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Oil rally from US end of Iranian waivers eludes Nigeria on subsidy cost, pipeline disruption ISAAC ANYAOGU

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L-R: Imrane Barry, MD, Total Nigeria plc; Yusuf Kazaure, MD/CEO, Galaxy Backbone Limited; Ademola Odeyemi, executive director, international banking, GTBank plc; Olivier Angot, chief financial officer, IHS Towers, and Akinkunmi Akingbogun, president, Lagos Business School Senior Management Programme Class 69 (SMP 69), at the maiden business conference organised by SMP 69 class at the Lagos Business School.

For 2 years running, Lagos leads Ogun in manufacturing investments L ODINAKA ANUDU

agos has once again overtaken Ogun State, once touted as Nigeria’s industrial hub, in manufacturing investments. This is coming on the back of a new wave of poor doing business practices that

have dogged Ogun in the last two years.

Lagos got 52 percent of total manufacturing investments in 2018 as against Ogun State’s 34 percent, data from the Manufacturers Association of Nigeria (MAN), a group with over 2,500 investors, show.

While Lagos, which includes

Apapa and Ikeja industrial zones, got total investments valued at N287.16 billion out of the total N552.64 billion, Ogun got N186.47 billion.

In 2017, Ogun mustered only 28.59 percent of the total N329.94 billion invested that year, whereas Lagos got 50.11 percent.

But this was not so between

2014 and 2016, when 50 to 70 percent of investments in agro processing, heavy and light manufacturing went to Ogun, while Lagos attracted less than 20 percent of the total.

The elephants in the room are multiple taxes charged by Ogun State and poor state of roads left Continues on page 38

il prices rose by more than 3 percent on Monday, the highest since November 2018, after the United States announced that it was ending waivers extended to buyers of Iran’s oil.

Brent crude futures rose more than 3 percent to over $74 per barrel on Monday morning while US crude futures rose 2.33 percent to $65.49 per barrel. Futures in London jumped as much as 3.3 percent to the highest intraday price since early Continues on page 38

Inside Saraki to Tinubu: Provide proof of budget padding P. 37

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NEWS FAAC disburses N1.92trn to 3 tiers of government in Q1 – NBS

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L-R: Patrick Atunanya, editor, BusinessDay; Bimbo Oloyede, CEO, Strictly Speaking; Motunrayo Alaka, coordinator, Wole Soyinka Centre for Investigative Journalism (WSCIJ); Omobola Akingbehin, senior editor, News Agency of Nigeria (NAN), and Rotimi Sankore, editorial management consultant, Nigeria Info, at the WSCIJ lecture on mainstreaming gender in media reporting tagged ‘House to House Gender Policy and Practice’ held at BusinessDay head office (The Brook) in Apapa, Lagos.

Pic by Olawale Amoo

ederation Account Allocation Committee (FAAC) has disbursed N1.92 trillion to three tiers of government in first quarter of 2019, according to the National Bureau of Statistics (NBS).

The NBS said this in FACC monthly allocation for January, February and March, 2019 Disbursement statistics published on its website and analysed by the News Agency of Nigeria on Monday in Abuja.

The bureau said FAAC disbursed N649.19 billion to the three tiers of government in January, 2019; N660.37 billion in February, while the sum of 619.86 was distributed to the three tiers in March.

Out of the N1.92 trillion, the Federal Government got

N803.18 billion in the quarter, states received N530.14 billion while the local governments received N398.43 billion.

The breakdown showed that the Federal Government received N270.17 billion in January, N275.33 billion in February and N257.68 billion in March.

States received N178.04 billion in January, N182.17 billion and N169.93 in March while the local governments received N133.83 billion in January, N136.88 billion and N127.72 billion in March.

In addition, the report said the amount disbursed in January comprised N547.46 billion from the Statutory Account, N100.76 billion from Valued Added Tax (VAT) and N976.53 million exchange

Continues on page 38

Investors shrug off Nigerian banking stocks NCC clamps down on sale of pre-registered SIM cards despite leading African peers on ROE DIPO OLADEHINDE & OLUWASEGUN OLAKOYENIKAN

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igh yields on government fixed-income instruments have positioned Nigerian banks as most efficient lenders among African peers.

But in spite of this, investors still remain unenthusiastic about them, leaving the stocks behind in share performance.

Despite having lower valuations compared to peers in South Africa and Kenya, the banks performed better in terms of profitability and ef-

ficiency in making use of their operating funds in 2018.

Research by BusinessDay using data from Bloomberg and Financial Times on five 2018 most-profitable banks in Nigeria, South Africa and Kenya showed that Stanbic IBTC Bank andGuarantyTrustBank(GTB) led African peers in terms of Return on Equity (ROE).

ROE measures a bank’s profitability by revealing how much profit it generates with the money its shareholders have invested.

“Income generation is a lot more robust in Nigeria and future income growth is

faster in the country than in South Africa and Kenya,” said Aderonke Akinsola, a banking sector analyst at Chapel Hill Denham Securities.

“We really have high interest rate in Nigeria, yields on Nigerian Treasury Bills are double digits and that is not what we are seeing in South Africa and Kenya,” Akinsola said.

Besides GTB and Stanbic Bank, the Nigerian banks include Zenith Bank, Ecobank Transnational Incorporated (ETI) and Access Bank. For South Africa, the banks were Capitec Bank, Standard Bank, FirstRand Bank, NED Bank

and Absa Bank (formerly Barclays Africa Group), while Kenya Commercial Bank, Equity Group Holdings Bank, Standard Chartered Bank and Cooperative Bank of Kenya were considered for Kenya.

In full-year 2018, Stanbic IBTC Bank had the highest ROE of 34.5 percent compared to 28.9 percent recorded in 2017.

Nigeria’s most capitalised lender, GTB, followed closely with an ROE of 30.9 percent in 2018 compared to 29.96 percent recorded a year earlier, while South Africa’s leading

Continues on page 38

FMBN rewrites own story, disburses N58bn mortgage loans in 2yrs

... records 23,600 NHF loan beneficiaries CHUKA UROKO & ISRAEL ODUBOLA

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he current management of the Federal Mortgage Bank of Nigeria (FMBN) has, in the last 24 months, changed the story of the apex mortgage bank that had been underperforming with very little impact on the country’s mortgage sector which it superintends and the housing sector it is supposed to catalyse.

Between April 2017 and March 2019, the bank posted strong performance by disbursing mortgage loans to National Housing Fund (NHF) subscribers, home renovation, estate development and cooperative development totalling N58 billion.

A breakdown of the loan disbursement shows that N22.3 billion was given out as NHF loans to 3,171 workers; N16.9

billion was given out for home renovation loans to 20,429 workers; N13.6 billion was given out for estate development; N2.7 billion went to cooperative development, while ministerial pilot housing scheme project got N2.5 billion.

The high level of loan disbursements, averaging N29 billion per annum, represents a significant increase in performance when compared to the N152 billion which the bank had given out over a 24year period (1992-April 2017) at an average of N6.3 billion per annum.

Additionally, the FMBN also posted strong performance in the processing of applications for refund of contributions to the NHF by workers who have retired from service. The bank successfully processed 120,759 NHF refund cases and paid out a total of N16.5 billion between April www.businessday.ng

2017 and March 2019.

The amount the new management has recorded in terms of NHF refunds within the period under review exceeds N10.8 billion the bank recorded between 1992 and April 2017, when the current management took office.

The bank also funded the construction of 6,538 housing units across the country.

All these records are in line with the bank’s determination to improve service delivery and extend access to its affordable housing solutions by more Nigerian workers.

“These results reflect the passion of the present management to reposition the FMBN on the path of greater impact, responsiveness, and professionalism,” Ahmed Dangiwa, FMBN’s CEO, noted in a statement signed by Zubaida Umar, group head, corporate communications

of the bank.

“I am indeed very pleased at the remarkable results that we have been able to achieve in about two years since we were appointed to run the affairs of the Bank,” Dangiwa added in the statement obtained by BusinessDay. The chief executive pointed out that the records demonstrated their determination to justify the confidence of President Muhammadu Buhari in their capacity to reform the FMBN as an effective tool in the hands of government to tackle the lingering housing deficit.

“The FMBN remains the best route to affordable homeownership for the Nigerian worker and we seek the support of all housing industry stakeholders in our bid to transform and reposition it to deliver on its mandate of providing affordable social housing,” Dangiwa said.

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... arrests, convicts over 200 individuals

JUMOKE AKIYODE-LAWANSON

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onstant enforcement activities of proper Subscriber Identity Module (SIM) cards carried out by the Nigerian Communications Commission (NCC) through its Compliance Monitoring and Enforcement (CME) team have resulted in securing convictions against more than 200 individuals arrested for indulging in sales of preregistered SIM cards.

The telecoms regulator, which continuously notifies consumers on the dangers of patronising fraudulently activated or improperly registered SIM cards, partnered with government agencies including the Office of the National Security Adviser (ONSA), the Central Bank of Nigeria (CBN), the Nigerian Police Force, the Nigerian Security and Civil Defence Corps (NSCDC) and the judiciary to stop the illegal sale of improperly registered SIM cards. It also partnered with Mobile Network Operators (MNOs) and telecoms consumers in ongoing consumer awareness programmes across the six geo-political zones of the country to sensitise consumers.

According to the Commission, due to fraudulentlyactivated SIM cards, many genuine subscribers have become victims of armed robbery, kidnapping and financial crimes or SIM swap fraud, requiring concerted efforts to address the menace.

As a proactive measure, the telecommunications regulator in 2017 came up with a SIM replacement guideline which makes the process of replacing lost, stolen or damaged SIM @Businessdayng

cards more stringent in order to protect telecommunications consumers.

Speaking recently on reason for such stringent conditions, Umar Garba Danbatta, executive vice chairman of NCC, said before replacing a SIM card, consumersarerequiredtoidentifythemselvesproperlythrough court affidavit, national identification card (or other valid IDs), SIMpack,amongotherrequirements, saying this is to ensure thattelecomsubscribersarewell protected from being victims of SIM swap fraud.

According to him, at times a subscriber might have issues with his or her phone number thinking it is a network issue.

“Unfortunately, by the time the subscriber discovers what is happening, money would have been fraudulently taken out of his or her bank account through the registered phone number using USSD codes. SIM swap or replacement has a lot of issues attached to it because, oftentimes,alotofpeoplewhoarenot theownersofsomenumbersdo SIM swap at various customer centres of the service providers,” Danbatta said.

He said there have been cases of fraudulent activities done on people’s bank accounts as a result of SIM swap and the victims often complain to the Commission, expecting that NCC will compensate them.

“To stop this SIM swap fraud, the Commission, in 2017, developed guidelines on SIM replacement, which sets water-tight rules for telecoms consumers to replace their SIM card when there is a need for it,” he said.

•Continues online at www.businessday.ng

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EFInA, British High Commission partner to power financial inclusion in Nigeria ... as winners of $2m Fintech Challenge Grant emerge

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nhancing Financial Innovation & Access (EFInA), in partnership with the British High Commission to Nigeria, held an interactive session with CBN and stakeholders in the FinTech industry in Lagos April 18, 2018.

The event themed ‘Powering Financial Inclusion through Fintech’ focused on exploring methods and activities to grow the ecosystem through increased funding and enhanced regulatory harmony.

The event served to present and reward several innovations and new infrastructure for financial inclusion among low-income earners in the country, with EFInA, the leading financial sector development organisation announcing the winners of its $2 million Fintech Challenge Grant.

Opening the session, EFInA’s Board chairman, Segun Akerele highlighted the challenges faced by the industry in Nigeria, as he explained that understanding global market trends and other success factors remain important in improving the national ecosystem.

Akerele said with over $250 million in cumulative funding and about 200 active FinTech ventures operating in the digital retail payments, lending and payments infrastructure spaces, the Nigerian industry is one of the most active in the world.

However, 36.8 percent of Nigerian adults are still excluded from the formal economy and basic financial services, even though they

have access to mobile phones.

Emphasising the importance of collaboration, the CEO of EFInA, Esaie Diei, commended the industry stakeholders for their commitment to expanding access to financial inclusion in Nigeria, as he explained that several organizations are working to ensure that Central Bank Of Nigeria’s 2020 Financial Inclusion Strategy (NFIS) to reduce financial exclusion to 20 percent in 2020 remains achievable.

The objectives of the EFInA Fintech Challenge Fund are to provide financial services that are accessible to everyone especially the low-income segment, improve customer experience, enhance the transparency of financial services and increase the adoption of financial services with reliable, valuable and affordable products, he said.

“The CBN’s National Financial Inclusion Strategy is directly intended to create a level playing field that focuses on driving collaborative activities among actors while also adopting a risk-based approach. So with the single goal of ensuring that eight in ten Nigerians are financially included by 2020, all stakeholders have to play strongly to achieve high impact. With the regulatory framework provided by the Central Bank, we all also need to facilitate stronger collaboration among stakeholders to create innovative financial products and services,” said Stephen Ambore, head, Digital Financial Services, CBN.

Mixed reactions trail Senate’s move to override Buhari on budget timeline bill OWEDE AGBAJILEKE, Abuja

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he Senate last week took bold steps to override President Muhammadu Buhari’s veto of the “Budget Timeline Bill”.

The move, buoyed by the report of the Senate Technical Committee on Declined Assent to Bills by the President headed by David Umaru (APC, Niger East), has received mixed reactions, even as it is seen as positive steps by the senators to address the intractable challenge of budget delays.

While some analysts have commended senators for the initiative, others believe they are embarking on a wild goose chase.

This comes as Senate President Bukola Saraki referred the bill to the Senate Committee on Constitution Review for further legislative work.

The Committee, chaired by Deputy Senate President Ike Ekweremadu (PDP, Enugu), is expected to carry out public hearing on the all-important bill any moment from now.

The Constitution of the Federal Republic of Nigeria 1999 (Fourth Alteration, No. 28), which was earlier rejected by President Buhari in 2018, seeks to amend Sections 81 and 121 of the 1999 Constitution, by making

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it mandatory for the president and governor of a state to lay the annual budget estimates before parliament three months to the end of a financial year.

It also compels the parliament to pass the annual budget before the commencement of the next financial year.

President Buhari had in 2018 declined assent to the constitution amendment bill on the grounds that sections 2 (b) and 3 (b) of the proposal “appear not to take full cognisance of the provisions of Section 58 (4) of the 1999 constitution”.

In rejecting the president’s submission, the David Umaru-led panel had posited that the bill was not in conflict with the 1999 constitution as claimed by the president.

The purpose of the bill, the committee had explained, was to ensure that Nigeria reverts to the January to December budget cycle.

Section 58 (5) of the 1999 Constitution provides that two-thirds of both legislative chambers of the National Assembly (73 senators and 240 members of House of Representatives) are required to override the president’s veto.

In an interview with BusinessDay, Austine Aigbe of the Centre for Democracy and Development

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(CDD), said the move was commendable. According to him, the process ought to have been started before now.

“The National Assembly ought to have attempted to override the president’s veto. If they had done so before and it went through, the president would have been conscious of the way he was not signing bills,” Aigbe said.

“Even if they do not have the numbers, the point is, they should just try it. What kills business is not taking risks. The National Assembly needs to take risks by trying to override the president’s veto on any bill,” he said.

Aigbe argued that there are many other crucial bills like constitution amendment bill that would have improved the budgetary process and the PIGB that would have improved the petroleum sector.

“And just now, we have been ranked very high in terms of misery index. IMF just ranked us the second lowest in terms of the way we use our sovereign wealth fund. Bills that would have strengthened our economic architecture have been thrown out based on political affiliation. And I think it is not helping us as a country,” he said.

Other political commentators

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say overriding the president’s veto would be a tall order considering the fact that not only are both chambers polarised along party lines but lawmakers against the president’s action cannot garner the required two-thirds to upturn his decision.

Checks by BusinessDay revealed that APC currently controls the Senate with 57 senators, as against PDP with 47 lawmakers. African Democratic Congress (ADC) has two, while All Progressive Grand Alliance (APGA), Social Democratic and People’s Redemption Party (PRP) have one senator each.

“Getting two-thirds majority to override the president’s veto is not a tea party. Since none of the political parties in the Senate can garner twothirds, I can say with all confidence that the move by the Senate is dead on arrival,” a legal practitioner, Ike Etiaba, said.

“You will also recall that since Nigeria’s return to the Fourth Republic in 1999, the National Assembly has been able to override the president’s veto only once. That was during the Olusegun Obasanjo administration in year 2000 where the National Assembly overrode the president’s veto on the bill establishing the Niger Delta Development Commission (NDDC),” he noted.

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Military and corporate business leadership: Embracing the difference STRATEGY & POLICY

MA JOHNSON

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ike beauty, leadership seems to live in the eye of the beholder and while we may recognize it in action, it is difficult to supply a universal description. The concept of leadership appears to be driven by myths; for instance, some say “leaders are born, not made;” others are of the view that “leaders must be charismatic and have unblemished private lives;” while a few say “leadership is management by another word;” there are those who believe that “leadership is for generals, corporate business leaders and politicians.” Yet, history, experience and observation contradict such glittering generalizations.

At one time or the other, you must have heard, read, and perhaps seen a highly intelligent, highly skilled business chief executive or military top brass who was promoted into a leadership position only to fail at the job. And you may also know stories of generals, admirals, air marshals, or captains of industry, with solid but not extraordinary intellectual abilities and technical skills who were promoted into similar positions but performed well in office. You may be wondering how an intelligent and highly skilled person fails when assigned leadership responsibilities. It is because of the phenomenon known as leadership. “Leadership is one of the most observed and least understood phenomenon on earth. Leadership is key to the success of the military both in peace and war, and to the survival of the corporate business not only when the business environment is friendly but also when you have a dysfunctional atmosphere.

Today, leaders in the military and corporate business face tremendous pressure to meet short term targets and solve functional problems. In the military and corporate business world, you have to solve problems and overcome

challenges. In fact, what is common to leaders in the military and the corporate world is courage, competence, and character. Character is the foundation; competence is about your skills of leadership and execution; courage is the energy that keeps you doing the right thing, even when there are challenges.

Both military and corporate leaders have competitors who are trying to beat them. So both require information, strategies, plans and good execution to win. The difference is the context and the fact that one is life and death of humans and the other is life and death of the company. The idea of war is however, much more serious and so the two must never be confused.

A wartime military needs competent leadership at all levels of command. No one has yet figured out how to manage people effectively into battle; they must be led. Of course these are significant differences, but there are certainly many correlations. Mainly, you have a mission and people as well as obstacles to overcome. Both the military and corporate business require leaders to influence their people to achieve results and meet their goals.

Negotiating is also similar to the military and corporate business leaders. Negotiations in any contemporary society affect all aspects of individual and collective life. Whether in the military or corporate business, negations are in constant session. In fact, you can negotiate anything- war, businesses, alliances between nations etcetera. That is why some scholars refer to the world as a “giant negotiating table.”

There are very few differences between the military and the corporate business. The military is a large, complex and non-profit organization while the corporate business is established for profit. Budgeting is another area of difference between the military and the corporate business. The military does not have to worry about where the money is going to come from after budgeting to make a change. But this is not the case with corporate business leader. The corporate leader bothers about sourcing for funds to implement the firm’s budget. Certainly, there could be a budget constraint for both leaders, but how to get funds is a big difference.

Most of the differences in styles or methods of leadership can be related to differences in cultures. The basis of the military culture is the oath taken that

puts mission accomplishment above life itself. The expectation of personal sacrifice is key. In the corporate world, loyalty is to the owner of the business.

In the military, fundamental allegiance is neither to boss nor to the unit but to the Constitution. The culture of the military continues to place more emphasis on personal character than on personal expertise.

There is a big difference between the military and the private sector in corporate governance practice. Corporate governance is the “collection of mechanisms, processes and relations by which corporations are controlled and operated.” According to Mark Goyder, “governance and leadership are the yin and yang of successful organizations. If you have leadership without governance you risk tyranny, fraud and personal fiefdoms. If you have governance without leadership you risk atrophy, bureaucracy, and indifference”.

The military has the presidency, members of the defence committees of the National Assembly (NASS) and the Ministry of Defence (MOD) interfering often in the day-to-day activities of the military. For instance, the MOD headed by the Minister, and ably assisted by the Permanent Secretary and other directors’ form the broad spectrum of those who form the corporate governance structure of the military. The NASS also performs oversight functions. Some of these individuals are politicians while others are bureaucrats. So you can see the predicament of the military in corporate governance.

In corporate businesses, the shareholders elect the board of directors who in turn determine the Chief Executive Officer, approve the overall strategic direction of the corporation and monitor its operations. Although, corporate businesses are subject to shareholder constituencies, such influence is far from the direct impact of the NASS over the military. It may probably be unfair to equate NASS oversight in managing the military with that of a corporate board as it oversees the direction of a corporation.

There is a saying that if you fail to plan, you plan to fail. Military leaders and corporate business executives are doers; they execute. Knowledge is useless to both leaders until it has been translated into actions. But before springing into action, the executive needs to plan his course. The action plan is a statement of intentions rather

‘

In fact, what is common to leaders in the military and the corporate world is courage, competence, and character

than a commitment. It must not become a constraint. It should be revised often, because every success creates new opportunities. So does every failure. The same is true for changes in the business environment, in the market, and especially in people within the enterprise- all these changes demand that the plan be revised. A written plan should anticipate the need for flexibility. Planning in the corporate business can equally be frustrating. Looking ahead reliably more than 3 years would be stretching one’s luck. For instance, if you build manufacturing capacity too soon, you have got idle capital sitting on the ground. If the plants are built too late and you cannot supply your customers it affects your company negatively because it takes time to design and build these plants.

Generals will plan for battles when they are going to war. Planning in the military is much more difficult to determine than it might be for corporate business because of political actorspresidency, NASS and the MOD. How does the military lead in ways that position it for the future while also meeting current demands? Strategic Thinking, Strategic Acting, and Strategic Influencing are essential skills to adapt, innovate and succeed well into the future.

Without an action plan, the general may become a prisoner of events in the battlefield. But as you plan, there may likely be constant interference from political leadership in order to attain the military objective of the war. Let’s take a 10-year transformation plan of any military organization. You may be surprised that at the end of the tenth year, you might have barely achieved only 50 percent of the plan because of cut in defence spending, and change in technology, among other problems. So changes in defence directions will affect your plans. And without check-ins to reexamine the plan as events unfold, the military may have no way of knowing which events really matter and which ones do not. There is no way you can plan for the future, let alone prepare for it, if you do not know your business. Thank you.

• Excerpt from the text of a lecture delivered at the National Defence College, Abuja, on 8 April 2019. The main paper is available at proshareng.com Johnson is an author and a retired naval engineer who has passion for African development and good governance

VAT in Nigeria: The devil is not in the rate

Suraj Oyewale, ACA

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he issue of raise in value added tax (VAT) rate in Nigeria from the current five percent has reared its head again as it has been doing for the past 10 years.

Anytime this issue hits the news, it is usually followed by claims and denials of support, with the quoted government source usually claiming they were misquoted. While this latest frenzy is not different, it is looking like there has been greater momentum on the call to increase the VAT rate in Nigeria.

Proponents of VAT raise easily point to the UK, with a standard VAT rate of 20 percent, to

justify why Nigerian VAT rate is ridiculously low and must be raised. While it is true that the VAT rate in Nigeria is truly one of the lowest, the operation of VAT system in Nigeria is significantly different from the operation of VAT in other countries, especially those with materially high rates.

Actually, we do not have VAT in Nigeria, what we call VAT here is not true VAT. It looks more like the sales tax it sought to replace in 1993. VAT in Nigeria taxes revenue, rather than “value added”.

A true VAT system largely balances. Nigerian VAT is nowhere neutral, it is a huge business cost.

Under the UK VAT system, you can reclaim VAT on almost all your business expenses, whether goods or services. All you need to do is file your quarterly VAT return showing the VAT you suffered (i.e. paid to your suppliers – of goods and services - in the accounting period ) and the VAT you charged your own customers.

If the former is higher than the latter, you claim refund from HMRC (the UK tax authority), and they refund you within 10 days, or a little longer.

If the reverse is the case, you pay the net VAT

to HMRC. In Nigeria, VAT is not recoverable on services, and goods that don’t go directly into your production or goods bought for re-sale.

Let me give an illustration with an hypothetical Jarus Limited.

Let’s say Jarus Limited produces plastic from rubber. It buys rubber from (say)Lakatabu Plantation Limited and uses to produce the plastic which it sells to its customers.

If Jarus Limited were situated in the UK, it will reclaim the VAT on all its expenses (the VAT paid to rubber supplier, to the transporter, to the office computer supplier, to the official mobile phone supplier, on warehouse rent etc) from VAT it charges its own customers (plastic buyers). If the VAT on all those goods and services purchased is higher than the VAT on the sales it made, it is the government that will refund the balance. If higher, it pays difference to government. This is also the case in many other countries.

But under Nigerian VAT Act, Jarus Limited can only recover VAT on purchased direct material input (rubber). It cannot reclaim VAT it paid on transportation, computer, rent etc. Such

costs are capitalized with the asset or expensed if it is a revenue item (i.e. added to the cost).

In other words, the Nigerian VAT system adds five percent to the cost of purchase of services and capital expenditure at multiple stages in the supply chain.

So merely looking at the VAT rates between Nigeria and the UK (and other countries) and concluding that VAT rate is low in Nigeria does not do justice to the system. With such narrow recoverable input VAT, what we have in Nigeria is not true VAT, it is largely a sales tax.

Despite the UK rate being 20 percent and the Nigerian rate five, a business in Nigeria will incur more business cost, over and above the value it added, in the name of VAT than a comparable one in the UK. The devil, therefore, is not in the rate, but in the operation. The VAT system in Nigeria requires a major reform to bring it in line with international systems before any issue of rate raise arises.

Oyewale, an economist and chartered accountant, heads the Nigerian tax team of an independent oil and gas company

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South Africa – Mmusi’s DA (1)

Rafiq Raji

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musi Maimane, the head of South Africa’s main opposition Democratic Alliance (DA) party, should ordinarily be popular with most South Africans. He is black and so should naturally appeal to black South Africans. And since he is married to a white woman, whites should naturally warm up to him as well.

As head of the DA, which is still adjudged by most black South Africans as a party that promotes the interests of whites, Maimane ought to fit in perfectly. But that has not been the case. In other words, Maimane’s black heritage has not proved to be as much of an asset as the DA likely hoped.

Ironically, President Cyril Ramaphosa, Maimane’s counterpart in the ruling African National Congress (ANC), likely ticks most of the boxes on the key traits the DA likely sought

in their leader.

Ramaphosa has mass appeal with Blacks, Whites and Indians in South Africa. And yet this should ideally be Maimane’s forte.

What the DA has going for it as a party, however, is a reputation for service delivery. It has demonstrated this in the relatively better-run Western Cape province, which it has been governing since 2009.

But why is this reputation not resulting in more popular support?

One of the reasons is that memories of apartheid still run deep. There is hope that this might change in the future, however.

Younger South Africans, who naturally would increasingly have vague memories of apartheid, might eventually buy into the DA’s message; especially if the ruling ANC continues to flounder on the provision of basic public services and does not succeed in checking the corrupt activities of its cadres. But that future is probably still a long way off.

Thus, there is a sense Maimane is probably resigned to the fact that the DA may not be a ruling party at the federal level for a long while. And it is almost certain the DA would not be one under Maimane’s leadership.

What do experts think? New African asked Roger Southall, emeritus professor of sociology at the University of the Witwatersrand in Johannesburg,

who first highlights points on the subject from an earlier paper he wrote and thereafter answers our follow-up questions.

“The Democratic Alliance, the official opposition, had sought to divest itself of the tag of being the party of white liberalism by becoming more racially diverse and progressively transforming its free-market [orientation] into a social market orientation.”

“However, for all that it had increased its vote share and representation in parliament from one previous election to another, it had proven incapable of taking advantage of the ANC’s dismal record of governance and an upsurge of popular ‘Zuma must Fall’ sentiment which had swept the country during the latter years of his presidency.”

“Although it had played an important role in demanding accountability by Zuma in parliament and via the courts, the DA had been outshone in this regard by the theatrical performances of the EFF [Economic Freedom Fighters].”

“Despite the many scandals of the Zuma administration, the DA’s likeable but ineffectual leader, Mmusi Maimane, had failed to capture the public imagination.”

“Worse, his predecessor, Helen Zille (who remained Premier of the DA-ruled Western Cape) had antagonized vast swathes of the black public (whose sup-

‘

Younger South Africans, who naturally would increasingly have vague memories of apartheid, might eventually buy into the DA’s message; especially if the ruling ANC continues to flounder on the provision of basic public services and does not succeed in checking the corrupt activities of its cadres

port the party was desperate to attract) by a long series of ill-advised ‘tweets’ which highlighted what she regarded as the constructive aspects of colonialism.”

“To be sure, a solid party performance in the 2016 local government elections had led to ANC defeats and the forging of coalitions between the DA, the EFF and smaller parties to run Johannesburg and Nelson Mandela metro (Port Elizabeth) but these were soon to come under severe strain.”

“Indeed, the latter one had collapsed in a racially-charged dispute in August 2018. Most damagingly, the DA had fallen out with Patricia De Lille, its own mayor of Cape Town, in an extended fractious battle in which unspecified charges of corruption were rebutted by equally unspecified charges of the party being run by a white cabal.”

“De Lille’s eventual resignation from the DA, after various court battles, threatened to fracture its hold over the Western Cape’s Coloured community and, as a result, its control over the province (which it had swept in 2014 with 59 percent of the provincial vote).”

• An edited version was published in the April 2019 issue of New African magazine “Dr Raji is chief economist at Macroafricaintel.

He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

The many reforms of Okechuwu Enelamah Bisi Daniels

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early all four years at the helm of the Ministry of Industry, Trade and Investment, Dr. Okechukwu Enelamah has been driven by the need to improve Nigeria’s business environment for sustainable economic growth.

“When I became minister, I promised that my vision for the Ministry is for it to be seen as the Ministry of Enabling Environment,” he says.

“We aspired to make Nigeria one of the most attractive places to do business in Africa and even the world, by improving the business environment.”

Backed by President Muhammadu Buhari’s commitment to a more conducive and attractive business environment in Nigeria, the Presidential Enabling Business Environment Council (PEBEC) was established under the chairmanship of Vice President Yemi Osinbajo.

As Vice Chairman of PEBEC, the Minister is actively involved in Nigeria’s ongoing efforts to achieve a sub-100 ranking by the World Bank on Ease of Doing Business.

Recently, he was in Lagos to launch the REPORTGOV.NG App, an official public service feedback and complaints platform to support business climate reforms implemented by the Council since 2016. The platform is to facilitate the escalation and resolution of issues encountered with Ministries, Departments and Agencies (MDAs) towards ensuring a more businessfriendly environment.

PEBEC has also commenced the fourth 60day National Action Plan (NAP 4.0) on Ease of Doing Business (EoDB).

The NAP 4.0 aims to further reduce the challenges encountered by SMEs and businesses in areas such as starting a business; access to credit; paying taxes; enforcing contracts or trading within and across borders; amongst others, by eliminating critical bottlenecks and constraints.

The first, second and third National Action Plans resulted in significant progress, and the fourth National Action Plan is anticipated to strengthen these ongoing reforms.

The concerted efforts at improving the ease of doing business have paid off. Among the achievements are improvements in Nigeria’s business regulatory environment. The country rose 24 places from 169 to 145 in the World Bank’s 2018 Ease of Doing Business Index; its highest jump in the history of the rankings.

And although Nigeria ranks 146 in the latest Doing Business rankings, the country’s Distanceto-Frontier (DTF) score, which is the absolute metric, improved from 51.52 in Doing Business 2018 to 52.89 in 2019.

In all areas of the Ministry’s mandate, there are ongoing reforms but Enelamah is able to keep his eye on all the balls.

The mandate of the Ministry is creating an enabling business environment for businesses to thrive; implementing the Nigerian Industrial Revolution Plan (NIRP); attracting long-term local and foreign investment; encouraging expansion of MSMEs; and promotion of global and regional value chains that enhance trade.

One of the silent reforms of the Ministry is in Intellectual property, such as trademarks and patents, an area key to ensuring an enabling environment for business.

It entails the development of a National Intellectual Property Policy for Nigeria; modernisation of the legal framework to capture existing treaty obligations of Nigeria; extend the coverage of the law to more recent developments; and the modernisation of the administrative regime for IP in Nigeria.

In the past, stakeholders were encountering problems such as delays and lack of clarity about processes, poor state of records, which were not digitised, making for ease of destruction and loss; as well as difficulties with access and retrieval of records.

These necessitated urgent transformation of the administrative processes within the Commercial Law Department of the Ministry and, indeed, the structure and operations of the Department.

Among the early achievements are streamlining of the Registries as separate Registries (Patents & Designs, and Trademarks) with different registrars in accordance with the Acts establishing them.

This has made for better accountability; and the backlog of applications for registration and issuance of certificates for accepted and unopposed applications dating back to 2014 has been cleared by the registries. It has also relieved stakeholders of frustrations and restored their confidence in the registries.

For the first time since the Trademarks Act came into force some 51 years ago, an Annual Report on Trademarks has been issued.

Total files digitised as at October 31, 2018 was 266,318: made up of 16,650 files from the Registry of Patents and Designs; and 249,668 files from the Registry of Trademarks.

The importance of industrialisation in Nigeria’s economic growth has never been in doubt, yet its contribution to Gross Domestic Product has been low. With a commitment to making Nigeria competitive for local production and thereby increasing the contribution of manufacturing to GDP, the Ministry has been leveraging the country’s comparative advantage and factor endowments.

To accelerate industrial development, the ministry, which has embarked on an aggressive implementation of the Nigeria Industrial Revolution Plan,initiated the establishment of the Nigeria Industrial Policy and Competitiveness Advisory Council aimed at increasing the contribution of the manufacturing sector to GDP by 250 per cent over a five-year period, and establish Nigeria as the manufacturing hub for West Africa, by implementing initiatives aimed at accelerating industrialization, leveraging private sector expertise and capital.

The Council has made many high-level interventions to address industrial sector issues such as electricity supply, broadband penetration and access roads. A recent example is the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme, under which the

private sector has committed to sponsoring the construction or rehabilitation of road projects across the country.

The Council is also engaged in the implementation of sectoral policies for areas in which the country has comparative advantage such as in agriculture and petrochemicals.

Acknowledging the major role ofSmall and Medium-Scale Enterprises in industrial and economic development, the Ministry made noticeable improvement in access to finance for this category of investors.

Numbering over 77 million, MSMEs contribute almost half of Nigeria’s GDP and employ over 60 million people.

In the last four years, there have been sustained efforts to build capacity, increase access to finance and eliminate bottlenecks to conducting business in Nigeria. Some of the achievements in support of MSMES include the inauguration of the National Council on Micro Small & Medium Enterprises (NCMES) for more focus on MSMES. The Ministry has increased access to finance for MSMES by providing capital for both start-ups and expansion through the interventions of the Bank of Industry and the World Bank-funded Growth and Employment (GEM) Project.

The Bank of Industry, which is an agency of the Ministry, provides relatively low-interest rate and innovative financing solutions as incentives towards stimulating interest and growth of entrepreneurship.

The bank’s disbursements are to 11 sectors, including food processing, agro- processing, healthcare and petrochemicals, solid minerals, N-Power, the creative industry and gender business amongst others.

Between January 2015 and October 2018, the bank disbursed a total of N487.5 billion to 3,334 large, medium and small enterprises.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Daniels is the Strategy and Communications Adviser of the Minister of Industry, Trade ad Investment

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Tuesday 23 April 2019

BUSINESS DAY

EDITORIAL Publisher/CEO

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Sign the Petroleum Industry Bill, Mr President

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he passage by the Senate of the revised Petroleum Industr y G overnance Bill on Wednesday, April 17, 2019, represents an opportunity for the Buhari administration to register its footprints on the positive side of Nigerian petroleum policy. The bill reflects changes and revisions Mr President demanded. PMB should therefore not hesitate to ensure that the Bill becomes law before the Eight Senate prorogues and the process must start willy nilly afresh.

The Petroleum Industry Governance Bill is one of the oldest bills in the Nigerian legislature. Its longevity in the cooking pot underscores part of the problem with the industry and with the understanding and management of the primary source of income for the Nigerian purse. President Umaru Yaradua introduced it first in 2008. The bill seeks to promote best practices in the management of the extraction of Nigeria’s oil. It has suffered delays, antagonism and nitpicking since then.

The Petroleum Industry Governance Bill (PIGB) is a critical bill with significance

for the industry at the heart of the Nigerian economy. That it has taken 11 years to reach again to the semi-final of the race to make it law speaks to the seriousness or lack thereof with which the Nigerian political elite manage the economy. The concurrence of the House of Representatives and presidential assent must happen before May 28 when the present government and legislature ends.

It is critical that the House of Representatives concurs and that Mr President assents to this bill. It will be good optics for the administration. More importantly, it will be an essential stepping stone to laying a new foundation for the Nigerian petroleum industry.

The PIGB is only one part of a multi-faceted bill that seeks to redirect and structure activities in the petroleum sector. The Bill passed by the Senate has removed provisions for the Petroleum Equalisation Fund as demanded by Mr President. It also reduced the revenue accruing to the Petroleum Regulatory Commission from ten to five per cent, in agreement with Mr President.

The presidential objections were sound. As the country moves towards deregulation, a pricefixing Petroleum Equalisation

Fund is needless. Agencies that take so much from the purse are also not the way to go.

We extend commendations to the Senate which set up a Technical Committee on Declined Assent to Bills by Mr President, seven of them, and acted promptly on the recommendations. It is the way to go, except that it took about eight months to do the needful.

The delay in the management of this bill is bothersome.

The pace has been slower than a snail. After the failure of the initial 2008 effort, it commenced life again in 2012 as the Petroleum Industry Bill. Specifically, it was “A bill for an act to provide for the establishment of a legal, fiscal and regulatory framework for the petroleum industry in Nigeria and other related matters.”

Some of its eleven objectives included creating a conducive business environment for petroleum operations, enhancing exploration and exploitation of petroleum resources for the benefit of the people and “establish a progressive fiscal framework that encourages further investment in the petroleum industry while optimising revenues accruing to the Government.”

It also sought to deregulate

and liberalise the downstream petroleum sector, create efficient and effective regulatory agencies and promote transparency and openness in the administration of the petroleum resources in Nigeria.

The ambitious PIB was trimmed to the PIGB, tackling only one aspect of the many objectives of the original bill.

The absence of legislation and policy direction has cost Nigeria dearly in the interim. Multinational and local players cannot make new investments without a compass. Some have moved their investments elsewhere.

No t e t ha t t h e P re s i d e nt wrote to the Senate in August 2018communicating his objections. It took another eight months for the Senate to revert with the changes and a draft Bill for assent. Before then, the president also took his jolly time to respond to the Senate, almost a full year as well.

Now is the time. We reiterate that the House of Representatives must act expeditiously to ensure that the PIGB gets to Mr President this April so he can sign off before the end of his first term. Nigeria’s best interest demands the goodwill of both parties in affirmative action on the PIGB.

HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo

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Tuesday 23 April 2019

BUSINESS DAY

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Media business Over 59 foreign investors expected in Nigeria October to seek local partnerships … To participate in Food Fair Stories by Daniel Obi Media Business Editor

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ver 59 foreign investors in the food and hospitality industries are expected in Nigeria in October this year to seek local partnerships and viable investment options in the Nigeria.

Their eventual investment would boost foreign investments which experienced decline last year. “Foreign Direct Investment in Nigeria averaged $1.3 billion from 2007 until 2018, reaching an alltime high of $3 billion in the fourth quarter of 2012 and a record low of $435.64mMillion in the second quarter of 2018”, Trading Economics Website said.

On their arrival, the foreign investors would also participate in B2B Food and Drink and hospitality exhibition in Lagos scheduled for October 22-24 at Landmark center Lagos organised by Afrocet Montgomery, one of exhibition and events companies and which is at the forefront of trade and consumer

shows in Europe, Asia, Africa and the Middle East.

Speaking to BusinessDay in Lagos, the event director, George Pearson said the Nigerian Food Event (NFE), the pioneer B2B food event in Nigeria , will not only cater to businesses operating within the food industry, but with the in-

clusion of two other incorporated exhibitions; the Nigerian Drink Event and the Nigerian Hospitality Event. “The cumulative exhibition will encompass three key industry segments to bring together qualified stakeholders and key industry members”.

He said the fair which will host

Research forum identifies culture as key to unlock African potentials, open new markets

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arket researchers have identified culture as a veritable platform to unlock African potentials and deepen new markets. This is on the background of growing resurgence in Africans, both in diaspora and in the continent embracing their traditions as signposted in fashion, music and food.

The researchers across Africa who converged on Lagos for Africa Market Research Association, AMRA’s forum 2019 with the theme: ‘Building tomorrow, Africa leading’, strongly believe that the cultural shift of Africans offers new investment opportunities and new thinking in product formulation, packaging and marketing.

This new direction, according to the speakers, becomes significant as Africa is rising with consumer population expected to hit 2.4 billion from the present 1.2 billion in the next 30 years. “With this statistics and revelations, no firm will like to ignore the African market”, Ndeye Diagne of Kantar in Ivory Coast, said at the forum.

In her presentation, Ndeye said there is global trend around realism and this is being expressed well in Africa especially the youth who are eager to show their Africanism and African values. “There is emerging

trend in Africans strongly identifying with their root and being African.

Today, Africans are really expecting products and services that resonate with who they are.

“All along there had been disruption when it was all modernity influenced by the West and their media.

This is still happening but we are taking the best of that and complementing it with our culture and roots and traditions”, she said.

To assist investors and entrepreneurs in creating products and services that resonate with the African consumers, Ndeye said researchers must therefore reflect the new shift to culture and traditions in the work they do. “To achieve this, researchers need to be closer to the consumer and understand them”.

Also speaking, Caroline Matiko of

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Gmaurich Insights, Kenya believed that Africans must embrace storytelling to promote their culture.

Joy Uyanwune, President, Nigerian Market Research Association said the primary reason of the conference is that African researchers have recognised their unique position in the development of Africa. “We have recognised that we are the force behind the growth of businesses, brands and products and services. Through market research, we advise on the direction for these products. Therefore we need to be careful with how we gather information and we need to be careful that we are using not just international standard, but methods that reflect who we are.

“As we say Africa rising, we must recognise that market research is a very critical aspect of making that to happen”, Joy said.

In his paper, Hakeen Fahm, Lagos State commissioner for Science and Technology regretted that potentials of marketing and social research have not been optimally utilized. “I have no doubt that leveraging technology/ digital platforms for marketing and research will enhance the understanding of the African consumers’ wallet in a market of complexities”, he said.

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over 85 Exhibitors, 70% which will be foreign organizations seeking viable investments in Nigeria, will see not less than two thousand five hundred visitors in attendance of the event.

He said regulators will also be participate in the fair to further educate exporters in the business of exporting.

Pearson also said that already Afrocet Montogomery has obtained strong endorsements from key stakeholders in the Industry, including Advertising Association of Nigeria, ADVAN who advocate the need to create strong meeting points for players in the Industry to seek out new avenues of collaboration. “We are excited to say, we have the full approval and support of The Advertisers Association of Nigeria, (ADVAN), who will play a key role in ensuring the top food and beverage companies in Nigeria will take part”.

Also speaking, executive director of ADVAN, Ediri Ediali said the organisation is delighted to be part of the fair as her members have seen the value derivable from the fair.

mediaReach OMD wins Young Lions Media, Nigeria competition

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n a competition among multiple Media Agencies in Nigeria at the Young Lions Media competition held recently, Rita Oladimeji and Tobi Babalola from mediaReach OMD grabbed the title of Young Lions Media – Nigeria.

With this win, mediaReach OMD will represent Nigeria at Cannes in June 2019 for the Cannes Young Lions Media - Global Competition.

By winning the 2019 edition of the competition, mediaReach OMD will be representing Nigeria for the 9th time at Cannes, since 2008.

Babalola and Oladimeji have also won the Young Pitcher Integrated competition and have qualified for Dubai Lynx, which will happen in March 2020.

The above two competitions were open to young (under 30 years) media professionals representing various Media Agencies in Nigeria. Teams representing various media agencies this year were given a Media Brief as part of Young Lions Media competition and had little over 24 hours to think, create and submit a communication strategy that answers the Media Brief.

Finally, based on the presentations to the Jury, comprising of senior Media Advertising professionals, the winning campaign and team was chosen based on criteria used for the Cannes Young Lions Media - Global competition.

PricePointe Wholesale Club begins operation, launches ultra-modern shop in Lagos

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ricePointe Wholesale Club, a new entrant into the Nigerian retail sector, modelled after the America’s Costco and Sam’s Club, has started business with the opening of its flagship warehouse in Ilupeju Industrial Crescent, Lagos. The 8000 square meters indoor warehouse is the first of six locations it plans to set up in Lagos, with the next location planned for Lekki, to help its members get products at manufacturers’ prices while cutting out traditional middlemen in the process.

“Speaking at the Launch, Founder and Chief Executive Officer of PricePointe Wholesale Club, Tayo Williams said, “PricePointe Club is pioneering this world-class multi-store multi-brand to provide a one-stop lifestyle shopping experience for Nigerians who want to shop things in bulk conveniently, at a world class environment that’s convenient for them and their families, and most importantly, at really great prices.”

“With products and services sourced directly from manufacturers and providers, PricePointe club members will enjoy groceries, household items, appliances, insurance, flight tickets, petrol, @Businessdayng

diesel, and more at massive discounts you won’t find anywhere else; all of which are open to PricePointe club members. Retailers can also buy less than a carton but still enjoy Wholesale prices, as well as the convenient opportunity to shop from 6am every day, including Sundays” he added.

Williams disclosed that PricePointe Club has entered into partnership with various manufacturers and service providers to ensure that its members get the lowest possible prices. He mentioned global industry leaders such as Nigerian Breweries, Reckitt-Benckiser, Procter & Gamble, 7UP Bottling, and Indomie amongst those that have signed to work with them. Others are Binatone, Powergen, Powerhorse, UAC and many more.

The launch, in partnership with Ecobank, and its multi-featured digital payment solution, Ecobank Pay, as well as Old Mutual, also saw the emergence of winners in the raffle draws held at the launch event, which included prizes of rent up to N2 million for 1 lucky winner, school fees up to N1 million for 2 lucky children, as well as free groceries, travel tickets, & auto insurance for a year.

14 Tuesday 23 April 2019

BUSINESS DAY

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Branding Focus on African market behind Global Accelerex brand repositioning - Ariyo Kayode Ariyo is the Executive Director, Business Development & Operations of Global Accelerex, a fintech company which has contributed massively to the financial inclusion drive of the Central Bank of Nigeria. The firm recently won the CBN-NIBSS award as Cashless Driver: Point of Sales (PoS) Transactions. In this interview, Ariyo spoke on Accelerex-organised forthcoming PoS Innovation Summit and the relationship between banks and fintech companies. He also explained why his firm rebranded. Excerpts What is PoS Innovation Summit about and what are the expected gains of the next edition of the event? he PoS Innovation Summit is a platform where stakeholders in the financial technology ecosystem come together to deliberate, share wisdom and experiences in a bid to improve service delivery in the e-payment sector. These discussions are aimed at achieving the financial inclusion goals of the Federal Government and attaining the Financial System Strategy (FSS) 2020 Plan of the Central Bank of Nigeria.

The first edition for this year will focus on improving financial inclusion through the agency banking system. A good number of Nigerians have embraced the deposit, transfer and withdrawal of money through agent banking operators both in urban and rural areas. As this trend evolves, creativity and innovation will be major contributors to sustainable growth, especially regarding new

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can do without the support of banks.

They are the ones legally licensed to hold money on behalf of customers.

What we do as a Fintech company is to serve as an enabler; a platform through which bank customers pay one another without having to walk into banking halls. We believe that partnering with commercial banks and other financial institutions will make it possible to bridge the financial inclusion gap and reduce the number of people who are still unbanked.

How big is the contribution of Global Accelerex to increasing the financial inclusion rate in Nigeria?

We have contributed massively to the financial inclusion drive of the Central Bank of Nigeria. Recently, we won the CBN-NIBSS award as Cashless Driver: Point of Sales (PoS) Transactions. This award was given to us because our PoS terminals processed the highest volume of transactions on behalf of banks in 2018. The higher the number of people that adopt the cashless payment system, the

Kayode Ariyo

market segments. The theme of the event - Agent Banking Deployment to Reach the Last Mile – will focus on the delivery of convenient, accessible and cost-effective financial services to the underserved and unbanked.

How would you describe the relationship between banks and fintech companies in Nigeria?

Banks have been great partners with Fintech companies in the financial inclusion drive across Nigeria.

The truth is that there is very little we

lower the number of the unbanked.

Accelerex Agent Network Platform, a product developed to facilitate the business of super agents, agent managers and sole agents, has also contributed to the inclusion drive by making the activities of agents easier and convenient. The platform is secure and packed with unique features and benefits, including instant transaction notification, same day settlement and remote monitoring of agents. www.businessday.ng

How would you describe the role government, CBN and Nigerian banks have played so far in the financial inclusion drive?

The government has done a lot in the area of creating enabling laws to promote financial inclusion in Nigeria through the Central Bank of Nigeria (CBN). Some of the key initiatives by the apex institution to bridge the financial inclusion gap include Agency Banking, Tiered Know Your Customer Requirements, MSME Development Fund, Compulsory Financial Literacy Workshops for Schools by Banks and Mobile Money Operation.

These policies have contributed immensely towards getting more unbanked people into the banking system. We believe that with the new emphasis being placed on Agent Banking, even more unbanked people will soon come into the banking funnel.

What prompted your new logo design and the overall brand restage?

We are repositioning the business to take on bigger responsibilities within Nigeria and across Africa.

This is borne out of a new strategic direction to deepen our footprints on the continent by providing financial technology solutions to help businesses grow. We are building new processes and bringing in talents to enable us continually deliver on our promises to our partners. By changing our logo to Accelerex, which is shorter and easier to pronounce, we hope to increase mind share and generate more goodwill for the brand. The new logo is bold, progressive and futuristic, reflecting our new corporate vision and direction; a globally accessible brand with strong African footprints.

We will also not relent in our effort to develop creative new solutions that will simplify different financial payment needs.

What is your target audience going to expect with your rebranding efforts or is the rebranding only a logo changes?

With the new brand comes a renewed commitment to our partners, clients and other stakeholders to deliver superior financial technology solutions to suit their unique business needs. For us, it is beyond just a logo change. It comes with a consciousness that we must exceed our best performance. The new logo is a reminder of our responsibility to our clients; to deliver sterling customer service at all times. We are very lucky to have dedicated staff who go the extra mile to achieve results that exceed our customers’ expectations.

In this new phase of our growth as a company, we pledge to do far more than we ever did in the past

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L-R: Gbenga Fashola, project consultant, Terminal 3 Restaurant; Tosin Adefeko, managing partner, AT3 Resources Limited; Bunmi Ajisafe, chief executive officer, Terminal 3 Restaurant and Lekan Ajisafe, director, Terminal 3 Restaurant at the press briefing to announce the launch of Terminal 3 Restaurant & Lounge, at Ogudu, Lagos.

Terminal 3 Restaurant launches Ogudu outlet for dining, relaxation experience

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erminal 3 – a growing restaurant brand that has pioneered a revolution in the Nigerian fast food sector, has unveiled its outlet in Ogudu, Lagos.

The grand launch of the restaurant is in line with its desire to offer customers an extraordinary dining and relaxation experience.

Terminal 3 encompasses a Quick Service Restaurant, Casual Dining Restaurant and Lounge. The three in one restaurant is set to embark on an enterprising drive to deliver superior customer experience by redefining QSR in Nigeria.

Speaking at the grand launch, the Chief Executive Officer, Bunmi Ajisafe stated that the Nigerian QSR industry is quite dynamic and that is why Terminal 3 is competing through amazing innovation. In her words “we are proud and excited to open our outlet in a busy area like Ogudu and we are

confident in our ability to provide our customers a fresh experience. Beyond our array of culinary delights, we offer a more contemporary environment that is welcoming and comfortable for everyone.”

She added that the brand remains optimistic about its operations and will continue to position itself for upward growth in the industry whilst giving customers the kind of experience they require.

Terminal 3 has definitely set for itself the target of being one of most popular and customer focused restaurants in Nigeria. “We can definitely start looking forward to the celebration of the launch of more outlets across Lagos and other states in the near future”. According to her, Terminal 3 which wants to take the hospitality industry to the next level has keyed into the health eating consciousness of Nigerians as its offers are natural.

WorldRemit partners Paga to launch international mobile money transfers to Nigeria

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igital money transfer company WorldRemit is considerably expanding its presence in Nigeria by joining forces with Paga, Nigeria’s first and foremost mobile money company, for international digital money transfers.

Using the WorldRemit app or website, the Nigerian diaspora living in over 50 countries can now send money quickly and securely to over 11 million Paga users.

The new partnership considerably grows WorldRemit’s footprint in Nigeria, expanding the company’s service offering from bank transfer and airtime top-up to include mobile money. The introduction of international transfers to mobile-to-mobile accounts in Nigeria supports WorldRemit’s commitment to financial inclusion in the country, where nearly 40% of the adults are unbanked.

WorldRemit’s mobile-first, digital model saves customers time and money as they do not have to visit a bricks and mortar agent to send money home. “International transfers to Paga mobile money wallets via WorldRemit are instant. Recipients can then transfer funds from their Paga wallets to other users of Paga wallets or bank accounts, top-up mobile airtime, and pay for bills and groceries at shops and businesses that accept Paga payments. Customers can also withdraw money as cash at Paga agent locations, perform cardless @Businessdayng

withdrawals at select ATMs or store their funds in their Paga accounts”, the company said in a statement.

Since its launch in 2009, Paga has been recognized by the World Bank and International Monetary Fund as the fastest-growing Agent Network for its role in driving financial inclusion in Nigeria. With a diaspora of 15 million people living in countries including the United States, the United Kingdom, Australia and Canada, remittances play a significant role in Nigeria’s economy. The World Bank estimates that in 2018 alone Nigeria received $26 billion in remittances, making it the largest recipient in Africa.

Tamer El-Emary, Chief Commercial Officer at WorldRemit, in the statement comments: “Paga and WorldRemit share a commitment to making life easier for Nigerians sending and receiving money. Our partnership represents a new milestone for WorldRemit as we expand our service offering in Nigeria to include mobile money, a technology that has been transformational for communities across Africa.

With WorldRemit, customers living in over 50 countries can send money home 24/7 with a few taps from their phones. Our partnership with Paga supports financial inclusion initiatives in Nigeria by introducing a new and convenient way for people to receive money from abroad and directly into their mobile money accounts.”

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Tuesday 23 April 2019

BUSINESS DAY

Marketing & Pr

First Bank has made itself nimble, modern and strongly competitive in 125 years - Bakare Hafiz Bakare was Chief Strategy Officer, First Bank of Nigeria Plc before moving on to serve as Managing Director/CEO, Keystone Bank Limited under AMCON transitional governance arrangement. In this interview, Bakare shares views and his contribution to building the 125 years First Bank of Nigeria, described as a focused premier banking and financial services institution, which has despite changes in leadership over decades of its existence has kept faith with the roadmap for radical repositioning. Excerpts How does it feel to have been a part of the 125-year old premier bank in Nigeria, First Bank of Nigeria? reat and nostalgic as I was not just a part but made some modest contributions. I first got involved with FirstBank as a Management Consultant in 1996 when I was a key member of the Andersen Consulting (now Accenture) led Enterprise Transformation Project tagged “Century II”, which laid the foundation to reposition the bank for a more successful second century of operations, maintaining leadership in a more challenging and dynamic financial services industry. Among other deliverables on that major project, I had primary responsibility for conceiving the idea of a new Consumer Banking Strategic Business Unit (SBU) and developing the SBU Strategy along with a FirstBank counterpart staff, Christy Okoye, then an Assistant General Manager who later became the pioneer Head of that SBU and eventually an Executive Director in the Bank.

I subsequently joined the banking industry and some years later in 2003 came back to FirstBank to start a career that lasted six years. I served as the Bank’s Chief Strategy Officer with responsibilities covering Strategy and Implementation (for the Bank and the Group); New Business Development; Mergers & Acquisitions; and other functions.

I remain a proud ambassador and alumnus of FirstBank, going on to become an Executive Director in Keystone Bank Limited upon nomination by the Asset Management Corporation of Nigeria (AMCON), culminating in my service as Managing Director/CEO having led the postdivestment transition of Keystone Bank upon AMCON’s successful divestment.

As someone who has handled the management of the FBN brand, what would you describe as the brand essence of the bank?

The thematic brand essence of the Bank arising from the Brand Transformation Project and which also guided management of the brand when I was in charge was: “Dependably Dynamic”. This was consistent with the two key imperatives of “Growth” and “Modernization” which underpinned the Bank’s strategic intent of being “the clear leader in the financial services industry”. Even if the actual words of the brand essence have changed based on recent rebranding efforts by the current management of the Bank, the philosophy remains the same i.e a bank that takes pride in its rich history, longevity, time honoured ethical values that confer solidity (standing “gidigba”) and safety while it has made itself nimble and modern enough to adapt to the dynamic operating environment and be strongly competitive!

If you were to put the First Bank Brand Evolution into various epochs, what would the epochs be?

For anyone who is familiar with the history of the Bank, there are different epochs depicted by periods during which landmark events, some of which I was privileged to be part of their conception and implementation, took place. I will take this from the founding of the Bank in 1894 till date over several epochs: (1). 1894: The Bank was incorporated in Liverpool as the Bank for British West Africa after acquiring African Banking Corporation, which was established in 1892.

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Hafiz Bakare

(2). 1896: Opened first international branch in Accra, Ghana.

(3). 1969: Incorporated in Nigeria as the Standard Bank of Nigeria Ltd. (4). 1971: Listed on the Nigerian Stock Exchange (5). 1982: Established a branch of the Bank in London, United Kingdom (6). 1996: Initiated Enterprise Transformation Project – Century II (7). 2001: Started Century II – The New Frontier (8). 2002: Established the first offshore financial subsidiary of a Nigerian-owned bank in the UK as FBN Bank (UK) from the erstwhile London branch.

(9). 2004: Launched New Corporate Identity From Brand Transformation Project (10). 2005: Acquired two banks – MBC International Bank Ltd. and FBN (Merchant Bankers) Ltd. Created FBN Capital Ltd. for Investment Banking & Asset Management.

(11). 2007/2008: Floated Nigeria’s biggest offer and became the first company to attain N1trillion market capitalization. Floated first-ever hybrid capital offering out of Africa. Expanded presence in Europe with the establishment of a branch of FBN Bank (UK) in Paris, France.

(12). 2009 – 2012: Established presence in Asia and Middle East. Established insurance subsidiary in partnership with Sanlam of SouthAfrica. Reverted to being a limited liability company First Bank of Nigeria Ltd under a new holding company FBN Holdings Plc listed on the Nigerian Stock Exchange.

(13). 2013 to date: Refreshed the brand with changes in the logo to portray “gold standard” among others. Established presence across Africa with full-fledged banking subsidiaries and still in progress.

What are your reminiscences on managing the corporate image of an iconic brand like FBN? The foundation for managing the brand’s corporate image was laid by the Brand Transformation Project which was ongoing when I www.businessday.ng

joined the Bank. When I later assumed the role of Chief Strategy Officer, the erstwhile Corporate Affairs Department came fully within my purview under the name Image Management in addition to the responsibilities handled by the former Chief Strategy Officer.

Brand projection and management of corporate image were then actualized and driven within the context of the larger role of the Chief Strategy Officer as strategic activities vital to corporate success. Therefore, on one hand, we drove “direct” initiatives around advertisement and significant presence in local and international media coupled with deliberate feature articles; outdoor advertising on billboards and wall drapes; sponsorship of and participation at strategic local and international events (World Economic Forum, Economist Conferences etc) with speaking opportunities at the highest level; international awards and presence at CEO and Board levels; use of Below The Line items (calendars, diaries, corporate gifts etc) as conscious means of strategic brand projection due to the

“

My role as Chief Strategy Officer also enabled me to leverage various other initiatives within my purview and fully optimize opportunities for brand projection and corporate image enhancement

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quality and timeliness being competitive tools; as well as general branding.

On the other hand, my role as Chief Strategy Officer also enabled me to leverage various other initiatives within my purview and fully optimize opportunities for brand projection and corporate image enhancement. Some of these include branch development in liaison with other stakeholders complete with proper branding to enhance customer experience in the outlets; creation of new subsidiaries of the Bank and extending the group co-ordination role to ensure uniform branding across all subsidiaries both locally and internationally projecting the FirstBank monolithic brand, expansion of the Bank internationally in Asia and Europe with representative offices or branches, enhancement of the design, quality and content of the Bank’s Annual Report reinforcing the FirstBank corporate identity and the variants of the Bank’s brand colours at different times; the Bank’s hydrid offer making it the first Nigerian institution to attain N1trillion market capitalization which was well exploited in the press; Standard & Poor’s international ratings being the first in the 100-year history of the Bank and the second Nigerian corporate to obtain such thereby raising the Bank’s international profile; investor relations participation at various international fora (London Stock Exchange, IFC Washington DC, Merrill Lynch, Renaissance Capital etc) to project the brand and tell the FirstBank story usually together with the then Chief Risk Officer, Mr Sanusi Lamido Sanusi (SLS) who later became the Bank’s CEO, subsequently Central Bank Governor and now Emir of Kano.

How were you able to surmount the challenges of managing the brand image of an old bank that still remains relevant, modern and contemporary?

It is very important to state that as Chief Strategy Officer responsible for Corporate Planning & Group Co-ordination of which the realigned Brand Management was part, I had the full support of the MD/CEO, Mr. Jacobs Moyo Ajekigbe to whom I reported directly.

Mr. Ajekigbe allowed freedom of thought in the implementation of the Brand Strategy developed with my team members, drawing inspiration from the Brand Transformation Project which was aligned with the Bank’s overall corporate aspirations underpinned by the key imperatives of “Growth” and “Modernization”.

Would you say that FBN has been consistent and proactive in its strategic image management? If yes, how? If no, why not?

I would say yes. All the points made in the course of this interview clearly indicate such consistency and being strategic. The succeeding teams after I left in 2009 have built on the foundation to take the brand to another level. A number of the local and international platforms we opened up are still being leveraged to even greater extent. Event sponsorships with speaking and branding opportunities, exotic and high-profile branding of corporate events like AGMs, year-end parties etc, presence in local media for example advertisement in the business segment of the flagship Channels News At 10.00 which we initiated during my tenure has continued till date, international fora like World Economic Forum has continued to be leveraged even beyond participation.

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Tuesday 23 April 2019

BUSINESS DAY

COMPANIES & MARKETS

17

Declining market conditions pressure Dangote Sugar

COMPANY NEWS ANALYSIS INSIGHT

Pg. 18

MARKETS

Just when you thought Cadbury’s best performance in 3yrs went unnoticed, this happens below 2018’s average inflation rate (12 percent) at adbury Plc is a meagre 8.75 percent, in still some way reflection of an industryoff from repli- wide struggle of shrinking cating a stellar sales volumes on the back 2013 financial of low demand, Cadbury performance, but in 2018 chalked over half a billion the company churned out naira (N522 million) from its best numbers in three selling and distribution years. expenses alone in 2018.

In its 2018 scorecard, When we looked at the Cadbury showed improve- breakdown, we found that ment since making a loss Cadbury had knocked off in 2016, when the Nigerian N394 million in “reduneconomy slipped into its dancy costs” which turned first recession in 25 years. out the biggest driver of the But even more impres- reduction in Selling and sive was how the numbers Distribution expenses in stacked up against a five- the period. year trend analysis.

Here’s the company’s The trend analysis re- explanation of how N394 vealed that the food and million in “redundancy beverage maker picked up costs” was saved. the pieces of a poor year be “The 2017 expense redevilled by weak consumer lated to the Company’s purchasing power in 2016 plan to reposition its strucby growing profit before ture and processes and optax from a loss position of timise resources to achieve N563 million to N360 mil- a simpler and agile perforlion in 2017 while after tax mance-oriented organisaturned from a loss of N296 tion. This resulted in the million in 2016 to a gain of reduction of 149 positions.

N299 million in 2017, a 201 Agreements were reached percent increase. with union representatives In 2018, that improve- which specify the number ment continued. This time, of staff involved and the profit before tax surged 249 redundancy compensapercent to N1.2 billion from tion package offered by 2017 numbers, while profit the company, as well as after tax rose by 174 percent amounts payable to those to N823 million, the highest made redundant, before in three years. the financial year end. In Despite the improve- 2018, there was no redunment, however, Cadbury’s dancy of this nature.”

2018 PAT was still some way Operating costs reducoff the record N6 billion tion also helped Cadbury’s recorded in 2013. operating margin increase Cadbury’s bottom-line to 4.72 percent in 2018 from turnaround was driven 2.15 percent in 2017, which more by cost-cutting mea- means N95 of every N100 sures than increased sales. of sales was used to pay for While Revenue grew variable costs excluding LOLADE AKINMURELE

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interest and tax.

Not the best margin in an industry with an operating margin average of 11 percent where Nestle boasts the highest margin— 22.77 percent in 2018. But the positive to take away is that Cadbury improved its margin when others fell short.

Nestle’s operating margin declined marginally to 22.77 percent in 2018 from 22.81 percent the year before, while Unilever’s also fell to 9.9 percent from 14.36 percent. Perhaps, Cadbury benefitted from a low base.

Operating margin measures what percentage of revenue is made up by operating income. It therefore demonstrates the strength and profitability of a company’s operations.

It doesn’t stop at op-

erating margin. Cadbury recorded improvements in other key profitability ratios.

Cadbury’s profit margin rose to 2.29 percent from 0.91 percent. A profit margin in low single digits leave much to be desired, particularly as it is below the industry average of 10 percent. However, it still shows progress from last year’s abysmal figure. At this growth rate, Cadbury would have achieved a 15 percent profit margin two years from now, by 2021.

In 2018, Nestle had a profit margin of 16.85 percent while Unilever’s was 11.32 percent.

Value investors use the profit margin metric to assess the profit-generating capacity and efficiency of firms. Profit margin represents how much naira

of profit the businesses generated for each naira of sale.

Cadbury also recorded improvement in Return on Assets and Return on Equity. In 2018, Cadbury generated more profit per naira of assets compared to 2017 as its ROA went from 1.06 percent to 3 percent in the period. Very low compared to the industry average but again, shows progress. ROA gives investors an idea of how effective the company is in converting the money it earns. The higher the ROA figure, the better, because the company earns more money on less investment.

On the Return on Equity (ROE) front, Cadbury’s ROE more than doubled to 6.49 percent in 2018 from 2.55 percent in 2017, a sign of improvement even

though the promise land remains some distance away.

ROE provides investors with insight into how efficiently a firm is handling the funds that shareholders have contributed to it.

Cadbury’s earnings per share nearly tripled to 44 kobo in 2018 from 16 kobo in 2017, also the highest in three years but well behind 2015’s 66 kobo and 2014’s N1.06.

The rally in 2018 went unnoticed by stock investors as Cadbury’s share price shed 36 percent, the most among industry peers in a 2018 bear rout that saw the entire equities market decline some 17 percent as a result of massive foreign outflows driven majorly by policy normalisation by the US Federal Reserve and heightened political risks related to the 2019 general election.

This year, Cadbury is up roughly 10 percent, well above the 5 percent year to date loss of the consumer goods index. But after the 2018 scorecard was published two weeks ago, it seemed investors ignored the company’s improving numbers or had priced it in much earlier, only for the stock to emerge one of the highest gainers last week.

It stock gained 8.91 percent to N11 from N10.10, according to data by the Nigerian Stock Exchange (NSE). That earned Cadbury a spot on the list of top gainers for the week-ended April 18, beating Nestle, the only other consumer goods firm to make the list, to 8th place.

INSURANCE

AIICO Insurance’s net premium income soars 14 percent as life business shines ISRAEL ODUBOLA

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et premium income of AIICO Insurance Plc, a key player in the Nigerian insurance industry, appreciated in double-digit at 14 percent in full year 2018, triggered by more than 25 percent rise in life business, which accounted for 64 percent of its gross premium written.

The insurer posted

N31.9 billion as net premium income in the review period, an uptick from N27.9 billion reported in the previous year.

Net underwriting income trended northwards by 15 percent to N34.8 billion in the review period driven by elevated income from insurance contracts, pension and other contracts.

The insurer was able to overturn an underwriting loss of N4.02 billion posted

in full year 2017, to a profit of N3.21 billion, even as profit before taxation appreciated by 15 percent to N3.49 billion in the review period, an uptick from N3.04 billion posted in the prior year, while post-tax profit skyrocketed by 145 percent to N3.15 billion in 2018.

The insurer recommended for shareholders’ approval a final dividend of 6 kobo per share of ordi-

nary 50 kobo each, payable to shareholders’ whose names appear on the Registrars of Members by May 9, 2019.

Earnings per share, which captures the profit allocated to each unit of common stock, appreciated by 25 kobo to 35 kobo in the review period.

Total assets of the insurer appreciated by 19.4 percent to N109.9 billion in 2018, thanks to increase

in cash & cash equivalents, financial assets, reinsurance assets and property & equipment among others, while shareholders’ fund hit N14.5 billion, representing 37.7 percent increase over N10.6 billion posted in the preceding year.

AIICO Insurance Plc specializes in pension and asset management, general and health insurance, annuity and life assurance,

serving corporations, individuals, financial institutions and government in the country.

Shares of the insurer gained 2.74 percent last Thursday to 0.75, outperforming the financials industry and insurance sector that lost 0.24 percent and 0.12 percent respectively. The insurer has returned 19 percent since the start of 2019.

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

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Tuesday 23 April 2019

BUSINESS DAY

COMPANIES&MARKETS ANALYSIS

Declining market conditions pressure Dangote Sugar

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rice and Volume Declines Drag Revenue Growth: Dangote Sugar Refiner y (DANGSUGAR) posted FY2018 revenue of NGN150.37bn, a decline of 26.44% from NGN204.42bn in 2017. Total sales volume fell by 11.60%, due to the challenges faced in evacuating products from the factory in Apapa. In addition, industry headwinds such as the smuggling of substandard sugar into the country, especially in the north-eastern and northwestern markets, depressed the effective price of refined sugar to NGN12,929 per 50kg bag (vs. NGN15,539 in 2017).

In 2019, the company intends to overcome the challenges with product distribution by using third-party trucks to complement the capacity of its own fleet. We expect the price of refined sugar to hover around the current level of NGN12,929 per bag of refined sugar and an increased sales volume of 7% to settle revenue at NGN160.31bn by FY2019.

Profits Shrink as Im-

pact of Revenue Decline Trickles Down: The impact of the decline in revenue was telling on the bottomline as both the Profit before Tax and Profit after Tax declined by 35.44% and 44.76% respectively to NGN34.60bn and NGN21.98bn. The company’s earnings was further burdened by the absence of more than NGN3bn in net finance income, which supported profit in the previous year. In 2019, we anticipate the cost of goods sold to rise by 9.36% to NGN121.04bn from the additional use of third-party trucks.

Double-Digit Margins but Drivers of Profitability Weaken: Operating profit margin and net margin settled at 21.74% and 14.61% respectively, outperforming their five-year averages of 15.16% and 12.43%. These however mask the deterioration in the drivers of the company’s profitability. The return on equity declined by 20.70% to 22.12% (vs. 42.82% in 2017) as the asset turnover (0.86x) dropped to its lowest level in seven (7) years while net margin also contracted

by 4.85%.

“Sugar for Nigeria Project” Moves Forward Despite Challenges: The company sustained momentum on its flagship backward integrated project of producing up to 1.5–2.0 million tonnes of sugar from c.150,000ha of sugarcane plantations, as the company invested NGN3.61bn in subsidiaries in 2018. The company incorporated the Niger, Adamawa, Nassarawa and Taraba Sugar Companies as independent subsidiaries in 2018, having 99% majority stake in these subsidiaries.

The pace of implementation however continues to be challenged by disputes with host communities in Nasarawa, Herdsmen crisis in Adamawa, among others.

Valuation and Ratings: Using a lower expected EPS of NGN1.72 and target PE of 7.55x, we estimate a target price of NGN12.99, as against our previous estimate of NGN12.60. This represents a downside of 8.84% from its closing price of NGN14.25 on April 18, 2019. This implies a HOLD rating on the stock.

• From Meristem Securities www.businessday.ng

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Tuesday 23 April 2019

COMPANIES&MARKETS

BUSINESS DAY

19

Business Event

FINANCIAL SERVICES

United Capital kick-start 2019 with 5% growth in managed funds amid challenging economic conditions ISRAEL ODUBOLA

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unds under management of United Capital Plc, a Lagos-based financial & investment firm, grew by 500 basis points in the first quarter of 2019, despite headwinds witnessed in the period ranging from uncertainties around the concluded-general elections, slow economic recovery to reduced issuance of securities by the three tiers of government.

Funds under management, which measures the total market value of the financial assets which the firm manages on behalf of its clients, hit N79.16 billion in the review period, an improvement over N75.69 billion reported in the previous comparable period.

Total revenue of the Lagos-

based financial and investment firm, dipped tangibly by 34 percent to N1.45 billion in the review period, as against N2.20 billion posted a year earlier, triggered by reduced investment income, fees & commission income & net trading income.

Investment income from fixed deposits and investment securities contracted by 20 percent and 33 percent to N378.8 million and N392.8 million in the review period.

Fees & commission income was down by 17 percent, while net trading income plunged 71 percent to N31.9 million compared with N111.4 million posted a year before.

Commenting on the results, Peter Ashade, Group Chief Executive Officer, stated that reduction in the issuance of securities

by the three tiers of government, coupled with inability of some states to issue securities owing to their huge debt burden given the Investment & Securities Act 2007 weighed on advisory income fees, but yet the firm still grew income fees from advisory services by 7 percent.

“The quarter under review was indeed a challenging one for us as uncertainties around the 2019 general elections which took place therein plagued the capital market, resulting in slower than expected economic activities in the period”, said Ashade.

The contraction in investment income, net trading income as well as fees & commission income, significantly weighed down on pre-tax and post-tax profit despite the 48 percent cut in tax expense.

L-R: Temidayo Johnson, sales manager, technology and innovation, Dizengoff Nigeria; Graham Leslie, country manager, Dizengoff Nigeria; Guy Rabinovich, general manager, technology and innovation, Dizengoff Nigeria, and Kai Wulff, executive vice-president, Balton CP Group, during a Ruckus interactive session with ISPs, organized by Dizengoff in Lagos.

ENERGY

OPEC harps on importance of Dangote Refinery to World Oil Production Stability

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he Organization of Petroleum Exporting Countries (OPEC) is upbeat at the prospect of the Dangote Oil Refinery serving to drive world crude oil refining capacity increase especially in Africa by 2020.

The Organization in the current edition of its World Oil Outlook (WOO), said that the Dangote refinery, which is the first privately owned and operated refinery in Nigeria, will refine as much as 650,000 barrels of crude oil per day at installed capacity.

Presently, total world oil production in 2019 averaged 80,622,000 barrels per day.

Approximately 68 per cent is coming from the top ten countries, and an overlapping 44 per cent comes from the fourteen current OPEC members.

OPEC said in the outlook

that the world is expecting some capacity expansion coming from Nigeria in Nigeria by 2020, either through the rehabilitation of existing refineries – in part to raise their utilisation rates, or through grassroots projects, like the Dangote Oil Refinery.

OPEC stated: “Last year’s World Oil Outlook hinted that, in Africa, “new projects could improve the situation somewhat toward the end of the period”.

This year, increasing confidence that the Dangote project in Nigeria will go ahead is indeed changing the picture.

“Allowing for some uncertainty in the project’s start-up timetable, incremental potential in Africa is expected to continue to lag incremental demand-based

requirements through 2020, after which the potential is for a balance or excess requirements.

“A deficit of around 0.2 million barrels per day (mb/d) in 2019 to 2020 is estimated to swing to an excess of around 0.3 mb/d by 2022 to 2023. It must be borne in mind that this regional outlook is unusual in that it hinges largely on a single project”.

OPEC said the completion of the project would reduce the importation of petroleum products in West Africa. “Since the project is in West Africa, its implementation does not necessarily alter the situations in North and East/South Africa. What should happen, especially in West Africa, is a reduction in the need and opportunity for product imports,” it added.

L-R: Rasheed Olaniyan, head, T24 Operations, Central Bank Nigeria; Olufemi Muraino, executive director, Inlaks; Premier Owioh, executive director, Keystone Bank; Olufemi Adeoti, managing director/CEO, Inlaks, and George Ajufo, director, information technology, Central Bank Nigeria, at the Temenos 2019 Conference, in Netherlands.

DEALS

Court affirms Elano as rightful manager of Indorama’s 7.5% host community equity IGNATIUS CHUKWU

T

he Federal high court sitting in Port Harcourt has declared Elano Investment Limited as legitimate manager of the 7.5 percent equity shares granted to the host communities of the Rivers-based Indorama Eleme Petrochemicals Limited.

The judgment is said to have not only laid to rest the acrimonies that erupted two years ago in Eleme areas leading to arson and violence but has restored peace in the area.

Elano had dragged 28 persons from the seven communities that own lands in Indorama to court over protracted violent actions including arson against the board members of Elano aimed at pushing them out of legitimate management

of the shares.

This came after the sharing of over N14 billion that had accrued to the host communities, an amount that stirred huge interest in Elano and Indorama.

More funds began to accrue to Elano from Indorama on yearly basis.

The matter dragged on and went to the table of the Rivers State governor (Nyesom Wike) who asked the Ministry of Chieftaincy and Local Government Affairs to look into it, but Elano later approached the high court to determine if the agreement that ceded authority to them (Elano) was valid and subsisting.

In his ruling, the justice, Hillary Oshomah, granted all the prayers of the Elano board, saying he did so after studying the claims by Elano and counwww.businessday.ng

ter claims by the defendants.

The court said it took cognizance of the fact that Elano was given due mandate by the communities to source for funds (almost N3bn) to buy out the 7.5 per cent offered to the host communities by the Federal Government through the Bureau of Private Enterprises (BPE) and to manage it.

The judge said it also recognised the agreement between Elano and the host communities which provided for sharing of dividends and use of funds for development purposes.

The court granted order of injunction restraining the defendants from interfering or obstructing Elano from acting as ‘legitimate manager’ of the 7.5 per cent Indorama Eleme petrochemicals limited host community equity.

L-R: Olukunle Iyanda, president and chairman of council, Nigerian Institute of Management (Chartered); Makanju Mackason Kadiri, commandant, National Defence College, Abuja, and Abdullahi Muraina, national treasurer, NIM, at the fifth membership induction ceremony of the Institute for officers of the College in Abuja

L-R: Niyi Adebiyi, director, corporate communications, Visa West Africa; Francis Galadima Wasa, deputy director, payments systems management department, Central Bank of Nigeria; Bankole Falade, director, government relations, Visa West Africa, and Aribidesi Lawal, risk manager, Visa West Africa, at the Payments Security Workshop organized by Visa for CBN, which took place in Abuja recently.

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Tuesday 23 April 2019

BUSINESS DAY

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Tuesday 23 April 2019

BUSINESS DAY

PROPERTY&LIFESTYLE Office Space

Greystone Tower expands office space options for corporate tenants Stories by CHUKA UROKO

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or reasons of demographics, size of the market and volume of business activities taking place in Nigeria, analysts insist that the country, Africa’s largest economy and the most populous country on the continent, is grossly undersupplied with residential and Grade A commercial real estate.

Unarguably, the two major sub-markets in the country, in terms of high residential and commercial real estate, Ikoyi and Victoria Island in Lagos, have seen substantial developments that are scrambling for the city skyline and competing for the few tenants who can afford the premium rents/ prices on demand.

Victoria Island has seen iconic developments such as The Wings Towers which is offering 27,500 square metres, Nestoil Tower, 7,500 square metres, Madina Tower, 8,300 square metres and Civic Centre Towers, 8,096 square metres while Greystone Tower, with its towering height, is next on the queue.

Located in the heart of Victoria Island’s financial district, overlooking the entire district and Ikoyi harbour, right on the corner of Idowu Taylor Street and Engineering Close, Greystone Tower is rising as a world class commercial office building and a striking addition to the city skyline.

The imposing tower which was designed by Majoroh Partnership and is being built by Dori Construction and Engineering Limited is standing on 18-floors and, according to the

project managers, it has 5 floors of parking space, a ‘concessionary floor’ with restaurants, café and gym to enhance lifestyle factor in the building.

“This will become a natural focal point in the Victoria Island financial and business district. The elegant lines of Greystone Tower put it in good company with the best buildings within the city. The location alone, alongside Nigeria’s most recognized structures, offers prestige on a global scale”, Udo Okonjo, Vice Chair/ CEO, Fine and Country International, explained to BusinessDay. Fine and Country, the leasing agent on this iconic office complex, is a global real estate brand, specializing in providing premium services through exceptional marketing and professionalism in the upper segment of the real estate market.

Greystone Tower belongs to the league of new office buildings, redefining the Lagos city skyline with its organic and responsive warm clear glass façade. Its structure rises organically with external shading and elegant features offering an inviting and engaging architecture, in contrast to the hardness of its concrete and glass neighbours.

Okonjo noted that amenity was foremost in its conception, from the micro climate at the groundplanetothepublicspace that responds to the blurring of workplace and life. “This new premium grade landmark building embraces innovation and high technology to produce a tower form that is organic and responsive.Automationfeatures throughout the building com-

bine with shading elements and layers of performance glazing to create an advanced environmental skin”,she said.

Internal spaces reflect contemporary thinking for a flexible workplace creating an advanced urban environment in which to work and spectacular view corridors to the Bar Beach, Banana Island and Marina areas. Situated in Nigeria’s leading business and cultural precinct – Victoria Island in the heart of the city, Greystone Tower is minutes away from all transport hubs.

The form of this Tower is derived from the overlapping intersection of two carefully proportioned rectangles and a simple rectilinear core.

The rectangular form has been developed to capture

the unique primary view corridors with each corner offering a primary point of generation or ‘center point’.

In the Southern corners the center points are directly related to the significant views towards the Bar Beach and the views around the abundant water surrounding Victoria Island including the Marina downtown areas. The northern corners point towards Ikoyi and the waterway separating Victoria Island with views of Civic Towers, Banana Island and Lekki.

Okonjo hopes that with all these unique features and unrivalled façade, Greystone would be offering exceptional working environment and at the same time, expanding space options to corporate tenants.

CBN, NMRC, REDAN, others out to tap into opportunities in UK, EU markets

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ey stakeholders in the real estate and housing finance sector of the Nigerian economy are set to hold a two-day conference/exhibition in London focused on ‘Home Ownership and Property Investment in Nigeria Made Easy’ for Nigerians in the UK and the Europe.

The event which will be holding on May 17-18, 2019 at the Crowne Plaza Hotel, Battersea, London is designed to show Nigerians in the UK and EU safe and credible steps towards owning their own homes or buying a property for investment income purposes in Nigeria.

The conference is meant to begin to reverse the many sad stories of Nigerians in the United Kingdom and the EU trying to buy properties back home that they can return to for vacations or for rental income, but have been swindled out of their hard-earned remittances, by either unscrupulous agents or, worse still, family members and friends, and by so doing incentivize investment in the real sector in Nigeria.

It is being jointly hosted by major stakeholders in the sector including the Mortgage Banking Association of Nigeria (MBAN), Nigeria Mortgage Refinance Company (NMRC), the Central BankofNigeria,theFederalMortgageBankofNigeria(FMBN),the Real Estate Developers Association of Nigeria (REDAN), Urban Shelter Limited, Dunn Loren Merrifield, Amiable Financial ServicesUK,DiasporaRealtyUK, among others.

Kayode Omotoso, Executive Secretary/CEO of the Mortgage Banking Association of Nigeria, and lead conference host, says the conference/exhibition will, among other things, “showcase the deployment

of the Uniform Underwriting Standards for Diaspora Mortgages recently approved by the Central Bank of Nigeria as new guidelines for long-term Diaspora Mortgages”.

“The new guidelines would, for the first time, enable Nigerians living in the Diaspora to access 15 to 20 - year mortgages from mortgage lending banks in Nigeria to buy their homes; or for those who already own their homes, to buy additional homes for investment income purposes,” he explained.

According to the conference coordinator, Chii Akporji, Founder/ CEO of Alphacities Africa, the conference will also “focus on addressing all issues and concerns along the housing value chain that potential buyers in the Diaspora often come across.

These include accessing land for off-plan development; issues of title and C of O duplication; associated legal and regulatory issues around home purchase and ownership; the deployment of Proptech, blockchain technology; the mechanics of the National Housing Fund; buying from state owned housing corporations; payment platforms for Diaspora focused mortgages; accessing mortgage finance, interest rates issues; mortgage refinance and opportunities for mortgage securitization.

Aside from the organisers, several leading Nigerian developers as well as mortgage banks will be exhibiting at the event, in additiontoseniorlevelexpertson the policy and regulatory issues pertainingtothehousingmarket in Nigeria. All would be on hand toprovideanswerstothenumerous queries and concerns facing potentialhomebuyerorinvestor in the Diaspora.

Interior Deco

How DO.11 transforms lives by creating beauty, style, comfort

M

otivated by the passion to always make people happy, DO. 11, a frontline interior design company in Nigeria, has taken delight in the business of transforming lives by creating beauty, style and

comfort in spaces where people live or work.

Interior design and/or decoration has always been a serious business revolving around creativity and expression which man has used, in various ways, to transform na-

ture and recreate environment.

From a modest and humble beginning that has endured economic cycles and unfriendly operating environment where human resource, finance, power and material sourcing are a huge challenge, DO.11 has grown to become a destination for all home, office and hospital furniture needs.

Carefully guided by a strong vision to make spaces come alife, the company has deployed creativity and mastery of the art to achieve its mission of transforming lives by beautifying spaces using wood, laminate, plywood, fabrics, steel, chrome and other materials, giving phenomenal results.

“We have designed, created and delivered over 2000 design projects, and sold over 5 million pieces of furniture, transforming lives by creating

www.businessday.ng

beauty, style and comfort in the process. This, when you think about it, is really what we are all about at DO.II,” enthused Ifeyinwa Ighodalo, DO.11’s CEO, who spoke to BusinessDay in Lagos recently Ighodalo, an Accountancy graduate, developed interest in space designing quite early in life, reflecting her interest in figures, details and also what, to her, was a family trade and passion. This, according to her, explained her short stint in the formal working space and early return to the art of creating beauty.

DO.II is currently in a transition phase and its movement from a remodeled one-storey residential building, to a threefloors and a penthouse open plan purpose built 1,300sqm+ showroom tells the story. This move, according to the CEO, is the start of a critical stage

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of the business as their old showroom had become more stifling than expressive of all that the company had to offer.

This is a Nigerian brand which has a local outlook but global standards. The company prides itself as a brand that is proudly African, creating ‘Made in Nigeria’ products and believing that this is the way furniture is sold all over the world.

“DO.II focuses on office and home furniture and fittings manufacturing, interior design, renovations, remodeling, procurement and project management. Our extensive furniture range includes office furniture, living room, bedroom, dining room and hospitality furniture”, Ighodalo disclosed.

With a team of over 100 trained and committed staff, 50 percent of which are women in middleanduppermanagement, DO.11 has a daily production @Businessdayng

capacity that is over 1,000 with the hope of quadrupling that number in the next 18 months – 3 years to meet Nigerian and Pan-African furniture demand.

The company currently produces at about 70 of our factory installed capacity, but now that its flagship store is open, the next project is to fully optimize its current installed capacity as it develops and equips its over 10,000-square metre factory and warehouse property h in Lagos.

DO.11 has an ambition expansion plan such that in the next 3-5 years, it will be making another big move to its permanent factory and warehouse location--another multi-storey retail outlet in Nigeria. It also plans to export its own made in Nigeria furniture to new markets outside the country.

Tuesday 23 April 2019

BUSINESS DAY

23

PROPERTY&LIFESTYLE Market Analysis

Real estate funds grow AUM to N45bn in April despite low patronage, industry woes

Why exit strategy is important in real estate investment

ENDURANCE OKAFOR

CHUKA UROKO

E

ven though the real estate funds (REFs) has the least investment options among the listed asset classes on the Security and Exchange Commission (SEC), it has been able to grow its asset under management to N45.26 billion.

The asset managed by the real estate funds has appreciated by 145 percent in the last eight years, SEC data analyzed

by BusinessDay shows.

The funds by the Nigeria property industry grew by N26.84 billion from N18.42 billion in December 2011 when BusinessDay started tracking the data to 45.26 billion as at the week ended April 12, 2019.

This accounts for 6.26 percent of the mutual funds in the entire market which has Net Asset Value (NAV) of N723.15 billion, and also represents the third highest NAV after money market and fixed income funds.

“Real estate investment trust (REITs) is very liquid, and it is very difficult to see people go to floor to buy REITs, as such one hardly sees any trade in any of the REITs,” Paul Uzuma, MD of Halo Nigeria Capital Limited said.

According to the Lagosbased analyst, people don’t tradewhattheydonotknowand whattheyarenotsureof,hesaid, adding, “the real estate funds do notreallygiveadequatefinancial reporting to update you on what

..ranks 3rd largest NAV

isgoingonandsoactivitiesthere are streamlined to, maybe, the issuers.”

REF is an investment vehicle that pools resources together to invest in real estate, therefore, allowing individual investors to partake in the benefits of the underlying properties.

According to BusinessDay estimates, Nigeria may require, in monetary terms, between N170trillon to N200trillion to bridgethehousing gapifeachunit cost is estimated at N10million.

“Real Estate Fund is an investment vehicle that can

be used to address Nigeria’s housing shortage and encourage economic activity in the real estate sector,” said Ayo Akinwunmi, head of research at FSDH Merchant Bank For the past 10 years, Nigeria’s housing deficit has widened to more than 17 million units fueled by lack of patient capital for developers to build affordable housing for the growing low income earners who account for the larger populace of Africa’s most populous nation.

Thus, real estate develop-

ers are in search of viable alternative sources to funding real estate projects in a country where cost of funds has made bank credit inaccessible, unaffordable and unattractive to the sector.

Figures by the National Bureau of Statistics (NBS) for the third quarter of 2018 as analyzed by BusinessDay revealed that the property industry was among the least attractive industries to the country’s commercial banks as it got one of the smallest portions of loan in the review quarter.

Real estate sector only attracted N710.2 billion credits from banks in Q3 2018 as against the N744.56 billion and N784.2 billion it got in Q2 and Q1 in 2018 respectively.

“Real Estate Fund is an investment vehicle that can be used to address Nigeria’s housing shortage and encourage economic activity in the real estate sector,’ FSDH Research told BusinessDay in a mail response.

A further analysis of the data from SEC, the industry regulator, revealed that UPDC real estate investment fund raked in the highest share of the real estate funds having NAV of N22.97 billion, 72 percent of the entire N45.24 billion.

Managed by both SFS Capital Nigeria Limited, Union Homes REITs and Skyle Shelter Fund shared the remaining asset in the real estate funds.

For the week ended April 12, 2019, Union Homes REITs reported a higher unit price at N85.50, followed by Skyle Shelter Fund with a unit price of N40.70 while UPDC real estate investment fund reported a unit price of N12.36 According to the data from the state funded NBS, Nigeria real estate sector, as at Q4 2018, contracted by 3.85 percent (year-on-year). This is 2.07 percent points better than the -5.92 percent growth rate for Q4 2017.

Developers embrace shell as demand for fully-furnished apartments drops TEMITAYO AYETOTO

D

evelopers are attuning their building projects to shell apartment .option as demand for fully furnished apartments crawls on the back of economic crunch, BusinessDay checks reveal.

Demand for apartment furnishing is typically driven by multinational corporations seeking to book stays for relocating employees or those in town for extended periods.

It is also driven by foreigners on tourist mission, or people who have suffered fire or flood attack. This set of people move with their families and usually crave ready-made homes fleshed with every home appliance to ease their relocation to the new city.

But recently, these demands are not forthcoming due to the contract in the size of the expatriate community in the country.

According to Afriland Properties, while the country managed to exit economic recession in 2016, the real estate sector has not, leaving adverse impact on capacity for demand and supply.

“Real estate continues to

hurt from the negative impact of economic recession.

You need a lot of capital and most projects are long term.

So if you are looking for fund, you basically may not have access to long term funds,” Oluwaseun Adebola, communications manager at Afriland Properties, told BusinessDay. However, fully furnished apartment such as Caterer’s Court in Ikoyi continues to record growth, although marginal, as it is considerably cost-effective compared to top rated hotels. The lease windows could be as much as a year under offerings like two or three bedroom flats.

“If you look at those 5-star hotels, if a room is 150, 000 per night, short-let apartment could still provide grade A quality room at N80,000,” Adebola explained.

“Some people are wary of hotel and want to live like they are in their homes. The good thing is that you can live as if you are living in your house.

This means you can cook and have all the infrastructural settings you have in your house.”

But in response to full furnishing shortfall, developers have found shell apartments more interesting. www.businessday.ng

New building apartments are now being delivered mostly for sale to clients with plastered walls, screed walls, plumbing or electrically installed, leaving out other essentials such as kitchen, tiling, bathroom ceramics and walls in need of painting.

This stems from the fact that buyers were often disappointed with the quality of finishing offered by developers and demanded lower prices and shells they could complete by themselves instead.

Dotun Bamigbola, chief

executive officer of Bamigbola Consulting, agrees that shell apartment has become a trend outpacing furnished apartments.

“This is because when people buy finished apartments, they still want to attune the features to their taste, leading to extra expense and waste of materials,” he said.

But when you sell as shell, the developer does not waste resources and buyers also don’t have to waste by ripping up and fixing all over again.

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“The shell model comes with flexibility, allowing buyers to do the finishing at their convenience and giving room for resale,” Bamigbola noted.

He believes that apartment furnishing will only rebound when the economy improves and opens up many projects for foreignerstoactasconsultantson The market is also not likely to find local alternatives for demand as regular Nigerians do not subscribe to except their organisations pay them as expatriates.

@Businessdayng

Q

uite a lot of people have invested their money in real estate assets mostly for the purpose of getting financial benefits in form of what is popularly known as return on investment. For such people, the whole point of purchasing investmentpropertiesistomake money through appreciation or rent in the years to come.

But real estate investment experts say investors should look beyond return on investment because, according to them, no successful real estate investor enters the market without establishing an efficient investment plan which includes having an exit strategy even before purchasing the investment property.

“An investor will most likely choose to let go of one or more of properties for various reasons. For this reason, choosing the best strategy for exiting a real estate investment is just as important as deciding which one to buy”, says Udo Okonjo, CEO, Fine and Country West Africa, a real estate marketing firm.

Okonjo explained to BusinessDay recently that a real estate exit strategy was a plan in which the real estate investor intends to remove him/ herself from a real estate investing deal, stressing, “it is a consideration as to what the real estate investor will do with the investment property”.

Investors like Actis and African Capital Alliance which are private equity firms with special focus on emerging markets are specialists in investment exit strategy and, usually, have their reasons for have such exit strategies.

Generally, an investor has exit strategy on his/its investment because it helps to keep his end date of a financial goal in sight. It’s never wise for an investor to enter a real estate investing deal without having a clear understanding of how he will profit or for how long he wishes to profit before moving on from the real estate property.

An exit strategy also gives an investor the freedom to reinvest in more real estate.

This is because an investor that has successfully exited a real estate investment has the liquidity to re-invest in other real estate properties and expand wealth.

Overall, there are two types of exit strategies that have proven to work, especially in the high end luxury markets like the Ikoyi, Victoria Island in Lagos and Maitama and Garki in Abuja are the ‘lease option’ or ‘lease purchase’.

The Fine and Country boss explained further that the lease is just like any other rental lease, where the tenant moves into the home and makes monthly rent payments.

24

Tuesday 23 April 2019

BUSINESS DAY

Can you be a mother and a senior law firm partner?

The number of women at the top of the legal profession remains low, but change is afoot MADISON DARBYSHIRE & BARNEY THOMPSON, FT

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t is a question that thousands of lawyers have faced for decades: can you be a mother and still make partner?

Last year, just over half of entrants to law school in the US were women; in Britain, it was two-thirds.

Yet in 2018 women made up just 19 per cent of equity partners in British law firms, according to PwC, the consultancy, while a McKinsey study from 2017 showed the same figure.

The generally accepted issue is the choice many women face between partnership — on call 24/7 and under pressure to generate business — or starting a family.

At the same time, says David Wilkins, director of the Center on the Legal Profession at Harvard Law School, there are limited equity partnership positions as many firms look to cut costs.

These factors combine to have “a disproportionate impact on women because they still bear the majority burden of childcare and childraising, and the sole burden of childbearing,” he says.

Yet increasingly those campaigning for greater diversity in the legal profession say it is wrong to accept this as inevitable and are pressing firms to find solutions.

While overt sexual discrimination is often challenged, unconscious bias and lazy assumptions are also holding women back, says Farmida Bi, chair at Norton Rose Fulbright.

For example, partners looking to build a team to work on a deal may assume a mother will not want a demanding client calling at 2am, or to travel frequently for work.

These assumptions are not made about fathers. Firms seeking to improve diversity at the top need to make alterations to their processes, says Ms Bi. The problem is exacerbated by pressure to bring work into the firm, says Sarah Chilton, a partner at CM Murray, which specialises in partnership and employment law.

“In professional services generally there is a feeling that you have to justify your existence.

When it comes to originations and billings, is someone being denied the opportunity to build that up because the person distributing work has a conscious or

unconscious bias against them?”

Charting a route back to work Because the traditional law firm model is a constant move towards “up or out” — partnership for those who make the grade, the exit for those who do not — firms need to identify talented associates early to stop them self-selecting “out” if they plan for children, says Melinda Wallman, partner at recruitment company Mlegal.

Ms Wallman is co-founded Reignite Academy, a programme that helps City lawyers return after a career break. “They need to say, ‘we want you to stay and make partner, and if you want to have a family, we want to be the firm you come back to’,” she says.

Firms serious about preventing women from falling behind while they are on maternity or family leave should also implement more regulated staffing and client management systems to stop the relationships with important clients being entrusted solely to men, she adds.

It is also important “not to forget people exist while they are on maternity leave”, says Ms Chilton. “Invite them to lunches and events, allow them to keep up their contacts.

Writing articles is something easy to offer someone on maternity leave — they can do that without leaving the house and . . . it keeps their name in the market.”

More fundamentally, Ms Wallman questions the idea that partners need to be permanently on call. “Do you need to be fulltime, 24/7 to be a successful law

firm partner?” she asks.

“We need to make it possible to do these roles on less . . . it is important for women but also for the next generation.” Law firms like to talk about flexible working to suit incoming generations who demand a greater flexibility and work-life balance

‘

Firms serious about preventing women from falling behind while they are on maternity or family leave should also implement more regulated staffing and client management systems to stop the relationships with important clients being entrusted solely to men

from their employers.

But they are “particularly bad” at defining the partner’s role in new ways, says Ms Chilton.

“They think a partner has to be a rainmaker,” she says, “but they could contribute to the partnership by taking on major management roles, or some departmental head roles.”

Is it time for quotas? In 2011 the US-based Women in Law Empowerment Forum launched a “gold standard” award for firms that hit gender diversity targets.

Firms need a minimum of 20 per cent female equity partners, plus various other criteria, to get that rating. Betiayn Tursi, cofounder and chair of the forum, says targets need to be “aspirational” and realistic.

“Fifty per cent is a false narrative,” she says. Given that 40 years ago most law firms might have one or two female partners, it is important to play the long game, she adds.

The forum introduced its gold standard to the UK this year.

Fo r Da na D e n i s-S m i t h, founder of the First 100 Years project, which promotes the history of women in the law, self-imposed targets have failed and change needs to be forced through.

In February, she called for quotas for the number of women at equity partnership and management level.

Only that way, she argued, could women break through the “incredibly rigid, inflexible and artificial places” that were law firm offices.

That makes many female lawyers uneasy, worried that clients will assume they have been thrust into roles to make the statistics look good.

Ms Denis-Smith dismisses this fear: “Women forget that they’re really good. I’ve never heard of a balanced or diverse partnership underperforming.”

Ms Chilton agrees.

“The statistics are so awful that quotas are not a bad thing,” she says. “Having quotas would encourage firms to make sure females have achieved what they need to achieve to make partnership.”

Targets of 20-25 per cent are “depressing”, adds Ms Chilton.

“If you only have a target of 25 per cent, you’re never going to exceed it, and it is so out of kilter with the number of associates.”

Most leading firms have a roughly 50:50 gender split at associate level, or a slight female majority. That makes the partnership statistics all the more shocking.

Clients have a role to play In-house general counsel and clients also have a role to play in pressuring firms they work with to increase diversity at the top, says Ms Wallman.

When clients demand diverse partnerships in order to secure contracts — as dozens of general counsels have recently called for in open letters — firms are forced to prioritise the issue.

This works both ways, however. Those who until now have expected to be able to reach lawyers at any time of day or night need an understanding of what requests are urgent and what can wait until morning.

Ms Denis-Smith has also criticised the position of salaried partner — a lawyer with the title of partner but without a share in the firm’s profits or a say in how it is run. That, she says, is merely to make the partnership figures looks better.

“The whole business model needs to be opened up,” she says.

Ultimately, having diversity at the top is essential for inspiring the next generation, especially in a time when firms are competing with in-house legal departments or smaller firms who can offer fulfilling careers without the punishing hours.

“The worst thing for diversity is to have marginal partners,” says Prof Wilkins. “Make your women and minorities superstars so that younger people can look at them and say ‘I can succeed’.”

BUSINESS DAY

Tuesday 23 April 2019

25

Admitting younger students can benefit MBA programmes

Daniel Kent enrolled in a three-year MBA programme at Yale

D

aniel Kent was a distinctive MBA candidate — both for his age and background. He was 23 when he enrolled at Yale School of Management seven years ago as a newly minted college graduate from a liberal arts school.

He wanted to hone his business skills and apply them to his non-profit organisation Net Literacy.

Mr Kent founded the organisation, which provides computers to community centres, schools, libraries and churches in the US when he was 15 years old.

His bachelors degree in growing and structuring cities from Haverford College, offered little entrepreneurial training.

He enrolled in the MBA through Silver Scholars, a threeyear programme at Yale for “fresh from college” graduates.

They apply in the final year of any US or overseas undergraduate course. Students complete the first year of the MBA on campus straight after graduation.

Then they do full-time internships at one or more companies, usually for a year, although some students work for longer. Students then return to Yale for the final year of the MBA. Barry Nalebuff, professor of management at Yale, says that the purpose of the Silver Schol-

ars programme is to ensure an MBA class includes people from a broader range of academic backgrounds.

Many Silver Scholars have studied social science or Stem subjects (science, technology engineering and mathematics) and say they would never have considered business school since it is not common in their academic discipline, according to Prof Nalebuff.

He says the success of case study discussions depends on having a variety of perspectives in the classroom — and this diversity is a boon for corporate recruiters too.

The FT’s 2018 Skills Gap survey found that employers want to hire graduates who can work well in teams and with a wide variety of people. Several US business schools are admitting undergraduates to their MBAs. MIT’s Sloan School of Management opened its deferred admissions scheme in January to

undergraduates or recent graduates from any university.

Postgraduates without fulltime work experience can also apply. Previously, this was only available to those studying at MIT (from 2018).

Matt Symonds, director of the Fortuna admissions consultancy, says the trend reflects business schools’ desire to shore up application numbers.

They fear a drop given the strong US job market and worry that those already in jobs might decide against doing an MBA in case they miss out on promotion.

Another factor is the increasing competition from the growing range of specialised masters programmes that admit younger applicants, says Mr Symonds.

In 2017, a $10m gift allowed the Wharton School at the University of Pennsylvania to create a deferred admissions programme for final year undergraduates at any Penn school.

Students admitted to the Moe-

‘

lis Advance Access Programme are guaranteed a place on the Wharton MBA after they graduate and have completed two to four years of work experience.

Students can pursue any career path they want, according to Blair Mannix, director of MBA admissions at Wharton.

“The only reason we would not welcome them back was if they stopped working,” she says, adding that a $1,000 deposit students pay when they enrol guards against dropouts.

She hopes students will pursue non-traditional career paths, such as entrepreneurship or public sector work, given how important diversity is to learning and recruitment.

“People often think that if they don’t go to consulting, banking or big business, they won’t have a shot at getting in the MBA,” says Ms Mannix.

“We hope that admitted students will take risks.” Moelis fellows have access to mentoring

The FT’s 2018 Skills Gap survey found that employers want to hire graduates who can work well in teams and with a wide variety of people. Several US business schools are admitting undergraduates to their MBAs

and networking events during the deferral period.

They are then eligible for a $10,000 scholarship in each year of the two-year MBA once they matriculate.

But admitting younger students has raised concerns that their inexperience could compromise the quality of case study discussions, which draw upon students’ experience in the workplace.

Prof Nalebuff says Yale limits the size of Silver Scholars groups to 10-20 students each year for this reason.

“The MBA cohort benefits from the Silver Scholars’ passion and idealism, but we need experience in the classroom too,” he says.

Harvard Business School created a deferred MBA admissions process called 2+2 ten years ago.

It is open to undergraduate and masters students.

They spend at least two (maximum four) years in full-time work before matriculating.

Chad Losee, Harvard’s managing director of MBA admissions and financial aid, argues this is sufficient for candidates to acquire enough working knowledge to contribute in class.

He says: “I was an MBA student here [between 2011-13]. I had 2+2 students in my cohort. I did not know who they were until a few months into the programme.

These are very talented people who have good work experience.” However, some employers are sceptical about employing untested MBA candidates in the deferral period, according to Prof Nalebuff.

Indeed, Mr Kent says that some companies viewed his inexperience in the workplace as a potential liability.

But he says many were willing to overlook that, hoping he would bring new ways of thinking to their business.

As part of the Silver Scholars programme, Mr Kent did a two-year product management internship with online legal advice company LegalZoom within his MBA. “I bypassed the two, three or four years that I would otherwise have spent in an entry level job after undergrad,” he says.

He returned to LegalZoom after the MBA, then quit to cofound Jobwell, an online job application and networking tracker. “No one treats me differently to other MBAs.”

26

Tuesday 23 April 2019

BUSINESS DAY

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

What educationists expect from the next education minister KELECHI EWUZIE

I

ndustry experts in the field of education have insisted that for there to be any meaningful development in Nigerian university system, the next minister of education must among other things address the issue of adequate funding for the university system.

They are of the views that the next minister of education must as a matter of urgency, make plans for the nation’s manpower needs in a bid to integrate this into university programmes.

According to them, “Nigeria’s university system is faced with a plethora of problems such as university underfunding, deteriorating infrastructure/equipment for teaching, dearth of funds for scientific research, outdated curriculum, issue of university autonomy, brain-drain, student unrest and constant industrial action.

Isaac Adeyemi, former vice chancellor, Bells University of Science and Technology, Otta, Ogun state observed that presently, the Federal Government is talking about diversification of the economy to stir it away from the current challenges, but attention doesn’t seem to be paid to the education sector especially the university system.

Adeyemi opines that if government really wants to stimulate the economy, and in turn enhanced quality in the universities, the infrastructure base of the system needs to be improved. “The present situation of lecture halls, laboratories, calls for an urgent need to make available enough funds for rehabilitation of existing facilities”, he said.

According to him, “Until all these issues are resolved in a way that encourages right learning environment, empowered workforce and globally competitive research faculty, the education

L-R: Dotun Coker, chairman Technical Committee, Lagos Football Association; Light Chijioke and Quadri Araromi, the two scholarship winners and the most promising players of 2019 Greensprings Kanu Football Camp; Lai Koiki, executive director of Greensprings School Lagos; and Emmanuel Essien, Sector Lead, Education and Religious Institutions, Union Bank at 2019 gala night event organised by Greensprings School, Lagos.

sector via the university system will not grow as desired”.

Peter Okebukola, Professor of Science Education, Lagos State University and former executive secretary, National Universities Commission (NUC), says Government should look less at the ability of the Universities to generate revenue for its running.

Okebukola says rather governments at the States and federal levels should look at the impact education sector would have on the general life of the individuals and the society without.

“If we continue to look at it as money making

Promoting digital books in Nigeria, Africa highlights 2019 International book fair KELECHI EWUZIE

S

takeholders in the education and book-related industries from around the world will gather in Lagos, Nigeria to among other things discuss the process of Optimising New Technology in Book Development and Distribution for the Promotion of Book in Nigeria and Africa at the 2019 International book fair.

This annual event hosted by Nigeria Book Fair Trust (NBFT) will take place from Monday, 6th May to Saturday, 11th May, 2019.

Gbadega Adedapo, Chairman, Nigeria Book Fair Trust and President, Nigerian Publishers Association disclosed this at a press briefing ahead of the event in Lagos.

According to him, “The week-long book fair which theme is “Optimising New Technology in Book Development and Distribution for the Promotion of Book in Africa“, is slated to hold at the Jelili Adebisi Omotola Hall, University of Lagos, Akoka, Lagos.

Adedapo said Hameed Bobboyi, executive secretary, Universal Basic Education Commission (UBEC), would deliver the keynote address on the second day of the fair, 7th May. Eminent Nigerians such as Okechukwu Ofili, managing director, Okada Books; Mike Olajide, executive director, Sidmach Technologies; Richard Xiang Pingnian, vice president, ZTE Technologies Nigeria, and Chander Shekhar, CEO of Spring Time Software will make the panel of discussants of the chosen theme.

Adedapo, who is also the managing director, Rasmed Publications Limited, explained that the book fair was essential for the promotion of effective reading culture for which the fair has been noted over the years.

According to him, “The importance of adopting new technology will be highlighted; the discussants will delve deeper into the root cause and way forward to grow the publishing industry and consequently quality of education, making books accessible to all the masses across Africa not leaving out people with print disabilities.

“The conference will have in attendance Oluremi Tinubu, chairman, Senate Committee on Environment; Ogbonnaya Onu, minister of Science and Technology; Yewande Sadiku, executive secretary of Nigerian Investment Promotion Commission, Osita Aboloma, director general, Standard Organisation of Nigeria, Yahaya Amfani, chief executive officer, Yaliam Press Limited and Oluwatoyin Ogundipe, vice chancellor, University of Lagos.

“In line with the theme of this year’s Nigeria International Book Fair, the National Library of Nigeria (NLN) will be having a sensitisation workshop for publishers and authors on digitalisation of ISBN and ISSN. The new approach to this and requirements will be made known to participants at the workshop.

“It should be on record that for the first time in the history of the annual Book Fair, Nigerian Copyright Commission (NCC) and Nigerian Educational Research and Development Council (NERDC) will be fully involved in the activities of the book fair.

www.businessday.ng

venture, we get mediocre, we harvest and get in people at the entry point and that is why so many people who don’t have controls would go into extortion and things like that because the environment seems to be highly commercial”, he said.

He observes that in a commercial university setting what people look at is what gets into their pocket, but if we see university education system as service, the operators of the system will begin to see their work as a missionary assignment until we begin to see education as a missionary assignment we will be getting it wrong.

Analysts maintain that without education, no country will forge ahead; adding that the quality of education a country has determines her economy as no country can grow more than the quality of her education.

They however expressed doubts whether Nigeria’s universities as presently constituted will be able to lay claims on being central to national capacity to connect with the new international knowledge system and adopt adapt and further develop new technologies needed in the wider society.

In 2018 Unified Tertiary Matriculation Examination (UTME), 1,652,825 candidates registered for the examination all over Nigeria, all competing for a system that can only absorb 500,000.

With 162 universities (41 Federal, 47 state and 74 private) recognised by the National Universities Commission (NUC), in addition to polytechnics, monotechnics, and colleges in various specific disciplines, this potentially leaves over a million qualified college-age Nigerians without a post-secondary place.

In advanced economies, models for university education in United States of America, United Kingdom, reveal that curriculum been taught in universities are relevant to the socioeconomic development of the nation.

A government-provided loan is available which may only be used towards tuition fee costs. Besides government funding these institutions, different funding arrangements are in place for students. With various research grants available to finance scientific research in universities, multinational companies set aside an amount to fund scientific research.

The UK’s universities have demonstrated their readiness to embrace change by modifying their financial strategies to prepare for uncertain times ahead. These initiatives are absent in Nigeria’s university system.

U.S. supports tech-driven solutions to disability issues Akinremi Feyisipo, Ibadan

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tudents of the University of Ibadan, Oyo State, gathered for the 2019 CampusLabs Disability Hackathon that seeks to address the challenges and needs of people with disabilities using technology solutions.

Following a five day boot camp facilitated by three Mandela Washington Fellows Emeka Ossai (CEO, CampusLabs), Busola Majekodunmi and Tobiloba Ajayi, 26 participating students representing 7 teams pitched their ideas before a jury of leading tech leaders and disability inclusion advocates.

The Hackathon is supported by a public diplomacy grant from the United States Consulate in Lagos.

Speaking at the grand finale of the Hackathon hosted at the University of Ibadan, U.S. Consulate Public Affairs Officer Russell Brooks lauded the students for working collaboratively to improve accessibility and mobility for people living with disabilities.

Brooks, who also served as a member of the jury for the pitch competition, explained that Hackathon provide opportunities for solving problems in novel ways.

“The United States government is proud to support initiatives like this which seek to leverage the exponential power of technology to solve problems and promote a culture

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of social innovation and inclusion,” Brooks noted.

He explained that about 15 per cent of Nigeria’s population representing 25 million people has disability and called for concerted efforts to promote inclusion and reduce the obstacles they face.

“Inclusion is a good indicator of how much we value and respect human life. We must become more actively involved in creating a more inclusive environment for all,” he added.

Idowu Olayinka, vice chancellor, University of Ibadan who attended the event alongside principal officers of the institution, expressed his commitment to supporting students working hard to promote inclusion of people living with disabilities.

Team Afia won the competition with their pitch for an app that will ease access of people living with disabilities to connect with providers of basic social services. They were rewarded with a cash prize of N500, 000 for their impressive performance.

All 7 teams in the pitch competition came up with varying technological solutions after meeting with families and people living with disabilities to gain a better understanding of the challenges they face.

CampusLabs works across Nigerian universities to raise a community of budding social entrepreneurs capable of implementing high-impact projects that benefit their local communities.

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Tuesday 23 April 2019

BUSINESS DAY

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EDUCATION Oyo approves Pixels International Academy to advance students career in photography RAZAQ AYINLA

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yo State Board for Technical and Vocational Education (BOTAVED) has given approval to Pixels International Academy, a new-age creative school founded by Pixels Digital Photography to empower Nigerians who want to build a career in photography, creative designs and branding.

The Institute got the endorsement of BOTAVED following the completion of its state-of-the-art the facility in Ibadan which is now open for students’ admission.

Omolaraeni Olaosebikan ,chief executive officer, Pixels Digital Photography said the primary aim of the Academy is to contribute to the socio-economic development of Nigeria through technical and vocational training.

According to Olaosebikan, “Pixels International Academy programme is designed to enable all Nigerians to develop professional confidence on and technical proficiency, to explore and to define their own distinct creative vision.

“Our goal is to help many Nigerians discover where an exciting career in photography can take them. It is also to give competitive edge to our students through the comprehensive foundation we provide for them through world-class sophisticated photography equipment and practical they would be exposed to while taking our cours-

L-R: Omolaraeni Olaosebikan, CEO, Pixels Digital Photography; Adebola Moody, Head of Operations, Pixels Digital Photography; Dolapo Ishola, Managing Director, Pixels International Academy and Ikechukwu Osuya, Marketing Manager, Pixels Digital Photography at a recent Press Conference held in Bodija, Ibadan to announce offering of courses having been approved by Oyo State Government.

Pic by Razaq Ayinla

es”, she said.

She urged all Nigerians who will like to build a career in creative designs, branding, to take advantage of the programme.

In her remark during a press conference held in Ibadan, Dolapo Ishola, Head of the

Academy said photography is a competitive field but there are many opportunities for talented and well-trained across fashion, wedding, landscape, photojournalism and conceptual photography.

“When you attend Pixels International

Academy, you will learn a wide range of skills using an established curriculum, learn more than photography skills, learn from professionals, enjoy the benefits of a creative learning community, establish industry connections and become a sought-after professional”, Ishola stated.

Course details for Foundation in Photography programme at the Academy include: Introduction to photography, Styles of photography, the Basic principle of the camera, Camera modes & settings, understanding exposure & exposure compensation, Introduction to photography, basic photo editing etc.

For a Diploma in Photography, students will be exposed to skills needed to explore and define their own distinct creative vision through training on Gear guide: lenses & sensors, advanced compositional principles, lighting photography, graphic design, business & ethics of photography etc.

Advanced Diploma in Photography will also provide the latest technical skills, insider advice and the chance to create own working portfolio for students. They will undergo courses like Time-lapse & hyper-lapse photography, gel lighting, colour management, high-end editing using frequency separation techniques, studio flash & shaping light etc.

The Academy also offers short courses and online programmes on Studio Photography Masterclass, Photo Editing & Retouching Masterclass, Compositional Techniques, Smartphone Photography and Photography Foundation Programme.

Different Types of Learners and their Peculiarities Intellectual Capital: A strategic resource for method. There are so many reasons for the existence of these outliers, which brings forward the global competitiveness and prosperity

OYIN EGBEYEMI

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he average Nigerian adult of today might recall times in school (at primary, secondary and sometimes even tertiary levels) when certain students were labelled “olodo” quite openly in their classrooms or homes in front of their peers or siblings. In some cases, it was even the parents of those children who did that labeling.

The old school method or mindset towards education, in its perceived simplicity would easily allow people to identify the slow learners in a rigid system of teaching and learning as dumb or stupid. With this in mind, I also wonder how many people now realise that some of these students who were labelled “slow”, “dumb”, “stupid” or “olodo” now excel in their careers and lives in general. What is even interesting is that some of these students are now doing very well in areas that we would view today as different or unconventional…different from the generic career paths (or expectations) of Medicine, Law and Engineering; or perhaps their academic performance began to improve when they moved to a different, more attentive, flexible or unconventional education system.

Knowing this should provoke some thought around the approach to our foundational education system and its expectations. Rigidity in teaching and learning rendered those who did not fall in line lost or confused. While the system worked well to address key values such as hard work and discipline, it was lacking in flexibility towards people who inherently cannot learn effectively through this so-called conventional

importance of considering the different types of learners and their peculiarities.

The first area, which the enlightened population is beginning to accept as critical is Special Education Needs (SEN). Children in this category do not fall under the spectrum of what we may view as normal learners because of some inherent limitations or special abilities, which they have purely as a result of their biological makeup.

These include learning disabilities such as dyslexia, behavioural disabilities such as Attention Deficit Hyperactivity Disorder (ADHD), physical disabilities such as cerebral palsy and developmental disabilities such as autism. In the old-school set up, the curriculum, staffing and teaching methods did not deliberately cater to children who fell under this category.

Some who suffered milder versions were not easily identified (some adults today may still not even know or accept that they might have one of these conditions). Hence inclusion was not necessarily identified as an issue, let alone addressed. Now, more modern schools are beginning to realise that inclusion is indeed an important aspect of their operations.

Some, which operate international curricula, actually have this as a requirement for compliance; otherwise they would not meet up to standards for accreditation. Fortunately, there is specialist assistance available and many private schools now accommodate departments for SEN Coordination to help meet the peculiar needs of these children.

It is extremely important that Individualised Education Programmes (IEPs) are developed, and doing so should be a joint effort between the teacher, parent, the school’s leadership and perhaps a specialised facilitator (if required).

These should be reviewed regularly amongst all stakeholders so that the child fully benefits from his or her learning experience.

Another area to consider is Gifted and Talented learners.

Oyin Egbeyemi is an executive administrator at The Foreshore School, Ikoyi, Lagos.

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YINKA ENIAYEWU

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ntellectual capital thereafter refers to as “IC” is an emerging multidisciplinary field that cuts across knowledge management, accounting and economics. From the knowledge management discipline, it is often viewed as a strategic resource that is required in an organisation to achieve the stated goals and objectives.

Accounting discipline on the other hand views IC as an intangible capital or assets of the company that creates the difference between the book value and market value of an organisation. Economics as a discipline also views IC as a hidden treasure that promotes competitiveness, improves growth and sustainability.

While knowledge managers and accountants address it as a resource for organisation management, Economist on the other hand do not only view it as an organizational intangible resource but a tool for the creation of national wealth, regional and global competitiveness of nations. It is also a vital resource for global prosperity. IC having generally adjudged as a tool for competitive advantages, what then is the composition of intellectual capital?

IC is the stock of skills, competence and capabilities which lies within the employees in an organisation or citizens of a nation; the processes and infrastructural facilities that supports a company or nations to function; and the reputation and relationship with internal

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and external stakeholders in the organisation.

Summarily, IC is the stock of human, structural and relational assets in an organisation or a nation. The intangible nature of IC makes it difficult to measure, hence different measurement approach has been employed to measure it, examples of such approaches are the Skandia navigator, the balance scorecard approach, and the Pulic measure of intellectual capital etc.

Pulic measure of IC employs quantitative techniques while other methods are based on subjective use of questionnaires and other qualitative approaches. Pulic measure of intellectual employs annual reports of organisations to measure IC hence, the method is adjudged suitable for cross– organisational and industry(s) comparison.

For value addition to be all encompassing in an organisation, Pulic combined the efficiency in financial capital (capital employed) with the efficiencies of human, structural and relational capital to derive a concept known as the Valueadded Intellectual Capital (VAIC). Despite being the most widely employed measure of intellectual capital, it is also not free from criticism.

Some of which are based on its structural capital measurement proxy.

Before now, IC is usually viewed as a mere content for information disclosure, but in this fast-changing economy where the globe is knowledge driven, the need to develop IC for long term sustainability becomes imperative.

The traditional production model is now shifting frontier from mere composition of labour, capital to the use of information system to drive productivity and hence catch-up with global competitiveness.

This is however seen in the business success of companies like Apple, Google, Toyota, Microsoft etc. These companies are able to drive their market and keep-up with changing market environment due to fast changing and technological driven competitiveness.

Same with majority of developing and emerging companies like Switzerland, Germany, Brazil, China and India.

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Tuesday 23 April 2019

BUSINESS DAY

BDTECH

In association with

Why technology is important in every economy

dress most of the challenges bewildering the manufacturing industry.

“Although the challenges faced in the manufacturing industry are not peculiar, the deployment of IT tools has proven to boost output and ultimately increase revenue for manufacturers.”

It has been said countless times by many industry stakeholders that

Nigeria needs to stop being an importer of almost everything to becoming an exporter of its products.

Manufacturing industries play pivotal roles in any economy, engendering rapid growth, jobs and wealth creation, which lead to improved standard of living; thus, there is a need to leverage on technology to meet the demand of the manufacturing industry.

“It is a known fact that our world is technology-driven and any country with the necessary technological knowhow leads directly or indirectly in the committee of nations. As a country striving to become more industrialised, a new breed of technologists must come onboard to meet the demands of the manufacturing industry, a situation that will then position us in our desired status among our peers,” said Emmanuel.

The country which is immersed in wealth of knowledge and full of young, brooding tech geeks is being tasked by the international community to use information technology and the internet to achieve economic growth.

“We have realised that road, water and electricity is no longer enough for economic growth in any country and we have noticed that the internet is essential in achieving economic growth,” said Ann Mei Chang, the chief innovation officer at the United States Agency for international development (USAID).

plastic, glass looking (glastic) design gives it a sleek and unique loo. The Galaxy A 70 has the facial recognition feature for unlocking the phone, super slow motion recording and includes hyper lapse.

The three rear cameras are a 32MP (megapixel) primary camera, 8MP ultra wide camera and a 5MP depth camera. With the same glastic design, the Galaxy A30 is not as slippery as glass, but it is durable as plastic, so you get the best of both worlds. Unlike the A70 and A50, the Galaxy A30 has a rear mounting fingerprint display.

The Galaxy A series product

specifications ranges from, Galaxy A70 with a 6.7 Infinity-U display with a triple camera that has an Ultra-Wide angle shot. With Rear angle, 32/5/8(UW)MP and Front, 32MP, with a memory of 6+12GB. The Galaxy A50 has a 6.4 infinityU display with a triple camera with Ultra-Wide angle shot. With a REAR angle, 25|5|8(UW) MP , Front 25 MP, with a memory of 4+12.4 GB. Lastly, the Galaxy A30, has a 6.4 infinity U-display. It has as a dual Camera with Ultra wide angle shot.

Rear, 16|5(UW)MP with a Front, 16MP and it comes with a memory of 4+64GB.

Stories by Jumoke Akiyode Lawanson

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echnology has been the driving tool for growth and advancement in developed nations around the world today. However, experts say Nigeria is still playing catch up in the technology space, as the kind of attention paid to, and support given to the tech industry is minimal compare to its huge potential which has the capacity to transform the entire country for good.

Revenue generating and economy boosting industries like agriculture, education, health and financial sectors will benefit a great deal, and change the dynamics of the country with the use of technology.

Stakeholders often argue that Nigeria’s growing software industry can be used to revolutionise the country.

In a way, similar to the smartphone technology boom which has now created a world shaped by the universality of the smartphone.

In emerging markets like Nigeria where mobile phones were once seen as a status symbol; largely limited to consumers in developed markets, mobile phone penetration levels have spiked rapidly, surpassing population figures – with over 173million active mobile phone subscriptions in February 2019 and majority of its population accessing the

L-R: Muniru Wambai; board member, Financial Reporting Council (FRC), Daniel Asapokhai; executive secretary/CEO, FRC, Sunday Dare; executive commissioner, stakeholder management, Nigerian Communications Commission (NCC), Felix Adeoye; commission secretary and Usman Malah; chief of staff to the executive vice chairman (EVC) of NCC, during a courtesy visit of the FRC delegation to the NCC headquarters in Abuja recently.

internet via mobile, which has seen smartphone ownership grow even more.

The telecommunications industry in Nigeria has constantly remained profitable, generating billions of naira for the federal government annually. Even as telcos like MTN continue to record revenue increase year-on-year.

With the limitless opportunities available on the internet, and the digital revolution which makes the world a global village, there is no doubt that technology is indeed an essential tool for transformation and growth.

According to Amos Emmanuel, president of Programos Foundation,” only technology can be used to ad-

Five improved features on Samsung’s new Galaxy A Series

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amsung recently released the new Galaxy A Series, designed with incredible improvements to the essential device features. These include immersive viewing experiences, longer lasting performance, enhanced security, larger battery capacity and ground-breaking cameras.

According to Adetunji Taiwo, head of information and mobile technology, Samsung Electronics West Africa, “This is a series that has also embraced affordability in a big way and is set to capture the imagination of more people, in

many more ways. Ultimately, the new Galaxy A Series is designed for the way that people are connecting today – sharing, capturing and consuming live content on-the-go.”

The new series offers diverse, powerful devices that can keep up with these spontaneous, collaborative interactions.

“We are committed to providing meaningful innovation to everyone for a better mobile experience. That innovation starts with the all new Galaxy A Series,” said David Suh, managing director at Samsung Electronics West Africa. “People are changing the way they connect,

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and their smartphones need to keep up. Our new Galaxy A Series offers improvements to the essential features that will support these live interactions, with diverse options to meet their ever-changing needs,” he added.

Features of the new Samsung A70, A50, A30, A20 and A10 smarthphones.

With Samsung refreshing its budget and mid-range line up, the Samsung Galaxy A50 and A70 smartphones are the most in-expensive smartphones that come with a triple camera setup and an in-display fingerprint sensor. Its

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@Businessdayng

Tuesday 23 April 2019

BUSINESS DAY

BDTECH

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E-mail: jumoke.akiyode@businessdayonline.com

Tech innovations that can help tackle youth unemployment in Nigeria

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Using mobile technology Fighting youth unemployment with mobile phones sounds like a questionable approach. However, mobile technology could be the right solution. The power of mobile technology is often underrated. You just need a mobile phone with a sim card and it can be used to connect employers and job seekers via SMS. Unemployed individuals would receive an SMS notification about available jobs and they could reply by sending their skills and experience.

igh unemployment, especially among the youths, has negative consequences on the economy of the country and population. Finding the right solution to this problem isn’t an easy thing to do. It requires the cooperation and contribution of everyone. Fortunately, technology may be able to provide some solutions.

Here are some tech innovations that can help tackle youth unemployment in Nigeria.

Investment in IT infrastructure Good technology infrastructure is the most important requirement for any technology-based solution. It is crucial to invest more in good internet connection, computer and mobile equipment, and other IT-related supports.

All these can be harnessed to train and retrain young Nigerians on relevant digital skills.

Technology in schools The importance of technology in African schools and universities is central.

Many local schools have poor access to computers and the Internet. It is significant to integrate technology into school curricula.

Technology is evolving

rapidly and the demand for digitally skilled workforce will continue to grow in the future. Technology skilled workers have less trouble finding the right job or taking advantage of business opportunities in Nigeria and beyond. eCommerce

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aijaSecCon, the annual technical cyber-security conference scheduled to hold in Lagos on the 3rd of May 2019, will play host to a gathering of top industry professionals, experts and government to discuss and proffer solutions to tackle the menace of cybercriminals and sensitive information breaches which is costing Nigeria and Africa millions of dollars in loss annually.

Currently in its third year, the conference attracts technology enthusiast, analysts and experts including chief information officers (CIOs), chief technology officers (CTOs), chief security officers (CSOs), and senior management from key industries including finance, energy, telecoms, government, education and information technology (IT).

“A global survey carried out by IBM puts an average cost of a data breach at $3.86 million, up 6.4 percent from 2017. The average cost, globally, for each loss of stolen record containing sensitive and confidential information is also up from last year, landing at $148 per record.

“A 4.8 percent increase from 2017. With about 5.6 billion Naira reported electronic banking fraud cases in 2017

by NeFF, the Nigerian scene is observed to be one of the most hit within the African space,” said Rotimi Akinyele, the lead convener of NaijaSecCon’18.

According to him, these increasing figures show the need for increased cyber security awareness and collaboration between private and public sector professionals to reduce the negative impact of data breaches and tighten digital security.

“This year’s event is a gathering of seasoned information security practitioners, evangelists, penetration testers, crypto-crackers, reverse-engineers, digital forensics analysts, and 3lit3 h4ck3r5 who will come together to deliberate and advice on solutions to peculiar situations in Nigeria’s information space”, Akinyele said.

Akinyele added that with the introduction of regulations such as the Central Bank of Nigeria (CBN) Cyber Security Framework and the EU’s General Data Protection Regulation (GDPR) coming to raise the importance of security among Nigerian companies, the event is expected to attract over 500 guests. www.businessday.ng

this, many young Nigerians have seized the opportunities presented by ecommerce platforms such as the Jumia Sales Force programme which allows sellers to earn a commission on every completed sales transaction.

15 Nigerian startups graduate from NG_Hub FbStart accelerator program

Cybersecurity conference, NaijaSecCon, to tackle rising number of data breaches Jumoke Akiyode-Lawasnson

eCommerce has grown significantly over the years in Nigeria. eCommerce platforms like Jumia and Konga have empowered many entrepreneurs by connecting them with millions of consumers across Nigeria and they are able to earn a living. Beyond

Online education E-learning platforms are one of the most popular forms of education today.

Studying has never been easier and accessible. It provides access to quality study materials in the world. There are unlimited resources for free training materials on the internet.

You just need an internet connection and a computer. You can leverage this to hone your skills and use it to apply for available jobs.

“This year’s event will showcase a mixture of both technical and governance aspect of information security whilst providing access to enthusiasts on how and where to get started within the cyber security space”, he said.

Speakers for this event include industry experts like Bharat Soni - GTBank’s CISO, Osioke Ojior – NIBSS CRO, Harrison Nnaji – First Bank’s CISO, Ikenna Onyebuchi – lead, cyber intelligence center, Deloitte and others.

The event is programed into four sections which include; A Lockpick Village - where enthusiasts and thinkers alike are served to the chills of how lockpicking works, a Cyber Security Career Village – for cyber enthusiasts, IT security pros, and those who would love to create a career within the space, the Technical Conference – with industry experts unravelling and advising on applicable threats within the space and a Live Hacking Contest – for students of tertiary institutions, a special kind of cyber security competition where security enthusiasts take part in various challenges including reverse engineering, network security, cryptography, web security, network security, digital forensics and others.

Jumoke Akiyode-Lawanson

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n fulfillment of its commitment to support and empower local start-ups and upcoming entrepreneurs in realising their business goals, Facebook in partnership with CcHub recently organised a Demo Day and pitching session for graduating startups of its NG_HUB FBStart accelerator program.

The session afforded the startups the opportunity to pitch their solutions, ranging from agritech, healthtech, etransport, virtual reality and artificial intelligence, to investors and potential customers from around the world, and for the invited guests to have firsthand experience trying out their products.

The FbStart accelerator is a research and mentorship driven six-month program for innovative and visionary teams daring to create solutions with advanced technologies. The accelerator program provides the startups with the support they need to build and optimise value driven products and match them with

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resources from Facebook and CcHUB. Speaking at the event, held recently, Kendra Nnachi, startups and developers program manager, Facebook said: “We are really proud of the growth of the pitching startups and their solutions which are very crucial for the current realities in the country and for Africa as a whole. We went around the country to different universities and hubs to search for people with innovative ideas and a passion for driving impact.

Out of those communities came these 15 startup teams who have been working on their solutions for the past six months.

We are proud of their progress, and hope that this experience will positively change their lives.”

Damilola Teidi, director of incubation, CcHub, described the partnership between Facebook and Cchub as beneficial. “We partnered with Facebook last year because as an incubation hub, we understand the intricacies and issues facing startups in the country, especially in regards to funding.

This year, we regard these pitching startups as har@Businessdayng

vested potentials and this platform presents an opportunity for optimisation and funding for them,” Teidi said.

Among the startups and their solutions were RoadPreppers who designed Lara.ng, a chatbox for public transit directions in Nigeria and other developing countries; Quadron Studios who came up with QVES, a Virtual Reality safety training solution that prepares enterprise workers for emergency situations by use of immersive virtual training experiences; Gricd Agroservices, whose product, GRICD Frij is an affordable and portable cold chain device for efficient storage of vaccines, blood and other health/ agricultural products, as well as Vetsark, a webbased platform that uses disease report data to predict, prevent and manage disease outbreaks, for the benefit of livestock farmers, veterinarians and public health.

Other startups DeepQuest AI, Project Move, Up NEPA, Treplabs, Plantheus, Cycles, Insyt, SayPeace, Chiniki Guard, Team Kanji, as well as Smart Electricity.

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Tuesday 23 April 2019

BUSINESS DAY

Investments

ENERGY INTELLIGENCE OIL

GAS

PETROCHEMICALS

Market Insight Companies Commodity Tracker Policy

POWER

NEWS

Nigeria generated N4.3trn from Petroleum Tax, Royalties in 15 months - CBN DIPO OLADEHINDE

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frica’s biggest oil producer racks in a total of N4.3 trillion from Petroleum Profit Tax (PPT) and Royalties in Nigeria oil and gas sector within fifteen months, according to data obtained from the Central Bank of Nigeria (CBN).

BusinessDay analysis of CBN’s Economic Report for the fourth quarter of 2018 showed from Q4 2017 to Q4 2018 which is a total of 15 month Nigeria earned N4.3 trillion from its upstream business in form of royalties and petroleum profit tax thanks to a combination of higher oil prices and relative stability in production.

In Q4 2017 the country earned N666.10 billion while from Q1 to Q4 2018 the country earned N3.72 trillion which represented an improvement of 106.7 per cent compared to N1.8 trillion recorded within the same period in 2017.

In q1 2018, Nigeria earned N926.33 billion which reduced slightly to N841.03 billion in Q2 while in Q3 and Q4 2018 the country earned N914.56 billion and N1.04 trillion respectively.

Analysis of the report showed earnings from royalties and PPT of N3.72 trillion from the petroleum industry in 2018 represented 40.9 per cent of the 2018 budget of N9.1 trillion and 42.1 per cent of 2019 proposed budget of N8.83 trillion.

Further analysis showed royalties and PPT revenue of N3.72 trillion generated in 2018 represents 128 per cent of 2018 budgeted capital expenditure (N2.9 trillion), 78 per cent of 2018 budgeted recurrent expenditure of N4.72 trillion and 40.8 per cent of total allocation (N9.120 trillion).

Despite the increase in crude oil price during the period, CBN Quarterly bulletin said oil revenue declined relative to the proportionate budget owing to shortfalls in crude oil production and exports, arising from maintenance at various

NNPC terminals.

“The estimated increase in production was attributed, largely, to gains from sustained partnership with government and stakeholders in the Niger-Delta region and the security measures put in place to forestall production disruption and losses through pipeline vandalism,” CBN Quarterly bulletin said.

According to the proposed budget of the 2019 fiscal year, the Federal Government projects about N3.73 trillion as oil revenues. This figure was derived from two presumptions; first, that in the year, oil will sell at

a projected $60 per barrel; second, that oil production will hit 2.3 million barrels per day. Daily crude oil production estimate of 2.3 million barrels per day is the same amount as budgeted for the 2018 fiscal year.

Nigeria’s crude oil production, including condensates and natural gas liquids, averaged 1.86 mbd or 171.12million barrels (mb) during the review quarter representing an increase of 2.2per cent, compared with 1.82mbd or 167.44million barrels at the end of the third quarter of 2018.

Crude oil export averaged1.

41mbd, representing an increase of 2.9per cent above1.37 mbd in the preceding quarter.

“With proper policies, Nigeria can definitely make more money from oil than its currently making, moreover the current oil revenue is still not enough to make up for Nigeria’s infrastructural deficit,” Ademola Henry, Team leader at Facility for Oil Sector Transformation (FOSTER II) said.

Nigeria relies heavily on crude oil revenue to fund government spending. Oil accounts for about 15percent of Nigeria’s GDP but it makes up about 80percent of government revenue. Thus, a decline in oil price has an adverse impact on government revenue, thereby increasing the requirement for borrowing and debt servicing and attendant impact on the funds available for capital expenditure.

With external reserves fluctuating at $42.83 in February 2018 a trend which will generate concern for the country economic managers who will aim to continuously defend the Naira in the face of flux in foreign reserves.

Today, Nigeria is only capable of pumping some 2.5 million barrels of crude oil per day despite sitting on more than 40 billion barrels of proven reserves with its mid-stream and downstream infrastructure are arguably in worse shape than upstream production.

EXPLAINER

Electricity customers get new meters from May 1, this is how to obtain yours ISAAC ANYAOGU

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o far, the Nigerian Electricity Regulatory Commission (NERC), the electricity sector regulator has issued permits to third party meter providers affiliated with Abuja, Jos, Ikeja and Benin Disco’s Meter Asset Providers (MAPs), in accordance with section 4(3) of the MAP Regulations to provide electricity customers meters from May 1.

Section 4(3) of the MAP Regulation 2018 requires all electricity distribution licensees to engage MAPs that would assist, as investors, in closing the metering gap and thus eliminating the practice of estimated billing in the Nigerian Electricity Supply Industry. It was envisaged that customers will pay for the meters over a period of 10 years but BusinessDay understands that this may not be the case.

To acquire new meters under MAPs, customers would apply to the DisCo that controls the franchise area he resides. For a single phase meter, MAPs will charge an upfront amount of N36,991.50 and N67,055.85 for three phase meters, the regulation said. BusinessDay gathers that customers may pay more as they could be charged for the full cost of meters including the cost meters, installa-

tion, maintenance and replacement of meters over its technical life.

Chuks Nwani, an energy lawyer said this could impact NERC’s objective of closing over 4million metering gap if customers are required to pay the full cost of the meters. “You have to factor in the purchasing power of consumers, how many of them have the capacity to pay for the full cost of the meter? It may only be possible to close 25 percent of the metering gap” Nwani said.

According to the MAPs regulation, customers are obligated to allow Meter Asset Providers access to their facility for periodic inspection of meters to ensure integrity and reading accuracy.

MAP shall arrange for the testing and calibration of customer meters in line with the provisions of the metering code. The MAP shall repair or replace faulty meters within two working days of being notified of such faults.

Where a MAP fails in this regard, the customer shall not be liable for the payment of metering service charge for the billing period unless such delays were as a result of inaccessibility to the customer’s premises, says the regulation.

From May 1, accredited MAPs will begin meter distribution. Ikeja Disco has mandated Mojec International www.businessday.ng

Limited to provide 399,790 meters within the framework; Consolidated Infrastructure Group Ltd will provide 397,922 meters as well, while New Hamshire Capital Ltd will give it 276,699 meters, to bring the total number of meters it would procure from them to 1,074,411. No figures

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were given for the procurements made

by Benin Disco AEDC has appointed Mojec International Limited, Meron Consortium and Turbo Engineering Limited to provide 487,000, 213,000 and 200,000 meters respectively while JEDC has appointed the Triple 7 and Mojec @Businessdayng

International Limited consortium to provide 500,000 meters.

The Commission says it will monitor closely the rollout plan of distribution licensees and overall compliance with the regulation and various service agreements by the MAP and electricity distribution licensees.

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ENERGY INTELLIGENCE Investment

Mega deals in Permian Basin show how much Nigeria is losing STEPHEN ONYEKWELU

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ecent mega merger and acquisition deals in the Permian Basin, West of Texas is pitting oil majors one against the other in a race to take position in the world’s most prolific oil fields as Nigeria continues to dilly-dally about reforming its petroleum sector laws.

In the week ending April 20, Chevron made public its decision to takeover Anadarko Petroleum for $33 billion, a deal seen as a watershed moment for the Permian Basin and the U.S. shale industry as a whole, Oilprice.com had reported. The deal is believed to be the beginning of a massive round of consolidation in the shale industry.

Already, the Permian has rapidly shifted in favour of the largest oil companies, with ExxonMobil, BP and Chevron betting their futures on West Texas and New Mexico.

Exxon expects to produce 1 million barrels per day (mb/d) from the Permian by 2024, while Chevron had announced plans to produce 900,000 bpd by the same date.

While ExxonMobil might not have immediate plans to depart from Nigeria, it recently joined the league of multinational oil companies selling some of their Nigerian oil assets. ExxonMobil was weighing the possibility of selling its stakes in Oil Mining Leases (OML) 66, 68, 70 and 104 with a total production capacity of 120,000 barrels per day as at 2017, which might provide an opportunity

for indigenous companies who have purchased assets worth billions from firms such as Eni, Shell, Chevron and Total in the past five years.

However, oil majors are scrambling for positions in the Permian.

The acquisition of Anadarko grows Chevron’s position in the Permian, while also adding offshore and liquefied natural gas projects to the oil major’s portfolio.

Chevron’s total production will jump almost to parity with Shell and ExxonMobil, rising to 3.6 million

barrels per day after incorporating Anadarko.

“We have always considered Anadarko as having the best positioned acreage in the sweetest spot of the Permian Delaware basin,” said Per Magnus Nysveen, head of research at consultant Rystad Energy. “Combining these shale assets with Chevron’s strong legacy position in the same area, we will now see Chevron emerging as the clear leader among all Permian players, both in terms of production growth and as a cost

leader.”

In fact, while Chevron’s prior goal was to produce 900,000 bpd in the Permian within five years, it may now be able to achieve 1.6 mb/d after taking over Anadarko, according to Rystad, pushing it far ahead of Exxon.

Nigeria’s President Muhammadu Burhari in 2018 declined assent to the Petroleum Industry Governance Bill designed to reform and lure investors in, who have not seen clarity in the sector.

The 8th Senate on April 17 passed the PIGB. “Following the adoption of the recommendations of the Technical Committee on ‘Declined Assents to Bills by Mr. President’, the @NGRSenate has once again passed the Petroleum Industry Governance Bill,” The Senate president said on its Twitter handle.

Whether the President Buhari would assent to the Bill and let in the much needed foreign direct investment into the sector will be known in the coming days.

Insight

Texas shows Nigeria how to record great strides in wind energy DIPO OLADEHINDE

W

hen people think of Houston’s energy sector, its oil and gas almost automatically come to mind, given that about one-third of the publicly traded oil and gas companies in the U.S, Yet wind energy is making inroads in Houston, Texas, a scenario that holds much lesson for Nigeria.

With over 4,600 energy-related businesses employing more than 237,000 people, Houston has earned recognition as the “Energy Capital of the World” with wind energy gaining more momentum a template for Nigeria energy space whose government have over the years being making frantic efforts to resolve its electricity challenges.

Wind energy (or wind power) is a form of renewable energy that uses airflow to generate electricity. Wind turbines are typically about 120 metres high to capture stronger winds and their blades span about 45 metres.

Susan Davenport, senior vice president for economic development at the Greater Houston Partnership, says more than 30 companies in the Houston area operate in the wind energy sector.

“Houston is actively working to grow this sector, so we hope people will seriously think of Houston when they think of renewables in this new era of energy,” Susan Davenport said at an April 9 news conference in Houston where the American Wind Energy Association released its 2018 state-ofthe-industry report.

Davenport noted that as global energy forecasts continue to show an ever-increasing need for energy, “we know oil and gas will be critical for years to come. But at the same time, as that energy mix gets larger, we know an increasing share of energy will come from renewables and we’re already capturing a sizable share of that market.”

According to a non-governmental organisation Greater Houston Partnership, out of the $5.2 billion in venture capital reeled in by Houston businesses from 2015 to 2017, renewable energy accounted for more than 35 percent.

Davenport said Houston is “uniquely suited” to support companies involved in wind energy and other types of renewable energy, thanks to its deep pool of energy-oriented talent.

The American Wind Energy Association’s annual report for 2018 shows the wind energy sector employs www.businessday.ng

between 25,000 and 26,000 people in Houston and elsewhere in Texas, up from 24,000 to 25,000 in 2017, with the total investment in Texas wind energy projects sitting at a whopping $46.5 billion. More than one-fifth of wind energy jobs in the U.S. are located in Texas.

Also, information from American Wind Energy Association revealved 38 non-utility companies have bought or are planning to buy 4,900 megawatts of wind energy in Texas, including Shell

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Energy, AT&T, Budweiser, ExxonMobil, and Walmart.

“Texas continues to lead the nation, with hard work and ingenuity, in harnessing this great American renewable energy resource, literally out of thin air,” says Tom Kiernan, CEO of the Washington, D.C.-based American Wind Energy Association.

“Texas has a long and storied history of energy production and as [our] report demonstrates, wind is an important part of the state’s energy @Businessdayng

success story. In many ways, the Texas wind story is the story of American wind power.”

While Texas and Houston seems to be growing and expanding its renewable energy space, Nigeria still depends on non-renewable energy despite its vast potential in renewable sources such as solar, wind, biomass and hydro.

The total potential of these renewables is estimated at over 68,000MW, which is more than five times the current power output.

Electricity generation for Nigeria’s grid is largely dominated by two sources - non-renewable thermal (natural gas and coal) and renewable water or hydro. Coal and natural gas make up the largest portion of energy production in Nigeria, while energy generated from hydro is well below potential. As a result of wide gap between demand and output, only 45percent of Nigeria’s population have access to electricity.

This power deficit has also weighed negatively on business operations in the country making users seek alternative energy means, primarily through buying gas or diesel-powered generators which are relatively expensive as most businesses that use them incur high production costs.

32

Tuesday 23 April 2019

BUSINESS DAY

OFFGRID BUSINESS FUNDING

Off-grid operators’ call for partial risk guarantees is asking for the moon ISAAC ANYAOGU

S

ince Azura Edo IPP was delivered on budget and ahead of project delivery date, every investor in Nigeria’s energy sector including off-grid operators now wants the Azura financing template where the Federal Government provided a sovereign risk guarantee.

The demand for a partial risk guarantee was prominent in the communiqué issued at the end of the 4th Nigerian Energy Forum (NEF) held on April 9-10 in Lagos, organised by the Nigerian Institute of Electrical and Electronics Engineers.

“Local and international partners must mobilize private investments for renewable energy projects, including off-grid and commercial and industrial captive power schemes, with partial risk guarantees provided by the public sector,” the communiqué signed by Oluwole Adeuyi and John Funso-Adebayo, executive members of NEF. Nigeria’s off-grid sector is awash with cash and is key sector attracting new foreign direct investment.

The European Union formally launched a € 30 Million fund for renewable energy projects in Nigeria at the forum where over 230

participants attended the forum, including representatives of government, energy industry associations, development partners, entrepreneurs, academia and the private sector.

Participants at the conference agreed that with partial risk guarantees, new investments will come into the sector. Partial Risk Guarantees (PRGs), also known as political risk guarantees, cover private lenders and investors against the risk of the government or its agency defaulting on its obligations in a private undertaking

PRGs experts say are designed to provide comfort to investors and debt providers for risks that are beyond their control and that they might otherwise be unwilling to assume. They mitigate risks to produce more competitive loan pricing and enable the financial institutions to reduce their allocation of risk capital in accordance with the rules. PRGs provides a powerful incentive to abide by contractual commitments and undertake policy and regulatory reforms necessary to mitigate performance risk.

Many of the projects, the Nige-

rian government has executed with international financial institutions have included PRGs with the World Bank such as the Azura Edo-IPP, $500m Calabar gas plant and Seven Energy $112million facility.

Promoters of the Azura IPP presented a watertight project complete with partial risk guarantee from the World Bank and backed the government to a corner.

A default could cause reputational risk for Nigeria in the event the Federal Government decides to treat the contract in its usual cavalier manner.

Experts say this is a key reason why the government has been unwilling to grant new PRGs to the power sector especially the offgrid sector where the market is not fully developed. Analysts say the 14 Solar IPPs have stalled because of similar demands from investors to a Federal Government who is highly indebted.

The communiqué also demanded among other things for Improved coordination and collaboration among key energy stakeholders in the public and private sector, development of more efficient power and cooling technologies to reduce energy demand, enable digital energy management, minimize noise pollution and improve cost savings, thereby promoting environmental sustainability.

It also called on renewable energy investors and developers to explore innovations in financial engineering for making bankable projects, minimizing risks of currency depreciation, increasing new connections and creating new jobs in a low-carbon economy. It also called for the creation of a Clean Energy Infrastructure Fund by the Bank of Industry and the Central Bank to empower local operators and competitive regulatory regimes.

INSIGHT

Checkout Latest Thermal Energy battery about to enhance renewable energy DIPO OLADEHINDE

A

new narrative is about begins in renewable energy space as a South Australian company Climate Change Technologies (CCT) Energy Storage has unveiled the world’s first operational Thermal Energy Device, a battery that’s cheaper than lithium-ion batteries, with the capability of storing six times more than traditional batteries, and is completely recyclable.

hold 1.2 megawatts of energy - storing it at more than 12 times the density of a lead acid battery.

The battery has a lifetime of at least 20 years and can store six times more energy than the lithium-ion equivalent for between 60percent and 80percent of the price.

Because of the modular design, the Thermal Energy Device is easily scalable by connecting multiple boxes (each one fitting in a 20ft

container along with all its input and output electronics) together.

In the case of a power outage, each Thermal Energy battery can remain active for around 48 hours.

Expectations Engineering team at CCT expects the battery to be used to provide power away from existing grids, such as remote communities, telecoms networks and transport systems.

What is Thermal Energy Device?

Thermal Energy Device is a modular energy storage unit that accepts any kind electricity such as surplus power from wind, solar generators or straight off the grid .The energy is stored at more than 12 times the density of a lead acid battery, before being used to power a generator to provide current.

According to CCT Energy Storage, Thermal Energy Device has similar functionality to lithium-ion and lead-acid batteries; it can take any form of electrical input and create Alternating Current (AC) or Direct Current (DC). A standard Thermal Energy Device box can ANALYSTS: Isaac Anyaogu (Team Lead), Stephen Onyekwelu, Dipo Oladehinde

CCT Chief Executive Serge Bondarenko said Thermal Energy Device had the ability to change the global energy market by providing the most affordable and environmentally friendly alternative power source.

“We believe energy is a resource that should be accessible to all corners of the globe – and that means it’s vital to provide an energy source that’s cost effective, environmentally safe and sustainable,” Bondarenko

said on the company website.

“TED is the first battery of its kind and will be a game changer in the renewables space, with the ability to significantly reduce power costs while providing versatile and long-lasting energy with little to no environmental effect.”

When is production expected to start?

The South Australian based CCT Energy Storage said production of the battery will begin immediately at the business’ Lonsdale plant as European energy partner MIBA Group will make and distribute it to Denmark, Sweden and the Netherlands.

The business, which is based in Lonsdale, South Australia, will supply at least 10 Thermal Energy Device units to commercial customers this year; production is expected to increase to more than 200 units by 2020.

TED’s prototype was first conceived in 2011 by a team of scientists and engineers. The company now is now working with researchers at the University of South Australia to reduce the melting point of the silicon substrate, which will further reduce the battery’s end cost.

Feedback: 07037817378, 08137433034, 08135447789

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

Tuesday 23 April 2019

BUSINESS DAY

33

LEGALPERSPECTIVES With Odunayo Oyasiji Case Review

Civil Design Construction Nig. Ltd. V. Scoa Nigeria Limited (2007) LPELR-SC.216/2001

T

What to note: his matter bothers on issue of hire purchase. It addresses the issue of whether a hirer can under common law repossess the hired goods without an order of court.

Fact: The plaintiff/appellant (plaintiff at the trial court and appellant before the Supreme Court) bought an Ingersoll Cyclone Water Well rig with registration No. LA 2632 WD from the defendant/respondent for the sum of N431,842.00 under a Hire Purchase agreement. The rig became his after he fully paid for it. The appellant also bought another rig with registration number LA 8509 WD under hire purchase agreement from the respondent for the sum of N514,482.00.

The appellant paid the sum of N414,482.00 while the sum of N100,000 in two instalment of N50,000 each remained unpaid.

The facts of the foregoing two transactions were not disputed by the parties.

There is a third transaction which is the main source of the dispute in this matter.

The transaction is about road scrappers.

The appellant claimed that it bought a road scrapper each on 26/1/84 and 10/2/84 for the sum of N159,903.00 and fully paid for them. He claimed that they later agreed that the money paid for the two scrappers be credited to the appellant on account of the purchase by the appellant on hire purchase terms of one new rig and two service rigs. He further stated that the respondent told him that they cannot carry out the agreement. On this basis, he claimed to have instructed the respondent to sell the scrappers and refund the amount paid on it to him.

The respondent on the other hand contended that each of the scrappers were sold for N177, 162.00 and that the appellant is still owing the sum of N34,518.00 on the two scrappers. The respondent further stated that the appellant bought two other scrappers without making any deposit. Rather, he deposited its rig No. LA 2632 WD as security. The respondent claimed that the appellant instructed that the four scrappers be delivered to Sokoto Agricultural Development Project (SADP) and that they have delivered them as instructed. The appellant denied ever giving such instruction.

It was on the basis of the foregoing that the appellant instituted this matter at the High Court of Lagos State. Judgement was given in favour of the appellant at the trial court while the respondent was favoured at the Court of Appeal.

Issues for determination The counsel for the appellant submitted the following issues for determination“1 In the circumstance of this case, and in particular having regard to the issue of estoppel and the presumptions of law that arose in this case, was the Court of Appeal right in holding that the Common Law as opposed to the Hire Purchase Act, (Cap.

169 L.F.N) governs the transaction relating to the motor rig registered as LA 8509 WD? 2 With regard to the plaintiffs 2 scrappers and the reliefs sought for their conversion/detinue what reliefs should the Court of Appeal have awarded in the circumstances of this case?

3 In the circumstances of this case, what is the correct measure of damages for the seizure of the plaintiff’s rigs?

4 Was the award of the sum of N108,324.16 to the defendant made on the correct principles of law?”

The respondent submitted the issues below for determination“1. Whether there was evidence to support the award of damages made by the Court of Appeal.

2. Whether the Court of Appeal was justified in making a fresh appraisal of evidence already appraised by the trial court.

3. Whether the Court of Appeal was right when it held that Exhibit D3 was in-admissible and evidence of fact not pleaded.”

Arguments/ SubmissionsThe appellant while arguing issue 1 submitted that the fact that 100,000 naira still remains unpaid with regards to rig No. LA 8509 WD is not in dispute. He noted that the sum of N414,482.00 had been paid. He stated that the transaction was governed

by Hire Purchase Act and not Common law as claimed by the Respondent. This is because the rig No. LA 8509 WD is a mechanically propelled vehicle intended or adopted for use on roads and duly registered as a motor vehicle.

He further submitted that the position of the Court of Appeal that the transaction was governed by common law as the agree-

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ment did not incorporate the provisions of Hire Purchase Act since it did not state that repossession will not be possible after the payment of 3/5th of the purchase price is an erroneous one. This is because section 2(c) of the Hire Purchase Act and the schedule to it were reproduced verbatim. Also, Clause 6 of the agreement contains restriction of owners right to recover goods, it is only in the Hire Purchase Act that such restriction exists. No such restriction exists under common law as long as the hirer is in default with regards to the payment of instalment. Therefore, the agreement is governed by Hire Purchase Act and that it is wrong for the respondent to have repossessed after the payment of 3/5th of the purchase price.

He argued that even if common law is to govern the agreement, repossession cannot happen after the payment of 50%-60% of the purchase price without recourse to the Court.

The counsel to the respondent submitted that the transaction is not within the purview of the Higher Purchase Act. He stated that the failure to state in the agreement that the respondent cannot repossess after the payment of 3/5th of the purchase price is a confirmation of the fact that the parties do not want the Hire Purchase Act to govern the transaction.

Judgement The court held that “even under the common law, if it were to apply to the facts of this case, which I do not concede, the respondent cannot seize or repossess the rig without recourse to the court, It is therefore not the case that if the common law applies, the respondent can repossess the rig by seizure or otherwise than

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as provided by law, particularly as it is in evidence before the court that appellant had paid up to 60% of the purchase price of the rig in question which fact has not been disputed by the respondent. I therefore hold that the Hire Purchase Act applies to the transaction between the parties and that as it is admitted that appellant has paid 3/5th of the purchase price of the rig in issue the respondent cannot in law repossess the rig otherwise than in accordance with the law”.

The court further held that “Even under the common law, it is settled that a hirer cannot repossess the hired goods without an order of court. In the instant case, it is not disputed that the respondent never obtained the leave of the court before seizing the rig in issue. In short, in either way, the respondent’s seizure of the rig in question was in breach of contract and therefore condemnable. It is therefore clear, and I hereby hold that the respondent having seized rig No. LA 8509 WD in violation of the provisions of the Hire Purchase Act cannot recover the outstanding installment of N100,000.00” Conclusion From the above judgement of the Supreme Court, it is established that recovery or repossession based on default with regards to payment of instalment is not an automatic right under both common law and Hire Purchase Act. Recourse must be had to court when attempting to recover a property that is subject of hire purchase after the person has already paid 50 to 60 percent of the purchase price. This is even expressly spelt out under the Hire Purchase Act i.e. after payment of 3/5th of the purchase price recourse must be had to court before the property can be repossessed.

@Businessdayng

34

Tuesday 23 April 2019

BUSINESS DAY

BOOK SERIALISATION

W H Y N OT Citizenship, State Capture, Creeping Fascism, and Criminal Hijack of Politics in Nigeria

Continued from Tuesday

Chapter VI The Gideon §project Finding Grass and its Roots

S

ame could be said of the now party chairman, Adams Oshiomole.

When the shambolic primaries in Delta State finally played out, one of the first to call me was the Ondo State Governor. “Is Adams not supposed to be your friend” he asked. That is what you get from having unreliable friends. With friends like him here, it is probably better to have enemies.

In the fortnight before the primaries, I came to see the ugly side of insincerity in making trips almost every other day at the urging of supporters. These trips, I came to realise, were just to respond to demands for payments, screening, checking on the party for failure to meet its obligations under guise of providing election guidelines, a delegate list and other requirements.

Then there were several other meetings called by the party chairman, Adams Oshiomole, to manage the crisis in Delta APC, a great part of which he created.

All these trips, providing flight tickets, local transport fares, hotels, security and one or two accompanying aides were setting me back by nearly $7,000 (seven thousand US dollars) per day. No one bothered to ask how these purposeless meeting trips were being financed.

When, in a meeting called by the Vice-President, Professor Yemi Osinbajo on December 3, 2018 at his Aguda House Lodge, former Delta State Governor Uduaghan indicated there were feelers that the decision to “give” the ticket to Ogboru had been made long before Oshiomole was elected chairman and he, Uduaghan moved from PDP to APC, I wondered how none of the friends hinted at such to me.

If Oshiomole knew that was the game, was he not obliged, as a friend to hint me of this?

He would have prevented me from wasting all that money and exposing myself to the risk from accidents whilst travelling, and the violence that goes with the territory?

For a person who often put his life on the line for friendship, the biggest challenge of the exercise is finding people who could say the most generous things about you but act, without provocation

against your interest.

In all the games leading up to the APC primaries, I expected my friend would ensure that I got a level playing field. I did not expect to be given any unfair advantage over any other but the last thing I could have expected was that the friend would lead the abuse of the rule of law at a level of impunity that would make the APC primaries the most indecent experience I have ever been exposed to. Even with the assassination attempts under Abacha, and tiffs in which President Obasanjo considered me, who had led his policy advisory team, a bitter opponent because he saw me as supporting the efforts of the then Governor of Lagos State, these paled in comparison to this experience.

As the games toward September 30 gathered momentum, I had moments to reflect. One point of reflection was the Chris Asoluka perspective.

My long-standing friend, Dr Chris Asoluka, had for long been active in practical politics but was repeatedly out-played. He informed me that people had called to ask him if it was true that I was considering running.

I told him the story of the groups trying to get me to commit to a run. “In that party called APC” he asked. Why not in APC, I asked.

Responding with another question, he continued, “Is it not obvious that they despise you?

How can anybody play the kind of role you played in their 2015 victory and be so side-lined?

They did not even have the decency to offer you even a seat on one small board to shield their dislike for what you stand for.”

I laughed and acknowledged that no government, since I was 19, some 40 plus years before, had made more effort to shut

‘‘

Why would a party I made my reputation available to and the leverage of my significant following to work for when I thought the Jonathan train needed to be stopped before we all end up in a ditch www.businessday.ng

me out.

But with how busy I have been, how would I have survived the load of work if they had not been so determined to exclude me.

He insisted that I be careful because it could be the leaders of the party, who he called sharks and indecent people, who may have been sending those people coming to urge me to run so that they could get an opportunity to rubbish me for good.

I asked of what benefit it would be to them to rubbish someone who was still bing accused of being the reason the youth and the business community dropped their scepticism toward candidate, Buhari. It was a rhetorical question. I was essentially trying to force the point that Nigeria is a mess because those who should be fighting to restore its dignity are far too concerned with plots to tarnish them, so they watch as the country descends into the abyss and then they plan to emigrate. If no one fought to make things good in Canada and the United States,

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would it still be open to those shipping out to those climes?

“Is it not staying inside that den of demons and sharks that you can fight back for the people” I asked him. His response was, “Na you sabi.”

As the rush to September 30 with its layers of intrigue gathered momentum, I found a true sense of mission in being stubborn in the face of the truths Chris Asoluka highlighted. Why would a party I made my reputation available to and the leverage of my significant following to work for when I thought the Jonathan train needed to be stopped before we all end up in a ditch, be so desperate to “rubbish” me?

Why would a party I spent hours and days working on its roadmap and manifesto, as pure service, with the meetings hosted in my home, desire ill of me?

For Chris and others, it is about greedy, evil people who have captured the party and fear people who speak the truth; and, may be reluctant to cooperate in some of the evil plots that they

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hatch.

My view of man is slightly less pessimistic. Some elements, when they get power, think that their views on every matter is ordained from heaven. They are therefore deeply distrustful of anybody who may not swallow everything they say.

I had repeated arguments with Chief John Oyegun, the previous party chairman who said I was a cti ng n e u tra l on matters of policy affecting the party. I told him that I was trying hard to keep quiet because the government was pursuing policies that contradict positions, I had taken most of my adult life.

T h e e xtant political culture in Nigeria has been a b o u t p o w e r a n d domination. As Lord Acton said l o n g a g o , “Power corr u p t s, absolute powe r corrupts absolutely.” Those who are in positions of authority in Nigeria arrogate absolute power to themselves. That view of absolute power means deafness to other points of view. APC became challenged because it resisted attempts to have internal party conversations and feedback. I offered Oyegun my services to help build such structures many times. But he was not interested.

That philosophy has performance failure written all over it because those who could have an insight into a different way can get forced into silence or into rebellion. The failure of governments in Nigeria largely comes from the inability of political parties to find alternatives to different or competing ideas within a certain ideological spectrum. To be brutally honest, if these were a real democracy in Nigeria APC had become unelectable by 2019.

The price Nigeria has paid for that has been a recursive economy and high levels of uncertainty which deter investments, has been high. But little get measured and discussed.

At that stage I began to define my mission as saving the

Tuesday 22 April 2019

BUSINESS DAY

35

BOOK SERIALISATION political party shop that was inadvertently contributing much to Nigeria’s decline than to its progress. Running, for me, with no disposition for holding office was therefore a gift from heaven.

When you talk about treachery and betrayal in Nigerian politics people laugh it off as naive. Politics they say is about treachery. If that be politics, then it needs to be reinvented for trust is central to any collaborative human endeavour. It is not hard to see that Nigeria becoming the poverty capital of the world has a direct relationship with the environment being a low trust one. The culture of low trust creates much uncertainty. Uncertainty triggers high transaction costs resulting in the non-competitiveness for the country which also reinforces perception of national character as unreliable. All are disincentives to trade and investment. In addition, they impact negatively the believability of communication, making it easy for fake news to take root and trigger violence.

Why would people smart enough, even if in crooked ways, to rise to the top, act in ways that could gravely diminish their own country and hurt the many people that look up to them for leadership? Even if a certain level of self-interest is served by this damaging course of action, surely it should be possible to find a different way.

When I put this question to a focus group of senior Nigerian politicians, I was shocked by what I heard. One elderly former minister was blunt : “Why do you think they will not let you become Governor even if they are supposed to be your friends?

Well, a State like Delta is a cash cow. If they need 5 billion naira in a hurry, they call the Governor of Delta who has prostrated and grovelled before them and the money is delivered pronto.

They know they cannot dare that with you because they will get a sermon on the welfare of poor people in the State. So, they may enjoy having you around to burnish their reputations or help with things they are not equipped to think through, but they certainly do not care enough to let you block their access to the gravy train.”

Suddenly, I began to put into perspective Senator Peter Nwoboshi’s remark from two decades before that many of his colleagues in the cabinet were unhappy with my frequent complaints about how corruption was hurting development. So, I asked: can they really hate the people that much? His retort was quick and sharp. It was not about love or hate, it was about interests. You may sneer at an interest to own a vacation home on every continent, but to some of them it matters more than whether Nigeria is signposted as the poverty capital of the world or not. I could not but quietly begin to hum Etcetera’s ballad, Ring the Alarm… who will save us now?

‘‘

My pain today is that 8 out of every 10 young people I meet want to leave Nigeria. It is hard to blame them when their apparently successful senior brothers with good jobs in the banks, professional services firms and even oil companies are quitting their jobs and moving with their families to Canada A Day in Infamy September 30, 2018 in Asaba is a day that belongs in infamy.

It belongs there not because a supposed primary election was rigged, but because it was done so unintelligently that those who organised it ought to go to jail. Not so much for the criminality of what they did but for how it exposed them to be low lives.

I have earlier stated how I wrote to the national chairman and then to Jones Erue, the purported state chairman demanding for guidelines for primaries and a delegates list as stated in the INEC law, receiving no answers.

On the night before, I got a call from a university professor who claimed to work for INEC. He said he was looking forward to meeting me in Udu, ostensibly the venue for the primaries.

I told him nothing would make me go to Udu, two and half hours from the State capital.

That drive for the primaries was clearly not on my plan. Up to that point in time, no one had communicated the venue to candidates.

A call to the former Governor Uduaghan who just joined the Party but who seemed to have taken over in many ways, showed that Erue had tried to move the venue of the primaries at the instance of Ogboru and Omo Agege. He, Emmanuel Uduaghan, had then advised that the consequences would be grave, especially for the personal security of the people involved.

This led to a last-minute return to Asaba. It was to the Party Secretariat in Asaba that we were hastily summoned to at noon on that Sunday. We were requested to come to a meeting with the panel sent from Abuja to conduct the primaries.

The briefing exercise by the chairman, General Larry Onoja, which I captured on camera for www.businessday.ng

posterity and through which I continue to see the face of perfidy, was disgraceful. Even on the day of the primaries, Onoja failed to produce a delegates’ list.

Somehow, the so-called ‘monster’ PDP party gave their members who paid for the expression of interest forms, delegates lists, along with their receipts. The Party of change could not manage that.

The APC had effectively carried out 419 advance fee fraud against its members, collecting huge sums of money from people, then planned not to give them a chance to participate in the elections.

From the perspective of a student of institutions and economic performance, this was a national tragedy; Nigeria’s national character was already, unfair as it may be, that of a nation of fraudsters. Now, even their ruling party was engaged in institutionalised 419. I felt such sorrow for my country. Cry, the beloved country.

Chapter VII A Path from Serfdom Can Nigeria escape from this pit into which poor leadership and politics have entrapped it?

I have spent a great deal of my time mentoring young people.

Many of the new breed leading public speakers, media top cream and management consultants were part of a network I created 20 years ago to support the generation next. Some in the group include; Fela Durotoye, Linus Okorie, Lanre Olusola, Bishop Feb Idahosa, Deji Adesanya, Ubong Essien, Chude Jideonwo, Debola Williams and many more. As they became leading lights, one is now a presidential candidate, another a gubernatorial candidate and a third is the first certified public speaking professional in West Africa, the value of investing in people is a crystallising factor for me.

With each batch moving to the front row, I began to turn to younger ones. My pain today is that 8 out of every 10 young people I meet want to leave Nigeria. It is hard to blame them when their apparently successful senior brothers with good jobs in the banks, professional services firms and even oil companies are quitting their jobs and moving with their families to Canada.

To observe this and do nothing about laying out a roadmap for reclaiming Nigeria and setting for it a new course will be to curse the privilege of citizenship that birth into the country has given. So, quo vadis Nigeria?

What would be ideal is for the political class that has hurt the prospects of the country so much, with its obsession through capturing power for personal aggrandisement deployed in impunity and total disregard for the rule of law and the dignity of others, to do a public mea culpa.

I recognise that is not so likely. Yet, there is still the op-

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tion of bringing together those who once profited from the system but lost out in the scramble without clear rules to form a league of wailers to shut down the system.

The trouble is that the nature of the system is such that many of those people, because of the opportunistic nature of ascendency, lack much personal power, influence and loyalty such that the moment they are removed from the position their value to any movement begins to crumble.

Will Nigeria’s scavengers rethink their parasitic dependence on the state by exposure to information about economic decline looming? When HSBC and UBS closed shop in Nigeria in the third quarter of 2018 and trends like oil companies such as SPDC and Exxon Mobil reducing their operations to thread bear minimum with so many job losses, it did not lead the National Assembly to reconsider its allocation to itself. It seems so obvious now that once there is some oil being sold, the vultures will hover, waiting for the elephant to fall and die so they can scavenge. So, who will save Nigeria? What road must Nigeria travel to liberation?

Drawing from experience, what can Nigeria learn from Rwanda that rotted before the eyes of the world in that horrendous genocide and is today example of parchments of hope in Africa?

L eadership and the Paul Kagame mystic has come in for praise here just as Singapore rose on the back of Lee Kuan Yew’s leadership, and Malaysia on that of Mahathir Mohamad. In many ways, Brazil’s revival certainly owes a lot to the leadership of Henrique Fernando Cardoso and Inácio Lula Da Silva.

Surely leadership matters and a process for selecting, grooming, and deploying leadership talent in the public sphere of the modern era, political parties will have to be up to speed. Nigerian political parties have proved to be big failures here and are indeed perceived to be under criminal capture with possibilities of reducing governing in Nigeria to a criminal enterprise

‘‘

The failure of governments in Nigeria largely comes from the inability of political parties to find alternatives to different or competing ideas within a certain ideological spectrum

@businessDayNG

@Businessdayng

and the grave consequence of the country being seen as a rogue state.

Leadership may matter significantly to how Nigeria is salvaged but cannot be a standalone solution. Indeed, leadership may be necessary but not enough for the redemption project.

There is an existential crisis for Nigeria today that is derived from a view of Nigerian national character that is not salutary. Re-programming will have to involve building consensus around the Nigeria project among a purposeful new elite.

Nigeria needs new founding fathers who should begin with new values, new structures and a new national purpose. The path from serfdom is more rigorously engaged in the companion volume, In the Devil’s Den, but a few things are imperative to escape onrushing anarchy.

They include leapfrog initiatives in education and healthcare; government focused on the people and the common good; strategy based on dominating the value chains of factor endowments where Nigeria has obvious latent comparative advantage and creating citizenship culture that breeds patriots.

Of even greater urgency in liberating Nigeria is a focus on reengineering and rebuilding key institutions, beginning with the rule of law and property rights.

Both have been so violently and systematically abused that it makes uncertainty central to the Nigerian condition.

I have said so frequently that the biggest risk to doing business in Nigeria is regulatory risk.

The number of South African companies that have come and departed Nigeria, not to talk of current MTN travails with fines that will wipe out their profits for a generation.

Worse can be found with the story in banking and oil and gas where a combination of leadership problems and institutional weaknesses not being addressed in election campaigns because of the hijack of the political parties and process by those not given to rigour of sober reflection.

A more active diaspora has to energise visions of a new Nigeria as has been the case with the Meiji Restoration in Japan and the recent rise of India and China.

Chapter VIII Reclaiming A Lost But Blessed Land The evidence that those who have had an iron grip on Nigeria’s fortunes and possibilities for a generation are lacking in wisdom is not hard to find. Some of it has been provided in the foregoing chapters. A people who cannot even identify their own longterm self-interest cannot be fit for purpose in nation-building.

The imperative of liberating Nigeria from such a corrupt self-centred group of people has become the imperative of the moment.

Continues on Wednesday

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Tuesday 23 April 2019

BUSINESS DAY

NEWS

FG achieved 66.22% capital expenditure performance in 2017 –FRC

One year of Edo-BEST: Stakeholders laud Obaseki on revamp of basic education

iscal Responsibility Commission (FRC) says the Federal Government achieved 66.22 percent capital budget performance in 2017, with projects cash backed up to N1.56 trillion.

The figure was obtained from the FRC 2017 Annual Report and Audited Accounts on Monday in Abuja.

The report said that of N2.17 trillion allocated for capital expenditure in 2017, only N1.439 trillion was utilised by Ministries, Departments and Agencies (MDAs).

The figure leaves a balance of N734.5 billion as either not cash backed or utilised.

The report described the performance as impressive compared to the 2016 record, which had only N1.58 trillion as capital expenditure and N1.21 trillion cash backed projects.

“According to the Budget Implementation Report (BIR), as released by the Budget Office of the Federation (BOF), as at June 12, 2018, a total of N1.56 trillion was released and cash backed to MDAs for 2017 capital projects and programmes.

“The sum of N303.46 billion was released in the first batch or warrant, N365.35 billion in the second, N66.42 billion in the third and N19.67 in the fourth batch or warrant.

“Additional releases of N23.30 billion and N784.94 billion as Au-

...8,700 teachers trained; 7094 teaching tabs distributed

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thority to Incur Expenditure (AIEs), were made.

“The report also revealed that N1.439 billion or 92.12 per cent of the total amount released and cash backed were utilised by MDAs as at June 12, 2018, which signified the end of the 2017 capital budget implementation.”

The report showed that of the 40 MDAs captured, most of them did not fully get the amount appropriated to them in the budget, while some had releases that were more than appropriated to them.

However, some had releases but did not fully utilise them.

The Ministry of Finance, which had an appropriation of N5.181 billion received N9.96 billion and cash backed, but utilised N5.593 billion, while Foreign and Intergovernmental Affairs had N10.29 billion appropriated but got and utilised N16.97 billion cash backed.

The Ministry of Communication Technology was appropriated N8.434 billion, had N9.624 billion released, cash backed and utilised, while the Ministry of Budget and National Planning was appropriated N4.092 billion, had N5.057 billion released, cash backed and utilised.

Some of the MDAs that did not fully utilise their releases are the Ministry of Education which was appropriated N56.81 billion, but had N33.424 billion released and cash backed but utilised N31.61 billion.

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takeholders in the education sector have commended Edo State governor, Godwin Obaseki, for revamping the state’s basic education sector through the Edo Basic Education Sector Transformation (Edo-BEST) programme, noting that the initiative has revolutionised the sector.

A cross-section of stakeholders, who spoke to journalists, said in the last one year, the state government has shown rare commitment to improving learning outcomes at the basic level of education resulted in the training of over 8000 teachers on the use of digital tools in primary schools across the state.

They hailed the renovation of schools across the state, noting that the governor’s sincere and systematic approach to addressing challenges in the basic education sector cannot go unnoticed.

Esther Ehiagwina, a parent with two pupils in Emotan Primary School, said the intervention of the state government had saved public education at the basic level and boosted the confidence of parents who have now returned their wards to public primary and junior secondary schools across the state.

“What I can tell you is that with all the reforms carried out by the state government, we have seen a tremendous change in teaching and learning at the schools. It has made parents like me confident in

the system. After the teachers were trained and dilapidated schools repaired in my area, I had no choice but to bring back my kids to the school,” she said.

Special adviser to the Governor on Media and Communication Strategy, Crusoe Osagie, said, one year ago, Governor Obaseki initiated Edo-BEST, which deployed a mix of approaches to tackle challenges facing the basic education sub-sector, noting, “The state government’s vision for sustainable development can only be achieved when children at the basic education level get the best of education in line with modern trends and global standards. This will make children learning in public schools across the state globally competitive.”

He explained, “Not less than 8,700 teachers have been trained on modern teaching techniques to improving learning outcomes in 931 schools across the state.

170,000 pupils’ electronic records have been created which has made it easy for parents to keep tab of the progress of their wards in schools.

20,000 new students have enrolled in public schools in the last year.”

He said 234 schools across the state were under renovation/construction, which was a deliberate effort by the state government to improve conducive teaching and learning environment.

SHIN responds to killing of Korean at LADOL free zone … says shooting was deliberate KELECHI EWUZIE

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amsung Heavy Industries Nigeria (SHIN) has described as false the claims by LADOL and the Nigeria Security and Civil Defence Corps (NSCDC) that the shooting of a Korean employee at LADOL free zone by an operative of NSCDC was in error.

Speaking with journalists in Lagos on the shooting, which claimed the lives of the Korean and an operative of NSCDC, Jejin Jeon, managing director of SHIN, stated that the LADOL guard fired deliberately at his NSCDC colleague, killing him with three shots at the scene, before moving away to a different location where he also deliberately shot the Korean employee that had been working in a crawler crane within the SHI-MCI yard.

Jeon, who also showed journalists video evidence of the incident to back his claim, stated that the statement by Mohammed Abdullahi Gana, commandant general of NSCDC, that the NSCDC guard opened fire “in error” was also false, insisting that the shooting was a deliberate and unprovoked attack.

He recalled that after the killings, the gunman then made his way to the front gate of the SHI-MCI yard where he threatened SHI-MCI’s unarmed guards and demanded to pass the gate, adding that the shootings could not have been accidental.

He also faulted the press state-

ment issued by LADOL where it claimed that the Korean employee was in a “stable condition,” when the employee had already died.

According to Jeon, the Korean employee was never in a stable condition as his injuries were life threatening, as he was in a critical condition from the moment he was shot until the moment he died.

He stated that LADOL’s statement that he was in a “stable condition” issued after the SHI-MCI employee had already tragically died was a deliberate attempt by LADOL to downplay the seriousness of the matter.

“Thirdly, LADOL falsely state that they were providing ‘every support we can to those impacted and their families.’ LADOL have provided no support to the Korean employee, or to his family or to SHIMCI since the incident. They made no communication to the employee or his family whatsoever, either privately or publicly, and have offered no other support as of now. To this date, there is no public apology to the Korean expatriate that lost his life.

“Fourthly, LADOL falsely stated that the incident was, ‘contained entirely within the fabrication and integration shipyard at LADOL.’ The gunman threatened the SHI-MCI security guards at gunpoint to pass the gate. He then exited the gate to the area outside the fabrication and integration yard,” he said.

SMEDAN deepens investment in MSMEs, trains 312 entrepreneurs in Ogun, Bayelsa, Kaduna RAZAQ AYINLA, Abeokuta

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Picknickers having fun at Johnson Jakande Tinubu (JJT) Alausa Park and Garden, during the 2019 Easter Monday holiday in Lagos, yesterday. Pic by David Apara

LCCI urges Buhari to sign CAMA Bill to bolster MSMEs ODINAKA ANUDU

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agos Chamber of Commerce and Industry (LCCI) isurgingPresidentMuhammadu Buhari to assent to the Companies and Allied Matters [CAM] Bill 2018 in order to catalyse the growth of micro, small and medium enterprises (MSMEs).

The chamber says the CAMA Bill2018isalaudablemovetomake a 29-year-old legislation more contemporary and bring it in tune with theeaseofdoingbusinessagendaof the present administration.

Muda Yusuf, director-general, LCCI, in a statement sent to BusinessDay, says the bill, when signed

intolaw,willreducethecostofdoing business, especially for small businesses, while boosting their growth andpromotingeconomicinclusion.

He says it is capable of boosting thenumberofjobscreatedbysmall businesseswhileencouraginginformal sector players to move into the formal sector.

The CAMA has been in operationsince1990,butconcernsbythe private sector have forced amendments to the bill as many of its provisions are not in tune with current business realities. Having been passed by the National Assembly, it is on the table of President Buhari, waiting for assent.

“The LCCI urges the president www.businessday.ng

to expeditiously assent to the bill in view of its immense potential impactincatalysingthegrowthand transformationoftheMSMEsinthe Nigerian economy,” he says.

He believes that the bill will make it possible for a company promotertoestablishaprivatecompany with only one shareholder and simplify the processes for the registration of Private Company Limited by Guarantee.

It will review of the concept of ‘authorised share capital’ to be replaced with ‘minimum share capital, thus saving the promoters the trouble of having to pay for sharesnotneededataspecifictime, he explains.

“It will broaden the scope for technology applications in compliance processes. CAM Bill 2018 has provisions for electronic filing, electronicsharetransferande-meetings for private companies. This would make the processes smarter and cost effective,” he says.

“Inthelightofthehugepotential benefits of this law, we request that the bill be expeditiously signed so that the SMEs in the economy can begin to reap the benefits of its provisions. The president’s assent to this bill would also position the SMEsintheeconomytocontribute to the realisation of the objectives of the Economic Recovery & Growth Plan (ERGP).”

https://www.facebook.com/businessdayng

s part of efforts to increase investment in training and empowerment of young entrepreneurs that form the bulk of main players in the micro, small and medium-scale enterprises, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has begun innovative training for 312 young business owners drawn from Ogun, Balyesa and Kaduna states.

The training, according to Ime Andy, assistant director, Enterprise Development and Promotion Department of SMEDAN, is designed to improve on the investment space within MSMEs’ sector of Nigerian economy and to mitigate the perceived failures being recorded by the young business owners who are majorly greenhorns.

Andy says 312 young entrepreneurs were selected from Ogun, Bayelsa and Kaduna as beneficiaries under the Young Business Owners in Nigeria (Y-BON) for 2019 as the programme is being run simultaneously in the three states, adding that two centres are selected in each of the three states for the training and 52 participants would be trained in each of the centres.

She states, “Like in Ogun here, the two centres are in Abeokuta and Sagamu, 52 each in a centre which gives us 104 participants in Ogun. The same @Businessdayng

thing goes with other states, so in that case, 104 participants are also undergoing the training in other two states and they would be supported with provision of workspace.

“The criteria for selected participants include youths between the age of 20 and 45, and they must already be in business. The programme is in three stages: we have done the first stage which is the sensitisation stage; this is the second stage in which the participants are being educated and trained on building their capacity to run their business successfully.

“After training stage, based on the provision by the government, SMEDAN will support the successful participants who have passed all the criteria with a token of money to provide for workspace. I believe with this support the unemployment rate will be reduced and it will also contribute to the Gross Domestic Products of the economy.”

Also, Gbenga Ogundeji, the South-West Zonal coordinator of SMEDAN, notes that the training on entrepreneurship and marketing skills would sharpen business management knowledge of beneficiaries and enhance performance, explaining that Federal Government is supporting SMEDAN’s mandate to create new employment opportunities for young Nigerians, by assisting them to create jobs for others instead of relying on white-collar jobs.

BUSINESS DAY

Tuesday 23 April 2019

37

NEWS Joe Boy knocks out Ghana’s Brave Warrior to retain ABU title Anthony Nlebem

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igerian boxer, Oto “Joe Boy” Joseph, has successfully defended his African Boxing Union (ABU) lightweight title. Joe Boy, on Sunday, saw off the feeble challenge of Ghana’s Success “Brave Warrior” Tetteh at GOtv Boxing Night 18, held at the Indoor Sports Hall of the Obafemi Awolowo Stadium, Ibadan.

Joe Boy, miles ahead in ability, toyed with the dire Tetteh before knocking him out in the first round.

In the other title fight on the night, Ridwan “Scorpion” Oyekola dethroned Taofeek “Taozon” Bisuga as the national super featherweight champion.

Scorpion thrice dropped Bisuga on the canvas in a fight that ended in 46 seconds. In the light middleweight division, Akeem “Dodo”

Sadiku knocked out Republic of Benin’s Ekpresso Djamihou in the fourth round of an international challenge duel.

West African Boxing Union welterweight champion, Rilwan “Baby Face” Babatunde, made an impressive return to action, dismissing Ganiyu “Energy” Kolawole in the third round of their duel.

Rising lightweight star, Taiwo “Esepo” Agbaje, knocked out Michael “Holy Mike” Jacobs in the first round of their challenge duel.

The super bantamweight bout between Opeyemi “Sense” Agbaje and Sadiq Adeleke ended in a draw.

Jamiyu “Sunshine” Akande defeated fellow debutant Mufutau “Oloke” via a second round knockout, the same outcome as the clash between Isaac “I Star” Chukwudi and Jubril “Terrible” Olalekan, which was won by the former.

JAMB dismisses report on alleged reduction of UTME scores as fake

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oint Admissions and Matriculation Board (JAMB) has described as fake, a trending report that scores of candidates who sat for the Unified Tertiary Matriculation Examination (UTME) are being reduced.

The board in a statement signed by its head of media and publicity, Fabian Benjamin, and made available to the News Agency of Nigeria on Monday in Abuja, said the report was false.

The report had claimed that scores of candidates who sat for the UTME and were found wanting by the board were being reduced by 100 marks.

JAMB said an investigation carried out discovered that the fake news emanated from a gang who coordinated from a town called Igarra in Edo State with affiliates in Lagos and other states.

The board described the act as fraudulent and meant to extort parents and candidates.

“A gang being coordinated from a town called Igarra in Edo State with affiliates in Lagos, Ogun, Osun, Abia, Anambra and Plateau states are circulating fake notice of impending reduction of UTME scores.

“This is with intent to extort and defraud parents and candidates. Candidates’ results would be received on their registered cell phones as soon as the on going scrutiny of the examination centres are completed and publicly announced.

“Only the fraudulent candidates or parents stand being defrauded on this matter,” the board said.

Benjamin had in an interview on Sunday warned candidates not to be carried away by rumours and misleading information in some sections of the media, especially the social media.

The 2019 UTME was conducted nationwide from April 11 to 18. More than 1.8 million candidates registered for the examination.

Telecoms’ operators engage in 14,639 porting activities in February – NCC

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igerian Communications Commission (NCC) on Monday said telecoms’ operators carried out 14,639 Mobile Number Portability activities in February 2019.

The NCC made this known in its “Incoming and Outgoing Porting Activities of Mobile Network Operators’ Report’’ on its website.

The commission said in the report that 10,650 subscribers ported within the networks in January, hence an increase of 3,989 activities in February.

It said out of the 14,639 porting activities recorded in February, 7,735 were “Incoming Porting Activities,” while 6,904 were “Outgoing Porting Activities’’.

The regulatory body said in the outgoing table, 2,281 subscribers moved from Globacom Nigeria to other networks through Mobile Number Portability in February.

According to the NCC, those that left Globacom increased by 1,094, as against 1,187 customers that deserted the network in January.

It said in the month of February, 1,643 customers moved from MTN Nigeria, showing an increase of 571 subscribers against 1,072 that left the service provider in January.

The NCC said 1,801 subscribers moved from 9mobile in the month under review, representing an increase of 197 customers that left the network as against 1,604 that left in January.

It said 1,179 customers of Airtel Nigeria ported to other networks within the same period, a decrease of 225, when compared with 1,404 users that left in January.

In the incoming table, 9mobile led with an additional 4,017 customers joining its network in February.

MTN Nigeria came second on the gainers’ list with 1,582 subscribers; 1,268 subscribers moved to Airtel Nigeria, while Globacom Nigeria got 868 customers.

The News Agency of Nigeria reports that the exercise was launched on April 22, 2013, by the NCC, with the aim of deepening competition in the industry. www.businessday.ng

L-R: Adetutu Ojelabi, wife of the founder, Covenant Harvest Christian International Ministry; Dotun Ojelabi, founder of Covenant Harvester Christian International Ministry; Wale Adefarasin, general overseer of Guiding Light Assembly, and Adebola Williams, CEO of Red Africa, at the launching of book to remember late Adekunle Ojelabi, the famous historian and author of the idely acclaimed textbook of West African History in Lagos.

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Atiku condemns killing of British aid worker, Nigerian partner …as NATOP condoles with families of slain tourists INNOCENT ODOH & OBINNA EMELIKE

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ormer Vice President Atiku Abubakar on Monday condemned the killing of British aid worker, Faye Mooney, and her Nigerian partner, Matthew Oguche, in Kajuru Castle, Kaduna State at the weekend.

In a statement personally signed by Atiku and made available to BusinessDay by Paul Ibe, his media adviser, the People’s Democratic Party (PDP) presidential candidate in the February 23, 2019 election said it was imperative to keep Nigeria safe for Nigerians and foreigners.

According to a police report, Mooney and Oguche, two tourists who were staying over in the Kajuru Castle, were killed in an attack on the castle on Saturday.

They two were among tourists who visited the castle at the weekend.

The tour operator, who is a specialist on Kajuru Castle, had organised many trips to the castle in the past with no incidence until this one.

“The death of any Nigerian or foreigner from terror, crime or insecurity grieves my heart.

Nobody’s life is worth taking to advance a religious, political or criminal cause,” Atiku said.

“I condemn the killing of British aid worker, Faye Mooney, and her Nigerian partner, Matthew Oguche, two days ago in Kaduna State. Several other Nigerians were kidnapped during the episode. I want the government and people of the United Kingdom to know that these atrocious actions do not reflect Nigeria’s national

character.

“These killings must end or Nigeria will lose desperately needed friends, partners and investors. Not only do I condemn this recent killing, but I make an urgent call for the federal and state authorities to track down the culprits and make them pay for their crimes. The time for empty rhetoric is long gone. Now is the time for urgent national action to stem insecurity,” he said.

Atiku said Nigeria must once again become synonymous with peace, progress and prosperity, adding that this can only happen when crime and punishment are a natural cause and effect.

“As long as there is impunity, our nation will lack unity and security. Impunity must end and must end in earnest. These crimes continue to reoccur be-

cause previous killings have not been met with justice. When the punishment for crimes is not forthcoming, criminals are emboldened to commit even worse crimes,” he said.

Meanwhile, the Nigerian Association of Tour Operators (NATOP) has sent a message of condolence to the families of the victims of the attack experienced by tourists at the Kajuru Castle.

Bilkisu Abdul, national president, NATOP, condemned the assault on tourists and regretted the loss of lives recorded in the attack.

Abdul called on the government and the security agencies to bring the killers to book, as insecurity is a problem for tourism.

NATOP has been trying to grow domestic tourism in Nigeria and the attack comes as a setback to these efforts.

Saraki to Tinubu: Provide proof of budget padding … says Buhari has forwarded 11 bills in four years

OWEDE AGBAJILEKE, Abuja

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ational Assembly has described the allegation credited to APC national leader and former Lagos State governor, Bola Tinubu, where he accused the eighth National Assembly leadership of padding national budgets with ‘pet projects’ as careless, irresponsible and callous.

It therefore urged the APC national leader to either substantiate his allegation or withdraw it.

The development comes as the nation’s apex legislative chamber has revealed that President Muhammadu Buhari has only forwarded 11 bills to the eighth National Assembly since its inauguration about four years ago.

A statement on Monday by Yusuf Olaniyonu, special adviser (media and publicity) to the Senate president, however, explained that this excluded the routine annual appropriations and supplementary budget

proposals.

“Two of these bills, the Mutual Assistance in Criminal Matters Bill and the National Minimum Wage Bill, have been passed. One of the bills, the Money Laundering Prevention and Prohibition Act (amendment) Bill was withdrawn by the Executive following the disagreement between the Attorney General and the Chairman of the Economic and Financial Crimes Commission (EFCC).

“Also, another one, the National Water Resources Bill was rejected because it infringed on the rights of states to develop their water resources. The remaining seven which are the National Centre for Disease Control and Prevention Establishment Bill, Federal Institute of Industrial Research for the Development of Micro, Small and Large Industries Bills, the Suppression of Piracy Bill, Communications Service Tax Bill, 2015; Federal Institute of Industrial Research Bill, 2017; Raw Materials

https://www.facebook.com/businessdayng

Research and Development Council (Repeal and Re-enactment Bill 2018; Nigeria Natural Medicine Development Agency (Establishment etc) Bill, 2018- are at various stages of passage,” Saraki said.

According to the statement, the Eighth Senate has passed an unprecedented 282 bills so far, surpassing the achievements its predecessors.

He listed some of the bills to include the Nigerian Financial Intelligence Agency Act, which enabled the country to be re-admitted into the Egmont Group; the Police Reforms Bill, Police Trust Fund Bill, Mutual Assistance in Criminal Matters Act, Public Procurement Act (amendment) Bill, Petroleum Industry Governance Bill, Electoral Act (amendment) Bill, Nigeria Railways Authority Bill, Company and Allied Matters Act (amendment) Bill, Secured Credit Transactions Act, Whistleblowers Protection Bill, constitution amendment bills, Discrimination Against Persons With Disability Bill. @Businessdayng

Others include Electronic Transaction Bill, Bankruptcy and Insolvency Act, North East Development Commission (NEDC) Act, Witness Protection Programme Bill, Credit Bureau Reporting Bill, Sexual Harassment in Tertiary Educational Institution Bill and Compulsory Treatment and Care of Victims of Gunshots Bill, National Financial Intelligence Agency Act, Federal Audit Services Commission Bill, among others.

Saraki said the approval of the bills made the National Assembly under his leadership receive national and global commendations from individuals and organisations like the Financial Intelligence Database Agency (Ultrascan); the Nigerian Police leadership; Bill Gates; World Health Organisation (WHO); World Bank; Pakistani child education campaigner and youngest Nobel Laureate, Yousafzai Malala; National Association of Petroleum Explorationists (NAPE) among others.

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Tuesday 23 April 2019

BUSINESS DAY

NEWS For 2 years running, Lagos leads Ogun in...

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unattended to by the state

government, which seems more interested in revenue collection than attracting more investors, manufacturers say.

“I will like to put on record that the only motorable road within the OPIC Estate was constructed by members of MAN within the estate,” Paul Gbededo, group managing director, Flour Mills of Nigeria plc, told Dapo Abiodun, governorelect of Ogun State, on April 11.

Gbededo’s reference was to the dismal state of roads at Agbara, one of the major industrial clusters in Ogun, which also hosts Unilever, Pharma Deko, Beloxxi Industries and Nestlé Nigeria, among many others.

BusinessDay gathered that the government in 2018 asked manufacturers operating within the zone to contribute 30 percent while the state contributes 70 percent for the rehabilitation of the roads.

Gbededo said reconstruction of Agbara/Atan road was critical, adding that though manufacturers were willing to collaborate with the government on the project, government needed to take the lead in ensuring its proper and timely completion.

At the meeting, Seleem Adegunwa, chairman of MAN, OgunStatechapter,explainedto Governor-electAbiodunthatthe activities of government agencies, particularly the Ministry of Environment, were sometimes inimical to investments.

Ogun State is currently Nigeria’s leading industrial hub, with virtually all the large enterprises in Lagos having a factory in the state. But the state is hard hit by insecurity, poor infrastructure and money-chasing regulatory agencies hampering investments.

Recently, Procter&Gamble, located in Agbara, which was until July 2018 United States’ biggest non-oil investment in the country, packed up.

In 2018, manufacturers told BusinessDay that they pay a large number of taxes in Ogun each month, including those demanded by the Federal Government.

They added that things were becoming more predictable in Lagos and less so in Ogun as many government agencies demanded the same fees and levies in Ogun.

“Ogun is gradually be-

coming less organised,” said Olusegun Osidipe, director of research and statistics at MAN. “Many things are still handled manually in Ogun, but you can easily check who owns a piece of land on the system in Lagos. You know how much to pay on Land Use Charge in Lagos, but not so in Ogun,” Osidipe said in 2018.

In the first half (H1) and second half (H2) of 2018, Ogun got N95.31 billion (out of total N305.56 billion) and N91.16 billion (out of total N247.08 billion), respectively, while Ikeja got N54.8 billion in H1 of 2018 and N85.76 billion in H2 of 2018. Similarly, Apapa got N93.31 billion in H1 and N53.29 billion in H2 of 2018.

Compare these with previous data. In 2014, for instance, manufacturers invested N691.77 billion, out of which N514.87 billion went to Ogun

State, representing 74.42 percent of the total.

Apapa and Ikeja in Lagos contributed N15 billion and N85 billion to the investments, respectively, representing a combined15percentofthetotal.

Also, out of the N180.12 billion invested in the manufacturing and agro-allied industries in Nigeria in the first six months of 2015, N128.3 billion went to Ogun, representing 71.23 percent. Ikeja and Apapa industrialzonesgotN15.74billionand N6.98 billion, representing 8.7 percent and 3.9 percent share of the total, respectively.

Similarly, manufacturing investments worth N309.33 billion were made in H2 2015, out of which N302.26 billion went to Ogun,representing97.7percent of the total. Apapa and Ikeja shared the remaining less than 3 percent with other industrial zones across the country.

Oil rally from US end of Iranian waivers...

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November.

The United States Secretary of State, Mike Pompeo, on Monday said countries that hitherto enjoyed waivers to buy oil from Iran after US imposed sanctions on the country would no longer be granted exemptions.

“We’re going to zero. We’re going to zero across the board,” Pompeo told reporters after the White House made the announcement in a statement.

“There are no (oil) waivers that extend beyond that period, full stop,” he said, adding that there would be no grace period for those economies to comply.

The waivers granted by the United States were necessary to allowcountriesincludingChina, India, Japan, South Korea, Italy, Greece, Turkey and Taiwan to buy oil from Iran, even after it placed sanctions on Iranian exports. In an indication that the Trump administration is willing togotougheronIran,itisending the waivers to further squeeze

the country’s economy.

This has resulted in temporary jump in oil prices and may even lead to higher orders from Nigeria by India which buys the most of Nigerian crude, but these gains could also elude Nigeria which spent N730 billion last year paying for fuel subsidies.

IbeKachikwu,ministerofstate forPetroleumResources,recently said the landing cost of petrol is nowN180perlitre.Thistranslates to a subsidy of N35 on every litre consumed, and going by NNPC figures of 53 million litres daily consumption, it means Nigeria could be spending N1.855 billion on subsidy daily.

In 2018, NNPC recorded N730.9 billion as under recovery, a heading under which it subsumes extra-budgetary allocations including petrol subsidies, according to the group’s latest monthly operations and financial report.

Wumi Iledare, a professor of Petroleum Economics and Policy Research at the Centre for Petroleum Energy Economics

FAAC disburses N1.92trn to 3 tiers of...

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gain differences.

The sum of N45.36 billion was shared among the oil producing states as 13 percent derivation fund in the month.

Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received

N4.69 billion, N4.04 billion and N8.04 billion respectively as cost of revenue collections.

Further breakdown of revenue allocation distribution to the Federal Government revealed that the sum of N216.57 billion was disbursed to the Federal Government’s consolidated revenue account.

In addition, N4.81billion was disbursed as share of deri-

Investors shrug off Nigerian banking...

Continued from page 2

Capitec Bank and Kenya’s Equity Group Holdings both had the third-best ROEs of 27 percent in 2018, respectively.

“Nigerian banks have been very aggressive investing in Federal Government debt instruments,” said Johnson Chukwu, managing director of Lagos-based investment firm, Cowry Asset Management Ltd. “These fixed income instruments have minimal risks attached to them.”

Nigeria’s largest bank by assets, Zenith Bank, took the fourth position with ROE of 23.8 percent, South Africa’s First Rand Bank followed with ROE of 23 percent, while Kenya’s Commercial Bank occupied the sixth position having recorded an ROE of 21.9 percent in 2018.

Similarly, Access Bank booked an ROE of 19 percent to emerge seventh on the list, followed by Cooperative Bank of Kenya which recorded www.businessday.ng

L-R: Michael Economakis, chairman, A.G Leventis Nigeria plc; Mischodovis Sarantis, ambassador of the Hellenic Republic, and George Polymenakos, MD, Nigerian Bottling Company Limited, at a celebration of the Greek National Day sponsored by Nigerian Bottling Company in Lagos.

In the first half of 2016, total investments estimated at N54.55 billion were made by manufacturers in the country, out of which N37.51 billion moved to Ogun within the period. This means that 69 percent of all investments within H1 of 2016 were channelled to Ogun State.

Apapa and Ikeja shared the remaining 31 percent with other industrial zones such as Edo/Delta, Imo/Abia, Oyo/ Ondo/Osun/Ekiti, Kano/ Sharada/Challawa, Kano Bompai, Anambra/Enugu, Bauchi/Benue/Plateau, Rivers, Kwara, and Abia.

In the second half of 2016, MAN survey shows that N313.62 billion worth of investments were directed to Ogun out of the total N448.94 billion. This represents 70 percent of the total. a manifold at the Cawthorne Channel field on OML 18.

From there, crude is evacuated the short distance to the Bonny oil terminal. The pipeline has a capacity of 150,000 per day.

Since completion, the pipeline has often been a target of oil thieves. Only one year after completion, Shell raised alarm that thieves were breaching the pipeline. In 2012, it estimated that 140,000 barrels of crude oil valued at $16 million was being stolen daily. SPDC sold the assets to Aiteo Eastern E&P Company Ltd, a subsidiary of Aiteo Group in 2015, which has proven to be quite adept at managing the asset.

Nigeria lost a third of its production in 2016 when militants calling themselves the Niger Delta Avengers carried out a destructive campaign on oil and gas installations of oil companies.

While there has been a significant lull in the activities of militants, the threat of militancy continues to simmer in the Niger Delta as the military intensifies campaign to rein in disgruntled elements.

and Law, University of Ibadan, said payments of subsidy could swallow the economy and lead to the collapse of education institutions, road infrastructures and health facilities because the country spends more than one quarter of the budget subsidising petrol which benefits the elites more than the people.

“Ghana, our next door neighbour, doesn’t control

the price of petrol, so why do we?” Iledare asked.

To compound the situation, adisruptiontotheNembeCreek Trunk line (NCTL) raises the spectre of militancy as the company feared sabotage in the fire incident that forced it declare a force majeure on April 21.

The NCTL had enjoyed smoothoperationsbeforetheincident, raising suspicion that the

fire may have occurred through anillegitimate,third-partybreach of the functionality of the pipeline, a critical national asset, the company said in a statement.

NCTL was constructed by Shell Petroleum Development Company (SPDC) from 2006 to 2010 at the cost of $1.1 billion to evacuate crude oil from the oil fields of OML29 for export.

It begins at Nembe Creek to

vation and ecology and N2.43 billion as stabilisation fund.

Also, N8.15 billion was shared for the development of natural resources and N5.82 billion to the Federal Capital Territory (FCT), Abuja.

For February, the report said the amount disbursed comprised N497.12 billion from the Statutory Account; N104.47 billion from Valued Added Tax (VAT) and N8.12 billion as excess charges recovered.

According the report, the

sum of N50 billion was distributed as FOREX Equalisation Fund and N654.70 million as exchange gain differences.

The sum of N48.49 billion was shared among the oil producing states as 13 percent derivation fund in February.

Revenuegeneratingagencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received N5.66 billion, N7.62 billion and N4.07 billion as cost

of revenue collections.

Further breakdown of revenue allocation distribution to the Federal Government of Nigeria revealed that the sum of N221.33 billion was disbursed to the Federal Government consolidated revenue account.

In addition, N4.94 billion was disbursed as share of derivation and ecology and N2.47 billion as stabilisation fund.

Also, N8.30 billion was shared for the development of natural resources and N5.90

billion to the FCT Abuja.

In March, the report said the amount disbursed comprised of N474.42 billion from the Statutory Account, N96.39 billion from VAT, N4.02 billion as excess bank charges recovered.

According to the report, N44.17 billon was distributed as Forex Equalisation Fund and N858.46 million as exchange gain differences.

18.33 percent ROE for the year.

ROE of South Africa’s Standard Bank Group stood at 18 percent in 2018, placing it in the ninth position, while another South African lender, NedBank Group, trailed with an ROE of 17.9 percent.

Nigerian mid-tier lender, ETI, had ROE of 17.8 percent, Absa Group Limited in South Africa recorded 13.4 percent, while Kenya’s Standard Charted Bank only achieved 6.8 percent for the year.

While the Nigerian banks, which are considered as the most liquid stocks on the Ni-

gerian Stock Exchange (NSE), best utilised shareholders’ funds to generate returns in the review year, they still largely lag behind their African peers in terms of stock valuation.

The five Nigerian banks considered had an average Price-to-Book (P/B) ratio of 1.08x, compared to the five South African lenders with an average P/B ratio of 3.07x, and Kenyan lenders with P/B ratio of 1.4x.

The price-to-book ratio compares a stock’s market value to its book value. A lower P/B ratio indicates that the

stock is undervalued.

Akinsola explained that the unimpressive share performance in the Nigerian banking stocks compared to other African countries was in line with the general market trend having lost over 26 percent in the last one year.

“Until we see the economy growing at a faster rate, which will probably be driven by government policies, it will broadly be the same happening for the banking stocks,” Akinsola said.

In the last one year, Stanbic IBTC Bank with the highest

ROE in 2018 had shed 5.61 percent to settle at N46.25.

GTB, which is the secondhighest in terms of ROE, has a year return of -21.06 percent, while Zenith Bank’s one year return stood at -22.41 percent.

“You will observe that investors are shying away from the Nigerian equities, which will reflect in the valuation of those companies,” Chukwu said, explaining that investors have a stronger preference for South African and Kenyan stocks, causing them to have higher P/B ratios compared with Nigerian equities.

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•Continues online at www.businessday.ng

Tuesday 23 April 2019

BUSINESS DAY

39

POLITICS & POLICY Ambode’s infrastructure development in Lagos Ayo Oyoze Baje

H

istory has its unique ways of vindicating the visionary, the pacesetters, the courageous and of course, all those propelled by the will to win against all odds.

Indeed, history is always kind to those willing to put in their best when it comes to leadership and leave lasting legacies worthy of emulation. And this is precisely so, for the outgoing Governor Akinwunmi Ambode of Lagos State, as history will certainly judge him kindly in several areas of the fast-paced economic development, over the past four years. Not the least of these laudable achievements are the giant strides taken, notably in massive, solid, stable and sustainable infrastructural development.

Truth be told, by the time the chaff of the shenanigans of politicking are separated from the grain of what people-oriented governance is all about, mention will be made of his futuristic approach to project prioritisation and performance. He knows that Lagos, as one the world’s fastest growing cities, with huge influx of people on daily basis, a modern seamless transport system would mitigate the challenges commuters face in the conduct of their businesses.

Should we talk about the city roads with the lay by, the first-of-a kind 10-lane Airport Road, ultramodern bridges at Abule-Egba, Ajah and the ever-busy Pen Cinema commercial hub? What about the largest rice mill in Sub-Saharan Africa currently ongoing in Imota Local Council Development Area of the State? Or, should we add the Oworonshoki Lagoon reclamation which is designed to transform the blighted area to major tourism, transportation and entertainment hubs?

The high rising, empirical

evidences are there in telling spectacle to dumb-found his traducers.

And what about the ongoing, talk-of–the-town Oshodi Transport Interchange?

It is a sprawling, urban edifice at the bustling Oshodi traffic nerve-centre. Precisely, it is meant to drastically reduce congestion on the highways right from the eastern flanks of Ikorodu-Maryland and stretching all the way to western part of Mile 2 and Apapa.

It should be noted that the Oshodi Transport Interchange Project (OTIP) forms part of the Bus Reform Initiative of the State Government, as an iconic infrastructure designed to transform the axis forever and enhance connectivity.

According to the goal-getting Governor Akinwunmi Ambode, the project, in a nutshell, seeks to “transform Oshodi into a world-class Central Business District (CBD) with business, travel and leisure activities conducted in a serene, secure, clean, orderly and hygienic environment, comparable with other transport terminals around the world including Stratford and Victoria Bus Station in the United Kingdom”.

Ultimately, on completion, it would consolidate all the 13-city and interstate bus parks into three multi-storey terminals. This will provide standard facilities including waiting area, loading bays, ticketing stands and drivers’ lounge. Others are the parking areas, rest rooms, accessible walkways and pedestrian sky-walks linking all the terminals.

According to the Commissioner for Works and Infrastructure, Adebowale Akinsanya while on extensive inspection tour of ongoing projects months back, the government was rising to reduce the difficulties being experienced by motorists, virtually on daily basis. He also gave the assurance that the

Akinwunmi Ambode

State Governor, Akinwunmi Ambode was seriously committed to the delivery of the projects before his exit.

Listed amongst these are the Airport Road, Pen Cinema Flyover, Oshodi Transport Interchange, Onikan Stadium, Oshodi-Abule-Egba Bus Rapid Transit (BRT) project and JK Randle Centre for Yoruba Culture and History, all work-in-progress.

And still in tandem with the foresight to ease transportation within the Lagos metropolis, the BRT mass transit system came in during Gov. Ambode’s predecessor, Babatunde Raji Fashola’s era to deliver fast, comfortable and cost-effective service in a densely populated city. It has created jobs for many, guaranteed safety and comfort as against the dare-devil danfos and bolekajas.

To up the ante, Ambode as at March 2018 rolled out 820 high and medium capacity buses, as an initiative to redefine public transportation and make the State to be globally competitive. The reformation is basically designed to inject 5,000 buses, modern terminals, facilitate ease of mobility for residents and

also rev up Lagos economy.

It began with the assembling plant at Awoyaya in Ibeju Lekki area of the State which also served as the temporary holding bay for 500 out of the 820 buses.

“This is an assembling plant. The dream is that be-

yond the procurement of 820 buses by government, the next set of buses in the vision should be assembled in Lagos in this assembling plant and another one in Epe,” he said.

“By the time you put these buses on the road, it will create jobs for drivers, engineers, technicians, and so on, thereby growing the economy of Lagos coming from the transport sector in addition to 100 bus stops being constructed simultaneously across the State with attendant positive impact on the economy. So, the idea is create jobs, grow the economy, make the city to be globally competitive and then make life comfortable for the people.” That is pragmatic job creation strategy for you.

One other area that has exhibited Governor Ambode’s foresightedness is the reclamation of the coastal area at Oworonsoki. The project was not a housing scheme but part of the overall programme for Lagos to emerge as the entertainment hub for Africa.

The plan is to reclaim 50

INEC seeks establishment of electoral offenders’ tribunal Iniobong Iwok

T

he Independent National Electoral Commission (INEC) has advocated the establishment of an electoral offenders’ tribunal to prosecute electoral offenders in the just concluded 2019 general elections.

International and Independent observers had reported that the 2019 general elections in Nigeria were marred by violence, votebuying and intimidation of opposition supporters in several states across the country.

The violence was particularly widespread in some

Southern states such as Rivers and Lagos.

Agitation among stakeholders and opposition political parties had increased in recent weeks for the prosecution of the perpetrators of violence and vote buying in the general election.

Speaking in an interview with BusinessDay, Monday, Festus Okoye, INEC National Commissioner and chairman of the commission’s committee on information and voter education, said that such tribunal was necessary because it would be more professional in the prosecution of electoral offenders than the current practices. www.businessday.ng

According to him, “Currently, it is the Police Force that arrest and investigate electoral offenders, after that INEC now joins hand with them and prosecute. But if there was an electoral offenders’ tribunal, they would be more professional in their work.

“We need such tribunal now even more than before, because they can take direct control of prosecution of electoral offenders. What have happened is that we are still waiting for report from the Police, on the people arrested and investigated in the 2019 general elections, before we can prosecute.” https://www.facebook.com/businessdayng

@Businessdayng

hectares of land while upon completion, the project would end the perennial flooding in the area. It would also accommodate boutique hotel, event centres, cinema, clubs, bars, bus terminal, parking space with capacity for about 1000 vehicles.

The concept and execution of all these landmark projects takes uncommon vision, sheer political will and the courage to do the right thing when it matters most.

In fact, they were deliberately embarked upon to align the state with the league of cities with world class infrastructures thus making Lagos to be globally competitive. Besides, the gains of the investment of the current administration in provision of critical infrastructure would soon be positively felt on a large scale in all sectors.

All said, history will definitely smile on Governor Akinwunmi Ambode as he bows out on May 29, 2019 for leaving worthy and noble legacies for his successor to build on.

40

Tuesday 23 April 2019

BUSINESS DAY

Solid Minerals business

LCCI starts summit today to address mining business, metals trading challenges JOSEPH MAURICE OGU

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agos Chamber of Commerce and Industries (LCCI) commences a 2-day summit today to proffer solutions to the challenges facing mining business and metals trading in Nigeria.

Babatunde Alatise, chairman, mining, solid minerals and allied services group of LCCI, says there are lots of misinformation and myths that have enveloped the mining industry in Nigeria, which the summit aims at clarifying.

According to him, misinformation and uncertainty on mining sector scare both local and foreign investors away.

“Our aim is to unravel all the mysteries surrounding mining and mining business in order to present it as an attractive business opportunity to the investing community,” Alatise says.

Expected to be in attendance are key regulators of the industry, captains of industry, investors and budding investors in the sector, financiers, bankers and insurance companies, professionals and all critical players in the mining industry. “ We w a n t t o e d u c a t e stakeholders such as financial institutions, government, investors as well as the general public to the attractiveness of the solid minerals industry in Nigeria,” Alatise says.

“There is a need to attract critical local investment to

the sector in order to maximise the benefits of the industry to the nation,” he says.

He notes that some efforts have been made to sensitise investors on the potential of mining sector, but these efforts seem not to have addressed the issues of presenting the sector as a veritable and robust business opportunity to investors.

“The summit is not to reel out problems of mining again and again. Enough talks about the problems, it is time to proffer solutions,” he says.

The summit has been designed to offer local and international players in the industry an opportunity to meet and deliberate on the fortunes of the industry with a view to making Nigeria indeed an investor’s destination in mining and metals exports.

“We will proffer practical and workable solutions to the challenges militating against mining and metals exports in Nigeria,” he assures.

One of the targets of the summit is the production of an investor’s guide in mining business for investors and potential investors in the Nigerian mining sector.

Recall that relevant ministries and government agencies as well as other stakeholders have said that solid minerals sector of the Nigerian economy have the prospects of being a major contributor to the nation’s Gross D omestic Product

(GDP).

The Economic Recovery and Growth Plan (2017 to 2020) as set out by the federal government, projected that the minerals and metals sector will be one of the sectors that will drive Nigeria’s economic recovery. It is estimated that the sector’s contribution to GDP would grow from N103 billion (recorded in 2015) to N141 billion in 2020, at an average annual growth rate of 8.5%.

According to the National Bureau of Statistics (NBS), the production of solid minerals in Nigeria hit 55.85 million tons in 2018 representing a growth rate of 22% in 2018, despite the fact that the mining and quarrying sector received the lowest credit from the banking sector to the private sector.

This growth, however, was achieved more in the quarrying segment where limestone, granite and laterite production grew and contributed more than 63.7% of the total solid minerals production in the country; limestone alone grew by 95% (27.1m tons) in 2018 as against the 2017 production of 13.9 million tons.

Most, if not all, of these productions were consumed in the infrastructure industry of the country. Growth of the high value and foreign exchange earning metals sector have remained rather very sluggish. Investments have been insignificant despite the quantum of proven and estimated reserves of various metals in the country.

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Tuesday 23 April 2019

FT

BUSINESS DAY

FINANCIAL TIMES

41

World Business Newspaper

US ends sanctions waivers on Iranian oil imports White House announces deal with Saudi and UAE to ensure markets ‘adequately supplied’ DEMETRI SEVASTOPULO, AIME WILLIAMS, DAVID SHEPPARD AND ED CROOKS

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he Trump administration said it would eliminate waivers that have allowed Japan, India and China to import Iranian oil despite US sanctions as part of an escalating effort pressure on the regime in Tehran.

In announcing the move, Mike Pompeo, the US secretary of state, said Washington’s aim was to bring Iran’s crude exports to zero.

South Korea and Turkey would also be hit by the end of waivers.

“Any nation interacting with Iran should err in the side of caution and do due diligence,” Mr Pompeo said on Monday. “How long we remain on zero depends solely on Iran’s behaviour.”

At the same time, the White House announced it had reached an agreement with Saudi Arabia and the United Arab Emirates to ensure there was “sufficient supply in the markets” to compensate for the loss of Iranian exports.

Mr Pompeo did not give details of the Saudi-UAE deal, and a White House statement only said the three countries “have agreed to take timely action to assure that global demand is met as all Iranian oil is removed from the market”.

“The Trump Administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime’s

destabilising activity threatening the United States, our partners and allies, and security in the Middle East,” the White House said.

Brent crude climbed 2.7 per cent on Monday to $74.12 a barrel in afternoon London trading, after hitting a high of $74.31 in early Asia trading. West Texas Intermediate, the US marker, rose as much as 2.6 per cent to a high of $65.87 in early New York trading, the highest intraday level in two weeks.

The move comes just weeks after the US branded Iran’s Revolutionary Guard a foreign terrorist organisation, the first time it formally labelled part of another country’s government as terrorists.

Oil prices have risen sharply this year due to voluntary and involuntary cuts by members of Opec, the oil producers’ cartel, that have tightened supply.

Reducing Iran’s production capabilities “is going to make an already tight market even tighter, especially with supply risks in Libya and Venezuela”, said Jason Bordoff, an oil adviser to the Obama administration and director of the Center on Global Energy Policy at Columbia University in New York.

Few oil analysts believe the US will ever be able to completely stop Iran’s crude exports, especially to China, where trade talks with Washington may complicate efforts to sever Beijing’s ties to Tehran. China had “always opposed” the US sanctions, foreign

Europe’s investment banks braced for more pain

E

uropean banks are set to report a third consecutive quarter of grim investment banking revenues, which analysts predict will drop as much as a quarter, intensifying calls for another round of job cuts and retrenchment.

After US banks reported a tepid start to the year on Wall Street, analysts have downgraded their assumptions for their subscale European cousins, which for years have been steadily losing market share.

Overall quarterly revenues will drop 24 per cent at European investment banks versus an 11 per cent fall reported by their big Wall Street rivals, analysts at Morgan Stanley forecast. Citigroup and JPMorgan expect the decline to be 22 per cent and 20 per cent respectively due to European banks’ greater reliance than their US peers on equities trading, the hardest hit area in the first three months of the year.

“We are not talking about a couple of percentage points off earnings here, we are talking about business models under threat,” said Magdalena Stoklosa at Morgan Stanley. “Banks will be forced to forgo optionality they don’t need and really think about the flow trading businesses, which without scale are difficult to maintain and [are] lossmaking on their own.”

The travails of the industry across the EU are well-documented

— collectively their stocks fell 25 per cent last year, wiping out $380bn in shareholder value, according to analysts at Autonomous Research.

But recently their problems have intensified.

Sergio Ermotti, chief executive of UBS, warned last month that his investment bank had one of its worst starts to a year in recent history with revenues dropping about a third.

He has put the Swiss bank, which reports quarterly results on Thursday, in “fuel saving mode”, delaying hiring and investment, in an attempt to save $300m in costs.

Deutsche Bank is on track for its eighth consecutive quarter of declining investment bank revenue. Analysts at Barclays estimate trading revenues will fall 30 per cent year on year at Deutsche, which is in merger talks with its domestic rival Commerzbank.

“Deutsche has to do a deeper restructuring, a downsizing of the investment bank as part of this, reduce its size by 20 to 30 per cent mostly from the US,” said a major bondholder of the German bank.

“Regardless of what happens with Commerzbank, they need to do it, but it’s easier for them to sell it to the market as part of the merger.”

France’s BNP Paribas and Société Générale have already started retreating after heavy losses in the fourth quarter, with the latter announcing earlier this month 1,200 investment banking job cuts as part of a plan to eliminate €500m in costs. www.businessday.ng

ministry spokesman Geng Shuang told reporters on Monday.

Yoshihide Suga, Japan’s chief cabinet secretary, insisted there should be no “negative effect on the operations of Japanese companies”, adding that Tokyo would be “exchanging views closely” with Washington on the issue.

A complete removal of waivers is likely to curb Iran’s exports to below 1m barrels a day, down from 1.9m in March according to industry database TankerTrackers.com.

After US president Donald Trump withdrew from the Iran

nuclear deal in May 2018 and moved to reimpose sanctions, US officials signalled he would not provide exemptions to allow some countries to import Iranian oil. But Washington eventually agreed to some waivers, partly because the administration was concerned about the effects of a tight oil market on the US economy.

On Sunday, a senior US official said the administration had decided that conditions in the oil markets now were more conducive to eliminating the waivers.

The decision to end waivers was

first reported by The Washington Post.

Saudi Arabia boosted production sharply last year before the US reimposed sanctions on Iran. But Riyadh was largely blindsided by the US decision in November to include waivers for many of Iran’s main customers, which triggered a dramatic sell-off in prices.

Since then, Saudi Arabia has led Opec by sharply cutting output while the UAE has indicated it will not make the same mistake this time, saying it will only raise

The rise of ‘super carry’ unsettles private equity investors

Analysts forecast investment banking revenues will fall as much as a quarter STEPHEN MORRIS AND DAVID CROW

A complete removal of waivers is likely to curb Iran’s exports from its production areas, such as the Soroush field in the Gulf, to a total below 1m barrels a day © Reuters

Big buyout groups are upping their share of profits from 20 to 30 per cent on some funds JAVIER ESPINOZA

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ome of the largest private equity groups are raising the performance fees they charge investors to well above the industry’s norm at a time when institutions are fighting to put money into the best funds.

Institutional investors are in some cases paying 30 per cent in “carried interest” — the share of profits taken by the private equity groups — up from the traditional 20 per cent share of profits that the industry has charged for decades.

Funds charging this “super carry” have been launched recently by Carlyle Group, Vista Equity Partners and Bain Capital in the US and EQT, Eurazeo and Altor in Europe.

Advisors to large private equity funds have defended the rise of “super carry”, arguing it is only the top-tier funds with stellar results that can get away with it. They also say that higher carried interest often depends on higher returns, or lower management fees, and is usually optional. But the practice has unsettled some investors.

Graham McDonald, head of global private equity at Standard Life Aberdeen, one of the UK’s biggest institutional investors, said: “Super carry is not necessarily something

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investors are entirely comfortable with because levels of reward and alignment are already healthy at the moment.”

“The pendulum has swung in terms of fundraising principally due to the wall of capital available and managers are taking the opportunity to improve the terms in their favour,” he said, adding: “Investors are feeling a bit sore about it.

Neil Harper, chief investment officer at Morgan Stanley Alternative Investment Partners, said the introduction of higher performance fees has been accompanied by increasingly aggressive behaviour by some groups.

Speaking at the recent SuperReturn conference in Berlin, he said: “You end up having interactions with people who deal with their investors in a professional manner but you get others who develop a huge amount of arrogance.

“Occasionally they can get away with that [because of good performance] but many times they don’t because that fund fails. People remember.”

A rise in carried interest hit the industry during the boom years leading up to the financial crash in 2008 but it went away when funds struggled to raise money in the lean years that followed the crisis. @Businessdayng

“Twenty per cent carried interest has been the market norm across the industry for decades so it is very hard to shift,” said Jason Glover, a London partner at law firm Simpson Thacher, on the sidelines of the Berlin event.

“However, there is clearly an argument to say that significant outperformance would merit even greater rewards. In that context, there is the opportunity to be able to charge higher carry.”

Investors worry that private equity groups can dictate terms when they are able to raise funds at their fastest pace since the crash. Buyout groups take on average 12 months to raise a fund compared to 20 months in 2010, according to Preqin.

“This shows a complete rebalancing of power in favour of buyout funds,” said the head of a multibillion-euro private equity group in Europe. “[After the crash] the industry was shaking like rats in a cage because of fears that we were going to have to reduce our carried interest and, lower our management fees.”

In the US, Bain is raising its second life science fund and it is giving investors an option to pay a 1 per cent management fee — which is lower than the 2 per cent usually charged — in exchange for 30 per cent carried interest.

42 BUSINESS DAY

FT

Tuesday 23 April 2019

NATIONAL NEWS

Sri Lanka death toll rises to 290 as terror warning probed Twenty-four suspects in Easter Sunday suicide bombings arrested AMY KAZMIN AND CHATHURI DISSANAYAKE

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he death toll from Sri Lanka’s devastating Easter Sunday bomb blasts rose to 290 on Monday, as recriminations grew among the nation’s bitterly divided political establishment over the handling of an intelligence alert that warned of an imminent attack

by Islamists.

In the deadliest terror attack to hit Sri Lanka, which is still recovering from a decades-long civil war, bombs ripped through three crowded Catholic churches and three luxury hotels popular among foreign tourists and local elites.

The explosions in at least two of the churches and two of the hotels — the Shangri-La and Cinnamon Grand — were carried out by suicide bombers, government officials told state-run radio on Monday.

Hours after the synchronised blasts, bombs exploded at a budget guest house and a residential housing complex, where Sri Lankan police had been sent in pursuit of the suspected culprits.

On Monday the Associated Press reported that the government had blamed National Thowheeth Jama’ath, a little-known radical Islamic organisation, for the atrocities.

The US state department issued a warning that “terrorist groups” were “continuing to plot possible attacks” in Sri Lanka.

In the aftermath of the explosions, it emerged that Sri Lankan intelligence agents had alerted

security officials of the threat of a terror attack from the group.

Rajitha Senaratne, the health minister, said all of the bombers were Sri Lankan citizens, but authorities suspected foreign links.

Ariyananda Welianga, a forensic crime investigator, said an analysis of the attackers’ body parts indicated that they were suicide bombers. He said most of the attacks were carried out by a single bomber, with two bombers targeting Colombo’s Shangri-La Hotel.

Reuters reported that an explosion went off on Monday in a van near a church in Sri Lanka where scores were killed the previous day when bomb squad officers were trying to defuse it.

Authorities said they have arrested two dozen suspects and Prime Minister Ranil Wickremesinghe appealed for international police help to find out if the bombers had receive “foreign assistance”.

Mr Wickremesinghe, who has been locked in a simmering power battle with President Maithripala Sirisena since last year, also complained that members of his government had not been informed about the intelligence threat, which he called “a very grave issue”.

He told Sri Lankan television: “Although information on this issue has been received before, not enough attention was paid to the matter. The fact that ministers were also not informed is also connected to it, but first what we need to do is to ensure the country is not destabilised.”

Kraft Heinz replaces CEO after $15bn writedown

Bernardo Hees departs as company faces SEC probe and questions about strategy JAMES FONTANELLA-KHAN AND ALISTAIR GRAY

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raft Heinz’s chief executive is leaving the food company after a profit warning that shook the global consumer goods industry.

Bernardo Hees will be replaced at the end of June by Miguel Patricio, an executive at the brewer Anheuser-Busch InBev, backed by the Brazilian investment group 3G Capital, which also controls Kraft Heinz.

The leadership change comes at a testing time for Kraft Heinz.

The maker of Kraft processed cheese, Heinz tomato ketchup and HP Sauce took a $15bn writedown in February due to a drop in the value of some of its biggest brands. The Chicagobased company also revealed it had received a subpoena from the US Securities and Exchange Commission and cut its dividend by one-third.

Following news of the multi billion dollar writedown Warren Buffett, whose Berkshire Hathaway has a large stake, admitted for the first time that he had overpaid for Kraft’s merger with Heinz. Mr Buffett and 3G Capital bought Kraft in 2015 to merge with Heinz in a 2015 deal valuing Kraft at $63bn. When the combined company floated on the stock market at the time it was worth $89bn — on Monday it was worth $40.2bn.

Mr Patricio told the Financial Times he was aware of the challenges ahead of him, admitting there is a lot of work to do at a time when the industry is undergoing

deep shifts and transformation.

But the 52 year old is resolute he can get the job done.

“There is nothing sweeter in life than a turnround,” Mr Patricio said in an interview with the FT. Mr Patricio, originally from Portugal, has spent two decades at AB InBev, including as global chief marketing officer between 2012 and 2018.

Mr Hees, 49, is a long time 3G executive. He oversaw Kraft’s 2015 mega-merger with Heinz.

“We appreciate his contributions,” said Alex Behring, the 3G executive who chairs Kraft Heinz, in a statement.

Mr Hees in the statement: “It has been an honour to serve as CEO of Kraft Heinz and to see it through its transformation over the past six years. I have confidence that Miguel and the team will take Kraft Heinz to new heights.”

Mr Patricio said his priorities in the first two months are getting to know Kraft Heinz people, the culture, work on a new growth strategy and the numbers behind the business.

“Bernardo (Hees) concluded the first phase,” Mr Patricio said in an interview. “I bring to the table a new background . . . I can contribute in a different way . . . making the company more consumercentric.”

He added that his focus will be predominantly on organic growth rather than dealmaking.

He added that he was open to partnerships with other innovative consumer groups as well as universities to help Kraft Heinz anticipate new trends rather than react to them. www.businessday.ng

China’s 1.4bn people consume 55bn tonnes of pork products a year

Fatal swine fever ravages China’s pig farms and shakes global food markets Pork prices forecast to soar as deaths from disease expected to reach 130m GREGORY MEYER, HUDSON LOCKETT AND ANDRES SCHIPANI

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s millions of pigs disappear in China, the rest of the world is beginning to notice.

The country’s pig population, the largest in the world, is likely to shrink by almost a third, losing 130m animals as African swine fever ravages the country’s farms.

The outbreak will reshape protein markets across the globe, driving up meat prices as China, the leading consumer and producer of pork, braces for years of shortages and disruptions to its food supply.

“This has been a game-changer,” says Jais Valeur, group chief executive at Danish Crown, Europe’s leading pork processor. “We’re only starting to see the real impact of African swine fever.”

The ASF virus, endemic to Africa, is fatal to pigs and has no cure.

The current wave of cases began in Georgia in 2007 and spread to parts of eastern Europe and Russia before reaching China in August.

After eight months of Beijing claiming the situation was under control, the crisis has now become undeniable. The Ministry of Agriculture said last week that a preliminary estimate forecasts pork prices to rise more than 70 per cent year on year in the second half of 2019.

The sharp drop in China’s pig

population has sent shockwaves through the world food industry.

Hog futures have leapt in Chicago.

Shares of meat companies have soared in São Paulo and New York.

US pork sales to China recently hit a record high despite a 62 per cent tariff imposed during the course of the trade war between the countries.

China’s 1.4bn people consume 55m tonnes of pork products a year, by far the most of any country.

Household meat consumption has steadily risen alongside incomes, with the bulk of demand met by a domestic pig population more than 430m-strong before the outbreak.

But deaths from the disease and culling are expected to leave 130m fewer pigs in China by year-end, estimates Christine McCracken, a New York-based analyst at Rabobank.

“It’s a big deal. They have half the world’s pigs and they’ve lost 30 per cent of that production,” she said.

The impact will endure. Ernan Cui, China consumer analyst at Gavekal Dragonomics, said that while eradicating ASF in other countries had taken at least five years, the Chinese market’s size, regulatory structure and low sanitation standards would prolong the crisis.

“For the country as a whole it could be a very long process —

more than a decade is very likely,” she said. Ms Cui added that the disease should ultimately accelerate industry consolidation, as small farms, which make up about two-thirds of the market, struggled to deal with the costs of containing the disease.

Rabobank predicts a shortfall in other import-reliant countries of Asia and Latin America in an “unprecedented shift in trade”, as meat supplies redirect to China.

The shifts should be felt across places and species. Europe is already China’s top trading partner in pork.

Mr Valeur said Danish Crown’s frozen shipments to China had doubled since February, when celebrations ushered in the Year of the Pig. Normally, most imports were limited to items such as pig feet, ears and organs. But “over the last two months pretty much everything is in demand from China”, Mr Valeur said.

Brazil is a country that is “well positioned for rapid growth” in pork exports to China, while its beef and chicken exports could also rise, said Morgan Stanley. São Paulobased JBS, the world’s largest meat processor, said: “It is noticeable that China is moving to import more, and this new demand encompasses all types of protein and not just pigs.”

The company’s shares are up more than 50 per cent this year, partly on hopes of higher sales to China.

Carlos Ghosn indicted in Japan on new charge of breach of trust Tokyo prosecutors accuse former Nissan boss of causing $5m in damages to Japanese carmaker KANA INAGAKI AND LEO LEWIS

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arlos Ghosn was indicted on a fresh charge on Monday as prosecutors accused the former Nissan chairman of making personal gains from and causing $5m in damages to the Japanese carmaker.

The latest indictment — his fourth — came on the 18th day of Mr Ghosn’s latest detention, after he was arrested for the fourth time earlier this month.

The former Nissan and Renault boss, who has maintained his innocence, has already been charged with falsifying his pay and for abusing his position in order to transfer unrealised trading losses to the Japanese group.

Mr Ghosn’s spokesperson said on Monday that he “is innocent of the latest charges brought against

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him by the Tokyo prosecutors” and that he will “continue to vigorously defend himself against these baseless accusations”.

His rearrest and a Tokyo court decision to extend his detention, just a month after his release on bail in March, have drawn criticism from human rights groups and legal experts of Japan’s “hostage” justice system.

Mr Ghosn’s wife Carole has called on the governments of the US and France to intervene, and has described a humiliating experience when prosecutors raided the couple’s Tokyo apartment to make the rearrest.

Mr Ghosn’s lawyers immediately sought his release on bail, which could be granted in the coming few days after the Tokyo court cut short @Businessdayng

by two days prosecutors’ demands to keep him behind bars for 20 days.

Carlos Ghosn says charges against him are a ‘conspiracy’ The Tokyo District Public Prosecutors Office said Mr Ghosn was indicted on allegations that he devised a mechanism whereby a proportion of payments made by a Nissan subsidiary to an overseas distributor found its way into expenditure that directly benefited the former chairman.

While prosecutors have not named the companies, an internal investigation by Nissan found that about $35m in payments were made to Suhail Bahwan Automobiles, an Omani distributor with ties to a friend of Mr Ghosn, between 2011 and 2018, according to people familiar with the case.

Tuesday 23 April 2019

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Asos investor loses three children in Sri Lanka attacks Fashion billionaire Anders Holch Povlsen is UK’s biggest private landowner MURE DICKIE

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hree of the four children of Danish billionaire fashion investor Anders Holch Povlsen, the UK’s biggest private landowner, have been killed in the Easter Sunday bomb attacks in Sri Lanka.

Mr Povlsen is the owner of fashion brand group Bestseller, which is the largest investor in UK-listed online fashion retailer Asos. His fortune is estimated by Forbes at $7.9bn.

Over the past 13 years, Mr Povlsen has acquired a string of Scottish estates with a total area of more than 220,000 acres, surpassing the Duke of Buccleuch’s holdings as the UK’s largest private landowner.

Bestseller told the Press Association that Mr Povlsen and his wife Anne had lost three children in the attacks. Contacted by the Financial Times, the company declined to give any further details.

“We ask you to respect the privacy of the family and we therefore have no further comments,” said Jesper Stubkier, Bestseller’s communications manager.

Wildland, a company established by the Povlsens in 2007 to manage their Scottish estates, also declined to comment.

Sunday’s bomb attacks in Sri Lanka targeted three crowded Catholic churches and three luxury hotels popular among foreign tourists and

local elites. The death toll rose on Monday to 290 people, making it the country’s deadliest terror attack.

The explosions in at least two of the churches and two of the hotels — the Shangri-La and Cinnamon Grand — were carried out by suicide bombers, government officials told state-run radio on Monday.

In a statement published on their Scottish company’s website this month, the Povlsens said they and their children and parents had long enjoyed a deep connection with Scotland’s landscape.

The couple aimed to return their holdings in the Scottish Highlands to their “former magnificent natural state and repair the harm that man has inflicted upon them”.

“It is a project that we know cannot be realised in our lifetime, which will bear fruit not just for our own children but also for the generations of visitors who, like us, hold a deep affection the Scottish Highlands,” they wrote.

However, Mr Povlsen’s acquisitions have highlighted concerns in Scotland about the control of large swaths of the country by often absent private landowners.

A Scottish government commission last month called for urgent action to address the concentration of land ownership that it said in some cases damaged fragile rural communities.

Crude rallies as US sharpens moves to curb Iran exports Global oil marker Brent hits highest level since November ANJLI RAVAL

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rent crude jumped above $74 a barrel on Monday, the highest since November, as the US was primed to announce measures to further curb Iran’s oil exports, putting pressure on global supplies.

A senior US official told the Financial Times that Michael Pompeo, the US secretary of state, would on Monday say that buyers of Iranian oil — such as Japan, South Korea, Turkey, India and China — would need to cut imports to zero or face penalties.

The end of these sanctions waivers would come as the US has ramped up the pressure on Iran in recent weeks and as oil prices have risen sharply amid voluntary production cuts by Opec countries and unintended supply disruptions.

Brent, the international oil benchmark, rose to $74.31 a barrel in early Asia trading, before retreating to $73.61, up $1.64.

West Texas Intermediate, the US marker, increased to a high of $65.87 a barrel, before easing to $65.35.

Sara Vakhshouri, energy consultant at SVB Energy International said a “zero export policy” would have “significant conse-

quences on the oil market and prices.”

Despite withdrawing from the nuclear deal with Iran and imposing sanctions against Tehran, the Trump administration provided allowances for big consumers of the country’s oil to carry on purchasing these barrels, albeit at lower levels.

The aim of these exemptions was to prevent a damaging crude price spike, which the US now believes is less likely to happen.

“The general consensus was for a rollover of waivers with reduced allocations. This is therefore a bullish development,” said Olivier Jakob at energy consultancy Petromatrix.

The US official said the administration has been given assurances from Saudi Arabia — the world’s largest exporter — and the UAE that additional supplies could be brought online to prevent a jump.

Saudi officials have privately been wary about responding to US demands. The kingdom accelerated output last year in anticipation of the Trump administration reimposing sanctions on Iran and implementing a stricter policy on crude exports. The US then maintained the waivers for buyers, triggering a price slide. www.businessday.ng

Three of Mr Povlsen’s four children were among the victims of the Easter Sunday bombings which killed at least 290 people © AFP

Sirius Minerals digs deep to make $5bn fertiliser mine a reality British-born entrepreneur needs $3bn to finish project in North York Moors NEIL HUME

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t a windswept industrial estate outside Redcar in northeast England the next phase of a huge construction project is about to begin.

After a blessing with holy water the blades of a massive drill, which will drive a 5 metre-wide tunnel through the dry local mudstone, spins into life.

For Chris Fraser, the chief executive of Sirius Minerals, the launch of tunnel-boring machine Stella Rose is another important step towards his vision of building a $5bn fertiliser mine under the peaceful national parkland of the North York Moors.

But that dream will not become a reality unless the British-born Australian entrepreneur can raise $3bn in the debt market to finish the job. Without additional funding, Sirius — which means “brightest star” in Latin — will run short of cash later this year and work on one of the world’s biggest mines will grind to a halt.

Sirius has already raised $1.4bn from investors, including $250m from Australia’s richest woman, Gina Rinehart, but struggled to secure a loan guarantee from the UK government, even though prime minister Theresa May has praised

the project.

If Mr Fraser, a former investment banker who helped finance some of the biggest iron ore mines in Australia, is feeling the pressure, he is not showing it.

“We are making good progress,” he said after the launch of the tunnel boring machine this month.

“We are pretty sure we will get this.”

Sirius revealed in March that it was in talks with a “major global financial institution” — understood to be JPMorgan — over a new debt funding package for the project, which it hoped to finalise by the end of the month.

“The best way to describe what we are working on is a capital markets-led structure rather than traditional bank and project finance”, said Mr Fraser. Sirius also needs to raise $400m to $600m of equity to cover higher tunnelling costs.

If it were not for a couple of cranes rising above the tree line it would be easy to drive past the Woodsmith mine, which sits in the hills two miles south of Whitby.

But behind artificial embankments a team of Sirius workers and contractors have cut a vertical hole as wide as a fairground Ferris wheel 60 metres into the ground. The concrete-lined chasm will eventually house the submerged head of a shaft that Sirius will use to access a

massive deposit of polyhalite 1,500 metres below the ground.

The company will use another shaft to extract the fertiliser, which will be loaded into a skip and hoisted on to a conveyor belt system 350m from the surface. From here it will start a journey to Redcar via a 37km underground tunnel, which Sirius decided to build to lessen the environmental impact of the project.

The polyhalite will then be processed and shipped to customers in the US, China and Brazil to spread on crops.

“This is a once in a lifetime opportunity for a mining engineer,” said Graham Clarke, operations director at Sirius. “It’s a chance to show the world we can still build big, complex mines in the UK.” The resource discovered by Sirius could support more than 100 years of mining.

If all goes to plan Sirius will start extracting polyhalite in 2021 and hit 10m tonnes a year of production by 2024. An expansion to 20m tonnes a year is planned but the company will need additional approvals from National Park UK. Polyhalite, from the Latin “many salts”, combines four of the six macronutrients essential to plant growth: calcium, magnesium, potassium and sulphur.

Business leaders are blinded by industry boundaries RITA MCGRATH

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hy is it so hard for executives to anticipate the major shifts that can determine the destiny of their organisations?

Former Intel chief executive Andy Grove called these moments “strategic inflection points”. For some, he wrote, “That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.”

It is an enduring puzzle why business leaders so often miss these shifts. Successful companies such as BlackBerry maker Research In Motion and Nokia did not heed the early signs of a move to app-based smartphones.

Video rental chain Blockbuster failed to acquire Netflix when it

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had the chance, in 2000.

Senior people rise to the top by mastering management of the key performance drivers in that sector. This, in turn, shapes how they look at the world. The problem is a strategic inflection point can come along and make the reference points they have developed obsolete. Take traditional retail. Its key metrics have to do with limited real estate, such as sales per square metre.

Introduce the internet and those measures are useless. And yet traditional systems, rewards and measures are all built around them.

British economist Edith Penrose grasped this crucial link.

Frustrated by academics of her day who founded their theories on industry-based classifications and industry-based data sets, she asked, “What is an industry?” In @Businessdayng

her studies, executives did not confine themselves to single industries, they expanded into any market where their business might find profitable growth.

Consider the energy sector, which has traditionally been immune to cut-throat competition.

Historically, most power generators and utilities were heavily regulated, the investment and depreciation cycles ran into the decades and the idea of building a direct relationship with users was foreign. The very term utility suggests a stable, natural monopoly. In that environment, the relevant measures assumed central energy generation, transmission outward through a grid and growing customer demand.

The sector’s suppliers likewise expected steady demand and a quiet life.

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Tuesday 23 April 2019

BUSINESS DAY

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ANALYSIS US airline JetBlue takes a gamble with plans for London-NY flights The transatlantic route is fiercely competitive and littered with failures JOSH SPERO

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s one airline with transatlantic ambitions came into land for the last time, another was making plans to take off — hoping to disrupt one of the world’s busiest and most important routes.

US carrier JetBlue will take on incumbents such as British Airways, Virgin Atlantic and United Airlines with its plans to fly between London and New York from 2021.

It is also taking a big gamble as it prepares to enter a crowded and fiercely competitive market, which is littered with failures. Only weeks before JetBlue laid out its ambitions, Iceland’s low-cost airline Wow Air announced it would make no more flights across the Atlantic as it declared bankruptcy.

As Wow’s example shows, there is a lot at stake for New York based JetBlue. London Heathrow to New York JFK is “the highest capacity

carriers, saying it would be “relatively small” compared with them, with its initial deployment of 13 planes representing about 1.5 per cent of its total capacity.

But Mint has already disrupted the US transcontinental market, driving down competitors’ fares, and its bigger impact might be to draw attention to the de facto oligopoly on transatlantic trade.

“Our view is that the transatlantic market has become very concentrated in the hands of the three large alliances,” said Mr Hayes, referring to Oneworld (which includes BA and American Airlines), Star Alliance (United) and SkyTeam (Delta).

“That’s why the fares keep going up.

People think there are 12 airlines, there are just three mega airlines.”

Mr Hayes’ solution is that aviation regulators should demand the alliances divest large numbers of airport slots — the right to fly at a certain time — if they want to

New York-based carrier JetBlue will attempt to succeed where many other airlines have failed as it launches flights across the Atlantic © Bloomberg

commercial long-haul route in the world”, according to one analyst, and more than 57,000 seats cross between London and New York each week.

Like Wow, JetBlue aims to export the company’s low-cost model beyond its home market. But chief executive Robin Hayes, speaking to the Financial Times, was clear that JetBlue could succeed where Wow and others, such as Primera (which went bankrupt) and struggling Norwegian, had failed.

“It is like chalk and cheese comparing us to these airlines,” he said, pointing to perks such as better legroom and free Wi-Fi for economy customers.

Not only that, Mr Hayes added, JetBlue could start to challenge the incumbents with its Mint-branded business class, lower cost structure and single-aisle Airbus A321LR planes, which he said would be easier to fill year-round than widebody aircraft, even during the winter lull.

Mark Manduca, analyst at Citigroup, said single-aisle planes were “the reason why the North Atlantic can be disrupted”, leaving legacy carriers cutting fares to fill wide-bodies at quiet periods and diminishing JetBlue’s need for a hub airport.

Instead, it can fly direct to desirable cities, although it has yet to say which London airports it will use, nor whether it would partner a European airline to provide passengers with connections. As well as New York, it will also fly from Boston to London.

Mr Hayes was modest about JetBlue’s initial impact on the legacy

expand.

This would especially help in London, where both Heathrow and Gatwick, the two airports likely to be most appealing to JetBlue, are slot constrained and operating at full capacity.

Daniel Roeska, analyst at Bernstein, said JetBlue would most probably use Gatwick, because JetBlue “need very specific slots to make the rotation work and those are peak times, and at Heathrow you won’t be able to get anything”.

There are lessons for JetBlue in the troubles of its low-cost rivals.

The chief executive of Wow said his “fatal” mistake was trying to turn the airline into a global business by adding expensive wide-bodies to its fleet.

Similarly, analysts at Bernstein have estimated that Norwegian, which flies the wide-body Boeing 787 Dreamliner across the Atlantic, loses €20,000-€25,000 per international flight.

At the other end of the scale, business-only transatlantic-focused airlines such as Maxjet, Eos and Silverjet also failed en masse, in their case because of the broad downturn in demand in the run-up to the global financial crisis.

JetBlue’s opportunity, Citi’s Mr Manduca said, was to offer a “hybrid” business and leisure service, “something you would deem comparable to the British Airways product”, which is dominant on the route but has faced criticism for its ageing fleet.

While BA has pledged to replace its older models — the average age of its 747 jumbo jets is 22 years — that will not be complete until the mid-2020s. www.businessday.ng

Why American CEOs are worried about capitalism Fearing a backlash against business if a Democrat wins the White House, some chief executives are pushing for pre-emptive reforms ANDREW EDGECLIFFE

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hen Roger Williams got his turn at the microphone earlier this month, his question for the bank CEOs lined up before the House committee on financial services seemed an unusual one to put to seven sharpsuited financiers. “Are you a socialist or are you a capitalist?” the Texas Republican asked each of them, from Citigroup’s Mike Corbat to David Solomon of Goldman Sachs.

None struggled to assure him of their free market bona fides, but the fact the question was even asked reflected a remarkable change in the discussion about business in Washington and beyond in recent months.

America’s decades-old system of corporate capitalism is suddenly up for debate. One reason is the rising prominence of self-described democratic socialists such as Alexandria Ocasio-Cortez, Mr Williams’ fellow committee member, which has put a spotlight on critics who were once outside the political mainstream. Yet some of the most influential voices calling for change are the very chief executives who have arguably benefited most from the current model.

Days before his appearance at the congressional hearing, one of the seven bank leaders offered some more nuanced thoughts on capitalism than his one-word affirmative answer to Mr Williams. Jamie Dimon, who earned $30m as chairman and chief executive of JPMorgan Chase last year, devoted several pages of his 23,000-word annual letter to shareholders to a reflection on the “fraying” of the American dream and the role business could play in stitching it back together.

Capitalism had lifted billions out of poverty, he wrote, but “this is not to say that capitalism does not have flaws, that it isn’t leaving people behind and that it shouldn’t be improved”.

Companies — like governments, unions and special interest groups — may have become too self-interested, he conceded, ticking off loopholes in the corporate tax code.

Having long been able to “almost literally drive by” many of society’s problems, they should now do more to address them, he argued. America needed to step up its spending in areas such as infrastructure and education, “and that may very well mean taxing the wealthy more”.

In the same week the billionaire founder of the world’s largest hedge fund delivered a similar message — with a sterner warning. Bridgewater

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Associates’ Ray Dalio, worth almost $17bn by Bloomberg’s calculations, issued a manifesto arguing that the capitalist system he had embraced as a precocious 12-year-old investor was now reinforcing inequality and must “evolve or die”. Part of that evolution, he said in the near-8,000word piece, would involve raising “more from the top” in taxes.

“I’m a capitalist and even I think capitalism is broken,” Mr Dalio said as he tweeted out his essay.

Expanding on the theme to a mass audience on 60 Minutes, the CBS current affairs television show, he said capitalism was “at a juncture”.

Americans could reform it together, “or we will do it in conflict”.

Few other capitalists have said so publicly that they share Mr Dalio’s fear of “some form of revolution”, but more and more of his peers are echoing his concerns about inequality and the populist backlash it has fed. Globalisation and technological change have “led to increased stress and declining living standards for many and created enormous wealth for a few,” Chubb chief executive Evan Greenberg wrote in the insurer’s latest annual report. The system was “failing a large portion of the population,” warned Weston Hicks of Allegheny, the reinsurance company owner. Companies from General Electric to Honeywell have begun to list populism and negative sentiment toward multinationals in the “risk factors” section of their corporate filings.

Those arguing for reform range from Rose Marcario, chief executive of environmentally-conscious retailer Patagonia, to Larry Fink, who as chairman and chief executive of BlackRock has pushed the companies the giant asset manager invests in to show they serve a social purpose beyond making profits for their shareholders.

Why now, 10 years on from the global financial crisis, after seeing stock markets and profits hit new highs and a Republican president cut corporate tax rates and regulations at their urging, do America’s leading capitalists sound so uneasy?

One answer, according to some in the thick of the debate, is fear.

“Part of what scares them is the politics,” says Darren Walker, president of the $13bn Ford Foundation. “What really scares them is when they look at the data showing younger people are increasingly comfortable with socialism as a way of organising the economy. That is incredibly frightening to them.”

According to a Gallup poll last year, the percentage of 18 to 29-year@Businessdayng

old Americans who have positive views of socialism has held steady at 51 per cent, but the percentage saying they have positive views of capitalism has fallen from 68 per cent to 45 per cent since 2010.

The 2020 US election campaign is also expected to feature a long list of candidates with strong views on the subject, from Senator Elizabeth Warren, who has proposed breaking up big companies and imposing a “wealth tax” on individuals with assets over $50m, to Howard Schultz, the former Starbucks chief eyeing an independent run, who has talked of a “growing crisis of capitalism” even as he has questioned whether other candidates have the business experience to fix it. Several are testing out messages on earnest topics such as quarterly earnings guidance, share buybacks and a financial transaction tax that rarely light up presidential debates but have this year found an audience.

“I think there’s a real fear that it’s legitimate now to talk about socialists’ and the left’s ideas of much higher taxes, corporate regulation, corporate reform and the stifling of free market enterprise,” says Martin Whittaker, chief executive of Just Capital, a charity that aims to build a more just marketplace by measuring how companies reflect Americans’ real priorities.

“In private emails and discussions [business] people have been diagnosing the problem and I think everyone recognises we have a real problem,” he says, but the solutions are still up for grabs. “People are trying to find traction for a sensible middle way of capitalism reform but it’s not there yet.”

For Morris Pearl, a former BlackRock managing director, the pressure capitalists are feeling is just a consequence of the “gross inequality” that has shaken many voters’ faith in the free market. Mr Pearl chairs Patriotic Millionaires, a group of self-professed “traitors to their class” who have been lobbying since 2010 for higher taxes on the rich.

Their message has attracted much more attention this year than before, Mr Pearl says, because “a lot of smart people suddenly realised there are a lot of people in the middle parts of the country that have just sort of had enough. Capitalism, if it’s going to survive, is going to have to address that.”

As the public’s anger about inequality mounts, he ventures, capitalists should be thinking of preserving themselves, not just their system: “Given the choice between pitchforks and taxes, I’m choosing taxes.”

Tuesday 23 April 2019

BUSINESS DAY

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tax issues Taxation of Not-for-Profit Organisations – matters arising Isah Aruwa & Cynthia Ibe

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Introduction ot-for-Profit Organizations (NPOs) are organizations formed for promoting a common cause, e.g., human rights, environmental conservation, improving health care services/ delivery, girl child education, developmental work, etc., without a profit motive. They are mostly funded by donations and grants, and run by its promoters and volunteers under the supervision of a management team. The Management Team (MT) is responsible for the day-to-day administration of such organizations.

In most cases, the MT, usually led by an Executive Secretary, an Executive Director, or whatever nomenclature is adopted by the NPO, reports to the Board of Trustees (BOT) who takes strategic decisions for achievement of the NPO’s overall goals. NPOs are organized on a local, national or international level, focusing on specific issues/areas.

In Nigeria, there are two forms of registration adopted by NPOs. They could be registered as an Incorporated Trustee (INT) or a Company Limited by Guarantee (CLG). The Companies and Allied Matters Act (CAMA), 2004 refers to NPOs registered as INT as: “…community of persons bound together…” by a common objective other than profit, while those registered as CLG are viewed as organizations formed for promoting a common cause, for which the income and property are applied strictly towards promoting the defined cause.

This article focuses on NPOs formed under the CLG structure.

We will review the income tax filing requirements of this type of NPOs, the level of disclosures required on the returns submitted to the Federal Inland Revenue Service (FIRS) and the need for the FIRS to revisit the statutory income tax filing obligations of the NPO, given the nature of their operation and tax exemption status.

Taxation of NPOs in Nigeria NPOs in Nigeria, similar to their taxable corporate counterparts, are required to submit companies’ income tax (CIT) returns to the FIRS annually, by virtue of the provision of section 55 of the Companies Income Tax Act 2007 Cap. C 21 LFN 2004, (CITA). The CIT returns should contain, amongst other things, the following documents: • The audited accounts, tax and capital allowances computation for the year of assessment, and a true and correct statement in writing, containing the amount of profit from each and every source computed; • A duly completed self-assessment form as may be prescribed by the FIRS, from time to time, attested to by a Director or Secretary of the company; and

• Evidence of payment of the whole or part of the tax due into a bank designated for the collection of the tax (where applicable).

The above provision requires NPOs to submit their CIT returns with financial statements (FS); which forms an integral part of the returns.

While there are no specific International Financial Reporting Standard (IFRS) for preparing NPOs’ FS, the FS are typically prepared based on the provisions of “IFRS for Small and Medium –sized Entities (SMEs)”.

The Standard defines SMEs as entities that: a) do not have public accountability ; and b) publish general purpose financial statements for external users. Examples of external users include owners who are not involved in managing the business, existing and potential creditors, and credit rating agencies.

It is the provisions of this standard that are applied in preparing the FS of NPOs in Nigeria. Given that NPOs’ primary objective is “not-forprofit”, their operations at the end of a financial year could either result in a surplus (excess of income over expenditure) or a deficit (where the expenditure exceeds the income).

Consequently, their “surplus” (or income) is exempted from CIT by virtue of the provision of section 23(1c) of CITA, unless such profits/gains were earned from a trade or business carried on by the NPO in the course of executing their mandate. Pursuant to this requirement, NPOs operating in Nigeria are required to register with the FIRS, comply with the provisions of section 55 of the CITA, and maintain the relevant books of account for purpose of compliance with the www.businessday.ng

relevant provisions of the CITA applicable to their operation. The FIRS would impose penalties on any NPO that fails to comply with the above requirement based on the relevant provision of CITA. Matters arising Sections 24 to 27 of CITA provides for treatment of tax-deductible and non-deductible expenses. While the list of the tax-deductible expenses is not exhaustive, the underlying basis for evaluating items not specifically mentioned is the test of whether the item is “wholly, reasonably, exclusively and necessarily” (WREN) incurred in generating the “income” or “profit” of an organization. Thus, irrespective of the accounting treatment accorded an expense item on the FS, the tax-deductibility of that item would be evaluated against the list provided under section 24 of CITA and, if not specifically identified, then by the application of the WREN test.

Items that do not satisfy the criteria from these two broad perspectives are disallowed in the tax returns. The CITA does not make an exception for NPOs in the preparation of its CIT returns. Thus, NPOs are required to prepare their tax computations based on the provisions of CITA regarding the tax deductibility or otherwise of expenses – without due consideration for whether the “surplus” is taxable or the “deficit” is relievable in subsequent years.

However, as section 23 of the CITA has expressly exempted NPOs from income tax obligation, the question arises “as to what use the adjustments for non-tax deductible expenses on the tax computation of NPOs serve” There is no standard practice in the preparation and submission of income tax returns of NPOs across

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board in Nigeria. Some NPOs prepare and submit their returns like other companies i.e., adjustments are made against the surplus on the FS to arrive at an “assessable surplus”, other NPOs merely reproduce the surplus shown on the FS, without adjusting for any non-tax deductible expense.

The latter view is driven by the understanding that since NPOs are exempted from income taxes, and are not involved in any trade or business, the surplus from their operations cannot be equated to a profit. Thus, only where the NPO was involved in any business activity, would such adjustments be necessary i.e., a prorated adjustment of the relevant cost.

CITA did not make any special filing requirements for NPOs other than those required by the provision of section 55 above. Similarly, the FIRS’ Circular Number 2010/03 also did not spell out any format for preparing the CIT returns of NPOs, different from those stated in section 55 above. Thus, the approach adopted by an NPO is dependent on its organizational practice. This marked inconsistencies in the approach for preparing CIT returns submitted could result in a conundrum during a review of the returns.

While there is a tendency to challenge the validity of some expenses reported as not allowable (particularly where a returns has outlined the expense items), the question is what purpose would such an adjustment serve when the entity is not liable to tax in any event?

Practices from other jurisdictions and way forward for Nigeria The tax rules in other jurisdictions are clearly defined. Such rules are put in place to harmonize the filing requirements of NPOs. For example, in @Businessdayng

Canada, NPOs are required to submit “corporate tax return” declaring their exemption from tax under Part I of the Income Tax Act. However, where an NPO successfully applies and obtains approval as a registered charity under the Income Tax Act, such NPO would not be required to continue submitting corporate tax returns. Upon a grant of such approval, the NPO is only required to submit the Registered Charity Information Return (Form T3010) annually. Thus, only a statement requiring certain information is disclosed annually.

In the United States of America, NPOs exempted from income tax are required to submit an annual returns of income and expenditure.

Some classes of NPOs are completely exempted from submitting the returns of income and expenses e.g., Churches and their affiliated organizations. However, where the NPO is involved in any unrelated business, it is required to submit an unrelated business income tax return. NPOs earning $1,000 or more from unrelated business activities are required to submit the unrelated business income tax returns for this purpose.

Clearly, the above practices provide clear guidance as to the filing requirements of an NPO, thereby, avoiding the inconsistency in the format of presentation and/ or treatment accorded transactions in their returns.

From a review of the practice in Nigeria, it is clear that there is no consistency in the approach adopted in submitting income tax returns by NPOs. Different NPOs adopt approaches that best suit them, since there are no special rules for preparing and submitting income tax returns by NPOs, different from the provisions of section 55 of CITA. However, since section 23 of the CITA clearly exempts the NPOs from income tax obligations, issuing a clear directive on the mode of filing CIT returns by NPOs, in compliance with the provision of section 55, taking into cognizance their exemption status as provided under section 23 of the CITA, would ensure consistency with international best practices and make the following outcomes possible: - a unified approach for income tax returns submitted leading to consistency of approach and disclosures - ease of review of the returns submitted by the FIRS. Conclusion It is hoped that the FIRS will issue clear guidelines, by way of a Regulation or Guidelines to NPOs on the mode of preparing and submitting their income tax returns annually.

The current reliance on the provisions of section 55 of the CITA does not address the special needs of the NPOs given their peculiar nature as tax-exempt organizations.

Aruwa and Ibe are from KPMG Advisory Services

46

Tuesday 23 April 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Thursday 18 April 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 243,484.80 6.85 3.01 537 58,396,894 UNITED BANK FOR AFRICA PLC 227,426.15 6.65 2.31 261 15,980,012 ZENITH BANK PLC 656,186.72 20.90 0.24 285 27,421,194 1,083 101,798,100 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 274,598.99 7.65 1.32 177 5,768,933 177 5,768,933 1,260 107,567,033 BUILDING MATERIALS DANGOTE CEMENT PLC 3,220,655.90 189.00 0.53 37 291,559 LAFARGE AFRICA PLC. 185,239.65 11.50 -4.17 99 3,334,988 136 3,626,547 136 3,626,547 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 335,413.40 570.00 - 9 6,789 9 6,789 9 6,789 1,405 111,200,369 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 1 1,000 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 1 1,000 1 1,000 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 1,000 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 76,312.80 80.00 - 6 8,085 PRESCO PLC 62,750.00 62.75 - 7 4,116 13 12,201 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 9.09 6 211,768 6 211,768 19 223,969 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 -7.14 6 395,093 JOHN HOLT PLC. 182.90 0.47 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 2 3,600 TRANSNATIONAL CORPORATION OF NIGERIA PLC 48,371.11 1.19 0.85 94 12,272,406 U A C N PLC. 20,025.01 6.95 0.72 50 1,076,889 152 13,747,988 152 13,747,988 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 3 35 3 35 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 33,000.00 25.00 -9.09 23 143,112 ROADS NIG PLC. 165.00 6.60 - 0 0 23 143,112 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 5 18,463 5 18,463 31 161,610 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 10,334.94 1.32 - 3 27,530 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 131,422.97 60.00 - 32 79,894 INTERNATIONAL BREWERIES PLC. 197,704.82 23.00 - 9 1,352,139 NIGERIAN BREW. PLC. 519,798.63 65.00 0.23 115 1,210,233 159 2,669,796 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 53,500.00 10.70 2.88 102 2,579,969 DANGOTE SUGAR REFINERY PLC 171,000.00 14.25 1.79 44 568,367 FLOUR MILLS NIG. PLC. 67,246.23 16.40 - 39 827,264 HONEYWELL FLOUR MILL PLC 9,278.33 1.17 - 13 122,150 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 3 6,062 NASCON ALLIED INDUSTRIES PLC 51,001.69 19.25 - 10 24,813 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 211 4,128,625 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,660.22 11.00 - 9 12,602 NESTLE NIGERIA PLC. 1,252,396.88 1,580.00 - 28 6,926 37 19,528 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,377.95 3.50 -9.09 11 273,432 11 273,432 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 37,521.01 9.45 - 13 93,563 UNILEVER NIGERIA PLC. 195,330.18 34.00 1.49 28 346,520 41 440,083 459 7,531,464

BANKING ECOBANK TRANSNATIONAL INCORPORATED 197,257.68 10.75 2.38 27 260,269 FIDELITY BANK PLC 56,211.11 1.94 3.19 98 6,284,201 GUARANTY TRUST BANK PLC. 1,024,205.04 34.80 0.14 114 1,594,789 JAIZ BANK PLC 14,437.48 0.49 2.08 9 670,300 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 78,885.75 2.74 -1.46 113 8,127,616 UNION BANK NIG.PLC. 198,021.12 6.80 - 31 175,635 UNITY BANK PLC 9,351.47 0.80 1.27 8 354,000 WEMA BANK PLC. 26,616.38 0.69 1.47 26 1,358,304 426 18,825,114 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,197.65 0.75 2.74 22 561,354 AXAMANSARD INSURANCE PLC 21,000.00 2.00 5.26 4 8,003,000 CONSOLIDATED HALLMARK INSURANCE PLC 2,113.80 0.26 - 1 2,046 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 2 21,000 GOLDLINK INSURANCE PLC 2,001.98 0.44 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 4 316,000 LAW UNION AND ROCK INS. PLC. 2,320.02 0.54 - 1 40,000 LINKAGE ASSURANCE PLC 4,160.00 0.52 - 0 0 MUTUAL BENEFITS ASSURANCE PLC. 1,760.00 0.22 - 7 6,715,270 NEM INSURANCE PLC 10,613.81 2.01 - 5 210,000 NIGER INSURANCE PLC 1,547.90 0.20 - 3 510,847 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 3 4,627 REGENCY ASSURANCE PLC 1,600.50 0.24 -7.69 16 1,981,102 SOVEREIGN TRUST INSURANCE PLC 2,001.80 0.24 - 5 1,284,500 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 20 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 -8.70 5 2,000,100 WAPIC INSURANCE PLC 5,353.10 0.40 2.50 20 880,476 99 22,530,342 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,361.36 1.47 - 7 51,700

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7 51,700 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 - 56 494,226 CUSTODIAN INVESTMENT PLC 37,349.84 6.35 - 3 200,100 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 37,625.15 1.90 -0.52 77 5,229,159 ROYAL EXCHANGE PLC. 1,131.98 0.22 10.00 5 730,025 STANBIC IBTC HOLDINGS PLC 473,113.55 46.20 - 9 70,152 UNITED CAPITAL PLC 14,880.00 2.48 -9.82 235 12,993,928 385 19,717,590 917 61,124,746

HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 15 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 - 7 861,667 8 861,682 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,225.00 4.15 - 8 26,712 GLAXO SMITHKLINE CONSUMER NIG. PLC. 11,002.06 9.20 - 30 123,400 MAY & BAKER NIGERIA PLC. 4,485.61 2.60 1.92 29 924,083 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 9 268,312 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 1 100 77 1,342,607 85 2,204,289

COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 3 105,100 3 105,100 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 1 2,000 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 1 2,000 PROCESSING SYSTEMS CHAMS PLC 1,690.58 0.36 9.09 25 13,838,666 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 0 0 25 13,838,666 29 13,945,766 BUILDING MATERIALS BERGER PAINTS PLC 2,434.52 8.40 -9.19 14 94,577 CAP PLC 23,800.00 34.00 0.74 4 162,897 CEMENT CO. OF NORTH.NIG. PLC 223,439.52 17.00 4.29 47 837,082 FIRST ALUMINIUM NIGERIA PLC 865.25 0.41 7.89 4 400,000 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 2 2,000 PREMIER PAINTS PLC. 1,279.20 10.40 - 1 50 72 1,496,606 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,818.12 1.60 3.23 17 907,142 17 907,142 PACKAGING/CONTAINERS BETA GLASS PLC. 27,998.43 56.00 -4.03 1 123,078 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 123,078 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 90 2,526,826 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 3 189 3 189 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 0 0 0 0 3 189 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 11 42,030 11 42,030 INTEGRATED OIL AND GAS SERVICES OANDO PLC 59,670.78 4.80 -2.04 51 381,009 51 381,009 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,104.17 175.00 -1.63 9 21,624 CONOIL PLC 15,960.90 23.00 - 11 5,372 ETERNA PLC. 5,607.82 4.30 - 11 192,477 FORTE OIL PLC. 35,101.87 26.95 - 17 46,943 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 1 300 TOTAL NIGERIA PLC. 66,546.28 196.00 - 20 20,722 69 287,438 131 710,477 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 2 60 2 60 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 346.95 0.74 - 0 0 0 0 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,637.89 1.75 4.79 3 149,236 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 2 210 TRANSCORP HOTELS PLC 41,042.18 5.40 - 2 10,271 7 159,717 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 2,400 1 2,400 PRINTING/PUBLISHING ACADEMY PRESS PLC. 199.58 0.33 - 3 2,480 LEARN AFRICA PLC 1,033.74 1.34 - 0 0 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 798.11 1.85 - 5 73,268 8 75,748 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 547.04 0.33 - 1 1,500 1 1,500

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Tuesday 23 April 2019

BUSINESS DAY

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47

BUSINESS DAY

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INSIGHT/INNOVATION

The Koreans are always ready

OGHO OKITI

T

wo weeks ago, I was in Seoul and Busan, both in South Korea, for a week. I was part of a team of Nigerians on a knowledge-sharing programme under the auspices of the Korean Development Institute (KDI).

Emomotimi Agama of the Securities and Exchange Commission (SEC) led the team, comprising mostly regulators from the institution. The KDI is helping to shape the establishment of a robust derivatives market in Nigeria.

As would be expected, the visit provided the opportunity to learn first hand about the country’s development, and pick one or two ideas for Nigeria’s economic development.

Indeed, the Koreans themselves recognizes that their experience holds relevance for other developing countries, especially those that are serious and determined to reduce poverty and create wealth for their citizens. Indeed, as far back as 1995 during my Masters degree programme in the University of Manchester, South Korea and the other Asian tigers – Hong Kong, Singa-

pore and Taiwan – were already topical amongst development economists.

The Korean story, just as the China story today, the Japan before it, and the upcoming Indian story is all about the pace of their economic growth.

While each economy provides peculiar story, the outcome is the same – unparalled economic growth and the reduction in poverty that follows.

Despite that that of Korea is very interesting and will share some peculiar insights I gained another time, it is the often subtle and rarely defined characteristics in a country, which I found in Korea, that I will like to share in this piece. Essentially, while it is important to share aspects of the economic outcomes and progress made in the last six decades in the country, I believe it will be more beneficial to share something that appear understated, but have implications for the way and manner they had developed.

With the country eight hours ahead of Nigeria, we arrived at the Incheon airport in Seoul about 4pm local time on Sunday 7th of April. As you would expect, by the time we came out, our host’s representatives were waiting for us. That has become fairly standard for everyone these days. After we gathered each other, within minutes we were in the bus that was waiting to take us to our hotels. I believe many will argue also that that is standard these days.

That night, our grueling schedule began with a dinner and by the next morning our site visits started. In addition to meetings and seminars within the hotel in Seoul, the team visited

9 institutions. These institutions include the Korean Exchange, Pukyong University and Korea Asset Management Corporation (equivalent of our own Asset Management Company of Nigeria – AMCON), all in Busan. Back in Seoul, we also visited the Financial Supervisory Service (FSS), Bank of Korea, KOSCOM – an IT Solutions company launched by the Ministry of Finance and the Korea Exchange, and two privately owned stockbroking firms.

Now, in all these meetings and visits, the Koreans were always ready. From the point of the vehicle taking us to the meetings, to the time it will take the bus to arrive at the meeting place, and the host waiting to receive us, I could not recall a time when they were not ready. I observed very carefully that in all the site visits, by the time we arrive at the seminar hall, all the writing materials were already set, and the presenter and the presentation ready.

That’s not all. I observed that the tea and coffee sections are set and you will not find the tea lady around anywhere.

Often in these meetings, we only met the presenter and of course, the IT guy is not waiting anywhere around.

If you are not surprised at the level of efficiency, diligence and time keeping from these companies and institutions, how about the many restaurants we had either lunch or dinner? Yes, these restaurant visits were arranged in advance, but nonetheless, given that for most of the visits, we had very limited time, they were always ready.

This level of efficiency should not be belittled because it takes a great deal

‘

Whereas it is common for those that work 10 hours in Nigeria to actually do 3 hours of work, and to have programmes start 2 – 3 hours late, it cannot be so in Seoul.

That, more than the statistics, spoke volumes about their development

of orientation and national attitude to build this level of consistency across so many public and private institutions, small and big. That pattern is underlined by a strong work ethic, and respect for time.

In Nigeria, I do understand our peculiarities. The environment we work in can disrupt even companies determined to ensure the respect for time. Everyday, we are at the mercy of dilapidated infrastructure, traffic and other measures beyond our control.

However, I have always also wondered why in big and small companies alike in Nigeria, it is very common to see workers and staff in offices moving about in the building without a purpose (at least, it seems so). Perhaps I have no way of making this very clear, but I have been in big banks where the staff just move up different offices without any clear reason. In the Bank of Korea, I initially thought it was an holiday, then I peeped through one of the cubicles, then I saw a sea of heads working at their desk, oblivious of whether we were around in that building or not.

Whereas it is common for those that work 10 hours in Nigeria to actually do 3 hours of work, and to have programmes start 2 – 3 hours late, it cannot be so in Seoul. That, more than the statistics, spoke volumes about their development. It is that process that we should emulate.

I thank you.

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

7 key events to watch over the next 90 days PROPHYLAXIS

AYULI JEMIDE

N

igeria is in a bit of a flux since after the much talked about 2019 elections. There are several events unfolding in the horizons that may affect us for good or for bad if they happen or fail to happen. I will identify 7 of such events very quickly, in no specific order.

Number 1 is that it is a no brainer that either Atiku or Buhari will win the case at the election tribunal. We all wait to see what the judges make of Atiku’s case and the data purportedly obtained from the INEC server. This is one election petition that will keep Nigerians glued to their seats as the drama unfolds. It will be a long drama because whoever loses at the tribunal is surely going on appeal and this case will definitely go to the Supreme court where we wait anxiously to see who will lead the Supreme court, which 7 justices will hear the matter and how the justices will rule.

Number 2 is the appointment of a new Central Bank Governor or the reappointment of the current Central Bank Governor, Godwin Emefiele. The decision as to who will be our next

Central Bank Governor for the next 5 years from May 2019 is one that investors and socio-economic pundits will wait to hear with some level of anxiety. This is a flagship decision and the caliber of person appointed can have good or bad effects on our economy from the day an announcement is made.

Number 3 is the appointment of Ministers or failure to appoint Ministers soon after the swearing in of a new President or appointing Ministers that fail to instill public confidence. History has shown that delays in announcing a cabinet or the announcement of a lack luster cabinet has dire consequences for the Nigerian investment climate and economy. So, we all wait to see when Ministers will be appointed by whoever is sworn in as President and the quality of people eventually selected for the A list positions.

Number 4. The workers and organized labour have fought so hard for their 30,000 Naira minimum wage, but the implementation battle has only just begun.

Labour have recently warned the Salary, Income and Wages Commission that they are running out of patience and the implementation circular for the recently approved 30,000-naira minimum wage must be released forthwith. We are all waiting for not just the release of relevant circulars, but to see how it will be implemented and if Peter will be robbed to pay Paul since we know that the finances of government at all levels is in dire straits.

Economists will also be curious to see if the new minimum wage will lead to any inflation and to know the contents of

‘

History has shown that delays in announcing a cabinet or the announcement of a lack luster cabinet has dire consequences for the Nigerian investment climate and economy

the Bismark Rewane Committee on the Implementation of the minimum wage.

Number 5 is the issue of the removal of petroleum subsidy. There has been so much hue and cry in recent times about the fact that petroleum subsidy is a monumental fraud. A recent report indicates that against the backdrop of the continued comatose state of the Nigeria’s local refining capacity, the country may have spent about N10 trillion in the provision of pump price subsidy on imported petroleum products between 2006 to 2018. Recent pointers and unclear signals show that removal of petroleum subsidy is on the front burner for any new federal government and so we wait to see if any action will be taken and the consequences of such actions on the downstream sector of the petroleum industry and the pump price of fuels.

Number 6 is the fact that we all await the passing of the Federal Government’s 2019 budget.President Muhammadu Buhari presented the 2019 budget of the Federal Republic of Nigeria estimated at N8.83 trillion Naira to the joint session of the National Assembly in December 2019 and the National Assembly is still working on it. Nigerians are curious to see not just the final product from the National Assembly but how government intends to finance this budget given the revenue shortfalls being experienced.

Number 7 relates to legislations either about to be sent to the President for assent or already awaiting Presidential assent. Some of the bills awaiting assent like the Companies and Allied Matters

Act (CAMA) are said to be major reform bills which may usher in a new regime for ease of doing business in Nigeria.

Another bill worthy of mention which is in the works is the Petroleum Industry Governance Bill (PIGB) which was rejected by the President last year but has recently been reconsidered by the Senate. The PIGB is one of four parts of the proposed Petroleum Industry Bill (PIB), which seeks to update the outdated provisions with a more comprehensive and current petroleum industry law that aligns with global standards. The president, earlier in July 2018, rejected the bill. The PIGB seeks to make the Nigerian Petroleum Regulatory Commission (NPRC) the sole regulator overseeing the licensing, monitoring and supervising of petroleum operations. The Police Reform Bill has also been passed by the Senate recently and should join the list of bills awaiting assent. This bill basically deals with the welfare of police operatives and seeks to set up a Police Trust Fund as an intervention.

Nigerians have their ears and eyes open to see how these and other events would play out in the next 90 days or more. There is so much at stake for us all, we need to keep our fingers crossed that politicians will not continue to play politics with our commonwealth.

Ayuli Jemide is Founder and Lead Partner of Detail Commercial Solicitors. An entrepreneur, public speaker and writer.

Email: AJ@ayulijemide.org Twitter: @JemideAyuli

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