BusinessDay 22 Nov 2018 by BusinessDay

NEWS YOU CAN TRUST I **THURSDAY 22 NOVEMBER 2018 I VOL. 15, NO 187 I N300

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Next Nigerian President faces $9.8bn in outstanding legal disputes U NNPC in legal tussle with IOCs over PSC terms Rejects $3.2bn arbitration award over terms F

NGUS 0CT 30 2019 365.74

Stock investors’ apathy seen in declining volumes on NSE IHEANYI NWACHUKWU

LOLADE AKINMURELE & ISAAC ANYAOGU

rom the recent disputes with international oil companies over production sharing contracts and a regulatory collusion involving the local unit of MTN Group, to the long-standing spat with local company, Continental Transfert Technique Ltd, there are a pile of legal landmines facing Nigeria’s next President elect. The battle for who leads Africa’s largest economy by 2019 started Sunday November 19, with over 70 presidential aspirants kick-starting their campaigns in what many say will be a two-horse race between incumbent President Muhammadu Buhari who seeks a second term under the All Progressives Congress (APC) and former vice Continues on page 33

L-R: John Addeh, chairman, Caritas Group; Adebimpe Adedayo-Ojo; Femi Adeshina, special adviser to President Muhammadu Buhari on media and publicity; Adedayo Ojo, MD/ CEO, Caritas Group/ author of the book, Public Relations Thoughts and Deeds; Bunmi Popoola Mordi, general manager, human resource/ company secretary, Total Nigeria, and Opeyemi Agbaje, CEO, RTC Advisory Services, at the Caritas Reputation Leadership Roundtable and book presentation in Lagos, yesterday. Pic by Pius Okeosisi

ncertainty surrounding the possible outcome of Nigeria’s forthcoming elections is reflecting on the volume of equities that are trading on the nation’s bourse. The remarkable disinterest for Nigerian stocks shown by both foreign and domestic investors Continues on page 33

Inside LADOL shows our reforms are P. 2 succeeding – Buhari BusinessDay Banking and Financial Institutions Awards holds tomorrow P. 2 FT Special Report: Investing in Nigeria P. A6-A7

2 BUSINESS DAY NEWS

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Thursday 22 November 2018

Stanbic IBTC opens offer for N30bn corporate bond MICHEAL ANI

tanbic IBTC, a local unit of South Africa’s Standard Bank has opened an offer for N30 billion in corporate bonds to the public, yesterday 21th October 2018, according to offer documents seen by BusinessDay. The bond which has a 5-year tenor would have its offer closing next week 28th November 2018, with an average pricing at 15.13 percent, representing a .02bps difference from Federal government bonds issued within the same maturity

period yielding 15.15 percent. This will be the third bond issuance by the bank since inception. The bank aims to use the bond proceeds to finance its working capital, improve its loan growth and trade financing. A source confirmed to BusinessDay that the bank is already meeting “with institutional investors on the issuance, with Stanbic capital, FSDH Merchant bank, Rand merchant bank (RMD) and United Capital as major advisers to the issuance.” Global rating agency Fitch has placed a AAA rating on the bond, while GCR rated the bond AA-.

INEC reviews collection of PVCs, decides method of recruiting adhoc staff JAMES KWEN, ABUJA

he Independent National Electoral Commission, INEC is to review the progress made on the collection of outstanding Permanent Voter Cards (PVCs) and new modalities for a more efficient administration of the collection process. INEC is also considering the method of recruitment and training of election Adhoc Staff and reviewing the framework for voting by Internally Displaced Persons (IDPS). Mahmud Yakubu, INEC Chairman stated this Wednesday while peaking at a meeting with Resident Electoral Commissioners, RECs at

the Commission’s Headquarters. He said the commission remains committed to monitoring the campaigns pursuant to it’s statutory mandate and to ensure compliance with the extant laws and regulations. According to him, INEC will also explore additional assisting measures in support of Persons with Disabilities (PWDS) in the electoral process. Yakubu explained that INEC management was examining additional ways to safeguard the sanctity of the ballot against the menace of votes buying at polling units, appraising issues relating to electoral logistics and facilities as well as preparations for the general elections.

Next Nigerian President faces $9.8bn in... Continued from page 1

president, Atiku Abubakar, who is the candidate of the People’s

Democratic Party (PDP). Other candidates that will be vying for Nigeria’s top job ahead of the elections in February 2019, are Oby Ezekwesili, a former minister of education, Kingsley Moghalu, former deputy governor of the Central bank and Fela Durotoye, a motivational speaker turned politician. While the candidates have put forward manifestoes where they disclose plans to resuscitate an economy yet to recover from a recession in 2016, the legal disputes confronting the country has gotten less attention even though it threatens to eat up a sizeable chunk of the government’s already dwindling revenues and throw a spanner in the works of ambitious plans to invest more in infrastructure and human capital. The country faces as much as $9.8 billion (N2.99 trillion) in legal claims brought against it by local and foreign companies. The cases were disclosed in the bond prospectus for the $2.8 billion Eurobond sold November. A lawsuit by one Process and Industrial Development (P&ID) Limited brought against the Ministry of Petroleum Resources of Nigeria is the biggest of the legal disputes and could cost the government $9.19 billion. Arbitration proceedings were commenced against the Ministry of Petroleum Resources by P&ID in relation to a definite agreement dated 11 January 2010 between the Ministry and P&ID for Accelerated Gas Development in OMLs 123 and 67 for a period of twenty years.

In February 2017, the arbitration tribunal awarded $6.59 billion against the Ministry of Petroleum Resources, plus interest which is $2.6 billion as of 12 November 2018. In March 2018, P&ID commenced proceedings in England to have the arbitral award recognised and enforced. The Federal Government is contesting those proceedings. In May 2018, P&ID filed an application with the US District Court of New York, for the recognition and enforcement of the arbitral award. The Federal Government is contesting those proceedings. Both matters are ongoing. State oil company the NNPC is currently in dispute with its 1993 ProductionSharingContractcontractorparties over the interpretation and application of certain provisions of the Production Sharing Contracts (PSC), which have stalled investments in the sector. The disputes are currently the subject of four separate arbitral proceedings which the contractor parties (Nigeria Agip Exploration Limited (NAE), Shell Nigeria Exploration and Production Company (SNEPCo), Esso Exploration and Production Nigeria Limited (Esso) and Statoil (Nigeria) Limited (Statoil), have instituted against the NNPC. The arbitral panel would decide the timing of amortisation of capital costs; allocation of tax; treatment of investment tax credit; and treatment of signature bonuses, loan interest and non-operator sole costs as deductible items for tax purposes. BusinessDay gathered that the four arbitral tribunals have issued awards of at least $3.2 billion, plus interest and

Continues on page 33

President Muhammadu Buhari with (L-R) General Manager of LADOL, Abuja, Imam Abdulkadir; Managing Director of LADOL, Dr. Amy Jadesimi; Executive Director of LADOL, Mr. Ibrahim Aliyu; Chairman of LADOL, Mr. Oladipupo Jadesimi; SGF, Boss Mustapha; Minister of Trade and Investment, Okechukwu Enalamah & Minister of State Petroleum Resources, Dr. Ibe Kachikwu during a courtesy visit of LADOL’s Chairman and top management to the President in Abuja recently.

LADOL shows our reforms are succeeding – Buhari

resident Muhammadu Buhari said his administration will continue to implement policies that will attract investment and spark competition in critical sectors of the economy for employment creation and growth. The President commended Lagos Deep Offshore Logistics Base (LADOL) for taking full advantage of the pro-business policies put in place by his administration and aimed at bringing domestic and direct foreign

investment which are yielding prosperity to the people of the country. According to President Buhari: Your competitive and aggressive activity has brought you success. I am pleased that you invested in a critical area, the oil industry, in which I have development interest. I am happy you are training Nigerians and giving them respectful jobs. What you are doing shows that whoever tries will succeed.” The Chairman of LADOL and Chief Executive of the company,

Chief Oladipupo Jadesimi said they had come to thank President Buhari for creating an enabling environment and anti-corruption regime that have enable their business to create a 10 billion Dollar investment and 50,000 new jobs. Managing Director of the company, Amy Jadesimi informed the President that their investment had a mission to attract local and international companies that will help reduce the cost of off-shore support services.

BusinessDay Banking and Financial Institutions Awards holds tomorrow KELVIN UMWENI

ll is now set for the BusinessDay’s Banking and Financial Institutions (BAFI) awards. The annual awards which usually brings together all those that matter in the nation’s corporate world will hold tomorrow, Friday 23rd November, 2018 in Lagos. Expected at the auspicious event are the presidents of professional associations such as the Chartered Institute of Bankers of Nigeria (CIBN), Institute of Chartered Accountants of Nigeria (ICAN), CEOs of issuing houses, top financial industry leaders among others. The award committee, in response to the demands made by key business leaders, incorporated other key sectors in the financial system in this year’s awards. The reason for the enlarged award categories is due to the need to recognize the critical role other actors in the financial system play in the economy. These other players include pension funds administrators, pension fund custodians, trustees, registrars, insurance companies, development finance institutions (DFIs), just to mention a few. This year’s BusinessDay’s BAFI awards have 29 categories with over 100 nominees that were carefully selected by the award committee based on universally acceptable

parameters. Among the categories for this year’s award are the Bank CEO of the Year, Bank of the Year, Stockbroker of the Year, Mortgage Bank of the Year, Investment Bank of the Year, Assets Manager of the Year, Microfinance Bank of the Year, Best Bank in Retail, Best Bank in SME Financing, Trustees of the Year, Insurance Company of the Year, Best Development Financing Institutions, etc. The nominees for the bank of the year includes Guaranty Trust Bank(GTB), Stanbic IBTC and Zenith Bank while the nominees for the Bank CEO of the Year award include the CEO of Access Bank, Herbert Wigwe, the CEO of First Bank, Adesola Kazeem and the CEO of Stanbic IBTC bank, Demola Sogunle. Four nominees were shortlisted for the Investment Bank of the year. These nominees include Zenith Capital, United Capital, Rand Merchant Bank and Coronation Merchant Bank. The nominees for the Trustee of the Year are FBNQuest Trustees, STL Trustees and United Capital Trustees while Jaiz Bank and Sterling Bank were nominated for the non-interest banking service provider of the year. Coronation Merchant Bank, FBNQuest Merchant Bank, FSDH Merchant Bank and Rand Merchant Bank are nominees for the Merchant Bank of the Year award category. The Digital Financial Platform

of the Year award category has nominees such as ALAT by Wema Bank, Cloud Trade by Eagle Global Markets, I-Invest by Sterling Bank and Invest Now by United Capital. Credit Direct, RenMoney and Zedvance are the nominees for the Consumer Finance Lender of the Year Category. Also, the nominees for the Pension Fund Custodian of the Year are First Pension Custodian and Zenith Pension Custodians. For the Best Managed Mixed Funds of the Year, nominees include AIICO Balanced Funds and United Capital Balanced Funds. Lead Fixed Income Fund, Lotus Capital Fixed Income Funds and SFS Fixed Income Funds are the nominees for the Best Managed Fixed Income Fund of the Year. The Banking and Financial Institutions awards is held annually by the BusinessDay Conferences and Events department in conjunction with the BusinessDay Research and Intelligence Unit (BRIU). Since its inception, the award has sought to recognize the financial industry’s leading, most innovative and most influential players. The last edition of the awards that held in 2017 saw Zenith Bank pick the bank of the year award. Fidelity, Sterling, FCMB, Access and Union banks were also recipients of different award categories during the last edition.

•Continues online at www.businessdayonline.com

Thursday 22 November 2018

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6 BUSINESS DAY NEWS CBN supplies $210m to forex market as BDCs get $85m allocation … naira depreciates against dollar at I&E window HOPE MOSES-ASHIKE

entral Bank of Nigeria (CBN) Wednesday injected a total of $210 million into the foreign exchange market. A breakdown of the dollar supply indicated that it offered the sum of $100 million to the wholesale segment, while the Small and Medium Enterprises (SMEs) segment received $55 million. Similarly, the invisibles segment, comprising tuition fees, medical payments and Basic Travel Allowance (BTA), among others, also received a $55 million boost. The Bureau De Change operators numbering 4,250 across the country received about $85 million as part of their weekly allocation. Consequently, naira traded stable at the BDC segment of the foreign exchange market, closing at N360 per dollar.

Isaac Okorafor, director, corporate communications at the CBN, while confirming the figures, said the CBN was pleased with the state of the forex market, adding that the bank would continue to intervene in order to sustain the liquidity in the market and guarantee the international value of the naira. He said the bank was determined to achieve its objective of exchange rate stability, thus the continued injection in the foreign exchange market. According to Okorafor, the level of transparency in the market was also a confidence boost. It would be recalled that the CBN in its last intervention window on November 16, injected $318.03 million and CNY62.18 million into the Retail Secondary Market Intervention Sales (SMIS). Meanwhile, the naira continued to maintain its stability in the forex market, exchang-

ing at an average of N361/$1 in the BDC segment of the market on Wednesday. “Exchange rate is still stable. There is no major disruption,” Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), told BusinessDay last night. He said with the interventions of the CBN and the efforts of the association at ensuring members sell at the stipulated price, exchange rate would remain stable. The nation’s currency on Wednesday depreciated against the dollar by 0.16 percent to close at N364.26k per dollar compared to N363.69k/$ traded on Monday at the investors and exporters forex window. The foreign exchange and money market resumed on Wednesday after the one-day holiday declared by the Federal Government to mark the Muslim festival.

Government-citizens trust, key in enthroning ethical standards - experts MICHEAL ANI

n order for a high ethical standard to be upheld in a Volatile, Uncertain, Complex and Ambiguous (VUCA) economy, there need to be trust between the government and the people, the government and the private sectors, the media and the people they serve, experts in the Nigerian communications space say. They are of the view that consequence management, where people are held accountable for their actions, is very essential in reviving perceived trust in the economy. “We cannot talk about reputation if there is no trust involved, that is one of the challenge that we reputation managers face in our different organisation, and this has given rise to fake news,” Yomi Badejo-Okusanya said in a

panel discussion at the 2018 Caritas Reputation Leadership Roundtable tagged “Ethics, Reputation and Technology in a VUCA economy, Wednesday in Lagos. “The first crisis of a VUCA economy is the disruption of trust, and our first challenge must be on how we can rebuild that trust so that the various component of a nation or an economy can start working on the basis of trust,” he said. Emeka Oparah, vice president, corporate communications/CSR, Airtel Nigeria, said the issues of fake news, unauthorised recording, manipulation and distortion of facts, images and videos, and hate speech were issues that must be tackled in the country as such moves were targeted at ruining the reputation of an individual, a firm or an economy. He noted that the situation

had even been compounded with the prevalence of technology, as some media platforms used incorrect facts and information in the name of dishing out news. According to Oparah, in order to restore sanity of quality information, the Nigerian Institute of Public Relations (NIPR) must insist on the registration and continued education of practitioners in order to promote and sustain professionalism. The institute must sanction aberrant conduct to serve as a deterrent to others “We must also be ready to test the cybercrime law of 2014 that was signed by former President Goodluck Jonathan, as this would install sanity in government offices,” he added, citing scenarios where public officials go unpunished even after being seen guilty of such offence.

Experts to chart way forward for internal audit practice in Nigeria

etermined to ensure that internal audit practice in Nigeria and the West African sub-region perform its expected role of enhancing efficient and effective Risk Management, Internal Controls, Compliance and good Governance in institutions, arrangements have been concluded to launch a dedicated book on the discipline. Internal auditing is noted it’s about immortalizing good corporate governance, effective Enterprise-wide Risk Management and effective Internal Controls, Compliance and good Reporting system in any or-

ganization. This is what Internal Audit Practice from A to Z in bookstores worldwide is already doing. In this vein, the book ‘A Z of Internal Audit Practice’ and a dialogue on Internal Audit Practice is scheduled to take place on the 27th November 2018 at Chartered Institute of Bankers of Nigeria in Lagos. Sam Ohuabunwa, convener of the conference during a press conference in Lagos said “Internal auditing will help to fight corruption from the foundation to its minimal level, because its controls the abuse of power and misuse of fund, the idea is to ensure everyone, pub-

lic and private organisations cultivate the culture of proper internal auditing. He stated that the idea to compile A to Z of Internal Audit Practice was conceived in 2010 after noticing there was no Nigerian author on the subject at any known bookstore in Nigeria. “The desire to compile a comprehensive textbook gave rise to the title: A to Z of Internal Audit Practice. This piece of work was a five years research effort (2011 - 2016) with the Institute of Chartered Accountants of Nigeria (ICAN) reviewing first and second unpublished editions with great commendations.

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‘Populations growth projected to drive consumer spending to $2.1trn by 2025’ HARRISON EDEH, Abuja

irector-general, Consumer Protection Council (CPC), Babatunde Irukera, says rising consumer spending across the continent, projected to reach $2.1 trillion by 2025, underscores increasing value of the African market. Irukera, who gave the information during a presentation titled: “Africa’s Emerging Market: A Matter of Asset and Access,” says the projected expansion has opened opportunities for consumer awareness, and prioritisation of robust regulation and stronger competition policies to ensure consumer satisfaction. The director-general, at the Africa Policy Forum of the Leeds University Centre of African Studies of the University of Leeds, where he made the presentation, said the consumer spending was about $1.4 trillion in 2015, and projected to reach $2.1 trillion by 2025. Describing Africa’s market as its greatest economic asset, Irukera advocated for the implementation of simple widely acknowledged principles of asset management and strate-

gies to maximise the benefits from markets in order to overcome poverty and achieve significant economic growth. “Asset management essentially refers to a systematic approach to governance and realisation of value,” he said in a statement issued on Tuesday. This growth, he said, is driven by key factors such as a young and growing population, rise in incomes, rapid urbanisation and widespread adoption of technology. Citing further statistics to underscore the burgeoning population, which is driving the growing expansion and importance of its market as including 16 percent of global population (1.2bn) living in Africa, he maintained that more than half of global population growth between now and 2050 was expected to occur in Africa, and Africa’s population to reach 2.5 billion by 2050 (more than double of current population). He said: “Considering population and age, it is clear that Africa’s greatest assets are its people and skills. Sadly, they are also our greatest export. “Africans are key applicants to nations with skills acquisition immigration policies, which focus on highly skilled

migrants, whether it is USA, Canada or UK. Essentially, these countries benefit from people who have acquired certain skills they need without the time and resource required to invest in development,” he said. He posited that rather than engage in unproductive handwringing over the export of talent and skills out of Africa, there should be a stronger focus on robust regulation and competition regimes to overcome current challenges and maximise existing opportunities. He stated further: “Coordinated policy and execution that recognise our asset, and regulate access in a manner that advances our causes and economies is the curve we need to turn to see continent wide growth. “The kind of growth that connects the numbers to people and lives such as moving people up from poverty to shared prosperity. Therein exactly lies the secret, rule and purpose of governance. At the heart of this is promoting a robust market and asset management modified only by market regulations that catalyse but protect.”

Obaseki approves Isaac Ehiozuwa as new HoS

overnor Godwin Obaseki of Edo State has approved the appointment of Isaac Ebose Ehiozuwa as the new Head of Service of the state. Ehiozuwa takes over from Gladys Idahor who retired from the Edo State civil service last week. A statement issued by the Secretary to the State Government, Osarodion Ogie, said, “In line with the provisions of Section 208 (1) and 2 (b) of the Constitution of the Federal Republic of Nigeria 1999, (as amended), the Governor of Edo State, Mr. Godwin Nogheghase Obaseki, has approved the appointment of Mr. Isaac Ebose Ehiozuwa as Edo State Head of Service.” Ogie added that the new Head of Service would be sworn in on Monday, November 26, 2018 at 10:00am in the Exco Chambers of the Governor’s Office. Recall that Governor Obaseki at the Thanksgiving Reception in honour of the former HoS, last Sunday, attributed his administration’s impactful reforms to the support of Edo civil service in the last two years, promising to sustain the sector-wide reforms.

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Professor Olaopa seeks reinvention of Nigerian public service

he 10th Inaugural Lecture of the Lead City University, Ibadan, Oyo State, was on Tuesday, delivered by Professor Tunji Olaopa on behalf of the Faculty of Social and Management Sciences of the school. Olaopa in the lecture titled “The Big Bad Bureaucracy? Reinventing the Bureaucracy as a new Public Service” drew extensively from his researches and experiences as a scholar practitioner to highlight the problems that had stifled the developmental growth of the Nigerian civil service as a strategic component and element of the Nigerian state. Tracing the historical evolution of the Nigerian Public Service from its colonial precedence, including its potentialities at inception as well as the glorious years of the 1960s and 1970s, Olaopa praised the sterling contributions of pioneer public administrators like Simeon Adebo and Adebayo Adedeji, among others. According to Olaopa, the professional and focused foundation not only gave the service a strong foothold at inception, but it brought in

quick gains. He however lamented the failure of the service to consolidate on the initial gains as the service soon slid into operational decline and productivity stagnation. Olaopa, who retired as a Federal Permanent Secretary after close to three decades in the Nigerian Public Service, noted that various attempts at civil service reforms failed to yield the desired effects, not because of design flaws, but due to what he called “execution traps” that have consistently bedevilled every reform administration in the civil service. These, he pointed out, are due to the fundamental conception-reality gap that ensures that the local condition and environment of administration in Nigeria almost always work contrary to the intent and trajectory of reforms. Olaopa, who was recently honoured with a Lifetime Achievement award by the University of Ibadan at its recently concluded 70th Anniversary, concluded that the Nigerian civil service was “a work in progress” with the enormous potentials and capacity to play its strategic role in nation building.

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Unsavoury findings in the 2018 National Nutrition and Health Survey TELIAT SULE

were carried out in 2014 and 2015. Through the survey, NBS is able to provide up-to-date information on the situation of nutrition and health, as well as measure key indicators that support the country to progress of Saving One Million Lives (SOML) Program for Result (PforR) initiative plus other goals. The major aim of NNHS was to evaluate the present nutrition status of children aged 0 to 59 months and women that fall within the reproductive age between 15 and 49 years at state, regional and national levels. A total of 19,471 boys and girls from 24,857 households were sampled for anthropometry and health status. Also, a total of 24,985 women aged 15-59 years were interacted with to determine their nutrition and reproductive health status using validated tool and

protocol. The survey adopted a two-stage cluster sampling methodology in selecting 36 clusters from 37 states where each cluster had 20 households each and over 95 percent of the clusters were accessed. Findings in the NNHS report indicate the level of child and women nutrition with particular attention on the global acute malnutrition (GAM); infant and young child feeding practices; reproductive health, as well as water and sanitation. “The national global acute malnutrition (GAM) prevalence among children 6-59 months of age based on weight-for-height Z score and/or oedema was 7.0 percent with moderate acute malnutrition (MAM) of 5.5% and severe acute malnutrition (SAM) of 1.5% including 24 (0.1%) oedema cases. The rates indicate that acute

frequency, predisposing them to unhygienic feeding conditions and increasing their vulnerability to illnesses. A pharmacist, Babatunde Olayiwola, CEO Minaret Pharmacy Limited in Ibadan attributed the high level of malnutrition to poverty. “The report simply shows that people are poor. As a result of this they are not able to feed their children very well. Even in pregnancy, if you don’t eat appropriately, it may affect the unborn child and the impact may be there with him for the rest of his life”, Olayiwola said. The reproductive health status of women aged 15-49 years mirrored the patterns displayed by the aforementioned metrics. According to the survey, the availability of skilled birth assistance is lowest in the North West at 22 percent. In states such as Sokoto, Jigawa, Katsina, Kebbi, as well as Bauchi and Yobe in the North East, over 80 percent of deliveries were not assisted by skilled birth attendants. Deliveries with the support of skilled birth assistants are highest in South East at 88 percent and followed by South West at 85 percent. Improvement was only recorded in the provision of water and sanitation facilities. Nationwide, 57 percent of the households had access to improved water sources, and improvement over 52 percent recorded in 2015. On the other hand, about 47 percent of the households had access to improved sanitation facilities. SouthSouth, South West and North West witnessed the highest proportions in access to improved water source while the North East and Central the regions with the lowest access to improved water source. Among the geopolitical regions in the country, South West had the highest response rate of 95.5 percent and it was followed by SouthSouth, 94.7 percent; North West, 94.6 percent ; South East, 93.4 percent; North East, 93.1 percent and North Central, 89 percent.

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he recently released report on the nutrition and health situation of Nigeria by the National Bureau of Statistics (NBS) does not give any ray of hope that the myriad of problems facing the nation’s health sector are gradually being addressed. The central message in the report is that you cannot continue to do something the same way and get different results. In other worlds, without adequate allocation of funds to the health sector by the federal and state governments, and appropriate compensations for health workers as well as ensuring that the resources allocated to the sector are judiciously used, the narrative will not change. Public health workers of the federal and state governments have embarked on industrial actions several times to call stakeholders’ attention to the poor state of healthcare facilities in order for governments to improve the working conditions of workers through improved funding and the provision of state-of-the-art equipment. While frequent strikes may not be the best solutions, the poor funding of the heath sector is one of the major causes of brain drain in Nigeria, denying the citizenry of the our best physicians. The 2018 National Nutrition and Health Survey (NNHS) was carried out by the NBS with the support of the National Population Commission and the Federal Ministry of Health. Of course, without adequate financial support, the project would not have seen the light of the day, meaning that financial support was provided by the Federal Government of Nigeria, United Nations Children’s Fund (UNICEF), United States Agency for International Development (USAID) and the Department for International Development (DFID). The 2018 edition is the third in its series as the first two editions

malnutrition levels have remained at alert levels of 5-9.9% over the years since 2014. The prevalence of underweight among children aged 0-59 months was 19.9 percent , just at the margin of the 20 percent threshold for serious situation that it has been since 2014, higher than the global estimate of 15 percent but consistent with the rates in the West and Central Africa region (22%)”, the NNHS report states. In addition, the prevalence of stunting, which means improper growth in children, was found to be at 32 percent, a level it has maintained since 2014. Stunting prevalence was found to be more critical in the north east and west, to be above 40 percent which is WHO critical levels. In the same geopolitical zones, boys aged 0 to 23 months and teenage women aged 15 to 19 years are at a higher risk of malnutrition. “These results sound a warning to all stakeholders that efforts to invest on nutrition sensitive to geographic location, gender, and age of target population should be maintained to reduce acute and chronic malnutrition levels to below 5 percent and 20 percent respectively as envisaged in the national and international goals. Improving nutrition in the first 1,000 days window and in adolescent girls is critical to improving the nutrition status of the entire population of Nigeria”, the NNHS suggested. While breastfeeding is a widespread practice in Nigeria, the survey found out that more than 80 percent of the new-borns do not timely receive milk and colostrums within one hour of birth, with about 27 percent of 0 to 5 months old infants are breastfed exclusively implying that over 63 percent of infants within this age group are introduced to complementary foods before the age of six months earlier than the recommendations of WHO/UNICEF. In addition, about 60 percent of the children sampled were not fed to the desired level of meal

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Tax evasion and the fear of prosecution

Francis Iyoha Professor Iyoha is of the Department of Accounting, Covenant University and Research Fellow, the Institute of Chartered Accountants of Nigeria (ICAN). He wrote viafoiyoha@ican.org.ng

ax evasion is a lucrative enterprise in Nigeria. It affords the evaders and some corrupt tax officials the opportunity to balance their budgets at the expense of the masses. I believe the government got agitated about the development and decided to introduce the Voluntary Asset and Income Declaration Scheme (VAIDS) in 2017 to enable or compel taxpayers to make good their tax obligations in terms of previous tax periods and pay any taxes due thereon. It was also implicitly meant to bring non-tax payers into the tax net and raise funds for development purposes. The government promised to forgive ‘tax sinners’ and also ‘excuse’ them from criminal prosecution of their delinquency in tax compliance if they would honestly declare previously undisclosed assets and income for the purpose of fair tax assessment. The initially scheduled closing date for the exercise was March 31, 2018. However, following demands for extension of time arising from ‘acceptance’ of the exercise and to enable more compliance, the gov-

ernment in its wisdom extended the closing date to June 30, 2018. The response to the VAIDS as a tax amnesty programme was adjudged effective and successful as in many countries such as the USA, Greece, Italy, Ireland, Portugal, Argentina, Brazil, Spain, and many others. At the end of July 2018, about five thousand, one hundred and twenty-two (5,122) applications were received and collated in four categories- full payment, no liability, outstanding payment, and inadequate information. Those with inadequate information consist of applications that had no tax computations, declaration of tax liability or information that will enable the applicant to be assessed to tax. This situation speaks to the lack of integrity with which many transactions are handled in Nigeria. Non-the-less, the exercise resulted in the declaration of a tax liability of about N93billion out of which about N35billion had been realized at the end of the exercise while the balance is expected to be paid in agreed installments. This is a good development and a feat for which the tax authorities should be commended. There is no doubt that the government was authoritarian in the VAIDS episode and so, resorted to the use of terms such as ‘prosecution’, ‘naming’ and ‘shaming’ tax defaulters. Of course, the strategy was potent as many tax defaulters rushed to fulfill their tax obligations under the scheme. The language of coercion which was adopted and understood, even in the state of low tax morale, is instructive. It is also curious

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There is no doubt that the government was authoritarian in the VAIDS episode and so, resorted to the use of terms such as ‘prosecution’, ‘naming’ and ‘shaming’ tax defaulters

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especially so in our context where there has been a callous breach of the social contract between the government and the citizens. There are better and more humane means of ensuring compliance with tax laws in enlightened societies but our case is different. However, there are a number of questions which require answers and include: Why did the tax defaulters embrace the VAIDs arrangements?, what factors militate against tax compliance in Nigeria and what steps should the government take to address or mitigate the low tax compliance attitude in Nigeria? The answers to these questions are evident from the results of our recent study on the compliance with VAIDS.

First, the result of our study shows that many recalcitrant tax defaulters complied with VAIDS for a number of reasons including in the main: fear of prosecution; risk of being detected; fear of being shamed publicly and fear of being named publicly. The implication of this finding is that taxpayers examine the cost and benefit of tax compliance and would evade tax where the cost of doing so is lower than the expected consequences of being detected and prosecuted. Secondly, people evade or are unwilling to pay taxes correctly and as at when due because of the lack of accountability of tax revenue by government; unprofessional attitude of tax officials; taxes perceived as a burden, lack of enforcement of tax laws; lack of knowledge of the benefits of paying tax and lack of knowledge of tax laws among others. Finally, tax morale is low and the easiest way to raise it is for the government to display accountability and transparency in the management of tax revenue. There is also a weak enforcement mechanism due largely to corruption in the system. Where the enforcement is weak, outright evasion or low compliance would. Tax is seen as a burden because the benefits of paying taxes are not evident either in words or actions of the government. What the citizens see and experience are hollow promises made by hollow-minded government officials. Even though the fear of being detected and prosecuted represent the main reasons for compliance with VAIDS, the government can create the enabling environment for more taxpayers to come into the

tax net and pay their taxes without being compelled to do so. And the options include: restoring trust in the social contract between the government and the citizenry via accountable government attitude towards tax revenue; creating awareness of tax laws; ensuring professional behaviour of tax officials; and reviewing of tax laws to reflect current and global realities and ensuring simplicity of the tax system. As the adage goes, “a drop of honey catches more flies than a gallon of gall.” Taxpayers will comply with tax laws if the environment is right. The government should be seen to be transparent and accountable in the management of tax revenue. If this must be, then the government should do what it has not done previously- dedicate tax revenue to specific and identifiable projects yearly and appropriately give an account of same. This way, the trust of the citizens for government promises and activities and would be restored. Once this is achieved, all other factors will as a matter of course, fall in place. But in the short run, there are strong pieces of evidence that tax defaulters fear prosecution and ‘naming’ and ‘shaming’. In this case, the government should set the machinery in place to ensure speedy prosecution of all identifiable tax defaulters. This will send signals to anyone contemplating default in tax compliance that government has ‘repented’ and no longer ‘business as usual.’

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President Buhari has actually completed his tenure

OKEY NWACHUKWU Nwachukwu is a Lagos-based communications consultant.

resident Muhammadu Buhari has completed his term of office. His campaign was premised on fighting corruption, insecurity and fixing the economy. Three and half years down the road, his administration claimed to have accomplished these goals. Lai Mohammed, Minister of Information, consistently trumpeting the administration’s unrivaled achievements, said in May this year that Buhari has fulfilled all his campaign promises with “unprecedented accomplishment.” In chiding critics for downplaying the government’s successes, he said, “We are putting our nation on the path of sustainable growth and development, diversifying our economy like never before, tackling corruption at its very core and de-

vising creative measures to secure lives and property.” In December 2015, just seven months in office, President Buhari proclaimed Boko Haram “technically defeated” because the terror group cannot mount ‘conventional attacks.” For him, this was another promise delivered. On the economic front, the government recently issued a long list of achievements. Among these include the restoration of economic growth, declining inflation, increasing investment in agriculture and infrastructure, promotion of transparency and accountability in public finances, support to SMEs and improvement in the ease of doing business; growing power generation and investment. The government also launched the economic recovery and development plan and claimed to have saved over N2 trillion through the Single Treasury Account, which the Goodluck Jonathan administration initiated, while boosting local content in production. It also approved the revamping of the Bank of Agriculture and enhanced patronage of the rail system. This is the third promise delivered. However, evaluations by other sources indicate otherwise. Between 2016/2017, the country experienced grinding recession

which a sizeable number of the population believes still pervades. The CBN and several international bodies have warned of a possible relapse. The Brookings Institution, quoting data from the World Poverty Clock, stated that Nigeria now has over 87 million people living in poverty, thus becoming the global poverty capital. The Universal Basic Education Commission also disclosed that Nigeria’s out-of-school children have surged from 10.5 million to 13.2 million under Buhari’s watch. Unemployment is still exceptionally high. Inflation, which steadily declined since January 2017, has resumed an upward climb, even as the rates remain in double digits. Inequality is growing at an alarming rate. In the latest ‘Commitment to Reducing Inequality’ index issued by the International Monetary Fund, Nigeria was rated 157th out of 157 countries. The Fund also recently revised the country’s economic growth to 1.9 percent, from the 2.1 percent earlier projected. Our debt burden is growing. The fight against corruption, politically correct at the onset, has malfunctioned. It has dovetailed into a weapon targeted at opponents, while corruption among and within Buhari’s government and party is left to fester, thereby stoking claims of bias. The few steps against ‘his peo-

ple’ followed public opprobrium. As a national malaise, corruption is thriving. Threats and arbitrariness have replaced a holistic and strategic execution of the anti-corruption war. But for the administration, with the fight as an end, it is mission accomplished. Today, Boko Haram has not only persevered; it has diversified into two deadly offshoots focused on soft and military targets, all delivering lethal outcomes. The categorization of Boko Haram as one of the world’s deadliest terror groups still stands. Most Internally Displaced Persons’ camps are still overpopulated. Some of the Chibok girls abducted four years ago and Leah Sharibu abducted from Dachi, Yobe state, in February remain in captivity. Juxtapose the current situation against what Buhari pledged while speaking in February 2015 at Chatam House, London. “Let me assure you that if I am elected president, the world will have no cause to worry about Nigeria as it has had to recently; that Nigeria will return to its stabilizing role in West Africa; and that no inch of Nigerian territory will ever be lost to the enemy because we will pay special attention to the welfare of our soldiers in and out of service, we will give them adequate and modern arms

and ammunitions to work with; we will improve intelligence gathering and border controls to choke Boko Haram’s financial and equipment channels; we will be tough on its root causes by initiating a comprehensive economic development plan promoting infrastructure development, job creation, agriculture and industry in the affected areas. We will always act on time and not allow problems to irresponsibly fester; and I, Muhammadu Buhari, will always lead from the front and return Nigeria to its leadership role in regional and international efforts to combat terrorism.” In reality, Nigeria today is filled lamentations, recalling memories of when Buhari was military Head of State. Those who said he was an extremist, ethnic bigot, rigid and vindictive now offer a painful refrain: ‘I told you so’. They had argued that Buhari lacks the national stature and mindset; that he would trigger very divisive tendencies in the country; that he has not evolved as a democrat. Note: The rest of this article continues in the online edition of Business Day @https://businessdayonline.com/

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Thursday 22 November 2018

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comment Positive Growth with Babs

Babs Olugbemi Olugbemi FCCA, the Chief Responsibility Officer at Mentor as Leadership Limited and Founder, the Positive Growth Africa

concluded my article on Nigeria and the sustainable development goals (SDGs) by identifying teachers as the major driver in the implementation and the achievement of the SDGs. Without teachers, no society can develop and achieve its potential. I wrote a story on how Mrs Musa accidentally motivated John and change his life as a teacher in my book titled, the teachers’ fortress (subtitled, a simple guide to becoming an efficient teacher and school leader of impact). John was an unserious boy in Mrs Musa’s class. Dirty, always making noise in the class and had his homework undone. In the same class was another John, who is a good student to have for any teacher in the classroom. The second John was among the brilliant and well-behaved students, unlike the first John. At one of the parent-teacher’s meetings, a woman approached Mrs Musa and asked, “How is my son, John doing in your class? Mrs Musa in her assumption

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Teachers who make impact feels this is the mother of the pleasant John and responded “I can do anything to have him in my class. He is such an excellent and brilliant boy.” Unknown to Mrs Musa he was talking to the mother of the “terrible John” who told her boy the good comments made about him by his teacher. John could not sleep that night. The next day, he went straight to his class teacher and said to Mrs Musa. “I never believed any teacher would like me and want me in her class. My mum told me what you said about me. From today, I will change and be a good student to match your expectation of me.” That was how John behaviour was changed by Mrs Musa’s unintended motivational comments. A teacher affects eternity; he or she can never tell where his influence stops said, Henry Adams. Teachers traditionally are the first and the best of all the professions because they produced others. It is important for teachers to go beyond teaching and do something that could change the success and growth trajectory of the students in their custody. I vividly remember a post that was widely circulated a few years ago. The former Governor of Lagos State, Babatunde Fashola invited and united with his teacher after 38years at the government house in Lagos. The teacher invited was not the only teacher Fashola passed through in his academic sojourn. Why could he never let her go unnoticed? We all have teachers who have, one way or the other, created memories in us.

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No teacher can teach skills unless they adapt to the new trends in the interest of their students. After all, you can’t give what you don’t have (nemo dat quod non habet)

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For teachers to cause a change, going beyond being sages on the stage in their classrooms is the sine qua non. Teachers who will be remembered are those who can inspire their students to see beyond today and belief, they are better than they are or think at the moment. Whenever I speak to teachers, I can’t but share the influence of Mrs A. B. Amodeni and Mr J. A. Oni on my life. They are more than the school principal and a teacher to me; they are counsellors that took ownership of the school environment and the students. They are not traders in the learning environment but are as stated in the book, the teacher’s fortress, teleprompters, energizers, activators, coaches, helpers, educators, role models and supporters of the students. They use emotional

intelligence in influencing the students towards developing the cognitive intelligence of the learner. Nigeria has and is in need of more teachers who are set to make an impact on the achievement of all the SDGs objectives, especially goal number four and five-quality education and gender equality. All the SDGs are hinged on the leadership capacity of those entrusted with the management of the nation’s resources. Coincidentally, teachers are the manufacturers of the leaders who will lead the society. Two of the major areas for teachers as the drivers behind the wheel of the teaching success and national development are students’ motivation and leadership outside being competent to teach in line with the set learning outcome. To motivate your students is to think like the owners of the students and take responsibility for their development within and outside the learning environment. Teachers who think like the owners of the students develop enduring relationships that empower the students with the right attitude and leadership skills to apply what is being taught in schools to life situations irrespective of location and the environment. They see teaching as a journey to developing the students’ six core skills of criticalthinking and problem solving, collaboration and communication, creativity and imagination, citizenship, digital literacy and student leadership and personal development necessary to thriving in the 21st century and beyond. No teacher can teach

these skills unless they adapt to the new trends in the interest of their students. After all, you can’t give what you don’t have (nemo dat quod non habet). In motivating the students, teachers are to act like life coaches, parents, mentors, emotion intelligence experts, advocates, collaborators and nation builders. No teacher without the ability top lay these roles either directly or indirectly will ever be remembered by the students. The leadership part is a corollary to the students’ motivation I just discussed. Students are better influenced by what they see others do. It is a game of what you say I cannot hear but what you do I can see and hear clearly. Teachers who influence their students beyond the learning environment are those who exude qualities the students are proud to emulate. If you ask your students to be punctual, the students want to see you on time. These two bridges (students’ motivation and leadership) are necessary for teachers in order to cause a change within the learning environment that will impact the SDGs. These bridges ride on the platform of simple and clear communication to the students. No doubt, the teachers who are much more remembered by the students are those who put their foot in the print of sand through a motivational relationship with the students and exemplary value-based leadership in the learning environment.

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Speaking in risk management tongues

YEMI ADESANYA (FCA) Adesanya is a risk & control manager in financial services

aulo Coelho, a renowned Brazilian novelist and author of The Alchemist, once said that “culture makes people understand each other better. And if they understand each other better in their soul, it is easier to overcome the economic and political barriers”. To understand each other, people must communicate in a shared language. Similarly, building an effective risk management culture requires the adoption of a shared risk language and an understanding of responsibilities for risks and

risk events at every organizational level. Risk is defined as the “effect of uncertainty on objectives”, in other words, the possibility that an incident will occur and adversely affect the achievement of objectives. Variance from objective can be positive or negative, but this article focuses on the negative deviation that we all prefer to prevent or avoid. Driving the right response often depends on communicating risk phenomenon in the right language. Saying “A risk exists in branch X” requires a different response from “An issue exists in branch X” or “An incident is underway in branch X”. Apart from the everyday connotations of the keywords, material differences exist between these situations and the responses they should trigger. Having identified and assessed risks in a process, project, prod-

uct, or system, attention must be paid to relevant events, be they negative outcomes we would prefer to avoid, or changes to the operating environment or risk profile that increase susceptibility to unfavourable outcomes. The table below shows the differences between risk, issue, and incident. For example, the likelihood of a fire outbreak in a branch is a risk; Manager discovers that the fire alarm in the branch has stopped functioning, that is an issue; fire outbreak in a branch is an incident! Now try this: Risk of data privacy breach via a service provider is ….? No non-disclosure agreement in place for vendors is…..? Confidential data leaked on Facebook is……..? Issues and incidents are interrelated – an unresolved issue can lead to an incident and an incident can lead to an issue that must be resolved to prevent future incidents. Take the example of the

risk of power outage and theft of a branch’s power generator. An incident has occurred here – generator theft. The incident has also created an issue – the branch no longer has a generator, which was one of the mitigants to the risk of power outage. Incident response therefore also requires root cause analysis to unearth underlying and resulting issues that indicate potential future vulnerabilities, changes to initial risk profiles or even new risks. Conscious path mapping is important to ensure that risks, issues, and incidents receive the appropriate treatment. Risks need to be proactively identified and managed. Issues need to be discovered and resolved as soon as possible, to prevent loss events. Incidents need to be responded to with the required sense of urgency to prevent, or at least minimize, losses. Issue resolution should be driven by the criticality of exposure and

magnitude of potential impact while incident response should focus on timely intervention to prevent or limit an imminent loss, or to ensure a quick recovery therefrom. Incident responses should be defined in advance as much as possible while most issue resolutions would require idiosyncratic responses. Without a separation of the response and resolution paths for incidents and issues, organizational resources may be overstretched leaving significant and more imminent losses without the attention required to address or curtail them. “To speak a language is to take on a world, a culture”; do you even speak a uniform operational risk language in your organization? How does your organization respond to risks, issues, and incidents?

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Editorial Publisher/CEO

Frank Aigbogun editor Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

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GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Thursday 22 November 2018

Governance by alternative facts

ince 2017, the government has been trumpeting its success in increasing local rice production. Such was the feeling of pride that the president made it a special theme in his 2018 New Year address to the nation where he claimed Nigeria has almost attained self-sufficiency in rice production and boasted that importation of rice will be completely stopped this year. We were quick to remind the president that although punitive tariffs have rolled back rice importation through the seas and land borders, the reality is that parboiled rice (consumed mainly by Nigerians) importation has risen exponentially in our neighbouring countries and virtually all of these rice find their way into Nigeria, where it is even difficult to see local rice in the market. But the government refused to listen and continued to believe and glory in its own facts – that it has stopped rice importation and is on

its way to making Nigeria self-sufficient in rice production. The minister of agriculture even took the joke too far at a meeting of the Presidential Fertilizer Initiative (PFI) and the Fertiliser Producers and Suppliers of Nigeria (FEPSAN) presided over by president Muhammadu Buhari where he claimed Nigeria’s import from Thailand has decline by about 95 percent and has led to the collapse of seven rice mills in Thailand and rais e d unemployment rate to four percent in the country. Ogbeh was quoted as saying: “... two weeks ago, the Ambassador of Thailand came to my office and said to me that we have really dealt with them... But I asked what did we do wrong and he said unemployment in Thailand was one of the lowest in the world, 1.2 per cent, it has gone up to four per cent because seven giant rice mills have shut down because Nigeria’s import has fallen by 95 per cent on rice alone.” H o w e v e r, a s i m p l e check reveals that both the president and minister of agriculture were greatly

mistaken and the figures they advertised were not true. First, Thailand’s rice export has been on a continuous growth trajectory, reaching a record high of 11.2 million tonnes last year. Data shows rice exports grew at 37.2 percent year-on-year. Information available on the Rice E xporters Association of Thailand website shows Nigeria’s import of rice for the last three years has been negligible - 58, 260, 644, 131 and 23, 192 metric tonnes in 2015, 2016 and 2017 respectively. Second, the unemployment figure in Thailand stands at 1.3 percent as at January 2018. So, it is neither true that rice mills have been shut down due to Nigeria’s low imports nor that unemployment figure has gone up to four percent in Thailand. But despite these facts being made available to the government, it stubbornly refused to listen and continued to peddle its own facts. Unable to take the lies further, the Ambassador of Thailand to Nigeria had to openly fault the minister’s account of events.

Earlier this month, the United States Department of Agriculture busted the g o v e r n m e n t ’s b u b b l e again when it released figures showing that rather than reducing, Nigeria’s rice import has rather increased and is projected to jump next year to 3.4 million metric tons, making Nigeria the world’s second biggest rice importer after China. Still, the government refused to accept the reality arguing very blindly and foolishly that all it knows is that those rice came into the country illegally and cannot be counted as real imports into Nigeria. How childish! The government cannot continue to peddle and believe its own facts different from what is real and acceptable worldwide. Granted this is a political season and the government is desperate to sell itself and trumpet its achievements, it must be guided by respect for concrete facts and data on the ground and stop the constant embarrassment it causes the country by its peddling of rumours, half-truths and sometimes outright lies just to score cheap political points.

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Thursday 22 November 2018

CITYFile

Reckless drivers to spend yuletide in prisons IDRIS UMAR MOMOH, Benin

he Federal Road Safety Corps (FRSC) says drivers found culpable in road crashes will spend the next Christmas and new year period in prison custody till January 15, 2019. Kehinde Adeleye, an Assistant Corps Marshall and Zone Five commander of the corps stated this at the launch of Guinness Nigeria Plc and the FRSC ‘ember months’ road safety campaign with the theme, “Responsible Drinking” in Benin, Edo State on Tuesday. “We had instruction from our national headquarters in Abuja that any driver we arrest, whether Keke or Okada, car or bus or truck driver in this ember months period will not be released until after January 15, 2019. “In addition, we will have mobile courts virtually all routes. If mobile courts are in session and any driver found culpable of causing road crashes, they will remain in prison custody till next year January. Adeleye who lamented the high rate of road crashes among motorists, noted that 45 percent of road accidents are caused by drunkenness. He also lamented that drivers of articulated vehicles especially tippers have been responsible for several accidents, noting that the zone is on the trail of tipper drivers for their involvement in road crashes in the zone. “I want to call the attention of the tipper drivers union. I am personally on the trail of tipper drivers. There are too many reports of drunk driving among your members and they are killing people on daily basis.

‘Suspect’ dies in brawl with NSCDC operative in Lagos

L-R: Rafiu Atangiri, Oloritun of Afuye, Epe; Tosin Payinegba, Oloritun of Ebode, Epe; Akin Oyebode, executive secretary, Lagos State Employment Trust Fund (LSETF); Amusa Okanlawon, Oloritun of Iberikodo, Epe, and Ottun Ishola, secretary to Olu of Epe, during the LSETF’s stakeholders community engagement in Epe.

Lagos assures of policies to aid industrialisation

JOSHUA BASSEY

uspected pipeline vandal allegedly trying to disarm an operative of the Nigeria Security and Civil Defence Corps (NSCDC) got killed in the process, the corps has claimed. However, sources said the deceased was shot and killed by the corps operative, as youths attempted to accost officers of the NSCDC said to have been involved in smuggling of petroleum products. It was gathered that some Civil Defence personnel, allegedly smuggling petrol from pipeline, were attempting to escape through the street but some youths stopped them. “One of the Civil Defense personnel got down from their vehicle and opened fire. The bullet hit the victim on the head,” a source said. But spokesperson of the corps in Lagos, Kehinde Bada, said the incidence occurred at a security post manned by men of the corps mandated to guard and protect the pipelines in Abule-Egba area, Oke Odo, a suburb of Lagos. She said that the officers had successfully foiled the activities of vandals in the area in recent times and brought to the barest minimal cases of vandalism. “As a result of this, a group of youths, five in number, suspected to be vandals attacked the NSCDC post on Sunday at about 9 p.m to steal the firearms. “This led to a scuffle between the officer on duty and the suspected vandals during which the victim pulled the trigger while trying to disarm the officer and unfortunately lost his life. “This is an attack on the NSCDC officer, however, investigation has commenced and necessary procedures will be followed. The corps values the life of citizens of the country and will in no way take life of another,” she said. The corps image maker further said that the operative involved in the incident was taken into police custody for safety as he called for backup from the nearest police station. Bada said the operative was taken into police custody after the youth in area went on rampage to avoid more loss of lives. ThepolicespokesmaninLagos,ChikeOti,confirmedthatthecorpsoperativewasintheircustody after thekillingonSundayattheStateCID,Panties.

overnor of Lagos State, Akinwunmi Ambode has assured that the government will continue to formulate and implement policies and programmes to consolidate the state’s position as Nigeria’s industrial hub. Meanwhile, Muda Yusuf, the Director General of Lagos Chamber of Commerce and Industry (LCCI) has charged the state government to do more in the area of establishment of industrial parks in order to encourage small scale industries which will in turn aid employment creation. Yusuf spoke with BusinessDay, Tuesday, during the 2018 Africa Industrialisation Day celebration. The event organised in Ikeja by Lagos State ministry of commerce, industry and cooperatives, was themed: “Promoting regional value chains in Africa: A pathway for accelerating Africa’s structural transformation, industrialisation and

pharmaceutical production.” The Africa Industrialisation Day was proclaimed by the Assembly of Heads of State and Government of the African Union in 1989. Ambode represented at the event by Olayinka Oladunjoye, his commissioner for commerce, industry and cooperatives, said that the various projects embarked upon by his government in the areas of security, environment, infrastructural renewal and upgrade were designed to create an enabling environment for industrialisation and sustain the state’s status as prime investment destination in Nigeria. He said that the task before the government was to encourage private sector participation through implementation of policies and practices that encourage the productive sectors of the economy, including the pharmaceutical industry. Ambode, who acknowledged the private sector as key stakeholders and prime mover of the economy, assured of open door policy aimed at harnessing

productive potentials using private sector as vehicle of economic growth. He noted that government was not oblivious of the challenges confronting entrepreneurs, stressing that it would continue to engage members of the private sector to develop appropriate and sustainable solutions. Salaudeen Jubril, faculty member, Lagos Business School (LBS), said promoting regional value chains would accelerate regional, international trade and investment flows, increase competitiveness and facilitate industrialisation of many economies. According to him, Africa requires more development financing, harnessing the potential of its youth population, infrastructural development and stable political environment to deepen industrialisation. John Isemede, a trade expert, said that weak industrialisation was responsible for the continued decline in the value of the naira.

NDLEA arrests 6 in Kogi, seizes 104 kg of Indian hemp

ational Drug Law Enforcement Agency (NDLEA) in Kogi says it has arrested six persons and seized 104.150 kg of weeds suspected to be Indian hemp between October 25 and Saturday. Idris Bello, the Commander of NDLEA in Kogi, said this while parading the suspects and the illicit substances on Tuesday in Lokoja. He said the arrests and seizures were made in different locations in the state. Bello said that a 65-year-old from Kaura Namoda in Zamfara was arrested with 90.7 kg of the illegal substance on the Okene-Lokoja highway on Oct. 25.

He said another 19-year-old from Ofu Local Government of Kogi was arrested with 400 grams of Indian hemp and a bottle of banned codeine cough syrup at Central Hotel in Lokoja on November 13. Both suspects, aged 25 and from Kano, were arrested on November 16 at Kasuwan-Ruwa area of Lokoja with 500 grams of Indian hemp. A 19-year-old Nigeriene and 36-yearold Nigerian were also arrested on the Okene-Lokoja highway with 11.6 kg of Indian hemp and 80 grams of Tramadol. The sixth suspect, a 36-year-old, was also caught with 450 grams of Indian hemp. Bello said the suspects would be

prosecuted after due investigation, adding that the command would continue to map out strategies to ensure that the rate of illicit drugs in circulation was reduced The commander urged parents and guardians to be alive to their responsibility by monitoring the activities of their children and wards. He also urged parents to send in their children and wards suspected to be involved in the use of hard drugs for counselling and rehabilitation. The NDLEA boss commended Governor Yahaya Bello for his efforts at providing a rehabilitation centre for the command.

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Thursday 22 November 2018

BUSINESSTRAVEL

‘AirPeace will help unify governments, states in Nigeria’ Allen Onyema, chairman/chief executive officer of Air Peace, who was recently conferred with an honorary Doctor of Business Administration (DBA) at the 9th Convocation Ceremony of the Chukwuemeka Odumegwu Ojukwu University, Anambra State on Saturday, spoke extensively on how he hopes to unify Nigeria with his airline, amongst other issues. Excerpts How do you feel about this award? feel happy. I have been pained that the country has not been recognising what I have been doing. Instead, there are calculated attempts to bring us down and hinder us from getting to where we want to be but with God on our side, it won’t happen. So, my happiness has no bounds because I have just being recognised by a reputable institution. I did not buy it and I didn’t know about it, it just came on merit and that makes me happy. We have tried to reciprocate this not because they gave me an award. I have been giving scholarships all over the place. I want to help education, I want to fight the incidence of violence and ethnicity in this country. The greatest pain to our development is ethnicity. If you want to fight corruption, all you need to do is put aside ethnic sentiments. A lot of things happen because of ethnicity in this country and that is why I want to set up the first centre for NonViolence and Peace Studies for them in order to liaise with the school and make it a compulsory elective for students so that people will start learning how to manage conflict. Conflict is a catalyst for change, so with this institute, Nigeria will be taught the ways and means of handling conflict to achieve results. You said Air Peace is looking at

Allen Onyema

starting international operations from Enugu. How is that plan going? When I say I am going to do international operations from Enugu, I am not saying I am going to shut out Lagos and other places. In fact, what AirPeace is doing is to use the airline to unify the government. In the first place, that was how I was doing Kebbi. I opened the Kebbi airport despite the fact that it wasn’t profitable for me. I was doing it to

create that cohesion for my country. I am doing Akure because I want the South West to feel AirPeace and we are not making profit from the route. I want to prove to Nigeria that we do not need all these divisions and ethnic issues. I want to build some unity for the economy. I will look at the places the Ibos frequent and I will give them flights. We will do London and America from Lagos and China from Enugu. We will do Jeddah from Kano. I want

to fly from Kano to Jeddah with my 737Max non-stop to serve the northern people. I want to do Lagos to Dubai and I want to do Kano to Dubai. I want to make it easy for the entire country. I do not want them to come to Lagos because they want to travel to other countries. So, I will take it to them. Ten brand new 737 Max can go to where I want them to go. When I say I want to use Enugu as international airport, I mean giving to the easterners the opportunity to fly to those places they always fly en mass, like China. Are you looking at interlining because if you are doing Enugu to an international destination, will it be very viable? When some people in government say they have given us destinations and we are not doing them; that simply means ignorance. What happens is that when they give you destinations to do, the countries where you are flying to must give you permission. It wasn’t like it used to be before, and that is why we call on government to help us play the politics. America does not have a national carrier, yet the government of America supports their flag carriers such as Delta Airline and United Airlines. You don’t need to answer national carrier for your government to support you. We are indigenous Nigerian investors. All the government need to do is to call Dubai and tell them

to allow us fly into their country and insist that if they don’t do it, we will stop them. The kind of jobs we create, all the foreign airlines put together, cannot do ten percent of what I have done in Nigeria. If you want to fight insecurity in this country, encourage job creation. Job creation is the antidote to insecurity. Someone who has where he is going to every morning will not go and carry a bomb. Therefore, government must support the indigenous investments. The government has also criticised you for keeping aircraft on ground, is that true? They gave us licence to go to China. We went to China and they said they must see three aircraft and those three aircraft will belong to you, one way or the other. When you buy these airplanes, they take time. In some countries it took them two days to respond to us and we reported to ministry of aviation, foreign affairs and the Nigeria Civil Aviation Authority, (NCAA), amongst others. It is not the fault of the airlines; nobody wants to keep planes on ground. Let them do what they are supposed to do for us. AirPeace is not going to do point to point operations and these are the issues we are trying to address so we don’t go the way of the others. AirPeace is already integrating with a carrier in the Gulf, so that when we drop people in Dubai, they take them to other cities. They also want to sell tickets to Africans.

Turkish Airlines record profit of over $1bn in nine months …reaches 83.4percent load factor in October IFEOMA OKEKE

ue to the increasing demand and unit revenues, Turkish Airlines posted profit from main operations of one $1.149 billion, in the first nine months of 2018, despite the increasing fuel prices. Turkish Airlines, managed to increase both passenger and cargo revenue significantly, achieved total revenue of approximately $4 billion in the third quarter of the year. With such remarkable performance, sales revenue in the first nine months increased by 20 percent to $9.9 billion, compared to the same period of 2017. Continuing its uninterrupted profitable growth performance, Turkish Airlines managed to increase its net profit by three times in the first nine months of the year and completed this period with a net profit of $755 million. In the first nine months of 2018, EBITDAR (earnings before interest, taxes, depreciation, amortisation and rent), which is used as a cash generation indicator, increased by 16 percent to $2.8 billion, with an EBITDAR margin of 28 percent. Commenting on this brilliant results, İlker Aycı, Turkish Airlines chair-

man of the board and the executive committee, said; “We are delighted and proud to announce our third quarter results of this year, in which we put great emphasis on strengthening and improving the infrastructure conditions we have. We would like to thank all our passengers, employees, business partners and stakeholders

who have contributed to this important achievement. “Despite the various regional and sectorial conditions that we have encountered, especially in last few years, the persevering attitude we displayed has been the source of our steady rise. “Today, with our significant investments, impressive growth fig-

L-R: Wale Tinubu, group chief executive, Oando PLC; Jim Ovia, founder and Pioneer MD/CEO Zenith Bank; Ambassador Sean Hoy, Ambassador of Ireland to Nigeria and Herbert Wigwe, MD/CEO, Access Bank Plc at the launch of Nigeria Humanitarian Fund Private Sector Initiative in collaboration with the United Nations held in Lagos.

ures and numerous successes we achieved, we continue to strengthen our prestigious position in the global aviation industry. As being one of the primary prides of our country, we are sure that this momentum will continue increasingly after moving to our new home, Istanbul Airport, as well.” Turkish Airlines, which has strengthened its identity as a leading global airline with its extensive flight network is operating flights to 49 domestic and 255 international destinations, a total of 304 destinations in 122 countries, along with Freetown, Samarkand, Krasnodar and Moroni routes which were opened this year. Turkish Airlines, operates a fleet of 329 aircraft, comprising 217 narrow body, 92 wide body and 20 cargo aircraft, as of today. Investing in the most advanced and environmentally friendly new generation aircraft, Turkish Airlines aims to reach a fleet of 475 aircraft by 2023. The airline has announced its passenger and cargo traffic results for October, with the airline reaching 83.4percent load factor. On top of the strong base effect of the last year, the growth in the number of passengers, revenue per kilometer and load factor, is an important indicator of the continued growing interest in Turkey and Turkish Airlines in the last quarter of

the year as well. According to the October 2018 traffic results; the passenger growth trend continued in October, thus total number of passengers carried went up by five percent reaching 6.5 million passengers, and load factor went up to 83.4 percent. In October 2018, total load factor improved by twopoints, while international Load Factor increased by 3 points to 83.2 percent, and domestic Load Factor reached to 85.1 percent. International-to-international transfer passengers (transit passengers) also went up by approximately seven percent, while the number of international passengers excluding international-to-international transfer passengers (transit passengers) went up by eight percent. In October, cargo/mail volume continued the double digit growth trend and increased by 24percent, compared to the same period of 2017. Main contributors to the growth in cargo/mail volume are domestic lines with 42 percent increase, Africa with 35 percent increase, North America with 30 percent increase, and Europe with 24 percent increase. Africa, North America, Europe and Far East also showed load factor growth of seven points, four points, three points, and three points respectively.

BUSINESS

Thursday 22 November 2018

COMPANIES & MARKETS

DAY

Ecobank secures US$200m syndicated loan facility

Pg. 17

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

AGRICULTURE

Presco’s 9-month revenue dips on surge in imports, lower palm oil prices JOSEPHINE OKOJIE

re s c o P l c re c o rd e d a d e cline in its nine month revenue after a surge in crude palm oil imports and weaker prices took a toll on Nigeria’s biggest palm oil producer. Presco reported a decline in revenue of N16.2 billion for the period ended 30th September, 2018 from N16.9 billion over the same period in 2017, representing a four percent decrease, according to data from the company’s nine month financial statement. Similarly, profit after tax declined marginally to N5.2 billion over the nine month period from N5.3 billion in 2017. “Sales are down due to the lower volumes but more significantly due to lower unit sales prices. The average price attained has ranged fromN400, 000 to N420,000 per ton,” Kenneth Crockett, chief financial officer, Presco Plc said in an emailed statement to BusinessDay.

“Our expectation is that there will be competitive pressure on unit prices for the rest of the year as importation of CPO has become attractive to some buyer due to availability of dollars at reasonable rates in the parallel market,” Crockett said. The company’s sales of CPO also declined for the period by four percent from N16.9billion in 2017 to N16.2 billion in 2018. Presco stocks closed at N66.25 per share Monday, where they have been since November 8, according to Bloomberg data. The stocks are down 3.28 percent since the start of the year. For the nine months ended September 30, 2018 earnings per share was N5.29 as against N5.36 recorded for the comparative period in 2017. On a quarterly basis, however, the decline was much more noticeable — Q3 2018 earnings per share N1.29 as against the N1.95 recorded in 2017. Globally, the prices of crude palm oil has been weak and has falling by 14 percent since the start of 2018 and its lowest levels

Source: Bloomberg

since 2015, Moody’s Investors Service says in October. The global crude palm oil price hedged higher yesterday as the Malaysian CPO fixture market stabilised after being oversold last week. Data from the Malaysian Palm Oil Council (MPOC)

shows that Nigeria’s imports from Malaysia has declined from 156, 291 metric tons (MT) in the first eight months in 2017 to 134, 468MT over the same period in 2018. This indicates a 14 percent decrease on a year on year basis and a 21,823MT decline. The

MPOC attributes the decline in sales to high stock of crude palm oil available at local palm oil refineries. Oil palm has the capacity to produce more oil than any other oilseed crop. About 90 percent ofpalm oil is used in the production of foods, while the re-

maining 10 percent is used by the non-foods industry, industry players say. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics are made from palm oil.

WEALTH MANAGEMENT

Valualliance records 91% profit margin despite soft dip in earnings DAVID IBIDAPO

he year ended June 2018 was good for Valualliance value fund, as profit accounted for about 91 percent of the company’s total revenue during the period, in a sign of a profitable and efficiently-run business. Despite a slight decline in profit after tax by 9 percent to N1.04 billion from N1.14 billion, Valualliance’s profit margin grew by 4 basis points from 87 percent recorded in 2017. Total revenue declined by 11.6 percent to N1.14 billion from N1.3 billion in 2017. The soft decline in earnings for the period was largely affected by a surge in total operating expenses which led

to a dip in net operating income hence PAT. Net operating income declined by 8 percent from N1.15 billion in 2017 to N1.06 billion in 2018 despite revenue growth, after the company recorded a surge in total operating expenses by 21 percent to N83.6 million from N69.10 million in 2017. BusinessDay analysis further revealed that during the period, fund manager’s incentive fees declined significantly by 99 percent from N70.5 million in 2017 to N969,000 in 2018. According to the company’s policy, the fund manager is entitled to an incentive fee of 20 percent of the total return in excess of 20 percent of the fund net asset value per annum (NAV). Total return is determined based on the growth in NAV.

Analysis of the fund’s financial position shows that total liabilities of the company declined significantly by 73 percent to N24.4 million. Components of the company’s liabilities included due to fund manager, trustee fees payable, custody fees

payable, audit fee, VAT on fees, fees in relation to dividend, annual registers fees and incentive fee payable. During the period, inventive fee payable declined by 98 percent leading to a significant drop in the company’s liabilities.

These fees are account balances payable to entities that render various services to the fund during the year which is computed monthly. Financial liabilities of the fund are measured at amortised cost except when specifically designated

as being at fair value through profit and loss. The Valualliance Value Fund (“Value Fund”), formerly known as “SIM Capital Alliance Value Fund”, is a closed end collective investment scheme, registered and regulated by the Securities and Exchange Commission, whose units are listed on the main board of the Nigerian Stock Exchange (NSE). The Value Fund commenced operations on the 30th of June 2011, raising the sum of N3.2bn through an Initial Public Offer. The Value Fund operates with a total return objective and aims to provide investors with capital growth over the long-term by investing in listed and unlisted Nigerian equities as well as other securities as approved by the SEC.

BUSINESS DAY

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Thursday 22 November 2018

COMPANIES & MARKETS MARKETS

FX inflows slide second straight week LOLADE AKINMURELE

oreign exchange inflow through the Investors and Exporters (I&E) window declined by 4.8 percent to US$693 million last week, reflecting sustained weak investor interest in the capital market as politics and rising interest rates in the US take their toll. The exchange rate depreciated by 11 basis points to close at N364.01 per US dollar, last week compared to the previous week at the I&E window, Friday while the parallel market rate was unchanged at N363 per US dollar. In the Investors’ & Exporters’ (I&E) FX Window, the total value of trades for the week-ended November 9, 2018 was $0.73 billion, representing a 42.52 percent ($0.54 billion) decrease on the $1.27 billion reported

for the previous week, bringing the year-to-date value of trades at the window to $51.39 billion. That’s 23 percent higher than the Central bank’s external reserves which stood at $41.6 billion Nov. 16. For the reporting weekended November 16, 2018, the CBN official rate rose by N0.05 to close at $/N306.70, indicating a 0.02 percent depreciation when compared to $/N306.65 recorded the previous week-ended November 9, 2018. The Bureau de Change (BDC) market rate rose by N2.00 to close at N364.50 per USD, indicating a 0.55 percent depreciation when compared to N362.50 per US dollar recorded the previous week-ended November 9, 2018. That puts the spread between the BDC market rate and the CBN official exchange rate at N57.80 per

FX trades in October slumped to second lowest level since January

Source: FMDQ

US dollar, a 3.49 percent increase from the N55.85 recorded in the previous week.

In the FX Futures market, $103.38 million worth of OTC FX Futures contracts

were traded in eleven (11) deals, compared to the total for the previous week-ended

November 9, 2018 of $108.58 million traded in fifteen (15) deals.

MARKETS

EVENT

Currency in circulation rises by 1.8% to N1.92trn in Q3

Sahara Group urges collaboration at oil & power conference

HOPE MOSES-ASHIKE

urrency-in-circulation (CIC) rose to N1.92 trillion at the end of August 2018, representing 1.47 percent increase over the level of N1.90 trillion at the end of the second quarter of 2018. It declined by 3.20 percent compared with N1.87 trillion recorded at the end of June 2017. The development relative to the preceding quarter reflected, mainly, the increase in its currency outside banks component. The Central Bank of Nigeria (CBN) on Monday released its economic report for the third quarter, which revealed that total deposits at the CBN amounted to N15.09 trillion at the end of August 2018, indicating a 11.6 percent increase above the level at the end of June 2018. The development was as a result of the rise in the deposits of the Federal Government and

banks, while deposits of the private sector declined. Of the total deposits at the CBN, the shares of the Federal Government, banks and private sector deposits were 49.4 percent, 31.5 per cent and 19.1 per cent, respectively. Reserve money rose by 3.2 per cent to N6.68 trillion at the end of August 2018, in contrast with the decline of 5.9 per cent at end-June 2018. The development reflected the increase in total bank reserves. The total assets and liabilities of the deposit money banks stood at N36.3 trillion at the end of August 2018, representing 0.8 per cent increase over the level at the end of June 2018. The report indicated that the funds were sourced, largely, from mobilisaion of unclassified and foreign liabilities, and realisation of claims on Central Bank. The funds were used, mainly, for payment of matured demand deposits, accretion to

reserves and extension of credit to the private sector. At N19.3 trillion, banks’ credit to the domestic economy, at the end of August 2018 showed an increase of 1.0 per cent above the level at end-June 2018. The development reflected, the rise in claims on both the Federal Government and the private sector in the review period. According to the report, total specified liquid assets of the banks was N11.264 trillion at the end of August 2018, representing 54.5 percent of the total current liabilities. At that level, the liquidity ratio was 2.0 percentage points and 24.5 percentage points above the levels at end-June 2018 and the stipulated minimum ratio of 30.0 per cent, respectively. The loans-to-deposit ratio, at 65.89 per cent, was 1.29 percentage points higher than the level at the end of June 2018 but was 14.11 percentage points below the prescribed maximum of 80.0 percent.

nergy and infrastructure conglomerate, Sahara Power Group is joining forces with Africa Oil & Power as a strategic partner for this year’s South Sudan Oil & Power conference. The energy giant is expected to highlight the need for collaboration among all stakeholders within and outside Africa as South Sudan; the world’s youngest democracy continues its march towards economic growth and development. Billed as “Africa’s Elite Energy Event”, the conference has been commissioned and endorsed by the Ministry of Petroleum and Ministry of Energy & Dams of South Sudan and is expected to address some of the most critical topics affecting the energy sector including the growth of exploration activities, the resumption of oil production, regional infrastructure, and security status at operational areas, among others.

Sahara Group’s Director for Governance & Sustainability, Pearl Uzokwe will deliver an opening keynote address on the first day of the conference. Speaking ahead of the event, she said “It is highly commendable that the Government of the Republic of South Sudan is lending support to such an important conference. We expect that it will bring together some of the most important stakeholders in the public and private sector to kick-start critical conversations as a prelude to creating organic synergies and long lasting cross-sectoral collaboration for the nation’s economic development. The South Sudan Oil & Power 2018 builds on the success of last year’s conference and will feature ministerial keynotes and other delegates from the East Africa region. Those in attendance will be part of several panel discussions on the energy sector as well as interactive

workshops for doing business in South Sudan. Amongst these workshops is one which will be hosted by Sahara Group titled “Collaborative Private Sector Participation in South Sudan’s Power Sector”. It will be jointly led by Uzokwe and Valery Guillebon-CEO Sahara Energy International Ltd PTE, the conglomerate’s oil & gas commodity trading and logistics division. Uzokwe, who recently emerged as the arrowhead of the Conglomerate’s Governance and Sustainability Directorate said “We anticipate that the conference will be pivotal to providing a credible roadmap that will drive ongoing developmental activities in South Sudan. Sahara Group is delighted to join all stakeholders in this all important mission and looks forward to partnering with the nation to light up South Sudan and lay a solid foundation for sustainable development in South Sudan.”

SERVICES

BassComm eyes new West African frontiers in expansion push JOSHUA BASSEY

assComm Nigeria Limited, an indigenous engineering company with strong presence in Nigeria, Ghana, Gambia and Sierra Leone, will be expanding frontiers in other African markets and

beyond, Ifeyinwa Ekweozoh, the company’s general manager says. Ekweozoh said in Lagos that the expansion drive which coincides with the company’s 25th anniversary is also to reposition BassComm as a key player as an assembler of Solar energy components, cable TV installation and di-

verse mechanical engineering services. “We think that as a company we have come a long way and acquired enough experience to expose our services to other African markets. And so the next 25 years will see us extending our quality services to other African markets while retaining strong pres-

ence in the Nigerian market,” said Ekweozoh in Lagos on Monday. According to her, the company which started off with TV cable installation has over the years diversified its portfolios to include unique engineering services to such big names as MTN, Exxon Mobil, Microsoft among others.

She believed the future of the Nigerian economy would greatly rely on solar energy given the power challenge in the country, stressing that it was time government, businesses and groups begin to seriously invest in the sector, adding that the moment, businesses are being forced to spend fortunes on diesel to

power their generating plants which adds to the cost of doing business. She said BassComm would also be using the 25th anniversary to give back to the society by visiting and donating to orphanage homes as well as host customers and business groups to dinner in Lagos.

Thursday 22 November 2018

BUSINESS

COMPANIES & MARKETS

DAY

Business Event

BANKING

Ecobank secures US$200m syndicated loan facility CYNTHIA IKWUETOGHU

he board of Ecobank Transnational Incorporated (ETI), the Lomé-based parent company of the Ecobank Group, has successfully closed a syndicated loan facility worth US$200 million. This was announced by the bank in a press release through the local exchange on November 19th, 2018 and signed by Greg Davis, Group Chief Financial Officer (CFO). The Bank stated that the facility was oversubscribed by U S $ 6 8 . 5 m i l l i o n t o US$268.5 million, increasing Deutsche Bank’s mandate as arranger from US$150 mil-

lion to 200 million. According to Davis, “the facility supports ETI’s goal of maintaining a diversified funding base with strong market access.” “The loan will be due for repayment in November 2019,” Davis stated in the notice. The bank was rated B2/ Not Prime global local-and foreign-currency issuer with a stable outlook in the longterm by Moody’s. The rating agency also assigned a notional baseline credit assessment (BCA) and adjusted BCA of b2 and b1 The bank’s ratings (BCA of b2) reflected the group’s stable funding and liquidity profile, recovering profitability, diversification benefits

and improving, but still challenging macro-economic conditions in the African continent. In September, Standard & Poor’s (S&P) rated the bank as B-/B on the group’s nonoperating holding company ETI and B/B on Ecobank Nigeria Ltd. Ecobank Transnational Incorporated was incorporated in Lomé, Togo and is the parent company of the pan-African banking group, Ecobank. Ecobank currently present in 36 African Countries. The bank is a full-service bank providing wholesale, retail, investment and transaction banking services and products and governments and other organisations and institutions.

L-R: Kehinde Bamigbetan, Lagos State commissioner for information and strategy; Folake Ani -Mumuney, president, ADVAN; Arjan Mirchandani, chairman of the occasion, and Femi Odugbemi, keynote speaker, at the ADVAN Awards for Marketing Excellence west Africa 2018 Theme; The power of story telling held at Civic Centre Ozumba mbadiwe Victoria Island Lagos

INDUSTRIAL GOODS

Dangote partners public to arrest erring drivers …to reward informants with N250,000

n a renewed effort aimed at ridding the organization of unscrupulous drivers, the management of the pan-African Conglomerate, Dangote Group has solicited the help of members of the public to assist in apprehending persons engaging in illegal haulage activities with the organization’s trucks. The company subsequently announced a mouth-watering monetary reward for any member of the public who offered information that would lead to the arrest of such persons by the law enforcement agents. The management disclosed that a sum of N250,000.00 would be given as reward for any persons who help in tracking unscrupulous drivers and confiscation of the illegal goods. Dangote Industries Limited also warned those who illegally transport materials on Dangote trucks that such unauthorised goods shall be confiscated and such drivers and owners would face the full extent of the law. In a statement issued by the Dangote Industries Limited and signed by its Chief Corporate Communications Officer, Mr. Anthony Chieji-

na, the company said “The Management of Dangote Industries Limited wishes to solicit the assistance of the general public in the fight to rid the organisation of illegal haulage activities being perpetrated by some unscrupulous persons. “In pursuit of this objective, anyone with verifiable information which will lead to the arrest of such person(s) or goods will be rewarded with the sum of N250,000.00 (Two Hundred and Fifty Thousand Naira Only).” To clarify its position, the management went on to list its products and goods which its over 10,000 trucks operating across the country and the neighbouring West African countries could convey. It stated “Dangote Trucks are permitted to transport only the following materials: Dangote Cement Plc – Dangote Cement, Limestone, High Grade Gypsum and Coal; Dangote Sugar Refinery Plc- Dangote Sugar; Nascon Allied Industries Plc – Dangote Salt & DanQ Seasoning; Agrosacks Industries Limited – Bags; Dangote Flour Mills Plc – (Dangote Wheat, Flour and Danvita) “We hereby alert the public to report any suspected

Dangote Truck driver involved in illegal haulage supported with credible evidence of such act.” While the Police and other law enforcement agents have been authorised to arrest any Dangote Truck driver involved in such illegal act, it urged members of the public while making their report to remember to include the Truck Type; Truck Plate Number; Truck Cab No.; Location of the Truck, Contents of the Truck, Colour of the Truck and Photographs of the Truck and goods if possible. Dangote Group has devised various means in the past to rid the company of unscrupulous drivers who engaged in illegal haulage activities and others who constituted themselves into menace to other road users. Recently the company had to arrest some of its drivers on illegal haulage business and handed them over to the authorities. The authorities commended the gesture of the company management and urged other organisations to borrow a leaf from Dangote Group management by doing selfcleansing of their drivers’ rank and file.

L-R: Mohammed Mijindadi, managing director, General Electric, Gas and Power; Azuka Okeke, regional director, African Resources Centre for Health Supply Chains; Bankole Oloruntoba, chief executive officer, Nigeria/World Bank Climate Innovation Centre; Eniola Edun, general manager, Techplus; Deremi Atanda, Executive Director SystemSpecs Limited, and Tunji Adeyinka, group managing director, Republicom Group, at the Techplus 2018 Breakfast series held at Zone Tech Park in Lagos.

L-R: Obi Ezeilo, LACIAC + G Elias & Co Entertainment Industry roundtable Director Nigeria Copyright Commission; Yetunde Akinloye, director, Nigeria Communications Commission; Funmi Iyayi, CEO, LACIAC; Tunde Olaniyan, general manager, commercial legal, Airtel Nigeria, and Jude Abaga, one of Nigerian Artists, (MI), during the LACIAC + G Elias & Co Entertainment Industry Roundtable in Lagos.

MARKETS

MPC to hold key lending rate at 14 percent LOLADE AKINMURELE

nalysts widely expect the Monetary Policy Committee (MPC) of the Central Bank of Nigeria to hold the benchmarck interest rate at 14 percent, where it has been for two years, when it holds its last meeting of the year on Nov 21 and 22. They hinge their forecast on inflationary threats arising from

the expected liquidity boost from election spending. Campaigns for the presidential and national assembly elections officially commenced 18 November 2018, in line with the election time table of the Independent National Electoral Commission (INEC). This is expected to result in increased spending in the run-up to the February 2019 elections.

Also, election spending could rise further, post commencement of governorship campaigns slated for 1 December 2018. Weak economic growth remains a concern that could continue to favour a vote against further tightening by the MPC, even as the likely impact of increased dollar demand on FX stability will be a factor against an accommodative stance.

L-R: Anthony Oko, sector commander, FRSC, Benin; Everest Oghonim, packaging manager, Guinness Nigeria; Kehinde Adeleye, zonal commander, FRSC, and Titilola Alabi, sustainable development & alcohol in society manager, Guinness Nigeria, at the flag off of the 2018 Dona’t Drink & Drive Initiative of Guinness, tagged #Jointhepact, in Benin, Edo State

BUSINESS DAY

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Thursday 22 November 2018

BUSINESS DAY

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Investor

In association with

Helping you to build wealth & make wise decisions NSE All Share Index

Year Open

38,243.19

Market capitalisation

N13.609 trillion

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

2,564.13

1,713.69

1,087.32

Week open (09 – 11–18)

32,200.21

N11.756 trillion

2,343.01

1,421.31

787.55

Week close (16– 11–18)

32,058.28

N11.704 trillion

2,328.25

1,419.49

787.55

Percentage change (WoW) Percentage change (YTD)

-0.44 -16.17

-0.63 -9.20

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

1,746.68

475.44

139.37

1,447.79 1,442.98

417.33 413.86

NSE 30 Index

-0.13

0.00

-0.33

-17.17

-27.57

-17.39

-0.83 -12.95

2,560.39

1,975.59

1,379.74

119.60

726.34

293.52

2,233.25

1,345.86

1,180.36

119.05

726.61

290.21

2,229.21

1,359.65

1,173.69

-0.46 -14.58

0.04 -25.56

-1.13

-0.18

1.02

-0.57

-12.24

-12.93

-31.18

-14.93

IHEANYI NWACHUKWU

in equity trading. In t e n m o nt h s p e r i o d t o October 31, EFCP Limited accounted for stocks trading valued at N198.734billion o r 9 . 3 3 p e rc e nt ; F BN Qu e s t Securities Limited followed after equities valued at N106.818billion were exchanged through the firm. The value of stock traded by FBN Quest Securities represents 5.01percent of the total value exchanged on the Nigerian Stock Exchange in the review period. Chapel Hill Denham S ecur ities Limited accounted for stocks trading

NSE Pension Index

330.69

…account for N1.45trn worth of equity deals in ten months

A l s o, C S L S t o c k b r o k e r s Limited accounted for stocks trading valued at N215.162billion or 10.10percent of the total value of stocks traded on the Nigerian Bourse in ten months. Most of these big stockbroking firms have foreign investors as their clients. Between January and September, foreign investors exchanged equities value at N991.19billion against N783.34billion in the same period of 2017, according t o re p o r t o n d o m e s t i c a n d foreign portfolio participation

NSE Ind. Goods Index

976.10

Stanbic, Rencap, CSL, others lead equities trading n ten months to October, only ten stockbroking firms accounted for e q u i ti e s d ea l s va l ue d at N1.45trillion or 68.45percent of the total value of stocks traded on the Nigerian Bourse in the same period. Interestingly, Stanbic IBTC Stockbrokers Limited, Rencap Securities (Nigeria) Limited and CSL Stockbrokers Limited accounted for reasonable percentage of the recorded value of stocks traded, according to the latest broker performance report from January 2, 2018 to October 31, 2018. T h e b ro ke r p e r f o r ma n c e report shows that Stanbic I BTC Sto ckb ro ke r s L i m i t e d accounted for equities trading in ten months valued at N419.021billion. This amount represents 19.66 percent of the total value of stocks traded on the Nigerian Stock Exchange (NSE) within the ten months period. Stocks exchanged through Rencap Securities (Nigeria) Limited in ten months period were valued at N264.723billion; this amount represents 12.42percent of the total value of stocks exchanged on the NSE in the review period.

NSE Lotus II

valued at N70.58billion or 3.31percent ; while stocks exchanged through Cordros Securities Limited were valued at N54.230billion or 2.55percent of the total value traded. The report also shows that United Capital Securities Limited exchanged equities valued at N49.89billion or 2.34percent ; Cardinalstone Securities Limited (N45.865billion or 2.15percent); and A.R.M Securities Limited (N33.529billion or 1.57percent).

Assessing leverage in investment funds: IOSCO seeks feedback on proposed framework

he Board of the International Organisation of Securities Commissions (IOSCO) is requesting feedback on a proposed framework to help measure leverage used by investment funds which in some circumstances could pose financial stability risks. The proposed framework, outlined in IOSCO Report: Leverage, comprises a two-step process aimed at achieving a meaningful and consistent assessment of global leverage. The first step indicates how regulators could exclude from consideration funds that are unlikely to create stability risks to the financial system while filtering and selecting a subset of other funds for further analysis. The second step calls for regulators to conduct a risk-based analysis of the subset of investment funds identified in the first step. The consultation paper principally focuses on the first step, although it also invites feedback on both the second step and the design of the two-step approach. IOSCO does not prescribe a particular set of metrics or other analytical tools. Instead, each jurisdiction is expected to determine the most appropriate risk assessment for it to adopt, given that some riskbased measures are not appropriate for all funds. The two-step framework seeks an appropriate balance between achieving precise leverage measures and devising simple, robust metrics that can be applied in a consistent manner to a wide range of funds in different jurisdictions. It also addresses synthetic leverage, by including exposure created by derivatives; considers different approaches to analyzing netting and hedging and the directionality of positions; and includes approaches that limit model risk. The consultation paper responds to a request made in the Financial Stability Board´s 2017 report Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities, which provides policy recommendations to address risks to global financial stability arising from potential structural vulnerabilities that may result from asset management activities.

BUSINESS DAY

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Thursday 22 November 2018

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United Capital investment views

Equities fall to the tune of the bears, NSE-ASI shed 0.4percent week-on-week

he local bourse yielded to bearish pressure in the prior week which seemed like a tussle between the bears and the bulls. Although the market opened the week on a bearish footing, concurrent bargain hunting on two of the five trading days culminated to the -0.4percent week-on-week (w/w) decline recorded. The exchange index settled at 32,058.3 points, market capitalization declined by N51.8billion to end at N11.7trillion and year-to-date (YtD) return descended to -16.2percent. Activity level was divergent as average volume traded rose 19.1percent to 256.9million units while average value traded lost 36.6percent to N2.3billion. Performance across sector indices reflected the dull theme in the market as four of the six sector indices we track trended southwards. The Agriculture (-2.6percent), Oil & Gas (-1.1percent), Banking (-0.8percent) and Insurance (-0.5percent) sector indices were the laggards as declines inOKOMUOIL(-5.1percent),SEPLAT (-2.4percent), TOTAL (-0.5percent), DIAMOND (-29.7percent), UBA (-1.8percent), ZENITH (-1.6percent) and AIICO (-1.5percent) dragged the indices. On the flip side, the Industrial Goods (+1.1percent) and Consumer Goods (+0.04percent) indices closed the week upbeat consequent on bargain-hunting in CCNN (+3.1percent), WAPCO (+6.7percent), FLOURMIL (+11.7percent), NESTLE (+1.4percent) and NB (+0.9percent), which outpaced the declines recorded in DANGCEM (-0.7percent), INTBREW (-9.9percent) and DANGSUGAR (-1.2percent). Investors’ sentiment as measured by market breadth remained underwhelming at 0.7x (previously 0.8x); 23 stocks advanced while 31 declined. We expect an extension of the observed mixed proceedings in the week ahead. Money Market: CBN maintain liquidity tightening stance In the week to 16th November, the CBN continued on the path of liquidity tightening, issuing N450.5billion worth of OMO bills relative to N423.8billion maturities. The Apex bank also maintained OMO stop rates in its 1-year bill at 14.5percent. Consequently, system liquidity tightened slightly as money market rates (the Open Buy Back and Overnight rates) averaged 6.5percent versus 4.5percent in the period before. During the week, the Apex bank conducted its bi-monthly NTB auction, wherein it successfully refinanced N128.2billion. Demand was overwhelming as bids of 3.1x the offer turned up, against 1.8x recorded at the previous auction. What’s more, the 182-day bill beat the 364-day bill as the most demanded tenor with a bid-to-cover ratio of 4.3x. Overall, stop rates cleared lower on the 91-day and 182-day bills on account of the drop in supply, while the edged higher on the 364-day tenor; 91-day (10.95percent versus 10.98percent at the last auction), 182-day (13.16percent versus 13.49percent at the last auction) and 364-day (14.45percent versus 14.4percent at the last auction). In the secondary market, trading sentiment was guided by the anticipation of more attractive offerings ahead of the NTB and OMO auctions that took place later in the week. Overall, yields on benchmark Nigerian Treasury Bill (NTB) papers inched higher by 23bps on average to close at 13.9percent: 91-day (up 14bps to 13.4percent), 182-day (up 22bps to 13.6percent) and 364-day (down 23bps to 16.5percent). In this coming week system maturities to the tune of N409.0billion – made entirely of OMO maturities - is expected to hit the system and

we expect the tempo of this events sustained weekly FX intervention to guide trading sentiments through by the CBN to continue to support the local unit at N360-N365/1$ the week. Bond Market: Higher clearing as demand pressures persist. Meanwhile, the volatility in global rates in FGN Eurobond auction In the primary market, the federal crude oil prices remains a potential government successfully raised dark cloud for reserves while the $2.9bn in Eurobonds to fund the recently issued $2.9bn Eurobond fiscal deficit and financing needs remains positive for the overall of the 2018 budget. The issue was reserves position by year-end. G lobal e quitie s mixe d; oversubscribed more REPORT than three STOCK by MARKET FOR NOVEMBER 16TH 2018 times, but it was also overpriced geopolitics and economic data when compared to the last issuance were in focus The week to 16th November 2018 February. Aintotal turnover of 1.285 billion shares worth N11.539was billionainmixed 13,245 deals were this weekas week fortraded investors Particularly, compared by investors on the floorwhen of the Exchange in contrastgeopolitics to a total of and 1.079economic billion sharesdata valued at stood to thebillion February 2018hands Eurobond N18.196 that exchanged last week in 14,372 deals. in full glare. During the week, the US issuance, the spread between Treasury department highlighted Nigeria’s Eurobond rates and The Financial Services Industry (measured by volume) ledthe the activity chartStates with 890.433 million a United recorded comparable US treasury is more that shares valued at N8.113 billion traded in 7,923 deals;fiscal thus contributing 69.31% and 70.31% to the deficit of $100.5bn, 60percent than 100bps higher, which does not total equity turnover volume and value respectively. higher The Services Industry followed with 284.370 than this time last year. come as a surprise, considering the million shares worth N585.368 million in 298 deals.The third place was Consumer Industry Additionally, USGoods consumer fact that the Fed has consistently with a turnoveron of 44.694 million shares N 2.054 price billion ininflation 2,367 deals.met the Fed’s target delivered its promised rateworth hikes and US benchmark 10-year Treasury of 2percent after rising 0.3percent Trading in the Top Three Equities namely Diamond Plc, Ikeja Hotel Plc, and FBN Holdings and Plc, month-on-month (m/m) yield recently touched a 7-year high. Bank (measured by is volume) accounted shares worth y/y N1.758 billion in 1,957Clearly, deals, respectively. The offer made up offora 708.003 $1.2bnmillion2.5percent contributing 55.11% yielding and 15.23%7.625percent, to the total equity turnover volume andeconomic value respectively. the benign growth and 7-year tranche $1bn 12-yr tranche at 8.75percent robust labour market pose a very and $750m tranche paying strong case for a December rate hike. Equity Turnover -30-yr Last 5 days On the geopolitical front, reports 9.25percent. Chinese officials delivered The Bonds market started off the that Turnover Turnover Traded Advanced Declined Unchanged a written response to the Trump week increase in yields which Datewith an Deals Volume Value (N) Stocks Stocks Stocks on Stocks possible trade came back 142,110,924 of heightened risk- administration 12-‐Nov-‐on 18 the2,772 1,556,344,511.64 97 14 in an attempt 12 71 concessions to deoff sentiments and weak demand 13-‐Nov-‐18 2,880 399,757,012 2,242,647,562.95 escalate 104 16 ongoing 26 trade spat 62 the interests. Nonetheless, by mid-week, buoyed sentiments, while the 2,726 229,264,469 2,498,219,890.33 99 16 15 68 14-‐ N ov-‐ 1 8 some client interest was recorded as secretary’s players on attractive 15-‐Nov-‐18 cheery-picked 2,595 349,253,071 2,453,302,539.23 commerce 88 10 21 comments 57 the US is19 still set to16 hike tariff63 to yield FGN bond that98 16-‐Nov-‐offerings. 18 2,272 Overall, 164,263,686 2,788,428,087.50 25percent from 10percent on $200bn yields traded sideways on average

WEEKLY REPORT

worth of Chinese goods showed the to close at 15.5percent. On another need for cautious optimism over the note, average yield for FGN Eurobond tariff spat. inched higher from 7.5percent to While we await the outcome of 7.7percent while average yield in a potential faceoff between Trump corporate Eurobonds edged lower to and Xi at the G20 meeting later in the 9.4percent from 10.3percent. For Further Inquiries Contact: Market Operations Department month, DJIA, S&P 500 and NASDAQ Page 1 Factoring in the recent weakness indices shed 2.6percent, 2.1percent, in oil prices as well as expectations and 2.4percent respectively. of higher inflation and renewed In Europe, BREXIT dominated supply of bonds at the forthcoming headlines as Prime Minister May’s auction, our outlook for the bond draft agreement presented to the market remains bearish – despite house of common hit another the successful $2.9bn Eurobond stumbling block. The draft deal was issuance. largely unwelcomed, leading to the Foreign Exchange: Pressure resignation of the BREXIT secretary on Dollar reserves slows amid and the secretary of state for works rising yields and pension. In the Foreign exchange market, M e a n w h i l e , G e r m a n ’s the local currency weakened further economic output fell by 0.2percent against the dollar across all the q/q, the first downturn since market segments as FX demand 2015 as the confluence of trade pressures failed to abate. This was in disputes dampened exports spite of CBN’s sustained weekly FX while new regulations in the carintervention in the wholesale and manufacturing industry affected retail FX market. growth. A convergence of these Also, FX reser ves eased incidents translated into bearish marginally by 0.3percent week-onsentiments across major European week (w/w) to $41.6billion as at equity indices; the Pan European Thursday. Meanwhile, benchmark STOXX (-2.3percent), UK’s FTSE Brent price fell into a bear market, (-1.3%), France’s CAC (-1.8percent) trading largely below the $70.0/b and Germany’s DAX (-1.8percent) support level for the first time in indices all trended lower w/w. 2018 to $65.5/barrel on Tuesday, Across Emerging markets, equity while later rebounding to c. $68.0/b indices closed upbeat w/w save for (at the time of writing) amid talks of South Africa’s JALSH (-1.3percent) another supply cut by OPEC in its index which trended southwards next meeting. w/w. Brazil’s IBOV (+1.3percent), In line with this, FX rate at the Russia’s RTSI (+1.1percent), India’s Parallel and Investors & Exporters SENSEX (+0.8percent) and China’s market depreciated by 14basis points SCHOMP (+3.1percent) all closed (bps) w/w and 11bps w/w to close the week higher. Notably, Argentina’s the week at N362/$1 and N364.0/$1 Inflation that rose 6.5percent in respectively, while the official market September 2018, rising sharper than rate fell marginally by 2bps w/w to the Argentine Central Bank’s survey close at N306.7/$1. expectation of 5.9percent. Looking ahead, we expect the

Investor’s Square •Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

Economy and Markets

New Strategic Plan: DMO targets optimal debt portfolio mix by December 2019 IHEANYI NWACHUKWU

i g e r i a’s D e b t Management Office (DMO) recently published its fourth Strategic Plan (2018 – 2022) with key objective to use debt and debt-related instruments to support Nigeria’s development goals, while ensuring that public debt is sustainable. In the newest debt strategy, DMO wants to achieve an optimal debt portfolio mix of 60:40 for domestic and external debt by end-December, 2019. The debt office also hopes to attain 75:25 ratio for long and short-term debt instruments in the domestic debt portfolio by end-December, 2019. The Debt Management Office (DMO) is in the process of raising an additional $2.8billion Eurobond in addition to the ex isting $8.3billion. Nigeria’s external debt has increased by $10.7billion (majorly driven by Eurobond worth $7billion) to $22.1billion between to 2016 and 2018. This was motivated by a strategy to optimize the country’s debt mix by tapping into the relatively cheaper external debt market. With the sustained increase in debt profile, concerns around Nigeria’s debt sustainability gained a global attention at the IMF/ World 2018 annual meeting, with the IMF highlighting the need for the country to check further increase. “While the Nigerian au t h o r i t i e s c o nt i nu e t o point to a low debt/GDP as a justification for a further increase in debt, the real concern for the fiscal authorities is the rising cost of debt servicing which stands at circa N2trillion, representing 43percent of FGN’s revenue at H1-2018”, research analysts at Lagos-based United Capital Plc said in their November 9 note. The new debt management strategy shows DMO wants to keep the share of debt maturing within 1-year, as a percentage of Total Debt Portfolio at not more than 20percent ; and target an Average Time-to-Maturity (ATM) for the Total Debt Portfolio at a minimum of 10 years. Also, DMO is targeting

Patience Oniha, DG, DMO

to maintain a Public Debt Po r t f o l i o t hat i s w i t h i n approved Limits, and sustainable, as defined by the Government approved Debt/GDP Ratio, and any other thresholds that may be approved by the Government. Amongst others, the mandate of the DMO includes to advise the Government on all matters related to Public Debt; negotiate and contract debt, including issuing securities in the Domestic and International Capital Markets; issue guarantees on behalf of the government; maintain a comprehensive, accurate and up to date record of Nigeria’s public debt; and service the public debt of the Government as and when due. DMO developed the new Strategic Plan following the expiration of the third Strategic Plan (2013 – 2017) and the need to align public debt management activities with Government’s economic policy thrusts, as encapsulated in the Economic Recovery and Growth Plan (ERGP), among others. “The building blocks for the fourth Strategic Plan are: changing investor needs and higher investor expectations from the DMO on products and services; Government’s

prioritisation of the development of infrastructure which requires new and more creative ways of financing; and the active and supportive role expected of the DMO under the ERGP, two of whose pillars are reducing the infrastructure gap and a private sector-led growth. Other building blocks for the fourth Strategic Plan are: the growing Contingent Liabilities of the Government and the expected increase in Guarantees to support infrastructural development; the growing Public Debt St o ck a n d t h e n e e d f o r Portfolio Risk Management to be brought to the fore, in addition to the existence of a Debt Management Strategy; and the need to upscale debt management capacity at the sub-national level. The Debt Management Office was established in October, 2000 by the Federal Government of Nigeria with the aim of centralising the nation’s debt management functions in a single entity, and to address the challenges inherent in the management of Nigeria’s debt, which can be attributed in part to the split in the function across several Ministries, Departments and Agencies (MDAs).

Thursday 22 November 2018

C002D5556

BUSINESS DAY

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SAHCO IPO: What the offer document says …Vetiva analysts set target price of N5.03 IHEANYI NWACHUKWU

k y w a y Av i a t i o n Handling Company (SAHCO) is currently in the market for its Initial Public Offering (IPO). The IPO priced at N4.65 per share opened on Monday November 12, 2018; it will close on December 19, 2018. The offer prospectus seen by INVESTOR shows the net proceeds of the IPO estimated at N1.83billion will be disbursed to three Vendors in consideration for the shares divested under the Offer. The three vendors in the offer are Sifax Shipping Company Limited, Taiwo Afolabi, and Folashade Afolabi. By way of Initial Public Offering, investors are offered 406.074million ordinary shares of 50kobo each in Skyway Aviation Handling Company Plc (SAHCO). Out of 1.353billion ordinary shares of 50kobo each in the issued share capital of Skyway Aviation Handling Company, Sifax Shipping Company Limited owns 550million units (40.6percent); Taiwo Afolabi owns N503.58million or (37.2percent) while Folashade Afolabi owns 300million or 22.2percent. The Lead Issuing House in the IPO is Vetiva Capital Management Limited while Joint Issuing House is Cordros Capital Limited. The Initial Public Offer is being undertaken to enable the Vendors

divest 406,074,000 Ordinary Shares representing 30percent of the entire issued and fully paid up ordinary shares of SAHCO in partial compliance with the terms of the SSPA (as approved by BPE). Ten (10) percent of the shares being offered for sale will be reserved for staff of SAHCO (in accordance with section 4.2 of the SSPA and section 5 (3) of the Public Enterprises (Privatisation and Commercialisation) Act No. 28 of 1999) under an Employee Stock Ownership Plan to be set up and administered by a Trustee. Only Nigerian citizens are entitled to apply for and be allotted shares under this Offer in accordance with the provisions of the SSPA and Public Enterprises (Privatisation and Commercialisation) Act Cap. P38 LFN 2004. An application has been made to The NSE for the Admission to its Daily Official List, of 1,353,580,000 Ordinary Shares of 50 Kobo each representing the entire issued and fully paid up ordinary shares of SAHCO, according to the abridged offer prospectus. The shares being offered for sale will be allotted on the basis of equality between the three hundred and sixty (360) Federal constituencies in the Federation and the Federal Capital Territory. However, shares may be allotted from Federal constituencies with under-subscription to those with over-subscription. In the financial period to

March 31, 2018, Skyway Aviation Handling Company reported revenue of N1.36billion; profit before tax of N23million and Loss After Tax of N25million. “The need to go public was part of the share purchase agreement that we had with Bureau of Public Enterprises, which is the government. “SAHCOL was handed over to the SIFAX group 100percent. Part of the share purchase agreement states that after a period of time, some shares of the company will be diverted to the public and that is exactly what we are respecting today. “We are aligning ourselves with the documents that were signed. SAHCOL becomes one of the first case of that they want to put out to the public of privatization”, Basil Agboarumi, the new Managing Director of

SAHCOL had noted. Skyway Aviation Handling Company Limited, with its new private sector management composition and orientation kicked off the development of business models geared towards ushering in efficient service delivery. SAHCOL has invested in personnel development, state-of-the-art fleet replacement and massive infrastructural development, to ensure efficient and speedy service delivery. Currently, SAHCOL is significantly present in all the commercially operated airports in Nigeria, where services are offered in the following areas: Ramp handling, Passenger handling and Cargo handling. These are in addition to other services such as Aviation Security, Baggage Reconciliation, and Premium Lounge.

The company’s coverage cuts across all the regions in Nigeria which include Abuja, Minna, Kaduna, Jos, Yola, Katsina, Kano, Maiduguri, Sokoto, Gombe, Port Harcourt, Calabar, Enugu, Owerri, Uyo, Lagos, Ilorin, Benin, Asaba, and Akure. The research team at Vetiva Capital initiated coverage on SAHCO titled “Conquering aviation handling a flight at a time” with a target price of N5.03. “We derived our target price using a Discounted Cash Flow model based on earnings from its Ground handling and Cargo businesses over a 20182022 forecast period (at current capacity). We are positive about the long-term growth capacity of the company given the expected growth in its cargo business, increase in the company’s’ client base and improvements in the

broader sector”, according to Vetiva Capital Research. About the company Skyway Aviation Handling Company Plc (SAHCO) is a locally owned company engaged in the principal activities of Ground Handling (Passenger and Aircraft Handling) and Cargo Handling operating in close conjunction with the aviation industry. SAHCO was incorporated as a private limited liability company on 22nd April 2009 under the Companies and Allied Matters Act. The Company is a member of the SIFAX Group and in 2009 was the vehicle used by the SIFAX Group to acquire the Federal Government’s 100percent equity stake in Skypower Aviation Handling Company Limited (Skypower), an aviation handling services entity, under the privatization programme of the Nigerian Government. Prior to the privatization of the company, it was part of Nigeria Airways Limited (NAL). NAL was liquidated in 1996 and Skypower was separated from the airline as part of the Nigerian Federal Ministry of Aviation’s 1996 reform. Following the acquisition, Skypower became a wholly owned subsidiary of SAHCO. On October 2nd 2018, SAHCO and Skypower merged with SAHCO as the surviving entity. SAHCO is one of the premier ground handlers in the country, along with rival NAHCO, which is already listed on the floor of the Nigerian Stock Exchange (NSE).

Senate says committed to improved capital market investments

he Senate has stated that it is willing to encourage legislation that will improve investments in the capital market by ensuring the regulator is able to perform its responsibilities efficiently. This was disclosed by the Deputy Chairman Senate C o m m i t t e e o n Ca p i t a l Market, Foster Ogola in Abuja when members of the Capital Market Committee visited the Securities and E x c ha n g e C o m m i s s i o n Head Office, Abuja as part of its Oversight function. Ogola stated that the Senators were on oversight visit which is done periodically look at what the Commission is doing and see how the Senate can support the SEC in their work. He said, “We are here to look at your performances within the year, challenges you encountered and explore ways the Senate c a n h e l p t o ma k e y o u

perform better as the Apex Regulator of the Nigerian capital market. “As the apex regulator of the capital market, we expect inputs from you on ways to deepen the market and make it more vibrant and if there are ways we can assist with relevant legislations we are willing to do so to grow the capital market and ultimately our economy”. Ogola reiterated the determination of the Senate to make laws that will encourage new listings as well as help to revamp the capital market and make it more vibrant. I n h i s c o m m e n t s, a member of the Committee, Mohammed Shaaba Lafiagi expressed the need for more interface between the senators and the SEC in a bid to look at specific issues and find ways of solving them. Earlier in her remarks, Acting Director General of the SEC, Mar y Uduk commended the Senators on the efforts they have

made so far in ensuring adequate legislation for the capital market. Uduk however appealed to the lawmakers to assist in ensuring that government owned companies list on the exchange. This she said will boost investors’ confidence as well as attract investments from foreigners. S h e s a i d , “ We h av e very big government corporations that can be listed and that will give foreigners comfort to list too on the exchange. If this happens, it will be good for our market and also give confidence to investors. She disclosed that the Commission has embarked on a number on initiatives to boost investors’ confidence as well as deepen the market. According to her “we just ended our Capital Market Committee Meeting last week and one of the decision reached was to give an extension in the deadline for regularization

L-R: Shaaba Lafiagi, member, Senate Committee on Capital Market; Mary Uduk, acting director general, Securities and Exchange Commission, and Foster Ogola, deputy chairman, Senate Committee on Capital Market, during the Senate Committee on Capital Market oversights visit to SEC in Abuja, recently.

to December 31, 2019. This is in a move to ensure more investors regularize their accounts thereby reducing the volume of unclaimed

dividends in the Nigerian capital market. Uduk told the Senators that the CMC considered the issue and decided it’s

best to give investors more time to regularize their multiple accounts in order to derive the benefits from their investments.

BUSINESS DAY

C002D5556

Thursday 22 November 2018

In association with Luxury

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Spending Trends

Abuja now the most expensive place to prepare jollof rice Bunmi Bailey

buja, Nigeria’s political capital city has overtaken Kano as the most expensive place to prepare a pot of jollof rice in the country, according to the third quarter 2018, SBM jollof rice index report. The composite index, computed by SBM Intelligence, Nigeria’s leading geopolitical intelligence platform, tracks the prices of the main ingredients used to prepare a pot of one of Nigeria’s primary delicacies, ‘Jollof rice’. “For the first time since we began to track this index, Wuse in Abuja has overtaken Kano as the place in Nigeria where it is most expensive to prepare a pot of jollof rice for a family of five. Prices there are at an average of N7, 670, while Kano still remains high at N7, 390,” SBM said in the

report. Jollof rice is a popular delicacy eaten in most of West Africa. It is a fragrant and colourful delicacy made of rice, peppers, tomatoes, spices, onions vegetable oil. Usually well-garnished, it appeals to all age brackets that it is revered across the sub-region for its unique delicious taste and spicy flavour. In recent times, jollof rice has become the subject of heated discussion online among Nigerians, Ghanaians and Senegalese as to who owns the bragging rights to the dish, and of whose version of the delicacy is the most delicious. In the period between JulySeptember (third quarter) 2018, Abuja was among the states with the highest food prices in Nigeria, according to the National Bureau of Statistics. Jollof rice has been expensive to prepare in Abuja since

the beginning of the rainy season, a chef at Nkoyo restaurant in the city, who did not want to be identified told BusinessDay by phone yesterday, without giving more details. The SBM report also stated that the impending Christmas season and the increase in the cost of transportation of food stuff into the Abuja, the crisis in the North and North Central, and flooding in the North appear to be the reasons for the increase.

Global retail update

he festive season is gaining momentum with Amazon launching holiday pop-ups in major European cities, and Aldi developing a taste for Christmas Down Under. Meanwhile, Britain’s biggest retailers are taking a break from the frantic buildup to Christmas for ‘Purple Tuesday’, a national day dedicated to the needs of disabled shoppers. Below are the recent updates: Brazilian ventures in the US, South America Carrefour has announced that its subsidiary in Brazil has acquired e-Mídia, a food tech company focused on digital content. The retailer has improved its profitability in the country. In the growing wholesale segment, its Atacadão banner saw an 11.4% increase in gross revenue. Strategic sales Cereal maker Kellogg is looking to sell its fruit snacks and cookies business to focus on its morning foods, snacks and frozen foods brands, which it will consolidate into one unit. The reorganization is part of Kellogg’s previously announced cost-saving programme Project K. Exec changes Coty has announced that Pierre Laubies will replace Camillo Pane as its chief executive officer, and Peter Harf will be taking over the chairman role from Bart Becht. The management shakeup comes as the cosmetics giant struggles to integrate

41 beauty brands it acquired from P&G. Good intentions Supermarket giant Albertsons released an update on its sustainability efforts, reiterating its commitment to be a ‘steward of the environment’. US grocer Schnuck Markets is building on its delivery programme and has introduced curbside pick-up at some of its stores. Robotic expansion in Europe Ahold Delhaize has teamed up with the Delft University of Technology in the Netherlands to conduct a robotics and artificial intelligence research programme. This comes after the DutchBelgian international retail group announced a partnership with start-up Takeoff in the US to create automated warehouses. Festive experiments Amazon is launching holiday pop-ups called “Amazon loft for Xmas” in major European cities. Meanwhile, some of the UK’s biggest retailers, among them Asda and Marks & Spencer, are preparing for “Purple Tuesday”, aiming to raise awareness for disabled customers. Profit hit After decades of rapid growth Inter Ikea, owner of the Ikea furniture brand, is battling with increasing costs for raw material, while also trying to maintain its hallmark affordability. The company reported a 12% rise in net sales but says costs outpaced wholesale sales. More Singles’ Day win-

ners E-commerce powerhouse Alibaba may have pioneered the concept of the world’s largest shopping day based on sales, but its rivals are also cashing in. Competitor JD.Com, which started the festival run on November 1, saw a 27% revenue jump thanks to an offline push. The more the merrier Aldi has adapted to the summery festive season in Australia. In one of its holiday ads, the discount chain shows a Santa, who crushes down on a very harsh environment but experiences surprising community hospitality. Click here to watch the clip. Outstanding performers European food specialists are thriving amidst the retail giants. They might be small but surely have found their niche. Data, collected by LZ Retailytics, shows that growth is fuelled by liquor chains and frozen food operators as well as a surging interest in organics and wholefood stores. Under pressure British supermarkets and other producers of packaging waste might have to pay up to GBP 1 billion under the government’s new waste strategy. The concern about the future of Britain’s high street continues as nearly 1,000 retail businesses went into administration according to new research. Deliveries and dividends French conglomerate Casino Group are solidifying the 2016 partnership between their Franprix line of supermarkets and Spanish delivery service

It added that another significant driver of the rise in the cost of jollof rice in Abuja is the cost of protein (turkey and beef ) which remained stable for the first half of the year, but has spiked by 50 percent in some places. This rise in protein cost is as a result of the increase in the cost of poultry farming. The report attributed that the rise in protein to an increase in the cost poultry farm-

ing, resulting in turn from higher prices for feeds and vaccines. This contrasts with the situation in Kano, where, according to the report, the price of beef has declined from an average of N1,000 to N800, compared to a rise from N1,500 to N2,000 for a similar quantity in Wuse, and from N1,500 to N1,700 in Awka, the capital of Anambra state. And almost counter-intuitively, beef is 50 percent cheaper

in Lagos, Nigeria’s southern commercial capital, at N1,000 for the same quantitative that goes for N2,000 in Abuja, the report noted. Other ingredients used to prepare this national delicacy are parboiled rice, tomato stew, chicken, pepper, salt, onions, spices, thyme, vegetable oil and curry powder. For tomato, the price has fallen across Nigeria, following the onset of the dry season, during which it is easier to plant the vegetable, according to the report. The SBM report also made a forecast for the fourth quarter that the impending end of year festivities will also bring in seasonal price increases. “We expect that the continuing violence in the key food producing areas and also most of the cattle routes means will continue to put upward pressures on the price of proteins as well as key staples

Thursday 22 November 2018

C002D5556

BUSINESS DAY

LG introduces smart inverter AC into Nigerian market

Twin Waters unveils new leisure Mall

…AC saves 40% energy with 8 months payback period

ANGEL JAMES

By our reporters

G Electronics, global leader and Nigeria’s Number one air-conditioning brand in room and commercial air-conditioning, has once again demonstrated its market leadership with the introduction of LG Single Split Smart Inverter AC into the Nigerian Market. The SCAC which now comes in floor standing airconditioners popularly known as packaged unit ACs clearly shows LG Electronics understands the desires of its esteemed consumers hence its determination to offer Nigerians cutting-edge technologies especially consumers seeking energy efficient products. “Unlike the conventional airconditioner which cannot operate at lower speed due to its constant rotation, the newly introduced LG Single Split Commercial Air Conditioner (SCAC) unit is designed to save energy by 40 percent by constantly adjusting the compressor speed to maintain desired optimum temperature level thereby reducing energy costs, “ says Cholyong Park,

general manager, Air Conditioning and Energy Solutions, LG Electronics West Africa operations. “The AC comes with a single split smart inverter compressor, making it more stable hereby increasing durability.” Accordance to Park, the LG Floor Standing Smart Inverter AC possesses some unique features which stands it out from conventional ACs. Some of the unique features includes, 40 percent energy saving, wide voltage range, smart inverter, 30 percent cooling speed, and small generator operation. It achieves cooling speeds even in very harsh weather condition and interestingly, at a low voltage.” The AC comes in various working capacities, there is the 2HP which works with a 2.5kva generator, 3HP works with 3.5kva and the 5HP works with a 3 phase 6.5kva generator. “This has given credence to the fact that, the AC has the ability to perform optimally even with a Small Gen Operation mood which is yet another unique thing about the product. In terms of reliability, it has an inbuilt high and low voltage protection mechanism which enables

it to regulate its frequency appropriately, therefore prolonging the lifespan of the AC.” Another remarkable feature of the Floor Standing AC is the Wide Operation Range which the company said it’s second to none in its category of ACs with directional control mechanism based on human motion. At the same time and condition, the inverter reaches the set temperature which is about 30 percent quick cooling capacity faster than its constant speed level. “Users can hardly hear any disturbing sound from the LG

Smart Inverter AC since the Low Noise Plafond compact feature which functions between 18,000- 100,000 British Thermal Unit (BTU). With millions of AC units being sold every year, there are definitely quiet ones available in the market; LG Smart Inverter Single Split AC belongs to this category, : Park said. For the triple filter system in the AC which is deliberately designed to ensure that the split aircons neutralizes foul odours and hazardous Volatile Organic Chemical (VOCs) creating a more comfortable environment, eliminating unpleasant smell completely paving way for more refreshing and pleasant smell oozing out of the AC. Another remarkable quality of the AC, according to Park, is the ability to auto-clean itself from time to time reducing the manpower hour required to do that drastically. “Once a user presses the “Auto Clean” button it starts immediately after cooling operation has stopped, to get rid of any traces of accumulated mold and bacteria from the AC. In less than 30 minutes the auto clean dries the inner part of the AC for normal operation to continue,” Park explains.

win waters, a premium ultra modern entertainment centre has officially unveiled its new leisure centre in Lekki. In a press statement the entertainment centre is said to be the latest addition to the exclusive collection of luxury leisure centers in the world today. Twin waters has brought first of its kind opulence to Lagos, with each experience purposefully built to delight every category of its bespoke guests. Angela Okonmah, chief operating officer of twin waters said “We are all excited to announce to all fun lovers in Lagos that the five floors of luxury at twin waters are now officially open, our entertainment centre is arguably the first of its kind in Lagos and sets the standard for combining grand experience and fun, giving people longing for entertainment options in Lagos, a wonderful opportunity to have all their needs catered to in one building. She stated that the brands dream is to redefine fun and luxury in Lagos by providing an international standard of leisure, gaming, shopping, and dining

The entertainment centre is a 2,100sqm development overlooking the Atlantic Ocean while its avant garden centre is equipped with valet parking services, highly trained security personnel and upscale customer service, offering a variety of luxury family friendly activities. Its features two fine dining restaurants chai tang which offers an intimate gathering in the exclusive private dining rooms, cocktail on the outdoor terrace, nestled by atlantic breeze a Chinese dinner and 788 on the sea, serving premium seafood, American style restaurant and sports bar, a roof top bar and lounge, maradiva which is an event centre for all types of functions, C suite meeting, social event and cooperate meetings, it boasts of 5 event suites hosting up to 1000 guests fitted with high speed of WIFI access. The maradiva is also equipped with a personal lift, high security personnel and ample parking space. it is also a host to rufus and bee a sport bar with over 100 exciting games, , which provides ultimate gaming experience for kids, adults, families and corporate teams, an ultra modern gaming arcade inclusive of bowling alley.

for dialysis due to lack of funds. On Saturday, I became unconscious. One of my previous customers who heard of my deteriorating condition offered to fund one session of my dialysis. When I got to the hospital, I was told I was short of blood and N18,000 was needed for blood diffusion but we couldn’t afford to pay for the blood and I wasn’t given. To be strong, the doctor advise I do dialysis regularly pending the time I raise the funds for the surgery but I don’t have the money to fund a single session of dialysis. I can’t even feed my family anymore. Cost implication The total amount of money required for the surgery is N13m while dialysis per session costs N68,000 with

blood diffusion. How have you coped so far? Handouts from family, friends, business associates and well-wishers. The assistance has stopped for a while and it’s understandable. The economy is hard and everyone have their individual problems to tackle. A plea for help This sickness has cost me a lot. My wife, a microbiologist lost her job because she often took permission at work to take me to the hospital. She had to start hawking snacks to put food on our table. My children have been in and out of school but there’s little I can do. I plead with everyone to help in any way they can so I can do this surgery and get back on my feet again.

Living under poverty line How Nigerians are struggling to survive

If you want to contact the writer of this story call: +234(0) 803 889 1567, +234(0) 8155184838 chinwe.agbeze@businessdayonline.com

Kidney patient needs help to stay alive Name: Joseph Nnagbogu State of Origin: Enugu Age: 43 Dependents: wife and four children Occupation: Trader I used to retail hospital equipments at Idumota, Lagos. I had three shops and boys who worked for me until I was diagnosed of renal failure in 2016. How it started In 2004, I was diagnosed of diabetes. I was still managing the diseases and trying to control my blood sugar when I got the sad news in 2016 that my kidney had been affected. Initially, I went to Goodluck Hospital, Akute Road in Lagos but they couldn’t detect what was wrong and the hospital referred me to LASUTH in Ikeja, where I was

diagnosed of renal failure. Then, LASUTH referred me to Dialyzer Medical Center at Oshodi for dialysis. Since 2016, I have been

on dialysis. I spend N150,000 a week on three sessions of dialysis. At a point, I could not go out again. When I ran out of cash, I sold one of my

shops and used the proceeds to fund my dialysis. In the end, I had to sell my three shops. For weeks, I couldn’t go

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Thursday 22 November 2018

An ethical AI in Africa: Government or private sector? FRANK ELEANYA

“

he robots are coming” has become a rallying cry for sceptics who believe evil forces will be unleashed on mankind with all life control lost to super intelligent machines powered by technology. Artificial intelligence is the theory and development of computer systems able to perform tasks normally requiring human intelligence. In other words, it is the ability of digital computer or computercontrolled robot to perform tasks commonly associated with intelligent beings. Supporters of artificial intelligence believe that while some jobs will necessarily need to give way for robots that will do them better, new jobs will be created and humans can make machines work for good. In Africa where job opportunities are scarce with millions of graduates out of jobs and man-made calamities are an everyday occurrence, it makes sense to doubt the intentions of machines that think like humans. How do you control a machine? Importantly, who gets to ensure that these machines actu-

ally work for people and not against people? At the 2018 Website Summit in Lisbon, Portugal, Sophia the social humanoid developed by Hong Kong-based company Hanson Robotics which has full citizenship in Saudi Arabia, once again displayed what is possible in the future world of artificial intelligence. Ben Goertzel, chief executive officer of SingularityNet and chief scientist at Hanson Robotics disclosed at a press conference which BusinessDay attended, that so far sixteen Sophia’s have been made while five are active. He expects Sophia and its kind to get more intelligent as they learn from human interactions fed through algorithms. However, he says there is no “guarantee” that they will always be used for good. Africa, at the moment, may not be experiencing advanced forms of artificial intelligence like Sophia; it is nonetheless witnessing transformations that could only be possible with the integration of the technology. The entire financial service sector has seen major disruption as a result of financial technology companies (fintechs) using artificial intelligence to make loans accessible to small businesses

and individuals, encourage a savings culture, spur new health sector enterprises and agribusinesses, and power rural homes with energy. It has dented the high unemployment rate creating new job opportunities like data scientists, programmers, developers and AI tutors. The reality is artificial intelligence is being infused into most things that companies and individuals make these days. And the more consumers use these innovations, the more intimate data belonging to them are mined. Gradually but steadily, a new culture of artificial intelligence is emerging. It is crude,

driven mostly by hunger and poverty and not research, it is lawless and fawned by ignoramus. To be fair, those qualities are not unique to countries in Africa; artificial intelligence all over the world is seen as in its early stages. This is why a lot of investment is going into research that will increase understanding and address issues of safety around AI. Unfortunately, most of the African governments seem occupied enough to care so much about a new technology that has little bearing to the problems they are currently facing. It leaves the new challenge of keeping AI responsible firmly in the hands of

private businesses. But how do you trust corporate organisations to act responsibly with a technology as powerful as AI? Can a corporate entity with plans to drastically reduce its operating cost by replacing human workers with robots act responsibly? Some may ask, “Is the risk of AI getting out of control immediate?” Maybe not. Should it then be ignored? No. “The all-encompassing capture and optimisation of our personal information – the quirks that help define who we are and trace the shape of our lives – will increasingly be used for various purposes without our direct knowledge

or consent,” Eleonore Pauwels, research fellow on Emerging Cyber Technologies at United Nations University (UNU), said on Saturday, 17 November, 2018. The threat of AI has become so real that the European Commissioner for Competition Margaret Vestager said at the Web Summit that the only promise of a better world with technology rests on the rules put in place to make those markets work well – including competition. If there must be rules for artificial industry, leaving it in the hands of private businesses is a big bad idea. The United Arab Emirate (UAE), arguably the most AI friendly country in the world and the first to appoint a minister of artificial intelligence already has a team developing a document on AI principles and ethics. The intention is to commit companies to using technology to build a safer and more environmentally friendly world. African governments can neither afford to wait for the rest of the world to figure it out first then leapfrog as always. There is no one-sides fit all in ethical solutions. Africa needs to be an active voice on the ethical table.

Domesticating knowledge of AI to solve African problems CALEB OJEWALE

hirty-three (33) year old Moustapha Cisse, head of the Google Artificial Intelligence (AI) Research Lab in Accra, Ghana is a shining example of the limitless possibilities for young people in Africa, who want to make sterling careers in technology, and create positive impacts in their society. Cisse, who is fast emerging as a leading authority in AI, had to leave his home country of Senegal, to study in France before becoming an expert in this field. While most of the millions of young people on the continent are unlikely to have the same opportunity, this knowledge is gradually becoming available in Africa for those desirous of it. “I had to do this (study abroad for AI) ten years ago, and we are working to change the situation. First, there are more resources available out there for peo-

ple to educate themselves. Secondly, Google is collaborating with institutions to develop flagship graduate programmes that allow people to do cutting edge machine learning education

on the continent (of Africa),” said Cisse in an interview during the Google Making AI event in Amsterdam earlier this month. He further explained, “An example is the African

Masters of Machine Intelligence, developed in partnership with the African Institute of Mathematical Science. This will bring the best of AI education into Africa, to train young Africans

Moustapha Cisse, head of Google AI, Ghana (right) in a chat on Making AI Responsibly, during a recent Google event in Amsterdam.

who already have degrees in applied mathematics, computer science or engineering to start careers in this field. This is an important step even if it is not enough.” Empowering young people with the knowledge to develop technologies based on AI, can contribute towards solving many of the problems on the continent. In applying AI, many sectors in Africa are uncharted territory. As Cisse highlighted, the opportunity to positively impact people’s lives with machine learning and AI in general is huge in Africa. “If we can put the technology in the hands of people who have the problems and allow them to solve it by themselves, then the potential is very important and that is part of what we are working on. “I personally believe that there is a lot of potential in agriculture, education, healthcare to apply AI and alleviate some of the current problems we have,”

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com

said Cisse. Recent BusinessDay articles on the use of AI to combat illegal logging, flood alerts, and detecting diseases in crops, are only an infinitesimal part of the several ways the technology can help to address many of the problems on the African continent. Cisse explained that beyond adapting usage of AI as currently deployed in other parts of the world to solve problems in Africa, ongoing work at Google is aimed at developing local solutions as well. “What we are also looking forward to is being able to build technology that is tailored specifically for the problems that we have here, and hopefully, also exported as a contribution of Africa in AI to different parts of the world. That is why I often say that we are not just here to do AI for Africa, but AI by Africa. We should bring our own contribution to the current research and development in this field,” he said.

Thursday 22 November 2018

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BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

UN Nigeria Humanitarian Fund: Templars others, lead private sector initiative Theodora Kio-Lawson

he law firm of Templars has recently joined a select group of investors who are partners to the United Nations Nigeria Humanitarian Fund (NHF) Private Sector Initiative (PSI). The initiative launched last week, is the first of its kind globally, and the first attempt by the United Nations to collaborate with the private sector and to have them contribute to its humanitarian initiatives, which as of today provides aid to over 7 million Nigerians across the country. The Nigeria Humanitarian Fund (NHF) is evolving to partner with the Nigerian private sector to mobilize additional resources and ensure more timely and effective life-saving support for the affected population. The Private Sector Initiative (PSI) is set up to strengthen the response to the effects of the crisis in Nigeria’s North-east. The PSI is also expected to serve as a blueprint for private sector engagement in humanitarian action around the world through a country-based pooled fund, set up and managed by the United Nations. Templars Partner, Olumide Akpata, alongside, Wale Tinubu, Group Chief Executive, Oando Plc, Jim Ovia, Founder and Pioneer Group MD/CEO, Zenith Bank, Asue Ighodalo, Chairman, Nigerian Economic Summit Group (NESG) and Kyari Bukar, former Chairman, NESG have been nominated as founding members of the NHF Private Sector Initiative (PSI) Steering Group.Speaking

L-R: Special Representative of the Secretary-General and Head of [UNOWAS]; Dr. Mohammed Chambas; Templars Partner and Founding Member NHF Private Sector Initiative, Olumide Akpata, and UN Resident Humanitarian Coordinator, Edward Kallon.

MD/CEO Oando Plc, Wale Tinubu; Chairman, Nigeria Economic Steering Group, Asue lghodalo and CoChair[NESG],Kyari Bukar.

Ambassador of lreland to Nigeria, Amb. Sean Hoy (L) and Group MD/CEO, Access Bank, Herbert Wigwe

Group Chief Executive Oando Plc, Adewale Tinubu (L) and Founder/Group MD/CEO, Zenith Bank, Jim Ovia

about his nomination to the steering group, Olumide Akpata said, ″I am extremely delighted to have been nominated to serve alongside such eminent personalities, as a member of the steering group - for a cause I consider to be extraordinary and most timely. I definitely intend to contribute my quota to this noble

effort and in the process, add appreciable value.” Wale Tinubu, who hosted the event at the Oando Victoria Island ‘Wings’ building, described the event, as an important milestone for the social development of Nigeria. His words, “I always say that history will never forgive those who are

in a position to create change and sustainable impact, and do nothing about it. Being in a position where one can effect change, the focus must be on creating sustainable impact. This belief is at the pinnacle of our business operations and social impact efforts. This initiative is set to create hope for our citizens

amidst the humanitarian crisis and promote social development for the country as a whole. I am proud to be a part of this unique opportunity.” The Oando boss thus, commended the support received from other private sector leaders who were also present at the launch, to put an end to the crisis. He thanked the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) for the opportunity to partner on such an impactful initiative. In his remarks, Jim Ovia of Zenith Bank and co-chair of the NHF-PSI Steering Group said, “Together we can take meaningful, collective action for the millions of Nigerians in need of assistance.” Access Bank’s Herbert Wigwe described the collaboration as “a rare privilege to partner with the UN to fight poverty in north-east Nigeria.” Encouraging businesses to invest in humanity, the UN Deputy Secretary-General, Amina Mohammed who joined in the launch via video described the NHF Private Sector Initiative as a “creative and innovative effort, leveraged on private sector partnerships to help those in need.” Earlier in his opening remarks, Edward Kallon, UN Resident/Humanitarian Coordinator & UNDP Resident Representative described Nigeria as home to one of Africa’s strongest private sectors. “…the plan is to create a blueprint for more private sector engagements across Africa.” On his part, Dr Mohamed ChamContinues on page 27

Lawpavilion to unveil AI solution for new lawyers at Call-to-Bar

awPavilion Business Solutions Limited has announced plans to launch yet another Artificial Intelligence (AI) solution in form of a mobile application (App) designed to improve efficiency for the young lawyer. The Managing Director, Ope Olugasa, who disclosed this to the press, stated that the App, which will be launched at the forthcoming Callto-Bar Ceremony, is specifically designed for the ‘New Wig’ (new entrants into the legal profession). Shedding light on this new solution, Olugasa disclosed that the App will not only guide them but will ensure that they have basic principles of law; precedents; a an array of cases and Civil Procedure Rules at their fingertips to guide them through the initial stages of their work. He said, “the major tasks that new wigs perform in law firms are legal research, giving legal opinions, litigation and legal drafting. With our Artificial Intelligence (AI) legal software, known as TIMI, a new lawyer will have the LawPavilion Electronic Law Reports,

LPELR (online version) to assist them with legal research; TIMI Chatbot on Civil Procedures will assist them in litigation; while, TIMI’s Precedent Forms and Agreements Templates will sufficiently handle legal drafting for them. “Believe me, there hasn’t been anything like this! Imagine having at your finger tips an app that allows you do this much. Speaking further on the merits of this solution, the Lawpavilion boss added, “Where a young lawyer is in the middle of drafting an originating process; a motion or any other court process and gets stuck or confused, he/she could initiate a chat with TIMI ChatBot, who is always on hand to help and she will promptly provide a step-by-step guide on how to go about filing or drafting those processes. Also, she provides notes with legal authorities to support Civil procedure principles.” According to Olugasa, this quick and easy access would aid their research and collation of relevant data to draft processes.

Vice President of Nigeria, Professor Yemi Osinbajo, SAN with the Top Ten finalists of the SimmonsCooper Advocacy Development Initiative (SCAD), 2018; an initiative of SimmonsCooper Partners - the law firm where Vice President was a Senior Partner.

“Instead of going through the time consuming and hectic method of sifting through voluminous indexes of Law reports, you can easily search through our vast and current database

from your mobile phone on the go,” he said. On the relevance of such assistance to ‘New Wigs’, Olugasa was of

the opinion that younger lawyers were prone to various forms of courtroom Continues on page 27

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Thursday 22 November 2018

BDLegalBusiness

Kenna Partners hold colloquium to mark 25th Anniversary UN Nigeria Humanitarian Fund....

ulti-practice law firm, Kenna Partners, is set to mark its 25th anniversary in grand style tomorrow, Friday November 23rd, 2018. As part its silver jubilee celebration, the firm would hold a colloquium with the theme, “Footprints in Law & Society: Towards a paradigm shift”. The event scheduled to hold at the Oriental Hotel, Victoria Island, Lagos is expected to be graced by several distinguished members of the bench, top legal practitioners, professionals and business executives from various sectors of the economy, a handful of whom will form the panel to discuss the evolution of law and legal practice and its impact on the society at the colloquium. According to the organisers, the occasion of its anniversary is a significant one for the firm, as it marks its growth and achievements over the years, as well as celebrate its people; and culture of excellence in the practice of law. “We believe it will be an engaging and intellectually stimulating event,” a representative of the firm said. The firm also disclosed that would also use the occasion of its anniversary to unveil a book titled Brief Insights: a Selection of Milestone Cases, which chronicles some notable decisions of the Nigerian Courts. Speaking about the book, the firm’s Practice Development Manager, Aniekan Equere disclosed that the book is a

Continues on page 25

Left to Right, Kelvin Erhonsele – Senior Associate; Emma-Louise Verhees - Deputy Practice Development Manager; Moruf Sowunmi- Senior Associate; Professor Fabian Ajogwu – Principal Partner; Charles Nwabulu – Associate Partner; Tosin Kachikwu – Senior Associate; Aniekan Equere. Practice Development Manager.

careful selection of cases, which celebrate matters brought by litigants before the Courts, the persuasive arguments of lawyers and the decisions that have enriched legal practice and modern legal history in recent times. He said, “The milestone cases selected and discussed, touch on the practice and procedure of the Courts, company law, real estate, fundamental human rights, election petition, oil and gas, maritime amongst others. The book is another contribution to legal knowledge and practice in Nigeria by the law firm of Kenna Partners. “Law continues to be an instrument of social engineering and as the law evolves, there is a need for lawyers, judges and the entire legal system to adopt changes in the approach to addressing challenges in the

society,” Equere said. According to him, the lecture will be delivered by the Honourable Justice Amina Adamu Augie, Justice of the Supreme Court, under the distinguished chairmanship of the first female Senior Advocate of Nigeria, Chief ‘Folake Solanke SAN. Participants at the lecture will discuss how best to handle a transition of the legal profession from one which still bears strong vestiges of stages of its development through history whilst preserving our cherished traditions at the Bar as the profession must evolve to meet the emerging realities of a dynamic and interconnected modern world. A carefully selected panel comprising of Damian Dodo SAN, Odein Ajumogobia, SAN and several others would be discussing the theme.

PHOTOFILE

bas, Special Representative of the Secretary General and head of UNOWAS noted that global challenges are growing and the UN needs the intervention of the private sector to tackle these challenges. Chambas stated further that the UN was honoured by this partnership with Nigeria’s sector. He said, “Nigeria’s business community and the UN as natural partners.” Speaking at the pre-launch press briefing with selected media houses, the Head of Communications at United Nations Office for the Coordination of Humanitarian Affairs, Samantha Newport disclosed that the nine-year conflict in the North-east has created a deepening humanitarian crisis and over seven million Nigerians are in need of urgent assistance across the affected states. She said, “In late 2016, public partners, relief organisations and other key stakeholders involved in the humanitarian response in Nigeria, collectively expressed support for the establishment of the Nigerian Humanitarian Fund (NHF) as a strategic and vital tool to deliver the most urgent humanitarian relief. “In February 2017, the United Nations under the UN Resident/ Humanitarian Coordinator, Ed-

ward, Kallon launched the NHF; a country-based pooled fund (CBPF) managed by the UN Office for the coordination of Humanitarian Affairs (OCHA), in support of lifesaving humanitarian operations in Nigeria,” Samantha said. She further revealed that the Nigeria Humanitarian Fund (NHF) has already raised $70 million from 17 countries namely, Sweden, Germany, Netherlands, Denmark, Belgium, Norway, Ireland, Switzerland, Korea, Canada, Spain, Luxembourg, the Arab Gulf, Malta, Azerbaijan and Sri lanka. “It has already allocated some $67 million to urgent life-saving needs, with an emphasis this year on assisting new arrivals and over congested IDP camps, as well as the cholera outbreak. Of that $70 million, $67 million – including this latest $17 million allocation – has been allocated to various organisations in support of the humanitarian response in north-east Nigeria,” The OCHA head of communications said. The NHF managed by the OCHA under the leadership of the UN Humanitarian Coordinator in Nigeria, Edward Kallon, was created to provide funds in a flexible and timely manner, so those who need it the most have can have access to basic life-saving support.

Lawpavilion to unveil AI solution... Continued from page 25

humiliation, for failing to comply with the Civil Procedure Rules of Courts and other courtroom gaffes. “The path of a lawyer freshly called to the Nigerian bar is usually fraught with challenges. Challenges of being thrown into situations where they are at their wits end; challenges of being required to provide answers to questions they have never considered; the challenges of preparing and filling Court Processes in our sometime unfriendly Court systems; the challenges of facing older wigs who are more experienced and very familiar with the Rules and practices of Courts, yet required to handle the matter successfully; the challenges of appearing before a Judge who is bent on ensuring that you learn the ropes, all in one day! All these experiences can be embarrassing and sometimes discouraging,” he said. It is hoped that this software solution would provide the necessary

foothold needed to walk their way into the profession and all the way up. “They will definitely need a launch pad to help propel them to greatness within the first few years of practice – this is what TIMI app is offering, and we think it is a unique opportunity for new wigs to own their personal Artificial Intelligence Legal Assistant as they begin their journey in Legal Practice,” Lawpavilion MD said. Thus at the Call-to-Bar ceremony, which holds next week in Abuja, lawyers newly-called to the Nigerian bar would have the opportunity to own their first AI solution by Lawpavilion at grossly discounted prices. The Lawpavilion Artificial Intelligence Software known as TIMI was first launched at the 2018 Annual General Conference in Abuja. The solution is aimed at helping lawyers handle more cases faster, with better accuracy and less stress. It has been described as a game changer and a competitive advantage for many in the Nigerian legal industry.

President, Nigerian Bar Association (NBA), Paul Usoro SAN NBA President, Paul Usoro SAN in a handshake with Former during the 2018 Annual Dinner of the Body of Senior Advo- NBA President, Wole Olanikpekun, SAN at the Dinner. cates of Nigeria (BOSAN) which held at Lagos Continental Hotel, Lagos over the weekend. ALUKO & OYEBODE LAW FIRM UNITES AGAINST CANCER, RUNS FOR A CURE Members of the law firm of Aluko & Oyebode came out in unity against cancer last Saturday as they ran against for a cure. SEE PHOTOS FROM THIS OCCASION BELOW:

Paul Alabi of Aluko & Oyebode received the winner’s trophy. #RunForACure 2018.

Lolade Tijani of Aluko & Oyebode won the 2nd place (female) in her race for a cure for cancer.

Emmanuel Odibeli also of Aluko & Oyebode was the oldest participant in the race against cancer.

Thursday 22 November 2018

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BUSINESS DAY

INDUSTRYFile Quality of legal professionals in Nigeria has greatly improved – VP, Yemi Osinbajo, SAN

LegalBusiness YOUNG BUSINESSLAWYER

Practice with meaning! T

immonsCooper law firm recently held its 2018 SimmonsCooper Advocacy Development (SCAD) com-

petition. The SCAD initiative this year, received the highest participation since its inception in 2014; with entries from 23 universities across Nigeria. The 2018 Dispute Scenario focused on Federalism, competition and anti-trust law, administrative law and electricity law amongst other legal perspectives received. This firm disclosed that the choice above was influenced by the firm’s belief that issues of true federalism, curtailment of economic monopoly and abuse of dominant position by businesses, strong and effective regulatory institutions, power and electricity and the enforcement of contractual agreements are vital components not only for any functional democratic society, but also for the overall economic development of Nigeria and the electricity sector in particular. SCP Partner, Dapo Akinosun who spoke about the 2018 edition of the SCAD initiative said, “We also received entries from outside Nigeria. The written Briefs were subjected to a rigorous 3-stage vetting process by a team of 18 carefully selected legal practitioners of repute within and outside SCP.” External SCAD assessors f o r t h e 2 0 1 8 c o mp e t i t i o n were, Messrs. Abiola Olawole O l a n i j i , Ad e d ay o Ad e d e j i , Ayokunle Akinpelu, Babajide Ojo, Babatunde Adewolu, Dayo Adamolekun, Faruq Abass, Francis Akinlotan, Olufella Olubunmi Oyewole and Oluwaseun Ajaja - all seasoned Practitioners. Among this year’s panel of judges were, Hon. Justice Oye-

wole, Fola Arthur-Worrey, Babatunde Irukera, Tinuade Awe and Dr. Ransome Owan. SCAD completion top 10 finalists were Agan Ucheawaji Ntieno-Owor, Agbontafara Olamide Mariam, Ikusika Bamidele, Olaitan John Ojelabi, Olalere and Yusuf Asamu. Others are, Olawepo Samuel Olajide, Omoyajowo Kolawole Ayodeji, Ordam Msughter Paul, Oyarinde Israel and Ujam Emmanuella Ngozichukwu. At the end of the Final Oral Presentations, which took place at ‘The Lagoon’, Victoria Island, Lagos, Ordam Msughter Paul (Pictured above) emerged winner of the 2018 SCAD competition. In his congratulatory remarks, the Vice President of Nigeria and former Senior Partner of the law firm, Yemi Osinbajo, expressed delight at the quality of presentations received from the law students. “Today, we definitely have a greatly improved quality of legal professionals. However, while the quality of legal practice is a lot better than it has ever been, the fact remains that the numbers are still not sufficient. We need to groom more efficient practitioners, so that there would be an increase in the number of quality practitioners and practices we have spread across the country.” Under the leadership of its then Senior Partner, Professor Yemi Osinbanjo SAN, the maiden SCAD competition held in 2014. Today, it has become a biennial competition that has become a platform for the expression of thought and writing skills for aspiring lawyers, SCAD is now in its fourth edition. Members of the firm disclosed that SCAD alumni have gone on to become young leaders in top law firms, and other cooperate organisations.

his week, I am going to tow a very different line from the regular discourse on career and business law to share what I believe is a fundamental ethos in the study of law and one which every young lawyer needs to take on board as early as possible in his/her career. One frequently asked question that anyone who lays claim to being a lawyer will have to answer at some point in his/her career is “Why did you choose to study law”? For many of us, the response to this question is usually along the lines of “I did not like math”, “We are mostly lawyers in my family” or even vague responses like “Law found me”, “There was nothing else I could do” and several answers which leave the audience more unclear. On a separate note, we hear it often that there are too many lawyers in Nigeria and it is argued that a community that is almost 200 million people strong and has less than 200,000 lawyers needs more. I note the truth in these indices, but I dare say that we really do not need more lawyers, but we need lawyers doing more impactful work and I will crave your indulgence to let me explain what I mean and the “why” for this article. Let me start by sharing a story; a lady was scheduled to fly out of Lagos with one of the few local carriers at 4.30p.m. a few weeks ago. Due to unexplained circumstances, the flight was delayed for several hours and passengers finally boarded about 8p.m. They were onboard the aircraft for two additional hours without any explanation from the pilot as to the reasons for the delay. A citizen who was rightfully aggrieved queried the pilot and his crew for the inappropriateness of the situation asserting that the passengers had a right to know the cause for the delay that left them onboard an aircraft for 2 hours after 4 hours delay in the airport. The pilot in what I term an abuse of his powers asked that the passenger deboard threatening that he would not move the aircraft with the “protesting” passenger on flight. True to form, when the flight was cleared for motion, the pilot refused to move with that passenger on flight. The passenger left the flight and in solidarity with him four Non-Nigerian passengers deboarded in protest of the pilot’s abuse of power. The relevant crux of this story is that there were at least three lawyers on that flight and they let it happen. You may have a different view, but I believe that the pilot should have been cautioned and the act of the pilot and his crew was a serious disservice to this citizen who had paid his hard-earned money for a service. It goes without saying that as a society we have become numb and struggle within very blurred lines of what is right to do. The jurisprudence of law as we all learnt in law school can be summarized to say that as lawyers, we are the gatekeepers of the con-

science of our society and it is our responsibility to uphold the law both in its strict and moral sense. I know certain lawyers, who, if they had been on that flight would have ensured that the pilot failed to execute this absurd quest and would have succeeded at it. And in the unlikely event that they did not, they would have filed a report at the Consumer Protection Council (CPC) and/or the Nigerian Civil Aviation Authority (NCAA) in defence of this passenger. What am I saying? Beyond our ideals of professional success, financial wellbeing and growth, are we planning how we can make our career, legal knowledge and exposure, relevant to the society around us? I am mid-track, so it may be too early to say but I know that for many retiring lawyers, a major question that comes to mind is if they had done enough to make the world around them a better place. Please do not get me wrong, advocacy is not for everyone. Not all of us are cut out to walk the line with the ilk of the Gani Fawehinmi SAN, Femi Falana SAN or Ayo Obe who have made it their duty without compulsion to question every abuse of power for the good of the society at the expense of their convenience and safety. But we are all definitely cut out to improve our world, both within the legal community and outside it. In my view, this is what gives meaning to practice. There are phenomenal young lawyers doing this, case in point, Adeola Oyelade and Yimika Ades-

ola. Adeola Oyelade was recently awarded the International Bar Association’s Award for Outstanding Contribution to Human Rights premised on his activities through his platform, Know Your Rights, which he started as a university student educating Nigerians about their rights and even creating an app to enable access to justice. Yimika Adesola, identified a gap in the development and integration of students/young lawyers into the workplace and began to study how to provide solutions within this sphere and she has evolved to become a service provider to the legal services industry via her platform Legally Engaged. There are so many more and one will not find these solutions sitting at a desk querying what a firm or organisation is doing for them. What value are you adding to your immediate community? What value are you adding within your firm? What improvement are you working on? Success as a lawyer, in my opinion is a trade on value and these opportunities lie all around us. It is critical that as you foray into your legal career that you identify these opportunities and begin to harness them. Please note not to put yourself under pressure, the process is incremental in nature, but you have to be looking out for these opportunities in the first place. Law practice which does not impact the legal community and beyond is without meaning and it is necessary to think about this even at the beginning.

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Leadership

Thursday 22 November 2018

Shaping people into a team

A Tattoo won’t hurt your job prospects Michael T. French of the University of Miami and colleagues surveyed more than 2,000 people in the United States and found that those with tattoos were no less likely to be employed than their uninked counterparts, and that average earnings were the same for both groups. In fact, tattooed men were slightly more likely to have jobs than other men. My gut instinct is that we’d see the same findings in Western Europe. In places like Eastern Europe and South America, we might even see that tattoos are more valued. I’m not sure about Asia. This would be a way to extend our research.

Alison Beard

rofessor French, defend your research. We went in expecting to find a negative relationship between tattoos and success in the labor market. My co-authors — Karoline Mortensen, who is also at Miami, and Andrew Timming of the University of Western Australia — and I thought we might see a wage penalty or employment difficulties, because hiring managers have said in previous studies that they’d discriminate against tattooed candidates. But in this analysis, after we controlled for factors that could affect job prospects — such as alcohol use and whether people had been in jail — we found no significant correlation between body art and employment or earnings. Regardless of size, number, visibility or offensiveness, tattoos don’t seem to stop people from finding jobs or bringing in as much pay as everyone else. We even saw two small positive correlations: Men who had tattoos were 7% more likely to be employed than men who didn’t have them, and both men and women with tattoos worked more hours per week. So, if I’m a guy struggling to find a job, some ink might help? Well, I’d urge caution about that. We uncovered a correlation but not causation. The message of this research isn’t that you can boost your job prospects by getting a tattoo. It’s that there’s no labor market penalty for having one. Why were you interested in the effect of tattoos? There’s been a lot of research on the career effects of other personal characteristics — race, age, beauty, health, height, weight and disabilities — and of behaviors such as drinking, smoking and drug use. But nothing much had been done on tattoos. Initially, we could find only two existing data sets in which people had been asked, “Do you have a tattoo?”

I have to ask: Do you have a tattoo? I have a few. On one calf I have a campfire and on the other my favorite motorcycling road. On my bicep I have a waterfall scene, and on the inside of my left forearm, I have a colorful arrow, which I get lots of compliments on. I got my first one 10 years ago.

When we compared their responses with their employment status, we also found no significant correlation. But that single question didn’t take tattoo size or location into account. We thought we might get different results by asking about tattoos you could see or that were especially large or considered offensive. Our initial hypothesis was also informed by studies suggesting that tattoos are taboo in the workplace. One showed that tattooed people were perceived to be less honest, motivated and intelligent; in another, 80% of human resources managers and recruiters expressed negative feelings about visible ink on prospective employees. And in a 2016 study, Andrew found that tattooed applicants were rated significantly less “hirable” for customer-facing jobs. Until recently, tattoos may have been associated with rebellion, criminal activity or gang membership — nothing you’re looking for in an employee. But times have changed? Yes, some of those studies are more than a decade old. Since then, body art has gained much more acceptance as a form of personal expression, just like your clothing, jewelry or hairstyle. Among our survey re-

spondents, 23% of men and 37% of women had tattoos. Some estimates suggest that there is a tattooed person in 40% of U.S. households, up from 21% in 1999. I’d also note that, as economists have shown in other contexts, stated preferences don’t always match revealed preferences. You might say you’d hire someone without tattoos over someone with them for a particular job. But when it comes right down to it, you’ll choose the most qualified person, body art or not. Even the U.S. Marines now allow recruits to have visible tattoos anywhere but the face, because when tattoos were banned, the organization found it was losing out on good candidates. I wonder, though: Is there a blue-collar/white-collar divide? Are tattoos OK for tradespeople but not professionals? That’s something I wish we’d asked about. A 2010 study did show that consumers perceived visible tattoos to be inappropriate in white-collar professions but not in blue-collar ones. And it’s possible that the people we surveyed were mostly in lowerpaying jobs, since they’d volunteered to answer our questions for a small

fee on Mechanical Turk. Their average annual salary was $36,485 for men and $25,930 for women. In some types of jobs body art might be seen as less of a negative or even a positive. But I suspect that nowadays most people think it’s OK for even doctors, lawyers and accountants to have tattoos. Women, too? Yep. Women accounted for twothirds of our sample, but we found no employment or wage penalty for those with body art. And even offensiveness isn’t a deal breaker? Not according to our data. The respondents who told us they had offensive tattoos were just as likely to be employed as those without any tattoos. But we were relying on selfreporting, so our sample size on that measure was small. And offensiveness is subjective. Is a Confederate flag a symbol of Southern heritage or racial oppression? It’s also possible the offensive tattoos were in places people could cover up. Is cultural context important? Would you get different results in other countries?

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

And sorry to get even more personal, but how old are you now? 57. Hmm. What if all the employed people with tattoos only got them once they were established in their careers — as you did? And that’s why they suffer no penalty? We note in the study that we have no information on the timing of tattoos. It’s possible that when you reach a certain earnings threshold, you say, “OK, I’ll get a tattoo now.” But the Pew Research Center has reported that 38% of millennials have tattoos. So we’re definitely talking about people early in their careers, too. What’s next in the field of tattoo research? We plan to use eye-movement tracking technology to see how people respond to photos of visible and offensive tattoos. But honestly, I feel that if our findings can be replicated with different samples, researchers should spend less time studying tattoos as they relate to employment and earnings. We should study other potentially stigmatized groups and try to correct real, not just perceived, biases.

Alison Beard is a senior editor at Harvard Business Review.

Thursday 22 November 2018

C002D5556

BUSINESS DAY

Road to 2019 Why Nigeria is Broken and how to fix it

The problem with Nigeria’s power sector and how to fix it ISAAC ANYAOGU

he 2013 power sector privatisation programme was designed to address an intractable situation where despite massive investments, Nigerians remained in darkness. In the nifty arrangement designed for the sector, DisCos would collect and pay the Nigerian Bulk Electricity Trading (NBET) Plc who will pay every other operator in the value chain – generation companies, (GenCos), gas companies (GasCos) and the Transmission Company of Nigeria (TCN). It was assumed that the DisCos would collect a cost-reflective tariff hence a Multi Year Tariff Order (MYTO) was developed. But political interference marred the process. First, the privatisation exercise was abused towards the end, when competent people driving the process were fired and replaced with those pliable to special interests. The regulator was weakened and became susceptible to political interference, especially in matters of tariff and the DisCos became the enfant terrible of the electricity market. It soon became a con game. The weeks leading up March 28 general elections were the darkest Nigerians ever saw. Power supply fell below 1,500 MW and large swaths of the population were thrown into darkness. People could not wait to cast away the Jonathan government. So, on March 31, 2015 when Jonathan called to concede defeat, light came to the land. Without any investment, without any policy intervention, power improved suddenly. Weeks after the inauguration of President Muhammadu Buhari, Nigerians were posting on social media pictures of bottles that broke because they had become too frozen. They said the body language of the president was responsible for it. By February 2, 2016, power generation had ramped to 5,074 MW, the highest in Nigeria’s history. Two weeks later, Niger Delta militants blew up the Forcadoes pipeline which feeds gas to all the critical gas-fired plants in the country. This led to the collapse of Nigeria’s power sector. Conservative estimates say losses were over $3billion dollars by September 2016, with over 1,500MW of power lost because Forcados is Nigeria’s major artery and accounts for 50 percent of gas production. Nigeria depends on gas-fired plants to generate 75 percent of its power. By May 2016 when Babatunde Fashola, minister of Power, Works and Housing, introduced an incremental power policy, the fissures in the power sector had begun to show. Decades of lack of investments in improving

power infrastructure, a shoddy power privatisation exercise that saw assets handed over to investors lacking technical capacity and an illiquid market brought the sector to its knees. The Nigerian Electricity Regulatory Commission (NERC) had announced months in advance that a new electricity tariff would be introduced by February under the Multi-Year Tariff Order (MYTO) 2015, which would see residential customer pay up N23.60 per kilowatt/hour, commercial and industrial customers as much as N38 per kilowatt/hour. Labour unions and civil society staged protests over the tariff increase. Their opposition was based on poor supply and estimated billings due to non-supply of prepaid meters. It didn’t matter that gas prices had risen and inflation rate had soared past earlier assumptions, rage and reason rarely find harmony. Human rights lawyer, Toluwani Adebiyi challenged the increment in a Federal High Court in Lagos. Trial judge, Justice Mohammed Idris, annulled the increment in tariff in July describing NERC’s action as procedurally ultra vires, irrational, irregular and illegal. Already, a liquidity challenge had set in as a result of absence of market price for power. The law suit further worsened the liquidity crises in the electricity market. GenCos could not pay gas suppliers; DisCos collected poorly and kept more for themselves than they should; Transmission Company of Nigeria (TCN) got less than 25 percent of invoice value and NBET reported poor remittances. Liquidity gaps in the sector grew north of N1trillion in 2018. Chuks Nwani, energy lawyer and vice president of PowerHouse International, an energy consultancy said, “The prevailing Disco tariff today was

modelled against variables that have been overtaken by time and events and therefore does not reflect the true pricing of electricity. MYTO 2015 for Discos were built on 196/$1, 8.3 percent inflation rate, certain available capacity and therefore the final tariff was a product of this variables. “You recall that from late 2015 there were changes in these variables which would require reciprocal adjustment of the tariff but the government did not allow NERC to increase the tariff to meet up with the current realities. The shortfall that the Discos could not account for becomes a debt for the market which the government is under obligation to pay since it is at their instance that the tariff was not increased. “This is why the government has to fully implement the revised customer tariff plan even if at the end of the day, the government is not going to fully pass it on to the customer, but it has to act fast to bring in liquidity to the market as this will save the sector from total collapse and attract new investments,” said Nwani. Babatunde Fashola, minister of Power, Works and Housing, insists that DisCos are not even providing costreflective service and if they improve collections by metering more people, this could assuage their losses. But this argument is disingenuous because it assumes the problem is only poor collections, but the real challenge is capacity. Customers who are metered pay as they should for power while those without meters are forced to pay charges that would have been criminal had the regulator been alive to its responsibilities. Addressing power theft needs serious investment which can only be made available through cost reflective tariff. For over 20 months, the minister has had monthly engagements with

operators and this has helped to provide a forum for frank discussion of the problems. It has since being discontinued. But while it lasted, DisCos were compelled to produce audited accounts, TCN’s assets stuck in the ports for years were increased and the management was restructured. Remedial actions In 2015, through the Central Bank of Nigeria (CBN) under the administration of former president Goodluck Jonathan, the Federal Government provided the sum of N213billion as Power Sector Market Stabilisation Fund at concessionary interest rate below market rate to DisCos and GenCos. In March 2017, the Federal Government provided a N701billion guarantee to gas producers. In June the Federal Government committed to invest N72 Billion for procurement of equipment and installation to help get the 2,000 MW to consumers. Early this year, the Federal Government said it had taken advantage of the new Meter Asset Provider (MAP) regulations to give a grant of N37 billion to a private sector operator to supply meters to interested Distribution Companies (DisCos). It soon reached N1.023 trillion this year But much of these intervention funding has not done much to lift the sector. “The danger with all these bailouts is that Nigerians will still pay for these monies, many which are given without the consent or knowledge of market operators,” said Joy Ogaji, executive secretary of AEGC told BusinessDay. Nigeria secured approval for a Power Sector Reform Implementation Programme along with the World Bank and African Development Bank for a $7.6 billion funding for the sector in 2017 and began a phased implementation of aspects of the

programme. Last year, Fashola announced that Gencos could now sell power directly to eligible customers and a competition transition charge has been announced by the minister to assuage the concerns of the DisCos that they will lose huge market share. NERC has approved a mini grid regulation which has provided opportunity to deepen energy access for rural communities. The Rural Electrification Agency (REA) is ramping up efforts to help communities without access to the grid or those who are underserved to get power through renewable energy sources. There are also many projects coming on stream in rural communities. Analysts say these efforts can only translate to results if the electricity market in Nigeria is made to work. Electricity cannot be treated as a social service and any plan to reform the sector must first start with improving the market. “This is not a time to trade blames, because there is enough to go round, rather it is a time to reiterate everybody’s responsibility and urge all of us to brace up, to do what we are obliged to do, which is to serve the people” Fashola said recently. Improving liquidity, experts say, is the first task in rebuilding the power sector. Nigeria’s eleven electricity distribution companies (DisCos) collected N106.6 billion out of the N171 billion of electricity invoice to customers between January and March this year and remitted 31 percent of the amount to the NBET, to settle obligations to generation companies and the Transmission Company of Nigeria, the regulator has said. In its 2018 first quarter report, the Nigerian Electricity Regulatory Commission (NERC) blamed poor collections on non-cost-reflective tariff and customers’ apathy. “Financial illiquidity remains the most significant challenge affecting the industry’s sustainability. This serious liquidity challenge is partly attributed to non-cost-reflective tariffs, and high technical and commercial losses aggravated by consumers’ apathy to payment arising from estimated billing and poor quality of supply in most load centres,” the report says. NERC said this has resulted in a situation where “Out of the ₦171.1billion billed to customers in the first quarter of 2018, only ₦106.6billion was recovered, representing 62.3 percent collection efficiency. Therefore, out of every ₦10 worth of electricity sold during the quarter under review, ₦3.8 is uncollected.” After improving market liquidity, the regulator needs to be strengthened to be independent and hold power sector operators to deliver the terms of their performance agreements.

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Thursday 22 November 2018

Road to 2019 Why Nigeria is Broken and how to fix it

How Buhari plans to take Nigeria to Next Level through jobs, power, infrastructure “The next four years will be quite significant for our country. Nigeria is faced with a choice to keep building a new Nigeria- making a break from its tainted past which favoured an opportunistic few.” ODINAKA ANUDU

uhammadu Buhari, presidential candidate of the All Progressives Congress (APC), has unveiled his plans for Nigeria. Buhari is seeking a second term, having been elected in 2015 to serve a term of four years. A peep into his manifesto shows that the 76-year-old Nigerian leader plans to take Nigeria to the Next Level in his second term by creating employment for jobless Nigerians, kick-starting energy revolution to power homes and industries, as well as building infrastructure to support the economy. In his abridged manifesto entitled, ‘Next Level’, Buhari spells out his plan for creating jobs for over 30 million unemployed population. Buhari says he plans to engage 1 million N-Power graduates and skill up 10 million Nigerians under a voucher system in partnership with private sector. He intends to create

jobs in agriculture sector through the Anchor Borrowers Scheme, where he says his focus is to support input and jobs to 1 million farmers. Nigeria’s president also wants to implement a Livestock Transformation Plan to create 1.5 million jobs along dairy, beef, hide & Skin, blood meal and crops. He targets an agriculture mechanisation policy with tractors and processors to create five million jobs. On the technology front, Buhari

says he will provide $500m innovation fund to tech and creative sector to create 500,000 jobs, while also training 200,000 youths for outsourcing market in technology, services and entertainment. The president is also desirous of making Nigeria an industrial hub by creating six regional industrial parks and special economic zones. The president says he is taking the country to the Next Level of 109 Special Production and Processing Centres

(SPPCs) to spur production and value additive processing. His School Feeding Programme will continue if elected to serve another four years, as he plans to increase the number of children fed from 9.2 million to 15 million, while creating 300,000 extra jobs for vendors and farmers. Also, Buhari points out that he will complete the 2nd Niger Bridge and the phased works on roads in each state of the federation, while ensuring that work is finished on LagosIbadan-Kano Rail. He further assures that he will complete Eastern Rail (Port-Harcourt-Maiduguri), which takes the network through Aba, all South East state capitals, Makurdi, Jos, Bauchi and Gombe. He also targets completion of Coastal Rail (Lagos-Calabar) and will classify broadband as critical infrastructure. “After addressing uniform Right of Way charges, Next Level is to move broadband coverage to 120,000 km of fibre network across Nigeria,” his manifesto says.

In terms of power, he targets a minimum of 1,000 MW new generation incremental power capacity per annum on the grid. He says distribution will get to 7,000 MW, stating that nine universities will have uninterrupted power when he completes the First Phase of 37. On off-grid power, he says, “Next level moves from 16 markets such as Sura, Ariaria to lighting up 300 markets and clusters with clean, uninterrupted off-grid power.” That is not all. Buhari plans to set up People Moni Bank to provide soft loans of up to N1million to small traders, artisans carpenters, tailors, mechanics, hairdressers, barbers, plumbers, vulcanisers and commercial drivers (taxis, Keke and motorcycles). “Next Level will take current number of 2.3 million traders, farmers, artisans under Trader Moni, Market Moni and Farmer Moni schemes to 10 million Nigerians under the People Moni Scheme.”

Oby Ezekwesili’s blueprint on university curriculum, vocational education Obiageli Ezekwesili is the presidential candidate of the Allied Congress Party of Nigeria (ACPN). Below are her thoughts on fixing Nigeria’s university curricula and vocational education.

pgrade of university curriculum Our entire wealth, growth and poverty reduction strategy is hinged on getting education and human capital development right. Our government will upgrade the curriculum in our schools to align with 21st century needs. We are still stuck in the past as things stand. Our university curriculum, for instance, needs to be directly linked to the labour market so that as we notice sources of present and future growth of the economy, we immediately think of the kinds of skills that must be deployed. My administration would also prioritise early childcare for those at the bottom of the pyramid. We will innovate with public and community funded schemes to enable the children of the poor have solid early child care and pre-school education. One of our signature programmes when we get elected next year would be TwentyToTheRanking which targets the transformation of 20 Nigerian universities to ensure that they feature in the rankings of the top universities in the world in seven years.

Our government will grant full autonomy to public universities. This cowardly control of universities does us no good. We would continue to fund our public universities with grants that will be linked to performance, results and accountability. As the universities begin to be innovative with how they raise money, the federal government under my leadership would develop a solid financing model to support students that will be a combination of financial aids, scholarships and student loans.

My administration would also integrate accomplished Diaspora Nigerians who would serve on the faculties of our local universities. They do not have to leave their current employment. But we would enter into partnership programmes with their institutions abroad such that they could teach in several Nigerian universities at once with the help of multimedia and teaching assistants. Vocational education Human capital development does

not revolve around acquiring a university degree alone. Not everyone can or will attend universities, but every single Nigerian can get a skill. That’s why our @ACPNHOPE government would be launching a massive national skills program called Get-A-Skill (GAS). The target of GAS is to train at least 900,000 Nigerians annually in diverse skills. In my time as Minister of Education between 2006 and 2007, I was already extremely worried about the mismatch between youth burgeoning, unemployability and limited economic opportunities, such that our team designed a major skills development programme that introduced a new level of certification to our education system. We designed and added Vocational Enterprise Institutions and Innovation Enterprise Institutions as national certifications accredited and regulated by the National Board for Technical Education (NBTE). There are currently over 200 Vocational Enterprise Inst. (VEIs) & Innovation Enterprise Inst. (IEIs) which are imparting skills in areas

as diverse as cosmetology, welding, fashion design, electrical installation, paralegal studies, film & TV production, hospitality, among others. However, 200 VEIs and IEIs are not nearly enough for a country as large as ours, especially as it has become so difficult to get skilled hands to drive important areas of our economy. The government has to be more actively interested and invested in training and skills. Whereas in 2007, our goal was to produce a minimum of 300,000 such marketsensitive skills annually, we shall be bolder in pushing an agenda to triple that number to 900,000. My government will push the GAS programme in partnership with the private sector to ensure more such institutions come on board. We need more schools to meet the needs of the construction sector; more technical schools to meet the needs of the telecoms sector; science, technology and IT, more schools to meet the needs of the agriculture sector; oil & gas, financial services, trade & logistics, and many others.

Thursday 22 November 2018

C002D5556

BUSINESS DAY

GARDEN CITY BUSINESS DIGEST

Niger Delta New Vision project anchors in Port Harcourt with 337 projects and a SIWP approach IGNATIUS CHUKWU

he federal government says it is executing 337 projects in the Niger Delta region with a whopping N2.71 trillion. Government unveiled what it calls “Strategic Implementation Work Plan (SIWP)” to drive the new vision. Officials from the presidency (office of the VP), the new vision had as focus partnership for regional development and nation-building, the key being to get the communities to support initiatives that would boost security and attract investments back. The Niger Delta New Vision (NNNV) group led by the Senior Special Adviser (SSA), Edohor Iyamu, reeled out the projects and urged civil society groups to help get the buy-in of the communities. Some of the CSOs and media said they hoped to hear what the FG was doing in sensitive issues of development affecting the oil region such as East-West Road, Bonny/Bodo Road, Amnesty, Ogoni Clean Up, Port Harcourt Soot, President Buhari’s directive that NDDC claims of about N1 Trillion be resolved, fate of about 35,000 coastal fishermen who suffered setback over the Bonga oil Spill years ago. Others included the how the Ecological Fund hardly got to the oil region or to the NDDC, the modular refinery issue, and relocation order by the Acting President (Yemi Osinbajo) to IOCs to Port Harcourt. Iyamu told the people: “By 2016 to 2017, pipeline vandalism became a major issue.

... FG says projects cost N2.71trn The VP came around. Talks were held around the region, PANDEF was born, 16-point agenda was listed, and the New Vision for Niger Delta was established as partnership between the FG, private sector, communities, to develop the region. Each has a role to play.’ He said the FG and the communities each has a role to play, saying communities were to keep the peace to allow development to come. They were to identify trouble makers too. He listed benefits so far as; “Maritime University in Okerenkeko in Delta State, which started in March, has admitted about 380 freshmen. Teaching has started. Modular refineries, up to three so far, are to be completed by end of March 2019. They are in Delta (Kwale) with initial 5000 barrels to be upgraded to 10,000. Niger Delta Exploration and Production Company in Rivers State, producing 1000 barrels per day of diesel, soon to be 5,000 bpd, to be commissioned by March 2019; Welter Smith Modular Refinery at Imo State; OkeOnah in Akwa Ibom State.” He went on: “There is the Ogoni Clean Up which he said may actually begin end of November 2018. Many measures were stipulated in the UNEP Report, and it is trying to meet up with these steps that cause delays, about 400 steps”, He said the objective of the workshop was to sensitise the people on things being done, get feedback from them, and start a narrative about the Niger Delta which

Edohor Iyamu

must be driven by the Niger Delta people. Ne w Vision up date: Charles Achodo Community initiative in policing may soon debut The SIWP has sustainability mechanism. Harmonisation of activities is the aim of this exercise. Communitybased tracking is coming on; bottom-up feeding is what we want. PANDEF suggested a community-based policing; getting communities to be involved in protection of pipelines. European experts are doing a study on this and the EU would support it with funding. Communities are eager to

people faced. Government added life-impact clause as mandate to reconstruct livelihoods of the community people. A combination of environmental remediation and livelihood improvement are now two key mandates of the new HYPREP. Sensitisation through media and community channels are going on but its in phases. Not all Ogoni is impacted, you must know. The $1Bn recommended by the UNEP is just to start off. It may actually gulp up to $3Bn. Stakeholders engagement has been done; sensitization has been done with youths, traditional rulers, communi-

ties, etc, showing them the opportunities open to them especially high level manpower to man the projects, Ogoni scientists have been trained to lead. It is wrong to say nothing is going on in Ogoni. Site work done on five sites so far, especially in Sisekee which UNEP Report said has the highest water contamination. We are going back to base data of 2011 to design action plan. Drinking water survey is going on to work out water supply strategy, mapping of drinking water supply in the four LGAs. We find that more than 90 per cent of water facilities in Ogoni are non-functional. We are taking water from boreholes to the labs to determine high level of contamination to enable us put more water facilities. The water must meet WHO standards. The job started today, November 15, 2018. Procurement: This is a dicey area. Between September 24 and October 12, 2018, we opened technical bids and financial bids. Contracts are to begin to be awarded for those within ministerial limits. Now, 403 companies bid. 183 passed, now 21 companies chosen to handle the 21 lots. Health outreach: over 20,000 patients were treated. It was a sensitization activity. Groups helping: UNITAR, PIND, Bori poly for trainings, etc. Of the 21 slots; five need council approval while the rest are within ministerial powers. Procurement has started in health, water, and now remediation.

are about to come on stream. The Ogoni clean up is going to kick-off, the gar flare commercialisation (converting the flare to profit). Reminding the SSA that the VP owed the region an explanation if his order would no longer hold, he said: It is an ongoing thing. If you gave the order and the IOCs come forward to explain why they cannot immediately move down to the region, it would be a failure by the government to say, oh, you can now stay behind. What the government has done is to try and improve on the security so we can come back to them and say, look, the security situation is better. That is why we all have a role to play. Those in the communities can now say, look, there is this effort by the government, let us do

our own part. That is why we are doing our best to engage the communities to see what the FG has done and know what they can do. This is to make the IOCs know that the coast is now clear to move back. It is better than just tell them to remain where they were because government has seen reason. The task is, what can we do to address it? The FG is doing a lot. Intelligence is going on, engaging the community youths on pipeline surveillance in the communities so that there can be peace. No responsible government will say, go into a place where you know is insecure and they are kidnapping there. They are human beings too. So, whoever we need to talk to say, look, we are doing ourselves more harm, we are doing it.

Yemi Osinbajo, vice president

protect pipelines in their areas but there needs to be a framework on that. It is good that issues of livelihood of the people of Ogoni has been included as mandate of the HYPREP. If you disrupt their lives and address only environment, there will be crisis. Ogoni Clean Up: Marvin Dekil HYPREP is repositioned to implement UNEP Report. So far, Governing Council, Board of Trustees, Project Coordination Office as structures to implement the Report are in place. Actions: Water supply in Ogoni and there is heath study to know health dangers the

Iyamu’s great clarification

Port Harcourt by Boat With

IGNATIUS CHUKWU

he Senior Special Adviser to the President on Niger Delta, office of the Vice President, Edohor Iyamu, led the Niger Delta New Vision tea to Port Harcourt to show what the FG was doing, mentioning 337 projects worth N2.71 Trillion ongoing in the oil region.

He said these were open to verification. Of course, these would be checked out. Did many not rush down the East to confirm the number the presidency recently claimed? Did one PH-based writer not embark on a trip on the PH-Enugu Expressway just to verify? Now, journalists did not think they heard well when Iyamu deflected a question on why the IOCs did not bat an eye lid when ordered by the Acting President to relocate to the oil region. He shot back at the journalists, wondering why they should not rather ask if the situation that forced the IOCs to flee have changed. This was at a time many leaders of the region have berated the then Acting President for not getting his order to count. Now, the SSA seemed to

have the answers; nobody was enforcing any order. The office of the VP rather knows why that order shouldn’t happen, at least for now. Hear is the reason, in his own words; What I said really was that certain things happened at a time that led to the IOCs leaving the region to Lagos. Certain situations existed then. The question we should ask ourselves is whether that situation has improved. What is the concern of the IOCs is security in the oil region. At the time of their exit, there was rampant kidnapping, killing, militancy, etc. Can we say confidently today that that situation does no longer exist? That situation has not really improved. So, the VP compelling them to come back would be rather unfair. That is why we are

doing our best to improve security situation in the region. I said we don’t want this new vision to fail. It is a partnership between the FG and the local communities for security in the region; otherwise, the investors and IOCs would find it difficult to come to the region for obvious reasons. This is like a charge to our community leaders and influencers in the region to come together and explain to those doing this harm that they are doing more harm to the region and that it is important to play down the issues of security. There is the responsibility of the government and from what we have said today, we have shown the myriad of things being done to the region, Maritime University up and running, Modular Refineries almost completed. Two

BUSINESS DAY

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Investing in Rivers State Hope rises for modular refinery dream as FG secures $500m funding support • As FG says illegal refiners, militants are free to come together and apply for license Ignatius Chukwu

espite seemingly dwindling fortunes in oil and gas globally, experts say Nigeria’s best bet is still to harness and exploit the hydrocarbon resources maximally especially through processing of crude and gas into different products that can be used locally. The modular refinery comes to mind, especially as it could mobilize idle youths and illegal refiners into viable modular refinery operators. Already, funding package to the tune of $500m has been secured from Exim Bank of China to support local refiners with between $2m and $10m to be repaid at five per cent interest over 10 years. A seasoned engineer and refiner, Rabiu Suleman, the Senior Technical Adviser to the Minister of State for Petroleum, Ibe Kachikwu, disclosed in Port Harcourt, Rivers State, at a one-day workshop for Civil Society Orgainsations (CSOs) and the media already, 44 licenses have been granted for establishment of modular refineries while he said 10 have received approval to produce. He said four of them have started construction while two may be commissioned in March 2019. Suleman, who posts about 31 years experience in the Nigerian National Petroleum Corporation (NNPC), one of the engineers that gave the briefing to the presidency that led to the modular refinery idea, regretted that while Nigeria’s population has grown from 110m in 1989 when he conducted then president, Ibrahim Badamasi Babangida (IBB) round the PH Refinery in 1989 to 200m in 2018,

Ibe Kachikwu

refining has rather declined. He said modular refinery system has become necessary because normal refineries of over 60,000 bpd capacity have become very expensive needing up to $2Bn in the face of competing demands on government. He also said the need for the private sector to lead in the modular approach is because government cannot run businesses. He said the CEOs of government enterprises have to run to Abuja frequently for minor approvals. “ MDs have to run to Abuja and Lagos to get approval for everything. Besides, “If the MD sacks a worker, his senator or so will press for his reinstatement. Now, is a CEO loses the power to sanction and to reward, he has lost it. So, Nigeria has stagnated on this score.” He said illegal refining has done huge harm to the economy. “They just boil, take small diesel, pour away the rest into the waters, pollution. The diesel is full of sulphur, it destroys generators, tankers, cars, which break down and block the roads.” Also, modular refineries produce more of diesel than fuel. Now, the FG said it is encouraging boat engine manufacturers to bend toward diesel engines in the future. Risk factors in investing in Niger Delta The FG is worried that huge opportunities abound for the oil region but that violence was scaring away foreign investors. Suleman said; “The only factor is Risk Exposure in modular refineries. Violence and community restiveness is the issue. Many investors are knocking at the door but fear of instability. There is a lot of money in China and US waiting to come in

but business environment is the issue. We need smart and intelligent lawyers to negotiate for Nigerians while getting the money. Taking loans that are not well negotiated caused grief for some European countries.” He queried: “Risks: How many people have been kidnapped in the past five years? How many dead bodies have been seen on the streets? Etc. The Risk Assessment Directors in big banks ask thee questions before allowing money to come to you. That is what you must know. The risk level affects loans and interest rates.” He said communities are being grouped into cooperative bodies to get filling station licenses to distribute the products from upcoming modular refineries. “It is to make them stakeholders so they can have interest in the modular refineries. This will reduce cost of security”. Reacting to insinuations that the real militants were shut out in the licensing rounds, the SSA said: “The first set of people we met were militants. I led the team of Navy that destroyed 45 illegal refineries. We later sat with the militants in Abuja and discussed the way out of illegal refineries and make them participate in the refineries. No governor or minister is owner of any of the 44 licenses, except they used cronies. AMCON had to take over the refinery (Amakpe), NDDC and NCDMB have agreed to put money there and revive it. The Amakpe investor has not recovered to this day. CAC helped to screen the ownerships of the applying companies. Licenses are open to this day.” He went on: “Some are using the licenses to dupe people and get money. I can run a modular with 20 people, not like PH Refinery that employs 1600 workers. Nafta can be made into perfumes which people go to Paris to buy at $120 or more. You can put the plant in another company and produce. There is a lot to crude oil. We have not exploited more than 20 per cent of oil.” On viability, he said: “We have sun for solar, wind for power, etc. Europe and America are saturated, now looking for where to invest. Provide an environment and investments will flow. $8m duty was waved for a 10,000 bpd modular refinery. It is much sacrifice by FG. Why can’t we bring out the crude and gas now and use it to develop our nation? Dubai has done that. The nearer a refinery to source of crude the better, plus market. Do not bother about your local government, if you are applying for a license. Infrastructure is the key. Let common people apply. Those using others to apply may lose it at last because the operator may deny you. God has given us everything to grow.”

Rivers people commend Gov Wike on sustained projects delivery - aide

ivers people in Ogu/ Bolo, Okrika, Obio/Akpor and Abua/Odual local council areas are said to have lauded Gov Nyesom Wike for continuing with projects delivery despite high level politicking ahead of 2019 Elections. The beneficiaries of projects in these local government areas commended Governor Wike for his commitment to the development of their communities, according to the governor’s media aide, Simeon Nwakaudu.

of the school. In Obio/Akpor Local Government Area, Governor Wike was commended for executing several road projects, major drainage and markets. Chairman of Obio/Akpor Local Government Area, Mr Solomon Eke said the people of the area are proud of the governor for his achievements. He said: “As a governor, he has put smiles on the faces of the people of Rivers State and the people of Obio/Akpor in particular. The

Governor Nyesom Wike

The people of Ogu/Bolo Local Government Area lauded the Rivers State Governor for his construction of Ogu/Bolo internal roads and the reconstruction of Community Secondary School, Ogu. Chairman of Ogu/Bolo Local Government Area, Navy Captain Erasmus Victor (Retired) said that the construction of Bolo Internal Roads has improved the economy of the area. He said: “The Bolo Internal Roads were flagged off by Governor Wike four months ago and today we are with a tremendous progress. The roads are taking shape and our people are happy with the Rivers State Governor “. Asitonka Bomaipirima, Chairman, Community Development Committee, Bolo praised Governor Wike for diligently executing the internal road project for the people. Principal of Community Secondary School, Bolo, Senior Section, Mrs Daisy Tamunoene commended Governor Wike for his investments in the education sector, especially the reconstruction of her school. She added that the fencing of the school has improved its secondary and stopped the evil practices that take place in the school. The governor was also commended by Grace Aningenime, a teacher of Community Secondary School, Bolo and Joseph Martins, a student

governor has spread projects all across the state to improve the lives of the people “. Chairman of National Union of Road Transport Workers, Rumuokoro Branch, Acho Amadi, Jane Emeka, a market woman and King Harry, former chairman of Community Development Community (CDC), Alakahia commended Gov Wike for the numerous projects in Obio/Akpor council area. They stated that they would continue to support him. In Okrika Local Government Area, the people lauded Governor Wike for the construction of the Okrika Zonal Hospital, the Okrika ATS Jetty, Okochiri Internal Roads and the reconstruction of Community Secondary School, Okochiri. Chairman of Okrika Local Government Area, Mr Philemon Kingoli said the people of the area are satisfied with the performance of Governor Wike who has extended key projects to them. A l s o s p e a k i n g , Ta m u n o Akaluogbo, Ibibia Owus and Dennis Tamunoseipiriala expressed gratitude to the Rivers State Governor for the key projects in Okrika Local Government Area. They stressed that he will be rewarded with their votes in 2019. Recall that Governor Wike stated that he will use projects delivery to the 23 Local Government Areas of the state as the platform for his campaigns.

Thursday 22 November 2018

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NEWS Next Nigerian President faces $9.8bn in... Continued from page 2

costs but the NNPC appealed to the Federal High Court, Abuja challenging the arbitration proceedings on the basis that the exclusive jurisdiction to determine tax disputes lies with the Federal High Court of Nigeria pursuant to Section 251 of the Constitution. Consequently, the arbitral award in the Esso case was set aside by the Federal High Court on 22 May 2012, while the court is yet to determine the cases involving NAE, SNEPCo and Statoil. Esso appealed the judgment of the Federal High Court and on 22 July 2016, the Court of Appeal partly decided in favour of NNPC and affirmed the decision of the Federal High Court that such tax disputes are not subject to arbitration. Seeing they could not get their way in Nigeria, Esso and SNEPCo applied to the United States District Court for the Southern District Court of New York for the recognition of arbitral awards against NNPC that were issued in October 2011 and May 2013, respectively. NNPC through its counsel moved for dismissal of the Esso case claiming enforcement of an award of $1.8 billion plus interest and costs. The case involving claims led by SNEPCo was stayed in April 2017 pending a decision by the Federal High Court in Nigeria concerning an application to set-aside the underlying arbitral award. While this was going on, the Nigerian Federal Inland Revenue Service FIRS sued everybody at the Federal High Court - NNPC and each of NAE, SNEPCo, Esso and Statoil, challeng-

ing the propriety of the arbitrations in view of Section 251 of the Constitution and claiming that the Federal High Court has exclusive jurisdiction in matters relating to Nigerian tax. The Federal High Court ruled in favour of the FIRS and the judgments were appealed. The Court of Appeal upheld the decision of the Federal High Court and affirmed that tax disputes are not arbitrable, as the Federal High Court has exclusive jurisdiction to deal with and hear tax matters. “These lawsuits results because government promise too much to attract investments and when they come, they realise they have given away too much but rather than renegotiate, governments comes at it with a cavalier attitude which is why investors are leaving,” said Ayodele Oni, an energy lawyer and partner at Bloomfield law firm. He added, “These oil companies are winning the law cases.” Another legal dispute involves Continental Transfert Technique Ltd over an agreement with the Government to manufacture the Combined Expatriate Residence Permit and Aliens Card (CERPAC) for the Ministry of the Interior, as far back as May 1999. Pursuant to the agreement, Continental was to provide equipment, technical support and training and the Ministry of the Interior (previously the Ministry of Internal Affairs) was to provide office accommodation for the Combined Expatriate Residence Permit and Aliens Card facilities. ThefeesearnedfromtheCombined ExpatriateResidencePermitandAliens

Card cards were to be split 60 per cent to Nigeria, 30 per cent to Continental and 10 per cent for operating expenses but the arrangement broke down. In November 2007, Continental commenced arbitration proceedings alleging misrepresentations by the Government in the agreement, in particular with respect to Combined Expatriate Residence Permit and Aliens Card sales projections. Continental sought damages in the amount of approximately $604 million. The Government denied the allegations and counterclaimed for Continental’s failure to deliver equipment and perform services. The amount of the Government’s counterclaim was approximately $34 million. The arbitration proceedings were held at the International Dispute Resolution Centre in London. In August 2008, the arbitration panel awarded damages of approximately $252 million in favour of Continental. Continental has initiated proceedings in the U.S. District Court of the DistrictofColumbiatoseekrecognition and enforcement of the arbitration award, and on 26 March 2013 the U.S. District Court of the District of ColumbiaissuedajudgmentthatgrantsContinentalanawardintheamountof$276.1 million,includingpost-judgmentinterest at a rate of 3.4 per cent. per annum. On 25 April 2013, the Government filed an appeal against the judgment which is still pending. However, in an out of court settlement chaired by the former Attorney-General of the Federation, the FGN agreed to pay Continental ₦18 billion in three instalments within six months of the execution of the settlement agreement as well as extend the CERPAC contract for a term

L-R: Olakunle Alake, group managing director, Dangote Industries Ltd; Thomas J. Cao, president, China National Building Material Group Corporation Ltd; Aliko Dangote, president/CE, Dangote Industries Ltd; Devakumar Edwin, group executive director, strategy, capital projects & portfolio development, Dangote Industries Ltd, and Shen Jun, president, Sinoma International Engineering Co., Ltd, during the delegates from China National Building Material Group Corporation Ltd visit to Dangote head office, in Lagos.

Stock investors’ apathy seen in declining... Continued from page 1

became glaring in the recently

released equities trading “fact sheet” for the third-quarter (Q3) of 2018. The Total Volume of stocks traded in the Q3 period decreased to 16.26billion, representing 20.10percent drop from 20.35 billion units traded in the corresponding period of Q3, 2017. Also, the market witnessed a 20.10 percent decline in average daily volume to 258.07 million, from 322.97 million recorded in the same period of 2017. The average daily value of stocks traded decreased by 42.98percent to N3.26billion, down from N5.72billion in Q3’17. Average daily transactions stood at 3,444 from 3,999 in Q3’17. The value of stocks listed on the Nigerian Stock Exchange (NSE) decreased by 2.11percent to

N11.97trillion, from N12.23 trillion in the comparable period. The Fact Sheet revealed equities turnover velocity in Q3’18 at 6.85percent against 11.79 percent in Q3’17. Number of Listed Companies decreased from 166 to 164. The Lagos bourse last week posted a bearish performance as the All Share Index (ASI) fell by 0.4percent week-onweek to 32,058.28 points, while year-todate (YtD) loss printed at minus 16.2 percent. The market capitalisation also settled lower at N11.7trillion. “The investors’ apathy that dominated the equity market in Q3 2018 continued in October. The increase in the yields on fixed income securities in Nigeria, increase in the interest rate in advanced countries, and pullback from foreign investors due to the political considerations were the major drivers of the decline in the NSE ASI,” said FSDH Research

analysts in their November strategic report seen by BusinessDay. The analysts noted that domestic investors also adopted a cautious approach to the equity market, in the face of the bearish market trend. Analysis of equity transactions for the period ended September 30, 2018 show foreign investor’s outperformed domestic investors by 29.54percent, as total foreign transactions increased by 18.82 percent from N70.97 billion in August to N84.33 billion in September 2018. Foreign outflows increased by 27.60percent from N34.31 billion to N43.78 billion whilst foreign inflows increased by 10.58percent from N36.66 billion to N40.54 billion over the same period. FSDH Research said they observed that some investors strategically entered the market in October to take advantage of the low prices of stocks as the volume of stocks traded increased, adding that “however the general

of three years as full and final payment. The sum of N7 billion has been proposed to be paid up-front, with subsequent payments of N6 billion and N5 billion, but the judgment debt is still outstanding and legal proceedings are ongoing. The now defunct Nigerian Telecommunications Limited (NITEL) is also linked in a dispute with Interstellar Communication Limited that could cost the Federal government as much as $286 million in damages. An appeal by the government was dismissed at the Supreme Court on 5 December 2017, and the apex Court has since endorsed the order absolute obtained by Interstella Communications Limited and has directed the parties to comply with the order. The Attorney General recommended that the President directs the Governor of the Central Bank of Nigeria to source the sum of $249.85 million as full and final settlement of the judgment to avoid the further accumulation of interest. Alternatively, the Attorney-General has also recommended to commission a further committee with the participation of the Office of the Chief of Staff to be party to any further renegotiation of the matter. A response is being awaited from the State House of Assembly. There is also a dispute with Korea National Oil Corporation (KNOC) in which the government was dragged to a federal high court after revoking two oil licenses (321 and 323) given to KNOC over claims that the latter failed to fully pay for the licenses which was said to have been awarded in 2005 for $485 million. The Federal government claimed KNOC only paid $100 million but the Korea National Oil brought an action in the Federal High Court, Abuja, for the reinstatement of the licenses. In August 2009, the court issued a judgment in favour of Korea National Oil, declaring that the purported revocation of Oil Prospecting Licence 321 and Oil Prospecting License 323 by the Government was invalid and granting an order restraining the Government, its agencies and servants from exercising any authority over the oil blocks. The Government appealed the decision, contending that Korea National Oil had failed to pay the applicable signature bonuses and execute agreed downstream projects which were conditions precedent for the award of the oil prospecting licenses and that consequently the revocation of the oil prospecting licenses was valid. The Court of Appeal decided against Korea National Oil and set aside the judgment of the Federal High Court. Korea National Oil then appealed to the Supreme Court, with certain matters also

subject to cross appeal. On 24 February 2017, the Supreme Court upheld the decision of the Court of Appeal. In July 2018, Korea National Oil requested a meeting with the Attorney General of the Federation and the Ministry of Justice to renegotiate the refund of their investment from the NNPC, the DPR and the Ministry of Petroleum Resources. The matter is still pending. The Federal government is also on the hook over a dispute with Enron Nigeria Power Holding Ltd. Since an international arbitration tribunalconstitutedbytheInternational Court of Arbitration of the International Chamber of Commerce issued an award in favour of Enron against Nigeria in the amount of $11.2 million plus interest, six years ago in 2012, the claims are now worth $21.7 million. On 30 January 2018, the Texas Federal Court issued, at the request of Enron, a Writ of Garnishment to J.P. Morgan Chase ordering it to hold the sum of $21.7 million held for the benefit of the Federal Republic of Nigeria (including the CBN). As a result, J.P. Morgan chase is prohibited from making any payment or delivering any property to the Federal Republic of Nigeria (or the CBN). Another alleged breach of contract entered into by the Ministry of Defence with one LR Avionics, for the supply of six SU-27 Fighter Aircrafts for the Nigerian Air Force, could also cost Nigeria approximately $2.4 million. In its final award, the Arbitration Tribunal awarded LR Avionics a sum of $5 million as general damages, $3 million as cost of legal representation and N9,420,000 as arbitrators’ fees. Following the failure of the Federal Republic of Nigeria to pay the arbitration award sum, LR Avionics obtained an order for recognition and enforcement of the award in 2014 from the Commercial Court in London, in the sum of $5 million (which has now risen to about $6 million as a result of the accumulated interest on the award). The order includes a final charging order, allowing LR Avionics to sell property belonging to the Federal Republic of Nigeria at 56/57 Fleet Street in London. Following an application from the Government, the Commercial Court in London set aside the final charging order. This was appealed by LR Avionics and the Government subsequently approved the settlement of $5 million of which the sum of $2.6 million (N800 million) has been paid. Recent disputes with MTN and banks complete a list of legal disputes Nigeria’s next leader must brace up for.

decline in the prices of stocks led to a decrease in the value of traded stocks.” Afrinvest research analysts in their November 19 note linked last week’s trading outcome on lingering bearish sentiments and persistent political uncertainties “which continue to pose downside risks.” Irrespective of the overall negative performance in the prior week, Afrinvest analysts noted investors’ higher buying interest in bellwethers. Although, the analysts expect the broad performance of the NSE Index to remain weak, “as investors sentiment remains pressured by developments in the polity.” Less than three months to the February 16, 2019 slated for the Presidential election, the curtain for official campaigns was lifted and it started on an economic note as aspirants released their economic policy agenda for public perusal. Aspirantsofthetwomajorparties,All ProgressiveCongress(APC)andPeoples

Democratic Party (PDP), led the way. The incumbent, APC’s President Buhari, presented a colourful scorecard of his performance thus far while highlighting the “Next Level” of achievements to pursue if re-elected. On the other hand, the main opposition, PDP’s Atiku Abubakar, highlighted the failures of the current administrations at the same time highlighting its plans to ‘’Get Nigeria Working Again.’’ Central to both policy agendas is the usual pre-election promises of improving security, infrastructural development, and economic empowerment. “We think this provides a blueprint for both parties to push their agenda before the electorates while availing investors with a template to assess the outlook for the Nigerian economy over the next four years under either the APC or the PDP,” according to Lagos-based research analysts at United Capital Plc.

•Continues online at www.businessdayonline.com

BUSINESS DAY

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Thursday 22 November 2018

Live @ The Exchanges Top Gainers/Losers as at Wednesday 21 November 2018 GAINERS Company

Market Statistics as at Wednesday 21 November 2018

LOSERS Opening

Closing

Change

Company

Opening

Closing

Change

MOBIL

N150

N165

PRESCO

N66.25

N62.15

-4.1

STANBIC

N48

N50

DANGCEM

N203.5

N200

-3.5

FLOURMILL

N18

N18.6

0.6

GUARANTY

N36.95

N35.85

-1.1

INTBREW

N30.2

N30.75

0.55

WAPCO

N16

N15

-1

PRESTIGE

N0.61

N0.67

0.06

ETI

N16

N15.5

-0.5

ASI (Points) DEALS (Numbers)

nder wr iting firm, Sovereign Trust Insurance Plc has continued in its growth trajectory recording 27 percent growth in Gross Premium Written in the third quarter of 2018, above what was generated in the same period of 2017 with a sum of N2 billion, from N7.3 billion to N9.3 billion. Net Premium rose from N3.5 billion to N4.1 billion in the third quarter of 2018, representing 17 percent increase. The company’s total Assets also increased by 7 percent in the quarter under review from N9.7 billion to N10.4 billion. As expected of an Underwriting Firm that has generated more business than it did in the previous quarter of 2017, the claims ex-

pense of the company slightly increased by 2 percent from N1.2 billion in Q3 of 2017 to N1.3 billion in the same quarter of 2018. Consequently the Profit before Tax (PBT) deepened by 16 percent from N716million to N601million in Q3 of 2018. There was a decline also in the Profit after Tax from N667m

to N543m, representing a 19 percent decrease in the quarter. Sovereign Trust Insurance Plc is really poised to ending the year on a very positive note going by the recent trend of its consistent growth rate. It is almost certain that the underwriting Firm will close the 2018 financial year on

3,359.00

VOLUME (Numbers) VALUE (N billion)

a 2-digit billion figure by all indication; a feat that will be considered historical for the more than 2 decades firm that is yet to hit that mark. No doubt, the company is very much on course in delighting its numerous shareholders across the nook and cranny of Nigeria and beyond, the company said in a statement.

237,746,984.00 3.503

MARKET CAP (N Trn

Sovereign Trust grows Q3 gross premium written by 27% Stories by Iheanyi Nwachukwu

31,969.79

11.671

NSE lauds PEARL Awards as event holds Sunday

scar Onyema, Chief Executive Officer of the Nigeria Stock Exchange has commended the Board of PEARL Awards Nigeria for upholding the standard of the project for 22 years and expressed satisfaction that it has become a reference point in the capital market. Onyema expressed this view when the Board of Governors of PEARL Awards Nigeria paid a courtesy visit to the CEO and management of the Nigerian Stock Exchange recently. The Board was at the Exchange to brief the Self Regulatory Organisation (SRO) of arrangements towards the hosting this year’s PEARL Awards as well as plans by the Awards to go continental in due course. “We are proud of the composition of your team and the consistency with which the Awards has been organised in over two decades; and we are particularly happy that it plays the role of an independent arbiter for this sensitive part of the Nigerian financial institution,” the NSE CEO said. Onyema also went ahead during the courtesy

visit by the Board of Governors of the Awards led by Farouk Umar to say that the Exchange’s endorsement of the Award is the least level of recognition it can give and expressed optimism that the Exchange looked forward to becoming a strategic partner of the PEARL Awards in the nearest future. “We are hoping we would be able to sign a Memorandum of Understanding with the Board of the Awards soonest as a way of seeking deeper strategic working relationship that would ensure a stronger Exchange, and also for us to contribute to the vision of PEARL Awards as a respected reward for excellent performance on the Nigerian Stock Exchange” In his response, Umar stated that the Board appreciated immensely the kind words of the CEO and plans by the NSE to partner with PEARL Awards and his team would be glad to work with the Exchange to strengthen the Capital Market through the Awards and other innovative initiatives including expanding the frontiers of the Awards to the African continent.

Overall winner of 2018 NSE essay competition emerges …gets N500,000 scholarship fund for university education, N250,000 equity investment

awrence Deborah of Good Shepherd School, Ajegunle Village, Atan-Ota, Ogun State, has been adjudged the

overall winner of the 2018 edition of The Nigerian Stock Exchange Annual Essay Competition for students in Senior Sec-

ondary Schools in Nigeria. This was disclosed at the Awards Ceremony at the Civic Center, Ozumba Mbadiwe Road, Victoria Island, Lagos, on Friday, November 16, 2018. Deborah clinched the first position ahead of over 20,150 participants across the country, winning N500,000 scholarship fund for her university education, N250, 000 equity investment, and a laptop. Her school was also rewarded with a trophy, three desktop computers, and a printer. Ashiru Oluwalanoayo of Corona Secondary School, Agbara, Ogun

State and Dominic Charles of GEC Comprehensive College, Ipaja, Lagos State, emerged first and second runners-up respectively. Each of them also got a laptop, equity investment and scholarships toward their university education; their schools got a varying number of computers and trophies. Seven laptops were given as consolation prizes to seven other winners. In his welcome remarks, Oscar N. Onyema, OON, Chief Executive Officer, NSE delivered by Bola Adeeko, Head, Shared Services, NSE noted that the goal of

the competition is to get future leaders to think about how to adopt technology as a veritable tool for building a financially savvy generation. “It is my belief that this topic will sow the seeds that will prepare this generation for the Fourth Industrial Revolution”. “There is the need to build a platform that will help awaken the interest of our youths and buoy up students to learn and appreciate economic concepts, particularly as it concerns financial literacy and the significance of the capital market to the economy, Onyema

added”. In her keynote address, Olufunso Amosun the first Lady of Ogun State ably represented by Yemisi Durojaye commended the NSE for this initiative which seeks to bridge the gap between classroom learning and practical knowledge required for long-term personal financial responsibility for societal development. “It is also heart-warming to note that over 40,000 young people in more than 8,000 secondary schools across Nigeria have benefited from this competition”, added Amosun.

Thursday 22 November 2018

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35 NEWS

BUSINESS DAY

Udo Udoma & Belo-Osagie connects Nigerian start-ups to free legal advice

L-R: Lehlé Baldé, strategy/partnerships, BusinessDay; Aramide Abe, founder, Naija Startups; Rashida Afolabi, corporate lawyer, and Oluwatosin Oni, principal partner, Echo VC Partners, at the Global Entrepreneurship Week- Investors dinner hosted by Naija Start Ups.

Nigeria faces bumpy economic times on falling oil price STEPHEN ONYEKWELU

… if sustained may lead to currency devaluation

il price has h o v e r e d around $60 per barrel in the last six days from a high of $79.83 in October, sending signals of turbulent economic times ahead for Nigeria, Africa’s biggest crude producer. A combination of higher production from the Organisation of Petroleum Exporting Countries (OPEC) member Saudi Arabia, historical high shale oil production from United States of America and Russia’s increased production meant to offset possible impact of sanctions on Iran contributed to oil glut and falling oil prices. Also, slowdown in economies such as China, India, South Korea and some of the Asian Tigers has negatively impacted global demand for oil. “This is a business cycle

Nigeria will have to manage carefully. The first hit will be the exchange rate because of our reliance on the import of refined petroleum products. So, the naira will take a beating because we do not have enough foreign reserve to defend it. This is one of the low hanging fruits the Petroleum Industry Governance Bill would have addressed,” Wumi Iledare, professor of petroleum economics, said. The current dip is the longest falling streak since futures trading began in 1983. But OPEC has remained optimistic about its forecast for the oil market. In its World Oil Outlook (WOO) 2018 released November 14, OPEC said that the world’s primary energy demand will surge by 33 percent from 2015 levels to 365 million barrels of oil a day (boed)

in 2040 with developing economies accounting for nearly 95 percent of this growth. It also said that India and China are forecast to be the most important contributors to energy demand. Nigeria relies on crude oil sales to fund its budget and this is responsible for over 85 percent of its revenue and a fall in revenue will hamper budgetary obligations. “If oil price continues to fall such as we have seen in the last few days, then there is need for concern. Already when oil price was at $72 per barrel we used about $3 billion of the foreign reserve to defend the naira,” Johnson Chukwu, managing director/CEO, Cowry Asset Management Limited, said. “At $60 per barrel and falling, this will put pressure on the naira, increase inflationary pres-

Gowon, Lagos, Ekiti, Bayelsa, Edo governors for ‘Nigeria Prays’ service at Deeper Life SEYI JOHN SALAU

special service by ‘Nigeria Prays,’ under the auspices of Yakubu Gowon, a former head of state, holds on Sunday, November 25, 2018, at the Deeper Life Bible Church headquarters, Gbagada, Lagos. According to a release from the office of the General Superintendent, Deeper Christian Life Ministry, Pastor William Folorunsho Kumuyi, the summit is to draw up sufficient prayers and heart-cry for the nation which is undergoing testy times and which is primed to hold elections three months from now. As a prelude to the very strategic service, Kumuyi has urged all Saints of God, within and without, never to

give up on their fatherland, stressing that what men cannot achieve through human efforts, can always be accomplished when the redeemed of the Lord pray unto Him for succour and for divine intervention. The cleric further declared that not only is it essential for believers to consistently intercede on behalf of their nation as Daniel did for Israel while in captivity, officials of government at all levels should always be invited and drawn to God’s presence as a salutary acknowledgement and acceptance of God as the only fitting solution to the nation’s gargantuan challenges. It would be recalled that the Convener of Nigeria prays, General Yakubu Gowon had similarly re-

marked that Nigeria’s problems can be solved faster and better than physical weapons of war. He also noted that God would honour the collective prayers and intercessions of Nigerians for the nation and heal the nation’s wounds. Highlights of the service will include powerful prayer sessions and a goodwill message by General Gowon. Pastor Kumuyi, the host pastor, will deliver the message at the service. The governors of Lagos, Bayelsa, Edo and Ekiti states, Akinwunmi Ambode, Seriake Dickson, Godwin Obaseki and Kayode Fayemi, respectively, will grace the occasion. Jide Sanwo-Olu, a governorship candidate in Lagos State, will also attend the intercessory service.

sure, and reduce the standard of living and purchasing power.” This means that the impact of the oil price fall has potential to affect the Nigerian economy, cause inflation, destabilise the economy, and cause devaluation of naira and loss of jobs. “In addition to falling oil price, Nigeria has fewer buyers for its oil. India, China and the USA, which used to buy Nigeria’s crude oil, have turned to other producers in the Arabian Peninsula” Bode Lukal, managing director of Bodeni Energy Limited told BusinessDay. “Traditional buyers have preferred other producers because of Nigeria’s production and political unpredictability. This has made some oil companies to retrench workers. Lower oil prices will compound the situation,” Lukal said.

do Udoma & Belo-Osagie has announced its upcoming UUBO Black Friday 2.0 event, which will hold on Friday, November 23, 2018. Conceptualised as a free legal advisory clinic for start-ups and SMEs, the UUBO Black Friday 2.0 leaning and engagement initiative offers promising Nigerian start-ups, their founders, managers and representatives an opportunity to interact with and receive free legal advice from our experienced legal team. In keeping with UUBO’s commitment to supporting start-ups, investors, corporate entities and institutions in local business, the firm is pleased to draw on almost four decades of practice as a multi-specialist law firm, its extensive network, and the wide-ranging expertise of its

dynamic team to deliver relevant, practicable and up-todate information and advice to attendees of this UUBO Learning & Engagement series event. UUBO Black Friday 2.0 offers attendees the opportunity to benefit from interactive and informative sessions on understanding and negotiating term sheets; giving up board seats; protecting intellectual property rights, contractual terms and conditions and much more. Lawyers from across the firm’s practice areas will be available to answer questions and to provide general legal advice, at no charge to attendees, on employment, tax, intellectual property, investments, venture capital, compliance and regulatory matters and financing, among others, during breakout sessions at the event.

Zenith signs landmark deal with BBC Global News

n a deal that captures the entrepreneurial spirit of Africa, Zenith Bank has been announced as the sponsor of the BBC’s Talking Business Africa, catapulting the brand into millions of homes across the world via BBC World News and BBC. com. Talking Business Africa, one of BBC World News’ weekly flagship programmes, is presented by Africa-based and award-winning journalist, Lerato Mbele-Roberts, and is changing the African narrative by showcasing the continent’s thriving marketplace. The multi-platform series brings global audiences insights into the entrepreneurs and business leaders shaping Africa’s economic fortunes, meeting and profiling the people who’ve created jobs, not just for themselves, but for others too. From the leaders of large multinational companies through to individual en-

trepreneurs just starting out, Talking Business Africa finds out how they got there, what motivates them and the challenges they face. Speaking at a special event at Zenith Bank’s headquarters in Lagos to mark this landmark deal, Jim Ovia, Chairman and CEO of Zenith Bank said: “Having built a successful brand like Zenith Bank based on trust and innovation, it was important for us to partner with a media organisation that reflected our values, which is why we’ve chosen the BBC, amongst others. By sponsoring Talking Business Africa, we hope to inspire Africans into business and encourage people across the world to do business with us. ” Charlie Villar, Chief Operating Officer of BBC Global News said: “Africa’s growth surge can be accredited to its many entrepreneurs and business leaders all over the continent.

EFCC to conduct due diligence on investors seeking to buy government’ assets ONYINYE NWACHUKWU, Abuja

t the instance of the Bureau of Public Enterprises (BPE), the Economic and Financial Crimes Commission (EFCC has indicated interest in conducting due diligence on any entity that shows interest in the purchase of government assets going forward. This is to prevent corrupt elements from using the privatisation process as a means of laundering illegally acquired funds, according to Ibrahim Magu, acting chairman, EFCC, who indicated the new plan. “We will be willing to support you against any threat that will discourage investors from coming into the country, and in order to achieve this I think we need to es-

tablish a common desk for a seamless synergy. “Once again I seize this opportunity to thank the BPE and I am happy to tell you that the baby you nurtured has now outgrown its parents as the EFCC today can boost of a befitting Head Office complex, which was made possible by our determination and support from the current administration,” Magu said. Magu, who was speaking in Abuja when director-general of the BPE, Alex Okoh, visited his Abuja office, expressed the Commission’s readiness to partner the BPE in all its transactions. Okoh had expressed the willingness of the Bureau to partner the EFFC to ensure transparency in all the processes of the reform and privatisation programme of the

Federal Government. The BPE boss said the activities of the Bureau reflect the principles of transparency that the EFCC was known to propagate, saying the EFCC’s achievements over the years, especially in sanitising the nation’s economy had raised investors’ confidence. Okoh, who was decorated during the visit as Anti-Corruption Ambassador by Magu, said he was at the Commission to solicit the EFCC’s support in ensuring that the activities of the BPE wre better monitored. His words, “the EFCC has provided a platform and atmosphere that has enhanced comfort and confidence in the investors who we directly deal with on a regular basis, the kind of comfort to engage and invest in this economy.

Thursday 22 November 2018

BUSINESS DAY

Thursday 22 November 2018

BUSINESS DAY

Thursday 22 November 2018

BUSINESS DAY

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Thursday 22 November 2018

special report: investing in nigeria

World Business Newspaper

Nigerian voters to choose between familiar faces The economy, security and corruption will be the central issues in February’s poll Neil Munshi

hen Nigerians go to the polls in February, they will face a choice between two septuagenarian men they know well. Both are northern Muslims who have run for president multiple times, served at the highest levels of government and found success in their chosen fields. Besides that, President Muhammadu Buhari and former vice-president Atiku Abubakar— commonly known as Atiku — could not be more different. Mr Buhari, a former general who ruled the country in a military government briefly in the 1980s, is reserved and formal. Mr Abubakar, who served as vice-president from 1999 to 2007 to then president Olusegun Obasanjo, is an outspoken former customs officer who has become fabulously wealthy across a range of sectors, including oil. “Atiku is the politician’s politician,” says Cheta Nwanze, head of research at SBM Intelligence, a Lagos-based political consultancy. “He has built networks around the country . . . He also is a more friendly person than Buhari, who is more austere and rigid in his approach.” Mr Nwanze sees Mr Buhari as “taciturn and given to trusting only a few, close people, and less amenable to compromise”, but adds: “Unlike Atiku, he is not motivated by wealth.” Mr Abubakar has already focused on Mr Buhari’s mixed economic record, along with the volatile national security situation that the former general campaigned on

solving in 2015. The Buhari team is focusing on allegations of crony capitalism that have long dogged Mr Abubakar and which he denies. A number of third-party candidates are also running — including former deputy central bank governor Kingsley Moghalu and activist Oby Ezekwesili — though few observers give them any a shot of winning in a system dominated by the two major parties, the ruling All Progressives Congress and the major opposition People’s Democratic Party. In 2015, Mr Buhari had the support of Mr Abubakar, a perennial party switcher. But last year, Mr Abubakar became one of many high-profile politicians to defect from Mr Buhari’s APC in order to challenge him and easily won a crowded PDP primary last month. Mr Buhari’s campaign has highlighted his reputation for keeping his hands clean, a notable exception in a country often referred to as a kleptocracy. The president has been credited with cutting down on graft, though some of his close allies have been accused of corruption. The president has also tried to emphasise his military service and came to power promising to “decimate” Boko Haram, the jihadi group that at the time of his election controlled territory across north-east Nigeria. But while the militant group is significantly diminished, it continues to terrorise the north-east — just one of the country’s security crises. Mr Abubakar has said he will privatise parts of the moribund staterun oil company, which has long been a cash cow for the government

and corrupt politicians. But in early November he also said he would lower the government-subsidised price of petrol, a popular promise many economists say would exacerbate Nigeria’s already precarious fiscal situation. The economy’s sluggish performance after the oil price crash may hurt Mr Buhari’s prospects, says Razia Khan, chief economist for Africa and the Middle East for Standard Chartered. “In Nigeria, people are not going to see the context of [how] oil producers have been suffering all over, all they see is Nigeria has been hit by something. It coincided with the time Buhari came into power

and the economic performance has been disappointing,” she says. Gross domestic product growth is forecast at close to 2 per cent this year, outpaced by population growth in the world’s fastest-growing big country. Unemployment has soared to 19 per cent from about 8 per cent when Mr Buhari took office. The administration has defended its record, in particular the infrastructure investment it has made and a recent drop in inflation. As vice-president, Mr Abubakar supervised the privatisation of many state assets, which opened him to accusations of crony capitalism, says Mr Nwanze. He contrasts this

with Mr Buhari’s “big government” ethos, and his tougher approach to regulation. The electoral system of Nigerian politics is complicated. The winner must win at least a quarter of the votes in 24 of the country’s 36 states, in addition to the popular vote, to triumph in the first round. Otherwise, there is a second-round run-off requiring a majority. The main parties tend to be fluid because they are largely based on patronage rather than ideology. An informal system rotates presidential candidates between the predominantly Muslim north and Christian south.

Bold refinery plan aims to transform Nigerian oil

‘Cobbled together’: Nigeria’s federal system shows the strain

Billionaire Aliko Dangote’s big gamble seeks to change the economics of the sector

David Pilling

Neil Munshi

hen the ship BBC Naples docked at a jetty outside Lagos in late September, it marked a milestone for Nigerian billionaire Aliko Dangote: the vessel was the first to land at the port he had built for a $12bn oil refinery that some say could transform his country’s economy. Mr Dangote has never lacked ambition. He has made his money selling cement, flour, sugar and salt to Africa’s largest economy — often, critics charge, with a government-assisted advantage — and beyond. But the Dangote refinery takes this ambition to another level. There is a range of estimates about when it will be operational: in 2020, according to the company, the year after that at the earliest, according to most analysts, and 2022, according to a Reuters report in August. Never, according to sceptics. But once operational, it will process 650,000 barrels of oil

a day, a third of Nigeria’s daily production and more than that consumed by its citizens. It will also be the biggest refinery of its type in the world. Last month at the Financial Times’ Africa Summit in London, Mr Dangote was understated. “We have achieved a lot — we’ve ordered all our equipment, and it has started coming,” he said. “There are quite a lot of challenges of doing this kind of gigantic project in Africa.” The challenges are clear in the refinery’s staggering numbers. It will be built on 2,500ha of swampland that requires the sinking of 120,000 piles, on average 25 metres long. The Lagos jetty extends for 230 metres and was built because no port in Nigeria is big enough to handle all the equipment it will take to build and run the refinery — including a distillation tower that will be the height of a 30-storey building. It involves the dredging of 65m cubic metres of seabed sand and the building of a Continues on page A7

The country has weak, sub-scale states and too strong a centre, say critics

uried on page 19 of a recent edition of Nigeria’s Daily Independent newspaper is a warning from traditional religious leaders to “shun calamitous predictions . . . that the country would cease to exist after the 2019 general elections”. Nearly 60 years after independence, and 50 years since the end of the Biafra war, there are still some who would question Nigeria’s viability as a nation. Yet the country has defiantly endured. It has remained fixed within the borders drawn by British colonialists, including Sir Frederick Lugard, the first governor from 1914 of a single entity created from the former northern and southern protectorates. Nigeria was born with a predominantly Muslim north and a predominantly Christian south, a nation encompassing some 250 distinct groups. Wole Soyinka, the writer and critic, told the FT that the nation had been “cobbled together”. Nigerians, he said, had “been brainwashed into thinking that, with independence, came this natural fusion”. To the con-

trary, he said, Nigeria was “constantly being negotiated”. The current structure of 36 states and one federal territory — in turn divided into 774 local government areas — has been long in the making. At independence in 1960, the country was divided into three regions: Northern, Western and Eastern, which broadly overlapped the territories of the three main ethnic groups: HausaFulani, Yoruba and Igbo. Over the next few decades, the regions were divided into states and new states created, while the capital was transferred from Lagos to Abuja in 1991. The federal structure finally took its current form in 1996. That make-up is under pressure again. Perennial talk of “restructuring” the federation has intensified. Atiku Abubakar, the main opposition challenger from the People’s Democratic Party, has made altering the Nigerian map one of his election pledges. In an open letter, he said he favoured devolution of “power and resources” to the states. Reassuringly — if perhaps unrealistically — he assured that no state would receive less funds than it does today. Indeed, one problem is that, having made 36 states it is almost

impossible to unmake them. The constitutional threshold is high, requiring both a two-thirds majority of the National Assembly and a two-thirds majority among the states themselves. Nigeria experts argue the current formulation does not work. “The idea you can have a federal structure with a very powerful centre and weak regions is a nonstarter,” says Olu Fasan, visiting fellow at the London School of Economics. When Nigeria gained independence, he says, the regions were powerful and the federal government played a co-ordinating role. But with successive divisions into sub-scale entities, that arrangement has been turned on its head. “The federal structure means that the centre collects all the money and distributes it to the states. The states have to go cap in hand, begging for money,” Mr Fasan says. Oluseun Onigbinde, co-founder of BudgIT, a civic organisation that aims to make the budget accessible to citizens, sees the problem in a similar way. Lagos, he says, accounts for 30 per cent of all revenue collected at state level. Many other states are not economically viable.

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FT special report: investing in nigeria Bold refinery plan aims to transform...

Nigerian factories seek more state support

Continued from page A6

1km breakwater. It requires more concrete than the capacity of the country, so the business magnate has established his own quarries. Nigeria does not produce industrial gas, trucks or power, so he is building all of those as well: his own gas plant, trucks in a joint venture with a Chinese company and a power plant able to produce the 480MW the refinery will need to run. By the time the project is completed, 138km of road and 180km of drainage will have been built. At full steam, the site is also expected to produce enough plastic for all of Nigeria, along with 3m tonnes of fertiliser every year. The fertiliser plant had been expected to begin production in November, but Mr Dangote said in London it would not start until January. The refinery is expected to create 9,500 direct and 25,000 indirect jobs. The businessman has spent $6bn of his own cash on the project, and raised a reported $4.5bn. If it fails, it may also bankrupt the man who has said his reward for completing the project will be buying his favourite football team, Arsenal. The refinery will transform Nigeria’s refining industry. Its 650,000b/d capacity outstrips the country’s current total of 455,000b/d from four state-run refineries that often run at less than 10 per cent utilisation. The decrepit state-run refineries “haven’t been able to justify all the investment in them for years”, says Jubril Kareem, energy analyst for Ecobank. After Mr Dangote’s refinery begins production, he says, “they could easily die a natural death because there won’t be any need for them any more — which actually a lot of people have been pushing for in recent years. Those refineries are not operating at any level that [justifies the view that] government should still fund them”. But even when Mr Dangote produces more fuel than Nigeria needs, he may not be able to sell it at home. The country’s subsidy regime involves the state-run National Nigerian Petroleum Company importing more than $7bn of fuel each year and selling it to retailers, who must sell it to the public at the subsidised rate of N145 (40 cents) a litre. Selling refined products at that price would be untenable for Mr Dangote, says Temilade Aduroja, energy analyst at Renaissance Capital in Lagos. “Our assumption is that the subsidy will have to go because, obviously, at N145 Dangote won’t make a profit,” she says. “The cost to produce at the refinery is more expensive than N145 — however, it’s cheaper than importing.” Ms Aduroja says she expects the government to scrap or change the politically sensitive subsidy after February’s presidential elections. “People will adjust — a couple of years ago it was N87 and they increased it to N145,” she says. Or the government and the company could decide on a flat rate at which the state will sell crude.

In manufacturing hubs such as Onitsha, business is hampered by poor infrastructure Aisha Salaudeen

Fortunes of Nigeria’s banks tied to the oil price There has been relief for many lenders but they are still too closely linked to the energy sector Neil Munshi

he rally in the price of oil over the past year is far from a universal benefit to Nigeria’s economy, which is dependent on crude oil revenue but cannot meet domestic fuel demands from its own supply. However, the rise has come as a welcome respite for the country’s banks, whose fortunes are tied to fluctuations in the oil market. About a third of all domestic commercial bank credit is extended to the oil and gas industry. If its entire upstream, midstream and downstream operations and supply chain were added together, analysts estimate oil and gas lending would make up as much as half of banks’ loan books. The system-wide non-performing loan ratio — a key metric for banks’ health — fell to 12.5 per cent in June from 15 per cent a year earlier, according to official figures. But by August, it had risen to 14.7 per cent. In a communiqué the following month, the Central Bank of Nigeria’s monetary policy committee said it was “concerned with the rising level of NPLs in the banking system, traced mainly to the oil sector”. The top-tier banks are generally improving. First Bank of Nigeria, the second largest by assets, is recovering from a slump that saw NPLs peak at 24.4 per cent at the end of 2016 — they were down to 20.8 per cent at the end of June. The rise in the oil price has “direct implications” for Nigeria’s banks given their exposure to the sector, says Olamipo Ogunsanya, banking analyst at Renaissance Capital in Lagos, speaking when oil had topped $80 a barrel. “NPLs were primarily driven by lower oil prices and a slowdown in the economy — the rate of new NPL creation has slowed.” But smaller banks are struggling. Last month, the Nigerian government announced it would

prosecute those responsible for the collapse of Skye Bank, a local lender, and several banks are still being kept afloat almost entirely by support from the central bank. Meanwhile, Diamond Bank recently announced the resignation of four of its board directors, amid a streamlining programme that has offloaded assets, in part because of the poor performance of its oil-heavy loan book. Last year, the sector was shaken when telecoms operator Etisalat’s Nigeria business, under pressure from the recession and the impact of capital controls, defaulted on a $1.2bn syndicated loan from 13 local banks. The rise in the oil price should help alleviate some of the pressure, although it fell back in early November. Most of the loans on banks’ books were restructured when oil was $35 to $40 a barrel. Low foreign exchange liquidity, which was a big driver of bad loans, has improved significantly as dollars return to the country via oil sales. Analysts say Nigerian banks are severely undervalued. “In fact, they are trading at valuations close to those of Turkish banks, which have suffered from rapidly increasing cost of funding and concerns about asset quality following the collapse of the Turkish lira, in stark contrast to the improving sector trends of the Nigerian banking sector,” says Renaissance Capital in a recent research note. Despite weathering Nigeria’s first recession in a quarter of a century, many banks made record profits in the past couple of years. Return on equity for the sector doubled to 20.5 per cent between the end of 2016 and October 2017, according to Oxford Analytica, a consulting firm. The banks fed on “the government’s desperation for money amid falling oil receipts”, vacuuming up tax-free profits on high-yielding treasury bills. At the same time, the central bank’s multiple exchange rate regime — which set different exchange rates for different industries, beginning in 2016

— created a unique arbitrage opportunity that the banks exploited. “It creates all kinds of opportunities and gaps [for banks] without forcing them to add value in other ways,” says a top Lagos-based banking executive. “It’s true of all the banks, all of us, because people do what’s safe . . . and that is what makes sense for shareholders.” That arbitrage opportunity has shrunk as the central bank has regularised its forex regime. But weak economic growth and slumping oil prices have since sent private sector credit growth slowing to a crawl — up just 0.8 per cent year on year in August, according to the central bank. That is because Nigerian banks mostly lend to multinationals and a few local corporate clients. The slowdown has forced the central bank to intervene in its “own sort of mini QE [quantitative easing]”, says George Bodo, banking analyst at Ecobank — in which it is willing to buy certain types of corporate bonds “because there’s a market failure they’re trying to address”. Retail lending remains underdeveloped. About 63m Nigerians lack a traditional bank account, according to the World Bank’s Global Findex database. “Banks seem to be locked in price wars [over corporate clients] — they’re vying for the same piece of cake and we’re looking for them to bake a new cake,” says Mr Bodo. “I think the next growth story is when they start doing consumer lending . . . that can drive valuations.” If lenders do not act quickly, they may be left behind. Nigeria’s central bank is opening the system to non-financial companies such as telecom operators, to follow Kenya’s example in developing a thriving mobile banking industry. South Africa’s MTN, which has more than 50m subscribers in Nigeria, plans to launch its Mobile Money service next year. For many Nigerians, their introduction to the formal banking sector may not be directly with a bank at all.

hen people think about Nigeria’s industrial hubs, one of the places they picture is Onitsha in Anambra state. Sitting by the River Niger Bridge that connects the country’s west to its south-east, the city and its surrounds house decades-old manufacturers such as spice maker Tiger Foods and wiring company Geoelis Cables. It may pale in comparison with Lagos’s urban scale, but it is also home to one of Africa’s largest commercial markets, the Onitsha main market. With an estimated $3bn in annual trading volume, the city plays a role in the production and distribution of manufactured goods to Nigeria and beyond. It has a rich history: the Britishowned Royal Niger Company helped establish Onitsha as a trading port in the 19th century. For a long time, countries including France, Taiwan and Japan exported their manufactured goods into Onitsha and Nnewi, the state’s second-largest city. It was not until Nigeria suffered a foreign exchange crisis in the early 1980s that Onitsha began its transition into manufacturing. Importing became increasingly expensive, and local businessmen were forced to turn to domestic production of their products. With technological help from Taiwanese partners and others, locals were able to move into small-scale manufacturing. Today, the city is dotted with companies as varied as brewers and fabric makers. But manufacturers say it is below full capacity. “We’re facing serious challenges here,” says Amaka Odili, a polythene bag producer in Onitsha’s Awada area. Ms Odili, who has been in business for more than 12 years, says manufacturing in Onitsha means battling against adverse operating conditions, such as poor infrastructure. Electricity, critical to the economic life of the industry, is frequently unavailable. Manufacturers are forced to switch for power to expensive alternatives, such as diesel-powered generators. At the moment, Nigeria has the potential to generate 12,500MW of electricity a day but most days generates only about 4,000MW, according to the US Agency for International Development. This means the amount of electricity given to each zone such as Onitsha is not sufficient to provide constant supply — so it has to be rationed. Onitsha’s manufacturers also feel they have insufficient institutional support. The bodies charged with the duty of encouraging the development of small and medium-sized enterprises have not lived up to expectations. “None of the organisations from the government pay attention to us. If I’m being honest, I don’t think they understand what we are going through,” says Engineer Emeka, who produces shoe soles at MCC Junction in Onitsha. But large-scale manufacturers are better off. This is mostly because those that produce goods at scale can create their own infrastructure and have a much larger bearing on the industry. Some disruption to business starts closer to home. The region has continued to see civil unrest led by Biafran separatists. This year it took the form of stay-at-home protests in Onitsha and other south-eastern cities.

A8 BUSINESS DAY NEWS

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FG’s delay in approval holds back massive investment in oil, gas industry MIHEAL ANI

ontinuous delay by the Federal Government in approving key licences and attending to other pressing issues in the oil and gas industry is making investors have a rethink about stakes in the industry. Analysts and industry watchers say a combination of indifference and lack of sensitivity to the importance of attracting fresh investment to the vital sector is causing many potential investors to stake funds in other countries. This is coupled with the delay in clearing the air on the regulatory framework that guide operations in the industry. In the past few months, some companies whose licences on a number of assets have expired, despite still retaining operatorship, are still expectant of official renewal. A few of the companies affected include AITEO, Amni, Atlas Petroleum, Conoil,

among others. “In other climes, these things are taken more serious. When sensitive matters are handled with kid gloves, investors notice the trend and stay off because of the uncertainty,” Success Akinwunmi, a finance lecturer at the University of Ilorin, says. The case of Lekoil presents an obvious picture of foot dragging. The company has been hoping for resolution of its long running struggle with the government to secure consent to buy controlling stake in Block OPL 310, a sole risk license off Lagos in the Benin embayment for years. The transaction has been held up in courts with several analysts wondering what could be the reason for the apparent foot dragging on the part of the judiciary on a decision which could unlock the western frontier of Nigeria’s transform margin to massive investment. At present, Lekoil has spent more than $120 million on OPL 310 but is un-

able to continue development without ministerial consent to the second equity transfer. Coupled with a court case that is being toyed with by the authorities. First, the court went on recess, then the judge returned from vacation and adjourned the case, then Optimum moved to join itself to the case, which still has not been heard. This has significantly impacted Lekoil share price leading to a drop of over $400 million in market value. Following an earlier farmin, then UK-listed Afren acted as technical and financial partner to Nigerian operator, Optimum Petroleum Development. In 2013, AIM-listed Lekoil farmed into Afren’s stake, thereby acquiring a 30% economic interest, translating to 17% of equity participation. However, Lekoil sought a much stronger position, company chief executive, Lekan Akinyanmi says. The authorities who are supposed to unlock investment have not done

enough to secure the position of Lekoil as well as many other indigenous operators, analysts say. “What is even worse is that the Federal Government is not protecting the interests of core indigenous investors who have staked a lot of investments on the industry, causing a situation where funds which should have been invested are left hanging, Akinyanmi says. “These types of delays are bad for business and the country because they have a negative economic impact on the companies that are affected by the delays.” Data released by the National Bureau of Statistics (NBS) indicated that there was a significant decline in foreign investment inflow into the Nigeria’s oil and gas industry in the second quarter of 2018, as total capital imported into the industry between April and June 2018, dipped by 70.98 percent, compared with the amount imported in the first

L-R: Pamela Shodipo, regional bank head, United Bank for Africa (UBA) plc; Bode George, former military administrator of Ondo State; Gbenga Adefaye, general manager and editor-inchief of Vanguard Newspapers, and Liadi Ayoku, executive director, UBA, during the conferment of the Bank of the Year Award on UBA at the New Telegraph Awards in Lagos.

FMDQ: IFC, FHF, others collaborate towards development of Nigerian housing market

ith a current deficit of 17-22 million housing units, the challenge faced by the housing sector in Nigeria is yet on the rise due to a variety of supply and demand side factors. From unfavourable land laws, difficulty in land registration and titling, to dearth of construction finance, restricting tenors of mortgage banks and general sector illiquidity, the Nigerian housing sector is faced with a myriad of challenges inhibiting its growth. It is in this vein that FMDQ OTC Securities Exchange (FMDQ), in seeking ways to resolve some of the identified challenges, partnered the International Finance Corporation

(IFC) and Family Homes Funds (FHF) as part of its Debt Capital Markets (DCM) deepening effort, to held its Series II Housing Roundtable (the Roundtable) session on Monday, at FMDQ’s business complex, Exchange Place. The Housing Roundtable, which was executed via a two-Series approach, held its Series I on November 6, 2018, with a focus on issues culminating from the supply side of the sector. The Series II, on the other hand, more largely focused on providing a platform for policy makers and investors, particularly from the demand side, to engage, discussing and proffering plausible solutions to the challenges that plague the housing and mortgage

sectors in Nigeria. Among key market participants in attendance at the session were Eme Essien Lore, country manager (Nigeria), IFC; Bolaji Balogun, chairman, Steering Committee, FMDQ Debt Capital Markets Development Project & Managing Director/ CEO, Chapel Hill Denham; Imeh Okon, senior special assistant to the President on Infrastructure; Tunde Reis, president/founder, First World Communities; Tokunbo Martins, director, Other Financial Institution Supervision Department, Central Bank of Nigeria; Sonnie Ayere, chairman, Mortgage Warehouse Funding Limited and founder/ CEO, Dunn Loren Merrifield Group, among others.

Thursday 22 November 2018

Why BPE can’t shift performance review of Discos to 2019 - Labour JOSHUA BASSEY

rganised labour warns that plan by the Bureau for Public Enterprise (BPE) to shift the performance review of the Electricity Distribution Companies (Discos) as captured in the Power Sector Privatisation Act, to 2019, is illegal, and amount to economic sabotage, and would therefore be resisted. Recall that the BPE in a press statement dated October 14, 2018, had announced December 31, 2019 as the final performance review date for 9 out of the 11 Discos created out of the defunct Power Holding Company of Nigeria (PHCN) in the wake of the power sector privatisation. The December 31, 2019, date announced by the bureau, contravenes the Privatisation Act, which provides for the review to be carried out on the 5th anniversary of the Discos. Going by the Act, the performance review had been due by October 31, 2018. Drawing the attention of the government to what it called illegal extension of the review date by the BPE, Joe Ajaero, the general secretary of the National Union of Electricity Employees (NUEE) warned BPE against laying a faulty foundation, stressing that labour, civil societies and the Nigerian public who are directly suffering from the poor performance of the Discos, would resist it. “We are worried that since the core investors took over the privatised electricity assets on No-

vember 1, 2013, their performances have been abysmal with Nigerians bearing the burden of paying outrageous/estimated bills since they have refused to provide their customers with prepaid meters. A good number of them have carried out their operations within the period under review without conditions of service and disengaged without recourse to any law. More disturbing is the involvement of BPE being government’s representative on the board of these companies who have not publicly declared a kobo profit as the Federal Government’s stake in the companies for the past five years. Quite unfortunate that some of the Discos have even gone to the extent of rejecting load from the national grid as wheeled by the Transmission Company yet nobody is checking this unholy act.” Ajaero called on the government to, in conducting an unbiased periodic reviews of the performance of the Discos and the generation companies, which should be this year, exclude the BPE from midwifing the process in view of the bureau’s membership of the various boards of these Discos, saying “it cannot be umpire in its own games.” He further called on the Federal Government not to renew the licences of Discos that have operated below expectation and without conditions of service. “We are serving a final notice to challenge the illegal extension and operation of the Dicos in the country,” said Ajaero.

Buhari commissions Edo-Azura plant, attends COAS confab

do State government will on November 27, host President Muhammadu Buhari, who will commission the Edo-Azura Power Plant and grace the Chief of Army Staff (COAS) Annual Conference billed to hold in Benin City, the state capital. In a statement, special adviser to the Edo State governor on media and communication strategy, Crusoe Osagie, said preparations were on top gear to give the President a grand reception. According to Osagie, “We are delighted that the President will be in the state for the Chief of Army Staff Conference, the commissioning of the Edo-Azura Power Plant and other engagements

in Benin City, the Edo State capital. Preparations are in top gear to give the president a befitting welcome.” The governor’s aide said, “Much as we are certain that the impressive governance model by Governor Godwin Obaseki is one of the reasons we are having August visitors from the Federal Government, we are also delighted that the President is coming down by himself this time.” He explained that some of the activities lined up for the visit include a visit to the Palace of Omo N’Oba N’Edo Uku Akpolokpolo, Oba Ewuare II; commissioning of the Edo-Azura Power Plant, and would attend the Chief of Army Staff (COAS) Annual Con-

ference. He said the state government was pleased to have the President commission the Edo-Azura Power Plant, an example of the state’s attractiveness to investors and a boost to the ease of doing business. “The Edo-Azura Power Plant is a success story in the state’s drive to keep investors and has become a model for other states in the country. We are very much delighted that the President will be here to commission the facility. “This will be the second time, we are having a visit from the Presidency in less than six months and it shows we are doing something right. So, we are indeed happy to have the President,” he said.

BUSINESS DAY

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NEWS YOU CAN TRUST I THURSDAY 22 NOVEMBER 2018

Opinion What type of state do we want in Nigeria? CHRISTOPHER AKOR Chris Akor, a First Class graduate of Political Science, holds an MSc in African Studies from the University of Oxford and is BusinessDay’s Op-Ed Editor christopher.akor@businessdayonline.com

ometime ago, I discussed what I felt were the reasons why African leaders found it particularly difficult to leave office when they should. B o r row i n g f ro m t h e t h e s i s of Africa’s foremost political economist, Claude Ake, I argued that it is because power is the established way to wealth in most of Africa and those who win state power can have all the wealth they want even without working and those who lose the struggle for state power cannot have security even in the wealth they have made even by hard work. The only way this works is when the economy is under state control. And that explains why most African leaders desperately seek to control their economies upon coming to power. They seek to determine who gets what, when and how; who deser ves to be helped to flourish and who must be smothered and crushed. That was the motivation for the policies of economic controls or what some scholars refer to

as the ‘control regimes’ practised all around Africa. These basically include state control and regulation of trade, state distorting and manipulation of interest and exchange rates and state industrial regulation through creation of monopolies or oligopolies. These policies do not only reduce the rate at which economies could grow and distort key prices in the macro economy, but they are also economically very costly and could lead – and indeed led - to many state collapse in Africa. Bu t h ow d o t h e s e l e a d ers care? Despite succeeding regimes knowing of the disastrous consequences of these ‘control regimes’, most of them still choose to retain them for, as Robert H. Bates, a Harvard renowned political economist argues, the policies generate huge political benefits for African authoritarian regimes, provide elites with sources of income and furnished means for transforming even declining economies into political organisations, enabling politicians to recruit political dependents, willing to fight – if necessary – to keep them in power. Like I argued on this page many months ago, in Nigeria particularly, this control regime, as against the popular belief that discovery of oil and the oil boom, was responsible for the gradual decline of the agricultural sector and the stoppage of cash crop exports. This can be seen from a careful study of the management and collapse of the commodity marketing boards.

Like I mentioned earlier, the ‘control regimes’ so dear to most African leaders is par-

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After about four years, what is noticeable is the crowding out of the private sector and a furious takeover or intention to take over tasks and functions hitherto performed by the private sector. Nigeria is a classic case of where government often fails to perform its job but actively seeks to perform jobs that are not its own

ticularly destructive to African economies. Besides the terrible inefficiencies it engenders, it prevents the inflow of private capital to develop the economies and provide jobs even when it is clear that no African government has the resources to provide all the infrastructure, jobs and social needs of its society. The sharp economic declines of the 1970s, 80s and 90s and the insistence of multilateral Western financial agencies on privatisation and a private sector led economy has resulted in the gradual weakening of state control in Africa. But some authoritarian and dictatorial regimes in Africa,

such as Museveni’s in Uganda and some other smart leaders in East and Central Africa have been able to warm themselves to these multilateral institutions, allowing semblances of reforms but devising ingenious ways of maintaining tight control over their economies. In Southern and Western Africa, where some leaders genuinely implemented the structural adjustment programmes prescribed for them, the reforms unwittingly unleashed forces that led to the toppling of longstanding dictatorial regimes. Nigeria, on its part, due to the oil boom in the 1970s – at a period when most African economies were a rapid decline – refused to join the trend and even went further to take control of most private enterprises and positioned itself as the sole economic player in the country. That was the period when a former president said Nigeria’s problem was not money but how to spend the money. Being one of the staunchest proponents of state control of the “commanding heights of the e conomy”, O basanjo attempted to continue with that trend on coming back to power in 1999. However, it soon dawned on him that Nigeria did not just have the re s o u rc e s t o e m b a r k u p o n such grand ambitions. He was wise and flexible enough to liberalise the economy and his 8 year rule coincided with the blossoming of the private sector in Nigeria. While oil and gas exp or ts accounte d for more than 98 percent of e x p o r t e a r n i ng s a n d ab ou t 83% of government revenues

in 1999, the oil and gas sector now accounts for just about 14 percent of Nigeria’s GDP. The private sector has clearly taken over and ensuring prosperity for Nigeria. Enter Buhari in 2015 and he attempted to bring in the e r a o f s t a t e c o n t ro l o f t h e economy that is now clearly outdated and impracticable. Mr Buhari has never hidden his dislike for the private sect o r d e s p i t e t h e ma r ve l l ou s job done by his campaign handlers to hide that fact during the campaigns. Mid way into his tenure, Mr Buhari said matter-of-factly that he was averse to the inclusion of members of the private sector in his administration’s economic management team b e c a u s e s u c h p e r s o n s f re quently steer government policy to suit their own narrow interests. He came to power therefore with a vengeance; to reverse what he may have likely considered as the mortgaging of Nigeria’s patrimony to private and selfish individuals by previous administration. Happily enough, the dec l i n e i n o i l re v e n u e s h av e slowed the progress of this state capture of the economy. But I was wrong when I thought the fiscal challenge the country was facing would force the government to turn to the private sector to help build the needed infrastructure to propel national development and too provide jobs for the millions of jobless Nigerians. I had erroneously thought that as the as the government grapples with declining revenues, the private sector will begin to assume

greater importance in the life of the country until such a time when the country becomes a fully liberalised economy. But I underestimated Buhari’s resolve. Although the government acknowledged in its Economic Recover y and Growth Plan (ERGP) that it does not have the resources to finance Nigeria’s infrastructure stock and will partner the private sector, the president has shown nothing but disdain for the private sector and an unwillingness to engage with them. After about four years, what is noticeable is the crowding out of the private sector and a furious takeover or intention to take over tasks and functions hitherto performed by the private sector. Nigeria is a classic case of where government often fails to perform its job but actively seeks to perform jobs that are not its own. 2019 will present Nigerians an opportunity to decide the kind of country they want to live in. Will they allow the state to claw back its awesome powers or allow the private sector to flourish thereby establishing a free society where public office will no longer hold the kind of attraction it currently holds for Africans? Will they allow t h e i n e f f i c i e nt g ove r n m e nt bureaucratic machine continue to define their lives and existence or create an environment where the private sector can deploy its huge resources and in a business-like fashion, help solve most of the countr y’s teething challenges and allow the citizens to be prosperous and lead quality and meaningful lives?

Eureka: There are three Buharis, not two!

IK MUO Ik Muo, PhD. Department of Business administration, OOU, Ago_Iwoye 08033026625, muoigbo@yahoo. com, muo.ik@oouagoiweye. edu.ng

ne of the key features of the Buharian presidency has been the politics of health, which impacted grievously on the health of the polity. At a certain time, he always had something to do in London and all his foreign trips (and they were numerous), were routed through London. All this culminated in his historical medical trip that lasted 100 days. On the day he returned, he was so frail that the wind was almost tossing him about. Then, one day, he travelled as usual, returned as usual but started bouncing unusually. He became so vibrant, energetic and active to the extent that everybody, including the son of man, noticed the new and improved PMB. I concluded that an oyibo scientific magic had taken place

and I left it at that. Not long after that, the story started that what we had was and is Buhari 2, a replacement of PMB, and who was sourced from Sudan! I did not believe so, and even now, I do not believe so. I told myself that the British media industry and Julian Assange and his WikiLeaks of this world would be the first to blow the whistle in a loud and unmistakable manner. After a while, the story died or so I thought. How ever in the last one month, there has been a recrudescence of the same story, with facts, figures, names and places being bandied about. The other day somebody sent me images that consumed my budgeted monthly data within a day: images comparing and contrasting between head and hairs, fingers and faces, ears, neck and every aspect of the imagined PMB2 with PMB1. My kinsman and the latest Biafranist, Nnamdi Kanu has been at the vanguard of this new wave of the TwoBuhari theory. Others have also joined the fray but Kanu has maintained the lead, arguing and insisting that there is the Buhari we know and the Buhari that we don’t know. I don’t agree with them but I want to start my own story by stating emphatically that there are actually three Buharis… and all of them are from Daura! The first one is Buhari The Soldier. That Buhari was the

Governor of the North Eastern State, Minister (commissioner) of Petroleum and Natural Resources, Head of State (31/12/8327/8/85) and the boss of PTF. That Buhari was ruthless, ruled by draconian and retroactive decrees and brooked no opposition. That Buhari fought several wars: against corruption, against indiscipline, against hard drugs. That Buhari contended with the change of currency, the UmaruDikko affair, 53 suitcases and the disappearance of $2.8bn from the coffers of NNPC (yes; that same NNPC). Nigerians faced the harshest economic reality at that time and the management of PTF left a lot to be desired, in terms of corruption, abuse of due process, and, parochial tendencies. The second one is Buhari The Saint! The first Buhari went into the closet, repackaged himself and became Buhari the Saint; the best Nigerian, the most honest Nigerian, a man of integrity and a democrat. It was as a Saint that this Buhari sought to lead Nigeria as a democrat in 2003 and 2007 (under ANPP), 2011 (under CPC) and 2015, when he became 4th time lucky under APC, courtesy of his pact with Tinubu, the Goodluck factor (who conceded defeat), and the saint brand. It was one of the wonders of the modern world that this Buhari who was draconian, subjected the countr y to unparalleled economic hardship and whose

management of the Ministry of Petroleum and PTF had K-legs, was packaged and sold to Nigerians as a saint. As at 2015, most Nigerians were willing to swear by this Buhari, and merely mouthing his name converted one from a sinner to a saint and the only indicator of progressiveness was to take a picture with this

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The transmigration from Buhari the Saint to Buhari the unmasked was a seamless and unnoticeable one. But before long, people started noticing some contradictions between the activities, utterances and policies of the second and the third Buhari. Everything became a Daura or at best, a northern Affair; corruption cases were treated with insecticides and deodorants depending on which political or ethnic divide one belongs

Buhari. Even when it took him 6 months to assemble his cabinet, when body language became an instrument of state policy and when most promises were denied or redefined, the sainthood mantra prevailed. Senators Saraki and Shehu Sanni, and Dele Momodu were his cheerleaders while the anointing by Fr Mbaka and Tunde Bakari was so concentrated that it could not evaporate. Nigerians made excuses for Buhari2 and gave him the latitude to do whatever he wanted to the extent that even when he doubled the prices of petrol, we clapped. The third one is Buhari the unmasked. The transmigration from Buhari the Saint to Buhari the unmasked was a seamless and unnoticeable one. But before long, people started noticing some contradictions between the activities, utterances and policies of the second and the third Buhari. Everything became a Daura or at best, a nor thern Affair ; cor r uption cases were treated with insecticides and deodorants depending on which political or ethnic divide one belongs; and rather than belonging to everybody and to nobody in particular, he belonged to those who gave him 95% votes, most of who own cattle or are herdsmen. Suddenly, those who saw the light started singing discordant tunes because the one who they believed

as a saint has been unmasked as…Now, those who staked all for the second Buhari, have beat hasty retreats and they include: Fr Mbaka, Senator Saraki, Pastor Bakari, Dr Obasanjo, Atiku Ab u b a k a r, Bu b a Ga l a d a n c i , Chief Olu Falaye, Dr Junaid Mohammed, Dele Momodu, Ghali NaÁba and A isha Alhassan. They have formed a club, which somebody christened d BFFs( Buhari’s Former Friends. That is the end of my story. I have done this nation a great service! I have proved that there are three Buharis and that all the three hail from Daura. This is a more straightforward affair than the Two-Buhari Theory, which has led and is still leading to wasting man hours, consulting intelligence experts and has the potential of causing unnecessary diplomatic rows. I hope that my service to the nation will be recognized at the next national honours awards. Meanwhile, a king will remain in power as long as his rule is honest, just and fair- Proverbs, 20:28. Other Matters I wish to express my gratitude to all those who were at the celebration of entrepreneurship and presentation of my latest book : ‘Entrepreneurship in a Changing Environment: Lessons from Experience, which took place at Igboukwu on 11/11/18.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.