uganda, Tanzania and the Democratic Republic of the Congo, announced the appointments, saying, “It take effective June 1, 2019.”

Farroukh, who currently serves as Smile’s Group executive director, operations, is a seasoned and experienced telecoms executive with a distinguished record of commercial and operational success. Far-

roukh’s vast experience extends to executive management positions at Investcom Holdings and the MTN Group (where he served as CEO of MTN Nigeria, MTN South Africa and Group chief operating executive, responsible for 19 countries) and immediately prior to joining Smile, as CEO of Mobily, Saudi Arabia’s second largest telecoms operator. Given the extent of the opportunity and the significance to Smile, Ahmad will spend the majority of his executive time in Nigeria.

Hailed as one of Africa’s most successful business leaders, Smile Telecoms founder and shareholder, Irene Charnley, has led the company’s innovation and pioneering of Africa’s first

4G LTE network infrastructure, using low band spectrum in 800MHz band.

Thereby revolutionising the way people in Africa accessed high speed internet. After 12 years at the helm, Charnley will now serve as deputy chairman and will fulfil a strategic role.

According to Mohammed H. Sharbatly, Smile’s co-chairman, and Group CEO of Smile’s majority shareholder, Al Nahla Group of KSA, “The Africa telecoms market is as dynamic as it is challenging, and Ahmad is suited to lead Smile’s next exciting phase of growth, as we have transitioned from a spectrum rich upstart to the fastest, most reliable data gigabyte factory in sub-Sahara Africa.

Unity Bank refutes allegation by SPIPRPP

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nity Bank has faulted the allegation against it by Special Presidential Investigation Panel for Recovery of Public Property (SPIPRPP) over the ongoing reconciliation of the affected MDA accounts.

It says the report is geared towards misinforming the public and misrepresenting the bank’s position and nil impact resolutions reached during the reconciliation engagements. This is containedinapressreleasedfrom the bank on Tuesday.

According to the press statement,intheongoinginvestigation, the bank has conducted itself professionally by providing all evidence of customers instructions requested by the panel as it relates to all the MDAs. The bank had earlier transferred all the MDAsbalancestotheirrespective TSA accounts in Central Bank of Nigeria as far back in 2016 Upon approaching the bank in 2018 to conduct investigations on the subject MDAs, the bank cooperatedwiththepanelaccordingly. But out of its own volition, the panel refused to admit further documentary evidence from the bank when it was obvious that the bank had no balances kept in its books for the MDAs. Instead, the panel suspended the investigation, as apparently could not fault any of the evidence presented by the bank.

The panel in an earlier letter requested the bank to accept culpability and pay off a certain sum deemed outstanding, which the bank objected and insisted on completing the reconciliation exercise because the claims presented at this point against it were unfounded and frivolous.

It is therefore surprising for the SPIPRPP to turn back and issue statement to allege sabotage when it abandoned its sitting and investigation midway.

Furthermore, it must be emphasised that, without prejudice to the constitutional power of Revenue Mobilisation and Fiscal AllocationCommission(RMFAC) as the sole agency of government to investigate, review, reconcile and collect revenue for government, the bank cooperated fully

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with SPIPRPP and its consultants in the investigation process.

Also, it was proven beyond reasonable doubt that Unity Bank has all records to show that it does its banking transactions transparently and in compliance with extant regulations and at no time tookchargesontheMDAsthatare outside what are contained in the Bankers Tariffs that guide banking operations in Nigeria.

The allegations of SPIPRPP are superfluous, frivolous ill motivated and unfounded as falsely presentedinthenewspurportedly sent to the public.

We hereby call on our customers and the general public to disregard the allegations, which is subterfuge aimed to unnecessarily smear the image of the bank, the bank said.

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Wednesday 22 May 2019

BUSINESS DAY

news SystemSpecs set to export Remita across Africa SEGUN ADAMS

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ystemSpecs, the technology provider of the Federal Government of Nigeria’s Treasury Single Account (TSA) policy, has expressed its readiness to transform other African countries with the strategic deployment of its solutions.

Demola Igbalajobi, divisional head, Payment Gateway and Infrastructure, said penetrating other markets across the continent was principal to the activities of SystemSpecs’ session.

“Over the last few years, SystemSpecs has actually been looking at Africa as the next frontier for us, we have been engaging a few governments in Africa on TSA based on our experience in Nigeria. So, we are ready to deploy our solution within a matter of weeks to any country that is ready to adopt our payroll payment gateway for their TSA,’’ Igbalajobi said.

He made this known at a meeting between a Gambian delegation that had come to understudy Nigeria’s TSA, and key players in Nigeria’s Fintech sector on Monday in Lagos.

The divisional head of SystemSpecs, however, admitted the varying nuances of each country and the criticality of obtaining a full understanding of these processes to the successful deployment of the technology.

According to Igbalajobi, SystemSpecs is no stranger to these instances and have demonstrated the ability to acculturate over the years. ‘’For any country you go to, you must understand what they have, they might have a different ERP system, different ethnics but the concepts are similar because they all work with World Bank, IMF guidelines and suggestions.

“But the first part is to understand what they have, beyond that to deploy after we understand their needs will take us a reasonable time that is not too long,’’ he said.

Meanwhile, Sylva Okolieaboh, director of TSA, Office of the Accountant-General of the Federation (OAGF), had said that the centralisation of multiple bank accounts through the implementation of the TSA currently saved the Nigerian government over N45 billion monthly on interests.

According to Okolieaboh,

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Foundation makes case for lessprivileged, donates to amputees, others AMAKA ANAGOR-EWUZIE

O

wing to Nigeria’s challenged economy, which has negatively affected the living condition of many citizens, Ibiyinka Macaulay Foundation (IBMF) has urged privileged Nigerians to remember the poor among them.

Ibiyinka Macaulay, president and visioner of IBMF, made the call in Lagos while addressing the media to flag off the Foundation’s charity mission to schools, motherless babies’ homes, and other less-privileged individuals last weekend.

The Foundation, set up by Ibiyinka Macaulay, the fourth generation of Herbert Macaulay family, recently carried out a three-day visitation and donation of materials to Modupe Cole Memorial Child Care and Treatment Home, Lagos Cheshire Home, and Tower of Refuge Orphanage and Motherless Babies Homes.

It also commissioned water boreholes, renovated toilets and made presentation of generators to schools, including Salvation Army Primary School, Ajigbeda Girls High School and Abimbola Gibson Memorial Primary School.

Also, the Foundation in its feeding of the underprivileged programme took food items to the less-privileged located in Ebute-Meta and Surulere areas of Lagos State.

While addressing newsmen in Lagos, Macaulay narrated his near-death experience, the recovery from which gave him the passion to reach out to the needy.

He said he fell ill in October 2011 in the United Kingdom after visiting Nigeria in 2010, and was taken to hospital where he slipped into coma and woke up almost 14 weeks later at Kings College Hospital London.

Macaulay, who noted that the Foundation was born out of the family’s gratitude to God for giving him a second chance in life, said he however lost his left leg and the fingers on his right hand.

“I had blood poison and my organs shut down, which should have led to my death but God brought me back to life for a reason, which I cannot explain. I gave my life to God and the reason I set up this Foundation is to help humanity and give back to the society because I know that I did not bring anything to earth and I will not take anything back,” he explained.

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Global partners announce $61.8m allocation to boost AfDB initiative for women entrepreneurs Jonathan Aderoju

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overning Committee of the Women Entrepreneurs Finance Initiative (We-Fi) has approved a funding allocation of $61.8 million (N21bn) for the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) programme.

We-Fi is a partnership among 14 donor governments, eight multilateral development banks, and other public and private sector stakeholders, established in October 2017 and hosted by the World Bank Group.

According to Vanessa Moungar, the bank’s director for Gender, Women and Civil Society, “This substantial support from the Women Entrepreneurs Finance Initiative, We-Fi, will help us scale up our actions and achieve greater results for women entrepreneurs across the continent. Our ambition with AFAWA goes beyond regular assistance to women in business.”

With the We-Fi funding, AFAWA intends to improve access to finance for 40,000 womenowned/led small and medium enterprises in 21 African countries, mainly in low-income and fragile countries, where women entrepreneurs face greater challenges in

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accessing finance, markets, knowledge, and mentoring programs.

Specifically, the programme’s activities will be implemented in Botswana, Burundi, Chad, Comoros, Côte d’Ivoire, Democratic Republic of Congo, Ethiopia, Kenya, Mali, Mauritania, Mozambique, Niger, Nigeria, Senegal, Sierra Leone, South Africa, Tanzania, Tunisia, Uganda, Zambia, and Zimbabwe.

The activities funded by WeFi will be aligned with AFAWA’s three-pronged approach to holistically addressing the $42 billion (N15trn) financing gap between women and male entrepreneurs.

The first AFAWA pillar aims to increase access to finance for women through innovative and tailored financial instruments, including guarantee mechanisms to back up women entrepreneurs.

In collaboration with strategic partners, the second pillar focuses on providing capacitybuilding services to women entrepreneurs, including access to mentoring and entrepreneurship training courses. AFAWA also helps financial institutions address the specific needs of women-owned/led businesses through tailored financial and non-financial products.

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Wednesday 22 May 2019

BUSINESS DAY

NEWS

MainOne makes N25bn infrastructure investment for Lagos smart-city initiative Jumoke Akiyode-Lawanson

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ope of transforming Lagos to a Smart City is coming alive, as MainOne, connectivity and data centre solution provider, is committing N25 billion to deploy fibre optic infrastructure in Lagos toenablebroadbandconnectivity across the state, through its “DigitalLagos:BroadbandforAll”plan.

MainOne, recently granted an infrastructure company (InfraCo) licence by the Nigeria Communications Commission (NCC) to build digital infrastructure in Lagos, has drawn out a plan to buildover2,000kilometresoffibre

optic infrastructure with associated electronics in the next two to three years.

This will enable Lagos connect all institutions to the fastest networks, in addition to itsalready existing 700-kilometer network that covers major centres and Yaba, Nigeria’s tech hub.

FunkeOpeke,CEO,MainOne, says the company’s ambition to help build a smart Lagos is inspired by the vision of Babajide Sanwo-Olu, the incoming governor, who noted presciently that ‘Technology will improve the rule of law, education, ease of doing business and government processes of Lagos.’

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Opeke, who spoke with journalists at the MainOne head office in Lagos, Tuesday, said, “This critical infrastructure will enable Lagos connect schools, health centres and all institutions to the fastest networks. The shared and open infrastructure will connect telecom operators and internet service providers (ISPs) who can connect their towers and base stations to deploy more 4G and have the platform for 5G.” According to Opeke, the possibilities for Lagos through broadband are enormous, in terms of job creation, security, education, GDP growth and Foreign Direct Investments. The resulting net-

work to be built by MainOne will alsoprovideessentialconnectivity to critical State institutions, cover over 300 government agencies, up to 10,000 state CCTV locations, telecomoperatorsandISPs,smart city components/IOT devices, in addition to enterprises.

“We are launching this program at this time because the incoming government has set a vision to leverage technology to improvethefortunesofLagosand totransformLagosfromjustbeing a Mega City to being a Smart City and a 21st Century economy.

“Without this kind of infrastructure, you can’t achieve a digital Lagos. The infrastructure

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is the basic building block that you require to deploy WiFi in bus stations, public places, to get businesses, hubs and people connected. Broadband will support the deployment of surveillance cameras to efficiently monitor traffic, streets activity, and provide real-time data to security officials to minimize crime and enhance public safety,” she said.

Hip Consult, an independent management consulting firm, with specialisation in ICT and significant experience in infrastructure projects and technology around the world, will be working with MainOne to put together a concept paper and a plan for the

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project.

Judah Levine, CEO, HIP Consult, said a digital Lagos was a significant opportunity that was a prerequisite to realise all the benefits of a digital economy.

“We were engaged in order to undertake some research and analysis on what a digital Lagos could enable, and we have found out that fibre networks are the lifeblood of connectivity: when people talk about connecting towers, data centres, broadband revolution and job creation from a digital economy and many other benefits, the pre-requisite for all of this is connectivity,” he said.

Wednesday 22 May 2019

BUSINESS DAY

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Wednesday 22 May 2019

BUSINESS DAY

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Becoming an entrepreneur: Start with making what works work better Small Business handbook

Emeka Osuji

W

e have said elsewhere in this column that the future belongs to those who develop their talents and deploy them as freely as they want. Such freedom and people are found in the realms of private enterprise. They are entrepreneurs.

The future of the world economy is in the hands of entrepreneurs. This is why every thinking county that plans its future is doing all it can to promote private sector stake in its economy.

This was the idea behind the massive privatization programmes in Europe in the 80s that saw Prime Minister Margaret Thatcher sell British Telecom. That same wave of receding frontiers of government, led to the privatization of the telecom industry in Nigeria with attendant boom in jobs and prosperity.

One thing that is certain is that the global economy will continue in its failure to provide enough jobs for all those who need jobs. High and rising level of unemployment, which has already scandalized many governments, will not abate in a hurry. Many governments, especially those in the ever developing but never developed world, have shown that they cannot significantly improve on their already very poor capacity to create jobcreating opportunities. The world, not just Africa and her poor friends, is stuck with diminishing social welfare

standards as the challenge of unemployment continues to be prominent.

The millennials who, according to the United States Census Bureau, are those born between 1982 and the year 2000 are coming out to work. They have come of age and now bringing their characteristics to bear on the labour market. Research shows that they surpass the baby boomers, an earlier and more privileged generation, and are the fastest growing segment of the workforce.

This group of young people have come to be identified with certain characteristics that are reshaping the global workplace. They are known to be highly technology-driven. They are therefore closer to their laptops, smart phones and other high-tech gadgets, than they are to humans.

The millennials are less physical than the generations before them and therefore prefer to communicate by emails, Whatsapp and smart phones than being physically present. Due to the fact that they cannot imagine or survive well in a world without 24/7 electricity, internet and smart phones, in addition to their deep family-centric nature, they prefer to work flexible hours or from home, where these things are likely to be present. Being privileged and even “spoilt”, they crave attention. These traits have created the impression that the millennials are prone to job-hopping – a plus for entrepreneurship.

Essentially, today’s youth are restless and tend not to survive in straight-jacketed work places. Their job-hopping habit, boosted by their having been over protected, makes them go in and out of employment.

They actually do not fancy the idea of keeping jobs for donkey years like their parents, and that is where they come into conflict with the current

economic environment, which offers fewer job-changing opportunities. So how and where would they survive?

The answer is entrepreneurship. In many cases, their response to the dwindling opportunities for employment has led them to create and innovate. Several Apps are now online and making millionaires out of many young people who create them. The future truly belongs to private enterprise. As job opportunity shrinks and population rises, only those who can create their own jobs or Blue Oceans will make it to the next economic boom. These are people who are reflective; people who think deeply about phenomena and people who are willing to take a step forward on a risky path.

Today, we begin a series on entrepreneurship, which will focus especially on what entrepreneurs do.

For starters, let us dismiss the myth that to be an entrepreneur one always has to invent something new. That thinking is exactly what it is – a myth.

It does not exist in reality. The truth is that there may be some wheels to be invented but they are not too many left. What abounds is the opportunity to rework, reshape and reform the wheel. Therefore, to be an entrepreneur, one may or may not make a new discovery. We can do something new – create a new product or discover a new formula for solving a problem.

However, using a new technique to solve an old problem is also an invention. The definition of entrepreneurship is extensive enough to cover such activities. Of course, some entrepreneurs are riding on the back of ground-breaking inventions but others are either advancing existing ideas or doing an old thing in a new or better way. In other words, tweaking an existing invention or what is already in use, and making it better

‘

The truth is that there may be some wheels to be invented but they are not too many left. What abounds is the opportunity to rework, reshape and reform the wheel

able to serve its original purpose, is also entrepreneurial.

There are new business ideas that are already changing the way certain businesses are done in Nigeria. Plumbers are now available on the touch of an App. Similarly, automobile mechanics and those that repair domestic equipment, such as refrigerators and electronics, can now be hired online. It is about providing novel alternatives or variations of whatever that already exists and in making outright discoveries. Services like Uber and Taxify are simply riding on the old theme of taxi cabs. They have just found better ways to get a taxi ride. The way forward for the young and able is to think of better ways of doing old thing even as they seek to break new invention grounds.

The labour market is full of young people who have been uncharitably branded unemployable, with handsome blame apportioned to those who train them; not because they truly lack useable skills but because the economy has been run aground by the truly unemployables - politicians and their collaborating public service managers. It has therefore become fruitless to continue to hope for jobs in an economy that is actually contracting, both literally and relatively speaking. The future is indeed, lies in creativity and the application of talents to create one’s own job.

Entrepreneurs improve the working of what works or make it work better. Or better still, they replace what works with something that may not be entirely different but does the work even much better. There lies the way forward, as ignorant population policies drive unemployment to the blue skies of many poor countries.

Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

After the crash: Enjoy the oil price recovery while it lasts

Uyiosa Omoregie

T

he headline news that summarized the petroleum industry in 2014 was the oil price crash. The price of oil has been described as the most important economic variable in the world. The price of oil has far-reaching implications for economies and geopolitics. Crude oil prices fell below the 2009-2014 five-year average in early September 2014. The drastic fall in price was from a monthly peak of $112 per barrel (bbl) in June 2014, falling to $62/bbl in December. Since 2016 the oil and gas market has gone through a period of rebalancing, resulting in modest recovery in prices. Oil price recovery reached a peak of $85/bbl in October 2018. Gas prices have also achieved similar modest price recovery. The industry

has now entered what appears to be an expansion phase. The year 2018 was a profitable year for the five largest international oil companies(Exxon, Shell, Chevron, Total and BP), as they exceeded expectations for 2018.

This was due to the oil companies more disciplined business approach and a focus on the lowest cost barrels during a period of market volatility. The combined cash flow of the five super major oil companies is the highest for at least eight years.

The oil and gas industry has always functioned in cycles since oil production began in the 1860s. The volatility experienced in the past few years are historically the norm in the industry, not an anomaly.

Boom-bust-rebound-reversal characterize this industry. Robert McNally’s book “Crude Volatility: The History of Boom-Bust Oil Prices” presents monthly oil price time series from 1859 to 2015 that reveal volatility in oil price. McNally also presents global spare oil production capacity from 1955 to 2015.

Spare oil production is important as it can act as a buffer in times of undersupply, not only helping to increase the supply of oil but also tempering oil price spikes. Axel Pierru, James L. Smith, and Tamim Zamrik, in a 2018 article published in Energy Journal, claimed

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that: “OPEC’s spare capacity reduces oil price volatility and generates between $170 and $200 billion of annual economic benefits for the global economy. Investments in spare capacity provide value to the economy because deploying the production held in response to disruptions saves costs that result from price volatility. This value can be calculated by subtracting the gross domestic profit (GDP) losses that the world would expect to suffer even after deploying the spare capacity buffer from the expected losses without the buffer.

The expected losses depend on the buffer size, the magnitude and persistence of the shocks, and on the global GDP losses incurred when there are production shortfalls.”

Before OPEC, oil price volatility was tempered by a cartel formed by international oil companies. At the same time, quotas were imposed the American government on oil production in the country. This alliance resulted in 40 years of relatively stable oil prices between 1932 and 1972. OPEC took over in the early 1970s as stabilizer of oil prices with mixed success. The American oil industry is back to relevance since the shale oil boom began about 10 years ago. The American shale producers are independent companies, purely profit driven with their production

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very sensitive to oil prices. They are marginal producers in the sense that they produce at the margins in response to oil prices, they price takers not coordinated price makers.

It now appears that the oil industry is back to volatility. Increase in the price of oil above a certain price will lead to more production

by American shale producers. An increase in production may flood the market leading to a decrease in the price of oil. So, the oil price circle goes round and round.

Robert McNally states: “Extreme volatility…is an intrinsic feature of the oil industry.

Historically, oil prices have experienced multi-decade eras of relative stability and wild, boom-bust gyrations…recent fluctuations mark a return of a free and unfettered market for crude oil, and as a consequence boom-bust oil prices are making a return after eight decades.”

Nigeria should take advantage of the current oil price recovery while it lasts. Important projects that were put on hold due to the low oil price must be reconsidered. Let’s enjoy the oil price recovery while it lasts!

Uyiosa Omoregie is a petroleum economist and management analyst.

He can be contacted at uyiosaomoregie@yahoo.co.uk

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Wednesday 22 May 2019

BUSINESS DAY

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Excellence doesn’t come by chance - Part 2

Character Matters with Daps

Dapo Akande

I

’m very sorry to burst your bubble but we won’t get very far as a nation if things remain the way they are.

As at October 2018, 13.2 million of our school age children were out of school. How is a child deprived of the opportunity to confront the rigours of education expected to strive for excellence when he or she hasn’t been given a chance to know what it means?

How can a child unfamiliar with the precise understanding required to solve a Mathematical question, possibly comprehend the concept of perfection? Four plus four will always equal eight and so if you get nine, “Ah! O de ti da to” (it’s good enough) simply won’t work. There are no two ways about it. For it to be correct, it must be exact.

In this same vein, families, organizations and nations require leadership that sets a standard of excellence for members, employees and compatriots respectively to follow. I won’t mince my words, excellence must be incorporated in our value system if it’s ever to become ingrained in our minds.

The lack of this both at the micro

level of family and at the macro level as a society, goes a long way to explain our present predicament as a nation. One wise man put it so succinctly when he said, “Nations develop or decay in response to the value system they operate by.”

Professor Vincent Anigbogu, founder of the Institute for National Transformation, in his supremely revealing book, The Grand Design, further reinforced this for me when he said this of Lee Kuan Yew’s sublimely successful government in Singapore: “By enforcing rigid requirements which created an enabling environment and an appropriate corporate culture, Singapore emerged from being a Third World nation to her present status as the 9th wealthiest nation in the world, with a GDP per capita income of over $63,000 US.” This was a man, nay, a leader who made it a duty to major in the majors and to focus on substance with fanatical discipline, instead of chasing shadows. Not one to give beautiful but vacuous speeches, he meticulously drove issues beyond mere rhetoric but to positive, tangible and measurable conclusions. Each time he successfully turned the fortunes of a particular sector around, whether it be the financial sector, manufacturing or his drive to attract foreign direct investments, he would look back at it, review it and conclude that, “it was good”. A clear testament to a Total Quality Management System that works.

The scriptures tell us that the period of Micah in Judges 17:5-7 was a time when, “everybody did

what was right in their own eyes”.

Can the same be said of our dear country where there appears to be no commitment to a nationally recognized benchmark of excellence? Where there’s no collective expectation of a specific standard? Excellence is a concept closely associated with godliness. Contrary to the belief of many though, godliness cannot be attained by merely following all the church routines and formulas such as attending all church services, vigils, special programs, fastings and so on. All these are good but mean nothing when one is devoid of Godlike character. On the other hand we have some nations of this world who just seem to be doing so well but are far from being Christians.

Excellence has for long been their standard. So what’s the “magic”?

They’ve come to understand what it truly means to be Godly. They’ve come to understand what it means to be righteous ; doing what is right in the sight of God. They realize it’s not about following any religious formula but about assuming God’s character. Loving their fellow man as themselves.

Governments providing for their people, showing them that they care. Placing a premium on the lives of their people by upholding justice. “Learn to do good; seek justice, correct oppression; bring justice to the fatherless, and please the widow’s cause,” (Isaiah 1:17). Giving justice to all, irrespective of their station in life. Looking after their aged by according them due privileges as senior citizens. In some countries

‘

Excellence is a concept closely associated with godliness

this can take the form of free bus passes and sundry subsidized social services. The good book says, “Honour your father and your mother, so that you may live long in the land the Lord your God is giving you”. Dutifully, they have embedded this precept in governance by recognizing the fact that it goes beyond just looking after one’s biological parents. God will always honour such. Thank you for this insight, Professor Anigbogu. You will never hear of such countries owing their pensioners for months or even years on end, while political office holders walk home with millions of naira every month. In such countries you will not hear of state legislators selfishly proposing a bill for them to collect life pensions, like they recently did in Bayelsa, while the state government still owes civil servants months of unpaid salaries. No, merely going to church doesn’t make you Godly. Kudos to the Governor for refusing to sign this most odious of bills into law.

So the progress and prosperity of these societies are not founded by magic after all, but by faithful adherence to the word of God and His principles. Godliness. Perhaps without realizing it, they are in many ways already “occupying” till Jesus comes. They have taken up that mantle of excellence and it’s evident for the whole world to see.

Changing the nation...one mind at a time Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

The worst strategic error in business

Brian Reuben

B

usiness leaders generally agree on the need for strategy. No business can survive without one because no matter how turbulent and intensely competitive an industry might be, the firm with the right strategies will always have superior results. Performing on top of the market requires a firm grip on strategy.

Sadly most executives are confused about strategy. They don’t know what it is. As I travel and interact with executives, I find one passion burning in the heart of many of them. I’ve seen them express it with intense passion, I’ve watched them blame everything from the government policies to climatic conditions to anything conceivable as being the limiting factor behind their inability to reach this goal. What is the goal?

The drive to be the best company or business

in their industry. This is the competitive focus of many companies.

It’s not hard to know why. The society rewards ‘best’. We are conversant with phrases like, ‘the best graduating student’, ‘the best footballer’, ‘the best staff of the month’ etc.

So we try to be the best bank, the best insurance company, the best school, the best furniture company.

Unfortunately that’s the wrong competitive focus because in the very first instance, there is no such thing as a ‘best’ company!

There is no best car, no best bank, no best restaurant because a company could be best or otherwise depending on the need of the person accessing their products or services.

What works for Charles may not work for Seyi. What works for Amara may not work for Zain. That’s just the way it is.

Superior performing companies don’t focus on being the best company. Consider the automobile giant, Toyota. Toyota’s competitive focus is ensuring that their products meet the highest expectations of the market and even exceed it . The Toyota production system strive for the absolute elimination of waste , overburden and imbalance in all areas to ensure smooth and efficient operations. Going the extra mile for them means providing customers with the highest

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quality vehicles , at lowest possible cost , in a timely manner with the shortest possible lead times. This defined their uniqueness. It emphasizes what make Toyota cars unique.

You can get a good car at a low cost. Toyota is a unique car but by all means not the best car because there is no best car.

All superior performing cars follow the same path, their focus is on being unique, not being the best. They focus on a segment of the market or may be on the whole market but with a unique offering. It is this uniqueness that gives them a competitive advantage. The worst competitive error is to compete on being the best. You can’t be all things to all people and expect to be a superior performer. Competing on being the best can at best keep you struggling along with others.

You see behind the drive to be the best is the assumption that there is a best already which you intend to take out. Apparently there will always be a market leader in every industry. But one thing to understand is that market leadership is a result of offering unique value to the market. It is a natural consequence of a unique value clearly communicated to the right market. Of course this presents a question, which market is the right one? Well the right market is that whose

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needs fits best into the offering targeted at them. So they buy not because you have to sale but because they need to buy. Take the Swedish furniture company, IKEA for instance. People on budget buy from them not because IKEA wants to sale but because IKEA offers them the chance of owning good furniture at a low cost. The reason Honda could not capture the Indian tricycle market even though it has a respected brand and may be better quality than local rival, Bajaj was simple: Bajaj configured its offering in a way its most beneficial to the Indian user.

Honda had a good product for the wrong market, so eventually they were forced out of the market.

So as the fight for market share intensifies in every industry, understand that if you are going to control the market you will need to rethink your assumptions about strategy and what it means to be strategic. Begin by identifying unmet needs you can take care of. There’s no way around it. You’re either going to meet the needs of the people in a whole new way or meet needs nobody cares to take care of. That’s what will give you the market leading position you desire. Yet there’s much more.

Dr. Reuben is a strategy consultant

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Wednesday 22 May 2019

BUSINESS DAY

Editorial Publisher/CEO

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

NERC, review electricity tariffs without further delay

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or the power sector to remain viable and for Nigerians to have power, it is necessary to review electricity tariffs to reflect the cost of production of electricity.

The Nigerian Electricity Supply Industry (NESI) is cash strapped with shortfalls estimated above N1.4trillion.

Power generation companies routinely get about 30 percent of their market invoice and the Transmission Company of Nigeria (TCN) gets even less.

Power plants are owed billions, DisCos barely collect more than 60 percent of invoices and electricity theft is rampant.

Needless to say, these are the perfect conditions for chaos.

A key reason this is so is because the regulator is weak and susceptible to government interference. Hence decisions that should be based on market realities are filtered through the prism of political correctness.

One example is the regulator’s decision to compel operators to sell electricity below the cost of production.

According to the Multi Year Tariff Order (MYTO) rules, elec-

tricity pricing should have been reviewed at least six times. The MYTO is essentially a 15-year tariff path for the NESI with limited minor reviews each year in the light of changes in a limited number of parameters (such as inflation, interest rates, exchange rates and generation capacity) and major reviews every 5 years, when all of the inputs are reviewed with stakeholders but this has not been done since 2015.

The prevailing electricity tariff today was modelled against variables that have become obsolete.

MYTO 2015 for Discos was built on 196/$1 exchange rate, 8.3 percent inflation rate, gas prices of $3 and certain available capacity and guarantees from government. The trouble is that while all these variables have changed, tariff has not.

It is in the interest of a government with little to show as achievements keeping electricity prices low to appease disgruntled electorates when facing re-election, but markets do not operate along such parochial considerations.

Worse still, the current electricity pricing does not benefit anyone. Operators cannot be compelled to improve service because they are forced to sell

power below the cost of production. Customers rely on inefficient diesel generators and pay five times the cost of grid power. The question is, in whose interest is electricity so miserably priced in Nigeria?

This month, NERC initiated a process that will ostensibly lead to tariff review by demanding DisCos to submit Performance Improvement Plans (PIPs). It will cover the 2020- 2024 tariff period but it will be subject to the contractual provisions of the performance agreements executed between the core investors and the Bureau of Public Enterprises (BPE) in respect of the allowances for capital and operating expenditure in the remaining term of the agreement.

NERC will use the PIPs to define performance standards in terms of metering, customer satisfaction, network expansion, safety and social responsibility. It will also be used to check reduction in aggregate technical/commercial losses and overall improvement in service delivery to customers.

The PIPs will form the basis for revenue requirement projections and also serve as the companies’ service charter with the consum-

ers to which they will be held accountable by the Commission, according to the guidelines.

As noble as these plans sound, there are many ways it can go wrong starting with aligning it with contractual provisions of the performance agreements executed between the core investors and the Bureau of Public Enterprises with regards to capital and operating expenditure allowances in the remaining term of the agreement. The Federal Government has not completely fulfilled its obligations under the agreement and the DisCos would resist attempts to compel them to meet with any requirement they consider difficult.

Yet, as far as intentions go, this is better than nothing. We think it would be better for the industry in the long run to follow the guidelines in the Power Sector Recovery Programme on periodic tariff review. Babatunde Fashola, minister of Power, Works and Housing likes to talk about incremental power, it is this principle that is now required to help the power sector – an incremental tariff review that will not hurt consumers so much and allow operators to cover costs.

GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

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Wednesday 22 May 2019

BUSINESS DAY

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The many challenges of financial inclusion in Nigeria Franklin Ngwu

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n a circular, Central Bank of Nigeria (CBN) lamented that we are not meeting any of the financial inclusion targets agreed and contained in the 2012 Financial Inclusion Strategy. Not only are we not meeting the targets, we are even retrogressing! For instance, while we achieved 60.3% in 2012, it declined to 58.4% in 2016 against a target of 69.5%. This translates to a financial exclusion of about 41.6%. Focusing on adults, the report revealed that while 36.9 million adults were banked, over 59 million remain unbanked. According to the CBN, “performance did not meet expectations across all inclusion targets for products, channels and enabler.

Among product categories- credit, insurance and pension all fell short of targets by the most significant margins. Point of sale terminals and Automated Teller Machines showed the least progress among channels.”

The above is not surprising as pursuing financial inclusion and other policies with flawed models or approaches can only result in limited outcomes. Some people will inevitably be included but the outcome will be below the target and unsustainable. This is the reason why the number of formal bank accounts is less than 40million in a country of 200million people with insurance penetration of about 1% even when formal

financial sector has been in Nigeria for over 122years! To achieve a sustainable and effective financial inclusion in Nigeria, there is a fundamental need for a change of our approach to banking and other financial services. It will require a change from our present economic approach to a sociological (socio-cultural/ economic) approach. With a sociological understanding of the meaning and causes of financial inclusion and exclusion, a new approach and strategy will emerge. The reality is that Nigeria has two functional but limitedly interconnected sub-economies: the formal and the informal economies. As both are functionally vibrant due to good population of economic participants, any effort to promote more interaction of the subeconomies will require first a genuine and comprehensive appreciation of the inherent institutional peculiarities of the two sub-economies and then a carefully planned and effective integration strategies.

Even if we in the formal sector argue that we know better than those using the informal banking sector and as such can make suggestions for them, I think that the best approach will be to genuinely engage and ask them why they don’t use the formal financial sector. In 2012 CBN financial inclusion strategy, no ‘formal financially’ excluded person or group were deemed important to be included as stakeholders in the financial inclusion drive. The lucky and important 3 stakeholders include first, the providers such as formal banks and insurance companies, second are the enablers which are the regulatory institutions such as CBN, NDIC. The third group of stakeholders are the supporting institutions and development partners such as World Bank and other agencies and experts.

The situation is like a team of medical

‘

To achieve a sustainable and effective financial inclusion in Nigeria, there is a fundamental need for a change of our approach to banking and other financial services

doctors that prescribe medication for a patient without interacting with the patient to find out his/her symptoms.

Expectedly, the patient might improve but will not be effectively cured due to improper diagnosis of his/her ailment.

This is what has been happening in our financial and other sectors of the economy. We keep adopting policies and models without careful examination of the suitability and amenability of the policies to our peculiar contexts.

If we can effectively appreciate our contextual peculiarities in our policy proposals and implementation, then the appropriate term should be ‘Formal Financial Inclusion’ and the definition should be ‘increasing access to formal financial services and products to those that do not use the formal financial sector especially those that use the informal banking sector’. This clarification will help us in understanding the causes of formal financial inclusion/exclusion and possible solutions and contribution such as the National ID Card.

The fundamental problem with our current economic approach is that the use(s) of formal financial sector are dictated mainly by instrumental needs. Examples of instrumental needs include for instance the need to save, transfer money to a friend, pay school fees, buy a property and pay for flight tickets etc. Expectedly, if the above needs can be met without using the formal financial sector, the need to use the formal financial sector or to be ‘formal- financially’ included is therefore absent. Incidentally, this is the situation in Nigeria with those wrongly classified as financially excluded. Majority of their financial instrumental needs can be met within their respective vibrant informal financial groups in addition to our cash dominated economy. Even their basic

Charting the course of Nigeria’s future Olanrewaju Rufai

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lthough Nigeria’s Gross Domestic Product (GDP) is projected to reach $3.3 trillion by 2050, the gulf between the country’s reality and its undisputed potential has never been wider.

In fact, Nigeria has always been a nation of potential. When Nigeria achieved independence in October 1960, the nation was hailed as a beacon of hope for the African continent. Almost sixty years afterwards, predictions of a glorious future are yet to be fulfilled.

Instead, the nation continues to grapple with basic economic problems. As at this day, the Nigerian economy is yet to fully recover from its contraction in 2016.In addition, data from the Nigerian Bureau of Statistics shows that the 2018 GDP growth rate was under 2 per cent while inflation remains stubbornly high at over 11 per cent, a double whammy which means that for the average Nigerian, cost of living has increased while real income has declined.

Furthermore, despite promises to diversify the economy, the federal government remains reliant on crude oil for 90 per cent of its revenues. The nation is also silently straining under the weight of its debt, as the national debt stock has

more than doubled in the last three years to over N24 trillion. Currently, the federal government spends over half of its earnings on debt servicing, leaving little for infrastructure development. This in turn leads to the government taking on more debt to fund infrastructure, thus creating a vicious cycle of debt.

However, perhaps most alarming is the unprecedented rise in youth unemployment. Since 2015, the unemployment rate in Africa’s largest economy has soared, rising from 8.2 per cent to 23.1 per cent in the third quarter of 2018. For young people aged 15 to 35, the figures are even worse as 55 per cent of the youth population are unemployed or underemployed. In addition to these galling figures, the nation continues to fail to prepare future generations for a fast-changing world, with over 10 million children currently out of school.

All of these paint a sordid picture for Nigeria. A combination of poor leadership, corruption and incompetence has resulted in a failure to diversify the economy, invest in critical infrastructure and harness the nation’s most valuable resource – its people.

Nevertheless, all hope is not lost.

An important first step in the process of rescuing the economy of our nation is the realization that political will for restructuring is necessary for progress. There must be an urgent will to address pressing issues such as the nation’s reliance on oil earnings, the archaic land use act and the non-practice of fiscal federalism, all of which combine to hinder the nation from realizing its potential.

Furthermore, all levels of government www.businessday.ng

must incentivize and encourage private sector participation in various sectors of the economy and infrastructure development. The government must create an enabling business environment for small and medium-sized enterprises to thrive by making Nigeria a progressively easier place to do business. Far-reaching reforms which will encourage industrial manufacturing, technology and innovation insectors where Nigeria can develop sustainable competitive advantages must be delivered. Non-oil sectors of the economy, in particular manufacturing and technology, must be actively encouraged via the implementation of supporting policies, while subversive acts such as multiple taxationof businesses and regulatory overreach must all be eliminated.

In addition, the nation’s ticking time bomb of youth unemployment must be resolved through the enactment of viable job creation policies and enhancement of labour productivity. This however will not be possible without sustainable investments in education and infrastructure development. Investments in education, particularly STEM education, are critical in order to prepare the young generations for the jobs of the future. In addition, there is a need for concerted effort to grow the economy. Given the current population growth and unemployment rates, the economy will need to grow 6-8% annually to reduce youth unemployment.

The need for infrastructure development for economic growth cannot be overemphasized. Therefore, while the federal government’s current focus on infrastructure development is laudable,

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The nation’s ticking time bomb of youth unemployment must be resolved through the enactment of viable job creation policies and enhancement of labour productivity

financial needs (savings and lending) can be better met within their informal finance groups than within the formal financial sector. For instance, the rotating local savings and loans provide a more effective and reliable financial system to the ‘formal financially excluded’ than the formal banking sector. So there is no incentive or benefit to use the formal banking sector. Not only is there no incentive or benefit to use the formal banking sector, there is inherent mismatch between the needs of the ‘formal financially excluded’ and the services/ products of the formal banking sector.

Their savings and loans are of very small amounts, volatile and short-term which the formal banks are unwilling and unable to provide or service due to the high administration costs.

In addition to the instrumental needs, the informal finance sector also provides for the intrinsic needs of the majority of those classified as financially excludedthe poor and uneducated. Examples of intrinsic needs include sharing in the joys and sorrows of members like bereavement, child dedication, daughter’s marriage etc. As these intrinsic needs are culturally oriented and encouraged, the preference of the informal finance groups is guaranteed. Moreover, the regulations and operations of the informal finance groups are properly understood, accepted, internalised and complied with due to the normative (cultural) origin and approach of the rules.

Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail: fngwu@lbs.edu.ng

the government must also realise that its resources are limited. Thus, it must encourage private sector participation in infrastructure development via public-private partnerships, concession agreements etc.

Subsequently, Nigeria’s ballooning debt problem must be swiftly addressed. The nation is currently expending bulk of its revenues on debt servicing, thereby leaving nothing for infrastructure development which in turn leads to the government taking on more debt to fund projects. If left unchecked, the national debt stock might soon reach the level last attained prior to the debt relief in 2005.We only need to look at countries like Venezuela, Greece, and Zimbabwe to see how dangerous a public debt crisis can be. Therefore, the rising national debt volume must be tackled with urgency, perhaps starting with reducing government spending on recurrent expenditure.

Overall, fiscal prudence and investments in education and infrastructure are key to unlocking Nigeria’s potential. However, this is only achievable with political will, implementation of market reforms and creation of policies which will improve the living conditions of a rapidly growing, young population.

The future of Nigeria is dependent on this. Otherwise, fifty years from now, we might still be describing Nigeria with the word potential.

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

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Wednesday 22 May 2019

BUSINESS DAY

cityfile Enugu designates 12 courts for juvenile cases

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L-R: Lanre Ogunlesi, chancellor, Remo Anglican Diocese; Seni Adio, managing partner, Copley Partners; Michael Olusina Fape, Archbishop Lagos Ecclesiastical Provice/bishop Diocese of Remo, and Akin Osinbajo, deputy chancellor, Remo Anglican Diocese, at the closing ceremony of the Third Session of the Twelfth Synod “Themed” The Glory of the Crucified Life in Irolu-Remo, Ogun State.

Bandits attack BusinessDay driver in Abia GODFREY OFURUM, Aba

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bdullahi Usman, a driver in the circulation department of BusinessDay Media Limited, was last week attacked by armed robbers at Asa, along Aba-Port-Harcourt Expressway, in Ukwa West local government area of Abia State.

Usman was attacked at about 2:00am while conveying Thursday, May 16 edition of BusinessDay Newspapers, from the press in Aba, to Port Harcourt.

Usman explained that his attackers laid siege on motorists at a bad section of the road, close to an army check point at Asa, where he was attacked.

The hoodlums, according to the victim, dragged him out of his vehicle, (a Golf car) into the bush, where they beat him up and disposed him of his

mobile phone and unspecified amount of money. While still being held by his assailants in the bush, an oncoming truck rammed into Usman’s vehicle and destroyed its entire rear.

Usman is not alone in this, as the Aba correspondent of Vanguard Newspapers, Alaribe Ugochukwu, also fell a victim to the robbers. Ugochukwu’s house, situated at the Ogor Hill area of Aba, was attacked twice within a week.

The robbers broke into Alaribe’s apartment through the roof and carted away two-laptops, television set, cloths, undisclosed amount of money and other personal belongings.

The robbers first broke into the house on a Tuesday, and took away the laptops and other personal effects. They returned on Friday afternoon and made away with an LCD television set and other items that they could not carry when

they struck on Tuesday.

According to Alaribe, “I left home for work and there was no one at home. My wife however returned home at about 2:35pm and saw our doors open. When she entered, she discovered that my two laptops, her cloths, a Techno phone and cash she left at home had been taken away.

“On Friday, when we had left for our offices, they struck again in the afternoon and took away the flat screen television set, our wedding gifts, cloths, phone chargers and some bag materials my wife bought for sale.

“All the household items that I laboured for have been taken away. I need protection from the police, my family is no longer safe”, he lamented.

He appealed to security agencies in Aba, to rise up to the increasing level of insecurity in the city.

There has been increase in criminal activities in Aba and

its axis, despite the ongoing “Operation Puff Adder”, an anti-crime exercise, launched by the police to fight crime.

Consequently, residents of the commercial city have condemned security agencies in the state over their inability to fight crime and criminality, especially in Aba. The residents became more apprehensive over a recent robbery in a Bet House, at 18 Asa Road, by St. Michael’s Road. The incident which took place around 6: 00pm, also close to an army check point, left many injured.

The residents told our correspondent that they have lost faith in the Nigerian Army and Police in putting an end to the activities of the hoodlums, who rob people without fear.

“What is the work of these soldiers, who mount checkpoints everywhere if robbers could rob and escape without any resistance? One of the residents queried.

NDLEA loses 200 personnel in line of duty …decries incessant violent attacks on operatives

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uhammad Abdallah, chairman, National Drug Law Enforcement Agency (NDLEA), has decried incessant violent attacks on its personnel during operations; saying no fewer than 200 operatives have lost their lives in line of duty since inception.

Abdallah disclosed this in Abuja on Monday, vowing to henceforth, activate the law to deal with those who engaged in such act. He recalled that an attack was instigated against

NDLEA staff in Ondo State leading to loss of lives of four of the officers in February, barely a year after a similar incident in Okene, Kogi State happened where three of its staff were killed by unknown gunmen.

“Another incident of violent attack took place in Jigawa State where an officer sustained severe machete cuts on the head following a mob attack on the staff in the course of an operation.

“Personnel of the Kazaure area command of the agency, Jigawa, went to raid and diswww.businessday.ng

mantle a notorious drug joint at Braga Dan Amar in Kazaure.

The crowd at the joint turned themselves into a murderous squad and attacked the NDLEA team with intent to kill them but for the intervention of the community, the mob vandalised the area command’s office.

“In March, Edo State command of the agency was similarly attacked during an operation to burst cannabis storage in Okpuje Forest, Owan West local government area.

“The mob insisted on seizing the suspects and exhibits

and began to shoot, hail stones and brandish cudgels, injuring officers and damaging operational vehicles,’’ Abdallah said.

The chairman noted that investigations into the incidents are ongoing while expressing confidence that the culprits would be brought to justice.

He urged all stakeholders in the drug control chain to foster a more responsive synergy and maintain a stronger foothold in the country’s onslaught against the nefarious drug merchants whom he said “were becoming increasingly violent’’.

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nugu State government has designated 12 courts, three in each senatorial zone, for hearing of juvenile cases in the state.

Peace Nnaji, the state commissioner for gender affairs and social welfare, made the disclosure when the House of Assembly committee on gender visited the ministry as part of its oversight function.

The commissioner said that the state chief judge, Ngozi Emehelu would be deploying some judges and magistrates to be handling cases of juvenile in the state.

She said that cases involving children should not be treated in an open court as stated in the Child Right Act so that they would be free to express their view without fear of anybody or the press.

She added that the state government would equally train social workers who would help judges and magistrates to prepare such children before they appeared in the juvenile court for prosecution.

According to her, the good news is that if any one of them has any problem with their parents or guardian and cannot go back to the home, the child

could be taken to a home specially made for such people.

Nnaji said that the state governor has approved the sum of N44 million to rehabilitate the centre where such children would be housed.

The commissioner said that the three ministries handling the job were ministries of works, inter ministerial and of gender.

She disclosed that the governor also gave approval to the ministry of health to construct a home for the children loitering on the street as part of implementation of the Child Rights Act. “When these children are caught, they would be taken to the building and their families invited for questioning.

Nkechi Omeje-Ogbu, the chairman Enugu State House Assembly committee on gender affairs and social matters, said the committee was on the visit to know the general overview of the activities and achievements of the ministry.

O m e ja - O g b u c o m mended the government for approving juvenile courts in the three senatorial zones of the state adding that this was the first of its kind.

Hotel manager charged with N5m theft

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45-year hot e l m a n a g e r, Ibrahim Ologun, have been charged before an Ikeja Magistrate Court, Lagos, for allegedly stealing his employer’s N5.9 million in addition to other valuables.

Police prosecutor Ishola Samuel, told the court that Ologun committed the offence in March 2018 at No .10, Ajaba Street, Off Ashipa Road, Ayobo, Lagos.

Samuel said that the defendant collected N1.7 million from the hotel and failed to remit the money into the company account.

“The defendant also stole a generator valued at N900,000, a double door refrigerator, a plasma TV, mattress and standing and ceiling fans all valued at N500,000,” he said.

The prosecutor further @Businessdayng

accused the defendant of stealing N2.8 million meant for the supply of essential commodities to the hotel.

“He, instead, converted the money to his personal use. The complainant and owner of the hotel, Adetokunbo Eboda, knew about the stolen money when the hotel’s account was audited,” he said.

Samuel said the case was reported to the police and the defendant was arrested.

The offence contravened section 287 of the Criminal Law of Lagos State, 2015, which stipulates three years imprisonment for offenders.

Magistrate I. A. Abina, admitted the defendant to bail in the sum of N300,000 with two sureties in like sum and adjourned the case until June 10.

Wednesday 22 May 2019

BUSINESS DAY

COMPANIES & MARKETS

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The Companies and Allied matters act (repeal and reenactment) bill 2019 – what you need to know

COMPANY NEWS ANALYSIS INSIGHT

Pg. 16

MARKET

These four big-cap stocks outshine NSE’s benchmark index in 2019 ISRAEL ODUBOLA

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mid the stock market rout and a gradually growing economy, the policy inconsistency of the Buhariled administration continue to de-motivate investors from naira assets, however, some firms have seen their shares advance in 2019.

The above means that there is light at the end of the tunnel for the broader e conomy that grew some 2 percent in the first three months of the year, its strongest first-quarter growth since 2015.

Among the 30 mostcapitalized stocks on the Lagos Exchange, four including Nigeria’s third-largest miller, Dangote Flour, Cadbury, Sterling Bank and Union Bank, delivered most value to investors, and outshined the benchmark index, which has returned 6.6 percent losses on Monday.

These four stocks also outweighed the NSE-30 year-to-date performance that is down some 12 percent.

Dangote flour has the best year-to-date performa n c e a m o ng N S E - 3 0

firms with 139.7 percent return despite negative bottom-line spurred by 16.31 percent decline in receipt from flour as well as elevated operational expenses.

The strong appreciation in the miller’s shares is triggered by the N130 billion purchase consideration offered by food and agri-business giant, Olam International, to acquire the miller’s total 5 billion shares outstanding.

Mid-tier lenders Sterling bank and Union bank returned 21.05 percent and 21.43 percent to investors respectively since the start of the year. This translates to a monetary appreciation of N11 billion and N35 billion respectively.

Sterling’s tangible share advance is largely on the back of its relatively earning figures in full year 2018 and first quarter 2019. The lender posted a doubledigit growth of 15 percent in 2018 full year to N9.2 billion partly due to 18.1 percent surge in non-interest revenue, and further sustained momentum with a modest 5 percent rise in bottom-line.

Union Bank’s bottomline dipped 4 basis points

to N5.2 billion on the back of lowered interest income spurred by low interest rate environment, but bottomline was not severely battered, thanks to 39 percent surge in non-interest earnings.

Cadbury has seen its shares advance 2.5 percent since the year started, making it the only consumer goods player in the NSE-30 space with share appreciation.

The food products maker had its best earnings scorecards in two years. Top-line and bottom-line were at their peak at N36 billion and N823 million respectively since 2017, even as the firm maintained tempo in the first three months to March.

The Lagos bourse has been bullish in the last three trading days, thanks to enlistment of telecom giant, MTN Nigeria Plc, which is now the second largest-listed firm after Dangote Cement.

Analysts positioned that the local bourse would rally in the near term, but the market still need economic-enhancing policies for full recovery.

Source: NSE, Bloomberg

Market

MTN spurs NSE to biggest daily gain in 3 months DAVID IBIDAPO & SEGUN ADAMS

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he Nigerian equity market on Monday recorded its highest daily gain to extend its gaining streak to 3 consecutive trading days since the listing of MTN last Thursday.

At the close of trading on Custom Street, the Nigerian all share index (ASI) picked up by 1.74 percent.

The stocks market neared 2 percent daily growth although reports on Q1 GDP showed a slow down by 16 percentage points from 2.38 percent in the fourth quarter of 2018 to settle at 2.01 percent in the first quarter of 2019.

However, analysts opined that the performance of the Nigeria all share index was independent of the GDP report-which they said,

did not catch investors’ by surprise.

“The slowdown witnessed in the economy was a resultant effect of the 2019 general elections in Q1,” Gbolahan Ologunro, analyst at CSL stockbrokers opined, “This had already been envisaged by investors as witnessed also in the fourth quarter of 2018, hence, priced into the market.”

Gains in the day’s trading session pared year to date loss from -8.14 percent as at friday of the previous week to -6.54 percent.

Fola Abimbola, Equity analyst at FBNQuest also explained that the effect the growth in the economy on the stock market would be very minimal.

“Anybody that would take a position on stocks would not be based on the fact that GDP growth

didn’t outperform the previous quarter, ’’ he stated.

The analyst explained that the major driver for stocks on the exchange is their quarterly numbers which failed to impress in Q1 2019 on the heels of “election uncertainties, as most Company management claimed,” Abimbola explained.

The Nigeria stock market began experiencing a rebound on the market index, ending its bearish trend upon listing by introduction of the shares of Telco giant MTN which has seen investors gain in value about N2.2 trillion in the last 3 trading days.

While some equity investors who had hoped to become one of the owners of the telecoms company are still yearning despite existing shareholders of MTN Nigeria are largely unwilling to

offer their holdings, buy pressure from “the big money bags” have seen share price of MTN rally at an average of 9.98 percent in the last 3 trading

days.

Analysts however anticipate that upon the Telco giant reaching its intrinsic value which is assumed to range be-

tween N150 to N190 based on various valuations by analysts, the market will stabilised and existing negative sentiment may set in.

L-R: Anselm Izuagie, president, All Nigeria Confederation of Principals of Secondary Schools (ANCOPSS); Lami Amodu, director, basic and secondary education, Federal Ministry of Education; Sade Morgan, corporate affairs director, Nigerian Breweries Plc; Mike Ene, secretary general, Nigeria Union of Teachers (NUT), and Grace Adewumi, Lagos State coordinator, Teachers Registration Council of Nigeria, at the Flag Off Ceremony of the 2019 Maltina Teacher of the Year in Lagos.

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

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Wednesday 22 May 2019

BUSINESS DAY

COMPANIES&MARKETS

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34

Wednesday 22 May 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Do agent networks help to boost savings, financial inclusion?

Stories by Endurance Okafor

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ccording to a recent report born out of the partnership between Mastercard and the World Bank Group, savings benefit both the providers of Digital Financial Services (DFS) and their customers.

This is because customers who use DFS accounts to save money can improve their financial resilience, build a buffer against income shocks, and be in a better position to invest and engage in long-term financial planning, thus become included in the financial cycle.

Financial Service Providers (FSP) that have more savers in their portfolio can profit by generating more income and lowering their cost of funds.

“The claim that agents can drive savings mobilization has been a major incentive for introducing agent networks. Yet, the question of whether agent networks can boost savings has rarely been systematically assesse,” the IFC-Mastercard report which was compiled from the longitudinal study with nine microfinance institutions in Sub-Saharan Africa said.

The report titled “Effects on institutional deposit mo-

bilization and customer saving behaviour,” explored the impact of agent networks on: changes in transaction activity of customers, changes in deposit mobilization, and changes in savings behavior of customers.

The survey by the international financial organisations revealed that agent adoption and usage increase the number of transactions and the value of transactions at Financial Service Providers.

According to the data as analysed by BusinessDay, customers in Senegal increased the number of monthly transactions by 32percent (average monthly values by 21%) and customers in Madagascar by

59percent (average monthly values by 62%) after agent adoption.

“A randomized experiment in Senegal confirms increased customer activity through agents. Over the period of a year, individuals directed to agents made 1.4 more deposits and 1.5 more withdrawals than those directed to branches,” the report said.

For the changes in deposit mobilization, the report revealed that total deposits at FSPs kept increasing with and after the introduction of an agent network.

During the three years after agent adoption total deposits doubled for Baobab Senegal (BSN) and

Madagascar (BMG), the report show.

In Nigeria, agent network is an initiative that is still in its baby stage, crawling and looking forward to the day it will start running.

According to financial inclusion analysts, the agent networks are mostly needed in the northern part of Nigeria, where barriers to accessing financial services are highest.

“The urban area like Lagos have more financial agents than where they are needed in far north which has high exclusion rate,” an industry player who asked not to be quoted told BusinessDay Proximity to financial institutions, high illiteracy

rate, low income, and cultural barriers are some of the challenges dampening the appetite of northerners from being included in the financial net.

Despite the increase in Nigeria’s financial inclusion rate in 2018, the Northern region of Africa’s most population retained its position of highest excluded hub in the country, EFInA’s biannual 2018 figures shows.

The percentage of financially-excluded people in 2018 dropped by 4.8 per cent from 41.6 per cent in 2016 to 36.8 percent in the review year, although, millions still lack access to financial services and the North East, North Central and North West take the large share of the rate.

According to EFInA Survey (A2F) for 2018, Nigeria adult population who are both formally and informally excluded from the financial market stood at 36.6 million.

Compared to other regions of Africa’s largest economy, the northern part of the country reported more unbanked people owing to high illiteracy level, insurgency in some parts of the region coupled with high poverty rate, as compiled from BusinessDay survey.

On how agent networks impact changes in savings

behavior of customers, the report by Mastercard-IFC revealed that the proportion of customers that consistently increase their account balances over time (pursuing a clear savings strategy) or consistently decrease their account balances (unsavings strategy) remained mostly unchanged at about 20 percent in Senegal and 7percent in Madagascar after the introduction of agents.

“However, the share of inactive customers increased, implying that changes in the size of agent networks only affect the relative share of sporadic and inactive users but not the proportions of active customers with clear savings or un-savings strategies,” the report explained.

The Central Bank of Nigeria (CBN) has plans to ensure 80 percent of the Nigerian adult population are included into the financial cycle by 2020 and to achieve this target, the apex bank proposed to give mobile money license to Payment Service Banks (PSB) to enable other businesses outside the financial institutions to contribute to achieving the goal.

Survey by BusinessDay revealed that most of the PSBs will have agent networks that will enable the companies spread its operations across the country.

AMMAN launches Northern women for financial inclusion initiative

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h e A s s o c i at i o n of Mobile Money Agents in Nigeria (AMMAN) has launched its special agenda for northern women with the theme ‘Northern Women for Financial Inclusion (NWFI’), an advocacy programme that seeks to break the barrier of reaching the women at last mile.

Out of the 36.6 million excluded Nigerian adult population, 44.1 percent are male and 55.9 percent are female, this leaves the gender gap at 11.8 percentage points, EFInA’s figures analysed by BusinessDay show.

Figures from the World

Bank’s global Findex database revealed that the financial exclusion gap in Nigeria widened by 24 percentage points in 2017.

According to the report, 51 percent of Nigerian male adult population had a bank account in 2017 compared to the 27 percent recorded for female.

The gender gap reported for 2017 is 4 percentage points wider than the 20 percent gap that was recorded in 2014 when the total male adult with bank account was at 54 percent with female at 34 percent.

“Core of NWFI is advocacy and job creation for Northern women so as to bridge cultural barrier

that deters women from mingling with the general public. It has been reported that Kano and Gombe states were least s t at e s i n t h e f i na n c i a l inclusion ranking in the countr y,” Victor Olojo, National President, AMMAN, said.

With less than two years to achieve its 8o percent financial inclusion deadline, the CBN said it’s yet to know why women are most excluded from the financial cycle.

Thus, the apex bank and EFInA, an organisation that promotes financial inclusion among the poor, are partnering on a project aimed at establish-

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ing the factors responsible for women being the most financially excluded in the country.

“We started the survey to know why women are most financially excluded two months ago and it should be out by the end of June, we want to move fast and be able to give CBN some credible information so that they can come out with policy recommendation,” Diei told BusinessDay in Lagos on the side lines of the organisation’s financial empowerment event held recently.

Olojo stated that AMMAN had taken her rightful place in the financial inclusion industry in Nigeria.

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“We are now the alternative to all other stakeholders, who failed to deliver on the 2020 goal of the Central Bank of Nigeria (CBN) of reducing exclusion rate to 20 per cent.”

Also, AMMAN in collaboration with EcosaHybrid Network recently held a capacity building workshop.

The aim of the workshop was to bridge knowledge gap among financial inclusion agents and other core stakeholders in the industry.

The focus, which was in the Northern part of the country, was designed to bridge financial inclusion gap in the North. @Businessdayng

According to the organisation, the workshop became necessary in view low awareness of the association in that part of the country as well as impact skills on agents on agent banking and mobile money, “The workshop offered training and follow-up to execution of new agent network in northern Nigeria especially in Kano State, share funding and product opportunities among participants as well as provide varieties of point of sale terminals (PoS), fund transfer platforms among others for agents to access from the exhibition stand,” Olojo explained.

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Wednesday 22 May 2019

BUSINESS DAY

Wednesday 22 May 2019

BUSINESS DAY

INTERVIEW

19

Nigeria’s economy growing way below its potential – IMF chief ABEBE SELASSIE, IMF Director, Africa Department was in Abuja recently to launch the Regional Economic Outlook for Sub Sahara Africa (SSA). In an interview, Selassie explained to a BusinessDay team of TONY AILEMEN and CYNTHIA EGBOBOH the implications of Nigeria’s slow, fragile economy and the need to evolve policies that would attract private sector investments and raise low revenues. The IMF Director particularly noted that Nigeria’s economic performance is below its potential of around by 6 - 7 percent or even more.....excerpts

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hat is the main focus of the presentation?

We have put out the regional economic outlook for April, 2019. As you are aware, that is where we take stock of the development in the region, including what progress so far has been and the challenges policy makers face. It is framed to make sure that the Economies in the region can grow fully to their potential. What we found basically, is that the recovery in the region from the real levels of growth that we saw in 2015/2016 continues.

So, this year we are projecting growth of about three and half percent, as compared to 3 percent last year and we see scope for growth to be a bit higher in the next couple of years close to 4 percent. The good news is that there is a recovery but this regional average number for the sub-Sahara Africa as a whole actually masks quite a lot of variation in terms of growth numbers. So, really, there is some very bright spot economies with up to about 20, 21 economies growing at about 5 percent or more this year, even though the regional average is just about 3 and half percent, there are quite a lot of economies that are growing significantly higher, but also there are some economies that are not growing that rapidly. These include some of the largest economies in the region, like Nigeria, Angola, South Africa which are growing below 3 percent for the last few years. What we have done is to bring out basically some of the study about what is driving higher growth in the fast growing economy and what is holding growth back and what needs to be done to stimulate growth in the slowly growing economies.

What are the key issues you have identified that are responsible for the low level of growth in Africa, particularly, Nigeria?

Again, it is really important that

we do not generalise by saying Africa, because we have in the region, countries like Ghana, Ethiopia, Senegal which are all growing at 7percent, so there are quite a lot of countries with still a lots of dynamism.

Nigeria was hit very severely by the oil commodity price shock in 2014/2015 when oil prices dropped very sharply to very low level for quite a while, and even now, it is only just increasing. In addition to this price shock, there are two other shocks like security challenges that faced those in the North East and also the Delta region. As a result of the security problem in the Delta region, we saw a drop in the actual production level of crude oil. So, all of these combined to have a severe impact on the economy. The good news is that the economy is recovering in the last couple of years, so we are projecting growth to be around two and half percent this year, it was 1.8 last year, so we have seen recovery. But two and half percent growth is way below Nigeria’s potential. This is an economy that should be growing at 6 or 7 percent or maybe more. So, to get there, we require two broad policy areas of reforms.

First and foremost is for the government to do some more revenue mobilization which is necessary for them to be able to address some of the bottlenecks to growth. This include developing infrastructure. You need to invest more on roads, trains, ports services, etc. Government should commit more resources, as your revenue to GDP ratio here is one of the lowest in the world really, talking about non-tax revenue.

So more efforts are needed to generate revenue that are required to invest in Heath, education and infrastructure, so I think that is an important policy requirement. Secondly, is the reforms to ensure that you have things like uninterrupted energy supply. So, part of the challenge is the need to invest more to strengthen energy supply and also facilitate www.businessday.ng

more private investments on the terms that the government wants. This second group of reforms will be to improve the business climate to facilitate high private investments that are needed to diversify the Nigeria economy away from reliance on oil which is really desperately needed. So, reforms in these two areas are amongst the ingredients needed to facilitate higher growth.

by having a bigger market to produce to the region of West Africa and beyond. So I think Nigeria stand to benefit from the AFCFTA.

You talked about the impact of security on the economy. Do you think that government’s response to the current security challenges is strong enough to tackle the problem?

We have seen unfortunately in recent years in the sub-Sahara Africa as a whole, after declining conflicts related deaths, that there has been sudden increase in these conflicts related deaths. These are mainly within the Sahel and Lake Chad region and this has impacted quite a large number of countries on this region. The causes of these conflicts are numerous, for various reasons, some are local, some are related to border challenges that we see in this region. We think really that it is time to address some of them.

‘

Of course, removal of fuel subsidy will have impact even on the poor. Serious economic challenges facing the country can be offset by targeted social transfers to the people particularly of low income levels

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In terms of what the government can do in the economic policy area, we think that the government should ensure inclusive growth. Typicality, when we talk about inclusive growth, we mean benefitting growth that the countries are sometimes enjoying not only in the capital but also investing in some of the infrastructure other areas need to integrate them into the economy, and maybe invest even more in those areas to make sure they have better education and health outcomes, those kind of more inclusive policies we think can foster and address some of the things that give rise to these conflicts.

Some countries have expressed genuine fears @Businessdayng

over the AFCFTA, which made it difficult for them, including Nigeria, to sign the agreement. How can these fears be addressed?

The Africa Continental Free Trade Agreements, AFCFTA, we think is one of the land mark policy initiatives taken by policy makers that has the potential to greatly facilitate trade amongst member nations in the region, not just trade alone but will help to enhance growth as well. Of course policy makers in some countries have some reservations and concerns, some relating to potential effects on domestic manufacturing sector, some relate to dislocation of workers as a result of potential competitiveness pressure, so these are legitimate concerns and of course with any kind of trade deals, and any kind of changes in competitiveness envi-

ronment, you can have these kinds of dislocations. But it is also possible to find ways that policy can intervene and directly help those that can be affected. So, we have to look at the totality that will be beneficial to the economies in the region. To Nigeria specific concerns, I think we can talk to policy makers here to identify what the problems are.

But from a more advantaged point, I think Nigeria stands to benefit greatly because what we have seen is that intra-African trade tends to be much more in manufactured goods, in processed goods rather than trade with outside the outside world. So one of the great objective here is the economic diversification and Nigeria is such a big domestic market already, we think can play bigger in terms of diversifying its economy and can benefit greatly in terms of facilitating diversification

Talking about the private sector investments, how can we attract more into Nigeria?

I think what has been holding back private sector investments in Nigeria in the last couple of years clearly is uncertainty about the business environment, the policy environment and it is important to have a very clear communication about how the government intends to tackle the challenges it faces, like revenue mobilization, more medium term plan on the objectives of addressing the infrastructure deficit and having a fiscal framework which is forward looking and all kind of things that could help reduce uncertainty. But also as I said earlier, if you are a private investor - this is much more important for domestic private investor than foreign investors - before you invest, you want some insurance of regular electricity supply at a reasonable cost, which will reduce the cost of running generators. You know, having an uninterrupted electricity supply is important for any private sector investment decision in terms of opening factories, even agriculture sector if you want to process your goods for sale to the market, this can be basic infrastructure services. The investors must be assured that these are being addressed clearly. All of these are the kind of things that will bring confidence to the private sector to invest.

we see the government effort to adjust the minimum wage and at the same time, you need to get the resources to be able to pay for this wage increase, so what is needed is consistent and comprehensive policy package, and most of this minimum wage are going to paid by the state governments and there is need to ensure that they have enough resources to pay. So that is what is really needed.

Do you think the Central bank is committing too much on fiscal issues considering the level of economic growth needed in Nigeria?

The last couple of years has been very challenging for the economy as a whole. You have been hit by severe impact on fiscal revenues, to export revenue. I think the Central Bank has really done a nice job of facilitating the economic adjustment to the new low price equilibrium and some of the balances done to the foreign exchange market

have been eliminated and inflation is coming down. That has been effective. But now going forward, what is going to be needed is to come back to monetary policies. This is generally best for the central bank to face its traditional roles, this is true everywhere not specific to Nigeria. When they are able to focus on a single policy objective, Nigeria have had central bank focus on inflation when they have other objective that you also have to hit that could create difficulties and challenges for meeting the policy objectives that you have, so it is in this context that we are recommending this advice and it is something that has to be considered.

The IMF has often criticized Nigerian government on fuel subsidy issue. How do you think government should address this delicate matter?

The estimate shows that Nigeria spent something over N700 billion and this is equivalent

With Nigeria’s current economic situation, do you think funding the new minimum wage for Nigeria is sustainable?

We see in Nigeria, there is need to improve the quality of education, health and many of the beneficiaries of the increased minimum wage will be people working in these sectors. So, www.businessday.ng

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@Businessdayng

of $2billion. Importantly, this is a big slice of the revenue which should have accrued to the society. These facts are not debatable points. So, on this point, our view is that this N700 billion spent towards fuel subsidy at current prices can be put to better use to address millions of investment and developmental needs that the government may need to undertake. These include better electricity provision, better health care and education provision by the government.

Even if you want to invest in high agriculture production, we think those investments are better through the use of these resources. Of course, removal of fuel subsidy will have impact even on the poor. Serious economic challenges facing the country can be offset by targeted social transfers to the people particularly of low income levels. So, our voice simply is to say, aren’t there other alternatives that could take the place of fuel subsidy that could yield better outcomes and incomes for the people?

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Wednesday 22 May 2019

BUSINESS DAY

AGRIBUSINESS

In association with

ag@businessdayonline.com

Low mechanisation limits Nigeria’s agric potential Josephine Okojie

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ow level of agricultural mechanisation on farms across the country has continued to limit the capacity of farmers to expand their cultivation areas, perform timely farming operations and achieve economies of scale in food production.

Stakeholders in the sector stated that for the country to attain high level of food sufficiency and reduce dependency on food imports, it had to improve the level of agricultural mechanisation.

Ava i l ab l e s t at i s t i c s s h ow that Nigeria is one of the least mechanised farming countries in the world with the country’s tractor density put at 0.27 hp/ hectare which is far below the Food and Agriculture Organisation (FAO)’s 1.5hp/hectare recommended tractor density.

“Mechanisation is a ver y critical issue because it will help eradicate poverty of rural farmers,” Sani Dangote, president, Nigeria Agribusiness Group (NABG) and vice president of Dangote Industries Limited, said in an exclusive interview with BusinessDay. “If farmers continue to use crude equipment, their poverty can never be eradicated. Farmers need to farm and harvest their produce using mechanisation in order to increase production and profits,” he said.

Dangote stated that the only way youths can find agriculture attractive was through mechanised

L-R: Adenike Kazalma-Mantey; Wim Douw, senior private sector specialist - investment climate; Ivan Anton Nimac, global lead - investment policy and promotion all of World Bank Group; Akin Sawyerr, executive secretary, Agricultural Fresh Produce Growers and Exporters Association of Nigeria (AFGEAN); Yago Aranda-Larrey, private sector specialist- investment and competition; Anupa Aryal and Winifred Odonye during a courtesy visit to ALTS offices to discuss FDI and the Federal Government’s backward integration policy in Lagos recently.

farming. “With mechanisation, agriculture becomes attractive for the youths and they can take it up as a profession,” Dangote added.

With the continual drift of the young population from the rural to urban centres in search of whitecollar jobs and away from the drudgery of manual farm labour, self-sufficiency in food production is becoming a herculean task.

“Currently, more than 70 percent of farm labour is provided by human power; over 20 percent is provided with draft animal power and less than 10 percent by mechanical power,” Elesa Yakubu, national president, Tractor Owners and Operators Association of Nigeria

Ogun distributes 5,000 kolanut seedlings to farmers Josephine Okojie

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gun State government has distributed 5,000 improved Kolanut seedlings to farmers across the state in an effort to upscale the production of the produce.

Speaking at the flag-off ceremony, Abosede Ogunleye, permanent secretary, Ministry of Agriculture, in a statement made available to BusinessDay, said the scaling up for the crop was necessary as many Kolanut trees are old with low-yield per hectare.

Ogunleye stated that the distribution of the seedling was in collaboration between the state government and the Raw Material R e s e a rc h a n d D e v e l o p m e n t Council to ensure that beneficiaries are trained and monitored for optimum Kolanut production and improve livelihood.

This means on a per capita basis, Nigeria ranks 132nd out of the 188 countries worldwide measured

by FAO / United Nations in terms of the number of tractors in the country. Nigeria has fewer tractors than minnow countries like Serbia & Montenegro, with 400,000, Pakistan with 320,000, or Uzbekistan with 170,000 tractors.

But, it is not that Nigerian farmers are not interested in using mechanisation; they are faced with some challenges.

Ademola Adefemi, who runs a 10-hectare of maize and cassava in Ogun State said, “ I love using tractors for tilling the land and ploughing but most times it is

Kogi bio-ethanol plant to engage 200,000 youths, says Bello Victoria Nnakiaike, Lokoja

She therefore implored Kolanut farmers to make good use of the opportunity provided to boost their productivity.

According to her, the old ko l a nu t t re e s have 1 5 ye a r s gestation period while the improve seedlings being distributed have a gestation period between four to five years.

Earlier, Hamid Ibrahim, director general of the Raw Materials and Research Development Council, said that the collaboration between his organisation and Ogun state is to promote sustainable Kolanut production as well as stimulate investment opportunity in the entire value chain.

Speaking on behalf of the beneficiar ies, S egun S oyola, chairman, Kolanut and Bitter Kola Association of Nigeria, Ogun State chapter, appreciated the state government for its support, saying it would attract youths to kolanut farming. www.businessday.ng

(TOOAN), told BusinessDay. In Nigeria, a significantly higher proportion of farming area is still cultivated by hand tools.

The international Food Policy Research Institute (IFPRI) reckons that Nigeria is still at the early stage of agricultural mechanisation.

But experts acknowledge that mechanisation of power intensive operations has been slow.

When measured in 2003, 16 years ago, Nigeria had only 30,000 tractors. African largest economy is currently adding 1,000 new ones each year, which is still not considered sufficient in replacing the aging, worn out, and broken down ones.

difficult to get it on time because other farmers want to hire it too. The few tractors we have are not given to farmers because government officials prefer keeping them instead of leasing it out to farmers.”

“Recently, I visited a government office for tractor hiring and I discovered that there were 17 tractors that have not been used.

Only two tractors are being leased to farmers and I had to queue for three weeks before I could hire a tractor,” Adefemi He n o t e d t h at i t i s v e r y challenging because most farmers depend on rainfall for their cultivation which is time bound.

The Federal and State governments try to provide tractors to farmers under different agric mechanisation schemes but most of the efforts are being frustrated by civil servants, who ensure such schemes never benefit ordinary Nigerian farmers.

According to Dizengoff Nigeria, in a press statement made available to BusinessDay, Iceland has more tractors per hectare of cropland than any other nation in the world.

“They have 37.2 tractors per 1,000 people, while Nigeria has 0.223.

This means that Iceland has almost one tractor for each farmer and 166 times more mechanised in their farming than Nigeria, the biggest economy in Africa,” Dizengoff Nigeria disclosed.

Nigeria needs a minimum of 746, 666 tractors equipped with tillers and other support gadgetry to sufficiently mechanise agriculture going by best practices, according to the Ministry of Agriculture.

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overnor Yahaya Bello of Kogi State has said that the state’s bio ethanol plant would generate about $80 million annually while generating jobs to over 200,000 youths.

He who disclosed this at the State House recently added that his focus on human capital development would rest mainly on agriculture as he proposed 500,000 hectares for cassava production in ten colonies

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with each having 50,000 hectares to be spread across the three senatorial districts in the state.

Bello stated that each of the colonies would have bio-ethanol plant, starch manufacturing, garri processing, cassava pellet and leave plants that would exist in at least 15 Local Government Areas of the state.

“Conservatively, these plants are estimated to generate $ 80 million annually per colony and would engage about 200,000 unemployed youths across the state,” the governor said.

@Businessdayng

He also said his administration had considered so many things, but would give priority to the agricultural sector. “ You can never go wrong with agriculture,” he said, adding that Kogi state will continue to appreciate President Buhari who has revolutionised agriculture in Nigeria.

On Omimi Rice, Bello said he was happy that a lot had been said about the initiative, stressing that the plant would be one of the largest in the north as far as rice milling was concerned.

“The rice that will come from that particular plant will have no match.

Now we are going into a 500, 000 cassava revolution programme in the state.”

He equally disclosed that his administration had changed the narrative of the state from civil a servant-dominated state to an economically viable state that could feed itself and generate wealth, adding that this change was achieved through vast investment in the agricultural sector.

Wednesday 22 May 2019

BUSINESS DAY

21

AGRIBUSINESS ag@businessdayonline.com

Growing Nigeria’s chocolate for global market Josephine Okojie

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espite the fact that Africa produces about 75 percent of global cocoa beans, less than five percent of the wealth from the value chain is retained in the continent.

Cocoa is the major input for the production of chocolates and top global chocolate makers source their beans from Africa, with Nigeria among the top producers of the commodity.

According to a report by the International Cocoa Association (ICCO), the total value of exporting raw cocoa commodity from Africa is estimated at about $10 billion a year while total value from global chocolate production is put at over a $100 billion.

As a result, Nigeria’s chocolate industry is striving to tap from this global opportunity by having its own fair share in the ever-growing market.

Craft chocolate makers such as Loshes Chocolates, Kalabari Gecko chocolates and Loom Chocolate, among others, are striving to increase local production as well as consumption in the country.

On this note, the EtiOni development group organised the Eko Chocolate show in Lagos recently to promote Nigeria’s chocolate manufacturers and drive local consumption culture.

The ball room of the Lagos Oriental Hotel which was the venue of the show was filled to the brim as actors across the cocoa value chain, chocolate lovers within and outside the country gathered to showcase and exhibit as well as see what the country can produce as

regards chocolate.

With the theme ‘ The making of the Niger ian chocolate’ Oba Dokun Thompson, the Oloni of EtiOni and the chairman of EtiOni Development Group, said that the show was borne out of the need to put the value back into cocoa production and show cas e different ideas and possibilities by chocolate enthusiasts, cocoa entrepreneurs and consumers who have through their interest and innovation created the Nigerian chocolate.

“The show created opportunities for chocolate makers, chocolatiers and chefs, as well as equipment and accessory manufacturers, restaurants, dessert and pastry chefs, ingredients suppliers, cosmetics experts, branding and packaging companies among others who use cocoa as the main ingredient or part of their finished products to exhibit their products,” Thompson.

He stated that the chocolate

show was a continuation of the journey in making the Nigerian chocolate become a world class phenomenon, stressing that the beauty of Nigeria is captured in her diversity in art, culture, traditions and languages across the incredible landscape of lowlands and highlands, the plateau or the valleys and the plain fields or rain forest.

He hinted that cocoa with varied exquisite flavours are produced between the southwest and the southeast or south-south and parts of the middle belt which can create exquisite and premium chocolate products for great tasting and eating experience for all.

According to him, one of the most fascinating aspects of Nigeria is the vibrancy, brightness and colours of the several traditional attires of her over 500 ethnic groups.

“The Nigeria chocolate can thus be described as chocolate that is cheerfully made with

l ove f ro m si ng l e o r ig i n beans of high quality, rich in diverse fine flavours and can be found from the different cocoa producing regions in the country infused with the Nigeria spirit of resilience, achievement and purpose with diversity in the art and culture with a beautiful blend of an array of spices that captures the very essence of our being.”

Oba Thompson further stated that Lagos being a mega city and one of the most populated cities in the world is well positioned to be the main consumer market and trading centre for chocolate in Africa. He added that the show would take advantage of the fast development of the Lagos economy and culture and be an annual international and professional platform showcasing chocolate products and its culture which will bridge the innovative and efficient communications between exhibitors and

purchasers to build the idea and opportunity to create wealth.

He added that the chocolate show would further help to deepen the chocolate culture and showcase what is on offer at home and abroad to a wide and diverse audience who want to keep abreast of what is going on in the chocolate and culinary space around the world.

“This maiden edition is not only strategic but historic.

People around the world are familiar with Belgian, Swiss, Dutch or Modica chocolates even though these countries do not produce cocoa which is the main component of chocolate unlike the confectionary people who a re u s e d t o w h i c h h a s minimum cocoa quality with lots of unhealthy additives, chocolate compounds, animal fat, sugar and others,” he said.

The identities of those chocolates are reflective of the processes employed and the region or country they were made.

Some of the Nigerian chocolate manufacturers that exhibited at the show identified high cost of production, dearth of skilled labour, government regulations, high cost of raw materials, among others, as major challenges limiting the growth of the Nigerian chocolate industry.

They however called on government to invest heavily on research and development and also empower research institutes and technological institutions to build equipment for the industry rather than importing them, which is really eating deep into their profit.

Oyedipe, founder of Loshes Chocolate, said that their major aim was to showcase

Nigeria as a chocolate country, adding that there were many opportunities across the value chain which Nigerians need to tap into to develop the industry.

Similarly, Princess Odiakosa, founder, Kalabari Gecko chocolates, said that institutions like the Yaba C o l l e g e o f Te c h n o l o g y ( YABATE CH) should be encouraged to build machines that manufacturers can use for production.

“We as a country should start producing things like chocolate where we will see foreigners come to Nigeria supermarket and be confused with what to buy because of the good things that are made here in Nigeria,” Odiakosa said.

Uzoa ma Ka l zu ka n n e, founder of Loom Chocolate, said that getting skilled labour was not an easy thing, stressing that the nation’s educational system is really poor.

Kalzukanne said that there was need to have a reorientation and a change of mind-set about promoting foreign things above our local production.

For the sector to create more jobs, players called on the Federal Government to incentivise local investors and private sector participation by providing single-digit interest rates to encourage investments and activities in the cocoa sector as well as chocolate manufacturing.

“Unless there is a welldefined policy for cocoa production and processing, the country would continue to export its jobs and lose re v e n u e i t w o u l d h av e generated through value addition,” Akin Olusuyi, managing director, Ile Oluji Nigeria Limited, said.

the launch, Funmi Ayodele, CEO, Kings& Queens Venture Brand, a top distributor, said the company was bringing financial solution to millions of lives, not only in Nigeria but the world over.

“Green World has achieved outstanding progress in researches of using plant essence to counteract cancer, as well as enhance the lives of people the world over including Nigeria,” Ayodele said.

She explained that the company has over eighty leading varieties which can be classified into eight unique categor ies such as health care products, food, health care devices, personal care products, skin care products, home care

products, tourmaline devices and ornament, and organic and bio-fertilizer.

Speaking on efficacy of the herbal products, another top distributor, Sunday Oyeniran, said the supplements have helped to prevent and cure numerous diseases.

“In a world where diseases are countless and are on the rise per day, there is the urgent need to stay safe and to treat these health challenges.

These supplements give you the possibility of a better, longer and a healthier life,” Oyeniran said.

“The products are superb because they are made from herbal extracts. As an, African, you know that herbs are very effective,” he added.

Green World rebrands, reiterate commitment to quality products Josephine Okojie

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reen World International, producers of herbal products and supplements, has rebranded it range of products and reiterated its commitment towards providing quality products for Nigerians.

Ja m e s Su n , g e n e ra l manager, Lagos branch of the company, who made this known during the official launch of Green World’s brands in Lagos recently, said Nigerians had come to appreciate the value of the supplements for their general health and wellness.

Sun stated that Green World rebranded it range

of supplements in order to meet the needs of Nigerian users, and to build a steady, harmonious and sincere partnership between the customers, distributors and the company.

“That is why this celebration is to move the company to the next level and to bring financial solution and success to our teeming distributors in Nigeria and the world over,” he said “As a transnational group engaged in research and development, we have been improving people’s health and lifestyle through our cutting-edge production technologies.

“We have successfully opened up global markets www.businessday.ng

in Africa, Eurasia, Asia and North America with over 40 overseas branches and offices serving and supporting its

business partners all over the world, including Nigeria,” he further said.

Also speaking during

Funmi Ayodele, CEO, Kings & Queens Ventures and top distributor (l); James Sun, general manager, Green World International, Lagos Branch; Egbowhe Oghenefego, another top distributor; and Precious Prince, human resource manager, Green World, Nigeria, during the reunion and rebranding ceremony of five of their leading products, held at the company’s new office in GRA, Ikeja Lagos. https://www.facebook.com/businessdayng

@Businessdayng

22

Wednesday 22 May 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Motoring

KORP package dangles carrot to old Kia owners ...With 20 percent discount on parts, service charges MIKE OCHONMA Transport Editor

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o ensure that its customers have the best experience with their old cars at an incredibly affordable price, Kia has launched the Kia Ownership Rewards Program tagged KORP at a discounted rate.

The rewards program is available on parts and labor charges, basic maintenance, battery replacement, select suspension and air conditioning parts, brakes, routine service parts amongst others. Additionally, the old Kia owners will be entitled to special discounts on bodyshop repairs and painting.

It is aimed at offering greater value, convenience, and support to customers who have owned the brand for five years or more. It offers discount ranging from 15 percent to 25 percent on service cost and genuine parts.

These discounted pricings are based on the years of ownership, as it progressively reduces the cost of maintenance based on the years the car has been in operation.

More often than not, old car owners are confronted with the increasing cost of ownership owing to the depreciating parts of the cars and the need to continuously replace them to keep their vehicles in top condition.

For Sanjay Tatpati, chief operating officer, Kia Motors Nigeria, the programme is line with Kia’s effort to foster ‘peace of mind’ in

its customers and engage them meaningfully to drive affinity with Kia through service programs that speak to them rationally and connect them emotionally to the brand with the implementation of exceptional services.

According to him, ‘’Kia have added this value-added service, KORP to our service portfolio to drive customer satisfaction at its peak. This underscores our commitment to our brand’s global initiative, the ‘Promise to Care’; our service philosophy to offer service excellence and exceptional customer experience’’.

We have been offering various value-added services in the last four quarters to engage our and this one is for our proud KIA owners who are enjoying their rides for a long time.

This program is set to reward them throughout the vehicle’s lifecycle” said, Sanjay further added that “with the introduction of ‘KIA Ownership Rewards’, we are setting a new benchmark in the auto industry.

This program will substantially bring down the cost of maintenance as their Kia vehicles get older. Coupled with the unbeatable quality of Kia Motors Nigeria’s aftersales service, KORP will provide greater value for our customers.”

The KORP goes the distance to deliver a more fulfilling experience for old Kia owners with discounted pricing and exceptional service delivery. Service and parts pricing flexibility and the undying resolve of the company to always roll out customer-driven initiatives that match customers’ active lifestyle

are hallmarks of the KORP. The program is Kia’s way of appreciating old customers for their continued trust while servicing and maintaining at the accredited service center.

KORP is a service program designed to give customers great value and keep their old vehicles in top condition. For Kia owners who had owned their car for over 5 years, the KORP service program is tailored to suit the age and mileage of the car; making life easier for owners and keeping running costs down. ‘’The program is poised to ensuring excellent value for money. Our Kia trained technicians will only use genuine Kia parts, using the Kia service tools and diagnostic equipment to the exact global standard of Kia in service delivery to customers’’.

The COO stated.

Local placement order for new BMW X7 SAV in focus

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oscharis Motors is set to commence placement order for the first-ever BMW X7, the pinnacle of BMW’s X Sport Activity Vehicle (SAV) line-up. It builds on the class leading comfort, handling, safety and technology of all the previous SAV model lines that have been produced at the Spartanburg plant since 1999.

The 2019 BMW X7 offers standard three row seating for 7 with optional Second-row captain’s chairs offering a more exclusive seating arrangement for 6.

Standard two-axle air suspension, 21-inch alloy wheels and advanced driver assistance systems ensure that it lives up to expectations of style, driver engagement, passenger comfort and all-weather and all-terrain capability.

In terms of the exterior, a new dimension in luxury has added to its benchmarks. The automaker has pulled back the covers on a new definition of automotive luxury. It blends presence, exclusivity and spaciousness with the

versatile and agile driving properties customers would expect from a BMW Sports Activity Vehicle.

The newest and largest model in the line-up uses outstanding powertrain options and chassis technology, plus generous levels of space in each of its three rows of seats, to deliver unparalleled experiences for the driver and passengers.

The expansive exterior dimensions take luxury to a new level. At 203.3 inches in length, 78.7 inches www.businessday.ng

wide and 71.1 inches tall, and with a wheelbase of 122.2 inches, the X7 displays harmonious proportions and establishes itself as the new head of the BMW X model family.

Inside, there is more space for an exclusive ambiance. The impressive open expanse of the interior brings a new sensation of three rows of seats that treats the driver and passengers to an exceptional feeling of roominess within the X7’s elegantly appointed interior surroundings.

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Its expansive surfaces and clean structures give the instrument panel a modern look and its lines flow smoothly into the door panels. Large trim surfaces framed with electroplated accents on the instrument panel and center console enhance the interior’s elegant and exclusive aura.

For power and performance, the new 2019 BMW X7 launches with a choice of two updated gasoline engines. Heading up the range is the BMW X7 xDrive50i, with an extensively updated 4.4-liter V8 engine.

A 3.0-liter inline six-cylinder engine, found under the hood of the new BMW X7 xDrive40i rounds out the model line-up. All engines channel their power through an eight-speed Steptronic transmission, while BMW xDrive intelligent all-wheel drive is on hand to ensure that power is transferred into secure progress on-or-off road.

At Coscharis BMW outlets, the new BMW X7 comes with a 4 year free service plan and an extended warranty. @Businessdayng

JAC Autoland boost CSR with technicians partnership

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l i z a d e Au t o l a n d , t h e exclusive distributor for JAC passenger cars SUVs (Sports Utility Vehicles), buses and light trucks, has launched a Corporate Social Responsibility (CSR) initiative aimed at giving back to mechanics and technicians.

Aside the training and networking opportunities offered the technicians and mechanics, they were handed overall workshop apparels and tool boxes stocked with some basic tools.

Speaking on the initiative, Demola Ade-Ojo, managing director of Elizade Autoland, stated that JAC Autoland appreciates the importance of mechanics in the auto industry.

According to him, “the mechanics partnership is a CSR

initiative and they are the most unrecognised groups and Nigerians depend on them, we decided to do something to make them look professional.

“So we called them together, offered professional training to them in a serene environment, and also gave them overall workshop kits and tool boxes with some tools”.

Ade-Ojo explained that when any customers have a very good product with good design and pocket friendly price that the customers will appreciate. ‘’We want to get more Nigerians to trust the JAC brand.

They already trust Elizade, and they are beginning to trust the JAC brand”. At JAC we are not just selling cars, we follow the process end to end and we are happy with all the testimonials we keep getting from our satisfied clients”. He stated.

He said that JAC stands the test of time as more and more corporate bodies, government agencies and individuals are buying the vehicles across the country.

Elizade JAC Autoland offers total auto solution to customers as beyond sales; it offers quality after-sales in terms of spares and servicing, financing and suitable vehicles to fit the different terrain of the country. Among the corporate fleets’ users of the brand are Mobil, Flourmills, Nestle, and Guinness.

Wednesday 22 May 2019

BUSINESS DAY

23

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Rail

ModernTravel

Emirates unveils pavilion ahead Expo 2020 in Dubai

E Insecurity growing concern on Abuja-Kaduna rail corridor MIKE OCHONMA Transport Editor

T

he worsening state of insecurity on the Abuja-Kaduna highway has continued to have a worrisome effect to the extent; it is beginning to riase major concern this time around when many travellers along this axis are beginning to use the rail transport as an alternative.

In 2016, when the Abuja-Kaduna train was commissioned, nobody envisaged that it would enjoy the high patronage that it is currently witnessing, especially considering the distance of the take-off point to the from the city centre.

It takes one an hour or little more to drive from the AYA roundabout in Asokoro, to the Idu station, to catch a train to Kaduna. As a result of the huge traffic witnessed daily at the station, many fear that there might be a breach of security in no distant time.

Sadly, the security arrangements at the train stations, especially, the Kubwa

and Rigasa stations call for concern, as there is no serious presence of security personnel on ground.

Issues of security neglect on rail transportation have become a major source of concern for a very long time.

For instance, when BusinessDay visited the Kubwa station recently, many passengers and other visitors were walking in and out of the station without the required security checks.

Even at the Rigasa end, the security personnel were doing manual checking instead of using the scanners. This may inform why regular users of train, worry about their safety, against the backdrop of the less than satisfactory attitude of those trained and paid to provide round-the-clock security of lives and property.

This concern echoed by a senior civil servant, Charles Ikedi, who bemoaned the perceived security lapse at the station, as compared what is used to be at inception, in 2016.

He lamented that It is still that reactive and non -challant approach to security issues that confronts us a nation. Until the day something

terrible happens, that is when the relevant authorities will begin to run run around, making life difficult for the ordinary people in the name of putting measures in place.

“The present happening in the country now requires that there should be continuous reviews of our security strategies and there should be measures in place so that these terrorists and criminals don’t take advantage of it knowing that every attention has been shifted to the train service now’’.

Charles Ikedi said he expected that, the level of security measures at the Abuja- Kaduna station should have been improved, but rather it is deteriorating because when the train service started, the security was tight but now, no”, Ikedi said.

He however advised that,”I think the minister should do more. It is not enough to bring the trains. Where they brought the trains from, they saw how the people were operating it. If it means taking the NRC staff there to go and learn the best practices on how to operate the train they should please do’’. He advised.

Roads

Lagos-Badagry road extinction looms over failed portions

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s the rainy season sets in, this is not the best of times of thousands of road users plying the very strategic LagosBadagry expressway that has remained in very poor condition despite the corridor being the only get way to other West African countries of Republic of Ivory Benin, Togo, Ghana and Ivory Coast.

In the last years, travelling along the international road especially in has remained a nightmare and threst to millions of lives due to negligence of continuous construction and expansion modernisation work on the ongoing 10 lane integrated multi-modal transportation road project by the outgoing Akinwunmi Ambode administration in Lagos state.

Only last Saturday, BusinessDay transport reporter spent over five hours on 56.2 kilometer return road trip from the Okokomaiko end of Ojo local government to Suntan Beach, near Seme border on a fact-finding tour of the road, and at the end of the day, the journey was not pleasant.

Along the corridor, some of

the death traps that has recorded many cases of fallen tankers and trailers and other articulate vehicles exists along the stretch of the long neglected ASPAMDA Trade Fair complex, Military Cantonment, Ojo, the ever Lagos State University main gate at Iyana Iba and Okokomaiko.

Drving through from Agbara towards Okwafo towards Ibereko and French Village in Badagry simply paints a picture of a government that has not hidden its ‘hatred’ to millions of tax payers www.businessday.ng

using the expressway.

Of course, there are no moral justification for traffic officers to contravene any motorists any longer as drivers are at liberty to drive on any available lane they even is suitable for their vehicle to pass through.

To worsen it all, there is no accurate data on the number of crashes and accident victims along the corridor by the authorities concerned, even as business concerns have continued to lament as a result of extortions on the road.

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mirates have unveiled the design and visitor experience concepts of its pavilion at the upcoming Expo 2020 in Dubai. The pavilion’s design and visitor experience will utilise interactive technologies and design-thinking focusing on the future of commercial aviation.

The carrier - premier partner and the official airline of Expo 2020 - has already broken ground on the pavilion, where construction began in March.

It is estimated that 70 per cent of visitors to the Expo 2020 Dubai will travel to the event from other countries over the six-month event, and Emirates’ network of 158 destinations in 86 countries will help facilitate that mobility and support the Expo in attracting 25 million visits through its

Food lovers and gourmands looking for innovative dining concepts will be able to sample cuisines from every corner of the globe, with over 200 dining experiences from casual food truck concepts to fine dining, and 34 ‘never seen’ before food concepts in Dubai.

Guided by the three themes of Expo 2020 Dubai: mobility, opportunity and sustainability, the Emirates pavilion was designed to reflect the dynamic lines of aircraft wings ready to take flight.

The 26 slanted architectural fins that cover the entirety of the pavilion will hold over 800 metres of LED lights to create multi-sensory effects and movement across the structure, showcased by lightshows during every night of Expo.

marketing channels.

Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline, said: “We are incredibly proud to unveil the first details of the Emirates pavilion today, which celebrates the themes of Expo 2020 Dubai.

“The aim for our pavilion is very much in line with that of Expo 2020 Dubai, to stimulate connections, create experiences and foster creativity and innovation, inspiring a commitment for a better future.

“The forward-thinking experiences will highlight the best that is yet to come in aviation, and will be a platform to showcase how important mobility is for the world today and in the future.”

Taking place from October 20th, 2020, until April 10th, 2021, Expo 2020 Dubai is a must-attend event for visitors with an array of unique experiences at 190 country pavilions, and a packed entertainment programme with daily live events, parades, music and cultural festivals, inspiring talks and workshops and more.

The latest fabrication technologies, building techniques and sustainable design elements will be used such as integrated solar arrays, sustainable off-site construction, responsive solar shading and a verdant landscape on both the inside and outside of the pavilion.

The 3,300 square metre three-storey multi-function structure will be located in close proximity to the United Arab Emirates pavilion and within walking distance of the Al Wasl pavilion, the epicentre of the Expo 2020 Dubai site.

The interior includes an enclosed floor plan which allows natural daylight to enter the space, reducing energy consumption.

Experiential content will take centre stage, encouraging interaction throughout the visit.

The second floor of the pavilion will house an auditorium for speaker sessions and industry events, and the third storey houses a dedicated skygarden for visitors to enjoy the natural surroundings and green, open spaces.

@Businessdayng

24

Wednesday 22 May 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Firms build capacity to explore Africa Re, IFC financing support on agric Stories by Modestus Anaesoronye

T

he Insurance industry in recent times has seen increasing effort to strategically build human capital around agriculture and the agricultural value chain.

A number of insurance companies are hiring people in various disciplines including agricultural engineering and crop sciences to enable them play actively in the Africa Re, IFC financing support for the Nigerian agricultural market.

One the CEO’s who spoke to BusinessDay said “we are strengthening our capacity in agriculture because we want to explore that area” The CEO said, the company is hiring people in other disciplines including engineering and sciences, as part of the build up to explore opportunities in the agro allied space.

Africa Re, a leading reinsurance company in Africa and the IFC, a member of the World Bank Group had entered into an agreement earlier in the year, targeting to help insurers in Nigeria develop innovative agricultural insurance products for small holder farmers.

Under the agreement, Africa Re will work with IFC’s Global Index Insurance Facility to provide technical support to insurance companies who are licensed to underwrite index insurance products.

Index-based agricultural insurance, which pays out on the basis of transparent parameters like rainfall, does not require costly field visits to verify losses, provides an innovative and more efficient solution for small holder farmers to protect their crops against losses.

This initiative will also engender financial inclusion of the small holder farmers.

Mohammed Kari, commissioner for Insurance and CEO, National Insurance Commission (NAICOM) while launching the scheme at Africa Re’s headquarter in Lagos a few months back had commended IFC and Africa Re and promised that NAICOM will do everything possible to ensure the success of the scheme and even exceed expectations.

He said from four insurance companies

L-R: Caleb Yaro, Independent Director, FBNInsurance; Aderemi Ogunmefun, non-executive director, FBNInsurance; Margaret Dawes, non-executive director, FBNInsurance; Val Ojumah, managing director/CEO, FBNInsurance; Adenrele Kehinde, Chairperson, FBNInsurance; Anne Edeogu, Company Secretary, FBNInsurance; Oyewale Ariyibi, non-executive director, FBNInsurance; Seye Kosoko, Company Secretary, FBNHoldings, at FBNInsurance Annual General Meeting in Lagos recently

providing agricultural cover two years ago, the Commission has increased the number to 11, with another five applications already waiting approval, stating that he has no doubt that the target set for the project will be surpassed in two years.

Ken Aghoghovbia, deputy managing director/COO of Africa Re, speaking at the launching also had said : “We are excited to be partnering with IFC in assisting Nigerian insurers develop appropriate insurance products to protect small holder farmers. This initiative would certainly go a long way in moving Nigeria towards its goal of food security and is in line with the Corporation’s mission to support African economic development.”

Eme Essien, IFC Country manager for Nigeria also said: “60 percent of Nigerians rely on agriculture for their livelihood. Affordable and accessible risk management tools like index insurance are needed to help farmers mitigate the effects of climate-related shocks, protecting them against catastrophic losses and unlocking access to finance.”

Essien said “IFC’s support for affordable and accessible agricultural insurance will help Nigeria’s farmers mitigate the effects of climate-related shocks, protecting them against catastrophic losses and unlocking access to finance. Developing a sustainable agricultural insurance industry also requires a strong commitment from regulators, such as NAICOM, who embrace innovation to help farmers manage their risks.”

Oye Hassan Odukale, managing director/ CEO, Leadway Assurance Company Limited had noted that the agricultural insurance space is huge with a lot of potentials, urging the regulatory authority to further create a level playing ground so that many other companies that have interest could come in.

He applauded the technical support so far received from IFC, while urging them to give more.

Kunle Ahmed, managing director/CEO, AXA Mansard Insurance Plc stated at the event that given the huge potential in Nigeria’s agric space, this partnership to enable

insurance play actively in the sector is not a misguided priority.

Ahmed noted that NAICOM has begun to create the enabling environment with through this journey.

Edwin Igbiti, managing director/CEO, AIICO Insurance Plc also had noted that for the Commissioner of Insurance to be present at the launch is a clear indication that the project has got the Commission’s backing, stating that the penetration currently standing at 15,000 contracts, with 75,000 farmer beneficiaries will double The technical support provided to insurance companies in Nigeria will include specialized product design and developing digital platforms that will enable a prospective policyholder to view index insurance products on offer, compare different products from various insurers, review the term sheet and documentation, and select their preferred policy. The aim of this agreement is to provide thousands of farmers with access to insurance by the end of 2020.

Meristem emerges Nigeria’s best forecasting research firm

M

eristem Group has been adjudged the best forecasting research team in Nigeria, further demonstrating the underlying success points of Nigeria’s leading investment and wealth management group.

At the awards organised by Focus Economics, Meristem Research was awarded the overall best forecaster in Nigeria in 2018 ahead of many global forecasting institutions.

Also, for the second year running, Meristem Research won the award for best forecaster of Nigeria’s Exchange Rate, along with being the best in Gross Domestic Product (GDP) forecasting for the country.

Focus Economics is a leading provider of economic analysis and forecasts for 130

countries in Africa, Asia, Europe and the Americas, as well as price forecasts for 30 key commodities. The company is supported by an extensive global network of analysts. Since its launch in 1999, Focus Economics has established a solid reputation as a reliable source for timely and accurate business intelligence.

Kemi Akinde, head of Research at Meristem said the awards show Meristem Group’s investment in adequate human and technological capabilities to ensure that the Group provides timely and accurate information to its clients.

According to her, being voted as the best overall research team is a confirmation of the importance that the Meristem Group places on research and analyses as a backbone of decision-making. www.businessday.ng

“We are highly delighted to have won these awards. We know we place much emphasis and invest so much in our research capabilities and being confirmed by a global organisation is an exciting one for us,” Akinde said. She assured that Meristem will continue to adhere to best global practices to ensure that it continuously surpass the expectations of its clients and other stakeholders.

The latest awards come on the heels of several awards won by various subsidiaries of Meristem. Meristem Stockbrokers Limited recently won the Best Stockbroking Firm award at the 2018 Banking and Financial Industry (BAFI) Awards organised by the BusinessDay Media Limited.

The BAFI Awards came barely two months after the brokerage firm was recognized as

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the “Digital Stockbroker of the Year” at the maiden edition of the Bull Awards organized by the Nigerian Stock Exchange (NSE).

The NSE Bull Award is reserved for any stockbrokerage firm that leads in the ideas and ideals of transparency in the capital market, technology compliance and convergence, steady growth trajectory, and excellent track record among others.

Meristem Wealth Management had also blazed the trails as the first indigenous Nigerian asset manager to claim compliance with the Global Investment Performance Standards (GIPS). The GIPS is a set of guidelines created by the Chartered Financial Analysts (CFA) Institute to provide ethical framework for the calculation and presentation of the performance history of investment management firms.

@Businessdayng

Wednesday 22 May 2019

BUSINESS DAY

PENSION today

25

In Association with

Implementing GMP key to bringing stability, increased confidence in CPS …as over 103 workers retire without pensions …gives small contributors hope …challenges Government on compliance

I

mplementing the Guarantee Minimum Pension (GMP), a provision in the Pension Reform Act 2014 is important in bring stability in the Contributory Pension Scheme(CPS), by ensuring that small income contributors despite their challenges still have something to fall back on during retirement.

This challenge became more glaring recently when the industry regulator, the National Pension Commission (PenCom) disclosed that 103,016 retirees whose balance in their Retirement Saving Account (RSA) was not enough to purchase a Programmed Withdrawal or Annuities for payment in retirement have received en-bloc payments totaling N25.80 billion, from inception to the end of the fourth quarter of 2018.

According to PenCom, the Commission granted approval for the payment of the entire RSA balances of the categories of retirees whose RSA balances were N550, 000 or below and considered insufficient to procure a Programmed Withdrawal or Annuity of a reasonable amount over an expected life span.

“The sum of N845.36 million was paid to 3,572 retirees, which comprised of 188 public (FGN and State) and 3,384 private sector retirees in the last quarter of 2018. Consequently, 103,016 retirees received en-bloc payments totaling N25.80 billion from inception to the end of the fourth quarter of 2018.” the Commission disclosed.

Section 84 (1) of the Pension Reform Act 2014 says that “All retirement savings account holders who have contributed to a licensed PFA for a number of years to be specified by the Commission shall be entitled to a guarantee minimum pension as may be specified from time to time by the Commission”.

The Guarantee Minimum Pension as set out in the law was to be funded by government, PenCom and the operators, with government to pay one percent of its monthly wage bill into the Fund.

While PenCom and the operators have introduced the enhanced pensions as a means of cushioning the effect of non implementation of Guaranteed Minimum Pension under

PRA 2014 for retirees, the gap will still be huge unless government funds its own part. Again, this affects only retires on programmed withdrawal, underscoring why GMP is still the best option.

Pius Apere, an actuary and expert in insurance and pensions said the objective of protecting smaller contributors and enhancing the standard of living of retirees will not be met without implementation of the MPGS. “The above expectations cannot be fully met for all pensioners without the implementation of the guaranteed minimum pension as stated in section 84(1) of Pension Reform Act (PRA) 2014.This is true particularly for those retirees with small Retirement Savings Account (RSA) balances because they have not accumulated enough as at the date of retirement to have a decent standard of living in retirement. “

Apere said the delays in the implementation of have resulted in growing sense of disenchantment among current pensioners with relatively small RSA balances at retirement.

This is because of the small monthly pension they have been receiving over the years relative to the huge gains (from investment returns and/or dividends) the Pension Fund Administrators (PFAs) are currently making. The GMP (if implemented) would have eliminated the disenchantment among the current pensioners. The objective of the CPS is to ensure that every person who worked in either the public Service of the Federation, Federal Capital Territory, States and Local government or the Private Sector receives his retirement benefits as and when due .

It is also to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

The provisions of this Act shall apply to any employment in the public service of the Federation, the public Service of the Federal Capital Territory, the Public Service of the state, the public service of the local governments and the private sector.

In the case of the private sector, the scheme shall apply to employees who are in the employment of an organization in which there are 3 or more employees.

Recently, the law has been expanded to accommodate more people in the informal sector. “Notwithstanding the provision of subsection (2) of this section, employees of organization with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with guidelines issued by the commission. This gave birth to the micro pension scheme.”

This section is created to increase awarness and deepen knowledge about the contributory pension scheme.

If you have enquiries or contributions, send to this e-mail:

RC634453

Diamond Pension Fund Custodian Limited

1A, Tiamiyu Savage Street, Victoria Island, Lagos State.

Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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diamondpfcbusday@yahoo.com

@Businessdayng

26

Wednesday 22 May 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Stanbic IBTC wins regional awards Marsh report shows commercial insurance prices in pension, wealth management continue growing at Q1 Stories by Modestus Anaesoronye

G

lobal commercial insurance pr ices increased by 3 percent during the first quarter of 2019, according to data from re/ insurance broker Marsh, marking a sixth consecutive quarter of price increases.

Marsh also noted that the rate of growth in commercial insurance prices was at its highest since it began its survey in 2012.

Regionally, the Pacific had the largest price increases in the index (at more than 10 percent), while the UK and Continental Europe reported much lower increases of

around 2 percent.

Pricing for property risks increased by almost 5 percent on average, Marsh noted, while casualty prices declined by 1 percent in a continuation of a trend that began in 2013.

Composite pricing increases were also observed across all regions for a second consecutive quarter, for six consecutive quarters in the UK and Latin America, and for nine in the Pacific region.

Marsh found that property pricing increases were led by large, multi-layered programs (with a gross written premium greater than $1 million), which experienced almost 7 percent increases in rates.

Meanwhile, average pricing in financial and professional lines increased by almost 6 per-

cent, and all global regions experienced a rise, primarily driven by increases in D&O insurance.

Financial and professional liability insurance rates in the US increased by 2.8 percent, driven by pricing in D&O liability.

D&O pricing for public companies increased nearly 6 percent in the first quarter, with 77 percent of clients experiencing an increase, the highest percentage of increases in several years.

Dean Klisura, President of Global Placement at Marsh, commented on the findings: “While 3 percent is the largest average increase in insurance pricing we have seen since the index began in 2012, market capacity remains strong in most products and geographies.”

S

tanbic IBTC Holdings PLC’s entities have won the Best Asset/Fund Management Company and Best Private Banking Business in Wealth and Society West Africa at the Global Wealth and Society Awards West Africa 2019.

The awards further validate Stanbic IBTC’s standing as a leading end-to-end financial services organisation with market leadership across segments, including wealth management, corporate and investment banking, pension fund administration, stock broking, custody, trusteeship and others.

Stanbic IBTC Asset Management Limited won the Best Private Banking Business in Wealth and Society in West Africa, while Stanbic IBTC Pension Managers Limited picked the Best Asset/Fund Management Company in

L-R: Olumide Bolumole (NSE); Leke Oshunniyi, MD/CEO, AIICO Multishield; Sarah Adeniran, group head, Brokers Management, AIICO, AdewaleKadri, ED, Technical, AIICO; Oscar Onyema, CEO, NSE; Edwin Igbiti, MD/CEO, AIICO; , Babatunde Fajemirokun, ED/ COO, AIICO), Sola Ajayi, head, Retail Business, AIICO; and Jude Chiemeka (NSE) when AIICO MD, Igbiti, sounded the closing gong at the Nigerian Stock Exchange

Wealth and Society also in the West Africa category.

The award ceremony was held in conjunction with a Roundtable Dialogue comprised of private bankers, impact investors, and related parties, at the Eko Hotel Lagos. These new accolades complement the numerous recognitions awarded to both companies in 2018.

“B e i n g s i n g l e d o u t among peers is gratifying and we are very pleased to have been selected for recognition as the Best Asset/Fund Management Company in West Africa.

It is another prestigious award made possible by our esteemed and loyal customers. Our customers constantly challenge us through their patronage and positive feedback allowing us to push the envelope in innovative service to ensure they get full benefit of partnering with us,” Eric Fajemisin, chief executive, Stanbic IBTC Pension Managers Limited, said.

On his part, Oladele Sotubo, chief executive, Stanbic IBTC Asset Management Limited, expressed the firm’s delight

for being recognized by such a reputable and credible organisation from a pool that includes some of the industry giants in Africa. He said the awards further demonstrate Stanbic IBTC’s strength and desire to consistently provide best-in-class financial services solutions across all market segments by leveraging on the expertise and rich heritage of the Standard Bank Group, to which Stanbic IBTC Holdings belongs.

“These awards are testament to our capabilities and competences across all business segments, and speak to our unwavering dedication to consistently deliver innovative and robust solutions to our clients,” Sotubo stated.

The Global Wealth and Society programme opened in London in 2018, according to the promoters, out of the belief that wealth can be a force for good. As such we look for instances everywhere in the world where wealthy individuals, institutions and funds were targeted to make an impact in their local communities or the world at large.

AIICO grows PAT by 146 %, pays 6 kobo dividend

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nderwriting giant, AIICO Insurance Plc at the close of Business in 2018 achieved a profit after tax growth of 146 percent, rising from N1.28 billion in 2017 to N3.15 billion during the review year.

Profit before tax was 15 percent higher in 2018, from N3.041 in the past year to N3.496.

From the profitability

recoded during the review year, shareholders received 6 kobo dividend, a 20 percent increase from the payout in 2017.

Bukola Oluwadiya, chairman, AIICO Insurance Plc who disclosed this during the Company’s 49th Annual General Meeting in Lagos said with the 20 percent increase in dividend this year, the board has decided to move towards a progressive dividend policy www.businessday.ng

to deliver superior value to its shareholders.

“Our plan is to maintain or grow the ordinary dividends per share over time depending on business performance, growth prospects and regulatory solvency requirement. Oluwadiya said that despite the challenging business environment the company was able to grow its gross premium written by 17 percent to N37.666 billion,

against N32.098 in 2017.

The significant increase the company said was as result of growth in it life and general business lines.

Total assets of the company also rose by 19 percent, moving from N92.413 billion in the past year to N109.988 billion during the review period, while the shareholders fund was N14.53 billion, as against N10.55 billion in 2017, a 38 percent rise.

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The company’s net asset value increased by 39.4 percent, moving from N10.9 billion in 2017 to N15.2 billion in 2018.

Going into the future, Oluwadiya stated that the stability of the country’s political environment is a key component in determining and predicting the level of economic growth.

He expressed optimism that its management team is poised to execute strate@Businessdayng

gic options that will take the company to greater heights in 2019 and beyond.

AIICO Insurance Plc., a leading life insurer in Nigeria, commenced operations in 1963. It provides life and health insurance, general insurance, investment management and pension management services as a means to create and protect wealth for individuals, families and corporate customers.

Wednesday 22 May 2019

BUSINESS DAY

INSIGHT

27

Rice production in Nigeria:

Journey to self-sufficiency and a smuggler’s paradise

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ice remains one the most consumed staples in Nigeria, has become a hot topic in the past few years.

Significant focus and investment, by the past two administrations, on trade policies and mar- keting systems has made Nigeria the largest producer of rice in Africa.

Specific actions have included tariffs, quantitative restrictions on imports, and an outright ban on imported rice. It was also included in the forex restriction list.

Yet, Nigeria still has a demand gap of three million metric tons, costing the country $1.83 billion a year.6 The key barrier to closing the demand gap is poor mechanization of rice production. Low income, limited access to affordable financing and a lack of technical skills have limited the adoption of mechanized farming across the rice value chain. As Nigeria’s population continues to grow, alongside rural to urban migration, ensuring food security in key staples such as rice becomes critical. To close this gap Nigeria should look to veteran rice producers, like India, for policy guidance on in- creased mechanization.

tion and productivity through timely farm operations such as proper irrigation and harvest, and better placements of inputs such as fertilizers. Conserving soil and water resources and increasing irrigation potential and efficien- cies have also been a major focus for India, as has reducing losses of produce by providing improved storage structures and technologies. However, it’s most compelling investment has been in the agricultural services centers and the commitment to renting machinery to farmers as a way of overcoming the steep costs of mechanization.

India is not only the second largest producer of rice in the world but also a net exporter of rice. As of 1961, rice farming was mainly dependent on human and animal power and production stood at 53.49 million metric tons.7 However, due to the increasing cost of animal upkeep and growing scarcity of human labor, India gradually and steadily shift- ed from primitive to mechanized farming techniques.

Improved yields followed suit

‘‘

Low income, limited access to affordable financing and a lack of technical skills have limited the adoption of mechanized farming across the rice value chain with India producing 168.5 million metric tons by 2017.8 Mechanization was introduced to rice production in the mid-1960s when Agro Industries Corporations (AICs) were

established.9 The AICs are private owned organizations, set up as machinery service centers, to pro- vide custom hiring and servicing facilities to the farmers in order to boost production, and improve quality, timeliness and efficiency. Custom hiring made tools and equipment – such as tractors, tippers, seeders, threshers, dryers, separators and other important tools – available to farmers. This service was supported by farm machinery banks to provide rental financing. Combined, these two components were critical players in overcoming the financial barrier to mechanization. These centers were run on a no profit or loss basis.

In 1971, the government of India supported the AICs by launching a scheme to set up agro- service centers all over the country.

The scheme was launched to enhance and support the efficiency and effectiveness of the AICs. The scheme which was adopted by the government in 1971 was not implemented until 1990 when production stood at 111.52 million metric tons under the National Agricul-

Using mechanization to boost rice production: The custom hiring approach - Lessons from India Currently, Nigeria’s mechanization rate per hectare is 0.27 horsepower per hectare (hp/ha) relative to India’s of 1.96hp/ha.

Engineering and technological inputs in agricul- ture have made a significant contribution in India’s yields, increasing produc-

ture Technology Project (NATP) and the National Agricultural Innovation Project (NAIP).10 Subsequently, India’s rice production increased to 168.50 million metric tons and is now the second highest producer of rice in the world.

In addition, India’s government supported farmers through the provision of input subsidies such as low-cost seeds and fertilizers, subsidized electricity and interest-free credit to farmers. The input subsidy was introduced in 2008 when production was 148 million metric tons. This supported the improved mechanized farming already in the system and as a result, rice production increased to 168.50 million metric tons annually. There has been consistency in the subsidies provided over the years. The seed-disbursement subsidy grew by 7.6% from 2010 to 2015. Over the same period, fertilizer subsidies increased by approximately 16% and the government- sponsored credit increased by 96%.11 Conclusion Nigeria has a good climate for rice production and it has a favorable market to absorb the production. However, it is necessary to improve the quality of indigenous rice to compete with im- ported rice through the selection and adaptation of modern rice technologies. The government has a role to play in forming strong policies that will favor mechanized production of local rice as it is being practiced in advanced world.

Prepared by analysts at Financial Derivatives Company.

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28

Wednesday 22 May 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

People make healthier choices when buying online

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s more and more grocery shoppers turn to the internet — some 4% of all groceries sold in the United States in 2016 were bought online, and the share is projected to reach 20% within a decade — retailers face increasing pressure to better understand their habits. A new study comparing digital and in-store buying sheds valuable light.

The researcher examined the purchasing histories of 34,000 households over two and a half years, using scanner data from a large supermarket chain that began rolling out an online option in 2015. When ordering online, she found, households were less price-sensitive and less inclined to save money by searching for substitute items; they spent $49 more a month, on average, than when buying in-store. The increase was not evenly distributed: People spent more on categories that generally contain nutritious

the groceries could encourage healthier choices. And because the level of distraction (noise, the presence of children and so on) and the influence of product placement are lower than in physical stores (no checkout lanes or end-of aisle displays), consumers may have an easier time exercising self-control.

For retailers, “a more sophisticated online pricing strategy, that incorporates the fact that the value of convenience appears to be different across the two purchasing environments, would likely lead to increased online revenues,” the researcher writes, while for policymakers, “initiatives that promote healthier choices (via product placement either in-store or online) could improve the quality of food purchases.” items, namely dairy (an average rise of 3.8%), fruit (5.9%), meat (5.7%) and vegetables (7.4%), cutting back on drinks (a de-

crease of 5.2%), oils (4.1%) and snacks and sweets (13.6%).

These results are consistent with behavioral theories that

people make better decisions when focused on the future, the researcher says; the lag between ordering online and receiving

ABOUT THE RESEARCH: “The Effect of Online Shopping on Grocery Demand,” by Katherine A. Harris (working paper)

those using the technique were viewed as benevolent or came across as manipulative. In all the experiments, phantom anchors generated favorable financial results for the negotiators who wielded them, but the counterparties felt manipulated. “This apparent tradeoff means that real negotiators should use phantom anchors with caution, the researchers write.

tener is unable to “unhear” it.

The researchers began by assessing whether phantom anchors are a real and sponta-

neously occurring negotiating strategy. In a survey of 50 salespeople who negotiate 17 times a month, on average, 29% said they routinely deploy them.

And in a laboratory experiment in which pairs of people negotiated the sale of a biotech plant, 29 of 82 negotiations involved at least one phantom anchor.

In a subsequent series of experiments involving simulated negotiations for cars, restaurant rental spaces and salaries, researchers examined how aggressively (or not) participants hit with a phantom anchor responded with a counteroffer, whether the final price favored the party who’d used the phantom anchor or the person on the receiving end, and whether

The power of ‘Phantom Anchors’

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hose who study decision-making understand the impact of anchoring a cognitive bias whereby someone becomes overly focused on a piece of information (the anchor) and fails to sufficiently move away from it. It can be especially powerful in negotiations, where the first offer made has a strong influence on counteroffers and on the final settlement. A new study examines whether so-called phantom anchoring has a similar effect.

Phantom anchors are aggressive offers that are quickly retracted — for example, someone selling a car might say, “I was going to ask $8,000, but I’ve listed it for $6,000.” Research in areas other than ne-

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gotiation has found that they exert a strong pull, because even though the initial figure is promptly withdrawn, the lis-

S

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ABOUT THE RESEARCH: “I Was Going to Offer $10,000 but …?: The Effects of Phantom Anchors in Negotiation,” by Nazli Bhatia and Brian C. Gunia (Organizational Behavior and Human Decision Processes, 2018)

Wednesday 22 May 2019

Harvard Business Review

BUSINESS DAY

29

MANAGEMENTDIGEST

Spotlight on recruiting: Expanding the pool DANE E. HOLMES

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oldman Sachs is a people-centric business — every day our employees engage with our clients to find solutions to their challenges. As a consequence, hiring extraordinary talent is vital to our success. In the wake of the 2008 financial crisis we faced a challenge that was, frankly, relatively new to our now 150-year-old firm. For decades investment banking had been one of the most sought-after and fast-growing industries in the world. However, the crash took some of the sheen off our industry. And simultaneously, the battle for talent intensified. Many of the candidates we were pursuing were heading off to Silicon Valley. Furthermore, we were no longer principally looking for a specialized cadre of accounting, finance and economics majors: New skills, especially coding, were in huge demand at Goldman Sachs — and pretty much everywhere else. The wind had shifted from our backs to our faces, and we needed to respond.

Not long ago the firm relied on a narrower set of factors for identifying “the best” students, such as school, GPA, major, leadership roles and relevant experience — the classic résumé topics. No longer. We decided to replace our hiring playbook with emerging best practices for assessment and recruitment, so we put together a taskforce of senior business leaders, Ph.D.s in industrial and organizational psychology, data scientists and experts in recruiting. Some people asked, “Why overhaul a recruiting process that has proved so successful?” and “Don’t you already have many more qualified applicants than available jobs?” These were reasonable questions. But often staying successful is about learning and changing rather than sticking to the tried-and-true.

Each year we hire up to 3,000 summer interns and nearly as many new analysts directly from campuses. In our eyes, these are the firm’s future leaders, so it made sense to focus our initial reforms there. They involved two major additions to our campus recruiting strategy — video interviews and structured interviewing.

— ASYNCHRONOUS VIDEO INTERVIEWS: Traditionally we had flown recruiters and business professionals to universities for first-round interviews. The schools would give us a set date and number of time slots to meet with students. That restricted us to a smaller number of campuses and only as many students as we could squeeze into a limited schedule. It also meant that we tended to focus on top-ranked schools. How many qualified candidates were at a school be-

came more important than who were the most talented students regardless of their school. However, we knew that candidates didn’t have to attend Harvard to excel at Goldman Sachs.

What’s more, as we’ve built offices in new cities, we’ve needed to recruit at more schools located in those areas.

Video interviews allow us to do that.

We decided to use “asynchronous” video interviews — in which candidates record their answers to interview questions — for all first-round interactions with candidates. Our recruiters record standardized questions and send them to students, who have three days to return videos of their answers.

Our recruiters and business professionals review the videos to narrow the pool and then invite the selected applicants to a Goldman Sachs office for final-round, in-person interviews.

This approach has had a meaningful impact in two ways. First, with limited effort, we can now spend more time getting to know the people who apply for jobs at Goldman Sachs. Second, we now encounter talent from places we previously didn’t get to. In 2015 we interviewed students from 798 schools around the world, compared with 1,268 for our most recent incoming class. The top of our recruiting funnel is wider, and the output is more diverse.

We have worked hard to ensure that the video interviews don’t feel cold and impersonal. They are only one component of a broader process that makes up the Goldman Sachs recruitment experience. We still regularly send Goldman professionals to campuses to engage directly with students at informational sessions. But now our goal is much more to share information than to assess candidates, because we want people to understand

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the firm and what it offers before they tell us why they want an internship or a job.

We also want them to be as well prepared as possible for our interview process. Our goal is a level playing field. To help achieve it, we’ve created tip sheets and instructions on preparing for a video interview.

— STRUCTURED QUESTIONING AND ASSESSMENTS: How can you create an assessment process that not only helps select top talent but focuses on specific characteristics associated with success? Define it, structure it and don’t deviate from it. Research shows that structured interviews are effective at assessing candidates and helping predict job performance. So we ask candidates about specific experiences they’ve had that are similar to situations they may face at Goldman Sachs (“Tell me about a time when you were working on a project with someone who was not completing his or her tasks”) and pose hypothetical scenarios they might encounter in the future (“In an elevator, you overhear confidential information about a co-worker who is also a friend. The friend approaches you and asks if you’ve heard anything negative about him recently.

What do you do?”).

Essentially, we are focused less on past achievements and more on understanding whether a candidate has qualities that will positively affect our firm and our culture. Our structured interview questions are designed to assess candidates on 10 core competencies, including analytical thinking and integrity, which we know correlate with long-term success at the firm.

They are evaluated on six competencies in the first round; if they progress, they’re assessed on the remaining four during in-person interviews. @Businessdayng

We have a rotating library of questions for each competency, along with a rubric for interviewers that explains how to rate responses on a five-point scale. We also train our interviewers to conduct structured interviews, provide them with prep materials, and run calibration meetings to ensure that certain interviewers aren’t introducing grade inflation (or deflation).

We decided not to pilot these changes and instead rolled them out en masse, because we realized that buy-in would come from being able to show results quickly — and because we know that no process is perfect. Indeed, what I love most about our new approach is that we’ve turned our recruiting department into a laboratory for continuous learning and refinement. With more than 50,000 candidate video recordings, we already have indications that students recruited from the new schools in our pool perform just as well as students from our traditional ones — and in some cases are more likely to stay longer at the firm.

Dane E. Holmes is the global head of human capital management at Goldman Sachs.

30

Wednesday 22 May 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Volume of imported vehicles drops 27% to 55,963 units in third quarter 2018 …As ship traffic drops by 7.3% amaka Anagor-Ewuzie

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he volume of imported new and used vehicles dropped by 27 percent in the third quarter of last year, on year-on-year basis, Nigerian Ports Authority (NPA) 2018 third quarter operational performance report, has revealed.

The volume dropped from 76,626 units recorded in third quarter of 2017 to 55,963 units brought into the country in third quarter of 2018, the report said.

The report, which was obtained by SHIPS & PORTS, revealed that operational activities in the nation’s seaport recorded a significant drop in the quarter under review as the number of vessels that called at the ports dropped by 7.3 percent to 969 when compared to 1,045 recorded in the corresponding period of 2017.

It further stated that the gross registered tonnage of vessels completed stood at 31,747,589, representing a drop of 7 percent over the corresponding period of 2017.

In terms of containerised imports, the report, puts container throughput at 368, 976 TEUs, showing a drop of 9.9 percent from 409,454

Twenty-foot equivalent units (TEUs) However, despite the decrease in ship traffic, the port recorded a marginal increase of 0.5 percent in cargo throughput with 18,336,786 metric tons over the 18,257,730 metric tons handled in the third quarter of 2017. The increase, according to the NPA report, was due to increase in service boat operations.

A breakdown of the cargo throughput within the review period showed that Liquefied Natural Gas (LNG) shipment stood at 5,574,845 metric tons, a slight increase

of 0.4 percent over 5,551,151 metric tons recorded in the corresponding period of 2017.

General cargo recorded stood at 2,113,578 metric tons, an increase of 43.3 percent over the 1,474,669 metric tons handled in the third quarter of 2017.

Dr y bulk stood at 2, 444,687 metric tons, a decrease of 8.3 percent from 2, 666,953 metric tons while refined petroleum stood at 4, 228, 720 metric tons, a decline of 8.4 percent from 4, 616, 155 metric tons over the third quarter of 2017.

On why volume is drop-

ping, Hadiza Bala-Usman, managing director of the NPA, said that the nation’s seaports were losing ship and cargo traffic because of government policies that are discouraging importation.

“We have noted a reduction in traffic coming into our ports. We attribute this to the fact that Nigeria has been advocating for self-sustenance in terms of manufacturing and consuming what it produces,” said Bala-Usman during NPA’s 2019 budget defence before the House of Representatives Committee on Ports, Harbours and Waterways

APM Terminals Inland Services to integrate into Maersk Logistics in August amaka Anagor-Ewuzie

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n line with its plans to provide customers with seamless access to a wider range of logistics & service offerings, AP Moller - Maersk said it had perfected plans to integrate APM Terminals Inland Services into Maersk Logistics & Services from 1 August 2019.

By implication, bringing together all operations skills and capabilities within logistics will create a base for growth and enable Maersk to excel in the execution within Logistics & Services products.

This is the next step for A .P. Moller - Maersk in the implementation of its strategy to offer end-toend solutions to its cus-

tomers, the company says.

“APM Ter minals can fully focus on becoming a world-class port operator, while Maersk, with the integration of inland services, will continue to focus on ocean transportation as well as logistics and service product development and delivery,” says Søren Toft, executive vice president/ chief operating officer, A.P. Moller – Maersk.

By structurally adding inland services to Maersk, Toft said customers would have a seamless access to a wider range of logistics and services offerings.

“It will put Maersk in an even better position to differentiate its offering and scale the Logistics & Services portfolio to an even broader customer base,” Toft added.

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A P M Te r m i n a l s w i l l continue to serve shipping line and landside customers with services on and around the port premises such as traditional storage and terminal handling as well as newly developed services such as fast-gates.

While focusing on its core offering, APM Terminals is also continuing to collaborate with Maersk for customers who are looking for end-to-end solutions.

“The even closer collaboration enables both APM Terminals and Maersk to reduce complexity and eliminate service overlaps, so that both brands can focus on their core strengths and provide greater value and better experience to customers,” says Morten Engelstoft, CEO APM Terminals.

The inland services portfolio is a network of inland terminals around the globe consisting of 36 business units with over 100 locations. Today, it offers a vast array of services for both shipping line customers and landside customers.

For shipping line customers, the offer ing of inland services centres on depot, container equipment maintenance and repair and transportation.

For landside customers, inland ser vices is supporting these customers by integrating their supply chains locally through services such as transportation solutions, CFS and warehouse, depots and temperature-controlled handling and storage environments.

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in Abuja.

“And so, this attendant reduction in cargo, in our understanding, is attributable to that because some of the items that constitute this drop include for example, the automobile policy, which had increased the cost of importation of automobiles from 30 to 70 percent in order to stimulate manufacturing in Nigeria.

So, there is a steep decline in the importation of vehicles,” he said.

According to her, there is an additional list of items that have been banned from importation in order to stimulate production of certain items in the country and also ensure that most agric produce are consumed in Nigeria.

“So you can see the number of ocean going vessels is reducing. The agencies that work around revenue generation for importation of cargo will be seen not to have performed,” she said.

Bala-Usman disclosed that the projected internally generated revenue of NPA for 2019 was N276.75 billion while net revenue from oil source is N255.69 billion. The organisation’s total expenditure for the year, she further disclosed, is estimated at N229.91billion.

This is made up of N110.71 billion for operat-

ing expenses; N52.13 billion for overhead costs; N58.8 billion for pension cost and N119.21 billion for capital expenditure.

She said NPA plans to remit N20.62 billion into the Consolidated Revenue Fund (CRF) from its projected 2019 operating surplus of N25.77 billion.

Patrick Asadu, chairman of the House Committee on Ports, Harbours and Waterways, however, blamed poor cargo clearing processes at the port for the drop in cargo volumes.

“I do not want us to just dismiss this. You may want to look to see what other things are going on. I think maybe we should look at things like efficiency of cargo clearance. We know what is going on with the congestions at the ports. I have no doubt in my mind that there are a lot of other factors,” he added.

Meanwhile, the NPA boss disclosed that the authority wants to make all our ports viable, competitive and to conform to the Ease of Doing Business policy of the Federal Government.

“With the commitment exhibited by NPA management, it is hopeful that the downward trend in port activities would soon be reversed,” she added.

Nigeria, Togo, Ghana, others lose $777m annually to piracy — UNODC

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igeria, Togo, Ghana and other countries in the Gulf of Guinea regions lose US$777.1 million to piracy and other maritime crimes annually, says the United Nations Office on Drugs and Crime (UNODC) report.

This was contrary to the recent position held by Dakuku Peterside, director-general of the Nigerian Maritime Administration and Safety Agency (NIMASA), which said that piracy and other maritime crimes have reduced drastically in the Nigerian maritime domain, making it safer for investment.

He said measures such as the deep blue project, which covers every aspect of maritime security, are being put in place to move the Nigerian maritime sector forward.

Gulf of Guinea, which is located in the northeastern part of the tropical Atlantic Ocean, @Businessdayng

is made up of coastal countries including Liberia, Ivory Coast, Ghana, Togo, Benin, Nigeria and Cameroon. Others include Equatorial Guinea, Gabon, Sao Tome and Principe, Congo Republic, Congo DR and Angola.

The report, which was released by Sylvester Atere, Outreach and Communications Officer of UNODC in Nigeria, said the annual lost was in addition to human costs experienced due to escalation of piracy, kidnapping and armed robbery at sea within the region.

According to the report, countries in the region lost a total of US$2.3 billion to maritime crimes between 2015 and 2017.

The report further revealed that pirate attack in the region more than doubled in 2018, accounting for all six hijacks worldwide; 13 of the 18 ships fired upon; 130 of the 141 hostages taken globally and 78 of 83 seafarers kidnapped for ransom.

Wednesday 22 May 2019

BUSINESS DAY

31

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Promote new global trade policies to curb poverty, LADOL boss urges WTO amaka Anagor-Ewuzie

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lobal institutions such as Wo r l d T r a d e O r ga n i s at i o n (WTO) need to execute new global trade policies that promote equal wealth creation among nations, Amy Jadesimi, managing director of the Lagos Deep Offshore Logistics Base (LADOL) Free Zone, said at the Global Female Leaders Summit 2019 (GFL) held in Berlin recently.

Jadesimi, who was one of the five global leaders on the opening panel of GFL, said it had become clear that nations’ survival depends on the ability to decrease poverty and increase both the spread and size of global wealth.

She however believed that sustainable globalisation requires the WTO and high-income, low-growth countries to recognise that current trade policies were not designed to lead to equality and prosperity for all.

“For example, rather than

L-R: Ellen Cecilia Malmstroem, commissioner for Trade European Parliament; Ellen Zentner, chief US economist/managing director, Morgan Stanley; Qian Wang, managing director/chief economist, Asia-Pacific Vanguard Investment Strategy Group; Amy Jadesimi, managing director of LADOL; Stefanie Babst, chief strategy policy analyst to the Secretary-General/chairman of the Military Committee NATO, and Melinda Crane, moderator/ chief correspondent, Deutsche Welle TV, at the opening panel of the Global Female Leaders Summit 2019, an economic forum for female executives in Berlin recently.

simply demand that countries immediately put in place new laws to protect Intellectual Property (IP) before wealthy countries will trade with them, the focus should shift to insisting that lowincome, high-growth countries develop home-grown IP to support their own market to a level that makes them

globally competitive and better trading partners,” she suggested.

According to her, such countries will naturally put in place laws to protect this “home-grown” and international IP, while also adding to global prosperity, creating thousands of jobs and new innovations that will move the

whole world forward.”

“Zero-sum game politics and trade policies are leading to global instability - collaboration is required on a fundamental level, particularly between governments and institutions to create new economy, sustainable technologies and business strategies,” she added.

Without radical reforms, Jadesimi said that the current global trade practices would further entrench a status quo that is undermining previous gains made through trade for high- income countries.

She added that it would increase inequality across the world and make it harder for countries in Africa to lift their people out of poverty.

“The Nigerian government has taken real steps to support the indigenous private sector in Nigeria and allow it to operate, add value and grow - when our private sector is the same size as the public sector, Nigeria will be part of the G20,” she noted.

“Many positive lessons can be learnt from the formation and positive impact of the European Union (EU) on its member states, including the fact that the EU protected its markets from non-EU countries until it had reached a certain level of industrialisation. African Union (AU) is potentially one of the most important institutions we have to develop Africa. It has to look inward and develop

African capacity for engineering, manufacturing and trading within the AU states,” she said.

Jadesimi explained that the continent of Africa has broadly experienced four different ages of globalisation including exploration, exploitation, expropriation, and exchange.

“The era of exchange based globalisation and trade is just beginning. To succeed it requires trade between equals, a level-playing field through which all participants, from nation states to private companies, benefit,” she said.

For exchange-based trade to be practically applicable, she pointed that countries and companies in Africa need to invest in and develop higher local capacity and quality within sustainable business models.

“This is already happening at companies such as LADOL and will lead to a significant increase in the global GDP, as well as decreases in inequality and increases prosperity,” she added.

ECOWAS needs uniform tariff regime for ships calling W/African ports - Bello

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o address issues of inconsistent tariff structure as well as tariff differentials imposed on cargoes calling West African ports by shipping companies, the Economic Community of West African States (ECOWAS) member states need to set a tariff structure for vessels

calling their ports, Hassan Bello, executive secretary of Nigerian Shippers Council (NSC), has said.

Speaking when a team of the monitoring mission of the ECOWAS Trade Liberalisation Scheme (ETLS) task force to Nigeria visited him in Abuja, Bello said one of the challenges of trade in Nigeria was

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the inconsistent tariff structure which was always higher for ships coming to Nigeria.

“Tariff on ships coming to Nigeria is higher when compared to other ports and there is a need to establish tariff regime. We are also looking at exceptional charges on ships coming into Nigeria like conges-

tion charges, which in some cases may not apply in other ports. All these need to be addressed,” he said.

According to him, the Council was negotiating for a comprehensive review of charges for cargoes. “We must also look at both the Ease and Cost of Doing Business in our ports because addressing

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them will help in trade facilitation within the region.”

Ken Ukaoha, speaking on behalf of the ETLS, said they were in the Council to see how far it had gone in implementing the agreement signed with the taskforce in 2017.

He said the ETLS would discover if there were areas

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where they could come in to assist and ensure the progress of trade facilitation with the private sector in Nigeria.

The ETLS was set up by the head of states of member nations to tackle the integration of the economic activities within the region as envisaged by the founding members of ECOWAS.

32

Wednesday 22 May 2019

BUSINESS DAY

BANKING

In Association with

Are banks ready for digital currency?

HOPE MOSES-ASHIKE

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ne day, Nigeria’s paper money or banknotes would be disrupted the way it is happening with banking transaction presently, and digital currency would be in use.

Paper money would be a history just like bata and commodity. It will happen in this country, it is only a matter of time. As it were, coins are gradually going into extinct.

Digital currency is a type of currency available in digital form. It can be used to purchase goods and services but can also be restricted to certain online communities.

Central Banks have always safeguarded their country’s currencies and some like the Nigeria’s Central Bank, have issued warning against cryptocurrencies.

However, some regulators have started experimenting with the idea of cryptocurrencies and the underlying blockchain technology.

The South African (SA) Reserve Bank is warming up to the idea of digital currency and has asked the industry to help it come up with the best ideas.

Some of the world’s biggest banks are said to be investing around $50 million to build a blockchain-based digital cash set-

Uche Olowu, CIBN, president

tlement system.

In 2015, Swiss banking giant UBS was said to be working on a cryptocurrency that would be “linked to real-world currencies and connected to central bank accounts” along with blockchain startup Clearmatics.

Reuters report noted that Bank of New York Mellon Corp, State Street Corp, Credit Suisse Group, Barclays, HSBC Holdings and

Deutsche Bank have also been working on the “utility settlement coin” (USC) project.

The International Monetary Fund (IMF) last week said that Central Bank Digital Currencies (CBDC) is one of the significant issues deserving consideration by policy makers.

The Fund said less than one-quarter of central banks around the world are actively exploring the possibility of issuing CBDC and that so far, only four pilot projects have been reported.

There are surely some positive aspects of adopting CBDC, said IMF. The Fund said it could reduce the costs associated with the use of cash, and it may improve financial inclusion in cases where there have been unsuccessful private-sector initiatives and unsuccessful policy efforts.

It could also help central banks strengthen the security of, and trust in, the payment system — and it could protect consumers where regulation does not adequately limit private monopolies. Moreover, issuing CBDC could also facilitate the “contestability” of the payments market, and could reduce the risk of having a few large providers dominating the system.

But how ready are Nigerian banks in adoption of digital currency, Uche Olowu, president/chairman of council, Chartered Institute Bankers of Nigeria (CIBN) said,

“banks are ready for this of course. It is part of progress development that is happening.

We are developing our intellects more to appreciating our environment and making sure that life is more comfortable. So it is not something we have to be afraid of in terms of disruption or technology that is coming, banks are ready whichever way”.

Olowu who spoke with some journalists immediately after the annual general meeting of the CIBN said there is disruption in banking industry and that there is going to be another disruption on paper money.

However, the Fund said central banks must also carefully evaluate the potential downsides to issuing CBDC. These could include: Concerns about integrity risks, if the CBDC is issued as an anonymous instrument that could be used for illicit activities. Almost all central banks that are researching the issuance of CBDC seem to favor a hybrid approach that allows central banks — and only central banks — to trace transactions; The potential impact on financial intermediation. Depending on the design of the CBDC, it is conceivable that bank deposits could migrate to CBDC, thus fundamentally changing the nature of financial intermediation; and The impact on monetary policy conduct and transmission channels, among others.

Union Bank’s CSI report show support for local communities

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nion Bank recently announced the release of its third Citizenship, Sustainability and Innovation (CSI) report, an annual compilation which details the financial Institution’s strategic focus, initiatives and impact across these three areas during the year.

Highlighting the Bank’s focus on transparent reporting of its CSI efforts, the report was prepared in line with Nigerian Sustainability Business Principles (NSBPs) and the Global Reporting Initiative (GRI) standards.

Assurance of the report was also conducted by independent auditing firm, Deloitte.

According to the CSI report, in 2018, Union Bank continued to expand it efforts in sustainability and citizenship by deepen-

ing key partnerships and strengthening its support for charities and local communities.

The report showcases the Bank’s efforts in these key areas by highlighting various projects it embarked upon, including women empowerment initiatives like seminars for female entrepreneurs; the distribution of hygiene care products to girls on International Day of the Girl Child and partnership with Pearls Africa to organize the Girls Coding Summer Camp, among others.

In line with its focus on boosting financial inclusion, Union Bank also provided inclusive banking services to Nigerians through the provision of 430 agent banks across the country. Also, the Bank and its

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employees joined forces to sponsor and distribute 8,000 care bags to people in underserved communities under the UnionCares umbrella.

During the year, Union Bank made significant progress in its efforts to minimize its environmental impact through expansion of its recycling initiatives and the installation of energy saving facilities across its branches.

Speaking on the release of the report, Emeka Emuwa, Chief Executive Officer, expressed his satisfaction at the achievements of the bank in the areas of citizenship, sustainability and innovation in the past year and the direction of the bank for the ongoing year.

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“This annual report lends credence to Union Bank’s positioning as an institution truly committed to improving the communities in which we operate. CSI is central to our core business and commitment to the triple bottom line of responsible financial, environmental and socio-economic development”, he said.

With innovation as a priority, the bank deployed various innovative solutions and initiatives such as the Robotic Process Automation (RPA) technology, the first of its kind in the Nigerian banking industry, as well as Ideas Bank and Union X, both inhouse initiatives to encourage employees’ contribution to the digital transformation drive of the Bank.

@Businessdayng

Wednesday 22 May 2019

BUSINESS DAY

33

BANKING Nigerian Banks - Alpha Capture: Now is the time to take the leap Stories by HOPE MOSES-ASHIKE

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MB Nigeria Stockbrokers (RMBNS) in its recently published banking sector report titled Nigerian Banks - Alpha Capture: Now is the time to take the leap, April 10, 2019, highlighted the key themes that will potentially shape Nigeria banking sector in 2019.

These themes include, declining yields on government securities, the recent 50bp cut in the central bank’s policy rate, the outlook for cost of risks and regulatory uncertainty.

On lower yield environment, RMBNS analysis shows that an average decline of 100bps in treasury yields can potentially reduce both asset yields and

Return on Equity (ROE) of its coverage banks by about 50bps to 10.6 percent and 20 percent respectively.

With demand and opportunity for credit growth still relatively weak, a decline in yield levels is not positive for banks profitability.

The leading research

house also finds the impact of 50bps cut in MPR, by the central bank of Nigeria, as neutral to interest income and benign for funding cost. For interest income, asset yields for banks are more sensitive to yields on government securities than movement in Monetary Pol-

EcobankPay partners PricePointe, Wholesale Club for seamless shopping

E

cobankPay, the lifestyle digital payment and collections service of Ecobank Nigeria has entered into a partnership with PricePointe Wholesale Club, a new entrant into the Nigerian retail sector, modeled after the America’s Costco and Sam’s Club, which started operations with the opening of its flagship warehouse at Ilupeju Industrial Crescent, Ilupeju Lagos.

Speaking at the unveiling of the Pointe Wholesale Club Ultra-Modern Warehouse, Patrick Akinwuntan, managing director, Ecobank Nigeria, assured customers of seamless transactions through the bank’s multifeatured digital payment solution, EcobankPay. The managing director said “Ecobank is highly delighted as a bank to be part of this great vision. We salute this concept and the courage of these young Nigerians behind this project. Count us as worthy partner. We assure customers of seamless, stress free and convenient transactions through our innovative digital payment solutions.”

He further explained

that EcobankPay enables the merchant receive credit instantly and also permits easy tracking of customers business profiling for quick access to credit, adding that it is safe, fast and reduces the risk of security in terms of exposure to cash or pilfering of merchant’s credentials and does not require any cost to set up.

Also speaking at the Launch, Founder and Chief Executive Officer of PricePointe Wholesale Club, Tayo Williams said, “PricePointe Club is pioneering this world-class multi-store multi-brand to provide a one-stop lifestyle shopping experience for Nigerians who want to shop in bulk conveniently, at a world class environment that’s convenient for them and their families, and most importantly, at really great prices.”

“With products and services sourced directly from manufacturers and providers, PricePointe club members will enjoy groceries, household items, appliances, insurance, flight tickets, petrol, diesel, and more at massive discounts you won’t find anywhere else; www.businessday.ng

all of which are open to PricePointe club members.

Retailers can also buy less than a carton but still enjoy Wholesale prices, as well as the convenient opportunity to shop from 6AM every day, including Sundays”, he added.

Williams disclosed that PricePointe Club has entered into partnership with various manufacturers and service providers to ensure that its members get the lowest possible prices. He mentioned global industry leaders such as Nigerian Breweries, Reckitt-Benckiser, Procter and Gamble, 7UP Bottling, and Indomie amongst those that have signed to work with them.

Others are Binatone, Powergen, Powerhorse, UAC and many more.

The PricePointe Wholesale Club flagship warehouse has other services such as Tire and battery centre, restaurants, dentistry, eye clinic, and many more.

The launch event hosted by Chioma Omeruah, popularly called, ChyGurl brought together some of Nigeria’s most respected individuals, celebrities and industry leaders.

icy Rate (MPR).

However, for funding cost, RMBNS analysis shows that the 50bp cut in MPR, to 13.5 percent, is immaterial to its coverage at only 6bp translating into a mean savings of N1.6bn for its coverage banks. However, lower rates on term deposits due

to the decline in treasury yields (-100bpsy/y) can effectively save 13bps in funding cost (a mean savings of N3.5bn).

Following the implementation of IFRS 9, RMBNS expects cost of risk to be higher in 2019 as banks no longer have the flexibility to pass impairments directly through equity. As such, the full impact of the predictive IFRS 9 model will come to play, in 2019, particularly as banks begin to book 12-month ECL on newly generated loans. On this basis, cost of risk for RMBNS coverage will increase to 1.6 percent.

Overall, the firm believes the current valuation of Nigerian banks is unjustifiably cheap despite the expected headwinds highlighted above.

RMBNS highlights that its tier-1 banks and Stanbic

IBTC remain attractive at 0.9x 2019e P/B, 21 percent ROE, compared with Kenyan banks’ 1.2x, ROE:19 percent. On an ROE adjusted basis, the valuation of Kenyan and MEA banks implies that Nigerian banks should trade at a 2019 P/B of 1.3x (44% premium) and 1.5x (67% premium).

RMBNS preference in the banking sector are GTB (OW, N48), Zenith (OW, N32) and UBA (OW, N11) with potential upsides of 41 percent, 59 percent, 79 percent respectively from current levels. The firm also believes FBNH (EW, TP: N9) is a stock to watch based on observable milestones relating to Atlantic Energy credit resolution. The successful resolution of this NPL can potentially rerate the stock to N11 – an upside of 41 percent from current price levels.

Sterling Bank powers skills competition in Kaduna

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or the second year running, Africa’s most agile company, Sterling Bank Plc, has supported iCreate Africa; a leading advocate of vocational skills development in Africa to host iCreate Skills Festival following its successful debut in Abuja last year.

The event took a different turn this year and will see the team making stops at different cities across Nigeria including Kaduna, Enugu and Lagos. The Kaduna regional competition which held recently featured over 80 competitors across Nigeria’s northern states and was dubbed, the ‘Grand Tournament of the finest of skills in the north.’ The competition focused on 15 skill categories such as bricklaying, tiling, tailoring, shoe making, plumbing and web develop-

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ment, among others.

While representing Sterling Bank at the event, Adeola Adejokun, head of public relations disclosed that “this is our second year of supporting iCreate Skills Festival because the future of the country is in jobs and there is need to do all that is necessary to create jobs in various sectors of the economy. This explains the bank’s intervention in areas and sectors that have the potential to create jobs thereby ensuring a future of shared prosperity for all Nigerians.”

Adejokun added that “The unemployment figure in the country is alarming, yet corporations are importing trades and craftsmen from other countries. In the construction sector, there is high demand for tillers and masons from Republic of

@Businessdayng

Benin in most parts of the country while a large number of young Nigerians idle away. This development can be attributed to the lack of interest from our youth to develop and hone their skills in technical fields. They are preoccupied with chasing white collar jobs losing out on the wealth creation potential of blue-collar jobs simply because they are perceived as not glamorous.”

Bright Jaja, CEO of Icreate Africa, said the skills competition/festival was the company’s way of tackling the increasing wave of unemployment and getting the right skills professional in areas normally looked down upon by many Nigerians, especially the youths who are daily in search of white collar jobs.

Jaja said, “I was really eager to solve a problem. I was tired of the situation and the solution being proffered to tackle unemployment by the government and everyone else. So, I thought of ways through which the foundation could solve the problem.

He thanked Sterling Bank for supporting him to bring the dream to life when other corporates could not see the value in his vision.

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BUSINESS DAY

news Enaise Okonedo elevated to full...

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and data for enhancing the quality of teaching at LBS, as well as serve the business and academic communities.

Before becoming dean, Dr. Okonedo was a full-time member of faculty, teaching courses in problem solving and decision making, corpo-

rate financial management and financial strategy. She also held several leadership positions at LBS at various times. She was a banker for several years before joining the School.

Dr. Okonedo is a member of the Senate and Governing Council of Pan-Atlantic University, and also serves

on the academic advisory board of the Global Business School Network (GBSN), a non-profit organisation based in Washington DC. She was until December 2013 the chairperson of the Association of African Business Schools (AABS), an association of leading business schools in Africa established to promote excellence in business and management

education. She remains a member of the AABS board.

An experienced professional with more than 25 years in the field, Dr. Okonedo is very much involved in designing and facilitating in workshops aimed at developing faculty for African business schools.

She also serves on the board of several international and indigenous companies.

L-R: Endurance Uhumuavbi, administrator, Nigerian Bar Association-Section on Business Law (NBA-SBL); Seni Adio, chairman, NBA-SBL, Adeoye Adefulu, chairman, 2019 conference planning committee, during a media chat between the chairman conference planning committee of the 13th annual business law conference and legal correspondents in Lagos.

Pic by Olawale Amoo

Osun to register miners to prevent crime - Oyetola … talks tough on insecurity

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sun State government will register all miners operating in the state, Governor AdegboyegaOyetolasaidonTuesday.

Besides, serious steps are to be taken to prevent security lapses linked to some of the criminals who are operating as illegal miners in the state.

These are the highlights of an Ife-Ijesa zonal security sensitisation meeting held on Tuesday in Ilesa. The zone is where the vast gold deposit in the state is located.

Apart from the governor, deputy governor, Benedict Alabi, wife of the governor, Kafayat Oyetola, others top government functionaries, traditional rulers led by Ooni of Ife, Oba Adeyeye Ogunwusi, and Owa Obokun of Ijesaland, Oba Adekunle Aromolaran, heads of security agencies in the state, leadership of artisanal miners and community leaders attended the meeting, which sought people’s cooperation in the fight against illegal mining, kidnapping, banditry and other vices now rearing their ugly heads in the state.

They appealed to residents to report any strange development in their domains for appropriate legal actions.

Governor Oyetola said:

“The activities of illegal mining vendors, if not checked, will shatter the safety, security and peace of our people as they are capable of engaging in untoward behaviours.

“Already, there is an upsurge in criminal activities in this area. We have of recent been battling with kidnapping, harassment of people, and indiscriminate shootings on the highway, all traceable to the nefarious activities of some of these illegal miners.

“Should these high level crimes continue, government will be forced to take a drastic action, which will include but not limited to a total ban on mining activities in this state.

“To prevent the hammer from falling, all hands must be on deck to avoid criminality. So, all miners operating in this state must be registered to enable the government keep a record.

“Community leaders (the Serikis) must play a key role in ensuring that this directive on registration is faithfully carried out. Thereafter, Serikis will be held accountable for acts of crime committed by miners in their area of operation.

“Ensuring that these crimes do not happen requires your collective support and cooperation and those of our people with the government.” www.businessday.ng

Heads of security agencies – the police, the army, the DSS, Immigration, the prisons, Road Safety, Civil Defence and the NDLEA - reaffirmed their commitment to securing the state and preventing the influx of criminals posing as miners.

Leaders of the gold mining union also sought for government support to enable them prevent crimes.

A community leader, Olu Odeyemi, warned of dire consequences unless drastic measures were taken to stop the rising level of insecurity.

Oba Ogunwusi and Oba Aromolaran urged the government to empower traditional rulers who know their domain and are in a better position to assist in securing their areas They called for synergy between the government, people and the security agents as part of efforts to strengthen security and stamp out all forms of criminality in the State.

The governor described the security stakeholders’ meeting as sacrosanct, in view of the huge mineral deposits in the zone, saying the elaborate plans the state has for artisanal miners would create wealth and improve the prosperity of the people.

He called on community leaders to support the govern-

ment in its efforts at ensuring proper registration and data capturing of all miners operating in the state.

He urged community heads to sanitise their domains by ensuring that criminals do not live in their communities.

He warned landlords and landownerstoalwaysbevigilant to ensure that houses are not rented to criminals saying they will be liable in a situation where such tenants commit crime and are traced to where they live.

Deputy Chief of Staff to the Governor, Abdullah Adeyanju Binuyo, who set the tone for the meeting, said Osun state would partner with development partners and the Federal Government, which has picked the state and Kebbi state as pilot of its gold extraction programme, to boost mining and get the benefits for the state and the people.

Oyetola described the meeting, a second one on insecurity in one month as “a testament to the importance this administration places on the safety and security of our people, adding: “It is our policy to adopt a creative and proactive approach to security and to respond with dispatch when security breaches occur.”

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These are the reforms needed to jump...

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1,000 people would be needed in Nigeria to achieve the Universal Health Coverage (UHC).

While the number of out-ofschool children keeps growing, analysts say the government must come up with policies that willpreparetheeducationsector for the jobs of tomorrow. The country has the highest number of out-of-school children.

“The government must guarantee access to basic education for all, improve the quality of secondary and tertiary education, and encourage students to enrol in science and technology courses,” he said.

Elimination of multiple FX rates Upon the reappointment of the governor of the Central Bank, Godwin Emefiele, there has been heightened expectation of an eradication of multiple exchange rates in the Nigerian FX space.

The International Monetary Fund (IMF) recently reiterated its position on the need for Nigeria to eliminate its multiple rates.

Considering the precarious fiscal position of the Nigerian economy, sources confirmed to BusinessDay that possible ways of solving some revenue challenges of the government include to move FX rates from official rate of N305/$1 to market-determined rate at N360/$1. This will translate to more money for the FGN to carry out its functions.

Also, the current state of Nigeria’s total debt stock is N2.88 trillion above the ERGP 2020 target of N21.51 trillion, representing a gap of 13.39 percent as reported by analysts at FDC. An increase in government revenue through a shift towards market-determined rates could lessen dependency on domestic and external debts.

Eliminating petrol subsidies There are debates as to whether or not the Federal Government should keep its subsidy provision on petrol.

Experts, however, have stated that the removal or reduction in subsidy levels would help the government channel these funds into more productive projects that would spur growth in the economy considering how much the government spends on petrol subsidy.

AccordingtoNNPC’sunderrecovery cost report in 2018, amount spent on petrol subsidy by the Federal Government amountedtoN730.9billionwith fuel price fixed at N145.

Totally eliminating fuel subsidy will push petrol prices near N250 per litre, at par with international petrol prices.

However, if the government considers a 38 percent increase in fuel prices to N200, it will save the Nigerian treasury about N277.23 billion, while totally eradicating subsidy will save the government N730.9 billion.

Power sector reforms The Federal Government in 2013 finally implemented the Electricity Power Sector Reform Act of 2005 – some eight @Businessdayng

years late. The main kernel of the Act was the privatisation of the nation’s power assets.

These assets that were hitherto managed for the government by the Power Holding Company of Nigeria (PHCN) were classified into two – the power generating companies (GenCos) and the power distribution companies (DisCos) which were sold to the private sector, with the government retaining some equity interests.

But the nation’s generated power, at a maximum output of 4,000MW, was awfully below demand, leading to power rationing which had defined the nation for decades. In response, the government had embarked on the development of generation assets, which it proposed for future sale.

To deepen economic growth, experts have asked government to imperatively implement a power sector reform, which should include the conversion of the N1 trillion power sector debts into equity, and to adopt a costreflective tariff.

Since the power sector privatisation in 2013, the Nigerian Electricity Regulatory Commission (NERC) has failed to review electricity pricing six times under the Multi Year Tariff Order (MYTO) it instituted to price electricity, a failure that has fuelled illiquidity in the sector and caused shortfalls of nearly N1.4 trillion.

Deregulation of the downstream oil sector In the last 10 years, investors in the nation’s capital market have continued to demonstrate low appetite towards shares of companies in Nigeria’s oil and gas downstream sector, thanks to plethora of challenges, which have virtually wiped out the margins of the oil marketing and trading companies, as well as other importers of petroleum products.

Before now, the sector was the darling of all – government, investors or general public.

However, recent analysis revealed the situation seems not to be the same again for listed firms in the sector, such as Oando plc, Forte Oil plc, Total Nigeria plc, MRS Oil Nigeria plc, Conoil plc and 11 plc (formerly Mobil Oil Nigeria plc) under the umbrella of Major Oil Marketing Association of Nigeria (MOMAN).

Facing the challenges in the sector, MOMAN suggested some important strategic steps which include full deregulation of the sector.

“Nigeriaasthelargestmarket in Africa offers unique opportunities for investment in the petroleum downstream subsector,” said a report by PricewaterhouseCoopers (PwC).

“However, the government needs to create the necessary business environment through price liberalization and strong independent regulation. In addition, challenges around pipeline infrastructure, technology, supply consistency and capital need to be addressed,” PwC said in its report titled ‘Nigeria: looking beyond oil’.

Wednesday 22 May 2019

BUSINESS DAY

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Wednesday 22 May 2019

BUSINESS DAY

NEWS

Pan Ocean to unveil 160,000bopd alternate export pipeline

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an Ocean Oil Corporation, operator of the Nigerian National Petroleum Corporation (NNPC) Pan Ocean Joint Venture, is set to unveil the 67-kilometre 160,000 barrels of oil per day Amukpe-Escravos Pipeline Project (AEPP) in Delta State.

The unveiling, scheduled to come on stream before the end of the second quarter of 2019, will further boost Nigeria’s crude oil exports and also serve as alternative to the much-troubled Trans Forcados Pipeline (TFP) for oil companies operating in the Western Niger Delta.

According to John Okusolubo, senior pipeline engineer and project lead, AEPP, “The primary objective of AEPP is to ensure that there is no disruption to crude oil export like the scenario we are currently experiencing on the TFP where crude export has been suspended. Nigeria’s experience and history has shown that it is not wise to be highly dependent on a particular source that is why we have AEPP as an alternative to TFP, which has been our major means of

exporting crude oil as a joint venture (JV) partner.”

Commenting further on the project, Okusolubo said, “The construction of the AEPP entails the use of continuous Horizontal Directional Drilling (HDD) method to install the entire pipeline length for the purpose of security from the act of vandalism which is prevalent in the domain.

“The project’s objective is to provide Pan Ocean JV and other Niger Delta mid-western producers like Seplat, Nigerian Petroleum Development Company (NPDC), Conoil, Sahara and other oil producers in the area an alternative export pipeline route to the existing TFP which has suffered disruptions as a result of vandalism.”

Nigeria’s crude export capability has been impacted since 2015 because of the massive vandalism of oil and gas infrastructure in the Niger Delta. The 240,000 barrels of oil per day TFP remains shut down after a fire broke out at the facility on May 19. Export of crude oil has been suspended while repair work is underway.

Unions to shut down NCAA’s operation over workers’ welfare IFEOMA OKEKE

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ctivities at the Nigerian Civil Aviation Authority (NCAA) would be disrupted from today by the National Union of Air Transport Employees (NUATE) for failure of the management to agree to their request on workers’ welfare.

The union and other labour organisations in the aviation industry had jointly requested that the agency tinker its organogram to elevate some workers due for promotion, but there were no vacant positions they would occupy if promoted.

A fortnight ago, the unions gave the agency ultimatum to create positions in the organogram to accommodate the workers promoted over 15 months ago.

In a statement issued by the union Tuesday, NUATE said it was peeved by the inaction by the management of NCAA and therefore declared a shutdown of the agency from today.

“As you are aware, our unions issued a seven-day ultimatum to Federal Ministry of Transportation (Aviation) and NCAA over sundry issues. This ultimatum

expired on Monday 20th May 2019. At this time, the Federal Ministry of Transport (Aviation) has completely neglected the ultimatum while the NCAA has reacted with only half-hearted measures. This means that no single item on the demands list has been ameliorated.

“Having therefore exhausted all efforts and patience on the issues, we are left with no other option, our unions hereby direct all staff of NCAA nationwide to commence an indefinite industrial action with effect from 0500hrs on Wednesday 22nd May, 2019. In the above regard, the general public is hereby notified that the situation will remain so until the following issues are completely resolved.

“For the above purpose, all NCAA workers are to assemble at the entrance/gate of the various work places and take directive from branch union officers on location until directed otherwise,” the statement from NUATE said.

However, investigations revealed that not all the workers are disposed to the strike action and those who do not agree with the demand of the unions might flout the directive today.

80% millennials want churches to advocate good governance - study SEYI JOHN SALAU

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ith growing rate of kidnapping, insecurity and depression among Nigerians, a recent survey by Alder Consulting, tagged, ‘The Alder Church Report 2019,’ says 80 percent of young Nigerians want churches to be directly involved in politics and advocate for good governance.

70 percent of respondents are of the opinion that the church should get involved in politics. However, 23 percent say that pastors can vie for public office, while 80 percent think that churches should advocate for good governance.

The Alder Church report measures the perception of the church in Nigeria and its impact on society and national development. It also provides information about sociocultural shifts that affect the church, highlighting public perception of church stewardship, use of technology and social relevance. The study also investigated emergent issues of youth sexuality and mental health in Nigerian churches.

According to Leke Alder, principal, Alder Consulting, the church is a barometerofthesociety;thechurchis asocietalinterface,anarbiterbetween the people and the government.

“Society is invariably reflected in the church and through the church we can measure the values of society through the perspective of youth; identifysocio-culturalnorms,andthe

level of engagement in society. The church is not a building – it is people collective, reflection of mankind in its most natural state,” Alder said.

Speaking further on the survey, Alder said the survey was conducted to provide the clergy a window through which they could reach society, therefore bridging the gap between the church, society and all stakeholders.

“It is more of a social report than a church report; hope it will help relevant authorities to focus on the big issues that are the bane of the society,” said Alder stating that politics, mental and emotional health, progression, and finance are critical issues facing the society today.

With a total number of 4,634 respondents; 3,634 responded online across Nigeria while 1000 responded offline from Abuja, Borno, Enugu, Kano, Lagos and Rivers States. The demographics show that 68% are below 35 years old of which 64% are employed while 32% are unemployed.

However, a further breakdown of the demographics indicated that 53 % of the respondents are male, while 47% arefemale.50%oftherespondentsare marriedwhileanother50%aresingle.

The survey finds that more millennials consume Christian content in digital format (e-bible, video message and audio messages) in the Northwest, than in any other region of Nigeria. This according to the report speaks to a strong desire for teachings in this part of Nigeria.

Lagos allays fears of residents on rainfall

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s the rainy season gradually sets in, the Lagos State government on Monday assured residents that it had put in place necessary measures to address challenges posed by heavy rainfall.

In a joint statement released in Alausa on Monday, permanent secretary Ministry of Information and Strategy, Fola Adeyemi, and his counterpart in the Ministry of the Environment, Abiodun Bamgboye, urged Lagosians to remain calm as the unpredictable pattern of rainfall currently being experienced was a natural outcome of climate change.

The government stated that it was not unusual to occasionally experience flash floods, especially in a coastal state like Lagos, as well as during rain of high intensity, as it occurred on Monday, but assured Lagosians that in a matter of time, they would all disappear and be contained by the drainage.

According to the statement, “Sometimes when it rains, we are likely to have flash-floods on our roads as it sometimes happens in other parts of the world, but the relief here is that the flash-floods will disappear in a couple of hours.”

The statement also assured Lagosians that relevant government agencies, like Drainage Services Department, LASEMA, LASPARK, had been put on red alert to adequately respond to any unforeseen occurrences, during rains of high intensity as well as cart away fallen trees, Electricity poles and confront any other

emergencies, during the rains.

Similarly, Lagos State Public Works Corporation is already on ground to clean the drainage channels, drainage setbacks and other road debris.

The government appealed to Lagosians to desist from the act of indiscriminate dumping of refuse in the drains as well as erecting structures on drainages and their alignments as these acts are capable of precipitating flooding.

“The general public is urged to promptly report cases of indiscriminate dumping of refuse into drainage channels and unauthorised places as well as other incidents of drainage blockage to the relevant government agencies,” the statement added.

The state government also advised Lagosians and motorists to be safety conscious during this period, urging them to take some safety measures like remaining indoors during the rains except when it was absolutely necessary, and avoid over-speeding when driving.

It also advised drivers to ensure their vehicles were in good condition and avoid driving through flooded areas that their depths might be difficult to ascertain.

While advising Lagosians along flood plains and lowlands to be alert and safety conscious, the government assured that it would continue to intensify efforts at containing the flood, stressing that it had and would continue to painstakingly maintain all primary and secondary channels during and after the rainy season. www.businessday.ng

L-R: Niyi Falade, managing director, CrusaderSterling Pensions Limited, and Abdul Bello, former GMD, OACN plc, at the 2018 CrusaderSterling Retiree Forum in Lagos, recently

ULC wants minister to exercise caution over demand on NUPENG JOSHUA BASSEY

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nited Labour Congress (ULC) has urged the Federal Ministry of Labour and Employment and its presiding minister, Chris Ngige, to exercise caution on the demand on Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) to present its audited account to the ministry within three days.

Recall that the ministry in a letter dated May 13, 2019, had demanded that NUPENG submit to it within 72 hours audited reports of the union’s accounts for 2017 and 2018.

NUPENG on receipt of the letter had raised concerns and alleged that the minister was planning to proscribe the union because of its

(NUPENG) involvement in the recent picketing of Ngige’s residence in Asokoro, Abuja, by the Nigeria Labour Congress (NLC).

During the picketing, which was triggered by the disagreement between organised labour and the minister over the ‘failed’ appointment of Frank Kokori, a former general-secretary of NUPENG, as chairman of Nigeria Social Insurance Trust Fund (NSITF), NUPENG had deployed two tankers to block the minister’s residence.

Joe Ajaero, president of ULC, a body to which NUPENG affiliates, said on Tuesday, that the urgency with which the ministry of labour was demanding the audited reports of NUPENG was an ill wind that could trigger an industrial unrest.

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“The rules are very clear regarding such requests by the ministry.

The law provides for thirty clear days instead of the three days demanded by the operatives of the Ministry of Labour. When laws are flagrantly disregarded by those who are supposed to be its custodian, it raises other questions. If the request was for the purposes of probity and standards in the industry, why resort to impunity in pursuing it or perhaps, there is an indecent haste to achieve a devious end,” Ajaero said.

The ULC expressed worry that despite its earlier warnings on the need for all stakeholders within the nation’s industrial relations space to stick to the dictates and precepts that guide engagement among the social partners, to avoid industrial unrest, @Businessdayng

actions and utterances arising out of the NSITF-Kokori affair had rather been bellicose and imperious.

“This is clearly against the principles of industrial harmony which all parties must seek to uphold at all times,” it said.

The labour centre argued that the deployment of actions that run against the ethics of tripartite engagement should not be an option as “we seek to resolve whatsoever grievances that may arise in our relations.”

Ajaero said the labour centre was therefore exploring avenues to seek more sensible and amicable resolution of all issues involved to avoid plunging the nation into a disastrous industrial unrest with unimaginable consequences.

Wednesday 22 May 2019

BUSINESS DAY

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news Shell paid FG highest revenue among 34 countries in 2018 … Bonga field projects approach FID DIPO OLADEHINDE

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n 2018, Royal Dutch Shell plc paid N2.2 trillion as revenue to the Federal Government from its exploration activities, the highest paid to any government among all the 34 countries it currently operates.

According to a breakdown from Shell financial statement, Nigeria government received a total of N2.2 trillion ($6.39bn), which represents a 48 percent increase compared with N1.5 trillion ($4.32bn) in 2017.

Further breakdown shows in 2018, Nigeria government received production entitlement of $3.7 billion, taxes of $1.3 billion, royalties of $358 million and fees of $976 billion.

It made another N2.1 billion as statutory payment to the Niger Delta Development Commission, Bayo Ojulari, SNEPCo’s managing director, said in a statement to BusinessDay. A further breakdown of Shell’s records shows Malaysia received the second highest payment of $4.7 billion; Norway received the third highest payment of $4.2 billion, while Oman received the fourth highest payment of $3.2 billion.

According to Ojulari, the payments resulted from oil and gas production by SNEPCo’s flagship investment, Bonga, which is Nigeria’s first oil and gas project in water depths of over 1,000 metres. “At the end of 2018, SNEPCo had produced 819 million barrels of oil from the Bonga field which translates into huge contributions to the Nigerian economy in addition to the significant human capital development of deep-water expertise among Nigerians.”

On the ongoing Bonga South West Aparo, a new project in the Bonga field, Ojulari said the company was making progress with the 150,000 barrel per day capacity project after signing the Head of Terms agreement with partners last February and released Invitation to Tenders to contractors in the same month.

“We are working with our government and other partners to take the project to a point where we are able to take the final investment decision,” he said.

He noted that the pride of SNEPCo was the increase in its Nigerian workforce to over 96 percent and the creation of Nigeria’s first oil

and gas engineers with deep-water experience. “The success story at Bonga is not only that it is Nigeria’s first deep-water project but the fact that Bonga is a Nigerian venture delivered by Nigerians using global expertise and processes offered by the Shell Group that have launched Nigeria into the league of notable deep-water players.”

Apart from payments to government, SNEPCo is also credited with many social investment initiatives nationwide, particularly in education, health and sports, which Ojulari said were considered very critical to the overall wellbeing of Nigerians.

According to Ojulari,, the company spent over N2.2 billion on various social investment programmes in 2018.

“Today, SNEPCo supports 298 undergraduates towards achieving their degrees with beneficiaries across the 36 states of Nigeria and another 375 scholars on full-board secondary school scholarship programme for pupils from public schools into seven top-flight private secondary schools across Nigeria to enhance access to quality education,” he said.

US, China trade war good for naira stability - Gwadabe HOPE MOSES-ASHIKE

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he trade war between the US and China has led to higher crude oil (Brent) prices, which is good for the naira and Nigerian economy, Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON), said.

Gwadabe said since the beginning of April this year, oil prices had remained above $70/barrel as the trade war raged, saying the US sanctions on Iran and Venezuela had tightened the supply of crude oil to the market and put upward pressure on oil prices.

Gwadabe disclosed that Washington had last week raised tariffs on $200 billion worth of Chinese imports to 25 percent from previous rate of 10 percent, pushing prices of affected consumer goods higher.

“The rising oil prices as a result of tension in the Persian Gulf and the increasing trade wars between two world economic giants, China and America will help to take the naira to another level of stability. I advise the Federal Government and the Central Bank of Nigeria (CBN) Management to take advantage of the two crises - trade tensions

and rise in crude oil prices by introducing that will support growth and development opportunities,” he said.

He said with the exchange rate stability being witnessed in the market, the next target of the apex bank should be to have a single digit interest rate that would stimulate economic activities and business growth.

He said Russia and the Asian countries were already utilising their Yuan Swap agreement with China to strengthen their local currency, a strategy Nigeria was also expected to pursue.

The ABCON boss expects the CBN management to deepen currency SWAP pact with China and diversify commodity exports to the US in other to diversify foreign exchange earrings for the country.

“Other great areas to focus for diversifying our foreign exchange earnings include promoting Diaspora remittances for economic buffer and foreign reserves accretion as seen in India and United Arab Emirates where migration remittances have lifted their economies,” he said.

He said effort should also be intensified by fiscal authorities in empowering the youths through job creation

and higher productivity.

“The ABCON Executive Council under my leadership will continue to promote improved capacity and technological advancement among BDC operators. We are also committed to better skills acquisition for BDC operators to elevate them to viable monetary regulatory partners and lead player in exchange rate stability,” he said.

He commended the CBN Management for promoting a sustainable exchange rate stability policy that is in consonance with its price stability mandate.

There is always an option for the CBN to either abandon the exchange rate stability mandate to accumulate foreign reserve and allow the naira to depreciate as was the case when the local currency dropped to N530 to dollar nearly two years ago, thus adversely affecting businesses, he said.

He said the CBN has been able to create a people-focused Central Bank promoting macro-economic objectives such as low inflation and a stable exchange rate, along with a focus on promoting inclusive growth and reducing unemployment in the country.

DexNova inaugurates new board of directors FRANK UZUEGBUNAM

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L-R: Joseph Osodi. head, brand marketing and communications, Credit Direct Limited; Chukwuma Nwanze, executive director, Credit Direct Limited; Abimbola Usman, winner, outstanding staff award; Akinwande Ademosu, MD/CEO, Credit Direct Limited, and Lilian Ohiarieku, during the presentation of cars to 6 outstanding staff as part of the company’s plans to reward and celebrate hardwork.

Customs Strike Force, SON stifling trade at ports – Shippers’ Association AMAKA ANAGOR-EWUZIE

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hippers Association of Lagos State (SALS) has condemned the operations of the Nigeria Customs Strike Force, a unit of the Nigeria Customs Service (NCS), recently deployed to the ports.

According to the association, the presence of the taskforce is gradually militarising the ports in the guise of checkmating smuggling.

Speaking with BusinessDay on telephone, Jonathan Nicol, president, SALS, condemned the modus operandi of the Standards Organisation of Nigeria (SON), which currently makes the environment of trade very unfriendly.

“Nigeria is not at war. Can anyone explain why our trade environ-

ment is littered with gun-carrying government agencies in a civilised society? The Nigerian Senate should save the lives and property of investors in our ports,” Nicol said.

Nicol, who said the duties of Customs were to collect revenue, alleged that Customs and SON had been constitutionally empowered to raise an army of destruction in the name of revenue collection.

“We give so much as traders and get little or nothing from government. It was the passion of simplifying trade that prompted government to appoint an economic regulator for smooth and equitable pricing of doing business in Nigeria,” he said.

Nicol said the cost of doing busiwww.businessday.ng

ness was constantly unstable as he kicked against the recent approval of the Practitioners Operating Fees (POF), saying, “This has triggered another fever in the sector.”

He noted that the collection of the POF amounted to double dues/ fees collection as all professional bodies collect annual operational fees paid by their members to their various associations.

“For instance, manufacturers pay annual dues to Manufacturers Association of Nigeria (MAN); Medical Associations and others do same. Government was not properly informed that the freight agents were paid fully for contract of clearing jobs. We cannot fathom where this is practised anywhere

other than Nigeria. Business will gradually fizzle out of our economic environment to other climes where trade tariffs are equitable,” he said.

He however decried the dilapidated port access roads at the TinCan Island area, the poor drainage system within and around the ports, and the lack of sewage facility, in spite of taxes being collected.

He, therefore, charged the government to address all issues affecting the port business as had been raised and require attention.

“Businesses are closing down every day. Multinationals are taking over our businesses in the guise of modern trends. How can an entire “economic matter” be treated with levity?

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exNova Consulting Limited, a professional services firm operating in the knowledge industry and dedicated to building excellent delivery capability in organisations, has inaugurated a new board of directors in its bid to retain its strong pedigree in the industry and also deliver qualitative service to its clientele.

Those appointed are Ituah Ighodalo, chairman; Olusegun Osinowo, non-executive director; Olusegun Olaniyan, executive director, and Adewole Oriade, CEO. Ituah Ighodalo commenced his professional career in 1982 at Pricewaters House now PricewaterhouseCoopers (PwC) and later founded Ighodalo & Co., a professional public accounting firm in January 1987. In October 2004, Ighodalo & Co. merged with three other firms to form SIAO/RSM. He is the chairman FAMAD Nig. plc, FINATRUST Micro Finance Bank, The Clinix Diagnostic Centre, Roch Tools Limited, Enugu Independent Power Plant, Capitalgate Limited, Elizabeth R Events Management, Trinicorp Nig. Limited, among others.

Olusegun Oshinowo was the director-general of Nigeria Employers’ Consultative Association (NECA) from 1999 till 2018. Oshinowo serves as a director of Nigerian-German Chemicals. He is on the board of several organisations including Nigeria Social Insurance Trust Fund (NSITF), Ni@Businessdayng

geria Labour Advisory Council, National Pension Commission (PenCom), National Orientation Agency, and the National Health Insurance Scheme.

Olusegun Olaniyan is a Project Management Professional (PMP) with over 15 years’ experience in various fields of Civil Engineering ranging from telecoms, building construction, water engineering and management, road construction, hydropower, renewable energy and municipal infrastructure projects.

Adewole Oriade is a project/programme management consultant, trainer and speaker with many years of experience in process facilitation, planning, monitoring and evaluation. He facilitates project and strategic management courses and conduct project management assessments.

He also helps clients establishing project management methodologies and project management office. Adewole is the content developer and facilitator for United Nations Office in Geneva (UNOG) on UNITAR organized Project Management for sustainable development and has trained several participants from African Management Services Company (AMSCO)-a UNDP project.

He is a member of faculty of Novartis African University teaching Strategic Project Management as well as a member of faculty of X-Academy of the Nigeria Stock Exchange teaching Project Management Fundamentals.

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Wednesday 22 May 2019

BUSINESS DAY

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Wednesday 22 May 2019

BUSINESS DAY

41

news EXPLAINER

Why May 29 differs from June 12 OWEDE AGBAJILEKE, Abuja

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ast week, the Senate passed the Public Holiday Act (Amendment) Bill seeking to change Nigeria’s Democracy Day from May 29 to June 12.

The bill, which originated from the House of Representatives, was unanimously adopted at plenary after a clause-by-clause consideration of the proposed legislation by Committee of the Whole.

The development comes as the Federal Government on Monday declared May 29 and June 12 as public holidays in the country.

While the former would mark the transition to a new government, the latter would commemorate the June 12, 1993 presidential election acclaimed to be the

freest and fairest in Nigeria’s history.

The President’s inauguration will still take place on May 29 this year in a low-key manner, while most of the elaborate activities formerly performed on May 29 have been shifted to the new Democracy Day - June 12.

Information minister, Lai Mohammed, explained that unlike the May 29 event, world leaders would only grace the June 12 programme.

President Muhammadu Buhari had in June last year directed that the National Democracy Day be shifted from May 29 to June 12.

Buhari gave the directive while conferring a posthumous award on the acclaimed winner of the June 12, 1993, general elections, Moshood Abiola.

Reps ban plastic bags, sets N5m fine, 3yrs imprisonment for offenders James Kwen, Abuja

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ous e of Representatives Tuesday banned the use, manufacture and importation of plastic bags in Nigeria and recommended paper bags.

The House stipulates that any retailer who provides customer with the plastic product is guilty of an offence and must be sanctioned accordingly.

The lawmakers stated that any person who manufacture plastic bag for purpose of selling, and that anyone who import the bag whether as a carryout bag or for sale should be penalised.

The House reached the resolution after consideration of report by Committee of the Whole on an Act to ban the use, manufacture and importation of all plastic bags used for commercial and

CHANGE OF NAME

I, formerly known and addressed as Angela Esther Chalokwu now wish to be known and addressed as Angela Esther Oladipupo. All former documents remain valid.

General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Ohiosimuam Airekpitan Omi now wish to be known and addressed as Mrs. Ojeme Airekpitan Omi. All former documents remain valid.

General Public please take note.

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I, formerly known and addressed as Miss Ebhodaghe Agnes now wish to be known and addressed as Mrs Agu Agnes. All former documents remain valid. General Public please take note.

household packaging.

Cited as Plastic Bags Prohibition Bill, 2018, it seeks to; “among other things prohibit the use, manufacture and importation of all plastic bags used for commercial and household packaging in order to address harmful impact on oceans, rivers, lakes, forests, environment, wildlife and human beings, and to relieve pressure on landfills and waste management”.

The bill stipulated that, “any person found guilty of offences under clause 1 shall be liable on conviction to a fine of not more than N5,000 or imprisonment for a term not exceeding three years or to both such fine and imprisonment.

“Any company or organisation found guilty of the offence provided in clause 1 shall on conviction be liable to a fine not exceeding N5 million.”

CHANGE OF NAME

I, formerly known and addressed as Mrs. Folashade Muibat Shodunke now wish to be known and addressed as Mrs. Mercy O. Oluwademilade Shodunke. All former documents remain valid.

General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Adeola Marian Adesina now wish to be known and addressed as Adeola Marian Olayinka - Shehu.

All former documents remain valid.

General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Elijah Matthew Adedayo now wish to be known and addressed as Elijah Matthew simplice. All former documents remain valid.

General Public please take note. www.businessday.ng

L-R: Amaka Obiora, company secretary/legal adviser, Caverton Offshore Support Group plc; Aderemi Makanjuola, chairman; Olabode Makanjuola, chief executive officer, and Bello Gwandu, non-executive director, during the 10th annual general meeting of Caverton Offshore Support Group, in Lagos, yesterday.

FG to generate N6bn from concessioning of 20 silos Cynthia Egboboh, Abuja

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he Federal Government has planned to earn a minimum of N6 billion from the concessioning of 20 silos under consideration.

Audu Ogbeh, minister of agriculture and rural development, speaking at the handing over ceremony of the silos to the concessionaires in Abuja, said the government established silos complexes and commodity warehouses in various parts of the country aimed at promoting products storage and stabilising commodity prices to industries.

Ogbeh said, “The Federal Government embarked on the construction of first set of metal silo complexes consisting of the five silos at Akure, Gombe, Ogoja, Minna and Makurdi.”

The concession is mainly for the purpose of ensuring efficient operation and maximum utilisation of the silos, adding that the

Federal Executive Council had approved 20 of the 33 silos complexes to be concessioned after successful negotiation with the preferred bidders.

The minister said of all the silos, the Federal Government would retain six6 silos for price stability, strategic reserve and to guarantee minimum price scheme. The concessionaires include: Matrixville Consortium, Flour Mill Limited, Coscharis Farms Limited, Agro Universal Consortium, Ebony Agro Industries Limited, and Neon Farms Africa, among others.

“The transaction process to concession the silo complexes was initiated in August 2013 by the ministry, while the infrastructure concession regulatory commission (ICRC) statutorily oversees the process with the world Bank support through the ministry of finance.

“The concession term is for a period of 10 years, during which

14 states yet to register for N55bn BHCPF OWEDE AGBAJILEKE, Abuja

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bout one year after the 2018 budget was signed into law, 14 states in Nigeria are yet to register for the Basic Health Care Provision Fund (BHCPF) to enable them access the N55.15 billion earmarked for primary health care in Nigeria.

The states include Kebbi, Jigawa, Akwa Ibom, Cross River, Gombe, Rivers, Borno, Zamfara, Ondo, Benue, Taraba, Nasarawa, Ogun and Sokoto.

The development comes as the Nigerian government has disclosed that only two hospitals in the country have cancer-treating machines. They include the National Hospital Abuja and the Lagos University Teaching Hospital (LUTH).

Health minister, Isaac Adewole, stated this when he appeared before the Senate on Tuesday. Adewole’s appearance followed a resolution in the Senate on May 8 on the deteriorating conditions of teaching hospitals in the country.

President Muhammadu Buhari had in June 20 signed the 2019 budget into law.

The National Assembly had earmarked N55.15 billion in the 2018 budget as 1 percent of the

Consolidated Revenue Fund (CRF) for the BHCPF. Health experts have lauded the National Assembly’s approval of the BHCPF in the 2018 Appropriation Act. It is believed that this would deliver basic health care services to all Nigerians through the primary health system.

While disclosing that 22 states have so far registered for the BHCPF, the Minister listed the requirements for accessing the funds to include presence of state health care development agency, state health insurance scheme and counterpart fund of N100 million.

He said he had also used the Nigeria Governors Forum and had personal interactions with the affected governors on the need to key into the Fund but to no avail.

He lamented that most states have abandoned primary and secondary health care, resulting in overcrowding of tertiary institutions.

According to Adewole, the collapse of primary and secondary health care centres have led to patients visiting tertiary health institutions for ailments like headache, malaria, high blood pressure among others.

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the concessionaires will operate and maintain the silo complexes under the supervision of the ministry and ICRC. The concessionaires will compensate the government through a fee structure broken down into three components,” he said.

Chidi Izuwah, director-general, Infrastructure Concession Regulatory commission (ICRC), in his remark said the continuous investment in infrastructure was essential for national growth, adding that infrastructure development often attracted private sector investment.

“These assets had been kept useless till now without creating financial value and aiding transformation of our nation as we are out to ensure that the government reap the full benefit of any public private partnership agreement.

“The government will get back this value through three component fund, which include; an upfront one-off payment of N1.3

billion, an annual fixed value of N3.4 billion and an annual share of profit from operations valued at N6 billion,” he said.

Mohammed Bello Umar, permanent secretary, ministry of agriculture stressed that the concession of the silo was a step in the right direction, as it would generate revenue for the government, adding that effective management of the silos would create wealth, employment and stimulate agricultural production.

He said, “I will encourage private sector investment, which will result in optimum and beneficial use of the silo facilities, to create wealth for the operators, generate employment and stimulate agricultural production in Nigeria.”

Umar, speaking further, said the ministry would encourage the concessionaires to succeed and would take full responsibility for the oversight functions to ensure that the silos were used for the purpose they were meant for.

Kannywood launches video streaming service, Northflix …with venture funding from the Norrenberger Financial Group

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he Kannywood film industry has announced the launch of a new video streaming service and online application Northflix - to industry stakeholders at a launch event in Kano State.

Northflix is a video streaming application created for and by the Hausa film industry. It provides a direct-to-consumer approach in delivering quality film content to movie lovers across Nigeria and the Diaspora, thereby increasing reach and value for the blossoming film industry.

The creation of Northflix will also help to stem the tide of piracy currently plaguing the industry, providing a more profitable business model to movie producers.

When asked about the experience and challenges faced in getting Northflix off the ground, Jamilah Abdulsalam, co-founder of Northflix, said, “Securing funding for the promotion of the arts in Nigeria is generally no small feat, thankfully we found a Venture Capital partner in the Norrenberger Financial Group, who understands the vision and sees the inherent value in @Businessdayng

the Hausa film industry. Their funding was instrumental in us successfully getting this project off the ground.”

Speaking on the decision to fund the project, Tony Edeh, managing director of the Norrenberger Financial Group, said, “At Norrenberger, we are on a mission to highlight and unlock the various opportunities for wealth creation that exist in our economy.

“Entertainment industries across the globe are multi-billion dollar industries, and videostreaming services like Netflix record profits in billions of dollars every year. The Hausa film industry is a grossly underserved market in the Nigerian movie industry and with the advent of Northflix, Kannywood can fully unlock its potential and begin to compete on a more global scale.”

Northflix, which also seeks to bring standardisation to the Hausa film industry, will soon be released to the general public, giving movie lovers access to a robust library of movies and television programmes, along with original programming produced by Northflix.

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Wednesday 22 May 2019

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

Judge rules Trump accountants must turn over financial records President appeals ruling on subpoena issued by House committee COURTNEY WEAVER AND ROBERT ARMSTRONG

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US judge has refused to block House Democrats from subpoenaing Donald Trump’s financial records from his accounting firm, rejecting the president’s arguments that congressional investigators were overstepping their authority.

The House of Representatives oversight committee issued a subpoena to the accounting firm, Mazars USA, after Michael Cohen, the president’s former personal lawyer, told Congress that Mr Trump routinely inflated or underestimated his assets for his financial benefit.

Amit Mehta, a US district judge, said on Monday he would not intervene on behalf of Mr Trump or his business to block the subpoena issued to the accounting firm, while giving Mr Trump’s lawyers a week to appeal against the decision.

“According to the oversight committee, it believes that the requested records will aid its consideration of strengthening ethics and disclosure laws, as well as amending the penalties for violating such laws,” said Mr Mehta.

“These are facially valid legislative purposes, and it is not for the court to question whether the committee’s actions are truly motivated by political considerations.”

The judge said the subpoena would also allow Congress to verify that Mr Trump had not violated the foreign emoluments clause of the

US constitution, which prevents US officials from accepting financial benefits from foreign governments.

Speaking outside the White House, Mr Trump said: “It’s totally the wrong decision by, obviously, an Obama-appointed judge.” Lawyers for the president filed a formal notice of appeal on Tuesday.

Separately, the House ways and means committee is fighting to subpoena Mr Trump’s tax returns.

In that case, the president and his lawyers have also sought to fight back using claims of congressional over-reach.

Earlier on Monday, Mr Trump took to Twitter to defend his relationship with Deutsche Bank after a New York Times report that said in 2016 and 2017 a bank employee flagged as potentially suspicious a series of transactions involving entities controlled by the president and by his son-in-law Jared Kushner.

“I built a great business and don’t need banks, but if I did they would be there,” the president said. “Deutsche Bank . . . was very good and highly professional to deal with — and if for any reason I didn’t like them, I would have gone elsewhere . . . there was always plenty of money around and banks to choose from.”

Deutsche, according to the report, declined to pass information on to justice department regulators. The employee, Tammy McFadden, was subsequently sacked and has lodged complaints with the Securities and Exchange Commission

Sephora ramps up store openings as it taps ‘beauty revolution’

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rance’s Sephora is opening up to 150 stores a year as the LVMH-owned beauty and make-up retailer seeks to accelerate its global expansion and keep up with a “beauty revolution”, according to its chief executive.

“Our retail stores are thriving; they’re alive, they’re kicking,” said Sephora chief Chris de Lapuente on Tuesday in an interview at the Financial Times Business of Luxury Summit in Madrid. “We’re opening between 125 and 150 stores every year, and we’re constantly renovating our biggest and best stores.”

Sephora’s investment in physical stores underscores the key role it sees for bricks-and-mortar outlets to engage with customers, as part of an “omnichannel” approach that includes ecommerce and building an online community through social media. The regions that will have the most new stores are North America and Asia; and growth in China is forecast to

both US and European regulators in recent years for violating antimoney laundering regulations and sanctions rules, and remains under investigation by several authorities over allegations of similar breaches.

The bank’s links to Mr Trump are sensitive because of political interest in the US president’s financial history and the German bank’s repeated run-ins with regulators in the US, where it has regularly failed Federal Reserve stress tests.

Last month, Mr Trump sued Deutsche to stop it from handing over financial records in response to congressional subpoenas issued

by Democrats asking for docu-

ments on its business relationship to the Trump Organization.

Mr Trump has been a Deutsche client since the mid-1990s, and he owed the bank $300m at the time of his inauguration.

The relationship has not always been smooth. In 2008, Mr Trump sued the bank, and was sued in return, over $40m in personal guarantees he made on a loan funding the construction of the Trump International Hotel & Tower in downtown Chicago.

He said the failure of Lehman Brothers was an unforeseeable event that should have freed him from his obligations. Deutsche has also financed projects for Mr Trump in Miami and Washington.

Chinese telecoms company says 3-month grace period ‘doesn’t mean much’ JAMES POLITI, DEMETRI SEVASTOPULO AND KIRAN STACEY

double in the next few years.

“What matters to us is to build wonderful relationships with our customers and the store is the place where these relationships are created and nurtured,” said Mr de Lapuente. “Experiential retail is very much part of Sephora’s DNA and we will continue investing in it.”

Sephora has enjoyed strong growth in the past few years on the back of soaring demand for cosmetics beauty products that has also benefited big brands such as L’Oréal and Estée Lauder.

LVMH does not break out Sephora’s performance in its results, but last year organic sales in the “selective retailing” division that Sephora is part of rose 12 per cent to €13.65bn (excluding the closure of Hong Kong airport concessions in 2017).

“It’s an extraordinarily dynamic market,” said Mr de Lapuente, a former longtime Procter & Gamble executive who became Sephora’s chief in 2011. “We’re living in a beauty revolution.” www.businessday.ng

The German bank has denied that Ms McFadden’s concerns were ignored or that she was fired because she made trouble for a big client. “At no time was an investigator prevented from escalating activity identified as potentially suspicious,” it said in a statement.

“Furthermore, the suggestion that anyone was reassigned or fired in an effort to quash concerns relating to any client is categorically false.”

Deutsche said it had “increased our anti-financial crime staff and enhanced our controls in recent years”, adding that it took compliance with anti-money laundering laws “very seriously”.

Deutsche has been fined by

Trump grants temporary reprieve from Huawei ban

French cosmetics chain says customer in-store experience is crucial to success HARRIET AGNEW

President Donald Trump’s lawyers had argued that congressional investigators were overstepping their authority © Bloomberg

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he Trump administration has issued a licence that will allow US companies to keep doing business with Huawei for the next three months in a bid to contain the fallout from the export restrictions on the Chinese telecoms equipment maker.

The licence would enable operations to continue for existing Huawei mobile phone users and rural broadband networks in the US, Wilbur Ross, commerce secretary, said in a statement on Monday.

“The temporary general licence grants operators time to make other arrangements and the [commerce] department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services,” said Mr Ross.

Ren Zhengfei, Huawei’s founder, said the reprieve “doesn’t mean much” to the company because it had already prepared for a potential blacklisting, and warned

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that the US was underestimating Huawei.

“We will not easily and narrowly exclude US chips . . . but if there is a supply shortage, we have a back-up,” Mr Ren said in an interview with Chinese state media on Tuesday. “The current practice of American politicians underestimates our strength.”

On Tuesday, Abraham Liu, president of Huawei’s EU office, said the “founding fathers of the US constitution would be alarmed when confronted with the actions of the Trump administration”.

“Huawei is becoming the victim of the bullying by the US administration,” he added. “This is not just an attack against Huawei.

It’s an attack on the liberal rulesbased order.”

Earlier on Monday, Google said it would stop providing Huawei with its Android software in order to comply with the export restrictions imposed by President Donald Trump. One industry source said the reprieve meant that Google could now resume providing the software. Google and Huawei declined to comment. @Businessdayng

Last week, as US-China trade tensions flared, the Trump administration abruptly announced that it was placing Huawei on the commerce department’s export blacklist, known as the entity list. This requires US companies wanting to sell to Huawei to obtain a special licence from the US government under a “presumption of denial”, meaning that Washington’s default position would be that any application would be rejected.

As well as dealing a blow to Huawei in the US and around the world, the move by the Trump administration triggered a sell-off in shares of US technology companies, including chipmakers, who are big suppliers to Huawei.

John Neuffer, president and chief executive of the Semiconductor Industry Association, which represents nearly 95 per cent of the US semiconductor industry, said: “We hope to work with the administration to broaden the scope of the license so it advances US security goals in a manner that does not undermine the ability of the . . . industry to compete globally and ensures [its] economic security.”

Wednesday 22 May 2019

FT

BUSINESS DAY

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NATIONAL NEWS

Former Credit Suisse banker pleads guilty on Mozambique bribes Detelina Subeva faced charge in US of conspiracy to help launder money JOSEPH COTTERILL

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former Credit Suisse banker has pleaded guilty in the US over handling alleged kickbacks in Mozambique’s $2bn “tuna bond” scandal.

Detelina Subeva, a former vice-president at the Swiss bank’s global financing unit, entered the guilty plea on a charge of conspiracy to help launder money before a New York court on Monday.

Ms Subeva is one of three former Credit Suisse employees whom US prosecutors have indicted over an alleged scheme to loot at least $200m from loans that the bank helped arrange in 2013 for the southern African nation, one of the world’s poorest.

The prosecutors accused the trio of working with Mozambique’s former finance minister and a representative of Privinvest, an Abu Dhabi-based shipbuilder, to siphon bribes connected to the debt. The loans imploded not long after being sold on to global investors.

Ms Subeva, 37, told the court that she had received funds from a $1m kickback that another of the trio, Andrew Pearse, allegedly received from Privinvest. The US dropped other charges against Ms Subeva.

Ms Subeva’s lawyer in London did not immediately respond to a request for comment.

The US has detained Jean Boustani, the Privinvest employee.

It is also seeking to extradite Mo-

zambique’s former finance minister Manuel Chang as well as the former bankers — Mr Pearse, 49, former head of the global financing group who went on to work with Privinvest, and Surjan Singh, 44, a former managing director at the bank. The three are fighting extradition.

Credit Suisse has said that its employees flouted due diligence rules and concealed communications from the bank.

The loans to state-owned companies were sold to investors as having helped Mozambique to create a tuna fishery and maritime security projects.

The funds raised were channelled through Privinvest, which had contracts to supply equipment connected to the loans.

However, about $1.4bn of the debt was concealed from the IMF and donors to Mozambique.

Donors cut funds to Mozambique’s government after the hidden debt was revealed in 2016 and Mozambique entered a deep financial crisis, including defaults on the loans.

According to US prosecutors, the bankers fabricated the rationale even on the one publicly issued bond for the tuna fishery, which was later turned into fully fledged government debt.

Mozambique has reached an agreement in principle with creditors on debt relief for the former tuna bond, and is close to a similar deal with VTB on a loan that the Russian bank arranged.

Arsenal business chief sees Premier League as main ticket to riches

Club’s managing director says competition is as vital to sponsors as Champions League to be in the Champions League as MURAD AHMED well, but I think that the Premier League piece is just as, if not more, rsenal has the chance to lift important than that.” its first European trophy in Arsenal’s lack of silverware in re25 years next week at the Eu- cent years has resulted in antipathy ropa League final in Baku, Azerbai- among some fans, who accuse Mr jan. It also offers an opportunity for Kroenke of chronic under-investvindication of the London football ment in players. Mr Venkatesham club’s business model under Stan said it was a “misconception” that Kroenke’s ownership.

Mr Kroenke was an absentee owner.

Victory over local rivals Chelsea Instead, the American billionaire would secure a place in next sea- and his team are in daily contact son’s Champions League — and a with Arsenal executives. share of its €2bn prize fund. That He does, however, admit that the compares with the €510m that is need to raise revenues is crucial. distributed among participants in Failure to qualify for the Chamthe lesser Europa League. pions League in the past two seaYet Vinai Venkatesham, the sons has led to revenues falling club’s new managing director and from £419m in 2017 to £389.1m a speaker at the Financial Times last year. The drop means Arsenal Business of Football summit on could soon be overtaken by bitter Tuesday, says that of more pressing north London rivals Tottenham importance is retaining its place Hotspur, finalists in this season’s among England’s so-called big six Champions League, in the rankclubs — and the firepower that ings of the world’s highest-earning brings to spend big on players. football clubs.

“Arsenal is clearly a top EuroMr Venkatesham insists that pean club so we want to be playing Arsenal has a “robust” business in the top European competition,” model: one more reliant on being a he said. contender for the English Premier “It’s important to our fans, it’s League, where it shares in roughly important to our current players. £8bn in multiyear broadcast rights, It’s also important to the types of than keeping a regular place in the players that we want and need to continent’s most prestigious club attract to the club and it’s also re- tournament. ally important to maximise our revArsenal last won the Premier enues so that we can invest on the League in 2004. Next season, it football side against our ambition.” will benefit from a new kit deal “The Premier League is the with German sportswear group thing that really draws the com- Adidas and a renewed shirt and mercial partners in. Of course, all stadium sponsorship with gulf our commercial partners want us airline Emirates.

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The offshore construction of Nord Stream 2 is continuing, with Moscow confident it will be completed regardless of US actions © AP

US prepares sanctions on Russia’s Nord Stream 2 pipeline

Move to target €9.5bn project that critics say Kremlin can use as political weapon HENRY FOY AND NASTASSIA ASTRASHEUSKAYA

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he US is preparing to impose sanctions on Russia’s controversial Nord Stream 2 gas pipeline to Germany, the Trump administration’s energy secretary has warned, targeting a project that critics say can be used by the Kremlin as a political weapon.

“The opposition to Nord Stream 2 is still very much alive and well in the United States,” Rick Perry told reporters at a briefing in Kiev during a trip to attend the inauguration of Volodymyr Zelensky, Ukraine’s new president.

“The United States Senate is going to pass a bill, the House is going to approve it, and it is going to go to the president and he is going to sign it, that is going to put sanctions on Nord Stream 2,” he said, in comments published

by Reuters.

Opponents of the €9.5bn scheme, which is under construction and will run from Russia to Germany under the Baltic Sea, fear Moscow will use it to increase its control over European energy supplies.

In particular, they claim it has been designed to hurt Ukraine by reducing the amount of gas shipped through the country.

Any sanctions would be a blow not just for the project but for Russia’s economy, giving fresh impetus to a five-year long sanctions regime against Moscow that has cut off some of its biggest companies from foreign banks and in effect banned many of its most prominent businessmen from doing business in the west.

Gazprom, the Kremlin-controlled energy group behind the pipeline, says Nord Stream 2 is a purely commercial project that will increase energy security for European consumers.

Executives close to the project told the FT that while they were concerned about talk of sanctions, they believed Washington would not impose measures but would only ramp up threats to deter western companies from investing in future Russian energy projects.

Bovanenkovo, a 1,000 sq km gasfield 2,200km north of Moscow in Russia’s Arctic, which Gazprom has developed to provide the gas for Nord Stream 2, is already scaling up production ahead of the pipeline’s planned completion at the end of the year.

Henning Kothe, chief project officer at Nord Stream 2, said the company was “aware that there is ongoing discussion in the US re-

garding sanctions against companies involved in Nord Stream 2”.

“We know there is risk. However, we do not expect that any sanctions will be imposed. We of course are in very close contact with companies working for us to follow the situation and if needed to take the necessary decisions,” he said, adding that no contractor had left the project over the sanctions risk.

Mr Perry was speaking a day after meeting Mr Zelensky, who has made clear Kiev will maintain its defiant stance towards Moscow, which annexed Crimea in 2014 and has backed separatists fighting a war in the country’s east.

“I would like to urge you that the United States keeps increasing sanctions against the Russian Federation,” Mr Zelensky told Mr Perry.

The Kremlin said it was confident the pipeline would be completed regardless of US actions.

“The project has been implemented to a large extent, and we are confident that it will be finalised and commissioned to the benefit of gas consumers in Europe,” said Dmitry Peskov, President Vladimir Putin’s spokesman, who described US threats as “nothing but an overt manifestation of unfair competition”.

The start-ups building ‘dark kitchens’ for Uber Eats and Deliveroo Tech investors bet they can serve up the right food at the right place at the right time TIM BRADSHAW

A

fter pouring more than $20bn into companies that bring meals to your door, such as Deliveroo in Europe, Swiggy in India and DoorDash in the US, tech investors are now looking at the other side of the table: how to make sure the right food is available at the right place at the right time to be delivered.

“The success of Uber Eats, DoorDash and others suggests there is a demographic shift towards consumption of prepared meals at home,” said Michael

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Ronen, managing partner at SoftBank Investment Advisers.

“The time is now to try and stand up supply that is more efficient against that demand.”

Venture capitalists have all aligned on the best solution: kitchens that only serve delivery customers, known as “cloud”, “ghost” or “dark” kitchens, that use a combination of advanced food preparation, underused real estate and algorithm-driven optimisation to lower overheads and increase output.

But the various approaches taken by start-ups are as different as sushi and fish ‘n’ chips. @Businessdayng

Some are focused simply on real estate, setting up and hiring out kitchens in the right urban locations to serve the new demand or commandeering defunct highstreet restaurants. These include Uber co-founder Travis Kalanick’s new start-up, City Storage Systems, which trades as CloudKitchens in the US, and London-based Karma Kitchen.

Those property ventures also create a new opportunity for kitchen services companies that focus on making the food, such as Dubai-based KitOpi, which operates in London and the Middle East.

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Wednesday 22 May 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Sterling rallies as May offers chance of second referendum

The pound rose to approach $1.28 after May said there is “one last chance” to pass her deal PHILIP GEORGIADIS

S

terling rallied on Tuesday afternoon after Theresa May offered MPs the chance of a second Brexit referendum if they pass her withdrawal agreement.

The pound rose to briefly approach $1.28 after the prime minister said she believed there is “one last chance” to pass her exit deal, which has already been rejected three times in the House of Commons.

Mrs May said the withdrawal agreement would include a requirement to vote on whether to hold a second referendum.

“I recognise the genuine and sincere strength of feeling across the House on this important issue,” Mrs May said.

“I have tried everything I possibly can to find a way through,” Mrs May said, admitting that the Brexit process had proven “even harder” than she had expected.

Sterling was recently trading 0.3 per cent higher against the US dollar at $1.2762, after having risen off multi-month lows ahead of Mrs

May’s speech.

Still, the path towards a second referendum, widely seen by investors to be sterling-positive, remains complex.

Zac Goldsmith, a Tory MP who had voted for Mrs May’s deal at its most recent failure, said the change of direction meant he could no longer support it.” I cannot support this convoluted mess.

That it takes us towards a rigged referendum between her deal and no Brexit is just grotesque.” he tweeted.

The last time MPs voted on holding a public vote on any final deal it was rejected by 292 votes to 280 with 66 MPs abstaining.

Labour whipped its MPs to support the proposal on that occasion.

The pound had earlier in the day slipped below the $1.27 level for the first time since January, amid broad dollar strength and investor scepticism on May’s chances of passing her withdrawal agreement.

The currency, which has traded as a barometer of investors’ expectations for Brexit, has fallen 1.9 per cent so far this month.

Former Tesla bull warns shares could plummet to $10 Morgan Stanley caution comes amid growing scepticism on Wall Street MATTHEW ROCCO

O

ne of Tesla’s longtime fans on Wall Street slashed his worst-case scenario for the stock price to a mere $10, in the latest sign that analysts have begun to lose faith in Elon Musk’s electric-car maker.

Morgan Stanley analyst Adam Jonas said on Tuesday that his new “bear case” for the shares, down from a previous estimate of $97, could materialise if Tesla were to miss by about half his forecast for sales in China. Mr Jonas also raised concerns about a “highly volatile trade situation in the region” and Tesla’s mounting debt load.

“This year’s sharp deceleration in demand has led to a substantial curtailment of the company’s ability to self-fund through free cash flow generation, at the margin potentially impacting the firm’s access to capital,” Mr Jonas wrote in a note to clients.

He added: “We believe as Tesla’s share price declines, the likelihood of the company potentially seeking alternatives from strategic/industrial/financial partners rises.”

Shares in Tesla have dropped almost 40 per cent so far this year.

The stock slipped as low as $196.04 in morning trading on Tuesday, down 4.7 per cent on the day, before rebounding.

The cautious view from Morgan Stanley — one of the underwriters of Tesla’s initial public offering in

2010 — comes amid growing scepticism on Wall Street that Tesla can increase profits and meet ambitious sales targets while fighting back competition from traditional automakers.

Wedbush’s Daniel Ives, another former bull on Tesla, warned this week that the company faced a “Kilimanjaro-like uphill climb” to rein in spending, describing the current situation as a “code red”.

Mr Ives, who lowered his price target to $230 from $275, knocked Tesla for pursuing “sci-fi projects” such as robotaxis, rather than focusing on shoring up demand for the key product, the Model 3.

Baird’s Ben Kallo said he continued to believe Tesla was positioned to outperform over the long haul. But he too lowered his price target on Tuesday, to $340 from $400, citing “constant noise” around the stock and “a lack of meaningful data points”.

The shift in sentiment has made Tesla the worst-rated stock among the Nasdaq 100, according to Bloomberg data. Analysts have an average rating of 2.75 on a scale of 1 to 5, with 1 being a strong sell.

Nearly 42 per cent of the analysts tracked by Bloomberg have a sell rating, compared with less than one-third a year ago. Wall Street’s average price target is $290.94, down from about $320.

Mr Jonas maintained his price target for Tesla shares at $230, with a “bull case” of $391, and an equalweight recommendation. www.businessday.ng

KPMG faces record £12.5m fine for bungled bank reports Accountant disputes ‘extravagant’ and ‘gargantuan’ penalty called for by UK regulator at hearing STEPHEN MORRIS

B

ritish regulators have called for KPMG to be fined at least a record £12.5m for misconduct in its work for Bank of New York Mellon, dealing another heavy blow to the reputation of the Big Four accounting firm.

The UK Financial Reporting Council, the audit industry’s watchdog, said at a London hearing on Tuesday the penalty would be justified because of the size of the US bank’s operations and the “truly exceptional” seriousness of the abuses.

While KPMG and one of its employees admitted they had acted improperly last year, the firm’s lawyers on Tuesday attacked the FRC’s proposed penalty as “extravagant” and “gargantuan.”

They argued the fine should be no more than £1.4m based on precedents from similar cases and the fact that the misconduct was unintentional, didn’t involve any criminality and none of BNY Mellon’s clients had lost money or assets as a result.

Due to the disagreement over

the size of the fine an independent disciplinary tribunal will decide the appropriate sanction after the three-day hearing. The largest sanction imposed by the FRC to date was the £6.5m penalty PwC paid last year for misconduct on its audit of retailer BHS. The latest case relates to reports produced by KPMG on how BNY Mellon complied with rules on safeguarding client assets, which were submitted to the UK’s Financial Conduct Authority in 2011. The work, which referred to about £1tn of client assets held in custody by the US bank, fell short of UK standards designed to protect customers.

The tribunal is another blow to the reputation of KPMG, which has been harshly criticised by politicians and regulators over the past two years for substandard work in the UK, South Africa and the US. This month it was fined £5m for “failing to exercise sufficient professional scepticism” over a 2009 audit of the Co-operative Bank, soon after a £6m penalty for a failed audit of motor insurer Equity Red Star at the end of April.

KPMG was also fined twice by

the FRC last year, receiving a £2m penalty over its work for retailer Ted Baker and a £3m fine relating to its work for insurance software firm Quindell.

Last June, the FRC criticised the company for an “unacceptable deterioration” in the quality of its audit work for large listed companies in the UK. KPMG is also under investigation by the FRC for its work at collapsed UK contractor Carillion, which was audited by the firm for 19 years.

“We accept and regret that some of our work did not fully reflect all aspects of the new guidance” and have enhanced our procedures since, a KPMG spokesman said of the BNY Mellon case. “We are committed to co-operating with our regulator to bring these historic cases to conclusion as swiftly as possible.”

BNY Mellon itself was fined a record £126m by the FCA in 2015 for failing to comply with rules that required customer accounts at its London branch and its international unit to be kept properly ringfenced between 2007 and 2013.

Whistleblowers: paying the pipers Complainants have little incentive to tell truth to power if the risks outweigh the rewards OWEN WALKER

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histleblowing takes courage. Jane Hutton, a trustee of the UK’s controversial £63bn universities pension scheme, has described the “considerable pressure” she felt investigating a potentially flawed valuation.

Criminality is not alleged in that particular case, but telling truth to power brings penalties more often than rewards: career blight, marriage breakdown and prosecution, for example. No wonder many turn a blind eye. A European Commission survey found three out of four witnesses to corruption did not report it. Fear of retaliation was the main reason.

Complainants risk exposure when bosses try to bend the rules.

That was underlined by a bungled attempt by Jes Staley, Barclays’ chief executive, to unmask an alleged whistleblower. UK watchdogs

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were rightly criticised for the leniency of a £642,000 fine. The Financial Conduct Authority meanwhile failed to investigate whistleblower complaints about Lloyds’ handling of frauds at a Reading branch.

Whistleblowing is on the rise, despite the patchy record of UK regulators. A new directive is introducing heavier protections in the EU. In Australia, tougher legislation comes into effect in July. The information age has given employees access to more data. There has been no shortage of scandals to reveal. Recently, a former employee of Danske Bank helped uncover a €200bn moneylaundering scandal.

Tip-offs and whistleblowing hotlines uncovered more than a quarter of the most disruptive frauds, according to a PwC survey.

Business pays lip service to the trend, but wonders where it will end. When the US introduced re@Businessdayng

wards for whistleblowers after the financial crisis, the US Chamber of Commerce complained it would reward “amateur sleuths in search of a big payday”.

The bounty can indeed be dazzling. In March the US Securities and Exchange Commission announced a $50m payout to two whistleblowers in a case concerning JPMorgan Chase.

Most countries are unwilling to go beyond paying compensation for lost earnings. Virtue is meant to be its own reward. The US experience suggests otherwise.

Whistleblowing against fraudulent government contractors was more than twice as common in sectors eligible for payouts, an analysis shows. Business happily incentivises profit-seeking by bosses.

They will be less tempted to chase earnings unethically if employees are incentivised to report such behaviour.

Wednesday 22 May 2019

BUSINESS DAY

FT

45

ANALYSIS

The US-China conflict challenges the world Smaller countries should band together to sustain multilateral free trade here does deepening economic conflict between the US and China leave the rest of the world, especially historic allies of the US? In normal circumstances, the latter would stand beside it.

The EU, after all, shares many of its concerns about Chinese behaviour.

Yet these are not normal circumstances. Under Donald Trump, the US has become a rogue superpower, hostile, among many other things, to the fundamental norms of a trading system based on multilateral agreement and binding rules. Indeed, US allies, too, are a target of the wave of bilateral bullying.

So what are American allies to do as the US and China battle? This is not just about Mr Trump. His focus on bilateral trade balances may even be relatively manageable. Worse, a large proportion of Americans shares a deepening hostility not just to China’s behaviour, but to the fact of a rising China.

We are also seeing a big shift in conservative thinking. In 2005, Robert Zoellick, deputy secretary

of the tariff war and the decision to limit the access to US technology of Huawei, China’s only world-leading advanced technology manufacturer, seem aimed at keeping China in permanent inferiority. That is certainly how the Chinese view it.

The trade war is also turning the US into a significantly protectionist country, with weighted-average tariffs possibly soon higher than India’s. A paper from the Peterson Institute for International Economics states, that “Trump is . . . threatening tariffs on China that are not far from the average level of duties the United States imposed with the Smoot-Hawley Tariff Act of 1930.” Tariffs may even stay this high, because the US’s negotiating demands are too humiliating for China to accept. These levies will also lead to diversion to other suppliers. Tariffs may then spread to the latter, too: bilateralism is often a contagious disease. Contrary to Mr Trump’s protestations, the costs are also being borne by Americans, especially consumers and farm exporters. Ironically, many of the worst hit counties are in Republican control. (See charts.)

of state, argued that China should “become a responsible stakeholder” in the international system. Recently, Mike Pompeo, secretary of state, has indicated a different perspective. Foreign affairs specialist Walter Russell Mead describes Mr Pompeo’s animating idea as follows: “Where liberal internationalists believe the goal of American global engagement should be to promote the emergence of a world order in which international institutions increasingly supplant nation-states as the chief actors in global politics, conservative internationalists believe American engagement should be guided by a narrower focus on specific US interests.” In brief, the US no longer sees why it should be a “responsible stakeholder” in the international system. Its concept is, instead, that of 19th century power politics, in which the strong dictate to the weak.

This is relevant to trade, too. It is a canard that the trading system was based on the notion that international institutions should supplant nation states. The system was built on the twin ideas that states should make multilateral agreements with one another and that confidence in such agreements should be reinforced by a binding dispute settlement system. This would bring stability to the conditions of trade, on which international businesses rely.

G0955_19X Wolf-Charts (Chinese retaliations) The US may soon have higher average tariffs than India All this is now at risk. The spread

Some might conclude that the high costs mean that the conflict cannot be sustained, particularly if stock markets are disrupted. An alternative and more plausible outcome is that Mr Trump and China’s Xi Jinping are “strongmen” leaders who cannot be seen to yield.

The conflict will then either remain frozen or, more likely, worsen as relations between the two superpowers become increasingly poisoned.

Where does this leave US allies?

They should not support American attempts to thwart China’s rise: that would be unconscionable. They should indicate where they agree with US objectives on trade and technology and, if possible, sustain a common position on these issues, notably between the EU and Japan.

They should uphold the principles of a multilateral trading system, under the auspices of the World Trade Organization. If the US succeeds in rendering the dispute system inquorate, the other members could agree to abide by an informal mechanism instead.

Most significantly, it should be possible to sustain liberal trade, at the expense of the US and China.

Anne Krueger, former first deputy managing director of the IMF, notes in a column that, by its own foolish decision to reject the Trans-Pacific Partnership, the US suffers from WTO legal discrimination against its exports to members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which replaced TPP. The EU also has free trade agreements with Canada and Japan.

MARTIN WOLF

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www.businessday.ng

Indian election: Narendra Modi’s incomplete project

If the prime minister wins a second term, he must arrest a slowdown in growth rate AMY KAZMIN AND LIONEL BARBER

I

n May 2014, India’s Narendra Modi took charge of a nation, which — despite its young and ambitious population — was anxious and adrift after a period of macroeconomic instability, corruption scandals and policy drift. A humble tea-seller’s son who rose to lead the prosperous state of Gujarat, Mr Modi had mesmerised India’s 1.3bn people — many still eking out a living through farming — with his vision of an urbanised, industrialised and modernised India, which could meet their rising aspirations.

In the acche din — or good days — he promised to usher in, India would absorb millions of youth into the workforce each year, and provide higher living standards — with better health and education — for an evermore connected and demanding population. Corruption, a persistent scourge, would be eradicated; India’s international stature would rise.

With this uplifting message, Mr Modi’s Hindu nationalist Bharatiya Janata party won the first singleparty parliamentary majority after three decades of fractious coalitions.

The new premier’s own reputation as a decisive, business-friendly leader and disciplined administrator raised hopes that India was poised for transformative reforms to unlock its oft-touted economic potential to rival China.

Now, Mr Modi — and all of India — is awaiting the verdict on how well he has fulfilled the lofty expectations he raised. On Thursday, officials will start counting votes from India’s general election. In the world’s biggest democratic exercise, more than 900m people were eligible to cast ballots in a contest framed as a referendum on the leader himself.

The result will determine whether the ascetic Mr Modi — a notorious micromanager who has centralised nearly all government decisionmaking in his own office — will have a second five-year term to try to fulfil his implicit promise: to help Indians achieve financial and material prosperity, while remaining rooted in socially-conservative, traditional values.

In the contest, Mr Modi’s BJP was pitted against a motley crew of disunited caste-based and regional opposition parties, including the Congress of Rahul Gandhi. With many voters still anxious about the economy, the BJP focused mainly on national security, promising Mr Modi would keep the Hindumajority society safe from external and internal threats, and linking his political rivals to India’s neighbour and nemesis Pakistan.

While Indian elections are notoriously difficult to predict, exit polls released on Sunday suggested the BJP and its allies would together secure a comfortable parliamentary majority. Though India’s exit polls

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have a mixed record, Indian shares rose strongly in Monday trading on the expectation that Mr Modi would secure a second term.

The prime minister’s supporters are optimistic. “In 2014, Modi was still hazy in most parts of the country,” says Swapan Dasgupta, an MP who has close ties to the prime minister. “But after five years of intense exposure, there is nobody in the country who doesn’t have a view on Modi. My view is that they are willing to give him another five years.”

Mr Modi — or whomever may succeed him in case of an electoral surprise — will have no time to savour victory. The prime minister boasts that India has grown faster under his leadership than ever before.

But businessmen privately warn that the economy is sputtering. Growth in gross domestic product slowed to just 6.6 per cent in the three months to December 31 compared with the same period a year earlier — its slowest pace in five quarters; industrial output has fallen steadily in the three months since, and contracted by 0.1 per cent year on year in March. Sales of passenger vehicles plunged 17 per cent in the year to April.

Private consumption has faltered and the government — whose spending has been the primary engine of growth over the past five years — has little fiscal space for further pump priming. Meanwhile, private investment remains tepid, as Mr Modi’s hard-edged anti-corruption rhetoric unnerves the elite business community, which had helped propel him into power with its financial support and public endorsement.

“The economy is slowing down faster than they think,” says a Mumbai-based executive. “If you want the economy to come back, you need to encourage animal spirits. But if people are scared, they are not going to invest. Business is now scared of what they [see] as the policeman.

A system that has been steeped in corruption for so long is in shock at the new way of doing things.”

When Mr Modi rode to power in 2014, he tapped widespread anger at the disastrous macroeconomic management and entrenched corruption of the Congress-led government over the preceding five years. But his ascent also marked a backlash against nearly 70 years of domination by a privileged, westernised and anglophone elite who had long romanticised rural life, with its arduous labour and often grinding poverty, as the authentic spirit of India.

As a Gujarati and Hindi-speaking autodidact — who rose through the ranks of the rightwing Hindu nationalist movement before entering electoral politics, Mr Modi tapped into the yearning of India’s toiling masses — the neo-middle class, as he calls them — for upward mobility and an escape from the travails of life in the countryside.

Mr Modi, who likens himself to a @Businessdayng

vigilant “watchman” standing guard over the national interest, vowed to destroy crony capitalism. Blaming a corrupt nexus of politicians and big business groups for the bad loan crisis inherited by his administration, he ordered the state banks that dominate India’s financial system to assess loan requests only on their merit, without regard for entrepreneurs’ political connections.

In its attitude towards the outside world, too, Mr Modi embodied a new assertiveness and ambition.

After decades of revelling in solidarity with other poor countries, Mr Modi has sought a seat at the top table for India. February’s missile strikes on Pakistan served as notice that his more muscular government would not quietly turn the other cheek to terrorist provocations — as the Congress-led governments had done.

“Modi is the tough guy, the nononsense guy, the man who isn’t afraid to take tough decisions and the man who isn’t afraid to take on the status quo,” says Mr Dasgupta.

The prime minister has certainly renewed popular optimism about India’s prospects. According to a recent Pew Research Centre survey, 55 per cent of Indians were satisfied with India’s overall direction last spring, up from just 29 per cent in the months before Mr Modi’s 2014 election.

Mr Modi is almost omnipresent in Indians’ daily lives, dominating newspaper headlines, television news and outdoor billboards — and many conversations. He has adroitly used social media — including his own “NaMo app” — to talk up his initiatives and forge an emotional connection with citizens.

Yet for all his soaring oratory about building a “New India”, Mr Modi has struggled to generate the steady jobs the country desperately needs, amid a fundamental economic transition in which India’s vast numbers of small, labour-intensive enterprises are being replaced by fewer, bigger and more capital-intensive enterprises.

“We have created a plutocracy right before our very eyes,” says Saurabh Mukherjea, chief executive and founder of Marcellus Investment Managers. “But the people that worked in these small industries have lost jobs. Cottage industries are getting hammered. You’ve got these boys able and willing to work everywhere but they don’t know what to do.”

In an era of growing protectionism and overcapacity, replicating China’s export-led growth model while trying to turn India into a workshop of the world no longer offers a short-cut to development. Mr Modi has sought other ways to stoke job-generating growth — from programmes to nurture high-tech start-ups to expanding the flow of microloans to small, cottage industries. These initiatives have won him strong loyalties among aspirational engineers and technology professionals, who dream of being part of a new digital push.

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Wednesday 22 May 2019

BUSINESS DAY

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Wednesay 22 May 2019

BUSINESS DAY

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Wednesay 22 May 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 21 May 2019

Top Gainers/Losers as at Tuesday 21 May 2019 LOSERS

GAINERS Opening

Closing

Change

Company

Opening

Closing

Change

N119.75

N131.7

11.95

UNILEVER

N32

N31

-1

N178

N185

7

CUSTODIAN

N6.5

N6

-0.5

N25.55

N27.8

2.25

GLAXOSMITH

N9

N8.5

-0.5

GUARANTY

N30.4

N31.3

0.9

N62.5

N62.15

-0.35

AFRIPRUD

N3.6

N3.94

0.34

N1.67

N1.51

-0.16

Company MTNN DANGCEM FO

NB JULI

ASI (Points) DEALS (Numbers) VOLUME (Numbers)

30,218.14 4,453.00 335,599,980.00

VALUE (N billion)

17.185

MARKET CAP (N Trn)

13.309

Global market indicators FTSE 100 Index 7,328.92GBP +18.04+0.25% S&P 500 Index 2,863.92USD +23.69+0.83% Generic 1st ‘DM’ Future 25,813.00USD +117.00+0.46%

Deutsche Boerse AG German Stock Index DAX 12,143.47EUR +102.18+0.85% Nikkei 225 21,272.45JPY -29.28-0.14% Shanghai Stock Exchange Composite Index 2,905.97CNY +35.37+1.23%

MTNN stocks push NSE market cap to new high of N13.3trn

Caverton grows profit by 338% in 5 years

…gains N372bn in just one day …investors may take profit on MTNN after 46% rally

ive years after its shares were listed on the floor of the Nigerian Stock Exchange (NSE), Caverton Offshore Support Group Plc, a foremost indigenous offshore logistics services provider has grown in leaps and bounds.

For instance, its Profit After Tax (PAT) grew by 338 percent in five years.

It comes to an average of 68 percent yearly. PAT moved from N980milion as at December 31, 2014 to N4.3billion as of financial year ended December 31, 2018. Profit before tax in five years also grew by 111 percent to N5.75billion as at December 31, 2018 from N2.73billion.

The Group’s Asset Base rose by 56 percent from N36.63billion as of December 31, 2014 to N56.06billion in 2018 while Shareholders’ Fund reflects the confidence of shareholders in the group with a growth of 54 percent in five years, from N11.93billion in 2014 to N18.38billion in 2018.

Meanwhile, Net profit in the financial year ended December 31, 2018 grew by 64 percent, from N2.62billion in the same period of 2017 to N4.30billion. The Net Profit jump in 2018, according to Caverton Group, was driven by improved profit before tax while PBT growth was attributed largely to the group’s ability to improve its revenue base as well as maintain its cost levels. PBT stood at N5.75billion in 2018 compared to N3.91billion in 2017.

The group says its shareholders’ funds which grew by 16 percent to close at N18.38billion in 2018, provides ample cushion for business growth. Shareholders had N15.80billion in the kitty of the company the preceding year.

Shareholders of the

Iheanyi Nwachukwu

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igerian stock market gained N372billion on Tuesday as investors rushed to buy the shares of MTN Nigeria Communications Plc (MTNN).

The shares of MTN Nigeria Communications Plc (MTNN) reached a new high of N131.7 per share on Tuesday May 21, 2019, having rallied by N11.95 or 9.98percent (permissible limit) as at 10:15 am.

The Nigerian bourse continued to thrive on the back of the MTNN listing, recording its highest session of gains since December 24, 2018 and highest turnover since March 2018. MTNN accounted for 85percent of turnover for Tuesday.

The All Share Index (ASI) rose by 288 points or 2.88percent and closed at 30,254.89points for the first time since April 23, 2019; against preceding day low of 29,373.40 points.

Negative year-to-date (ytd) return has moderated to -3.86percent.

In 4,453 deals, dealers exchanged 335,599,980 units valued at N17.185billion.

Dangote Cement Plc stock was also up, from N178 to N185, adding N7 or 3.93percent; while Forte Oil Plc advanced from N25.55 to N27.8, adding N2.25 or 8.81percent. On the losers table, Unilever Nigeria Plc led others after its shares dipped from N32 to N31, losing N1 or 3.13percent.

The value of listed stocks also increased from N12.937trillion to N13.309trillion, representing an increase of about N372billion in one day.

The rally speaks to the significance on this new listing and to the strength of the

L-R: Maria Anodere, senior manager, Litigation and Process Registry Department, Investments and Securities Tribunal; Emomotimi Agama, acting, head of department, Registration Exchanges and Market Infrastructure, Securities and Exchange Commission, and Caroline Dokpesi, principal manager, Commodities Exchange Division SEC, during the Training for senior management staff of Investments and Securities Tribunal on the Implementation of the Commodity Ecosystem in Abuja.

stock and company.

Taking a cue from the daily permissible limit of 10 percent which MTN Nigeria stock attains on daily basis since its listing, if demand continues to outweigh supply, it is surely off to reaching a high of N200 per share in the next 8 trading days to May 31. MTNN shares have gained N848billion in 4 days.

Analysts’ foresee investors taking profit on MTNN which has rallied 46percent in the four sessions since its listing by introduction.

However, they did not rule out the possibility of the stock persisting strong to drive the market to its fifth consecutive green on Wednesday.

The stock price upward trend continues amid the Nigerian Stock Exchange (NSE) confirming that significant issues have been raised that Dealing Members who have not been www.businessday.ng

involved in the cross deals have been unable to trade on behalf of their clients.

“The Exchange is not unconcerned about this state of affairs. Indeed, Council members of The Exchange urged brokers to discuss with their clients about possible sales of shares”, said the NSE in t statement released very late at night on Monday May 20.

MTN Nigeria listed by introduction. Chapel Hill Denhan acted as a joint financial adviser with Stanbic IBTC Capital in the historic listing of MTN Nigeria.

MTN Nigeria Plc in a statement on May 20, 2019 said it met all conditions required to list as a member of the Premium Board of the Exchange.

“The listing by introduction means that the existing shares of MTN Group (78.8percent), the Nigerian investors (19.4percent); and other investors (1.8percent) are listed.

A Lagos based fund manager speaking anonymously to BusinessDay because of the sensitivity of the matter confirmed that people are now negotiating MTNN share prices on 2 days limit up. “N150 per share is the going rate for MTN Nigeria in off market deals,” our source said.

“As an Exchange that champions transparency and equity for all stakeholders in our market, we have received stakeholder feedback concerning our present rules on cross dealing and will consider the issues raised as part of our sustained efforts to ensure our market remains equitable for all stakeholders.

“We believe in market forces as the most efficient methodology for price discovery. Demand and supply will interact to discover appropriate prices as trading activities continue in the market”, NSE further said in the statement.

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F

@Businessdayng

group got 25kobo per share as dividend in 2018 compared to 15kobo per share in 2017.

It represents an increase of 67 percent. But shareholders at the Annual General Meeting (AGM) which held at the Civic Centre in Lagos on Tuesday May 21 asked for more from dividend payout in the years ahead.

Shareholders want their Company to reduce the cost of borrowing and seek for cheap funds from the capital market to finance its operations and to save more money to be shared as dividends.

However, Aderemi Makanjuola, Chairman of Caverton Offshore Support Group Plc is optimistic that the entity would deliver a better performance in the year ending December 31, 2018, as he said the prospects look bright.

He disclosed that Caverton Offshore Support secured juicy contracts with the Nigerian National Petroleum Corporation, NNPC and Nigeria Petroleum Development Company, NPDC, which will boost the group’s revenue.

“We were awarded a 3-year (2+1) Contract for the provision of aviation services to the NPDC operating out of facilities at the NAF Base in Port Harcourt, Rivers State. The award of this new contract demonstrates the quality of character and tenacity of the purpose of our Management Team and this laudable development also represents true commitment towards ensuring seamless running of the nation’s oil and gas industry and by extension the Nigerian economy.”

Makanjuola said the Company demonstrated a strong commitment to Corporate Social Responsibility in the year under review.

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Wednesday 22 May 2019

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OIL

Uganda: Uganda agrees to pay oil firms more to use planned pipeline Page 50 GAS

L-R: Debo Fagbami, chairman, SPE Nigeria Council being presented with Shell in Nigeria Report by Bayo Ojulari managing director, Shell Nigeria Petroleum Development Company (SNEPCO) and George Ottoh, Bonga Southwest Opportunity Development Leader, SNEPCO, during Society of Petroleum Engineers (SPE) meeting with SNEPCO leadership in Lagos recently.

Algeria: Eni commits to longterm Algerian gas imports through 2027 Page 51 Market Insight

Debrief

Middle East tension gives Nigeria’s budget challenge helping hand FRANK UZUEGBUNAM

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Oil rises after OPEC+ keeps output cut Page 55 OPEC weekly basket price DAY

PRICE

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70.66

9/5/19

69.66

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69.88

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70.45

6/5/19

70.23 Source: OPEC

igeria’s 2019 budget benchmark is predicated on $60 per barrel, though as of the time the budget was been prepared, crude oil price hovered around $50. It drew criticism and was considered unrealistic.

“Notwithstanding the recent softening in international oil prices, the considered view of most reputable analysts is that the downward trend in oil prices in recent months is not necessarily reflective of the outlook for 2019,” President Buhari had stated in his budget address while justifying the crude oil budget benchmark.

The country’s 2019 budget tilt more on crude oil revenue projected at N3.73tn. With the non-oil revenue estimated at

N1.39tn, this leaves the economy vulnerable to oil price volatility and poses a major budget risk.

Another major shortcoming of the budget is the plan to borrow N1.649tn for the purpose of financing the budget deficit. Thus, with the recurrent spending estimated at N4.72tn, (inclusive of the provision made for the implementation of the new minimum wage), the economy could run into a major hitch should the sudden collapse of oil price in 2014 re-occur.

However, the rising Middle East tension which has boosted crude prices and kept prices above $70 level, at a time escalating trade war between the US and China is keeping oil prices subdued, is lending a helping hand to Nigeria’s budget challenges.

“Given that nearly one-third of global oil production and nearly all of global spare capac-

ity are in the Middle East, the oil market is very sensitive to any attacks on oil infrastructure in this region,” Swiss bank UBS said.

The attacks took place against a backdrop of US-Iranian tension over Iranian nuclear capabilities, its missile program and its support for proxies in Yemen, Iraq, Syria and Lebanon.

Asian shippers and refiners have put ships heading to the Middle East on alert and are expecting a possible rise in marine insurance premiums after the recent attacks on Saudi oil tankers and pipeline facilities, industry sources said. This may ultimately push up oil prices.

Also, armed drones attacked two of Saudi Aramco’s oil pumping stations and forced the state producer to briefly shut its EastWest pipeline, known as Petroline. The drone attacks pushed up global oil prices by more than 1 percent.

The Petroline is important because it is an alternative route for Saudi Arabia’s oil exports that bypasses the Strait of Hormuz.

Prince Khalid bin Salman Saudi Arabia’s deputy defence minister accused Iran of ordering the attack on Saudi oil pumping stations but the Houthis, which have been battling a Saudi-led military coalition for 4 years, said they carried out the drone strikes against the East-West pipeline.

While the Middle East tension persist, the International Energy Agency (IEA) said the world would require very little extra oil from the Organization of the Petroleum Exporting Countries (OPEC) this year as booming US output will offset falling exports from Iran and Venezuela. The energy watchdog also revised its forecast for 2019 growth in global oil demand 90,000 barrels per day lower to 1.3 million bpd.

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Outlook

Uganda: Uganda agrees to pay oil firms more to use planned pipeline

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ganda said it had agreed to pay a higher tariff to use a pipeline planned to run through neighbouring Tanzania, boosting the prospects of a project vital for Uganda’s nascent petroleum industry.

Landlocked Uganda in 2016 picked a route for a pipeline through neighbouring Tanzania to the Indian Ocean port of Tanga to help export its crude.

At a length of 1,445 kilometres, the project will cost $3.5 billion and has been described as the world’s longest electrically-heated pipeline.

Initially, Uganda said it had agreed with investors and Tanzania that it would pay a tariff of $12.2 for each barrel of crude shipped through the pipeline.

But the investors, which include France’s Total, later demanded a higher tariff, according to Ugandan officials, stalling negotiations over the project.

The government has agreed to increase the tariff to $12.77 per barrel after further talks with the investors, Irene Muloni, Energy Minister said in a statement.

Total, China’s CNOOC, and Britain’s

Brief

Tullow Oil jointly own the Ugandan fields and are also eyeing varying stakes in the pipeline.

About two thirds of the project’s cost will be financed by debt and a Ugandan unit of South Africa’s Standard Bank Group and Japan’s Sumitomo Mitsui Banking Corp are jointly helping raise the credit.

Uganda discovered crude reserves, estimated at 6 billion barrels, more than ten years ago in fields near the border with Democratic Republic of Congo.

The start of commercial production, which has been repeatedly delayed due to the lack of essential infrastructure such as an export pipeline, is now expected in 2022.

Muloni also said some preliminary surveys in a new basin in Uganda’s Karamoja region, a semi-arid area on the border with Kenya, had shown traces of oil.

“The ministry is conducting geological, geochemical and geophysical mapping in Moroto-Kadam basin,” she said.

“Work done so far shows evidence of possible presence of a working petroleum system as demonstrated by the encountered oil seep.”

The emergence of a second oil region could transform Uganda into a significant player in Africa’s oil industry, currently dominated by Nigeria and Angola.

Angola: Eni finds light oil offshore Angola

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ni has made a new light oil discovery near its West Hub facilities in the deep waters offshore Angola, the Italian supermajor announced.

The well, drilled on the Ndungu exploration prospect in Block 15/06, is estimated to contain up to 250 million barrels of light oil in place, Eni said.

The Ndungu-1 NFW well was drilled

by Transocean’s Deepwater Poseidon drillship in 1,076 meters water depth and reached a total depth of 4,050 meters. Ndungu-1 NFW proved a single oil column of about 65 meters with 45 meters of net pay of high quality oil (35° API) contained in Oligocene sandstones with excellent petrophysical properties.

The result of the intensive data collection indicates a production capacity in excess of 10,000 barrels of oil per day.

Ndungu is the first significant oil discovery in Angola inside an already existing development area. According to Eni, it certifies the concrete validity of the recent legislation, promoted through the Presidential Legislative Decree No. 5/18 of May 18, 2018, which defines a favorable legal framework on additional exploration activities within existing de-

velopment areas.

The find is the fourth of commercial nature since the Block 15/06 Joint Venture, including Eni (operator, 36.8421 percent), Sonangol P&P (36.8421 percent) and SSI Fifteen Limited (26.3158 percent), re-launched its exploration campaign in mid-2018, following the Kalimba, Afoxé and Agogo discoveries.

Together, the four are estimated to con-

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tain up to 1.4 billion barrels of light oil in place. The appraisal phase of these discoveries will target their additional upside.

Proximity to an existing subsea production system will allow the Block 15/06 partners to fast-track production development of the new Ndungu discovery, located about 2 kilometers from the Mpungi field.

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Ghana: Petroleum receipts double in 2018

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combination of rising production and higher global market prices are giving Ghana the much needed increased revenue. The latest report on petroleum receipts has shown a 94 percent increase in petroleum receipts for 2018 to GH¢4.529.68 million up from GH¢2,334.12 million recorded for 2017.

The 2018 Reconciliation Report on the Petroleum Holding Fund (PHF) attributes the increase mainly to an increase in price from an annual average of US$53.49 per barrel in 2017 to US$70.34 per barrel in 2018 and an increase in lifting volumes from 5,856,921 barrels in 2017 to 9,783,239 barrels in 2018.

The report reconciles the actual total petroleum receipts and the Annual Budget Funding Amount (ABFA) of the previous fiscal year.

Total crude oil production from the three producing fields – Jubilee, TEN and Sankofa-Gye Nyame – in 2018 was 62,770,787 barrels, translating into an average daily oil production of 170,233 barrels (bopd), compared to 58,659,625 barrels (160,711 bopd) for the same period in 2017, representing an increase of 6.55 percent.

The increase in production is attributable mainly to an increased production from the TEN and SGN Fields.

The Ghana National Petroleum Corporation (GNPC) was allocated a total of $305.27 million, made up of Equity Financing Cost ($201.10 million) and its share of the net Carried and Participating Interest ($104.14 million). A total of $436.75 million was transferred into the Ghana Petroleum Funds in 2018, compared with $203.83 million in 2017.

Out of the amount transferred, the Ghana Heritage Fund received $131.02 million, as against $61.15 million in 2017, while the Ghana Stabilisation Fund received $305.72 million, as against $142.68 million in 2017. The total amount transferred in 2018 from petroleum liftings and related proceeds to the ABFA was $235.10 million.

In line with Section 23(4) of the Petroleum Revenue Management Act, (PRMA), withdrawals from the GSF were capped at $300 million in the 2018 Budget. A total of $283.97 million was consequently withdrawn from the GSF in 2018. In accordance with 23(3) of the PRMA the excess from the GSF not withdrawn, about US$21.69 million, was sent into the Sinking Fund, established to save up money to meet Ghana’s foreign debt repayment obligations.

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Wednesday 22 May 2019

BUSINESS DAY

gas Brief Tankers sought to store abundant LNG as traders wait for better prices

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hile it is a gamble as weather-driven demand is unpredictable, price signals indicate the option to store LNG in vessels later this year is again becoming attractive, not only in Asia, but also in Europe. The price premium for later contracts, or contango, is building up for both spot Asian LNG prices and the UK benchmark, leaving traders weighing how to profit should they choose to store gas at sea.

“We could see a lot of floating LNG storage from September and this could also tighten shipping rates before winter,” Nick Boyes, a senior gas and LNG analyst at Swiss utility and trader Axpo Group, said.

Given the price gap, and with an estimated cost of storing LNG of 60-75 US cents a million British thermal units a month, “current freight rates allow for floating storage opportunities in September, October and November this year in both northeast Asia and Atlantic,” Boyes said.

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ENERGY intelligence

Algeria: Eni commits to long-term Algerian gas imports through 2027

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ni has reaffirmed its commitment to the long-term import of gas from Algeria, one of Italy’s major gas supply sources, saying it had signed agreements with state-owned Sonatrach for the import of Algerian gas through 2027.

The new agreement also included an option for the contract to be extended by a further two years to 2029, Eni said in a statement.

The deal comes at a critical juncture for Algeria, whose President Abdelaziz Bouteflika resigned in April after almost 20 years in power, amid regular civilian protests against the ruling administration.

“I am particularly pleased with the renewal of the gas supply contract and the level of the strategic partnership with Sonatrach, which spans from the exploration and production sector, to gas marketing and transportation, to renewables,” Claudio Descalzi Eni CEO said.

The new agreement covers almost 15 percent of the gas imported into Italy, Eni said, and also defines arrangements for gas transportation via the 90 million cu m/d capacity Transmed pipeline from Algeria.

Total Italian gas imports were around 64 Bcm in 2018, according to data from S&P Global Platts Analytics, implying the newly agreed Eni import

deal is for around 9.6 Bcm/year.

The new deal comes despite Sonatrach CEO, Rachid Hachichi, having only been appointed as head at Sonatrach in mid-April after the new ruling regime sacked Abdelmoumen Ould Kaddour, who had been CEO since March 2017.

Italy last year imported a total of 16.8 Bcm of gas from Algeria, according to Platts Analytics data. That was slightly down on the 18 Bcm it imported in 2017. Algeria, which accounts for around a quarter of Italy’s annual gas

supply, also has supply deals with Italy’s Enel and Edison.

Eni has been especially active in recent years seeking market alignment in its long-term gas contracts with suppliers such as Sonatrach, which were traditionally oil-indexed, in a bid to eliminate losses from its gas and power business.

Its import contract with Sonatrach is still thought to be oil-indexed, though Eni has worked to introduce more hub indexation into other gas import contracts.

Morocco: Chariot eyes 1 Tcf in Moroccan licence JKM futures for December are about $2.30 per million Btu higher than September contracts, or a premium of $7.6 million for a 3.3 trillion Btu cargo. How much profit can actually be made is strongly dependent on the cost of renting a tanker and of keeping the fuel in liquid form at minus 162oC (-260oF).

“I think it’s more a question of who’s going to jump the gun first when it comes to floating storage,” said Oystein Kalleklev, CEO of Hamilton, Bermudabased Flex LNG Ltd., a ship-owner and operator. “I reckon the first deals will probably be balanced contango trades benefiting both traders and shipowners as traders probably need to take some risk to get the maths to work.”

High storage levels in Europe means tankers are one of the few ways to benefit from the current contango. That would also benefit companies with extensive shipping capacity and shipowners that have battled with a collapse in spot charter rates since the start of the year.

In 2018, Cheniere Energy Inc., which mainly trades the US LNG it produces as well as some volumes purchased from the market, chartered out some ships and benefited from record-high shipping rates for vessels on the spot market when some parties were using the ships as floating storage.

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K-based Atlantic focused explorer Chariot Oil & Gas says its Anchois-1 gas discovery and nearby prospects in the Lixus Offshore Licence, off Morocco, contains 1 Tcf. Following completion of an independent competent persons report (CPR), it also says a nearby prospect, Anchois

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North, could contain 308 Bcf of prospective resources with a geological chance of success of 43 percent.

Netherland Sewell & Associates provided the report, which covers Anhois-1 and adjacent satellite prospects. Another CPR will now be produced covering an additional five prospects in Lixus licence.

This will be completed after an ongoing

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3D seismic reprocessing project.

“This independent third party evaluation confirms that the Anchois discovery and its nearby satellite prospects presents Chariot with an exciting and commercially attractive development opportunity,” Larry Bottomley, Chariot, CEO said.

The results of the feasibility and gas market studies expected to be announced in due course.

Chariot owns a 75 percent stake in the Lixus license, through its wholly owned subsidiary, Chariot Oil & Gas Holdings (Morocco), in partnership with the Office National des Hydrocarbures et des Mines (ONHYM) which holds a 25 percent carried interest.

Lixus covers about 2,390 sq km, 30km north of Chariot’s existing Moroccan acreage, with water depths ranging from the coastline to 850 metres.

The Anchois-1 well was drilled in 2009 in 388 metres water depth some 40 kilometres from the coast and encountered an estimated net gas pay of 55 metres in two sands with average porosities ranging from 25 percent to 28 percent.

A deeper target not penetrated by the well has 2U prospective resources estimated by NSAI of 116 Bcf, with the Anchois discovery containing a remaining recoverable resource of 423 Bcf, says Chariot.

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Wednesday 22 May 2019

BUSINESS DAY

power

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ENERGY intelligence

South Africa: Eskom raises $361m through loan drawdowns

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outh Africa’s power utility Eskom said it had raised 5.2 billion rand ($361 million) through drawdowns against a portion of committed loans, 4

billion rand of which was received from China Development Bank (CDB), and the issuance of domestic bonds.

The struggling utility supplies more than 90 percent of the electricity in Af-

rica’s most industrialised economy but has a 420 billion rand debt which it struggles to service, poses a threat to the country’s credit rating.

Eskom said it had secured 52 percent of its plan to borrow 46 billion rand during the 2019/20 financial year.

Eskom had expected to draw down 7 billion rand ($481 million) from a $2.5 billion CDB loan facility by late March, but South Africa’s finance ministry said last month that the drawdown had been delayed, meaning a planned bailout had to be brought forward. The company said its liquidity stood at 7.7 billion rand at April 30, 2019.

An electricity-supply crisis is looming in South Africa that could make intermittent outages in the past few months seem trivial by comparison.

Eskom, which supplies almost all the nation’s power, will lose more than onequarter of its current generating capacity over the next decade as it shuts aging coal-fired plants. Replacing that output and adding capacity needed to meet rising demand will take years and cost more than 1 trillion rand ($71 billion), according to government estimates. The problem is likely to worsen exponentially after 2030 as more plants reach retirement age.

President Cyril Ramaphosa has prioritised fixing the ailing utility in his new five-year term with government having pledged a 23 billion rand ($1.6 billion) a year bailout for Eskom over the next three years.

Siemens will exit power, gas, renewable businesses

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iemens will spin off and give up its majority stake in its lucrative gas and power division, comprising its conventional power generation, power transmission, oil and gas, and related services businesses, and transfer its current majority 59 percent stake in Siemens Gamesa Renewable Energy (SGRE) to the new business.

The company’s supervisory board announced the spinoff on May 7 as part of its Vision 2020+ strategy concept. The board said the move would help Germany-based Siemens meet medium-term growth and profit targets by “clearly focusing its portfolio on dynamic growth markets and efficiency gains.”

The gas and power spinoff and transfer of SGRE stake would create a new “major player on the energy market” with a business volume of €30 billion and more than 80,000 employees, Siemens said. The carve-out will give the new company “complete independence and entrepreneurial freedom,” it said.

Siemens said the new company will have a stock exchange listing by September 2020.

The gas and power unit had sales of 12.4 billion euros ($13.8 billion) in 2018, and 377 million euros ($421 million) in profit. Profitably has fallen year-over-

Sub-Sahara Africa: GE is banking on Africa’s burgeoning power market

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ub-Saharan Africa’s power generation capacity is projected to surge 4 percent annually through 2040, and its current energy mix, which is today dominated by hydro and coal, will likely be more diversified as interest rises in renewables such as solar

and wind, General Electric (GE) said in a white paper surveying market opportunities in the region that it released in May. The region is characterized by a seeming “over-dependence on governments” to resolve an energy dilemma.

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“Governments are faced with investment, policy and regulatory framework challenges that oftentimes hinder their ability to fulfill the responsibility of providing affordable and reliable power,” the white paper says.

However, with increasingly diverse funding from public and private sources, including innovative partnerships with private investors and independent power producers (IPPs), “the current narrative that two out of three people in the region needs access to electricity is expected to change,” it says.

Among major trends the white paper highlights are that IPPs and public-private partnerships (PPP) will account for 35 percent of the region’s installed capacity, excluding South Africa, by 2020.

“The IPP model, now the primary vehicle for investment in the region’s energy sector, is expected to grow in reach and beyond its current concentration,” it suggests.

“Transparent and credible regulatory oversight, dynamic power sector planning and committed and experienced equity partners further enable IPP participation in these economies,” GE noted.

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year in recent years due to growth in renewable power generation and decreased sales of Siemens’ gas turbines and other power plant equipment.

Siemens, which employed 379,000 workers worldwide at the end of 2018, including about 44,000 in its gas and power unit, said it will create 25,000 new jobs in digital industries and smart infrastructure, including electric mobility, energy storage, and smart buildings, though job cuts in other areas will reduce the net number of new jobs to about 10,000. The company wants to cut about $2.5 billion in costs by 2023.

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Wednesday 22 May 2019

BUSINESS DAY

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POLICY

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ENERGY intelligence

Aftermath of JMMC, pendulum swings to next OPEC meeting DIPO OLADEHINDE

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fter an uneventful monitoring committee meeting, attention has now shifted to next Organization of Petroleum Exporting Countries (OPEC) and its allies meeting which will recommend a course of action for the group over the second half of the year.

Their task is not an enviable one.

The meeting of the Joint Ministerial Monitoring Committee (JMMC), which oversees the deal between OPEC and its allies, was generally supportive of an

extension, and nobody rejected the idea, Nigerian Oil Minister Emmanuel Ibe Kachikwu said in a Bloomberg television interview.

Although, the committee did not make a formal recommendation to prolong the supply curbs, concluding instead that further monitoring of the market was necessary, with a focus on managing inventories and keeping supply and demand in balance.

With Saudi Arabia and other key producers in OPEC signaling their intention to keep oil supplies constrained for the rest of the year, while pledging to prevent any genuine shortages, attention

We are carrying out full-scale work on the restoration of the operation of the oil pipeline system and the provision for our consumers of oil of a quality that meets the required content standards www.businessday.ng

has now shifted to next OPEC meeting scheduled for June.

“We need to stay the course, and do that for the weeks and months to come,” Saudi Energy Minister Khalid Al-Falih told reporters after the meeting in Jeddah. The kingdom “is not fooled” by crude prices, currently above $70 a barrel in London, and believes the market is still fragile.

The contrasting messages underscore the uncertainty in the global market. If ministers do not agree to an extension next month, the production cuts that ended the worst oil-industry downturn in a generation will expire.

Yet their decision is clouded by the impact of US sanctions on Iran and the risk to demand from President Donald Trump’s trade war with China.

The Middle East-dominated group, alongside non-OPEC allies such as Russia, agreed to reduce output by 1.2 million barrels per day (b/d) for six months.

OPEC’s share was set at 800,000 bpd, to be delivered by 11 members, with Iran, Venezuela and Libya exempt from cuts.

The 2019 pact was a dramatic turnabout for OPEC and its allies, after the producer group had agreed to boost supplies in mid-2018. OPEC and its allies changed course after Brent crude futures tumbled from $86 a barrel in October, making them wary of a supply glut.

Experts have signaled the oil market is currently tightening, with sanctions

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on Iran and Venezuela. In April, there was also a suspension along the major Druzhba pipeline with several European nations halting imports from Russia after contaminated supplies were found.

Novak has reportedly said the total damage from the contaminated oil would be less than $100 million. He told reporters that supplies to Poland via the pipeline would start again.

“We are carrying out full-scale work on the restoration of the operation of the oil pipeline system and the provision for our consumers of oil of a quality that meets the required content standards,” he told CNBC. “This work is underway with our partners and I think that in the near future we will have a result in terms of a normally functioning system.”

The IEA cut its oil demand growth forecast for 2019 to 1.3 million barrels per day (MMbpd) in its latest oil market report. The alteration marked the first change to the IEA’s 2019 demand outlook for several months. Prior to the cut, the IEA’s oil demand growth forecast for 2019 stood at 1.4 MMbpd.

OPEC is scheduled to meet in Vienna, Austria, on June 25. On June 26, an OPEC and non-OPEC ministerial meeting is scheduled to take place in the city. Back in March, the JMMC adopted a recommendation to forego a full ministerial meeting in April and instead schedule a JMMC meeting in May.

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Wednesday 22 May 2019

BUSINESS DAY

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ENERGYintelligence

Total CEO says planned buy of Anadarko’s Africa assets ‘perfectly fitting’

Brief

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rench energy giant Total SA’s planned acquisition of US firm Anadarko’s African assets is “perfectly fitting” with the company’s overall strategy and helps play to its strengths, Patrick Pouyanne, Total Chief Executive said.

Total agreed to buy all of Anadarko’s oil-and-gas-producing assets outside the United States, including its biggest future expense, a multibillion-dollar liquefied natural gas project in Mozambique, for $8.8 billion.

The deal is contingent on the wider, $38 billion proposed takeover of Anadarko Petroleum Corp by Occidental Petroleum Corp, which last month outmaneuvered rival Chevron, which had also bid for Anadarko.

Pouyanne said the oil major has had its eyes on Anadarko’s Africa assets, which stretch from Algeria to South Africa, for more than a year.

“What we tell to investors is we play to our strengths. What are the strengths of Total? It is the Middle East, Africa, North Sea, Deep Water. It is just fitting exactly and perfectly with what we announced,” Pouyanne said.

Pouyanne’s move to buy Anadarko’s assets, the French firm’s biggest acquisition since

Schlumberger sells non-core drilling assets for $400m

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chlumberger has entered into an agreement with Wellbore Integrity Solutions (WIS) to buy various non-core drilling services for $400 million.

The deal will see WIS acquire the businesses and associated assets of DRILCO, Thomas Tools, and Fishing & Remedial services, along with part of a manufacturing facility located on Rankin Road in Houston, Texas. WIS is part of private equity-backed Rhone Capital.

The deal is expected to close by the end of 2019 and is subject to regulatory approvals and other customary closing conditions.

WIS expects to operate the combined businesses as a global, customer-focused provider of drilling tubulars services; tubing work strings, rentals and accessories; and fishing and remedial services for drilling, intervention and abandonment

since the 2014 oil price crash, giving him the firepower to swoop on Anadarko’s assets.

The company has made acquisitions worth almost $20 billion in the past five years, under Pouyanne’s leadership.

It took Pouyanne and a small group of advisers just days to line up Total’s bid for Anadarko’s Africa assets and by keeping those in the know to a minimum, the French CEO was able to stay flexible in negotiations, take a swift decision and ensure there were no leaks before the announcement.

American oil finds new markets

activities for the oilfield services industry.

“Our customers will benefit from our expansion as an independent service and product supplier with a strong global footprint,” says David MacNeill, CEO, WIS. “We are very proud to acquire these historic companies that have been delivering quality products and services to the oil and gas industry for over 60 years.”

Kristi Vilay, president, Bits & Drilling Tools, Schlumberger, added: “The DRILCO, Thomas Tools, and Fishing & Remedial businesses will have greater opportunities for growth uniquely positioned within a strategic buyer’s portfolio. This divestiture will enable Schlumberger to focus on its core drilling strategy, including the development of automation technologies that can be enhanced by digital enablement.” www.businessday.ng

taking over Elf almost two decades ago, will bolster his effort to refocus Total on operations in Africa, the North Sea, deep offshore and liquefied natural gas.

“We have been looking at these assets more than a year.

We have had some discussions before with Anadarko,” Pouyanne said. “It was not a lot of creativity to fix that these assets are not very well fitting for upstream and that there was a potential match between Oxy and Total.”

Total has built up a strong balance sheet under Pouyanne

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S crude is reaching new destinations around the world after Chinese buying slowed amid concern that the growing trade dispute between the countries could result in a tax on American oil.

America shipped 470.2 million barrels to 38 countries from October through March, compared with 359.3 million to

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31 nations in the previous six months. The volumes increased even as shipments to China sank nearly 80 percent.

“China is a large buyer of crude oil, but the fact that they do not buy from the US, does not mean that the US does not have any place to sell it,” said Sandy Fielden, an analyst at Morningstar Inc. “It just changed the destination of that US crude,

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since crude is fungible.”

Countries such as Canada and South Korea increased their purchases, while Chile took its first cargoes. China has not turned completely away from the US, and the Asian nation’s overall imports hit a record in April. New refineries coming online and purchases for strategic stockpiles should keep demand strong.

“US crude can easily find markets elsewhere,” said Abhishek Deshpande, head of oil market research and strategy at JP Morgan. “But China’s dependence on crude remains high.”

The Chinese government has issued increased tariffs on some American goods and imposed new ones for others. But that did not include US crude, even though China had threatened to impose a 20 percent duty last year.

“By not imposing tariffs on US crude, it leaves the option for crude imports from US open at a time when a lot of international supply of crude remains constrained for various reasons,” Deshpande said.

Wednesday 22 May 2019

BUSINESS DAY

marketinsight

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ENERGY intelligence OPEC Flakes

Oil rises after OPEC+ keeps output cut

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il rose to multi-week highs after OPEC indicated it would probably maintain production cuts that have helped support prices this year, while tension continued to escalate in the Middle East.

Brent crude was up by 90 cents, or 1.3 percent, at $73.11 a barrel having earlier touched $73.40, the highest since April 26. US West Texas Intermediate crude was up 71 cents, or 1.1 percent higher, at $63.47 a barrel. The US benchmark reached $63.81 earlier, the highest since May 1.

Khalid al-Falih, Saudi Energy

Minister said there was consensus among the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers to drive down crude inventories “gently” but he would remain responsive to the needs of a “fragile market”.

United Arab Emirates (UAE) Energy Minister Suhail al-Mazrouei earlier told reporters that producers were capable of filling any market gap and that relaxing supply cuts was not the right decision.

US President Donald Trump threatened Tehran, tweeting that a conflict would be the “official

end” of Iran, while Saudi Arabia said it was ready to respond with “all strength” and it was up to Iran to avoid war.

The rhetoric follows last week’s attacks on Saudi oil assets and the firing of a rocket into Baghdad’s heavily fortified “Green Zone” that exploded near the U.S. embassy.

OPEC, Russia and other nonmember producers, an alliance known as OPEC+, agreed to cut output by 1.2 million barrels per day (bpd) from January 1 for six months to prevent inventories from increasing and weakening prices.

IEA says global oil supply uncertainties ‘being managed’

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lobal oil supply uncertainties including Middle East tensions are “being managed,” with other producers stepping in to replace lost Iranian output, the International Energy Agency (IEA) said in its monthly oil market report.

The IEA said “solid gains” in production from Libya, Nigeria and the US had offset production falls in April from a range

of countries, including Azerbaijan, Canada, Iran and Kazakhstan. However, total global oil supply had fallen by 300,000 b/d in April to 99.3 million b/d, it estimated.

It noted the recent drop in Iranian production under the pressure of US sanctions, as well as attacks on shipping near the port of Fujairah and on Saudi pipeline pumping stations. However, “the IEA is reassured to see that the

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challenges posed by the supply uncertainties are being managed and we hope that major players will continue to work to ensure market stability,” it said.

Iran’s crude production fell by 130,000 b/d in April to 2.61 million b/d ahead of the withdrawal of waivers by the US that allowed some top consumers to continue buying Iranian oil despite sanctions against the country, the IEA said. “Already at the lowest level since September 2013, production in May could tumble to levels not seen since the 1980s war with Iraq,” it said.

However, “there have been clear and, in the IEA’s view, very welcome signals from other producers that they will step in to replace Iran’s barrels, albeit gradually,” it said, noting the availability of spare capacity, including in Saudi Arabia, which last month produced 500,000 b/d less than its allocation under its agreement with other OPEC members and Russia.

The IEA also noted Russia had continued to improve its compliance with the commitment it made to cut production alongside OPEC, reducing its production in April to 11.56 million b/d.

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OPEC+ conformity for April 2019 stands at 168 percent

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onformity of OPEC+ for the month of April 2019 was 168 percent, according to the cartel’s

website.

Following its 14th Meeting, which took place on 19 May 2019, in Jeddah, the Kingdom of Saudi Arabia, the Joint Ministerial Monitoring Committee (JMMC) has reaffirmed its commitment to achieving a balanced market and working towards oil market stability on a sustainable basis with solid fundamentals.

The JMMC expressed its satisfaction regarding the critical role which the ‘Declaration of Cooperation’ (DoC) played in the oil market recovery seen in the first quarter of 2019 compared to the fourth quarter of 2018, supported by high conformity to the voluntary production adjustments by participating countries. Conformity for the month of April 2019 was 168 percent, and this record high figure has also had positive ramifications for global economic growth in the first four months of 2019. Average conformity has

reached 120 percent since January 2019.

The Committee noted that an agile and flexible approach has been critical to the success of the DoC to date and will be key going forward. Since the DoC was signed on 10 December 2016, the partners have been able to adapt course depending on market conditions. When the market appeared skewed to oversupply, voluntary production adjustments were adopted and implemented, as was the case in December 2016 and December 2018, and equally, when concerns regarding demand outpacing supply surfaced as the market tightened, as was the case in June 2018, partners in the DoC took appropriate action.

In analyzing current oil market conditions and macroeconomic developments, the Committee also recognized that critical uncertainties remain, including ongoing trade negotiations, monetary policy developments and geopolitical challenges.

OPEC mulls production hike

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odest production hikes are on the table for June’s OPEC meeting following a gathering this past weekend in Saudi Arabia of the oil cartel, OPEC and other producing countries.

Saudi Energy Minister Khalid al-Falih told reporters at the event that he was recommending ‘gently’ driving oil inventories down. But he added that OPEC would not make hasty decisions about output ahead of the June meeting.

Two sources said Saudi Arabia, OPEC’s de facto leader,

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and Russia were discussing two main scenarios for June’s OPEC+ meeting and that both frameworks proposed higher output from the second half, Reuters reported.

OPEC and non-OPEC producers led by Russia agreed in December to cut output by 1.2 million barrels a day for 6 months, which has led to increased and relative stable prices since then.

The meeting comes as the US, Iran and Saudi Arabia have all warned in recent days that they could stagger into a military conflict in the Middle East.

After the US ban on Iran’s oil exports, two Saudi tankers were struck by unknown attackers, a Saudi pipeline was hit by an Iranian ally and the US beefed up its naval presence in the Persian Gulf and pulled diplomats out of Iraq.

The next big OPEC meeting is set for June 26 in Vienna, Austria.

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Wednesday 22 May 2019

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talking points

ENERGY intelligence

LNG spot market eludes Nigeria as Chinese buyers ask for more STEPHEN ONYEKWELU

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he US-China trade war is forcing Chinese liquefied natural gas buyers to rush for new suppliers but Nigeria may not benefit because it lacks ability to play in the LNG spot market as the country holds long term contracts.

China had responded to the United States of America by announcing May 13 that it will raise the duty on imports of US LNG to 25 percent from the previous level of 10 percent in retaliation to the US increasing its tariffs on $200-billion worth of Chinese goods. This is making LNG buyers in China gasp for new sources of supply and suppliers.

“US LNG export to China is already seriously affected by the 10 percent tariffs in effect from last year, and we expect it to continue to be so as long as the tariff is imposed”, Per Magnus Nysveen, Rystad Energy head of analysis said.

Rystad Energy forecasts show that

Chinese LNG demand will reach 95 metric tonnes per annum (mtpa) in 2025, up from 53 mtpa in 2018. This would make China the world’s largest LNG importer. The US, on the other hand, is the fastest-growing LNG exporter thanks to strong Asian and Chinese demand. US export volumes are expected to nearly quadruple over the coming years, reaching 84 metric tonnes per annum (mtpa) by 2025 based on currently sanctioned projects.

But Nigeria has little spare capacity to play in the LNG spot market and cannot take advantage of the window opened up by the US-China trade war. Most of Nigeria’s LNG cargoes are on long-term contracts of up to 20 years in some cases.

“Except Chinese LNG buyers get in on Train 7, which awaits final investment decision later this year, there is no chance that Nigeria’s LNG cargo will find its way to China. LNG projects are usually fully booked before they take off.

Nigeria has very little spare capacity for the spot market”, said Victor Eromosele, former chief financial officer at Nigeria

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LNG Ltd. Increased China tariffs will create additional headwinds for US LNG projects that are currently awaiting final investment decisions (FIDs). If LNG prices continue to linger around their current low level for an extended period of time, some of the more expensive LNG projects could struggle to offer competitive terms to buyers, and this could result in FID deferrals.

Most of these projects need to secure long-term contracts in order to get financing for their development. China is expected to be one of the biggest contributors in sponsoring new LNG projects over the coming years, and there will be reluctance to sign new deals with US projects as long as this trade war persists.

Texas-based Cheniere Energy and China Petroleum and Chemical Corp (Sinopec) agreed late last year on a 20year deal that would supply 2 mtpa of LNG to China starting in 2023. This deal could have been signed once the trade tensions were resolved, but due to the

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heightened tensions, this has not happened.

Sinopec, a late comer to China’s LNG scene compared to domestic rivals China National Offshore Oil Corp (CNOOC) and PetroChina, has said it wants to more-than double its receiving capacity over the next six years to around 41 million tonnes annually, by building three new terminals along China’s east coast and expanding existing facilities.

China’s growing energy thirst, particularly Beinjing’s drive to replace dirtier coal with LNG as source of fuel poses problems not only in the mid-term but in the long-term. China’s growing hydrocarbon demand, including its insatiable natural gas and LNG demand will see more Chinese funds transferred to oil and gas players, a predicament the US found itself in after 1970 when oil production in the country peaked, then started heading south, just as consumption was gathering steam from an unprecedented amount of drivers and automobiles on the road.

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POLITICS & POLICY 2023 Igbo presidency comment: Agbakoba attacks Amaechi, urges Buhari to ignore him Iniobong Iwok

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lisa Agbakoba human right lawyer, has said that it was too early for the Minister of Transport, Rotimi Amaechi to decide which region will produce the country’s next president in 2023, urging President Muhammadu Buhari to ignore him.

Agbakoba was reacting to a statement credited to Amaechi last weekend that the people of the South-east should not demand the presidency in 2023 because the Igbo have nothing to bring to the negotiation table.

The Minister also accused the region of working

against the re-election bid of President Muhammadu Buhari, stressing that President Buhari will not support the region’s bid for the nation’s top job in 2023.

“I don’t know what they will do now for voting against the APC, for refusing to support the APC, they cannot come to the table to demand the presidency slot for people like us in the APC. “If the Igbo had come and voted Buhari, they would boldly tell President Buhari and the National Chairman of the party that presidency should go to the Southeast,” Amaechi said Chiding the Minister over the comment in an interview with BusinessDay, Tuesday, Agbakoba noted that such comment

Olisa Agbakoba

EFCC quizzes Kwara Govt, state assembly officials over alleged suspicious payments Innocent Odoh, Abuja

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he Economic and Financial Crimes Commission, EFCC, Ilorin Zonal Office has commenced investigations into the alleged illegal payment of about N400 million to some members of the Kwara State House of Assembly and the State Executive Council members before the expiration of their tenures.

To this end, the anti-graft agency is currently interrogating the Secretary to the State Government, Sola Isiaka Gold and the Clerk of the State House of Assembly, Kperogi Halimat Jummai over the alleged payment which did not follow due process.

A statement issued on Tuesday by the Acting Head of Media and Publicity of the EFCC Tony Orilade said that all the 25 Lawmakers and some members of the State Executive Council two weeks ago received about N400 million severance gratuity before the expiration of their tenure despite the fact that the State is owing workers about three months salaries.

The petitioner said even though the Lawmakers and members of the State Executive Council are entitled to severance payment, it was the next administration that was supposed to pay the money.

It was further alleged that the State Government with selfish intent, swiftly paid the

money before the expiration of their terms.

More worrisome was the issue of furniture allowance running to hundreds of millions of naira according to the petitioner, which they wanted paid along with severance gratuity.

In a letter written by the Speaker, Kwara State House of Assembly, Ali Ahmed to the State Governor, it was confirmed that the Lawmakers were entitled to severance gratuity at the end of their tenure due to terminate on June 7, 2019.

The letter further stated that: “In accordance with the provisions of the Revenue Mobilisation, Allocation and Fiscal Commission (RMA & FC) Honourable Members are entitled to 200 percent of their annual basic salaries as their severance gratuity allowance at the end of their tenure of Office.”

Kperogi, who confirmed that the Lawmakers have received their severance gratuity, told EFCC operatives that the payment was approved by the State Governor, Abdulfatah Ahmed.

Kperogi said: “In a meeting of the Principal Officers of the Kwara House of Assembly wherein I am scheduled to be the Secretary, held on 8th of May 2019, Issue of Severance Gratuity to the Honourable Members was raised, the principal officers were informed that the State Governor has approved the payment of the www.businessday.ng

was against the intention of President Buhari who had promised an inclusive administration after winning a second term.

Agbakoba, who is a Senior Advocate of Nigeria (SAN), rather advised President Buhari to concentrate his effort on taping the resources of the country for its optimal development.

According to him, “It is too early for him to be talking about a region producing the next president. I don’t believe what Amaechi said.

“In any event, Amaechi is not Nigeria’s president, Buhari should ignore him.

Development of the country should be the priority.

“I think the President has promised that he would run

Severance Gratuity.

“At the meeting, I informed the House that his Excellency had approved the payment, adding that members were expected to be paid after the expiration of their tenure of Office. The House debated it and they overruled me.”

On the other hand, Gold wrote and sought for the approval of the severance gratuity and furniture allowances amounting to about N300 million of some members of the State Executive Council.

In a letter to the State Governor, dated May 8, 2019 Gold said: “Your Excellency, by virtue of the provisions of Kwara State remuneration of political and Public Office holders law, certain category of political and public office holders are entitled to severance and furniture allowances of their basic salaries respectively upon successful completion of tenure.”

According to the SSG, while the Lawmakers have received their monies, members of the State Executive Council are yet to receive their gratuity.

Meanwhile, the Commission is also investigating the pictures circulating in the social media which claimed that the government officials are packing four trucks full of loads to an unknown destination.

The store keeper of the State is being interrogated as at the time of this report, the statement added.

an inclusive government, he has not given us a clue he is going to be different,” Agbakoba said.

He further lamented the deplorable security situation across the country under the Buhari administration, stressing that the country was more fragile now than it had ever been under the current All Progressives Congress (APC) government.

“The President is going to be 80 years after the expiration of his tenure. He should be concerned about the legacy he wants to leave behind and run and inclusive government. His good legacies would be the only thing that would make Nigerians to remember him for good,” he said.

Edo: Tribunal dismisses PDP application for ballot papers recount IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

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ustice O. Ogundana-led Election Petition Tribunal sitting in Benin City on Tuesday dismissed an application filed by the People’s Democratic Party (PDP) candidate for a recount of ballot papers used for Etsako federal constituency in February 23, 2019 general election.

The PDP candidate for the election, Blessing Agbomhere is challenging the declaration of Johnson Oghuma, of the

All Progressives Congress (APC) winner of the election by the Independent National Electoral Commission (INEC) Agbomhere had filed the application praying the court to order the Independent National Electoral Commission (INEC) to make ballot papers used in all polling units for recounting as well as access to ballot papers for the purpose of fingerprints investigation.

In his ruling, Justice O. Ogundana said there was no provision in the electoral Act 2010 as amended that

provides for recount after declaration of results.

Ogundana, who said parties agents were allowed to count votes along with polling officers during the elections, added that recounting and fingerprints assessment have no correlation with errors or miscalculation in collation.

Meanwhile, counsel to the petitioner, Chika Adindu said 25 witnesses will testify for the petitioners, second respondent will present 28 witnesses, while third and fourth respondents will present three witnesses respectively.

INEC withdraws 2 certificates-of-return in Kaduna Abdulwaheed Olayinka Adubi, Kaduna

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he Independent National Electoral Commission, (INEC) has withdrawn two certificates-of-return issued to Hon. Haruna Aliyu, popularly known as Chakis and one Hon. Ibrahim Ismail following court orders.

Aliyu and Ismail are members of the Kaduna House of Assembly, representing Kaduna North II (Kawo) and Kaduna South II (Tudun Wada) constituency, respectively since 2015 on the platform of the All Progressives Congress (APC).

INEC, while upholding the court orders to withdraw the certificates of the duo and other 23 persons disclosed that 20 of the 25 certificatesof-return were withdrawn from All Progressive Congress (APC) members to other APC

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members; while two from People’s Democratic Party (PDP) members were withdrawn and issued to other PDP members.

Aliyu and Ismail whose certificates were withdrawn contested in the primaries where Hon. Yusuf Salihu scored 104 votes and Hon. Nasiru Usman had 49 votes at the said elections held on October 7, 2018.

Meanwhile, APC had submitted the names of the winners of the primaries but later allegedly substituted with the names of Hon. Haruna Aliyu and Hon. Hon. Ibrahim Ismail who had scored 24 and 35 votes, respectively to INEC as the party’s candidates.

However, the development led to legal fireworks to reclaim the stolen mandate at the Federal High Court in Kaduna.

In the judgment delivered on the 16th of April 2019 at the Federal High Court sitting in Kaduna, the presiding Judge, @Businessdayng

Justice Z. B. Abubakar said Hon. Nasiru Usman, having scored the highest number of votes cast at the primaries conducted on the said date for elective position as member State House of Assembly representing Tudun Wada Constituency, otherwise known as Kaduna South II, Kaduna State, is the nominated candidate for the general election.

Justice Abubakar stated that the purported substitution of the name of Hon. Yusuf Salihu for the Kaduna State House of Assembly election Kaduna North II Constituency is in violation of the provision of section 33 of the Electoral Act 2010 as amended.

Following the court orders, INEC had adhered to the directives and had issued certificates-of-return to Hon. Yusuf Salihu and Hon. Nasiru Usman as the winners of the 2019 Kaduna State House of Assembly election.

Thebigread

BUSINESS DAY Wednesday 22 May 2019 www.businessday.ng

The abandoned farms behind the global coffee craze Amid record crops and rising prices for consumers, some growers are unable to cover their costs Emiko Terazono, Jude Webber & Andres Schipani

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lot of farms are being abandoned,” says Sonia Vásquez, an organic coffee grower on the slopes of San José, southwest Honduras. “A lot of people are migrating — many can no longer make ends meet.”

Over the past six years Ms Vásquez, 46, has seen her crop devastated by disease — a coffee tree fungus that has ravaged parts of Latin America. Now her business has been wrecked by tumbling global prices — the value of her crop has shrunk by almost a third over the past year, falling well below break even.

Yet this should be a boom time for growers like Ms Vásquez based in the “coffee belt”, the region over the equator between the Tropics of Cancer and Capricorn. Consumers are drinking more — from drip coffees to vanilla lattes to cold brews — than ever before, but Ms Vásquez and other farmers from Peru to Papua New Guinea and Ethiopia to Ecuador are struggling. Prices of arabica beans — 60 per cent of the market — have fallen to a near 14-year low of around 90 cents a pound on the Intercontinental Exchange.

The value of the global coffee industry has almost doubled in the past decade to $90bn, according to Euromonitor. Despite fears that climate change could reduce supply in the medium to long term, a combination of better than expected harvests with more efficient producers and currency markets has conspired to keep wholesale prices low.

Both Brazil and Honduras last year reported record coffee output, while Colombia has been producing its highest levels since the 1990s. But demand has not kept pace and there is a massive oversupply in the market.

“This has surpassed an economic crisis.

People are moving away [from the farms].

They are absolutely heartbroken,” says Roberto Vélez, chief executive of the National Federation of Coffee Growers of Colombia.

“Consumers don’t know what is really going on.”

Affected farmers in Guatemala and Honduras have been joining the migrant caravans to the US, while some in Peru and Colombia are turning to coca, the source of cocaine, say traders. And while in the short term there may be plenty of beans, the exodus from coffee growing, especially that of the higher grade product, has fuelled worries among buyers about the sustainability of future supplies.

“If the situation continues, I’m not sure where we are going to be in five years’ time,” says Matt McDonald, procurement manager at Cafédirect, a UK coffee importer whose main suppliers include Peruvian co-operatives. “It’s a detrimental cycle because [the growers] cannot afford enough fertiliser, the quality reduces, the yield reduces. And it gets worse each year.”

Some multinationals are already acting to secure supplies by providing farmers and cooperatives with technical support and tree saplings. In September Starbucks committed $20m to smallholder farmers in El Salvador, Guatemala, Mexico and Nicaragua.

Nestlé, the world’s largest coffee buyer which invests about SFr68m ($67m) a year on technical support programmes for farmers, acknowledges that the price situation is unsustainable. But it adds that addressing the issue of farmers’ income is beyond the scope of any one company, and that it is “engaging with the International Coffee Organization” to try and find some solutions.

Coffee is largely divided into robusta, the hardy lower quality bean which is turned into instant coffee or blended into espressos to add a bitter kick, and arabica, the smooth

mild tasting higher quality bean. Arabica is graded from high — the beans grown at altitude which are wet processed — to lesser quality, farmed at lower altitudes and dried in the sun.

At the root of the price problem is the increased production of low-grade arabica coffee, say traders, which is dragging the whole market lower. “There is too much commodity grade coffee,” says Stephen Hurst at Mercanta, a UK-based trader focused on the speciality end of the market.

This flood of beans has driven the arabica futures price — traded on the ICE and known as the New York “C” — lower. Coffee is bought and sold using the New York price as a reference, with higher grades traded with an added premium and lower grades priced at a discount. The current benchmark has meant that even with an added premium, many producers are not able to break even.

The New York C has averaged about $1.20 a pound over the past three years. But over the same period the cost of producing, processing and transporting the beans has, for some growers, been more than $1.50 a pound.

This has led producers to seek a new way to price their coffee and bypass the New York C as a benchmark for the industry.

Some are dealing directly with growers or co-operatives to negotiate a price based on their costs and profits.

Mr Vélez says Colombian growers are desperate to untangle themselves from the New York market, because it does not reflect the true value of the high-grade coffees produced across Latin America. He adds: “Why do I have to be tied to a market which doesn’t work?”

Opponents argue the situation has been made worse by the rise of digital trading, where algorithms — some of them programmed to act on forecasts of Brazilian output — execute trades in anticipation of the market rising or falling, exacerbating price volatility.

Like many agricultural commodities, the coffee market is prone to “boom and bust” cycles where high prices trigger the planting of more trees and better management, resulting in improved production. In the case of coffee, the cycles are accentuated as it is not an annual crop and once a tree is planted it will continue producing although yields and quality tend to drop. But when the trees first mature — up to four years after planting — the new output can weigh on prices. And those lower prices can then lead to poorer quality beans and less output.

In this environment Brazil has come to dominate the market. Not only is it the largest producer and exporter of coffee, accounting for 28 per cent of the world’s coffee trade last

year, its farmers can grow their beans at low cost, with a break-even point of below 90 cents per pound. For many of its growers, harvesting is mechanised, with mass production allowing beans to be processed in much simpler ways compared with those in Central America and Colombia.

The country produced a record 62m 60kg bags last year, while a weak currency offered local producers and exporters higher returns on beans sold overseas. And although output is predicted to take a breather this year, it could produce another large surplus in 2020. “Other producers may see falls in production,” says Carlos Mera, senior analyst at Rabobank. “But it’s unlikely to be enough to compensate for the likely increase in Brazil.”

Yet even for low-cost farmers in Brazil, current prices are starting to hit profits. José Marcos Magalhães, president of Minasul, a large coffee co-operative in Varginha in the south of Minas Gerais which exports to 17 countries, says many of its 8,000 members are smallholders whose margins are being squeezed. “If this price range continues, there will be unemployment,” he says.

Lúcio de Araújo Días, commercial head at Cooxupé, Brazil’s regional co-operative and its largest coffee exporter, is adamant about what is to blame for the relentless drop in prices: financial speculation. Over the past five to six years, these financial players have taken their cue from the largest producer and exporter, Brazil, and since 2017 have held record “short” positions, betting on a fall in prices, at a time when non-Brazilian producers are already struggling to cover their costs.

“The global financial market is selling coffee thinking it can go on forever,” says Mr Araújo Días. “The funds are selling endlessly, every day they sell.”

Ever since the New York coffee exchange opened in the 1880s, speculators have been blamed for manipulating prices. Apart from buyers and sellers of physical coffee locking in their prices using futures, participants such as hedge funds also place bets on rising or falling coffee prices.

However, the level of speculation over the past year has led to questions from buyers and sellers, who use the benchmark to hedge their future purchases and sales, about the efficacy of the market.

“The speculators’ short positions are massive,” says Steve Pollard, coffee analyst at London-based brokers Marex Spectron. “But while they exaggerate the moves, they don’t determine the overall direction of the market.”

Although the growers’ stories are often used in the marketing of individual coffee brands, consumers are largely oblivious to the current plight of the farmers, assuming that the increased price they are paying for

their morning brew is — at least partly — passed on to the producer.

But in an everyday £2.50 brew, the coffee itself accounts for about 4 per cent, or around 10p — rent, labour and tax taking a much larger portion of the cost.

“The cost of coffee is really marginal [for the retailer],” says Jeffrey Young, chief executive of consultants Allegra Strategies. “Even if your coffee beans go down 30 per cent, the cost of cups and workers has gone up, the rent has probably gone up and everything else has gone up.”

Paying farmers a fair return for their beans has been the focus for some progressive roasters and traders in an attempt to “decommoditise” coffee.

Ken Lander experienced the pain of the grower first hand when he quit his legal career in the US to live in San Rafael de Abangares, in north-west Costa Rica. He bought a coffee farm almost as a hobby, intending to live off his US real estate sales, but lost all his assets in the 2008 financial crisis and was forced to start selling his beans.

He quickly realised that the batch of coffee he had just sold — which was roasted in the US — was generating about $30,000 in retail sales of which he received just $600.

The 52-year old teamed up with other growers and entrepreneur Michael Jones to start a coffee importing business in 2011 in Atlanta. Thrive Farmers, which buys from about 1,000 farmers across five countries, has a revenue sharing model designed to give 50 to 75 per cent of the revenue from the beans’ retail value to growers.

“How do you create a gross margin for a farmer that actually incentivises them to want to stay in the business?” asks Mr Lander, who is now Thrive’s chief sustainability officer while still growing his own coffee. “Our farmers have made three times more profits than their next best offer in the marketplace.”

Back in Honduras, Jairo Murillo, who grows coffee between the country’s capital Tegucigalpa and La Paz, needs to earn a living for his family. “We can’t survive,” says the 27-year-old who has a 1.7-acre farm. “Lots of people have left because of this. I’m thinking about leaving, or I’ll sell if I can find a buyer.

There’s no other option.”

Mr Lander says that like Thrive, many coffee companies from large to small have their own programmes to help the grower, but acknowledges that something more structural across the industry needs to be put in place.

“If we don’t, as a coffee industry, come to realise that a farmer cannot continue to grow coffee and make almost no margin or a negative margin, then we’re going to have issues,” he says. “You don’t have to be an economist to figure that out. It’s not that hard.”

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.