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Inside P. 37 FG to transmit minimum wage bill to National Assembly as Council of State approves N27,000 P. 39

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Arancha Gonzalex (l), executive director, International Trade Centre, and Babajide Sanwo-Olu, All Progressive Congress governorship candidate in Lagos State, during a meeting to promote investments into the state in Geneva, yesterday, ahead of the World Economic Forum in Davos.

FRANK AIGBOGUN, Davos

Continues on page 38

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NGUS MAR 27 2019 364.89

In crusade for reform in Ethiopia, Abiy finds inspiration in love for his people eform-minded Ethiopian Prime Minister Abiy Ahmed is better defined by the modern ideas that he is pushing rather than his young age of forty-two, and it is to his credit that he is more forwardlooking today than many of his colleagues in the continent.

At the World Economic Forum meetings in Davos, Abiy, who has both Christian and Muslim parents, presents image of a leader impatient to change the fortunes of his heavily-populated country ravaged by years of war and famine but which today has become the focus of global attention.

When a BusinessDay reporter sought to speak to him as he walked away from the opening of the World Economic Forum in Davos, his two minders attempted to fend off the approach

FGN BONDS

TREASURY BILLS

With eye on inflation, naira stability, CBN holds MPR at 14% T ONYINYE NWACHUKWU, HOPE MOSES-ASHIKE, ISREAL ODUBOLA, SEGUN ADAMS & OLUFIKAYO OWOEYE

he Central Bank of Nigeria (CBN) after the first Monetary Policy Committee (MPC) meeting for the year retained its monetary policy rate

Rising debt approaching pre-2005 Paris Club exit level Economic policy pushed to side-lines on elections – analysts

in consideration of economic risks (global and domestic), including inflationary pressure

which has intensified the risk of currency depreciation.

Consequently, by vote of all

the 11 members present at the Continues on page 38

2 BUSINESS DAY NEWS

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Wednesday 23 January 2019

Lessons for Nigeria as Saudi plans refinery, petrochemicals plant in S/Africa DIPO OLADEHINDE

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ews of Saudi Arabia’s plans to build an oil refinery and a petrochemicals plant in South Africa as part of $10 billion investments in the country will probably send

L-R: Abimbola Agboluaje, secretary, The Peter Bauer Foundation; Suraj Oyewale, senior tax accountant, Seven Energy; Lois Padonu, lead speaker, Unilag; Lasisi Ibrahim, supporting speaker, Unilag; Adefowope Iyabo Rahmat, lead speaker, Unilorin; Iortsor Nicholas, supporting speaker, Unilorin, and Chude Jideonwo, founder, Joy, Inc, at the Nigerian Fuel Subsidy Debate, organised by The Liberal Forum (aka The Peter Bauer Foundation) at the Freedom Park, Lagos.

Concerns over Access Bank’s proposed N75bn Rights Issue, others ... as publicised Extraordinary General Meeting cancelled IHEANYI NWACHUKWU

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ccess Bank Plc notified the Nigerian Stock Exchange (NSE) of the cancellation of its previously publicised Extraordinary General Meeting (EGM) scheduled to hold on February 1, 2019 in Lagos, giving no clear reasons.

Access Bank had on December 20, 2018 issued a formal notification of the now cancelled Extraordinary General Meeting.

“We regret any inconvenience that this cancellation may cause our shareholders”, Access Bank said in a Tuesday, January 22 notice at the NSE signed by Sunday Ekwochi, company secretary.

Access Bank Plc would have, among other special businesses slated for the now annulled EGM, been seeking for the shareholders’ approval for the directors to raise additional equity capital of up to a maximum of N75 billion by way of a Rights Issue.

Other special business/ordinary resolutions meant for the now cancelled EGM includes that the bank’s authorised share capital be increased from N20 billion made up of 38 billion ordinary shares of 50 kobo each and 2 billion preference shares of 50 kobo each to N35 billion

by the creation of 30 billion ordinary shares of 50 kobo each.

Access Bank Plc and Diamond Bank Plc last month received “No Objection” from the Central Bank of Nigeria (CBN) regarding a potential merger between the two banks, which is expected to complete in the first half (H1) of 2019.

Access Bank said last month it has already finalised terms and obtained regulatory approvals for a Tier-II capital issuance, which will raise $250 million, available for drawdown in January 2019.

The tier-1 lender said it has also obtained “No Objection” from the CBN to undertake a Rights Issue to raise up to N75 billion (about $207 million) in H1 2019. Shareholder approvals and other regulatory approvals are to be obtained before the offer opens.

“This accelerates the capital management plan to support retail growth, previously set out in the bank’s five-year strategy,” Herbert Wigwe, CEO of Access Bank Plc, had said.

Transaction completion is subject to Access Bank and Diamond Bank obtaining shareholder and regulatory approvals – Central Bank of Nigeria, Securities and Exchange Commission (SEC), the Federal High Court (FHC) and the National Pension Commission (PenCom).

The cancelled EGM would have also served as an avenue for the bank shareholders to follow through to the Memorandum of Agreement executed between Access Bank Plc and Diamond Bank Plc on the merger of the two entities.

The signed Memorandum of Agreement and announcement of headline terms which valued Diamond Bank at approximately N72.5 billion will see Diamond Bank shareholders receive N3.13 per share in cash and shares.

If the Rights Issue contemplated is undertaken prior to the implementation date of the merger, the directors of Access Bank would have at the EGM been seeking the shareholders’ nod by way of a placing and subject to obtaining all requisite regulatory approvals, to offer to Diamond Bank shareholders shares in Access Bank to be purchased after the Implementation Date on the same term as the Rights Issue and in the same proportion that they would be entitled to as if they had already become shareholders of Access Bank.

Access Bank had a capital adequacy ratio of 20.1 percent as at September 30, 2018. It is currently concluding a US$250m Tier II capital raising exercise in line with its capital plan to provide a robust capital buffer given the current macro-economic environment.

and gas legislation and better business environment.

South Africa currently has six refineries. Two of these use synthetic fuels as feedstock and four others use crude oil, with Royal Dutch Shell, BP, Total and Sasol being the major op-

ANALYSIS

shivers down the spines of Nigeria’s economy managers. For many of these managers, the economy has taken a backseat, no thanks to distractions from next month’s general election to which they have exposed themselves.

When it comes to investment in Africa’s oil and gas sector, one would predict the frontrunner to be the continent’s biggest oil-producing country. Though Nigeria has the requisite production capacity, huge oil reserves and massive gas reserve, it is not, sadly, the first-choice country for investment. This is understandable as Nigeria is fast losing its competitiveness to other countries with lower oil productions but simpler oil

erators. However, for about a decade,

South Africa has been making plans to build an extra refinery but has been unable to agree on commercial terms with investors.

Khalid Al-Falih, Saudi energy minister, commenting after a meeting with South African Energy Minister Jeff Radebe few days ago in Pretoria, said the planned refinery would be run by state-owned energy firm Saudi Aramco using Saudi’s oil.

Ministers Radebe and Al-Falih have already signed a Memorandum of Understanding (MoU) to cooperate on oil and gas undertakings.

Under the MoU, projects will be launched in South Africa, managed

Continues on page 38

Amid rising correlation, fund managers express views on 2019 asset allocation BALA AUGIE

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und managers have expressed a divergence of opinions over the best asset allocation strategy that minimises losses and maximises returns in a volatile and unpredictable macroeconomic environment.

This means correlation is rising and investors will have to work harder to achieve diversification.

Portfolio managers prefer assets that go up as others go down – a negative correlation – since bond and stocks move in opposite directions.

Analysts at CSL Stock Brokers Ltd, intheir2019macroeconomicsoutlook, haverecommendedabalancedportfolio allocation of 40 percent to equities, 40 percent to fixed income securities, and 20 percent to alternative assets as a hedge against a rise in inflation and a projected depreciation of the naira.

“For the equities market, we envisage H1’19 will be more turbulent than H2’19 as it will be characterised by political noise,” said analysts at CSL Stock Brokers.

“Given limited downside potential in the currency and high potential upside in stock prices, we believe it makes sense for US dollar-based investors to take positions on a oneyear view now,” said the analysts.

What the recent selloff may illustrate is that the industry standard of

60/40 model, where a fund manager holds a portfolio of 60 percent in stocks and 40 percent in bonds, can no longer protect volatility in all scenarios.

But analysts at United Capital Asset Management are of the view that alternative assets such as real estate and private equity are better pledges against inflation than fixed income.

They prefer an allocation of 30 percent to equity, 30 percent, bonds and 40 percent alternative asset.

“You need something above what inflation will give you. I am still bullish on equities after the election. Investors need to get exposure to Naira.

I think the wise thing is to keep cash,” said Kayode Tinuoye, fund manager, United Capital Asset Management.

However, Wale Okunrinboye, investment analyst at Sigma Pensions Ltd, thinks fixed income is probably the best way to go this year, but he is optimistic the market may normalise after the elections.

On the global front, Okunrinboye said the continued rate hike by the United States Federal Reserve means frontier and developing markets will be impacted.

“With the decline in oil prices since last year, it is negative for the Central Bank of Nigeria (CBN) to keep interest rate low,” said Okunrinboye said.

Nigeria faces a challenging 2019 amid a slowing global economy,

Continues on page 38

Sanwo-Olu excites Swiss investors with opportunities in Lagos ... Secures $5bn trade commitment ENDURANCE OKAFOR

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head of the World Economic Forum (WEF) holding in Davos, Switzerland 22nd to 25th January, 2019, the All Progressives Congress (APC) governorship candidate in Lagos State, Babajide Sanwo-Olu reinforced the enormous investment opportunities in the state at an exclusive session with selected Swiss investors in Geneva.

At the event held at the Mandarin Oriental Hotel, the business interaction triggered commitments of $5 billion investment in infrastructure

and capital projects in the state.

While the array of investors comprising commodity traders, equity managers, investment bankers, Fintech and IT experts, infrastructure builders, international donors, energy and power companies unanimously agreed that Lagos is a fertile ground for investments, they cited political risk as a more disturbing consideration over economic risk.

In reassuring them, Sanwo-Olu told theinvestorsthatNigeriaissafeforinvestment and Lagos State as the economic nerve-centre of the country presents the bestenvironmentforglobalinvestments.

“There is progressive leadership and stability in the governance of Lagos State since 1999. The state has been under the administration of a party, my party, which is the All Progressives Congress, for more than 16 years. The state has remained a reference point for infrastructural development and economic prosperity in Nigeria and West Africa,” Sanwo-Olu said.

“On investors’ protection, I think that should be the least of your worries.

Lagos has a comprehensive regulation that protects and shields investors. The scope of the regulation covers disputes resolution and commitment to ease of

doing business,” he said.

Earlier, the APC governorship candidate informed the investors about his determination to transform Lagos into a 21st century economy.

“Lagos economy is adjudged to be the 5th largest in Africa and is not yet a 24-hour economy, where you can do every transaction roundthe-clock. Do you think we have really maximised the potentials of that economy? We are saying it is a large and growing economy, and you are not playing in it yet,” Sanwo-Olu said.

“This THEME agenda, beyond being the focus areas of our government, is also indicative of areas of possible collaborationbetweenyouandourgov-

ernment. As I said, Transportation and Traffic Management, Health and Environment, Education and Technology, Making Lagos a 21st century economy, andEntertainmentandTourismarethe topline agenda our government will pursue upon election in 2019,” he said.

While assuring Sanwo-Olu of investors’ and multilateral institutions’ commitment to Lagos and Nigeria, Ibrahim Faria, country portfolio manager, High Impact Africa 1 Grant Management Division of Global Fund, pledged the commitment to support health system in Lagos State if Sanwo-Olu won the election.

•Continues online at www.businessday.ng

Wednesday 23 January 2019

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

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e conclude our discussion of ways to improve the rate of disbursement of the many intervention funds, which have been put at the disposal of MSMEs, especially the agribusiness facility for which the CBN is contemplating alternative disbursement strategies. We had suggested that the problem of low drawdown of the facilities may not be wholly attributable to the vehicle of disbursement of the funds – the banks. In our view, which formed the basis of this continuing contribution, is that it is time to look harder, especially at the MSMEs, to be sure they are fit for the funds. And to take corrective steps if they are not.

It is a settled fact that the banks do not fully understand the nature of SMEs, and this has informed their underperformance in serving the sector. This lack of deep understanding is however not a result of lack of interest or incompetence on the part of banks.

It is just the natural consequence of the structure and pathology of commercial banks. Even the most retailoriented commercial banks are not better able to do so due to the level of “retail banking” entailed by SME financing. Accordingly, they may try but the end result is known aforehand – they will fail, even with the best

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Still on SMEs and non-disbursement of facilities (concluding part) in-house SME desks. This is probably where the issue of appropriate vehicle for dispensing the facilities comes in. Nonetheless, the floating of a national microfinance bank is not a logical follow up reaction to this challenge.

In seeking to improve the rate of drawdown of the facilities, another thing to check is the terms under which the banks access the facilities on behalf of their SME clients.

On-lending facilities presuppose that the risk of loss is on the banks.

The CBN is not prepared to write off the facilities given out through the banks. Each bank is therefore responsible for recovering the sums it hands out to SMEs. So caution is warranted and that is the beginning of the “go-slow”. If we recall that the microfinance industry developed from the vacuum created by the failure of the banks to lend to the informal sector, for all kinds of reasons including but not limited to the lack of acceptable collaterals, then we begin to piece the puzzle together.

We have a quagmire: a sector that hardly qualifies for any meaningful financial facility now being served by banks that hardly understand the inner workings of the sector. The wheel stops turning or at best, turns very slowly.

The SMEs do not like matters of reading and writing. Apparently, many believe that the time spent in writing “grammar” should be used to make money and not wasted writing stuff. So records and reports are not relevant to them. For people who have yet to learn the virtues of proper book-keeping and other commercial records, this should not be hard to understand. People who carry feasibility reports in their heads and can summarize it at the banker’s table but never willing to put it down in writing, must be coming from distant lands from where the rest of us are. To be successful with them, it means that lenders

‘

Misconceptions are dangerous in business, and that is part of the problems devastating the SMEs. There are operators who still believe that success in business is determined by the extent of physical exertions they deploy.

But we all know that is old school. Technology and innovation have taken over

’

must speak their language – have capacity to work without proper records.

For this reason too, the banks are out; but a national MFB is not in.

The SME operators need to be told that the era of storing feasibility reports in the head are long gone. They need to begin to reform and quickly too. People have to be careful how they value what is found only in their heads because they may be the only ones that know of the existence of whatever it is in their heads. For starters, there is hardly any demand for goods and services that exist only in the head of some persons and not known to others.This is part of the drivers of the problem noted in 2014 MSME Banking Study by KPMG in which it was reported that most of the Tier 1 banks had less than five per cent of their loan portfolios in MSME lending. This low credit flow to the

sector and the low disbursement of the Agribusiness loan are fuelled by the same factors – the unfit nature of the borrowers - signalled by a lack of bankable ideas and projects, little or no documentation and such. Even more pathetic is that businesses are established, not on the basis of niche and capacity but at personal whim.

Such enterprises are unlikely to be fit for financial support of the type provided by CBN. Misconceptions are dangerous in business, and that is part of the problems devastating the SMEs. There are operators who still believe that success in business is determined by the extent of physical exertions they deploy. But we all know that is old school. Technology and innovation have taken over. Those hanging on to such misconceptions run the risk of failure. It is akin to what happens to some retired people who go into private business but fail to realize that there is a difference between the private enterprises they are setting up and the big corporations they served and from which they retired. They erroneously presume they can carry into their private and much smaller businesses the influence and goodwill they enjoyed in their previous positions in corporations. This presumption is often false and could be fatal. There is value in prior experience and contacts but they get discounted and reshaped by new environments.

There is always the inclination for people to go into business in the areas of their past formal employment. This is understandable as they harvest some value, based on their past core competencies and experience. However, the influence and following, which executives possess while in office is discounted considerably once they leave that office of power and influence. Even presidents have woeful stories to tell about the draught of traffic to their new private offices when they leave their powerful public positions. A

former President of the United States once revealed that his telephones stopped ringing soon after he left office.Being technically powerful in one’s last job may be a necessary but not sufficient condition for running a successful enterprise in that field without proper market research as a starting block. Markets shift; people move and products lapse. So do influence and power. Be sure there is a niche to be filled.

Nigeria has very low regard for formal education. This is evidenced by the fact that Senior School Certificate without cognate experience is good enough qualification for the highest office in the land, the office of president, but none of us is willing to entrust the management of our boy’s quarters to people with such qualifications. Today, one can run Nigeria with a doubtful school certificate but can hardly be allowed to drive any CEO with such qualifications - irony. It is a classic shame that the most important offices in the land are open to the least educated people while we expect a technology driven leadership.This malaise reflects in entrepreneurs that are unable to even understand the benefits of the financial interventions and where and how to access them.

Ironically again, the more universities we build the less education we seek. More children; now about 14 million, are out of school. These are future entrepreneurs; certainly of the Dark Ages variety, that will be here in the years to come. When entrepreneurs fail to equip themselves in terms ofenterprise structure, and leadership capabilities, banks will continue to structure them to the periphery of the intervention funds.

A national microfinance bank will not change it, unless another Trader

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Task before the technical committee on new minimum wage

UCHE UWALEKE Uche Uwaleke is a Professor of Finance & Capital market and the Chair of Banking and Finance Department at the Nasarawa State University Keffi

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s a demonstration of his commitment to an upward review of the national minimum wage, President Muhammadu Buhari recently inaugurated a Technical Advisory Committee on the implementation of a new minimum wage. The Committee has four terms of reference to guide it in coming up with sustainable funding solutions to the seemingly intractable challenge of implementing a national minimum wage across the country. With respect to the first term of reference, the Technical Committee is expected to ‘develop and advise government on how to successfully bring about a smooth implementation of impending wage increase’. In going about this, the starting point should be to undertake a thorough review of an

earlier report submitted by the Tripartite Committee and possibly take further inputs from organized Labour, the Private Sector and the Forum of Finance Commissioners.

The Committee’s second term of reference requires it to ‘to identify new revenue sources as well as areas of existing expenditure from where some savings could be made in order to fund the wage increases without adversely impacting the nation’s development goals as set out in the Economic Recovery and Growth Plan’. Identifying new revenue sources should include proposals for ramping up tax revenue and ensuring that the Federal Inland Revenue Service (FIRS) target of N8.3 trillion in 2019 is met and where possible surpassed. It should also include proposal for the sale of government’s unproductive assets that continue to drill holes in the nation’s treasury such as some aircrafts in the Presidential fleet. Part of the Committee’s recommendation should be the extension of the ongoing assets recovery dragnet beyond the period of the immediate past administration. The 2019 budget has made provision for various recoveries of about N203 billion. This figure will definitely be higher if the period is extended to include the recovery of government funds and other assets

stolen by public officials since the return to democratic rule in 1999.

The Committee is not expected to recommend borrowing as a possible source of funding the new minimum wage as doing so will contradict the Fiscal Responsibility Act of 2007 which forbids borrowing to finance consumption. Besides, this option does not recommend itself in view of the country’s growing debt burden and elevated inflationary pressure. What is more, the President had made it clear, while inaugurating the Technical Committee, that funding an increase in the minimum wage, and the attendant wage adjustments, should be done without a resort to additional borrowings.

Regarding the identification of ‘’areas of existing expenditure from where some savings could be made’, which is part of the thrust of its second term of reference, the Committee should recommend the reduction in the running costs of governance with respect to all the arms of government. This should also entail ensuring that all Ministries, Departments and Agencies implement the Integrated Payroll and Personnel Information System. Further, the Committee is well advised to review previous reports on the restructuring and rationalization of federal government Parastatals, Commissions and Agencies, especially the Steve Oronsaye report, with a view to proffering

suggestions on how to eliminate overlaps, duplications, and redundancies.

In search of areas of existing expenditure to prune down, the Committee should resist the temptation to look in the direction of the current oil subsidy regime for which the sum of N305 billion (US$1 billion) has been provided as underrecovery by NNPC on Premium Motor Spirit in 2019. This is because doing so will increase the pump price of petrol and further lower real wages thereby defeating the overarching purpose of implementing a new minimum wage. This much was recognized by the President when he stated that ‘’ in a period of economic challenges where purchasing power is weak, we must reduce some of the burden on Nigerians’’. Similarly, it is vital that the implementation of a new minimum wage does not result in unintended negative consequences. In this regard, the issue of a possible downward review for workers already earning above the new minimum wage should be handled with great care.

Much as the huge disparity in the salary structure of government workers should be narrowed, it would be unrealistic to expect the pay package of a staff of say FIRS to be the same with his counterpart in the core Ministry of Finance. It is a no brainer that revenue generating agencies in particular require incentives to be able to engage and retain high quality work-

force if productivity targets must be met.

Perhaps State Governments have a greater responsibility to discharge when it comes to ensuring prudent management of scarce resources given that many of them do not meet their financial obligations to workers as and when due. To this end, the Committee may consider recommending that State Governments be made to undertake significant cuts in their bloated overhead and personnel costs as preconditions for any federal government bailout in connection with implementing the new minimum wage. This could be by way of streamlining ministries departments and agencies, reducing the number of political appointees, eliminating payroll fraud and establishing an Efficiency Unit. They should also be discouraged from borrowing from commercial banks to execute capital projects in order not to incur huge debtservice obligations arising from funding mismatch. The Committee should also recommend a reduction in the security votes allocated to State Governors.

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COMMENT CHARACTER MATTERS WITH DAPS

DAPO AKANDE Graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.”

Contact: dapsakande25@gmail.com

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tell anyone who cares to listen that oyibo doesn’t care too much for “itiju” in his daily dealings. If he tells you today he will give you that business and then comes across someone who convinces him he can do it better, he will have no qualms in informing you that he can no longer give it to you and he’ll gladly explain why. After all, what matters to him is the quality of the job to be executed.

Whether that should always be the only consideration is a discussion for another day.

Now let’s come to our people.

Even when you’re a close friend or a relative, going by the potential helper’s thinking, it simply wouldn’t be right or fair for him to come out straight. How can he possibly tell you that he’s changed his mind? It’s not our way. No, it’s more kind to just ignore your calls. That’s a much “fairer” way of saying no. That way he’s giving you the chance to read

NJ AYUK & JOÃO GASPAR MARQUES Ayuk is the founder and CEO of Centurion Law Group and the executive chair of the Africa Energy Chamber of Commerce.

Marques is an energy analyst and a seasoned Africa specialist with in-the-field reporting experience from Africa’s petroleum hotspots.

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ith production declining and investment scarce, the Angolan leadership has put in place a number of new policies to reboot its oil industry and propel economic development. However, those changes take time and renewed deep-water oil and gas exploration for fresh reserves will take years to yield the desired results and stop the daily production crunch.

In the meantime, the government is targeting what it already knows exists, the country’s multiple deposits of what has been dubbed marginal oil fields, which will go on sale this year during the Angolan Marginal Field Bid Round.

Marginal fields are defined by reduced profitability or lack of commercial viability. These can, at times, represent considerable amounts of crude oil in the reservoirs, but that, due to costly recovery processes, are not worth the investment under the existing legal and fiscal framework.

In the Angolan deep offshore, several of these prospects have been found over the years and dismissed in the pursuit of more profitable opportunities. However, in the wake of the lack of investment in exploration in the country over the last four

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Itiju: A sense of shame or shyness (part 2) his body language. Forever conscious of your feelings because he’s considerate like that, he opts to “tell” you gently. He has spared you the certain hurt to be inflicted if he was to say “no”. The more I ponder on this rather bizarre reasoning, the more I’m inclined to see it as a revised version of traditional African culture and convention, where men spoke few words but preferred to convey their messages through proverbs and analogies, leaving the hearer to unravel his thoughts. I may be wrong but that’s my take.

Whichever way one looks at it though, it’s not the fairest way to treat a human being like yourself.

Remember, his feelings are just as real and germane as yours and that’s why it behoves us to always apply the golden rule: “Do unto others as you would like them to do unto you.”

If you don’t have the funds to give the person when he comes asking, then tell him so straight up. Don’t deceive him and waste his time by giving him false hope. You’re playing with his emotions. Dashed hope may just be enough to tip some others over the edge. It’s not smart and neither can you convince me you’re being cruel to be kind. It’s deceitful, plain and simple. And while we’re on it, you’re not saving face either. Is it the “itiju” of telling him that you can no longer do? Don’t deceive yourself, he will eventually find out anyway.

So why not save him the heartache

‘ For one, it operates as a check, restraining people from becoming pests to prospective benefactors.

With a healthy dose of it, preserving one’s dignity quickly takes centre stage

’ while also preserving your integrity, by simply telling him the truth. Fact is, your honesty is far more helpful to him and infinitely less damaging. That’s why a wise man once said, “First, lying corrupts the most important quality of my being human; my ability to make free, rational choices. Second, my lies rob others of their freedom to choose rationally “.

It’s quite sickening because there are some who even manipulate our “itiju” culture to play smart. They use it to serve their less than honourable intentions. Some will take something which may be considered negligible

from you, by way of buying on credit and then count on “itiju” to prevent you from chasing them up for it. You know as well as I do that our culture, as it has regrettably evolved, encourages people to puff themselves up and pretend to be more than they actually are. Everyone wants to be thought of as a big man so the sharp crook banks on “itiju” to hinder you from chasing him up for something so small. Imagine if others should hear. Will they not wonder why a whole you is so cut up about such chicken change? That’s why when you do decide to chase the smart Alec up, his demeanor changes completely. He wasn’t expecting it.

He thought he had got away with it.

He who cannot pay, foolishly resorts to trying to ridicule you with his, “is it not only so and so amount?” If it’s so insignificant then why don’t you just pay the damn thing, as it’s obviously not insignificant to the person being owed!

Many crooks masquerading as big men in our society are guilty of this. They use their so called name and status to deceive and cheat others of what rightly belongs to them.

Unfortunately, because of this same “itiju” culture, people would rather not expose their real financial standing thereby allowing the scoundrels to get away with it.

It would be foolish of me to say “itiju” doesn’t have any pluses however. For one, it operates as a check, restraining people from becoming

pests to prospective benefactors. With a healthy dose of it, preserving one’s dignity quickly takes centre stage. It can also put a check on unbecoming behaviour. In fact without it, we would constantly be getting on each other’s nerves, as we would pay little to no attention to the other person’s feelings, circumstance or patience threshold; nor would we even care how we look in the eyes of others.

This sense of “itiju would have been so welcome in our political terrain where those who should ordinarily bury their heads in shame, arrogate to themselves the position of political commentators, advising the nation on best governance.

Some fantastically shameless ones go further by presenting themselves as candidates for elective office. The icing on the cake is that many still receive support in large numbers!

After considering all the pros and cons of this peculiar national ethos though, my humble opinion is that our culture of “itiju” is less useful than it is harmful to us as a people. I also make bold to say that the cause of mental illness in our society is not always the excruciating circumstances but more often than not, the inability to seek the right help because of this ingrained culture of “itiju”. The Americans say, “If it ain’t broke, why fix it?”

Well, I for one feel this one is broken, so please Nigerians, let’s fix it.

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What Angola can learn from Nigeria as it creates remarkable opportunities for marginal oil production years, these marginal reserves have become more relevant for Angola’s macro-economic outlook.

So, in May 2018, President Lourenço’s government published a new framework specifically designed to promote investment in these areas. According to the official text, the law considers marginal fields those discoveries with proven oil reserves of less than 300 million barrels (exceptions are considered for bigger reserves in particularly expensive working conditions), standing at or below 800 meters of water dept, that do not give returns to the State of more than USD$10.5 cents per barrel, returns for the operator of no more than USD$21 per barrel and that have an average return on investment after taxes of less than 15%.

For those that fit these conditions, the government offers extensive tax and fiscal benefits, as well as, easier conditions for cost recovery, in order to make those reserves commercial and promote their development.

Angola is not the first to try this tactic. In 2003, Nigeria had already had a bid round for its marginal fields with a certain degree of success.

The majors are not likely to be particularly attracted by these relatively small prospects, but they represent great opportunity for smaller independent African and non-African oil and gas companies that can work efficiently and with less overheads than its bigger counterparts, while having the business certainty of working prospects with guaranteed reserves. The government is hoping that development in these mar-

ginal fields will help raise the current crude oil production (expected to be stagnant in the run up to 2022), while it promotes renewed investment in exploration and production in unexplored acreage.

The Marginal Fields Bid Round is expected to be launched in Luanda in June 2019 at the Angola Oil & Gas Conference, organized by Africa Oil and Power with the endorsement of the Angolan Government. It is likely to include onshore and offshore blocks in the Congo, Namibe and Cunene basins, and has already received considerable attention from industry players in the region.

Lessons learned The Nigerian experience with marginal oil field development had measurable success, with 24 licenses awarded to 31 companies, some as sole operators and others as jointventures. The 2003 marginal field bid round opened a number of opportunities to local and regional industry players while it contributed to increase the country’s oil output and promoted indigenous participation in petroleum upstream activities. For companies like Oando, Waltersmith, Shoreline Energy, Seplat, Sahara Petroleum or Brittania-U, these fields represented important opportunities to farm-out some acreage from the majors and lead their own projects. While some developments have been slower than expected, the outcome of the process was mostly successful. Today, around a third of the licenses issued produce meaningful amounts of crude oil.

However, there are a couple of lessons to be learned from the Nigerian

experience that apply to the Angolan reality. Firstly, marginal fields are particularly attractive for smaller indigenous or regional companies that can operate well with smaller profit margins. These companies are also much more cash-strapped than the likes of ExxonMobil or Total and therefore need investment capital to develop their acreage. The Nigerian experience tells us that seeking capital in the local financial sector can be challenging. Nigerian banks have been resistant to awarding credit lines to small operators in this kind of project. Normally, banks issue loans against equity or assets used as collateral. These oil operators’ attempt to use the oil reserves as collateral hasn’t been well accepted by the Nigerian financiers, and that has delayed field development. This means that inviting foreign partners with access to capital becomes paramount. Local Angolan companies are advised to seek the partnership of mid-size players like Tullow Oil, Trident, Kosmos, Noble, Perenco and many successful Nigerian oil firms, with extensive African experience and available liquidity that can help them progress and be successful in their endeavors.

Secondly, there is the issue of legal clarity. The Nigerian Petroleum Industry Bill, which in its many forms has been under discussion for over two decades, continues to create disruption and uncertainty in the industry and delaying new bidding rounds. If the current form of the bill is approved, marginal field operators are expected to receive significant

cuts in the taxes and royalties, but that remains unclear for the time being.

On that second note, the Angolan government’s action must receive praise. In record time, a simple and clear framework was created for the marginal fields concessions. It will be important that action is also taken in finding solutions to facilitate the financing of many of these projects so that these efforts have a measurable impact on the country’s oil industry. A December 2018 article on the Nigerian newspaper The Oracle, titled “Angola pulls investment attention off Nigeria”, blamed the ease of doing business and clear fiscal framework created for the marginal field bid round taking place in June as the main drivers in moving investors from the complicated dealings of Nigeria into the Angolan market, a sign of a job well done by the Lourenço administration.

In sum, Angola’s journey towards revitalizing its oil industry and boosting production is already yielding positive results, with the perception of international investors already shifting towards a more positive outlook.

Just in December, ExxonMobil and BP have pledged new investments in the country, while French Major Total launched its USD$16 billion Kaombo project in November and indicated further investment in the country in the near future.

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

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Wednesday 23 January 2019

Mobile money can be a win-win for banks and telcos in Nigeria

M

obile money as used in some African countries is as simple as it sounds, yet, capable of very sophisticated applications. In Ghana for instance, it has applications from purchasing treasury bills, Initial Public Offerings (IPOs), health insurance, to even the basic money transfers and digital service payments.

Mobile money in Ghana has gone beyond just achieving financial inclusion. It has also immensely redefined consumerism and flow of money within the $47 billion economy. At the end of 2017, mobile money transactions hit $32 billion, according to data by the Bank of Ghana, a figure that represents 68 percent of the country’s GDP. Users not only get to deposit and withdraw via mobile money, but there is also provision for interest accruals, between 1.5 per cent and 7 per cent as approved by the Ghanaian Central Bank, subject to whatever each telecommunications company can negotiate with each partner bank. In the 2017 State of the Industry Report on Mobile Money

by GSMA, it was noted that the 2015 regulatory guidelines from

the Bank of Ghana have allowed customers to accrue interest on mobile money deposits, resulting in exponential growth in total deposits in that market.

Mobile money is however not functioning in isolation of the formal financial sector, that is, commercial banks. At least in Ghana, mobile money is linked to banks, as different telecommunication companies work out modalities with partner banks. For the mobile money agents, they also have to visit a bank in order to get ‘eCash’ for their mobile money accounts.

Without visiting the bank, they cannot get it, ensuring the banks benefit from the system.

The mobile money system is bridging the gap between the banked and the under-banked population while providing convenience in transactions. Registered mobile money accounts in Ghana are now 23.9 million out of an estimated 28 million population. At the end of 2017 the Bank of Ghana in its report, stated there were 11.1 million active mobile money accounts.

The number of registered mobile money accounts, at 23.9 million is almost double the number of bank accounts, which was 12.5 million in 2017. The active registered agents

of the three (3) mobile money operators (MMOs) in 2017 stood at 151,745 and showed a growth rate of 41.27 percent over the previous year’s position of 107,415.

Despite this, banks do not appear to consider the mobile money system as a threat. The financial service providers have buy-ins structured into the operation of the mobile money system, which invariably makes it beneficial to them.

Ghana’s central bank in a 2017 report even alluded that “The growth in mobile money emanated from productive collaboration between mobile money operators and banks.”

The volume of mobile money transactions soared from 266.2 million in 2015, to 550.2 million in 2016, and the growth continued in 2017 with a 78.4 percent increase to 981.5 million transactions. Similar growth has been occurring in value of mobile money transactions, from GH¢ 35.4 billion in 2015, growing to GH¢78.5 billion in 2016, and then a 98.51 percent growth to GH¢ 155.8 ($32 billion) in 2017.

While cheques continued to be the major non-cash retail payment instrument in terms of values of transactions, value of cheques cleared as a percentage of total value of non-cash retail payments dropped from 60.21 per cent in 2016 to 49.33

percent while value of mobile money grew from 31.02 per cent in 2016 to 42.81 per cent in 2017. The volume of mobile money transactions represented 97.50 per cent of total volume of non-cash retail payments.

However, in terms of value of transactions undertaken in 2017, cheques continued to maintain its lead with GH¢179.6billion ($36 billion), while mobile money followed closely with GH¢155.8 billion ($32 billion).

Despite the best efforts by the Central Bank of Nigeria, the country largely remains a cash based society. With mobile money however, the CBN’s cashless policy will be bolstered, while also creating an opportunity for commercial banks to collaborate with the telecommunication companies in electronically circulating unprecedented cash volumes. Even though the telecommunication networks will be facilitating transfer of cash value among users (and other payment destinations), the banks will still be the custodians of this cash. They will be able to shore up their cash holdings, lend more, and expand their operations. With mobile money, Nigerians will be incentivised to spend more money, and the banks just like Telcos, can cash in on this opportunity.

Bashir Ibrahim Hassan

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Powergas, ETEFA gas flare monetisation projects to save Nigeria over $2.5bn

Pg. 14

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

CONSUMER GOODS

NBC stops production in Enugu, transforms plant to distribution hub DANIEL OBI

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igerian Bottling Company Limited (NBC), the non-alcoholic beverage manufacturing company and a member of the Coca-Cola Hellenic Group, has stopped production activity in its Enugu plant.

It is not clear why the company ceased production in the Eastern region but analysts said it could be linked to over-bearing cost.

Instead, the company has transformed the Enugu Plant into a hub for material handling and logistics for the region. It did not associate the development to operational cost, but the decision rendered some employees’ roles redundant.

The company explained in a statement that the decision to transform the Enugu Plant from a production facility to a logistics and distribution hub was largely informed by the desire to deliver better value to its esteemed consumers and trade partners not only in Enugu State but in the entire South-East region.

The Acting Director, Public Affairs & Communications, Ekuma Eze in the statement stated that the development

was in line with the holistic strategy to reposition the company’s operation for better efficiency and accelerate the business transformation plan.

Eze said ‘’the repurposing of some NBC facilities across Nigeria, Enugu inclusive, is in line with our sustainable business strategy with the overarching goal of improving efficiency and boosting production capacity to meet the ever growing demand of our discerning consumers.

While production activities have stopped at the Enugu facility, the company would continue to carry out logistics and commercial operations from the location’’ He stated that the company’s business transformation and optimization plan which commenced in 2015 involves huge investments worth over Euro 500m for the massive expansion and upgrade of some key plants including Asejire, Ikeja, Abuja, Owerri, Challawa, Maiduguri, Port Harcourt, and Benin resulting in increased production capacity, hence, the need to transform some other plants including Ilorin, Jos, Kaduna and most recently Enugu to handle commercial and logistics activities.

Speaking on the em-

L-R: Bardi Edward, network operations manager, shomolu business unit, Ikeja Electric (IE); Sunday Oyewole, chief technical coordinator, Ikeja Electric (IE); Kola Balogun, chairman, Momas Electricity Meters Manufacturing Company Limited (MEMMCOL), and Tunji Omole, director, (MEMMCOL), during the handing over of the Enhanced Onipanu Substation by MEMMCOL to Ikeja Electric in Lagos. ployees whose roles were rendered redundant by the transformation, Eze said ‘’As a result of business optimization, some roles became redundant. However, the whole process was con-

ducted with utmost respect and consideration for our employees and engagement with the Unions. The company provided robust and generous severance packages way above statutory require-

ments and industry average’’.

He also noted that the company as a responsible corporate citizen engaged with key stakeholders in Enugu State as well as key opinion leaders in the host commu-

nities to reinforce its commitment to investing time, resources and expertise to improve the socio-economic well-being of the communities through locally relevant initiatives.

MARKETS

Analysts recommend early positioning ahead of earnings season DAVID IBIDAPO & SEGUN ADAMS

S

equel to the bearish market performance of the Nigerian Stock exchange market (NSE) in 2018 which drove share prices low as foreign portfolio investors exited ahead of the 2019 general elections, analysts recommend early positioning of domestic investors to take advantage of low prices.

The Nigerian Stock Exchange Market (NSE) last week recorded an impressive performance to continue a 3 day uptick trend in performance in the previous week.

In the last 9 trading days on the local bourse, the Nigerian All share index has shown a bullish run after gaining 5.69 percent to close at 31,005.17 points on Friday from 29,336.80 points. Also, trading on Friday ended as the ASI picked up by 3.9 percent week on week (w/w) with a market value of N11.56 trillion.

BusinessDay analysis re-

vealed that this is the best performance recorded so far in the last 18 months and this was largely driven by aggressive bargain hunting for blue chip stocks led by Dangote Cement and Nestle.

In the last 8 trading days, CCNN (35.31%), Sovereign Trust insurance (30%), Royal Exchange (28.57%), Julius Berger (20.85%) and NEM (16.98%) stood as the best performing stock.

Meanwhile, last week NEM (43.4%), Sovereign Trust (30.0%), Royal Exchange (28.6%), CCNN (25.5%), and Custodian (21.7%) emerged the best performing stock.

Meanwhile, BusinessDay analysis further revealed that excluding the banking index which declined marginally by 0.98 percent in performance, other sectoral index had a positive performance last week. This chart was led by the Industrial index after it gained 11.51 percent.

Also within the last 8 days, the insurance index stood as the

Source: Bloomberg, BusinessDay analysts

best performing index after it appreciated by 18.34 percent while the oil and gas index stood as the worst performing index after it declined by 3.78 percent.

However, analyst question the sustainability of bullish run experienced in the market.

According to report by GTI, “we guide investors not to be carried away by unexpected rally witnessed”.

After Investors gained about half of a trillion naira (N440bn) last week, following the extension of the Bull Run to seven days- the longest streak since December of 2017, the equities market closed on Monday on a bearish note as ASI dropped marginally by some 0.88 percent.

The performance was on the back of decline in Dangote Cement which fell by 2.5 percent to close at N190 per share for the day.

“It is basically profit taking that we are seeing in the market,’’ Ayodeji Ebo, the Managing

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

Director of Afrinvest Securities Limited, leading licensed broker dealer and subsidiary of Afrinvest (West Africa) Limited told BusinessDay. Aluko Paul, analyst at MBC capitals shared same view opining that “Some bargain hunters who took position in Dangote cement and other good stocks last week cashed out to take profit, it is why the market trended downward today’’.

The analysts believe that there wouldn’t be any major sell-off before the election although post-election performance of the market they insist remains dependent on the conduct of the polls.

In today’s market, profit taking in Dangote Cement (-2.5%), Seplat (-7.99%) and Guaranty Trust (0.78%) among others, were sufficient to overturn gains in Cement Company of Nigeria, United Bank for Africa, First City Monument Bank and Sterling Bank stocks as year to date worsens to -2.22 percent from Friday’s 1.38 percent

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Wednesday 23 January 2019

COMPANIES & MARKETS OIL & GAS

Powergas, ETEFA gas flare monetisation projects to save Nigeria over $2.5bn …Introduces gas-fired city buses AMAKA ANAGOR-EWUZIE

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owergas, Nigeria’s biggest Compressed Natural Gas (CNG) distributor in partnership w i t h E T E FA , A u s t r i a n clean tech company, has through its Clean, Economic and Safe Transportation (CEST) Programme under the Gas Flare Monetisation Projects, introduced gas-fired city buses for public transport.

T h e i n t ro d u c t i o n o f the gas-fired city buses is expected to save Nigeria over US$ 2.5 billion per annum by reducing fuels c o s t s i n t h e t r a n s p o rt at i o n a n d p ow e r g e n eration sector by over 30 percent.

This was disclosed in Lagos on Wednesday d u r i n g t h e E T E FA a n d Powergas Nigeria press conference hosted by Guido Stock, Commercial Counsellor of the Austrian Embassy with the support of the Austrian Development Agency (ADA) in Lagos.

Johann Rieger, CEO o f E T E FA , l i s t e d C E S T Programme’s targets to i n c l u d e i mp rov i ng e n vironmental and health conditions by reduction of emissions, lowering the cost of public and commercial transportation, and fostering local talent employment with tech-

nology transfer and strategic knowledge sharing.

According to Johann, E T E FA t o g e t h e r w i t h leading European partn e r s d e v e l o p e d a h ig h quality 12-meter CNG City Bus prototype to meet Nigeria’s infrastructure requirements.

“The prototype is curre n t l y b u i l t , a n d l o c a l testing shall star t w ith strategic local partners by mid-2019. Powergas will provide the entire necess a r y i n f ra s t r u c t u re f o r supply of flare gas based CNG and ETEFA will supply highly efficient gas engines and associated technology.

“The bus will especially fulfill Euro 5 / EEV emission standards and European norms in economics and sustainability with a targeted lifespan of a minimum of 15 years, low operating costs and costs of investment close to the level of Chinese buses,” he added.

Rieger further disclosed that ETEFA is ready to support local manufact u re r s w i t h t ra n s f e r o f technology to manufacture this world class buses in future under license directly in Nigeria. “Depending on test results a n d re s p e c t i v e o rd e r s, local serial production could be started by one of the well-established car manufacturers in Nigeria already in 2020.

L-R: Wasiu Abiola, head of media, digital and sponsorship, NB plc; Sarah Agha, portfolio manager, national premium brands, NB plc; and Oludare Olateju, senior brand manager, Star Lager Beer, at the Fourth Edition of Joor Concert Powered by Star Lager Beer.

“This will create additionally hundreds of high skilled working places in manufacturing and maint e na n c e o f b u s e s, a n d support local partners to build a sustainable, cost efficient and clean transportation platform in the country and dramatically reduce damages to the local environment and health of people,” he said.

Sumeet Singh, general manager of Powergas said that Natural Gas Flaring is one of the big g e st e nvironme ntal

disasters of Nigeria.

According to him, over 7 billion Standard Cubic Meter (SCM1) of Natural Gas is being flared in Nigeria annually, leading to casualties of up to 2,500 individuals in the NigerDelta Region (due to gas flare related pollution and emissions).

“Gas flare emissions are contributing to 20 percent of the entire Greenhouse Gases (GHG) of the country and are causing a massive waste of energy and financial resources,” he said.

Singh, who said that

Niger ia’s annual diesel importation equals the Natural Gas being flared annually, added that the company is committed to positively contribute to the clean environment of Nigeria.

According to him, diesel imports are US Dollar dependent ; hence, this increases the cost of fuel and decreases the Niger ia’s s carce foreig n exchange reserves. “Natural Gas on the other hand is one of the most environmentally friendly energy

sources. With abundant reserves of 188 tcf (Trillion Cubic Feet), Nigeria ha s t h e l a r g e s t ga s re serves in Africa.

“A s a d o m e s t i c a l l y available natural resource, effective utilisation is extremely important for import substitution (of liquid fuels) and f o r e i g n e x c h a n g e s a vings. Projects can clean and process flare gas into Natural Gas, along with o t h e r by -p ro d u c t s l i k e P ro p a n e, Bu t a n e, L P G, etc,” he added.

E-COMMERCE

Konga,Visa partner to add value offerings in e-Commerce sector JONATHAN ADEROJU

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he E-commerce giant Konga has partnered with Visa, the world’s leader in digital payments to revolutionize the e-commerce sector in Nigeria.

By leveraging the delivery of digital and secure payments solutions across key segments of the Konga Group’s business portfolio, the strategic partnership is positioned to drive greater productivity in the sector.

While ensuring a digitally-driven and rewarding payment

experience for consumers, the partnership will offer shoppers and merchants on Konga’s online platform as well as walk-in customers to its growing number of offline stores nationwide, a unified digital payment experience when they pay exclusively with Visa.

However among the many exciting benefits of this partnership, shoppers who use the KongaPay app will be issued a digital Visa card which will enable them to make payments everywhere Visa is accepted. In addition, users of the KongaPay

app will be able to pay digitally at the time of delivery of their items by simply scanning the Quick Response (QR) code provided by Kxpress delivery agents – a development that will lend further ease and convenience to the payment process and elevate standards in the e-commerce sector.

According to Kemi Okusanya, General Manager, Visa West Africa, she said that “Partnerships are key for us at Visa, as we constantly look for new opportunities to ensure that more people have access to unique payment experiences that are seamless,

fast and secure. We are extremely delighted to unveil this strategic partnership with Konga which is positioned to further simplify the payment process and raise standards in the Nigerian e-commerce sector,” She further explained that “When it comes to making e-commerce transactions, people are continuously looking for the most convenient and secure ways to pay for products and also use several payment platforms when they travel to other parts of the world. What we have done with this partnership is to incentivize the process and provide

more value to customers who pay with Visa,” she added.

Nick Imudia, coChief Executive Officer (CEO), Konga Group, disclosed that the partnership with Visa holds immense potential for e-commerce in Nigeria, owing to the numerous opportunities it offers to revolutionize the payment process and optimize offerings in the sector.

“With this partnership, we are bound to witness a digitallydriven and effortless payment experience for all classes of customers on the Konga platforms – online shoppers, visi-

tors to our offline stores nationwide, merchants, third-party clients and other stakeholders. This development is not only momentous in view of its far-reaching implications for the growth of e-commerce in Nigeria, but one that will go a long way to boost customer experience and confidence in the sector.”

“Our excitement knows no bounds, especially in view of the many benefits this strategic partnership will unfold for our customers and millions of Nigerians in the days and weeks ahead,” he concluded.

Wednesday 23 January 2019

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INSURANCE

Goldlink Insurance announces new appointments OLUFIKAYO OWOEYE

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he National Insurance Commission NAICOM has announced the composition of new Interim management Board for Goldlink Insurance Plc. In a release sent to the Nigerian Stock Exchange announced the appointment of Naheem Ibe Ibrahim as the new chairman of the interim Board. NAICOM also announced the removal of Funke Moore as the acting Managing Director/CEO of the company and announced Kenneth Edore Egbaran as the new Managing Director and CEO.

Other new appointments to the board include Adeyinka Olutungase and Farouk Lawal Yola as non-executive Directors.

It would be recalled that Muhammed Mustapha Bintubi, board chairman of the company recently announced his resignation from the board of the company.

Trouble started for Goldlink Insurance following the breakdown of corporate governance rules in the insurance company.

The regulator, NAICOM, constituted a seven-man management board in 2012 and in a share capital audit that looked into the activities of the Femi Okunniyiled management observed that about 2.5 billion shares

were inappropriately issued to selected shareholders in the company without considerations. It also discovered that about 1.2 billion share unit were disposed of by some of the beneficiaries.

Since the unfortunate incident, various interim board, have been struggling to-reposition the company but has not fully achieved the desired objective. The last was the plan to raise N3.3 billion through rights issue in a move to reposition its business and return it to the path of profitability.

Goldlink Insurance Plc is an insurance company. The Company underwrites classes of insurance including general insurance, life and pension, and special risk insurance.

L-R: Emmanuel Edunjobi (EmmaOhMaGod), comedian and instagram content creator; Etop Ikpe, CEO, Cars45, and Mayokun Fadeyibi, head, commercial operations and marketing, Cars45, at the first Carsbazr live auction for 2019 in Lagos.

COMPANY RELEASE

Transcorp Hotels bids farewell to Ozigbo, welcomes Omogiafo

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ranscorp Hotels Plc, the hospitality subsidiary of Transnational Corporation of Nigeria Plc (Transcorp) and owners of Transcorp Hilton Abuja and Transcorp Hotels Calabar, hosted a farewell/ welcome dinner in honour of its immediate past managing director/CEO, Valentine Ozigbo, who has been elevated to the role of the president/CEO of Transcorp Plc, and Owen Omogiafo, current MD/CEO, Transcorp Hotels Plc. The black-tie event held at Transcorp Hilton Abuja was indeed a night of farewells and welcomes as the outgoing and incoming general managers of Transcorp Hilton Abuja, Etienne Gailliez and Kevin Brett, were also celebrated.

In his appreciation speech, Ozigbo attributed his excel-

lence and success as MD/CEO of Transcorp Hotels Plc to his background and great mentors whom he served under their tutelage, including Tony O. Elumelu, chairman of Transcorp Plc. “I couldn’t have found a better person to succeed me and I am confident that she will do better. I have seen her strong execution skills and I can attest that she will do even better than I,” Ozigbo said of his successor.

Omogiafo, in her remarks, thanked her predecessor and the Hilton management team for leaving behind a solid foundation for her to build on.

“I am well aware that I am stepping into big shoes, but they are solid shoes and they have a strong foundation. I am also aware of the company’s responsibilities to all its key stakehold-

ers and I’ll be working with the team members to execute them excellently,” she said.

Emmanuel Nnorom, chairman of Transcorp Hotels Plc, appreciated Ozigbo for maintaining and deploying highlevel of corporate governance and for driving positive transformation in Transcorp Hilton Abuja and Transcorp Hotels Calabar.

The glamorous event featured classical music, award presentations, and vote of confidence speeches from notable personalities who were present to honour these icons. They include Charles Soludo, former governor of Central Bank of Nigeria; Jan Van Der Putten, vice president operations, Africa and Indian Ocean, Hilton Worldwide; Collins Chikeluba, former director, CBN, among others.

COMPANY RELEASE

L-R: Samson Itodo, executive director, YIAGA Africa; Auwal Musa Rafsanjanim, executive director, Civil Society Legislative Advocacy Centre (CISLAC) and Adesina Oke, director legal CISLAC, during a press briefing on the state of the Nation by CISLAC with other Civil Society Organizations in Abuja. Pic by Tunde Adeniyi.

L-R: Lamidi Salami, secretary, Nigeria Union of Pensioners (NUP); Jeremiah Asoata, vice president, NUP; Jimoh Ijegbai, commissioner for local government and community affairs; Fredrick Akinido, chairman of local government pensioners association, Edo State, and Augustine Iredia, at a press conference with members of Local Government Pensioners Association, in Benin City, Edo State.

MEMMCOL, Ikeja Electric partner to enhance quality electricity service delivery KELECHI EWUZIE

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igeria’s foremost indigenous meters manufacturing company, Momas Electricity Meters Manufacturing Company Limited (MEMMCOL) has partnered with Nigeria’s leading electricity distribution company, Ikeja Electric (IE) to enhance quality electricity distribution service delivery to consumers by upgrading to Breaker-driven distribution Substation.

Sunday Oyewole, chief technical coordinator, Ikeja Electric (IE), speaking during the handover of the Onipanu 500KVA distribution Substation which is the pilot scheme of the project in Lagos commended the management of MEMMCOL for the innovative concept which would transform and enhance quality

electricity service delivery.

Oyewole stated that Ikeja Electric (IE) is concerned about the quality of electricity supplied to her esteemed customers.

“At Ikeja Electric (IE), we would continue to push the limits in terms of managing our distribution network, we would look into the finding of your report on this project with a view to collaborate with you to bring this kind of enhancement to all our over 16,000 substations’’ he said.

Kola Balogun, chairman, Momas Electricity Meters Manufacturing Company Limited in his remarks, said that the Substation enhancement project is conceptualised to push for migration of Substations from the old-fashioned fuse-based to a more intelligent and efficient

Breaker-driven Substation installed with surveillance in line with global trends.

Balogun further stressed that the enhanced Substation is an intelligent Substation, which would help to protect and optimise electricity transformers creating efficiency and ensuring load balance, and control hitherto not achievable with the fuse-based Substation.

“Beyond load balance which ensures efficiency, the Breakerdriven Substation is equipped with a reactive compensation capability to compensate for any anomaly that can happen in the Substation. In other words, the new enhanced Substation would further position Ikeja Electric as a world-class DISCO to better serve all connected customers” he said.

Tajudeen Akande (r), president of lagos country club; Adewale Ajayi, paramount ruler of Remoland; Kesington Adebutu, businessman and his wife Kofoworola Adebutu at the commissioning of the Club’s new Gate House in Ikeja Lagos.

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Banking is not where you go but what you do The advent of technology no doubt has brought a lot of transformation to the banking landscape, Patrick Akinwuntan, managing director of Ecobank, in an interview with journalist highlights the bank’s strong involvement in leveraging technology to deliver value to customers. He spoke to Hope Moses-Ashike :Excerpts.

Globally, the banking industry is changing as technology continues to disrupt the space. How do you see Nigerian banks faring in this fast changing operating environment? amously, I think it’s now well known that banking is not where you go but what you do. In the past, when you say I want to do any banking service, it was synonymous to traveling to one location to do banking.

But now, banking has come to your finger tips and we believe that increasingly, banking itself would become more affordable, more available; but the differentiator would increasingly be the effectiveness of the customer service that the bank brings to bear in adding value to the financial transactions being carried out by customers.

First, the definition of who is your customer is being expanded from the person that has an account in your bank to the person that uses your financial services platforms.

So, if you look at ATMs, they are interoperable. If you have an account in X bank, and you come to use Ecobank ATM, you are also my customer because you’re using my service; and if you are happy with the service on my Ecobank ATM, not minding which other

F

bank you brought your ATM from, it reflects positively in your confidence in the Ecobank brand.

Therefore, the concept of who is your customer is being expanded significantly. And that’s why the steps taken by NIBSS, the Central Bank in the establishment of BVN, is really forward thinking and should be supported by every Nigerian. What that does, is create an identity that enables banks really relate to customers in a non-restrictive manner because you know this is a participant in the economy and you provide the services.

Therefore, customers would have more choices.

The ease of access has improved. The transparency requirements are high because people can compare. And therefore, it creates growth.

You will find the level of instant payments today on the upward swing.

When I started my career in banking, if you wanted to make a payment from Lagos to somebody in Kano, you write a cheque and the person in Kano takes it to the bank in Kano. It takes 21 days to get value. But today, it’s at the speed of seconds to do your transactions.

So, banking is one of the industries that have leveraged the developments in technol-

Patrick Akinwuntan, managing director of Ecobank

ogy to leapfrog the challenges of infrastructure in Nigeria and make services affordable at a more reliable level to every individual.

It is a highly dynamic industry. It is an exciting industry for young people to bring to bear innovation and that’s why for us at Ecobank, we embrace innovation and we want to always be in the vanguard to do things better, such that more people get better value for their activities.

What are the challenges of mobile money in Nigeria because it is not as popular as it is in Ghana or Kenya?

It is important to focus on what is the vision and what we want to achieve. I am not a fan

for common size comparison from one country to the other.

We should be looking at what is critical for us in the journey that we are in Nigeria. The fact is that the experience in Kenya started out as mobile money but today from leanings there are more bank accounts than mobile money accounts in Kenya. And that was achieved through collaborations between the mobile money players and the banks in Kenya.

So mobile money started very quickly but when it comes to deposit of customers’ money, every economy understands that protection of small unit savers is a prime responsibility of the central managing authority in Nigerian, which is the Central Bank.

In Ghana it is partnershipbased, so you see Telcos led become partnership led. In Nigeria we started with financial institutions license led because the scale in Nigeria is such that any item that is not well managed, if it scales out of proportion, it is a big problem and that is why the regulators try to develop a stable framework before arriving at that.

And what we should be looking at is that now that we have arrived at this point, how do we make it work very positively for the economy?

Leveraging on what has been

the experience in other places is not a bad strategy.

But the real issue is that now we have this playing field, how do we make it work very well? Our prognosis is there should be a lot of collaboration because the field and the opportunity for growth is huge. The need of Nigerians is very significant and supply side of it is not as high. Therefore every opportunity to increase this supply of financial service should be encouraged.

The level of loans that bank customers are taking currently is dropping, how are you dealing with customers not coming forward to take loans and what do you think should be done?

The fact is that a loan in itself needs to be situated within the overall macroeconomic environment. In an environment where inflation is gradually coming down, I am talking comparatively now to two or three years ago. Inflation has a direct impact on interest rate and interest rate has a direct impact on the cost of borrowing and therefore the country has placed a lot on inflation as a precursor to bringing down the cost of fund and therefore permits much more loan activity in a sustainable manner.

You will agree that five,

six, seven years ago or in the past decade, the industry has started to manage the impact of loan defaults and what loan default does, is it makes the cost of borrowing to be much higher because somebody has to pay the cost finally in order for the engine to keep running.

Again that’s something the industry has to manage in terms of improving customer identification, improving the digitisation of transactions so that you can really see the track record of the customers.

The various credit bureaus have also been established so that the market is able to sift people who do well in honouring the obligation and therefore can have a lower cost borrowing from those who are trying to play the system and therefore inflicting an overall high cost of borrowing. So my prognosis is that as more participants are digitised, transactions, ease of tracking delinquent customers and the ease of getting value for being a good customer become more transparent, we will see a faster growth rate in the level of turnaround and loan activity.

You are already seeing it in the instant loan that is being offered on various platforms today. For you to have simple loan, you can do that on your phone now.

head, savings, explained that a prospective customer must have a savings account with Fidelity bank, adding that the bank has six different savings product that one can operate.

“Existing customers are expected to top-up their account with N10,000, while new account holders are to open with any amount, and grow the account to at least N20,000 and above, to participate in the monthly draws that could fetch you either promotional

gifts, N1 million, N2 million, or N10 million respectively”, she said.

Chris Nnakwe, acting chief technology officer of the bank, who spoke on the QR code system said, the QR system is the first of its kind in the banking sector and that as a technological driven organisation; Fidelity Bank is the first bank to develop this.

“It saves you the stress of going to the bank and saves your data”.

Fidelity Bank empowers 13 customers with N16m HOPE MOSES-ASHIKE

I

n a move to financially empower customers through a savings scheme, Fidelity Bank plc last week gave out a total of N16 million to lucky customers in the on-going Get Alert in Millions (GAIM) season three.

Some of the customers who won in the third monthly draw fall in the category of N2 million and N1 million. Those

who won in the N2 million include Umaru Gagi, Abdulrahman Olanrewaju, and Chioma Patience.

Those who emerged winners in the N1 million category are Steven Oriase, Kareem Amodu, Evangelina Moughalu, Raphael Omoijate, Ogechukwu Mike, Musa Abubakar, Onwuharaonge Kingsley, Blessing Uwadiegwu, Ukamaka Joy, and Nwankwo Onyeka.

Giving an opening remark on behalf of Nnamdi

Okonkwo, managing director, Chijioke Ugochukwu, executive director, shared service, noted that the promo season three which commenced October 2018 has seen the bank gave a total of N50 million in cash and 54 consolation prices to over 93 winners.

She said the bank still has N60 million to give out in subsequent draws up till the end of the promo, later in the year and also has several

consolation prices to as well give out.

“We also have so far given out airtime to the tone of N2.671 million; with the amount on the rise every week, as we give N1000 worth recharge cards weekly to first 100 customers to sign up a savings account with us; so far, we have credited 1,964 new customers with N1000 airtime each”, she said.

To participate in the promo, Janet Nnabuko , group

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Nigeria to spend N91bn on 10yr National Livestock Transformation Plan ... to prioritise cattle breed improvement ...NEC approves plan Stories by JOSEPHINE OKOJIE

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igeria’s farmers-herders crisis and banditry may soon be a thing of the past as the country is set to spend N91 billion on the implementation of a ten year National Livestock Transformation Plan from 2018-2027, the programme information document states.

Nigeria’s livestock sector is a key part of the country’s quest for food security and ensuring an end to the prolonged conflicts between farmers-herders which have detered growth in the subsector.

With the new livestock transformation plan which will be piloted in Adamawa, Benue, Kaduna, Nasarawa, Plateau, Taraba and Zamfara states, the country hopes to address the critical issues limiting the growth of the livestock industry.

“The proposed programme is designed, based on six pillars, with estimated direct and indirect costs of N90.43 billion and N261 million, respectively,” the document states.

The six pillars are economic investment, conflict resolution, law and order, humanitarian relief, information, education and strategic communication and crosscutting issues.

The document also states that the

budgeted amount will help increase the country’s yield of cattle milk per day through breed improvement of local herds.

“Through the priority breed improvement activity plus the high yielding and nutritious pasture, feed supplements and improved feed utilisation, the programme will enable between 150,000 and 200,000 local dairy cows produce up to five litres of milk per cow, per day for at

least 250 days per year.

“By year three, over 180,000 crossbred cows raised by artificially inseminated local foundation stock in year 1 will to produce up to ten litres of milk per cow per day for at least 280 days per year,” the document states.

It further states that in the tenth year, the crossbred cows will be producing 60 litres of milk daily to give a cumulative of 688.9 million

Agric 2019 budgetary allocation declines by 20% despite FG’s food security quest

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igeria has reduced its budgetary allocation to the agricultural sector by 20 percent from N173 billion in 2018 to N138 billion in 2019 despite government efforts to attain food security.

Experts in the agric sector say that the N138 billion which comprises of both recurrent and capital expenditure for the sector in 2019 cannot at the barest minimum, address issues relating to mechanisation, rehabilitation of irrigation facilities and dams, extension services, insurance, fertiliser subsidy, research and development, among others.

The experts say that the proposed allocation is an indication that the government is not ready to address the lingering issues limiting players in the agric sector.

“We need to fund our research institutes properly to develop improved seeds, rehabilitate our irrigation facilities and dams, provide extension service amongst other key issues,” said Anga Sotonye, publicity secretary, National Cashew Association of Nigeria (NCAN).

“With N138 billion budget allocation for the sector in an inflationary economy, we definitely cannot achieve anything with it for

agric,” said Sotonye.

He stated that if the government is serious about diversification through agric, the budgetary allocation must be increased so that the sector can contribute more to the country’s GDP. At present, the government is faced with reviving a sector challenged by poor storage facilities and processing practices as well as farming often mainly done with hand tools.

Av a i l a b l e s t a t i s t i c s s h o w that Nigeria is one of the least mechanised farming countries in

the world with the country’s tractor density put at 0.27 hp/ hectare which is far below the Food and Agriculture Organisation (FAO) recommended tractor density of 1.5 hp/ hectare.

Nigeria is 132nd out of the 188 countries worldwide measured by FAO / United Nations in terms of the number of tractors in the country.

Elesa Bitrus Yakubu, National p re s i d e n t , T ra c t o r s O w n e r s and Operators Association of Nigeria(TOOAN) while commending the government’s for having increased it in the previous agric budget, added that the FG needs to adequately provide fertilisers to farmers and provide trainings for them on the best practices.

“The need for mechanisation is very important too and government needs to provide infrastructure by rehabilitating our dams and irrigations,” Yakubu said.

Nigeria is one of the signatories of the Maputo Agreement to assign 10 percent of the entire budget to agriculture, but the N138 billion for 2019 only accounts for 1.5percent of the entire N8.8trillion budget.

This shows that the country’s agric allocation is still very far from the Maputo declaration.

litres yearly with a milk revenue of N241 billion.

Key dairy farmers who spoke with BusinessDay applauded the national livestock plan initiative, but cautioned the government on the implementation.

According to them, the policy document covered the gaps that were contained in the ERGP document for the subsector.

They noted that if the policy

is effectively and efficiently implemented, the country would eventually have a flourishing dairy sector.

“I have not read the content of the policy but I understand that it was designed to address the gaps in the ERGP for the dairy industry and this is very good,” one of them said “All we want now is effective and efficient implementation. The government also needs to increase tariffs to grow the industry, he added.

“The sector is currently the most neglected subsector in the agricultural sector. We need to learn from the Kenya dairy sector model to grow our own industry.”

According to the policy document, in 2016, a total of 897 communities where affected by the herders-farmers crisis and this also affected 21,756 households, resulting in the damage of 13,050 buildings and 1,144 schools, as well as 164 primary healthcare centres in five states.

The five states are Adamawa, B e nu e, k a d u na, Ta rab a a n d Nassarawa.

The National Economic Council (NEC) approved the plan last week Thursday during the NEC meeting presided over by the Vice Prresident Yemi Osinbanjo at the presidential villa in Abuja.

Akwa Ibom inaugurates committee to reactivate Akwa Palm ANIEFIOK UDONQUAK, Uyo

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n line with his administration’s commitment to promoting industrialisation, Akwa Ibom Governor, Udom Emmanuel has inaugurated a committee for the reactivation of Akwa Palm Industry Limited.

Emmanuel Ekuwem, secretary to the Akwa Ibom State Government, who performed the inauguration on behalf of the governor, said the inauguration of the committee was a demonstration of the “commitment and seriousness” of the present administration to revamp the economy of the state.

Governor Emmanuel charged members of the committee to take their work seriously as his administration was “deeply committed to the industrialisation of the state, diversification of the economy of the state, creation of jobs for young people in order to take them off the streets and make them have a sense of purpose.”

He enjoine d them to b e transparent, fair and above all, consult widely and take into account the interest of the host communities and villages in the course of discharging their responsibilities.

The governor called on the people of the host communities to be law-abiding and protect the facility against vandalism.

T h e t e r m s o f re f e re n c e, according to the governor, include engaging youths from the host villages and communities of Esit Eket, Mbo and Urue Offong/Oruko Local Government Areas, with a view to creating a market value for the industry, among others.

Responding, the Chairman of the committee, Edet Udoh noted that the reactivation of the Akwa Palm will increase the value of the faciltlty for potential investors who have indicated interest in the take over and management of the Palm Produce Industry.

Udoh, who is also the chairman, State Technical Committee on Agriculture and Food Security, solicited the cooperation of the Ministry of Agriculture and Food Sufficiency, Akwa Ibom Investment Corporation (AKICORP), and the host communities to enable the committee achieved its assigned responsibilities.

He expressed appreciation to the Governor for finding them worthy to serve the state in that capacity and pledged to work assiduously to justify the confidence reposed in them.

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Growsel: Repositioning to support smallholder farmers with finance JOSEPHINE OKOJIE

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o ensure that Nigeria’s expectations from its agricultural sector cr ystallise and support the current diversification drive of the government, Growsel – a leading agricultural crowdfunding organisation is repositioning to support smallholder farmers with more finance.

To d o t h i s , t h e organisation recently registered its Growsel Microfunds Inc as a nonprofit in the United States, to lift more smallholder farmers in Nigeria and other developing countries out of poverty by connecting them to global lenders.

As a result, Growsel is now adopting a global strategy in its efforts to attract the needed support and finance to empower smallholder farmers in developing countries. The organisation intends to leverage on donations and grants to aid its operations.

According to a statement made available to BusinessDay, the social impact model is expected to strengthen G r o w s e l ’s g l o b a l crowdfunding initiative and further position it for attainment of at least eight of the United Nation’s sustainable development goals (SDGs).

Francis Asinobi, field partner manager, Growsel recently disclosed that since 2016 when the organisation commenced operation, and now, it has evolved into a global lending platform positioned to connect underfinanced smallholder farmers to supporters from across the globe by providing them with access to capital via crowdfunding, farm inputs, and farm management solutions as well as training them o n g o o d ag r i c u l tu ra l practises.

“For two years or so, we have engaged seasoned professionals in testing various field models to define effective and sustainable processes to

A group of women smallholder farmers who are benefiaciaries of the Growsel Microfund

get an operating model that would deliver solutions to the challenges plaguing smallholder farmers in developing economies.

“Through various researches and experiments, we have gained a firsthand understanding of what works and what doesn’t work, when it comes to crowdfunding and smallholder farmers,” Asinobi said.

Agriculture has long been known to hold a great promise and has historically been Nigeria’s major source of revenue and foreign exchange.

In the 60’s and 70’s the country attained extra ordinary heights from its agricultural production as it generates bulk of its revenue. Then it all happened that oil was discovered in commercial quantity and Niger ia abandoned the sector.

But since the 2014 collapse of global oil crude prices at the international market, there has been renewed focus on the agricultural sector as the country attempts to diversify its economy away from oil.

The shift was necessitated by the growing statistics of youth unemployment and the vast agricultural potentials that can drive a more sustainable economic

development in Africa’s most populous nation.

As a result, there is consensus across board that there is no better time to leverage the potentials of the agricultural sector than now, to diversify the economy and place it on the path of sustainable growth and development.

To do this, Nigeria must now to address the issue of finance, which is one of the factors that have continued to impede the sector.

Lack of access to adequate financing by farmers and other actors in the sector has remained a major impediment that prevents investments in basic farm inputs needed

to raise productivity and sustain growth of the nonoil sector.

A s a re s u l t, y i e l d s have failed to increase significantly, leading to per vasive hunger and poverty.

Similarly, agro entrepreneurs seeking to build businesses that could boost food production has continued to remain at a subsistence level in the country.

But with Growsel new s t ra t e g y s m a l l h o l d e r farmers and agro entrepreneurs in Nigeria and other developing countries can now have access to finance to boost their productivity and improve livelihoods.

“Initially, we came into the field excited about the impact we could make in the lives of million in Africa, who are mostly farmers living in extreme poverty.

From then, our aim was to find the most effective m o d e l f o r d e l i ve r i ng agricultural funding solutions, a mission we have pursued vigorously,” said Olabisi Abodunrin, communications lead at Growsel. “ Two years down the line, we are even more thrilled that, after numerous researches and field testing of various models, including the Commission-Based, Profit-Sharing and OutGrower models, we can positively impact more lives and lift millions of farmers out of the poverty trap,” Abodunrin added.

Fi e l d i ng q u e s t i o n s from the press recently, Elcee McEdwards, chief communications officer, noted that social impact would be the game changer for Niger ian farmers who produce about 80 percent of the food consumed in Nigeria, but have little to nothing to cater for themselves and, by extension, their families. “ T h e S o c i a l Impact Model entails crowdfunding for smallholder farmers at zero interest rates through the support of lenders in developed economies who are willing to empower smallholder farmers to grow crops to support themselves and their

families.

To further guarantee lenders principal, Growsel has developed a field p a r t n e r p ro g r a m f o r screening and verification of farmers before registration, as well as off-taker arrangements to buy the farm produce from them at harvest, based on current farm prices, he said.

McEdwards added that the farm produce is sold to bulk buyers and off-takers, thereby guaranteeing commensurate economic returns for the farmers at the end of the planting cycle.

Growsel Microfunds Inc., operating through its crowdfunding platform www.growsel.org, continues to revolutionise the Nigerian agricultural space by leveraging on innovative technological solutions to tackle the unique challenges faced by underserved smallholder farmers in various local communities.

Furthermore, the nonprofit organization has unveiled its new identity elements and pay offline, ‘small seeds, big impact’ to drive home its course.

According to the organisation, the new logo represents global footprints of lenders, while the green tree indicates growth and cultivation by smallholder farmers.

Despite efforts targeted at increasing funding to the Nigeria’s agriculture sector, the role of commercial banks in financing the sector still remains minimal owing to the risky nature of the sector, low financial literacy among smallholder farmers and difficulty in determining their creditworthiness.

S u c c e s s i v e governments and the Central Bank of Nigeria have introduced various financing initiatives to encourage banks to finance agric at lower interest rates.

But the government does not have enough resources to lend to all actors across the value chain, so the need to encourage organisations like Growsel to be at the forefront of agricultural financing can never be overemphasised.

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Apapa: Osinbajo and burden of failed ‘vacate order’ to rampaging trucks CHUKA UROKO

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hen Ayo Vaughn chose to live in Apapa in preference to Ikoyi, that choice did not mean that the General (retired) in the Nigerian Army was settling for less, because at the time he made that choice, Apapa, Ikoyi and Ikeja GRA were at par as foremost Government Reserved Areas (GRAs).

Vaughn did not regret his choice because, like Ikoyi and Ikeja GRA, Apapa was a soughtafter address, a residential and commercial destination described as a city of aquatic splendour with its Roads and Avenues well paved and lined with rich ornamentals and beautiful flowers.

But today, unlike Ikoyi and Ikeja GRA which have soared in value, Apapa has become a wasteland—a paradise lost. Maritime activities, indiscriminate setting up of tank farms, the failure of rail transport system, the arrogance of the shipping companies and the ineptitude of Nigerian Ports Authority (NPA) have combined and conspired to rape the country’s premier port city and left it bare.

Apapa has become a metaphor for stress and suffering where the residents have been dehumanized, the environment degraded and investments devalued by rampaging trailers and tankers whose uncontrolled influx have over-run the port city with devastating impact on homes and businesses.

Against warnings from structural engineers and contrary to acceptable practice in sane societies, trucks are parked mindlessly on bridges and any other available space, causing unprecedented congestion and traffic gridlock that have become a permanent feature of the port city.

This is the scenario that compelled Vice President Yemi Osinbajo to come to Apapa twice in one week in July last year. Apapa was completely locked down with spiraling effect on the whole of Lagos, grounding economic and social activities in the sprawling city whose economy is representative of the entire Nigerian economy.

Osinbajo, ordered a 72-hour joint operation to clear the gridlock in Apapa. He directed that the operation should be carried out by collaborative efforts of the Police, Nigeria Navy, Nigeria Army, the Nigeria Air Force, FRSC and the NSCDC, LASTMA, LASEMA, Container truck drivers, National Association of Road Transport Owners, NUPENG, Road Transport Employers Association of Nigeria.

But nothing happened as a result of the presidential order and directive. The situation became even worse and has remained so ever since, leading to pertinent questions on the integrity, potency and efficacy of presidential orders and directives.

A cerebral professor of Law, Osinbajo comes off easily as a pastor-gentleman who should have the integrity enough to mean what he says. But, he has become a politician, and in Nigeria, politicians are not known to mean what they say or say what they mean.

Every statement suits situational expediency.

But for truck drivers and/or their principals to disrespect and disobey a presidential order goes beyond integrity and political gimmickry. To make matters worse, Osinbajo gave the order as Acting President, meaning that he had the full powers of the president and commander-in-chief, yet, nothing happened.

This is the second of such orders that Osinbajo gave as Acting President. In March last year, he or-

Failed portions that make Apapa- Oshodi Expressway ‘highway to hell’

made movement in and out of the ports extremely difficult.

“Before now, a truck driver could go on two to three trips a day within Lagos; now he can only do one trip. Outside Lagos, he could do two times in a week, today he can only do once in a month”, the clearing agent stated.

For that reason, the agent continued, transporting a 40-footer container from Lagos to Onitsha now costs an importer N1.3 million, up from between N320,000 and N340,000 before the congestion in Apapa. Moving the same container from Lagos to Shagamu which before cost N120,000 to N150,000, is now N750,000 to N800,000.

For an importer to move his goods from Lagos to Ilorin now costs him between N860,000 and N900,000, up from N220,000 to N260,000 he used to pay, just as transportation of same size container to Abuja now costs N1.3 million to N1.4 million, up from N420,000.

All these increases are putting pressure on businesses but, according to clearing agent, the person at the receiving end is the consumer to whom the importer transfers the additional costs.

Again, the implication of all these is that imported items will con-

elections”, he added.

In what seems like dancing on the graves of residents and businesses, both the Federal and Lagos State governments collect huge revenues from the two ports in Apapa which are considered the busiest in Nigeria, accounting for over 70 percent of all the import and export activities in the country.

The Federal Government has very strong presence at the two ports with its revenue collecting agencies which collect money for it in form of import duties and levies by the Nigeria Customs Service (NCS); royalties, rents and dues collected by the Nigerian Ports Authority (NPA); dues and levies collected by the Nigerian Maritime Administration and Safety Agency (NIMASA); certification levies collected by the Standards Organisation of Nigeria (SON), among others.

Report has it that, in 2016, NCS alone generated N898 billion as revenue for the federal government and this was even less than the N904 billion collected in 2015.

The reduction, according to a close source at the NCS, was because of the difficulty in accessing foreign exchange and removal of the 41 items which forced down the level of activities within the ports.

the ports.

The federal government, in spite of the huge revenue it takes from the ports, has abandoned port access roads. Apapa has a master plan which, if implemented, should make the port city a beauty to behold, but, according to Vaughn, this master plan has been distorted and destroyed.

“I am aware that Apapa has a master plan. Indeed, the whole Lagos has a master plan but nothing has happened or is happening. All the master-plan has been distorted. In Apapa, for instance, over the years, Flour Mills and Honeywell were just very small companies. Dangote was not even there at all.

“Today, these companies have grown by over 200 percent and no additional land has been created.

This means that these companies are choking the environment.

Today, Dangote alone occupies almost 50 percent of the ports, constricting the areas where containers could be parked. So, the Apapa master plan is as good as dead”, he stated.

It beats the imagination that a country could be so care-free with its premier port city which is a N20 billion a day economy. Every attention is on oil which, from happenings in the international oil market,

A typical gridlock on a ‘good day’ on Ijora-Apapa Bridge

dered international oil companies (IOCs) to immediately relocate their headquarters to the Niger Delta, urging the Minister of State, Petroleum, Ibe Kachikwu, to begin the process of engaging the IOCs

on the way forward to actualise the directive. This order was promptly ignored.

“If Osinbajo as acting president gave orders and nobody obeyed him, it means that he is a toothless bull-dog. If nobody listens to the president, who then will they listen to, meaning that the government is inefficient or, by omission or commission, not ready to address Apapa problems”, Vaughn who is the chairman of Apapa GRA Residents Association, lamented in an interview with BusinessDay. Vaughn is of the view that the major causes of the Apapa problem are the NPA which is government’s regulatory agency and the shipping companies. The failure of NPA to do what it is supposed to do is reason for what Apapa has become today. “Apapa has degenerated below what could be called a GRA. As far as this area is concerned, it is no more a GRA”, he noted.

How all these are impacting on the residents, their environment and investment, and the wider Nigerian economy is better imagined than expressed. The situation impacts directly on the residents and businesses within the port city, because, according to Vaughn,

“the problem of Apapa goes beyond the gridlock which everybody sees; a lot of us, especially the retirees, depend on income from our houses; many of these houses have been empty in the last five years”.

It is estimated that 40 percent of the entire buildings in the Apapa GRA are empty.

On the average, 10 houses are empty on any given street. Average house rent in this area is N5 million per annum, meaning that in one street alone, income loss for the five-year period is about N250 million.

Many property owners are selling at ridiculously low prices. A property vendor who did not want to be named, told BusinessDay that a woman in one of the streets put up her house for sale at N65 million last year, but nobody wanted to buy. Just a few days ago, the woman in anger sold the house for N40 million and left the area for good.

Vaughn lamented that, in spite of this ugly situation, Lagos state government still collects tenement rates from Apapa residents and expects them to pay same as payable in Ikoyi and Ikeja GRA whereas some houses here have been empty for three to five years. “And don’t forget, it is the same government’s policy that is preventing the owners from renting out those houses”, he stressed.

Wharf Road and Commercial Road used to be the ‘Central Business Districts’ of this port city where high net worth firms and banks had their offices and branches

respectively. A walk through these ‘districts’ shows that most of the banks have either relocated or have the number of their branches reduced.

On Wharf Road alone, more than 10 banks and two eateries have shut down their branches due to the pain and difficulty in accessing these branches, leading to loss of substantial customers in the area.

Unity Bank, for instance, which used to have four branches, now has two, Ecobank with eight branches has reduced to four and Access Bank with seven branches also cut down to four.

Eateries like Tetrazini has shut down, Tantalizer with three outlets has reduced to one and the only Mr Biggs eatery in Apapa on Creek Road is now out of the market. Film House Cinema inside Apapa Mall has also shut down.

Even the famous Apapa Amusement Park which used to be a source of joy for kids has been shut down due to low patronage. Major hotels like Rockview and many others are struggling for lack of patronage as most of their rooms are empty. Events that require renting their halls are no longer frequent.

“You can’t compare the situation now and how it was before. No one has been to hell and heaven but from experience, we can liken the situation in Apapa to hell. Apapa used to be a

place for good businesses, but not any more, said Ruwase Babatunde, President of Lagos Chamber of Commerce and Industry (LCCI).

Babatunde was reacting to ugly experiences of companies and industries which have to pay heavily in order to get their goods out of the ports. An importer who has his business within Apapa told BusinessDay, pleading anonymity, that before now, he spent between N180,000 and N190,000 on transportation of his consignment from Sifax Group depot in Apapa to another location within Apapa. Today, it costs him between N295,000 and N300,000 to move the same one 20-footer container to the same location, representing almost 150 percent increase in his freight cost.

“It has been a big problem these days and the experience in getting to Apapa has become a nightmare”, said Tony Anakebe, a port operator and member of freight forwarders association of Nigeria, adding, “businesses continue to slide to their lowest level; it takes us almost two weeks to get our containers loaded after finishing with the customs”.

A clearing agent, who pleaded anonymity, affirmed in a telephone interview, explaining that freight costs have gone so high because their turnaround has dropped significantly as a result of the congestion and gridlock which have

Risky journey: Okada-rider with his ‘cargo’ meandering between laden trucks on Apapa road.

tinue to be very expensive and unaffordable to many consumers.

“Until all these anomalies are addressed, Nigeria will continue to be too expensive a market for foreign direct investment which the country needs badly at the moment”, noted Emmanuel Ameke, a port operator. “Ease of doing business which has remained a hoax, especially at the ports, must be seen as an economic necessity and not political tool for winning

In spite of the recession that ravaged the economy for 15 months, unconfirmed report has it that NCS revenue for 2017 was over N1trillion.

The Lagos State government, on its part, collects landing fees from the ports. This revenue, according to officials of the state government, is to enable it maintain access roads to the port. It remains to be seen what the state is doing with the money it collects from

may not be sustainable in the long run. Apapa is not the only port in the country. All the eastern ports have been deliberately allowed to rot and die. This shouldn’t be, and time is now to look in that direction. Apapa as a destination and as a port city should be decongested for the good of humanity and the growth of the country’s economy.

Today is the time to start.

Pictures by Pius Okeosisi

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Austrian firm to invest in building drivers’ safety training centres in Nigeria …Aims at growing capacity among truck drivers in haulage business Stories by UZOAMAKA ANAGOR-EWUZIE

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ustr ian Te chnologies Nigeria Limited (ATN) in partnership with Test- & Training International (TTI) – a global leading drivers’ safety training company has concluded plans to build world class training centres in Nigeria for training of truck drivers, as well as other commercial and professional drivers in Nigeria.

The center known as Drivers’ Safety Training and Certification (DSTC) will be built in Lagos, Kaduna, Abuja, and Port Harcourt.

DSTC plans of developing network of drivers’ training tracks with the participation of local investors will be implemented in collaboration with the Federal Road Safety Commission (FRSC).

DSTC is led by former Formula One driver and two times Le Mans winner Alexander Wurz and his father Franz Wurz, European racing legend (three times European

Champion in Rallycross), who invented modern Road Safety Training in Europe.

Speaking during a press briefing hosted in Lagos last week by Guido Stock, the Commercial Counsellor of the Austrian Embassy, Hyginus Omeje, Corps Sector Commander of FRSC Lagos State, said a deficiency in traffic education and basic understanding of the consequences of careless driving, improper driving training and training in road and safety procedures, are the most significant factors contributing to traffic accidents.

“Hence, driver education and training programmes are highest priority in Nigeria,” Omeje said.

According to him, in 2017 alone, fatalities from road accidents in Nigeria were 5,121 while 31,094 people were injured. “Most Nigerian truck drivers are schooled by experienced colleagues using the apprenticeship method and are then allowed to drive with inadequate training after years of serving as ‘Motor Boys’. Demonstrating that “Lack of well-trained drivers

An overview of Drivers’ Safety Training and Certification (DSTC) Centre in Melk, Austrian. This centre is expected to be built in four different states in Nigeria.

hampers fleet utilisation, safe driving behaviours and total number of fatal accidents.”

Explaining the results of DSTC in Austria, Franz Wurz said that fatalities among young drivers have been re-

duced by 65 percent between 2003 and 2015 and due to the introduction of obligatory driver safety training.

“TTI also successfully introduced European training standards for tanker drivers.

BP (British Petroleum) was able to reduce rollover accidents by 80 percent and rear-end collisions by 60 percent within 1.5 years upon implementation,” he added.

Johann Rieger, CEO of ATN,

stated that the new ATN-TTI programme will create a winwin environment and substantial benefits for all stakeholders. “Besides, hundreds of new high skill, attractive working places and extensive knowhow transfer, society will also benefit in the reduction of the number of accidents – fatalities and injuries.

“Transport corporations will benefit, as a result of decrease in: loss of man power, damaged vehicles and/or lost goods and reduction of insurance premiums. They will be able to employ drivers that are certified based on international standards. Insurance companies will benefit from huge savings in accident related compensations.

“The government and FRSC will profit from improving efficiency in road safety and gain positive economic impact on GDP growth and employment. Consumers will benefit from lower cost of logistics and transport as well as lower cost of goods. Investors into the programme will gain from a sustainable stream of income in a completely new market segment,” he added.

NIMASA awards: With over $225m investment in Charkin emerges maritime education and training institute of the year port devt, TICT wins terminal operator of the year

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in-Can Island Cont a i n e r Te r m i n a l (TICT), one of the leading port operators in Nigeria, has been conferred with the Terminal Operator of the Year Award by the Nigerian Maritime Administration and Safety Agency (NIMASA).

The award was bestowed on TICT recently in Lagos at the NIMASA Corporate Dinner and Merit Awards chaired by Gen. Abdulsalami Abubakar, former head of State, and attended by the representative of the Secretary to the Government of the Federation, Boss Mustapha; Rotimi Amaechi, Minister of Transportation, and Dakuku Peterside, director-general of NIMASA among other dignitaries.

TICT owns and operates Terminal B of the Tin-Can Island Port, Lagos, which has three berths with operation capacity of 360,000 twentyfoot equivalent units (TEUs), a shore length of 770 meters and a backyard of 240,000

square meters.

Since it won the Federal Government’s concession to develop and operate Terminal B of the Tin-Can Island Port in 2006, TICT has invested about N70 billion (USD225 million) on the provision and development of facilities at the terminal.

BusinessDay understands that the terminal has also improved on service delivery and trained top quality manpower, giving rise to professional and effective service delivery at the port. Its ship turnaround time remains one of the best, as vessels spend only a few hours at berthing point to discharge their consignments, as against over 30 days spent for the same purpose before the 2006 port concession.

Recall that in November 2017, TICT made history with the unveiling of the first set of female harbour crane and Rubber Tyre Gantry (RTG) operators in Africa. They include – Oni Taiwo Omotayo; Tina Onwudiwe; Adewale

Adegoroye; Adeniran Maltida and Ajayi Oluwaseun.

“What is interesting is that we were able to bring in women operators into our industrial equipment conduct, which means that it is an additional opportunity for women in Nigeria and also a role model within and beyond the continent that women can actually turn into equipment operators in what has traditionally been a man dominated industry.

“Nigeria is the largest economy in Africa and Nigeria is also showing the way for women employment into the port industry. So, it is setting the pace for others within Nigeria and Africa as well,” TICT management said during the unveiling of the female crane operators in 2017.

Hadiza Bala Usman, managing director of the Nigerian Ports Authority (NPA), who was guest at the unveiling of the women crane operators had expressed delight and commended TICT for the initiative.

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gain, Charkin Offshore Training and Safety Centre, Port Harcourt, Rivers State has won the NIMASA recognition as the Maritime Education and Training Institute of the year 2018.

Owned by Charles Wami, a maritime educationist and safety expert, the centre won same award in the maiden edition of the programme in 2017.

The award was presented to Wami by his imperial majesty, Ooni Enitan Adeyeye Ogunwusi, the Ooni of Ife to the delight of eminent personalities and stakeholders in the maritime industry who graced the occasion.

Charkins has trained hundreds of persons in various aspects of the maritime industry, as well as oil and gas. It is on record that Wami is also the promoter of Charkin Maritime Academy (CMA), Port Harcourt which has the first ever land ship in the country,

MV Rivers Pride, formally unveiled on February 9, 2017 by Governor Nyesom Wike. CMA prides itself as an indigenous and privately-owned maritime training institution.

Wami pointed out that the academy needs the encouragement of all stakeholders to continue to provide maritime education and training of international repute.

“The school has a trend of rendering and improving on high quality training to guarantee competence in a conducive and friendly environment. It is a one-stopshop for marine, oil and gas training,” he said.

The land ship comprises of full mission navigational bridge simulator; ECDIS Simulation Room; GMDSS (Navigation) Simulation Room which conforms to the 2010 Manila Amendments by the global maritime watchdog, the International Maritime Organisation (IMO); and the basic

dynamic positioning class.

Other components of the land ship include advance dynamic positioning and examination class; nautical institute examination room, and the drilling system crane simulator.

Charkins has the approval of local and international regulatory agencies across the globe including NIMASA; Department of Petroleum Resources (DPR); OPITO, United Kingdom, and the International Well Control Forum (IWCF), United Kingdom.

Others are the Nautical Institute (NI); Oil and Gas Training Association of Nigeria (OGTAN); International Association of Safety and Survival Training (IASST), United Kingdom, and the Petroleum Technology Association of Nigerian (PETAN).

Besides the fact that it is a member of the British Safety Council, it is also affiliated to the Regional Maritime University, Accra, Ghana.

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Piracy: Attacks on ships in Gulf of Guinea more than doubled in 2018 - IMB Stories by Uzoamaka Anagor-Ewuzie

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iracy increased on the world’s seas in 2018 owing to a rise in attacks against ships and crews around West Africa, a report from the International Maritime Bureau (IMB) has states.

The IMB Piracy Reporting Centre (PRC) stated that 201 incidents of maritime piracy and armed robbery were recorded globally in 2018, up from 180 in 2017.

According to report, the Gulf of Guinea remained increasingly dangerous for seafarers as reports of attacks in waters between the Ivory Coast and the Democratic Republic of Congo more than doubled in 2018.

“The incidents include six hijackings worldwide, 13 of the 18 ships fired upon, 130 of the 141 hostages taken globally, and 78 of 83 seafarers kidnapped for ransom. The region saw a significant new spike in violence in the last quarter of 2018. Vessels have been boarded by pirates well

Mansur Ahmed (l), president, Manufacturers Association of Nigeria presenting the plaque of the Award of Federal Agency of the Year, 2018 to Bashir Jamoh, executive director, Finance and Administration, Nigerian Maritime Administration and Safety Agency (NIMASA), who represented the DG, NIMASA during the Independent Newspapers Awards 2018, held in Lagos.

outside territorial waters, with crew kidnapped and taken into Nigeria where they were held for ransom.

IMB report further said that there was an urgent need for increased cooperation

and sharing of intelligence between the Gulf of Guinea’s littoral states so that effective action can be taken against pirates, both at sea and onshore where their operations originate and end.

NIMASA promises to intensify efforts towards repositioning maritime sector … Wins Federal Agency of the Year Award

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he Nigerian Maritime Administration and Safety Agency (NIMASA) said it would intensify efforts towards repositioning the maritime industry in Nigeria, as the agency moves to become a leading maritime administration in Africa.

Dakuku Peterside, director-general of NIMASA, made the promise last week in Lagos during the Independent Newspapers Awards 2018, where the agency won the Federal Agency of the Year Award.

“We are spurred by this award and we appreciate the fact that our efforts to revitalise the maritime sector through our medium term strategy plan are yielding results. We will redouble our efforts to ensure that the quest of the Federal Government to diversify the economy gets the required support from the maritime sector and its stakeholders, as it portends several opportunities for economic growth and development.”

Peterside, who was represented by the executive director, Finance and Administration, Bashir Ja m o h , d e d i c a t e d t h e award to stakeholders and applauded the organisers for recognising the contributions of NIMASA in the economy.

A statement signed by Isichei Osamgbi, head, Corporate Communication Unit of NIMASA, said that Peterside appealed to the media to continue to spotlight the Federal Government’s efforts in repositioning the economy, adding that the media remains critical in the actualisation of the quest for economic diversification and nation development.

Ade Ogidan, managing director/Editor-in-Chief of Independent Newspapers Limited, said NIMASA had maintained a high level of transparency, particularly, in financial matters.

“Before, NIMASA was seen as an organisation that was riddled with corruption and all kinds of underhand practices. But

the recent report of a huge and noticeable increase in revenue generation from NIMASA is a big testimony of its unalloyed commitment to playing a prominent role in the overall development of the country,” Ogidan stated.

Ogidan listed the significant contribution of NIMASA to the Consolidated Revenue Fund of the Federal Government; quest for excellence through capacity building and promotion of staff, and automation of processes in the agency, as some of the reasons the agency was selected for the award.

Since th e ince ption of the Dakuku-led management, NIMASA has received several awards for excellence in its attempt to achieve a strong maritime sector that can compete favourably with its counterparts in other climes. Among the awards are Public Organisation of the Year, 2017, by the Tell Magazine, and Award of Excellent Leadership in Public Service in 2018.

A breakdown of the attacks shows that in the last three months of 2018, 41 kidnappings were recorded in Nigerian waters alone.

For instance, on October 27, 2018, 11 crew members were

kidnapped from a container vessel 70 nautical miles off Bonny Island, Nigeria. Two days later, Nigerian pirates in a speedboat hijacked a tanker underway 100 nautical miles off Point Noire, Congo.

Eight of the 18 crew were kidnapped.

Although no ships hijack was reported in the Somalia region, pirates fired upon a Suezmax tanker in the Gulf of Aden, as well as a product tanker and a capsize bulk carrier more than three hundred miles from the Somali coastline.

In Indonesia, patrols by the Marine Police have seen the number of incidents drop for the third successive year.

The majority of the 36 Indonesian reports were low level opportunistic thefts. Six crew members however were taken hostage and threatened, “Indicating the need to be vigilant”.

Attacks off Sabah, eastern Malaysia, continue to be a cause of concern with five crew members from two fishing boats reported as kidnapped. Separately four attackers in a speedboat fired on a tug, and the master was shot in the leg.

From Philippine Islands, 10 incidents were reported – down from 22 in 2017.

Batangas anchorage accounts for five of these. In one attack, suspected militants fired upon a general cargo ship.

Buhari commissions N6bn Baro River Port

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resident Muhammadu Buhari has commissioned the Baro River Port in Niger State at the weekend.

The port, which cost N6 billion was said to be equipped with a mobile harbour crane, a reach stacker, three forklifts and a transit shed and was built by Chinese firm, CGCC Global Project Nigeria Limited.

President Buhari said at the commissioning that the port will enhance intermodal transportation connectivity in

the country.

The President, who said that he has a personal attachment to the Baro port, noted that he assisted in the design of the port when he was chairman of the defunct Petroleum Trust Fund (PTF) under late Gen. Sani Abacha.

The President said the port would reduce pressure of big trucks on roads and create huge employment opportunities for Nigerians and help to decongest other ports in the country.

Earlier in his address, Olo-

runnimbe Mamora, managing director of NIWA, who expressed delight that the new port was completed under the present administration, said Baro port was the first colonial port in the country.

While stating that the port is a veritable outlet to ensure transportation of goods, services and passengers in the country, he said that the river port will also help in the creation of intermodal transportation system across the country.

SIFAX Group appoints Oyinloye as Group MD

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s part of plans to strategically position itself for better service delivery, corporate reengineering and the next level of strategic growth, SIFAX Group, has appointed Adekunle AbdulRazaq Oyinloye as the new Group managing director.

Oyinloye, who is the immediate past managing director/CEO of the Infrastructure Bank, is a graduate of Economics from the Ahmadu Bello University, Zaria.

He also possesses postgraduate degrees - M.Sc, Economics from University of Lagos; M.Sc Banking & Finance from University of Ibadan as well as the Strategic Management Certificate from the Columbia Business

Oyinloye

School, Columbia University, New York.

He has held senior management positions in major financial institutions in Nigeria, including the Infrastructure Bank Plc, Unity Bank Plc and Pacific Bank.

In the Infrastructure Bank, Oyinloye led a team of young enthusiastic professional to achieve a major turnaround for the bank by recording profitable operations within two

years.

His core area of expertise includes strategic planning, policy & procedure development, team building & performance improvement, finance, budgeting & cost management and among others.

Taiwo Afolabi, Group executive vice chairman, SIFAX Group, said that the appointment is in line with the Group’s vision of strategically positioning itself for the next strategic phase of growth.

“Recently, the company realised the need to restructure its workforce, especially at the senior management level due to its expanding business operations and resolve to provide better service delivery for its clients and better returns for all the stakeholders.

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Confirm genuineness, expiration of your vehicle insurance before you are flagged …use *565*11# on any mobile phone Stories by Modestus Anaesoronye

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re you a motorist plying the Nigerian roads, and not too sure of the validity and genuineness of your vehicle insurance document, then make sure you reconfirm it now, as vehicle inspection officers (VIOs) and the Police are back on the roads for routine checks.

Among other relevant documents, they will like to authenticate the insurance papers you are carrying, whether it is from a genuine insurance company or the

fake once at licensing offices.

They will also want to be sure that the paper you are carrying is not an expired insurance paper.

The agencies have been armed with technological gadgets that enable them make this confirmations on sighting your vehicle reg-

istration number without necessarily looking at the papers.

If you are found to have fake or expired paper, you will be fined and your vehicle may be impounded.

Every genuinely insured vehicle has been captured in the Nigerian Insurance Industry Database (NIID), so if your vehicle insurance is not found here, then it is a fake paper.

To confirm the genuiness of your insurance certificate before you are flagged dial *565*11#. This is will take you to a new page asking you to input your vehicle registration number or policy number, and

automatically it confirms your policy and the expiration date.

This works on any mobile phone, without or without internet access in any part of the country.

To enhance consumer efficiency and eliminate quakes, the Nigeria Insurance Association (NIA) has implored its member companies to upload all the cars they have insured into the NIID. Tope Smart, chairman of the NIA said the NIID which was launched in 2010 and became effective in 2011 was expected to house all car insurance policies till date.

“It will be disgrace if a policy holder presents his or her car insurance policy after a collusion or at check point and such insurance policy is not traceable, even on the NIID. “It will become more embarrassing, especially if the policy is authentic but could not be traceable at the point it was needed. “This will further destroy the good image we are projecting.”

According to the NIA boss, about three million car insurance policies has been uploaded on the NIID out of 14 million cars on Nigerian roads, out of which only 2.5 million cars are active on NIID.

What makes Allianz Nigeria the best place to work in 2019

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his photo is not from a dress-down Friday at work. It is not a working holiday either. No, it’s a regular workday, a Monday actually. Surprised? Part of the dress code policy at Allianz Nigeria – a composite insurance company owned by the Allianz Group - allows employees to ‘use their best judgement when determining appropriate attire and appearance’. That’s right; they trust their employees to dress smart and dress right! So here are 3 things that make Allianz Nigeria a strong contender for best workplace in 2019 Flexi-hour Allianz Nigeria is the first and the only company in Nigeria to have this as a work policy – or at least, they are the only one we know.

Employees can choose to resume as early as 7am or as late as 10am provided they put in the required 8

hours of work (plus a 1-hour lunch break) and voila! You’re done for the day. So if you resume by 7am, you can hit the close by 4pm and manage to beat the city traffic.There are however, concerns about the abuse of such a policy. Might not some staff resume by 10am and close by 4pm?

“We really don’t care. For us it is substance over form”, clarifies Owolabi Salami, executive director at Allianz Nigeria. “We trust our people to do right thing even when no one is watching, and for the past two years our people have made us absolutely proud of the decision to make flexible work hours a company policy”, he added.

Traditional attire, everyday The company also has a very interesting dress code policy. The policy states simply that Ankara/wool/ cotton attires are acceptable modes of dressing during the week. The HR

Manager, IfelekeAboyeji says they want their people to ‘dress the culture’. This contributes greatly to the ambience of the workplace.

Employees are free to don traditional attires that are both trendy and comfortable. “In my interactions with employees, I detect that people are generally happy about this flexibility in our dress culture”, she concludes.

Benefits/Remuneration Allianz Nigeria may not boast the most robust incentive package out there. But as an employee puts it, ‘the timeliness of our monthly remuneration is as dependable as sunlight’.

But why should this even be something to be highlighted. Many reputable companies owe their employees’ salaries for months in a row, in blatant violation of extant labor laws. As shocking as this sound, it is the grave reality.

A cross-section of staff of Allianz Nigeria Insurance Plc on a regular work day

With unemployment rate at 23 percent, employers take undue liberties with the payment of benefits confident that their employees have nowhere to go. Allianz Nigeria has a standing pol-

icy of paying out monthly benefits on the same day each month.

Where the day falls on a weekend or public holiday, payout is the working day immediately before. “In the

final analysis, we make our living here”, argues Aboyeji “so we want to offer our people financial security and freedom in the knowledge that the reward for their labor stays sacred”

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In Association with

Pension market expectant as PenCom prepares to buoy industry with 20m new contributors Adedeji stated that the initiative will explore the potentials in the pension industry by persuading players in the informal sector to join CPS through the micro pension plan.

“When more people subscribe to the plan, it will increase the pension assets, hence, allowing pension fund operators to invest more funds for economic growth and development, she noted.

According to Aisha Dahir-Umar, acting directorgeneral, PenCom, the implementation of the Micro Pension Plan will improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support at retirement.

The plan, when operational, would capture selfemployed people, especially, those with irregular income, usually in the informal sector and are largely financially uninformed with limited or no access to financial services, especially, pension plan, Dahir-Umar stated.

Section 2(3) of the Pension Reform Act, 2014 extends the coverage of the Contributory Pension Scheme (CPS) to self-employed persons through micro pension scheme.

Farouk Aminu, head, Research & Corporate Strategy, PenCom, had, at a forum in Lagos, said, the Commission is working on ensuring that the plan commenced as planned, noting that, this is a development that could enhance the growth of pension assets in the country.

He stressed that the plan has the potential to generate about N3 trillion to the pension assets, while it intends to mobilise about 12 million contributors within five years.

On benefits to be de-

Nigerian Nollywood actors, one of the target market for micro pension

afford them the opportunity to connect to other programmes of government while helping to finance infrastructure across the country.

Subscribers could, as well, use the balance in their Retirement Savings Accounts (RSAs) as equity contribution for residen-

rived, Aminu, noted that self-employed people and workers in the informal sector could reap by participating in the plan, saying, the initiative, in addition to providing income for people at old age and inculcating a savings culture through highly protected and regulated investment, would

‘

The separation of duties in the management of pension assets, where the Pension Fund Administrators (PFAs) administer the fund and the Pension Fund Custodians (PFCs) keep custody of the fund remains one of the best safety valves in securing the funds

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ension Fund Operators are expectant that the comings on board of micro pension scheme will turnaround the country’s Contributory Pension Scheme (CPS).

They believe that self employed persons in the informal sector constitute a large population of potential contributors who should key into the CPS via micro pension scheme.

The planned initiative is expected to attract over 20 million workers and N3 trillion into the pension assets.

With total pension assets as at October, 2018 standing at N8.45 trillion, the country’s pension assets are expected to rise astronomically by the time the initiative kicks off.

To ensure seamless operations, the National Pension Commission (PenCom), together with pension fund operators, has built robust Information Technology (IT) infrastructure that to support effective take off of the Plan.

The commission has als o had engagements with informal sector groups, such as, the Nigerian Union of Textile, Garment and Tailoring Workers of Nigerian (NUTGTWN), a body consisting Self Employed Tailors and Garment Workers; partner trade associations, Non Governmental Organisation (NGOs) and religious bodies in a bid to persuade them to subscribe to the micro pension plan.

Aderonke Adedeji, president, Pension Fund Operators Association of Nigeria (PenOp) said the operators are anxious to get the workers into the initiative, stressing that micro-pension remains one of the key focal points for development over the next 10 years.

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State.

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

tial mortgages and support their businesses, he said.

He stated that additional benefits to self-employed persons and informal sector workers include the cover provided under the Pension Protection Fund (PPF), explaining that under this arrangement, Government would bridge shortfalls or financial losses from investment of their accumulated retirement savings and guarantee them minimum pension in retirement, irrespective of how much they are able to save before retiring.

He posited that the plan would be funded by an annual subvention of one per cent of monthly wage of Federal Government employees, annual levy on PenCom and pension operators as well as pension fund investment income.

However, the head, Corporate Communications, PenCom, Peter Aghahowa, said, the micro pension initiative is made flexible for people to easily join, while

the method of contribution is decided by the contributors, who are to choose whether to contribute daily, weekly, monthly, quarterly, and so on.

Moreover, he said, anybody who is 16 years and above is eligible to join this Plan.

He stressed that the regulator and operators are jointly working on the I.T infrastructure to ensure a seamless operation of the plan.

Sola Adeseun, deputy zonal head, South-West Zone, PenCom, said the micro pension plan has similar built in safety measures like the Contributory Pension Scheme (CPS).

According to him, the separation of duties in the management of pension assets, where the Pension Fund Administrators (PFAs) administer the fund and the Pension Fund Custodians (PFCs) keep custody of the fund remains one of the best safety valves in securing the funds.

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

If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

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With insurance, you are able to mitigate all your risks – Old Mutual boss Stories by Modestus Anaesoronye

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he Management of Old Mutual General Insurance Company, a subsidiary of the pan-African insurance giant and leading global financial services provider, Old Mutual Limited, has advised Nigerians to embrace insurance as a means of mitigating all form(s) of risks in their lives and businesses.

In recent years, there has been an increase in incidents of natural disasters, terrorism, financial crisis and disease outbreaks that have affected the quality of lives. In fact, as people ventures into life’s daily routine at work, on the road and even at home, their lives and properties are exposed to risks in various forms.

Families have to deal with loss of loved ones, health emergencies caused by accidents or illnesses; home and property owners face the risk of burglary, flooding, fire attacks and building collapse; business owners have to deal with the risk of damage and theft to their business premises and assets; vehicle owners are also faced with risks of motor accidents, aggravated theft and third party liabilities. Apart from the grief experienced

Japhet Duru, ED, Technical, Old Mutual General Insurance Company

with these risks, the resultant financial loss can be more destabilising.

While these risks may seem distant from our comfort zones, they cannot be completely eliminated and since man has not devised a means to ascertain when risks will occur; the need to mitigate against exposure to acute financial loss becomes crucial. In the light of this mounting risk of financial insecurities, insurance has been identified by experts, as an important tool to mitigate against exposure to risk. In essence, Insurance guarantees peace of mind and financial security to the insured.

However, despite the critical realities, current trends

show that Nigerians are yet to truly embrace insurance as a tool for risk management. At 0.3 percent, Nigeria has a staggering low insurance penetration in comparison to counterpart markets in Africa - South Africa has 14.7 percent; Kenya 2.8 percent and Angola 0.8% penetration rate. Even with an estimated population of over 196 million people and a growing middle class, the National Insurance Commission (NAICOM) reports that only 1.8 million of our over 96 million adult population have any form of insurance.

A 2018 industry report on Health Maintenance Organisations (HMOs) by Agusto & Co. show the low

level of health insurance coverage in Nigeria, which was estimated to be at 5.1 percent. What this means is that in event of an unexpected health challenge, many Nigerians will have to rely on out-of-pocket expenses to settle their medical care. This is not far from reality as there has been a rising case of Nigerians resorting to online crowd funding campaigns to foot the huge bills of severe medical conditions, a situation which ideally insurance would protect against.

This is the same on the side of Motor Insurance. In spite of government’s effort to increase rate of adoption by making third party motor insurance compulsory, the Nigerian Insurers Association (NIA) reported that a staggering 64 percent of over 11.5million motorists carry fake insurance certificates.

For business owners operating in Nigeria’s tough economic and policy climate, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) reports that only 35 percent of SMEs have a form of insurance to protect against business risks.

Sadly, what this means is that these business ventures are at risk of being disrupted or in extreme cases failing in the event of an unfortunate incident. Entrepreneurs and investors face the huge risk of losing millions of Naira,

which could have been invested in pursuit of business success.

In recent times, Nigerians have also been victims of havoc wrecked by disasters such as, heavy rainstorm, fire explosion and flooding.

Many homes, properties and businesses nationwide have been destroyed and damaged - even causing loss of lives. In 2015 alone, the Nigerian Insurance Association reported that insurance companies paid a recorded 168 million Naira to insured victims of the flood.

Also, incidents of disastrous tanker explosions occurring in major metropolis in the country make a case for insurance protection. In a report by The Nation newspaper, after the 2018 Otedola bridge tanker explosion in Ojodu-Berger, Lagos, it was discovered by the Lagos State Government and the NIA that the petroleum tanker which caused havoc and 17 other vehicles destroyed in the incident were not insured. The implication of this singular incident is that the owners of the 17 vehicles cannot receive compensation for the loss they suffered on that ill-fated day and they must have been put in a place of financial discomfort caused by their loss.

By embracing insurance, Nigerians can protect their finances in spite of the risk that abound says, Japhet

Duru, executive director, Technical, Old Mutual General Insurance Company, “We have discovered that the Nigerian perception and affinity towards insurance has remained low in spite of Nigeria’s huge population.

The importance of insurance as a risk management tool cannot be underestimated.

In the third quarter of 2018, insurance companies paid claims totalling N145 billion to policyholders. By implications, the industry claims payout effectively prevented a massive economic loss which ordinarily would have caused untold financial crisis to those affected by various forms of incidents. What Old Mutual aims to fulfil in a bid to provide sound financial security and advisory services, is to educate Nigerians on how insurance affords them a well-rounded life rather than one where they fail to venture due to fear of risks.”

In a similar vein, Alero Ladipo, marketing executive, Old Mutual says, “When we compare Nigeria to other emerging markets, we have discovered that Nigerians are yet to fully grasp the importance of embracing insurance to mitigate the financial loss caused by risks that abound. By having this knowledge of insurance, we believe Nigerians will be able to make sound financial choices for their families and businesses.”

NAICOM confirms Moruf Apampa as ED FBNInsurance

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nsurance regulator, the National Insurance Commission (NAICOM) has confirmed the appointment of Moruf

Moruf Apampa

Apampa, as executive director, Business Development FBNInsurance Limited, a member of the FBNHoldings Company associated with the Sanlam Group of South Africa Apampa’s career started at T.A. Braithwaite Insurance Brokers and Company in 1994 where he learnt the

ropes of Insurance Brokage in Nigeria. In 1997, he joined Elmac Assurance Company Limited as special products manager and grew through the ranks to become the marketing manager of the firm with experience in managing the company’s branches in Abuja and Kano at various times. A seasoned Insurance Practitioner, Moruf has over 20 years of insurance, Sales Marketing and Business Development experience in leading insurance companies including AIICO Insurance PLC and Sunu Assurances Nigeria Limited where he led the team as its MD/CEO and launched the first USSD mobile solution in the insurance industry before joining FBNInsurance as executive director, Business Development in 2018.

Speaking on the appointment,Val Ojumah, managing director/CEO, FBNInsurance said, “Moruf is an astute insurance professional any company would be proud

to have on board. With more than two decades’ experience under his belt, we are sure he would bring that experience and managerial proficiency

to bear on our business.”

A Fellow of the Chartered Insurance Institute of Nigeria (CIIN), he is also an Alumnus of the Howard

University Business School and Lagos Business School respectively. Moruf is a graduate of Insurance from the Lagos State Polytechnic and

holds an MBA in General Management (with special emphasis on Marketing) from the University of AdoEkiti.

L-R: Femi Asenuga, managing director/CEO, Mutual Benefits Life Assurance Ltd; his wife, Debo; Akin Ogunbiyi, chairman, Mutual Benefits Group; Samuel Kayode Abiara, renowned cleric and outgoing General Evangelist, Christ Apostolic Church (C.A.C,); wife, Grace Abiara; Dotun Akinbiyi, wife of chairman, Mutual Benefits; Segun Omosehin, Mutual Benefits Assurance Plc; his wife, Modupe during the Mutual Benefits’ 23rd annual thanksgiving Service held at the Haven Hall, Ikeja, Lagos

BUSINESS DAY

Wednesday 23 January 2019

27

CITYFile

Firm evacuates huge dump site in Edo market IDRIS UMAR MOMOH, Benin

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social impact organisation working with communities and state governments to achieve environmental sustainability, food security and proper sanitation has evacuated a pyramid of refuse inside Ekiosa market.

The organisation, Lotus Ecoculture in partnership with TechAdvance Government Services, evacuated the more than a decade dumpsite as part of its corporate social responsibility.

Ekiosa market, one of the largest markets in Oredo local government area of Edo State located between second East Circular road and Sokponba road like other markets in the state is the primary source of waste materials generated by traders.

The chief executive officer of Lotus Ecoculture and TechAdvance Government Services, Osayi Olotu, said the initiative was part of the organisation’s way of keying into the government’s policy of keeping the state clean.

Osayi, who spoke with newsmen during the clean up programme, said the exercise cost over N1million and that Lotus Ecoculture partnered with its sister company TechAdvance Government Services. He said the quest for a sustainable environment resulted to the discovery of over a decade of a pyramid of dumpsite of waste and poor disposal at the market.

Dickson donates mattresses to corps members SAMUEL ESE, Bayelsa

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overnor Seriake Dickson of Baylesa, has donated additional 500 mattresses to the National Youth Service Corps (NYSC) members serving in state.

Dickson said this was part of his administration efforts at improving the welfare of corps members in the state.

The governor was represented by his senior special assistant on NYSC matters, Kelvin Appah, at the handing over ceremony of the mattresses in Yenagoa on Monday.

“I remember sometime in 2018, the governor also donated a total of 200 mattresses to corps members’ lodges in the state.

“I believe the donation of 500 mattresses today will make it a total of 700 mattresses released to the scheme for the comfort of these patriots.

“We are doing this because we are proud of NYSC’s quality service to the state,’’ Appah said.

Receiving the mattresses, Loto Bolade, Bayelsa’s NYSC Coordinator, thanked the governor for the support towards the scheme.

Bolade also commended the governor on the improved security and welfare of corps members in the state and urged them to reciprocate the governor’s gestures by rendering selfless service to the state.

“You must redouble your services to the state in your places of primary assignments, especially in community development services.

“On behalf of the NYSC Director General, I thank the state governor, the secretary to the state government, the chairman, NYSC state governing board and SSA to the governor on NYSC matters, for their support to corps members,’’ Bolade said.

Over a decade dumpsite being evacuated from a market in Edo State

Python Dance III: Troops avert communal clash in Abia

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roops of Operation Egwu Eke III, also known as Operation Python Dance 3, have prevented inter-communal clash between two communities in Ohafia Local Government Area of Abia.

Sagir Musa, deputy director public relations of 82 Division of the Nigerian Army, said on Monday that the troops intervened following attacks of Nkwembi community by some misguided youths from Okagwe community of Ohafia council area on January 9.

This, he said, led to the death of one person, with two persons reportedly missing, two houses and six vehicles burnt.

“This caused Nkwembi youths to re-organise for a counter attack, which troops of Sector 2 in 14 Brigade Area of Responsibility (AOR) assisted Ohafia Divisional Police Headquarters to contain.

“Normalcy has since been restored between the warring communities,’’ he said.

Similarly, he said that troops of Sector 5 in 302 Artillery Regiment, Onitsha, averted violent clash over possession and ownership of farm land between Nzam and Umenwelum communities in Anambra West local council area.

“The incident led to the destruction of farms across the communities, but the situation was salvaged by the deployment of joint patrol teams to the conflicting communities.

“No life was lost, while government officials and other stakeholders are in control of the situation at the moment,’’ he said. Musa also noted that based on credible information, troops of Sector 2, Sub Sector 3 in 144 Battalion located along Osisioma, Aba general area of Abia, monitored and pursued three suspected armed robbers.

“The robbers abandoned two locally made double barrel guns wrapped on a tricycle and dashed into the surrounding bushes on sighting a patrol van.

“The tricycle and the arms will be handed over to the police command in Abia for further action,’’ the deputy director said.

Musa revealed that following a tip off, troops of Sector 2 in 14 Brigade AOR, in conjunction with some personnel of the National Drug Law Enforcement Agency (NDLEA) conducted a raid on confirmed hideout of Indian hemp dealers in Atani and Ibom localities in Arochukwu council area of Abia.

“Consequently, five suspects were arrested; 25 parcels of Indian hemp and 17 already wrapped Indian hemp were recovered and are in custody of the NDLEA for further action,’’ he said.

Musa noted that based on intelligence of likely impending politically motivated violence in the build up to election campaigns by contending parties, troops had been conducting robust patrols in major identified flashpoints across the zone.

“These efforts are to provide a conducive environment for socio-economic and political activities by proactively checkmating anticipated crisis before, during and after the general elections, in line with the directive of the Chief of Army Staff,’’ he said.

According to him, the level of cooperation and information of intelligence value being received by troops and commanders of the operation in the zone from host communities is unprecedented.

The operation involved robust patrols, snap checkpoints, rescue missions, cordon and search operations, retraining of troops on contemporary challenges of internal security and coordinated interagency collaboration with other security agencies.

Rivers: Police kill 3 suspects in a shoot-out

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he police command in Rivers say they have shot dead three gunmen suspected to have killed one Nnafor Ogbu, the Ogale Eleme youth president.

Nna m d i O m o n i , t h e c o m ma n d spokesman, told newsmen in Port Harcourt that the gang broke into Ogbu’s house in Ogale, Eleme local government area and shot Ogbu dead.

According to him, Elijah Eleke, the DPO of the area, quickly moblised men of the division in search of the hoodlums.

Omoni said the gang was intercepted at the refiner y junction in Port Harcourt.

According to him, the suspects immediately opened fire on the police.

“In a return fire, three of them were fatally wounded and died before medical attention could be

given, while others escaped,” he said.

He added that the four corpses had been evacuated and deposited in a mortuary.

Omoni said one locally made double barrel gun and 11 live cartridges were recovered from the suspects.

The spokesman said investigations into the matter had commenced, assuring that the fleeing members of the gang would be arrested and brought to justice.

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LegalPerspectives

With

LOCUS CLASSICUS

Sule Vs Norwich Fire Insurance (Unreported) High Court of Western State Suit No W/74/70 1971

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be aided by equity.

The difference between the two is that while acquiescence suggests a situation whereby there is failure to take steps or the person has conducted himself in a way as to suggest that he is not interested in enforcing his right, laches focuses more on whether the time lapse that is between the period the right was breached and the time an action is brought is unreasonable.

The latin maxim for this is “Vigi-

Wednesday 23 January 2019

Odunayo Oyasiji

Maxims of equity quity aids the vigilant and not the indolent- This simply means that equity will only aid people who are awake to their rights and take steps towards the protection of same.

Another form of saying this which is also popular is that “delay defeats equity”. If your right is breached and there is a delay in bringing an action to enforce it then it is likely that equity will not aid the party that delayed in enforcing his right or seeking a redress.

Laches and acquiescence are defences which can be raised in relation to equity cases. Under acquiescence, a party breaches another person’s right and the person whose right was breached fails to take steps to address the issue. He may not be allowed in equity to bring an action with regards to the breach. Under the defence of laches, the court will determine if there has been unreasonable delay in bringing the action. If the court’s findings is that the delay was unreasonable then the party that delayed will not

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lantibus non dormentibus jura subvenient- equity aids the vigilant and not the indolent. If you sleep on your right your right will slip away from you. It must be noted that statute of limitation bars some actions from being instituted after a certain period of time- mostly civil matters. In Nigeria, some statutes establishing some organisations also do state expressly the period within which an action can be brought against an organisation or its officers.

n this case, the plaintiff was a driver for the Action Group.

The Action group purchased an insurance contract with the defendant which insured the plaintiff – as the driver – and the Action group – as the owner of the car. The plaintiff was involved in an accident against a third party.

This person sued the plaintiff and was awarded damages against the plaintiff. The plaintiff then sought to rely on the insurance contract entered into by the Action Group with the defendant insurance company. The defendant insurance company sought to avoid liability on the ground that it wasn’t the plaintiff who entered into the agreement with them.

The court held that the plaintiff could claim indemnity from the defendant insurance company since he was a beneficiary of the contract of insurance.

TULK VS. MOXHAY (1848) 2 CH. 774 In this case, the plaintiff owned some plots of land and sold the garden in the centre to a certain Elms. He made him agree not to build on it but preserve it in its existing condition. After a series of conveyances, the land was sold to the defendant. The defendant, although knowing about the restrictive covenant, proposed to build on it. Thus, the plaintiff sought an injunction against the building of the purposed structure. The action succeeded on the ground that the defendant had prior knowledge of the restrictive covenant. In order for a restrictive covenant to be enforced, it has to be to the knowledge of the defendant. Also, the original vendor needs to have other land in the vicinity which would benefit from the restrictive covenant.

When promise becomes a debt under the law I n our day to day lives people make promises and fail to fulfil it.

What happens in that situation?

We simply move on without making claims as it is just a promise and since nothing is given in exchange for it then no claim can be made.

However, the condition is different with regards to contractual issues.

Ordinarily, a contract without consideration (consideration can be in form of a price or something in return) may not be enforceable. The doctrine of promissory estoppel makes such contract enforceable even though there is no consideration attached. An illustration of such situation is where someone (a footballer) approaches you as the head of a sports centre to discuss taking training classes/ sessions for people interested in football. Based on this, you then incurred expenses to put in place the needed facilities and in the long run the footballer changes his mind. You may think that you have no claim since there is no contract.

However, promissory estoppel can

help you claim for the cost you incurred by acting on the promise of the footballer.

To claim successfully under promissory estoppel, there is need to establish some elements. They are1. That a clear promise was made.

2. You relied and acted based on the promise.

3. The reliance was a reasonable one and foreseeable by the person making the promise.

4. You suffered injury due to the reliance.

A promissory estoppel punishes the person making the promise for misleading the person he promised. The person is prevented from claiming that it was just a promise and no consideration was given and therefore no contractual obligation exists. An example of where the principle was applied was in the case of McIntosh V Murphy 52

Haw. 29, 469 P.2d 177 (1970) In this case, the defendant employer challenged a decision entering judgment for plaintiff former employee in an action for breach of a one-year oral employment contract. Plaintiff moved 2200 miles from Los Angeles to Hawaii to take the job and was fired prior to the end of the oneyear contractual term. On appeal, the court affirmed and held that the action of plaintiff moving 2200 miles from Los Angeles to Hawaii was foreseeable by defendant. Injustice could only be avoided by the enforcement of the contract and the granting of money damages because no other remedy was adequate. The court found that it was also clear that a contract of some kind did exist. Plaintiff’s reliance was such that injustice could only be avoided by enforcement of the contract.

Therefore, extra caution must be taken in making promises especially in business dealings. Such careless promises if relied on can be enforceable in law even though no consideration was given.

When silence means yes in business

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n business, parties communicate on important matters through letters. However, while some letters require the party to whom it is addressed to reply others may not. An example of a letter that may not require a response is a general letter showing services rendered by another organisation. On the other hand, it is extremely important to reply to sensitive business letters that requires that denial, acceptance or an expression of the company’s position on business issues. Failure to reply to such letter automatically amounts to an admission of the statements in the letter.

The above position has been established in various cases in Nigeria. Therefore, it is an unpardonable offence under the law as the law will deem the statements in the letter admitted. In the case of Trade Bank Plc v Chami (2003) 13 NWLR pt.836, pg.216.- Salami JCA stated that “The defendant in this case did not answer the letter and the failure or neglect

to answer such a letter in the circumstance is tantamount to an admission of the assertion in it. The letter was not a social but business letter. While social correspondence may be ignored business letters deserve to be answered. The failure or neglect of the defendant to reply or answer the letter is amounts to an admission because what is asserted in the letter and is not denied is deemed admitted.” In the matter, the bank wrote a demand letter to the defendant and he refused to answer. The Court of Appeal held that the failure to answer the letter amounts to an admission of its content.

Wednesday 23 January 2019

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BUSINESS DAY

29

Africa’s integrated high speed rail on track Pg 31

New Peugeot Pick-up targets 50% market share ….As NADDC boss lead dignatories at Abuja grand launch

How to prevent your car from overheating (1)

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MIKE OCHONMA mikeochonma@gmail.com

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he fight for market share in the Pick-up segment is getting turbo-charged following the historic unveiling and public launch of the returnee Peugeot Pick-up vehicle by PAN Nigeria Limited at the NAF Convention Centre & Suites, Kado, Abuja, Nigeria’s political capital.

To underscore the importance attached to the grand launch of the new Peugeot Pick-up utility vehicles, the event scheduled to start at 11 am last week Thursday kicked off promptly with invited guests from the federal and state governments, the military, police, customs, immigrations, the prison service, oil companies, banks and other financial institutions already present at the venue.

Fielding questions on the sidelines after the unveiling and testdrive of the new, Ibrahim Boyi, managing director and chief executive of PAN Nigeria Limited told BusinessDay motoring editor that, he was very elated and excited with arrival of the new Peugeot Pick-up.

Boyi expressed delight that the company are bringing in product that will compete and take its pride of place in the market; we are very happy and sure that the product will be accepted by the customers adding that PAN’s ambitious target is to take 50 pecent share of the Pick-up segment in future.

On the unique selling points of the debutant utility vehicle, Ibrahim Boyi disclosed that, first and foremost is the Peugeot DNA, adding that the brand has been known and trusted as a product of choice. Another value proposition

of the vehicle is that, it very easy to run, almost trouble free with low cost of maintenance.

According to the managing director, the most important selling point is that, PAN Nigeria is bringing in the Pick-up into the market at a very competitive price of between N9.5 million to N11 million, noting that there is every reason for the customer to rush and buy the Peugeot Pick-up.

In terms of percentage market target, Boyi said PAN and its dealership across the country is targeting an ambitious 50 percent market share. In his words, ‘’We are coming back to take our position. We have always been the market leaders and there is nothing wrong in coming over to take back our position’’.

Responding to BusinessDay’s concern on how PAN through its distributors is working to expand its market presence in the southern part of Nigeria, he stated that the company will soon be opening up new dealer outlets which will be complemented with very significant and massive products campaign in the south.

To achieve this result of sustainable market expansion strategies, he said the company have identified very key partners that PAN intends to work with and will soon be rolling out new outlets in Lagos and other southern states.

He described the large number of customers that attended the Pick-up product launch as an indication of the emotional attachment and nostalgic feeling that Nigerians have in the Peugeot nameplate as a product of choice for over many decades in the country.

There is a lot of excitement and lots of optimism that Peugeot is back. ‘’Based on the tes-drive we have done few minutes ago,

Jelani Aliyu (MFR).DG, NADDC leading the inaugural test-drive of the returnee completely revamped Peugeot Pick-up in Abuja last recently

I think, quite a large number of customers who drove the vehicles are virtually committed to the model, they are already taking orders today’’.

On the introduction of the Peugeot Pick-up in diesel engine and plans to introduce the petrol version in order to create choices for customers, the PAN boss advised that, people should start changing their mindset about the wrong perception that since petrol is subsidized and therefore cheap, and therefore diesel is perceived as expensive.

He noted that all over the world, diesel is not really a draw back, rather it is taking over as a product of choice and that should applicable in every market including Nigeria.

The market he advised should start to accept that reality on the continued use of petrol engines when the world is moving away from it and shutting down petrol engines plants. ‘’It is only a matter of time for people to begin accept the advantages of diesel engines. This is because diesel is a lot greener than petrol, emissions are a lot better, and performance of diesel engines are a lot better than petrol, lasts longer, deliver more power and service cycles are also longer than that of petrol. There so many benefits in the diesel version than petrol’’. He remarked.

According to him, if offering the petrol version is what the market requires, PAN will be delivering the petrol engines at some point.

The most important thing is that in the contemporary automotive sector, competitions cannot be moving against the tide with the movement of use of petrol to diesel as petrol is fast becoming lesser and lesser fuel efficient.

On aftersales service offering, quality of technicians and spare parts availiability to support the product lines of Peugeot including the new Pick-up, the PAN Nigeria Limited CEO said that one of the key value proposition that the brand is known for lies in aftersales service back-up and that is why most people buy the brand. ‘’In his words, before we launch any product or model including the new Peugeot Pick-up, we train our people in the technology and maintenance and repairs of the vehicles, in the disgnosis of those vehicles and we also make sure we equip our warehouses with the relevant and apprioprate quality spare parts required for servicing and repairs of this vehicle’’. He concluded.

After the formal unveiling of the new Peugeot Pick-up, dignatories at the event led by the Aliyu Jelani, director-general, National Automotive Design & Development Council (NADDC) accompanied by the PAN chief executive, and representatives of the military hierarchy, the government and the corporate community embarked on short test-drive of the vehicle round the Abuja federal capital territory. On-the-spot orders were placed for about five units of the Pick-up by some of the dignitaries that graced the occasion.

he beginning of this has been one of the hottest experienced in many parts of the country with temperatures hovering around 30 degrees and higher. With temperatures this high, it’s inevitable that many of us will have to deal with a car overheating.

“While it is rare for modern vehicles to overheat in hot weather, the two most common reasons for overheating are low water and coolant levels in the radiator or a leak in the cooling system,” says Tochuku Kelly, a trained automotive technician.

He says it’s important to check the coolant level. If you are not sure where to look for the reservoir, check your owner’s manual. If the level is normal, you might just have a malfunctioning temperature gauge.

However, if it’s low or empty, there is probably a coolant leak. In that case it is strongly suggested to call in roadside assistance.

But if you have to keep driving, make sure the engine is cool, and protect your hand with a glove or a rag, then twist off the radiator cap. Refill both the radiator and the reservoir, using coolant or if necessary, water. This should bring the temperature down once you’re underway, but stay vigilant as you most probably have a serious leak somewhere.

“If the temperature starts rising again, pull over and repeat the process. But this is by no means a long-term solution. “Get to a wellequipped workshop as soon as possible for the professional help your engine needs,” he says.

To prevent overheating, it is advised that the should have fresh coolant in its radiator, not just water, and also have the radiator checked for corrosion. Even even a well-tuned car may start to sizzle in hot conditions, particularly in stopand-go traffic or when climbing a steep incline.

The first sign that your car is overheating will be your dashboard temperature indicator starting to rise or a malfunction indicator coming on.

He said: “The first thing you need to do is shut off the air conditioner

and open the windows. This will help lessen the load on the engine and help it cool off. Although it sounds odd, it will also help to turn on the heater as this draws excess heat from the engine.”

If you’re in heavy traffic when this happens, shift into Neutral or Park and rev the engine just a little.

This will make the water pump and fan speed up, drawing more liquid and air through the radiator. The increased air and liquid circulation helps cool the engine off.

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‘B’ Segment N9m Nissan Kicks SUV hits market MIKE OCHONMA mikeochonma@gmail.com

fers astonishing amounts of interior space - thanks in part to the brand-new Nissan architecture, which includes a longer-than-usual 2,620mm wheel-base despite its compact dimensions.

Nissan’s designers have utilised every inch of this space to offer a C-segment vehicle with best-in-class rear passenger and luggage space. The luggage space measures 383 litres with the seats upright, which is almost as large as cars in a larger vehicle class just as the cabin has a range of storage spaces, including a lidded glove-box, deep door pockets, drink holders and cubby holes in the centre console.

It rides on Nissan’s new V-Platform, a lightweight but sturdy platform that reassures perfect balance between ride and handling. This feature allows for a fully independent front suspension that is capable of being fitted with either the larger 16” or 17” wheels.

The vehicle rigid subframe also increases structural rigidity by 300% for improved ride and handling characteristics yet affirming lower body roll.

On his part, Amit Sharma, head of sales and marketing said: “While the striking front end has won it many complimentsand awards stated that, the designers took their time to black-out all three pillars to create the impression of a floating roof, which slopes towards the rear and meets a rising shoulder line at the

C-pillar.”

Viewed from the angle he added, “The Kicks proudly display a high-ride height 17” alloy wheels (16” steel wheels on the Base model), with muscular matte black wheel arches and a steeply sloping rear windscreen that meets the roof towards the middle of the luggage compartment.”

At the back, the sculpted rear lights remind owners that the Kicks shares its DNA with the Juke, Qashqai and XTrail, even though the tailgate emphasizes an integrated spoiler that widens below the rear lights to allow a very large opening for easy loading and unloading of luggage and gear.

The Kicks will be offered in Nigeria with standard six airbags, bluetooth connectivity, apple carPlay and android auto integration with 17’ Alloy Wheels, integrated roof rails and a follow-me-home headlight module.

Nissan has added extra insulation materials in the dashboard with thicker carpets, improved seals around all the doors to reduce the vehicle’s noise and harshness levels. It is equipped with sturdier suspension assemblies, which do not transfer as much vibration into the cabin thus making the car as comfortable and fuss-free as possible.

Also coming to Africa as one of the most reputable

new vehicles in the planet world, the Kicks is undoubtedly big on attitude and selfexpression, and will replace the Juke at the small end of Nissan’s SUV line-up.

Stallion NMN is also planning in the long term to begin assembling about 500 units of the vehicle annually to ensure the vehicle is accessible and affordably priced. Parvir Singh, the managing director who recently dropped this hint in Lagos, at the media preview of the car said: “We are looking at assembling the Nissan Kicks very soon to further bring down the cost.”

Nigeria bound models combine larger and wider tyres aimed at significantly improving high-speed performance and low-speed ride comfort on undulating or rough roads.

Nissan as usual, does not compromise on safety. Driver, passenger, side and curtain airbags with Anti-lock Brakes (ABS), EBD and Brake Assist highlight the Kicks’ comprehensive level of safety equipment and part of the safety paraphernalia are five-seat belts and rear-view camera as optional equipment.

The Kicks is undoubtedly everything Nissan has leaned as the crossover pioneer and it has spared nothing in making the vehicle one of the most attractive crossover yet incorporating Nissan’s design cues and tagline –“Innovation that Excites.”

Wednesday 23 January 2019

Hyundai develops advanced multi-collision airbag system

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tallion Nissan Motors Nigeria (Stallion NMN), franchisees of the Japanese autobrand nameplate has introduced the Kicks, Nissan’s next generation B-segment crossover SUV offered with a N9miilion price tag.

It is positioned to compete with rivals like the Hyundai Creta, Ford EcoSport and newcomer Toyota NG Rush.

Described by some industry followers as an astonishing sport utility vehicle (SUV), Nissan Kicks comes equipped with the new Nissan V-motion platform recently integrated in the entire Nissan range of passenger vehicles.

A critical overview of the modest, but captivating SUV shows design cues that stands out. The Kicks styling showcases the best of Nissan’s design elements including a large V-motion grille, clear wrap-around headlights and integrated boomerang LED daytime running lights on appropriate models.

A completely new crossover, the Kicks incorporates distinctive styling and nimble performance, combining Nissan Intelligent Mobility that guarantees seamless connectivity and advanced driver assistance features.

The striking front-end is complimented by blackedout side pillars for a modern floating roof look, large wheels and a steeply sloping windscreen to give it a striking on-road presence. At the rear, the Kicks is fitted with an integrated spoiler.

First unveiled as a concept in 2014, and showcased across Brazil during summer 2016 to promote the Summer Olympics, of which Nissan was a lead sponsor, the Kicks boasts of being a design collaboration between Nissan’s design studios in California, USA, Rio de Janeiro-Brazil and Atsugi Japan.

Looking at the space, practicality and luxury credentials of the vehicle, the Kicks of-

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yundaihasannounced the development and future commercialisation of the world’s first multicollision airbag system that significantly improves airbag performance in multi-collision accidents.

Multi-collision accidents are those in which the primary impact is followed by collisions with secondary objects, such as trees, electrical posts or other vehicles, which occurs in three out of every 10 accidents.

Current airbag systems do not offer secondary protection when the initial impact is insufficient to cause them to deploy. However, the multicollision airbag system allows airbags to deploy effectively upon a secondary impact by calibrating the status of the vehicle and the occupants.

Hyundai’s new technology detects occupant position in the cabin following an initial collision.Whenoccupantsareforced into unusual positions, the effectivenessofexistingsafetytechnology may be compromised.

Multi-collision airbag systems are designed to deploy even faster when initial safety systems may not be effective, providing additional safety when drivers and passengers are most vulnerable.

By recalibrating the collision intensity required for deployment, the airbag system responds more promptly during the secondary impact, thereby improving the safety of multi-collision vehicle oc-

cupants.

Reacting on the new development, Taesoo Chi, Head of Chassis Technology Center at Hyundai Motor Group “By improving airbag performance in multi-collision scenarios, we expect to significantly improve the safety of our drivers and passengers,”.

“We will continue our research on more diverse crash situations as part of our commitment to producing even safer vehicles that protect occupants and prevent injuries,” he added.

According to statistics by the National Automotive Sampling System Crashworthiness Data System (NASS-CDS), an office of the National Highway Traffic Safety Administration (NHTSA) in the US, about 30% of 56,000 vehicle accidents from 2000 to 2012 in the North American region involved multi-collisions.

The leading type of multicollision accidents involved cars crossing over the centre line (30.8%), followed by collisions caused by a sudden stop at highway tollgates (13.5%), highway median strip collisions (8%), and sideswiping and collision with trees and electric poles (4%).

Hyundai Motor Group analyzed multi-collision scenarios in multilateral ways to improve airbag performance and precision in secondary collisions.

They will implement the system in new Hyundai and Kia vehicles in the future.

What a Rush as Toyota’s new model tackles segment rivals

T

oyota Nigeria Limited (TNL) yesterday in Lagos inside its corporate headquarters in Lekki, Lagos launched the new Toyota Rush into the local market in a fresh market push that industry watchers say will keep competitors on alert.

The all-new Toyota Rush returns with a much more aggressive styling, captivating features and a higher quality interior. It is a 7-seater vehicle, dressed in SUV-styling also incorporates many expected modern safety features such as six airbags, electronic stability control, and hill-start assist.

Simply put, Rush is the perfect city dweller with its 17inch alloy wheels, stylish LED headlamps and taillights, with a 220mm high ground clearance. On other days, the Toyota SUV can also be brought out of town with its fuel-efficient 1.5L VVT-I engine.

Toyota has certainly improved the quality of the interior judging from the dashboard and door panels of some of the specs with tastefully finished contrasting secThe Rush is also a seventions, nourished with the liberal use of faux stitching lines seater vehicle with MPV-SUV done at strategic locations crossover look. Styling cues at the front appear to be influwith simple patterns.

enced by the larger Fortuner, and include a tapered, fourslat grille that is flanked by slim LED headlamps with

notched indicators and LED daytime running lights. It is available in manual and automatic versions.

In terms of the safety kit, the Rush impresses with its ‘Safe-T Plus’ package that includes six airbags, a blind spot monitor with rear-cross traffic alert, vehicle stability control and Pre-Collision System.

In addition, part of the Pre-Collision System is front departure alert that alerts when you the car moves ahead by three metres, and Pedal Misoperation Control.

These safety systems, along

with traction control, hill start assist, ABS with EBD and brake assist, and pedal misoperation control contribute to the Rush’s five-star ASEAN NCAP safety rating.

A top management source in Toyota Nigeria Limited says that with the addition of the new Rush into its full product range, individual, fleet and corporate customers, including those in the government circles can be assured of positive returns on their investments. Toyota remains the nameplate to beat in terms of performance and resale value, the official concluded.

Wednesday 23 January 2019

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Local and global rail news as it breaks

Africa’s integrated high speed rail on track MIKE OCHONMA

mikeochonma@gmail.com

A

frica is looking to upgrade its transport infrastructure to boost intra-continental trade and regional integration. The African Integrated High Speed Railway Network is one such project Further to this laudable push, African countries are embracing high-speed rail in their drive to integrate the continent, develop their economies and improve import and export speeds.

Built to transport raw materials from the interior to a handful of ports, Africa’s ageing and neglected colonial-era railroad network combined with poor cargo-handling facilities at ports and excessive red tape at many borders until recently slowed inward-bound freight to the speed of a horse.

But improvements in terminal capacity and efforts to reduce border bureaucracy and cut 90% of intra-African trade tariffs have improved the average time it takes for a consignment to get from port to consignee.

This takes three days in South Africa, Nigeria, Algeria and Egypt, though Mauritania (32 days) and Chad (24) are the world’s worst.

World Bank figures for container port traffic in Sub-Saharan Africa show a rise from 11.6-million large containers in 2010 to 15-million in 2014, before declining to 14.1-million in 2016.

Countries that have bucked the downturn in recent years include Mauritius, Senegal, Algeria, Ghana and Equatorial Guinea; those driv-

ing the downturn include Togo, Gambia, Nigeria and Angola. West African ports alone are expected to gross 20-million large containers by 2020.

In North Africa, Algeria’s container traffic growth has been the most dramatic from 200,050 large containers in 2007 to 1.2-million in 2016. Egypt, with 6.7-million large containers in 2016, is Africa’s leader by volume. The figure for South Africa is 4.3-million large containers.

Container traffic has even shown

an uptick in war-torn Libya, with traffic almost quadrupling over that period.

Though far more volatile than container traffic, rail freight is also on the upswing in countries such as South Africa which is now the continent’s leader, with 99.5 metric tonne a kilometre as well as Mozambique, Gabon, Ivory Coast, Swaziland, Uganda and Cameroon, according to the International Union of Railways. However, a sharp decline in other countries is

clearly due to the unserviceable age of many tracks, locomotives and rolling stock.

Over the past 20 years, the attempt to revitalise rail has resulted in a rush to privatise rail services, particularly in West and East Africa. State control remains unchallenged across the Maghreb.

However, partial privatisation has gained a foothold in the eastern half of Southern Africa, though not in South Africa, Namibia, Angola, Botswana and Swaziland. Meanwhile, the African Development Bank (ADB) says privatisation has shown that better funding, regulation and expertise are crucial.

Electrified rail freight carries larger volumes more cleanly than road or air freight. But rail relies on inflexible infrastructure and is hard to link up across borders, where technical modes such as the power system and the gauge aren’t necessarily compatible.

For example, while the most widespread gauge in Africa is Cape Gauge as used in South Africa, Nigeria and much of formerly British Africa- at least five other gauges are used on the continent. So resolving compatibility issues will be a long and involved process.

The African Integrated High Speed Railway Network project, part of the AU’s Agenda 2063, aims to build on existing national railways and rehabilitate or construct 12,000km of “missing” linkages.

At least 20% of the pilot phase is expected to be completed by 2023.

The project is a key element of the African continental free trade area agreement, signed in March by 44 countries. SA signed in July. Nigeria has not signed as it is worried the

pact may undermine local business.

Agreement is expected to increase intra-African trade from its current level of just 18% of exports, and speed up the regional integration of transport nodes from point of production to point of export.

The high-speed rail project, for which technical proposals were opened in January, envisages four north-south routes and six east-west routes, integrating projects such as an Abidjan-Lagos high-speed line with existing rail infrastructure.

Today, fast-growing economies across the continent are upgrading antiquated rail infrastructure to support improved regional trade and mass local transit. However, according to the African Development Bank, the poor condition of rail infrastructure and rolling stock in many African countries is undermining the potential of rail systems to contribute to economic development.

On the continent today, the first true high-speed rail is Morocco’s new $2bn French-built passenger service. It connects Tangier and Casablanca, and peaks at 321km/ hour — twice the top speed of SA’s Gautrain and significantly faster than the Americas’ fastest train, which peaks at 240km/hour.

But the African integration project has had major stumbling blocks. The $3.2bn first leg financed, built and equipped by China of a $13bn Nairobi-Mombasa-Kigali-Kampala route began operating in June 2017. But cost constraints have meant the locomotives are only able to pull at 158km/h - not the high-speed connection that was promised.

Towards digital alteration of Africa’s rail system

F

ew modes of transport evoke such a sense of history and romanticism as rail. The first recorded use of rail transport was around 500BC, when ancient Greeks used a rail-like system – most likely powered by humans or horses to carry boats across where the Corinth channel currently is.

In the 1400s, German miners used wooden railways that were pushed by hand or pulled by horse. After the first iron rails were introduced in England in 1767, it took less than 40 years before Richard Trevithick built the first steam locomotive, also in England. In 1830, the world’s first regular steam passenger rail service was inaugurated by the Canterbury & Whitstable Railway.

Africa’s first network of railways was started in Alexandria, Egypt in 1852. By 1860, South Africa had launched its first steam train, running from Central Durban to the Point, and by 1897 a railway line between Cape Town and Bulawayo in Zimbabwe was completed.

In the early part of the 20th century rail lines were being constructed across the continent, connecting cities and countries in North, East, West and Southern Africa.

These developments in the rail sector are very crucial as the UN

estimates that 1.3 billion people will be added to Africa’s population by 2050, accounting for more than half of global population growth.

Trade will increase dramatically: the African Development Bank estimates that Africa’s GDP

could grow from a base of $1.7-trillion in 2010 to more than $15-trillion by 2060.

From this foregoing, it is expected, having the appropriate rail capabilities in place will be essential as the continent works toward achieving the UN Sustainable

Development Goals, especially as it relates to Industry, Innovation and Infrastructure.

In an in-depth study, the African Development Bank found five key drivers of the development of African railways, namely: An increase in transport demand due to African economic growth, leading to new demand for transportation and better infrastructure.

An increase in global supply chain competitiveness, demanding better and more integrated logistics, or what we would call digitally transformed supply chains.

An increase in the number and size of large African metropolitan cities requiring new urban mass transport systems.

New mining developments producing high-volume outputs, driving a need for higher capacity infrastructure capable of handling mining bulk volumes and the existence of landlocked countries with poor connectivity to sea ports, which require reliable and high-capacity access to the sea.

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Wednesday 23 January 2019

& INNOVATION Access, Diamond Bank says not worried about Telco led financial inclusion Supported by:

ENDURANCE OKAFOR

K

e n y a’s S a f a ricom, the telecommunication company that is driving the country’s financial inclusion through mobile money is bigger than most of the country’s banks.

Investigation by BusinessDay revealed that some Nigerian banks worry that Africa’s largest economy may take after Kenya if Telcos are given thesame opportunity but Access and Diamond bank, due to be merged legally by the first half of this year says it is not the case for the potential largest bank in the country.

“Are we worried by the payment service banks that are coming up? No. Most important thing is that there is no compliance asymmetry. So as long as all of that is concerned, we are comfortable and we are here to compete,” Herbert Wigwe, the CEO of Access Bank told BusinessDay recently at the bank’s head office in Lagos.

A financial inclusion analyst who spoke to BusinessDay on the condition of anonymity said the country’s banks fear the large infrastructure of the Telcos.

He said this is because there is no doubt that the Telcos will have a share of Nigeria’s financial market.

“Banks are afraid that the Telcos who are dominating the market share in their telecommunications industry will also begin to make more profit and generate more revenue in mobile money functions,” the analyst said.

Meanwhile, no less than 30 business names are currently undergoing registration as payment service banks with the functions to; maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-boarder personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards; and operate electronic purse.

BusinessDay analysis of Nigeria’s peers who are

Uzoma Dozie

driving financial inclusion through the Telco led model shows that the telecommunication companies with the largest customer base and infrastructure generates the highest revenue while also having dominance of the industry.

Kenya’s mobile money market for example has five players among which are; M-Pesa, Airtel Money, T-Kash, Equitel Money and Mobile Pay. Safaricom controls the lion’s share with 83.08 percent of the market, Equitel 16.36 per cent and Airtel 0.56 per cent.

Telkom Kenya has 1,581 base stations, some of which are leased, while Airtel has 1,548. Combined, however they are not close to Safaricom’s 4,000 base stations.

East Africa’s biggest mobile-network operator, Safaricom Plc, developed one of the world’s first mobile phone-based money transfer services, and says 88 percent of its almost 30 million customers now use it.

This is not different in Ghana, as according to the figures from the country’s National Communications Authority (NCA), between 2012 and 2017, MTN Ghana has been the consistent market leader by number of subscriptions.

“What happened in Kenya is different from Nigeria, Kenya had small banks and the financial service sector was not as well developed

Herbert Wigwe

as you have in Nigeria and also Safaricom which is the main driver of financial inclusion is almost 70percent owned by the government,” wigwe said.

BusinessDay sur ve y showed that the Telco led model in driving financial inclusion in African countries reported tremendous progress owing to the already existing large customer base of the Telcos.

Kenya has about 60 percent mobile money service penetration, while Ghana has about 40 percent service penetration, and Nigeria with a lot more population numbers, remains at 1 percent owing to its bank-led model.

Ghana’s decision to have a Telco led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to World bank data, and has helped lift financial inclusion rates in Ghana to 58 percent in 2017 from 41 percent in 2014.

This was not different for Ivory Coast who has experienced a mobile money revolution. As a result, there are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent.

In fact, Ivory Coast has the fifth highest rate of mobile money accounts in the world behind Kenya (58 percent), Somalia (37 percent), Uganda (35 percent), and Tanzania (32 percent),

according to Brookings Institute, a highly regarded, nonprofit public policy organization based in Washington, DC. Kenya also improved to 81.6 percent financial inclusion rate in 2017 from 74.7 percent in 2014, Ivory Coast improved to 41.3 percent from 34.3 percent and South Africa increased marginally to 69.2 percent from 70.3 percent.

“It is safe to say that Nigeria is playing catch-up when it comes to achieving inclusion and must look to learn from success stories like Ghana and Kenya if we are to achieve our goal of 80 percent inclusion by 2020,” said Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON) centered on Financial Inclusion.

Also responding to the payment service banks through which Nigeria apex bank wants to use in including mostly Nigerian adults who are rural dwellers, Dozie Uzoma, the CEO of Diamond said “ we are collaborating strongly with Telcos, and between the both of us we have probably done the most partnership with Telcos in driving financial inclusion.”

According to data compiled from the NCC website, percentage contributed to the Gross Domestic Product (GDP) of Nigeria by the telecommunications industry

revealed an increase by 0.98 percentage points from7.41 percent in Q3 2017 to 8.39 percent in Q3 2018.

The number of active subscribers for telephony services on each of the licensed service providers utilizing different technologies including GSM, CDMA, Fixed Wireless and landline, revealed MTN had 66.97 million subscribers, which is 40 percent of the total market share.

This was followed by Globalcom which exceeded Airtel’s subscribers marginally by 150000 users as the latter reported market share of 43.27 million or 26 percent and the former recorded 43.12 million or 25 percent of telephone users.

9mobile has the least share of the market at 9 percent, representing 15.36million active customers.

Yewande Adewusi a Lagos based financial inclusion consultant said there are different schools of thought on how mobile money should work in Nigeria due to our peculiar challenges but if we are looking at how to maintain monetary system stability or still maintain financial inclusion with the right oversight then the banks and Telcos should work together to drive it.

“We don’t know what models work in Nigeria a lot of factors make mobile money difficult to work in Nigeria, for example there are some rural areas that

don’t have Telcos network so even if Telcos drive mobile money there will still be problem of availability,” Adewusi told BusinessDay. Adewusi explained that Nigeria is a huge market and it is very obvious that what the country has been doing in the past is not working.

“However, moving forward it should be a combination of Telcos working together with banks or we should allow the Telcos have their own licenses which will be regulated through Special Purpose Vehicle (SPV) by CBN.” However some other analyst said financial inclusion can only grow if driven

by Telco operators who have large numbers of subscribers on their networks.

According to figures by NCC, the country’s telecommunications industry has a reach of 86 percent of the country, with 162.3 million customers (the single largest customer base of any industry in Nigeria).

This makes the industry till date, one of the most thriving sectors in the country and analysts have disclosed that it has the capabilities, including technology, infrastructure, and distribution network and subscriber base.

Meanwhile, Nigeria’s Telcos industry players have a combined presence in 773 local government areas across the country further emphasizing their ability to reach especially hard to reach areas of the country.

The communication service providing companies in Nigeria also have about 1,000,000 unique agents already in place selling airtime across the country, and analysts say this can quickly be converted to establish mobile money agent networks which can help reach out to the unbanked Nigerians especially those in the rural areas.

According to London based Group Special Mobile Association (GSMA), “from a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers such as Mobile Network Operators (MNOs).”

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Features Lack of resources paring rural women’s agric productivity Temitayo Ayetoto

L

eading an extensive farming system or large-scale processing of agricultural produce in the small town of Olla in Ejigbo, Osun State, is an exceptional feat that a handful of those thriving are like pearls on the community’s fabric.

Principally, the bigwigs operating on commercial scale are top government officials or professors with investments planned towards postretirement sustainability.

Collectively, the women are notable for their efforts in raising large volume of vegetables that have for years fed Ejigbo, a 6.5 kilometre distance with fairer economy. But individually, they are only a component that functions under men-led subsistence farming framework.

Naturally, men are adjudged entitled to farmlands while women’s access is tied to inheritance from husband or family bequeathal.

The trend which has lasted for years makes 58-year-old Juliana Tewogboye stand out as a successful garri processor over the last 18 years.

Until two years ago, what could be described as her processing plant regularly received four trucks of cassava at N40,000 each. From that stock came grew a modest source of income for other women employed to peel, blend and fry. A fryer earned N1,000 for churning out 250 kilogramme of garri a day.

Although her husband is a conventional farmer with better access to family lands, she has functioned as the powerhouse of the family, with their current house funded from her business and their children trained to tertiary institutions. Essentially, she is a role model noted for her hard work and resilience despite the exploitations she faces at times from cassava suppliers.

But Tewogboye’s community is not enamoured of her exploits because it is perceived as an overexposure capable of undermining the authority of husbands. The perception is also nurtured by women with the belief they don’t need elevated business as long as daily meals were forthcoming and they could afford pieces of clothes for their wards.

Unlike her, Kemi Sangotokun, a mother of five in her 30s, received N200 from her husband for breakfast on the first Sunday of the year. She was to get a kilogramme of garri and return a balance of N50 on the basis that she could afford to support the home from the little she made from farming.

Her romance with farming and trading was not fancied by her husband but coming up with such support was her way to justify leaving for the farm early in the morning.

Depending on the season, she tilled the land for vegetable, picked cashew nuts for sale or bought fruits from palm kernel farms during harvest.

However, neither of these farms belongs to her nor can she easily have access even when she can afford.

“In our area here, if a woman wants to rent an apartment, she will first be asked where her husband is. If her husband is dead, they will

Alice Oyesola

Kemi Sangotokun

Rachael Ayandiji

release the apartment. But if her husband is alive, he has to come with her whether or not they are divorced,” explained Alice Oyesola, a veteran farmer who has spent 40 years farming on her husband’s farmland.

“That’s the situation with just renting an apartment, without even mentioning land ownership. Women can’t buy lands without the approval of men. If they sell to her without a man, there are chances she would be cheated later on,” Oyesola said.

Rural women in agriculture like her constitute over 70 percent of the sector’s labour force, toiling in and out of season, but their efforts are unable translate to higher economic advantage. The cultural limitation that narrows their land access has remained a fundamental factor at widening the gender gap in agriculture and has fostered a stereotype for the nature of agricultural activities women can undertake. Men are five times more likely to own a land than women, according to the British Council of Nigeria. In Olla, for instance, a demarcation already exists. One would mostly find men on their lands cultivating yam, cassava, maize, millet and cocoyam or own cashew plantations while women nurse the vegetables, pick cashew nuts, harvest palm fruits or raise poultry products on rented farmlands.

Owning a land is an incentive for farmers to invest in increasing productivity which in turn boosts

their income. Consequently, lack of easy access to land limits their ability to raise productivity and also their chances at securing loans from the formal sector, which requires land as collateral.

A non-governmental and human rights organisation, Women Advocates’ Research and Documentation Centre (WARDC), has been picking holes in how policies fail to protect and support women’s rights across the country but the success rate remains low with most states yet to key into helping women with the law.

Abiola Akiyode-Afolabi, the executive director with focus on how empowerment of women in agriculture could be used to address the issue of hunger and poverty, believes the issue of women smallholder farmers is tied to the broader issue of gender inequality and discrimination against women. With the support of a patriarchal cultural norm, rural women have not had their voices amplified in policy issues affecting their lives and are yet to be involved in decisions that affect their livelihoods.

“None of the states have passed the law on land. All we have presently is a bill. In Benue state, they have a draft for gender policies and in Osun state; there is an executive order which the last governor didn’t sign.

So we are pushing for this governor to sign it,” she said. “Other states like Ogun and Kaduna have only passed the law on violence against women.”

While land access is a basic is-

sue, women also wrestle with other worries from poor access to inputs such as seeds, fertilizer, labour and financial services to training or insurance than men.

Olla women who are yet to make it to the level of Tewogboye’s scale many times find it arduous to get workers in the various stages of processing compared to the rate with which men get labour.

Because she can’t expand her workforce in the processing of cassava for instance, Yemisi Olorode, a single mother of five has to visit the principal at her children’s school at the beginning of the term to appeal for a special period of grace for school fees payment. For her first son in junior secondary school level three (JSS3), she needs to be permitted to pay his N5,000 school fees in three tranches and needs same for the last child whose bill is even only N1,500.

In modern agricultural value chains, growth of contract farming or out-grower schemes for high-value produce through which large-scale agro-processing firms seek to ensure a steady supply of quality produce have increased over time. Such schemes could help small-scale farmers and livestock producers overcome the technical barriers and transaction costs involved in meeting the increasingly stringent demands of urban consumers in domestic and international markets.

Yet, female farmers are largely

excluded from the arrangements because they lack secure control over land, family labour and other resources required to guarantee delivery of a reliable flow of produce.

While men control the contracts, however, much of the farm work done on contracted plots is performed by women as family labourers. Women work longer hours than men in vegetable contract-farming schemes controlled by male farmers.

Studies found that productivity on women’s farms is significantly lower per hectare compared to men, ranging from 13 to 25 percent but closing the gender gap could increase yields on women-run farms by 20 to 30 percent and could raise total agricultural output in developing countries by 2.5 to 4 percent.

Although a World Bank report established that equal access to resources does not necessarily guarantee equal returns for women farmers, it underscored the need for specialized agricultural training and customized support to ease their double work load as farmers and caregivers.

The right resources, the bank says, could help rural women maximize economic opportunities, increase productivity, improve food security, education and healthcare, since women tend to reinvest in their households.

In some of the strategies designed to address the issue, it proposes that microfinance institutions and other financial service providers with presence in rural areas can play a key role in supporting women farmers.

And in terms of linkage with agricultural value chains from processing to marketing, involvement of women can make traditional farming more productive and commercially viable.

The impact of the lack of land access could also be minimised through the deepening of women’s knowledge of farming techniques and technologies which can be adapted to rural women’s needs.

On the broader scale, enabling women farmers is projected to be more productive, benefit Africa’s next generation families in which women influence economic decisions to allocate more income to food, health, education and children’s nutrition. Also, improving gender equality through agriculture could further translate into a generation of Africans who are better fed, better educated and better equipped to make productive contributions to their economies, within agriculture and beyond.

David Tsokar of Food and Agricultural Organisation (FAO) Nigeria said operating environments in agriculture needed to be modelled towards promoting the participation of women and youth, which the organisation was doing in rice seed production.

He said the organisation was also supporting technical assistance to sustainable aquaculture systems for Nigeria which has been developed to help small scale farmers for diversification of livelihoods in rural areas, to improve nutritional status and increase income-generating capacity. “The project is currently being implemented in Ekiti, Osun and Ogun states,” he said.

Wednesday 23 January 2019

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Live @ The Exchanges Top Gainers/Losers as at Tuesday 15 January 2019 GAINERS Company

Market Statistics as at Tuesday 15 January 2019

LOSERS Opening

Closing

Change

SEPLAT

N530

N540

10

PRESCO

Company

Opening

Closing

Change

N62

N60

-2

GUARANTY

N31.7

N32.1

0.4

CCNN

N26.9

N25

-1.9

REDSTAREX

N4.4

N4.8

0.4

NB

N81

N80

-1

CUSTODIAN

N6.15

N6.5

0.35

UBA

N7.35

N7.25

-0.1

ZENITHBANK

N21.5

N21.8

0.3

NEM

N2.6

N2.5

-0.1

ASI (Points)

30,736.88

DEALS (Numbers)

3,320.00

VOLUME (Numbers)

245,987,455.000

VALUE (N billion)

2.443

MARKET CAP (N Trn

11.462

Stocks market up marginally by 0.01% as MPC leaves rates unchanged Stories by Iheanyi Nwachukwu

T

he Nigerian Stock Exchange (NSE) All Share Index (ASI) increased slightly by 0.01percent at the sound of closing gong on Tuesday January 22. This muted rally came despite 27 companies that recorded gains as against 12 laggards.

Also, the stock market’s mild gain came as the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) unanimously voted to leave key monetary policy rates unchanged at the end of its 2-day policy meeting.

The Committee decided to: Retain Monetary Policy Rate (MPR) at 14percent; maintain the asymmetric corridor around the MPR at

L-R: Tunde Arogunmati, executive director, African Incentive Partnership; Suleiman Hassan Zarma, minister of Environment; Laure Beaufils, deputy British High Commissioner, Lagos; Kyari Bukar, former chairman of Nigeria Economic Summit Group (NESG) and Bola Adeeko, head, Shared Services Division, The Nigerian Stock Exchange (NSE) during plenary of the Climate Finance Accelerator (CFA) workshop hosted by NSE in Lagos.

+200/-500basis points; hold Cash Reserves Ratio (CRR) at 22.5percent; and keep liquidity ratio at 30percent.

The stock market Year-to-Date (ytd) re-

turn stood at a negative of 2.21percent. The All Share Index (ASI) closed at 30,736.88points against the preceding day close of 30,732.72 points while Market

Capitalisation closed at N11.462 trillion against preceding day close of N11.461 trillion, indicating N1billion increase.

The volume of stocks

traded decreased by 50.72percent, from 499.2million to 245.98million, while the total value of stock traded decreased by 55.83percent, from N5.53billion to N2.44billion in 3,320 deals.

Seplat Plc recorded the highest price gain after its share price increased from N530 to N540, up N10 or 1.89percent; RedStar Express Plc followed after rising from N4.4 to N4.8, up 40kobo or 9.09percent.

Also, the share price of GTBank Plc advanced from N31.7 to N32.1, up by 40kobo or 1.26percent; Custodian Investment Plc advanced from N6.15 to N6.5, up by 35kobo or 5.69percent; while Oando Plc increased from N4.4 to N4.7, up by 30kobo or 6.82percent.

The Financial Services sector led the activity chart with 218.40million

shares exchanged for N1.814 billion.

Conglomerates followed with 9.7million shares traded for N29million. Diamond Bank Plc, Access Bank Plc, GTBank Plc, UBA Plc, and FBNHoldings Plc were actively traded stocks Tuesday on the Nigerian Stock Exchange.

Presco Plc led the laggards after its share price decreased from N62 to N60, down by N2 or 3.23percent. Cement Company of Northern Nigeria Plc followed from N26.9 to close at N25, losing N1.9 or 7.06percent. Nigerian Breweries Plc stock price declined from N81 to N80, down

by N1 or 1.23percent.

United Bank for Africa Plc dipped from N7.35 to N7.25, losing 10kobo or 1.36percent; followed

by NEM Insurance Plc stock price declined from N2.6 to N2.5, also losing 10kobo or 3.85percent.

Bond ETFs show investors ended a volatile year playing it safe

Standard Chartered hosts Countering Financial Crime Conference in Nigeria

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tandard Chartered Bank Nigeria Limited hosted banks, regulatory bodies and Law Enforcement Agencies to a first of its kind conference themed “Countering Financial Crime”. The conference which held at Civic Centre, Victoria Island, brought together key stakeholders from across the financial sector.

The conference focused on mitigating High Risk activities, particularly money laundering, during seasonal events.

The speakers were John Cusack - Global Head of Financial Crime Compliance, Standard Chartered Bank, Lucy Rahal - Global Head of

volatile stock market prompted another flight to safety for bond investors closing out a rocky 2018.

Exchange-traded funds (ETFs) that buy aggregate debt—treasur-

ies and predominantly investment-grade securities—took in more than $10.7 billion in December, the most all year.

Individually, government and investmentgrade debt funds also had their best months of 2018,

gathering $12.6 billion and $19.8 billion respectively.

Riskier securities meanwhile suffered. ETF investors yanked $4.9 billion from corporate bonds and pulled $4.2 billion from high-yield debt in the year’s largest monthly outflows for these funds. Bank-loan ETFs also lost $1.8 billion.

These outflows weighed on ultra-short bond funds, which invest in floating-rate debt like loans and securities that mature in less than a year.

Still, ETFs owning securities with one-to-three year maturities added $7.2 billion during the month, a record for the year.

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PEP and Sensitive Clients, Standard Chartered Bank, Solomon Abiakalam – Head of FCC (Nigeria & West Africa) Standard Chartered Bank, Ahmad Abdullahi - Director, Banking Supervision Department, CBN, Joshua Mshelbwala Gana Deputy Director, Financial Policy and Regulation Department, CBN, Umar Mohammed - Director of Operations, EFCC and Abdulrahman Muhammed Mustapha

- Head, Tactical & Strategic Analysis, NFIU. Speaking at the event, John Cusack, Global Head of Financial Crime Compliance, Standard Chartered Bank said, ‘The world has definitely changed, banks are not here to help criminals, we are here to fight Financial Crime. Make it absolutely clear, we know which side of the fence we are on and we are on the side of law enforcement and not on the side of criminals.’

Wednesday 23 January 2019

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BUSINESS DAY

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38 BUSINESS DAY NEWS With eye on inflation, naira stability, CBN...

Continued from page 1 meeting, the MPC decided for the 15th consecutive time to keep the MonetaryPolicyRate(MPR)at14.0percent with asymmetric corridor around the MPR at +2%/-5%; Cash Reserve Requirement(CRR)at22.5percent,and Liquidity Ratio at 30 percent.

Announcing the decision in Abuja on Tuesday, Godwin Emefiele, governor of the CBN, explained that the MPC felt that tightening will result in loss of the gains so far achieved, noting that this may drive the banks to reprise assets, thus increasing the cost of credit as well as elevating credit risks in the economy.

“It will also worsen the position of the Non-Performing Loans (NPLs) of the banks. The committee also finds that tightening will dampen investment and hamper improvement in output growth given the already fragile growth performance achieved,” Emefiele said.

Looking at the implication of the decision, Johnson Chukwu, managing director/CEO, Cowry Asset Management Limited, said the cost of borrowing will remain at the current levels and that the slow growth of the economy will continue.

Nigeria’s inflation rate, which has been in double digits for three years, rose to a seven-month high

of 11.44 percent in December, from 11.28 percent in November 2018, according data released recently by the National Bureau of Statistics (NBS).

In order to address the ensuing risks to possible increase in inflation rate in Nigeria and the weak exchange rate, Ayodele Akinwunmi, head of research at FSDH Merchant Bank, said the CBN will continue to use the sales of government securities to influence interest rates and yields.

The committee considered the risk in the global economy, noting the downward revision in the projected globaloutputin2019.It also considered the adverse impact of the trade war between the US and its major trading partners, the likelihood of lower crude oil prices, the impact of capital flows of continued monetary policy normalisation by major advanced economies, distorted signals of real exchange negotiations, as well as OPEC and other socio-politicaltensionsandelectionrisk on the domestic economy.

“It was clear that Nigeria’s approaching general elections risks are taking centre-stage, pushing economic policymaking to the sidelines,” Razia Khan, Standard Chartered Banks Africa Chief Economist, said in an emailed response to BusinessDay. Nigeria emerged from its first recession in 25 years in 2017 but growth remains fragile, although

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higher oil prices and recent debt sales have helped the continent’s biggest crude producer to accrue billions of dollars in foreign reserves.

On external borrowing, Emefiele noted the increase in the debt level and advised caution, noting that it could fast be approaching the pre2005 Paris Club exit level.

The Federal Government is recommending a 50 percent rise in the minimum wage weeks before a presidential election in a country where the cost of living has become a major issue.

“The MPC meeting was somewhat secondary to the decision that a bill proposing a 50 percent increase in the minimum wage will now be put forward,” Khan said.

She said the legislation passing the bill at this stage remains uncertain, although the decision followed a Council of State meeting earlier on Tuesday.

According to her, the MPC already made clear in its November statement that members do not consider a minimum wage increase, on its own, to be inflationary, given the current underperformance of the economy and subdued demand.

“The big question then is whether the minimum wage increase might prove to be the precursor to other post-election reforms – perhaps a revisiting of fuel price deregulation.

Any new developments will be key to the CBN’s assessment of risks at its next MPC meeting in March,” Khan said.

Wednesday 23 January 2019

Lessons for Nigeria as Saudi plans refinery...

Continued from page 2

by Saudi Aramco and the South African National Oil. Radebe said the exact location of the refinery and petrochemicals plant would be finalised in the coming weeks.

“Saudi Aramco and South Africa’s Central Energy Fund are moving forward with the feasibility study and identifying the parameters of the project,” Al-Falih told reporters in Pretoria, South Africa’s administrative capital.

The announcement by Al-Falih comes as a much-needed vote of confidence in Africa’s most industrialised economy, where President Cyril Ramaphosa is trying to attract $100 billion of new investments to rekindle growth and help revive a struggling economy as he prepares for a parliamentary election this year.

The new refinery would reduce the need for refined product imports, and ensure energy security for South Africa and allow the country to supply crude oilandotherpetroleumproducts,which would serve as a boost for the Rand.

The Arabian nation is also expected to invest billions of dollars in South Africa’s renewable energy programme through Saudi power firm, Acwa Power, while talks are also underway to invest in South Africa’s state defence company, Denel.

While Ramaphosa seems to be toiling night and day to gain investors’ confidence as he currently is flying the country’s flag at World Economic Forum in Davos, the reverse is the case for his Nigerian counterpart who was conspicuously absent from the economic meeting in Davos, thanks to strenuous campaigns ahead of next month’s general elections.

Despite being an economy that relies majorly on proceeds from crude oil exports, successive governments in Nigeria have been unsuccessful in putting in place adequate structure that will ensure policy stability, attract foreign investors and continuity in the economy.

BusinessDay analysis revealed foreign investment inflow into the Nigerian petroleum industry between January and September 2018 declined sharply by 61.6 percent to $118.2 million, compared to $307.54 million recorded in the same period in 2017.

Data obtained from the National

Bureau of Statistics (NBS) Third Quarter 2018 revealed that foreign capital inflow into the oil and gas industry in the nine-month period of 2018 accounted for 0.8 percent of total foreign investments into the Nigerian economy in the period under review.

“In Nigeria, there are uncertainties in business environment, the political environment is unstable, and oil and gas governance is amorphous. So what do you expect?”

Wummi Iledare, professor of Petroleum Economics and director of energy at the Center for Energy Studies, University of Ibadan, said.

Iledare explained that if the Petroleum Industry Governance Bill (PIGB) had become an Act in 2018, outlook for 2019 would have been brighter despite the so-called PIGB weaknesses that are ameliorative.

“There’s so much uncertainty in terms of the rule of law. The engagement process is not clearly defined. No matter how holistic the geological basin is, government must make effort so that people come to look for it,” he said.

Iledare said Nigeria’s declining investment at a time when the price of oil is rebalancing passes very negative signal and warning that the worse could be ahead if urgent actions are not taken.

Charles Akinbobola, an energy consultant in a Lagos-based oil and gas firm, said the body language that comes out of Nigeria every four years before the election is scary.

“Nigeria lacks stability and investors want their money in a place where they are sure of their investment. They prefer to have 10 percent return on investment in a place where the situation is not volatile, than a place where they get 100 percent but is very volatile,” Akinbobola explained by phone.

Over the years, stakeholders have agreed that oil and gas sector can best be described as the goose in the Nigerian economy. If it is well nurtured and fruitful, the spin-offs can lead to a transformation of the economy.

Unfortunately, despite this key role that the sector is expected to play, it has over the years failed to meet the yearnings of many ordinary Nigerians in terms of engendering the pivotal economic transformation and development of the country.

Amid rising correlation, fund managers...

Continued from page 2 Aliko Dangote (l), Nigerian business magnate, poses next to French President Emmanuel Macron prior to a meeting as part of the second edition of the ‘Choose France’ Summit, in Versailles.

In crusade for reform in Ethiopia, Abiy...

Continued from page 1

of the reporter until Abiy said, pointedly, “He is from Nigeria and I want to listen to him.”

During his short time in power, Abiy has released political prisoners, opened the space for his people to canvas their ideas, appointed a female president and mounted a breathtaking reform of Ethiopia’s economy by opening it up for badly-needed FDI and he promises more to come.

Asked what his motivation is for his revolutionary ideas, Abiy told BusinessDay, “It is the love for my people and the love for Africa.”

Not afraid to try new things or take his country via an uncharted path, the quiet-speaking Ethiopian leader says further, “We are changing our country and I believe we can make life better for the people.”

The prime minister’s words find resonance at the annual gathering of the elite from business and politics which opened yesterday in the Swiss alpine city of Davos where there was

a strident call for a more rapid pace of economic development in the world that is both fair and inclusive.

Ueli Maurer, the Swiss leader, in his opening remarks canvassed freedom and liberty and the opening up of economies around the world to offer people opportunities they badly need as the failing of globalisation forces people to seek succour in nationalism and anti-immigration.

Forum founder Klaus Schwab, who conceded that globalisation has not fully delivered, said the world needs to be more collaborative in contrast to the tendency today for leaders to seek to go it alone.

There was an applause from the business and political leaders gathered when a refugee from Kenya, Mohammed Hassan, who is originally from Somalia spoke of his life in the refugee camp in Kenya in the last 20 years and how he will have to return to the camp after his visit to Davos.

“The challenge today,” he said, “is how to move from keeping people in the refugee camps to giving them

the skill they need in life and moving them out into the world with hope to change their lives and the world.”

Satya Nadella, CEO of Microsoft, who is chairing the dialogue, said he had been inspired by the contributions of the collection of young leaders that had spoken and said world leaders now must use innovation and technology to challenge the status quo to bring about development that does not just deliver economic progress but economic development that is both fair and inclusive.

The meetings this year are focussing on how to make globalisation work better for a world increasingly divided by nationalism and anti-immigration fervour sweeping across the globe.

Many world leaders, from US President Donald Trump to Chinese President Xi Jinping, as well as French President Emmanuel Macron who lit up last year’s gathering with his blistering criticism of nationalism, are staying away this year, but the 2019 annual meetings of the World Economic Forum promise to be just as engaging.

elevated geopolitical risks and fragile investor sentiment.

Uncertainties surrounding upThe world is at a crossroads, say the organisers of the meetings, adding, “We can continue the present trajectory of polarising views, increased conflicts and numerous unresolved problems. At best this path will result in permanent global crisis management. At worst, it will deteriorate into chaos, with innumerable unintended consequences.

There is another option – shaping a global architecture in the age of the fourth industrial revolution. Together, we can and we must draw on the spirit of Davos to build the future, in a constructive, collaborative way.”

According to Schwab, the gathering’s founder, “Unfortunately, the rise of populism has been fuelled by a public discourse that does not sufficiently address, and more often confounds the substantive differences and implications of two related concepts, globalisation and globalism, even if the two terms refer to the same phenomenon of global connectivity and global cooperation.”

As was the case last year, Nigeria’s President Muhammadu Buhari is missing at the gathering.

coming elections could undermine the ability of the country to attract foreign investments.

The Nigerian economy has been growing sluggishly as GDP is struggling to exceed 2.0 percent with Q3 2018 figure of 1.8 percent.

As at the third quarter of 2018, the current account moved into deficit and the parallel market exchange rate has started to rise.

Inflation for the month of November has inched to 11.44 percent from 11.28 percent in October, the first increase in seven months.

Analysts at CSL Stock Brokers said the country risks a tough 2019 if radical reforms are not put in place. They added that GDP growth will struggle to reach 2.0 percent while they expect Naira to depreciate to a range of between N385-N390 per dollar.

“Inflation is also projected to hit a 15-20 percent range at year-end 2019 and we see the government struggling to finance itself as there’s not much upside to oil price expected,” said analysts at CSL Stock Broker.

The CBN’s policy is to defend the Naira with an external reserve of $43.0 billion.

Analysts at Coronation Merchant Bank see the Abuja-based bank supplying US dollars to the FX market at an average of $500 million per month during 2019.

Wednesday 23 January 2019

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FG to transmit minimum wage bill to National Assembly as Council of State approves N27,000 JOSHUA BASSEY & TONY AILEMEN

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he Federal Government is set to finally transmit the National Minimum Wage Bill to the National Assembly today for consideration and legislative approval after the National Council of State in Abuja approved N27,000 as the new minimum wage for the country.

Organised labour has, however, rejected the N27,000 recommendation, insisting that the Council of State lacked jurisdiction to determine another amount after the minimum wage tripartite committee set up by the Federal Government had submitted its report. The tripartite committee sat for almost a year before recommending N30,000.

Council of State, which met on Tuesday, agreed to N27,000, representing an increase of about 50

… labour rejects N27,000, meets Friday for next step … FG to pay workers N30,000 percent from the existing N18,000. The N18,000 minimum wage was signed into effect in 2011 by former President Goodluck Jonathan, raising the wage from the previous N7,500.

Chris Ngige, minister of labour and employment, who briefed State House correspondents on the outcome of the Council’s meeting at the Presidential Villa, said in consonance with the fact that the issues of national minimum wage prescription are in the exclusive list, second schedule, item 34, it is not a job that can be done by the executive alone.

“The president has to transmit the bill to the National Assembly and the National Assembly will take legislative action and return the bill that has been so treated to the president

for his assent.

“So, a bill will now be transmitted to the National Assembly that will amend the 1981 Act and 2011 Act. The highlight is what you want to know. The figure of N27,000 monthly has been approved for transmission to the National Assembly. The frequency of the review of the bill is five years, to get it in consonance with pension law of the federation as enshrined in the constitution.

According to Ngige, the council took into consideration the recommendations of the tripartite committee but reminded the President of Federal Government’s proposal of N24,000 and the governors’ proposal of N22,700 before arriving at the decision.

The minister however explained that organisations employing less than 25 work-

ers were exempted from the current minimum wage.

“Exemptions to this bill will be establishments that are not employing people up to the number of 25. The various times prescribed have also been altered in the bill and will be sent to the National Assembly before the close of work tomorrow (Wednesday).”

When reminded on labour’s insistence on N30,000 as the minimum wage, Ngige, noted that the N27,000 approved for onward transmission to the National Assembly was the lowest adding that organisations and states with resources can pay more “Labour should understand that this is the minimum below which no one can go. So, organisations and states with the resources can pay more.”

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Obasanjo launches another stinging attack on Buhari, alleges nepotism

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ormer President Olusegun Obasanjo says if Buhari does not trust people from other parts of the country to give them important jobs, he should not seek their votes in the upcoming election.

Obasanjo in yet another blistering attack on President Muhammadu Buhari and his ruling APC administration, says, “The person who is our leader now is saying he cannot allow another ethnic group to work with him because he cannot trust them.

“If he cannot trust my tribe or your tribe, of what benefit is he? And he is saying my tribe and yours should come and vote for him.

“He can ask for our votes, but he cannot trust us to work in good positions. Life is give and take. If you cannot trust me, why should I trust you?

“If you put me in a position and I misbehave, why not remove me and put others? But those you are putting

CCT to continue Onnoghen’s trial despite court orders …hundreds protest against CJN trial …CJN under immunity, moves to prosecute him illegal - SANs INIOBONG IWOK

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he Code of Conduct Tribunal (CCT), Tuesday, vacated all orders of court restraining it from going ahead with the trial of the Chief Justice of Nigeria (CJN) Walter Onnoghen.

In a dissenting ruling, the CCT chairman, Danladi Umar held that the decisions of Federal High Courts, Federal Capital Territory and Industrial Court were not binding on the CCT. The CCT in a split decision of two to one discountenanced the orders of the court on the grounds that the orders were made by courts of equal jurisdiction and the CCT is a special court empowered to handle exclusively the issues

relating to assets declaration.

“The tribunal is empowered by the constitution to carry and adjudicate on matters referred to it. The constitution is a grundnorm and the tribunal is not like the usual court.

“It is crystal clear the CCT has jurisdiction over breach of work ethics. CCT runs concurrent with the federal high courts and cannot obey other courts under same jurisdiction, including the Industrial Court. And again, the orders were obtained by people not party to the suit before CCT. “I therefore discountenance the orders and declared them null and void,” Umar said.

Umar said the orders of the court were inconsistent with the provisions of the

Constitution, adding that section 246 makes it clear that the tribunal has unquantified jurisdiction to hear any assets declaration case as may be referred to it by the Code of Conduct Bureau (CCB).

Umar also disagreed with the request to adjourn the trial Sine Die, on the grounds of a pending appeal at the Court of Appeal, adding that section 306 of the Administration of Criminal Justice Act, ACJA, 2015, did not make provisions for stay of proceedings in a criminal matter and that in the instant case, it shall not be entertained.

Umar’s position was supported by a third member of the three-man panel, Justice Juli Anabor, who aligned herself with the chairman’s position.

However, a second member of the panel, Justice Williams Atedze gave the dissenting judgment. Atedze, in his dissenting ruling, held that it would result to judicial anarchy for the tribunal to proceed with the trial.

The CJN is accused of false asset declaration and maintaining domiciliary account which comprised dollars account, pound sterling account and euro account which are alleged to be contrary to relevant laws, especially for public office holders.

Onnoghen is the first Chief Justice of Nigeria to be prosecuted in office over corruption or asset declaration allegations.

Continue on businessdayonline

in positions are your tribesmen and kinsmen because they are the people you can trust.” Obasanjo, who was speaking in a BBC Yoruba programme, said that leaders of the ruling All Progressives Congress will be thrown into hellfire if their records are exposed and examined.

Obasanjo said, “If we are talking about sin, the people that are there now, if we examine them, they will all enter hellfire.

“They will not just be jailed, they will enter hellfire.

Whoever God covers his sin, the person’s secrets are also protected.”

Obasanjo has thrown his weight behind his former vice president whom he says will make a better leader for Nigeria at a time like this.

“I did not say if Atiku (Abubakar) gets there he will behave like Jesus or Mohammed, but he will do better than what we are seeing now,” Obasanjo said.

Job creation: EdoJobs urges job seekers to look up new vacancies in Nigerian Observer

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Atiku Abubakar, presidential candidate of the PDP and former Vice President of Nigeria, acknowledging cheers from the crowd that thronged the Dan Anyiam Stadium venue of the People’s Democratic Party (PDP) presidential rally in Imo State on Tuesday.

39 NEWS

BUSINESS DAY

he Edo State government has urged unemployed youths in the state to check for new job vacancies published every week on Tuesday and Thursday, in the state’s newspaper, The Nigerian Observer.

Ukinebo Dare, senior special assistant (SSA) to the Governor on Job Creation and Skills Development, disclosed this in an interview with journalists in Benin City, the state capital.

Dare said the publication in the Nigerian Observer was an extension of the information available on its website, noting that the idea of publishing the vacancies was to make it more accessible to unemployed youths in the state.

“We are delighted to have struck the deal to have these advertisements up

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in The Nigerian Observer, which is a household name in Edo State. The publication is strategic, as it provides a catalogue of the top jobs from the public and private sectors available in the state every week,” she said.

Noting that the agency also places huge premium on capacity building, Dare said that the information provided on the special advert pages include the numerous training opportunities offered by EdoJobs, either through the Edo Innovation Hub or its training partners.

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Wednesday 23 January 2019

Tax Issues

Corporate income tax remains significant source of tax revenues for governments IHEANYI NWACHUKWU

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axes paid by companies remain a key source of government revenues, especially in developing countries, despite the worldwide trend of falling corporate tax rates over the past two decades, according to a new report from the Organization for Economic Co-operation and Development (OECD).

Corporate taxation is even more important in developing countries, comprising on average 15.3percent of all tax revenues in Africa and 15.4percent in Latin America & the Caribbean, compared to 9 in the OECD. Corporate tax revenues have also held up when considered as a percentage of GDP, where the average share increased from 2.7percent of GDP in 2000 to 3percent in 2016 across the jurisdictions included in the database.

A new OECD report and database, Corporate Tax Statistics, provides internationally comparable statistics and analysis from around 100 countries worldwide on four main categories of data: corporate tax revenues, statutory corporate income tax (CIT) rates, corporate effective tax rates and tax incentives related to innovation.

The new OECD analysis shows that corporate income tax remains a significant source of tax revenues for governments across the globe.

In 2016, corporate tax revenues accounted for 13.3% of total tax revenues on average across the 88 jurisdictions for which data is available. This figure has increased from 12percent in 2000.

The new OECD analysis shows that a clear trend of falling statutory corporate tax rates – the headline rate faced by companies - over the last two decades. The database shows that the average combined (central and sub-central government) statutory tax rate fell from 28.6% in 2000 to 21.4% in 2018.

More than 60% of the 94 jurisdictions for which tax rate data is available in the database had statutory tax rates greater than or equal to 30% in 2000, compared to less than 20% of jurisdictions in 2018.

Comparing statutory corporate tax rates between 2000 and 2018, 76 jurisdictions had lower tax rates in 2018, while 12 jurisdictions had the same tax rate, and only six had higher tax rates. In 2018, 12 jurisdictions had no corporate tax regime or a corporate income tax

rate of zero.

The OECD analysis highlights that CIT revenues are influenced by many factors, and therefore focusing on headline statutory tax rates can be misleading. For example, jurisdictions may have multiple tax rates with the applicable tax rate depending on the characteristics of the corporation and the income. Progressive rate structures or different regimes may be offered to small and medium-sized companies, while different tax rates may be imposed on companies depending on their resident or non-resident status.

Some jurisdictions tax retained and distributed earnings at different rates, while some impose different tax rates on certain industries. Lower tax rates are often available for firms active in special or designated economic zones, and preferential tax regimes offer lower rates to certain corporations or income types.

Another factor influencing CIT revenues is the definition of the corporate tax base. The OECD Corporate Tax Statistics database assesses how standard components of the corporate tax base reduce the effective tax rate faced by taxpayers, including the effects of fiscal depreciation and several related provisions, such as allowances for corporate equity.

Taking these provisions into account, the database shows that “forward-looking” effective tax

rates are generally lower than statutory tax rates, with an average reduction of 1.1 percentage points observed in 2017 across the 74 jurisdictions analysed in the database. Targeted tax incentives, such as for research and development (R&D) expenditures and intellectual property (IP) income, are widely used to reduce the corporate tax burden for specific activities.

The new database is intended to assist in the study of corporate tax policy and expand the quality and range of statistical information available for analysis under the OECD/G20 Base Erosion and Profit Shifting (BEPS) initiative.

In 2015, the OECD reported that base erosion and profit shifting was having significant effects on the corporate tax base, estimating revenue losses to governments from BEPS in the range of USD 100-240 billion (2014 figures), equivalent to 4-10% of corporate tax revenues.

The new database, which will be updated annually, aims to improve the measurement and monitoring of BEPS. Future editions will also include an important new data source – aggregated and anonymised statistics of data collected under country-by-country reporting now being implemented under BEPS Action 13 – that will allow “backward-looking” assessment of effective tax rates actually paid by firms.

KPMG Tax Alert

LIRS’ public notice appointing payers of capital sum as collecting agents for capital gains tax

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he Lagos State Internal Revenue Service (LIRS) issued a Public Notice on January 6, 2019 appointing employers and other payers of capital sums as “collecting agents” for the purpose of deducting and remitting Capital Gains Tax (CGT) due on capital payments. The Public Notice, which is further to an earlier LIRS’ publication on “exemption of compensation for loss of employment”, was issued pursuant to Sections 43 and 50 of the CGT Act and Personal Income Tax (PIT) Act, respectively.

The Public Notice is effective from January 1, 2019.

The Public Notice requires employers to withhold and remit CGT on “capital sums” paid to employees as “compensation for loss of employment”. A capital sum in the context of the CGT Act refers to any money or money’s worth that is paid to taxpayers in respect of qualifying transactions that fall within the meaning of “disposal of assets”. Such transactions include compensation for loss of office or employment, payment for surren-

der or forfeiture of rights, etc.

The Public Notice also requires appointed agents to file alongside their annual returns, a statement of the recipients of capital sum in a prescribed format and “nil” returns where applicable.

Comments The LIRS’ position is that CGT applies to any “compensation for loss of employment” that was not pre-agreed with the employee (i.e., non-contractual), and that preagreed amounts (i.e., contractual) are liable to tax under the PIT Act (PITA), even though there is no provision to this effect in the two legislation.

Historically, the CGT Act 1990 exempted compensation for loss of office below N10,000 from CGT. However, while the 1996 Budget pronouncement removed the N10,000 cap, it was only the PITA that was amended to exempt “compensation for loss of employment” from tax. To the extent that the CGT Act remains unchanged since then, any capital sum paid by an employer to an employee as compensation for loss of office in excess of

N10,000, is taxable under the CGT Act. It is obvious that the exempted amount of N10,000 is long overdue for review as it is practically valueless compared to the purchasing power of the same amount in 1990.

The LIRS enjoins employers to segregate compensation for loss of employment to their employees into “tax exempt”, “subject to PAYE” and “subject to CGT” for the purpose of their correct tax treatment.

However, if compensation for loss of employment is aligned with the LIRS’ distinction between preagreed amounts (revenue payment subject to PAYE tax) and amounts that were not pre-agreed (capital sum subject to CGT), the tax treatment can either be “tax exempt” or “subject to CGT”. In other words, there should be no third category that is subject to PAYE tax, unless the LIRS has terminal salary payable to an employee in mind, which has nothing to do with compensation for loss of employment.

In terms of administration of CGT with respect to individuals, while the tax will be easier to collect where employers make pay-

ments of a capital nature to their employees, there will be practical challenges in other instances. This is especially as CGT is not on gross selling price, and should not be deducted as if it were withholding tax (WHT). The CGT Act imposes CGT on chargeable gains determined after deduction of the allowable expenditure specified in the Act from the capital sum received on chargeable assets.

For instance, where a company is paying a capital sum to an individual, e.g., in a land transaction, deducting CGT will be challenging, as the tax will need to be deducted at 10% of the net chargeable gains on the asset.

Thus, the seller of the asset would need to provide information to the collecting agent paying the capital sum for the purpose of determining and deducting the CGT due on the transaction. It seems that the Lagos State Government in realization of this has in a way factored CGT into the composition of fees payable for Governor’s consent in land transactions. However, with LIRS’ new requirement for CGT to be

withheld by collecting agents, the continued inclusion of ”deemed CGT” in Governor’s consent fees would need to be reviewed to avoid double taxation.

The CGT on individuals becomes even impracticable where the capital transaction is between two individuals, as there is no assurance that any tax deducted at source from payment by an individual to another individual will end up in the government treasury.

This is the risk associated with the broad category of persons designated as LIRS’ collecting agents, unlike the definition of “person” in the WHT Regulations. Thus, making “other members of the public” CGT collecting agents for the government may not generate the anticipated result that the LIRS is aiming at.

We are not yet in the ideal and desirable world of voluntary tax compliance, and the Public Notice highlighting the statutory provision empowering the tax authority to appoint any person as its tax collecting agent in respect of CGT is unlikely to get us there soon.

Wednesday 23 January 2019

FT

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BUSINESS DAY

FINANCIAL TIMES

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World Business Newspaper

Davos 2019: What to watch for at this year’s World Economic Forum World leaders converge to discuss climate change, co-operation and globalisation Niki Blasina

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lobal leaders, corporate titans, academics and thinkers are gathering in the Swiss ski resort of Davos for the annual World Economic Forum, which begins on Tuesday morning. Some 3,000 participants have converged on the Alpine town for the meeting of the global elite that this year features some 350 sessions, centred around issues such as improving global cooperation, embracing the digital revolution and tackling climate change.

Here’s what delegates are likely to be talking about at Davos 2019: US President Donald Trump and other world leaders, including UK prime minister Theresa May and Emmanuel Macron of France have cancelled trips to Davos in the face of domestic difficulties. The absentees underscore the backdrop to this year’s event: a world in turmoil, fuelled by anti-establishment sentiment and populist politics.

Mr Trump, who delivered the keynote address at last year’s forum, called off his trip as the US government remains in partial shutdown, with lawmakers at an impasse over his demand for a federal budget that includes funding for a wall on the Mexican border.

Last week, Mr Trump decided that the rest of the US delegation would also stay home, including Treasury secretary Steven Mnuchin and secretary of state Mike Pompeo.

They were expected to speak on several panels, including a discussion on the future of America’s place in the world economic system.

In London, Mrs May called off her visit after a crushing parliamentary defeat on her proposed Brexit deal.

Mr Macron, meanwhile, is struggling to contain nationwide street protests

that have shaken France in recent months. He perhaps thought it best not to seen in the company of chief executives and corporate high-fliers.

Other notable absentees include Xi Jinping, Chinese president who is grappling with an economic slowdown, and India’s Narendra Modi, who is dealing with a re-election campaign amid the fallout of his party’s embarrassing defeat in state elections last month.

Nevertheless, dozens of national leaders will attend, including Angela Merkel of Germany, Italy’s Giuseppe Conte and the new Brazilian president Jair Bolsonaro.

Less than a month after his inauguration, Brazil’s leader Jair Bolsonaro will make his debut on the world stage with a special address on Tuesday afternoon.

Without Mr Trump in attendance, Mr Bolsonaro, dubbed the “Trump of the Tropics”, is one of the big names to watch this year — yet he is likely to come under fire on issues such as the environment and human rights, on which several talks will be centred.

The former army captain swept to

victory in Brazil with hardline policies on tackling crime and promises to combine “traditional family values” with economic liberalism. Yet he has a long history of disparaging gays, women and black people, and like Mr Trump, is a climate change sceptic. His election has raised fears among environmentalists that he will relax curbs on deforestation, which could lead to further destruction in the Amazon rainforest.

Mr Bolsonaro will probably look to present himself as a safe pair of hands to foreign investors. His case will be helped by a strong rally in Brazilian equities since he took office.

The WEF asked its members to rank their worries ahead of this year’s event, and this year’s “worry” list was dominated by climate change concerns.

WEF members fear that extreme weather events are becoming more common, and that the world has no effective mechanism to respond.

Climate issues account for three of the five risks deemed most likely to materialise in 2019 — and four of the top five risks that could cause the

most damage. The only other topics cited are weapons of mass destruction, and cyber risks.

With rising nationalism and a push for economic protectionism, there are growing fears that countries could turn their backs on global cooperation to address climate change — as Mr Trump did by pulling out of the 2015 Paris climate accord.

How leaders tackle the issue will be a focal point in Davos, which will host a panel debate on Tuesday featuring the veteran broadcaster and naturalist Sir David Attenborough. At 92, Sir David is the oldest participant to brave the wintry conditions in Davos this year. He will be joined by Al Gore, the former US vice-president and climate activist, and New Zealand’s prime minister Jacinda Ardern. Sir David will also be interviewed by Prince William, the Duke of Cambridge.

Optimism peaked at Davos last year amid economic momentum buoyed by new US tax legislation and rising growth in Europe and Asia. But the economic backdrop has since changed markedly. With the

escalation of a US-China trade war, uncertainty over Brexit, volatility in financial markets and a US government shutdown, pessimism is rising.

The IMF on Monday said the global economy was weakening faster than expected as it revised down its economic forecast. The new figures represent a significant shift for the global outlook and come as a result of weak data in Europe and Asia.

New GDP data from China released on Monday also showed that growth had now slowed for three consecutive quarters, prompting concern among investors that the country could drag down the global economy.

The Chinese economy, which contributes nearly one-third of global growth, could be the most pressing issue for nervous business chiefs in Davos. With Chinese leader Xi Jinping staying home, Wang Qishan, China’s vice-president, will give a special address on Wednesday as he seeks to reassure business leaders and make Beijing’s case for its economic reforms.

UBS warns of worsening climate as clients pull $13bn of money

Swiss bank’s ‘very poor’ earnings miss analyst expectations and send shares down Stephen Morris

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BS cast a shadow across Europe’s banking sector as Switzerland’s biggest lender blamed an economic slowdown and geopolitical tensions for missing analysts’ profit forecasts and for causing almost $13bn of client outflows.

The disappointing outcome of the first European bank to announce annual results followed a patchy performance from the biggest Wall Street banks last week and triggered a sell-off in shares of UBS and several of its rivals in Europe.

UBS’s market-leading wealth management unit was hit by a $7.9bn reduction in assets in the period as ultra-wealthy clients pulled money from plunging stock markets.

Combined with $4.9bn of investor withdrawals at its asset management business, that reduced the amount of net new money it collected last year to $24.7bn — less than half of the amount it collected the previous year.

UBS’s pre-tax profit rose just 2 per

cent to $862m in the quarter, failing to meet the average analyst estimate of $985m, and its shares dropped more than 4 per cent.

Executives warned the negative environment had spilled over into the first few weeks of this year, but said they had seen some “normalisation” in markets more recently.

“These are very poor results, and come as somewhat of a negative surprise so soon after the upbeat investor day” in October, said Citigroup analyst Andrew Coombs. “The investment bank was a sizeable miss” on estimates and “wealth management was hit by large outflows”, he said, adding that “the bank’s targets for 2019 look increasingly difficult to achieve”.

The news added to bearish sentiment about Europe’s already downtrodden banking sector. Shares in Deutsche Bank fell 3.4 per cent, while Switzerland’s Julius Baer dropped 3 per cent and France’s BNP Paribas lost 2 per cent.

“Look, it is a very difficult fourth quarter,” Tidjane Thiam, chief executive of rival Credit Suisse, told Bloomberg at the World Economic

Forum in Davos. “Things have gotten better since the beginning of the year.” Credit Suisse shares were down 1.2 per cent.

UBS’s investment bank swung to a $47m loss in the fourth quarter from a $46m profit last year due to “challenging conditions” in credit and equities trading, the bank said in a statement on Tuesday.

An improvement in foreign exchange and rates trading revenues offset these slightly, but the investment bank’s revenue was still down more than $200m. Its performance in bond trading was similar to the declines reported by Wall Street rivals, but the drop off in its equities trading revenues contrasted with strong growth at US peers.

UBS chief executive Sergio Ermotti said: “The overall results for the year are clearly not satisfactory, to meet our goals we need to intensify efforts to attract and retain higher portions of our current and prospective clients’ assets.

“We are taking commercial and responsible actions to mitigate the short-term impact of difficult mar-

kets . . . and return to our trajectory of growth.”

Mr Ermotti characterised these actions as “fuel-saving mode” and said options open to the bank included hiring fewer new staff, replacing those who leave more gradually and implementing IT projects over a longer period to save costs.

Since taking over in 2011, Mr Ermotti has restructured UBS to focus on managing the assets of the world’s rich, and has reduced the investment bank to a supporting role.

However, the bank has faced pressure to prove it can expand its global wealth management division, which was created last year by merging US and international operations, even in difficult market conditions.

The shares fell 29 per cent last year.

On a brighter note, the bank said it bought back SFr750m of shares in 2018, exceeding its target by SFr200m, and it plans to repurchase another $1bn this year.

JPMorgan analyst Kian Abouhossein said: “Investor confidence loss leading to higher

volatility, declining equity markets and deleveraging of the ultrawealthy . . . could be felt in the results. We see these results more a market condition issue rather than a UBS issue.”

The weak results raised questions over UBS’s ability to hit new financial targets it set in October, aiming for growth in pre-tax profits in wealth management at the upper end of its 10 to 15 per cent target in the three years to the end of 2021. It is also targeting 2 to 4 per cent net new money growth per year.

“We had a substantial number of deals pulled in the fourth quarter, the problem is not the pipeline, it is the environment,” Mr Ermotti.

UBS is also wrangling with executive succession after last year losing the high-profile head of its investment bank division, Andrea Orcel, who left to become chief executive of Banco Santander. However, two weeks ago the appointment fell through in a dispute over €50m of deferred pay that he was owed

by UBS, which the Spanish bank’s board refused to buy him out of.

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NATIONAL NEWS

FT US Democrats seek changes to revamped Nafta deal

Rumours swirl of move against president in wake of Zimbabwe violence

Demands raise prospect of stand-off or even new negotiations over trade pact James Politi

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he White House and congressional Democrats are heading for a clash over the ratification of the revised Nafta agreement, raising the prospect of a protracted stand-off and possibly new negotiations with Canada and Mexico.

Just a few weeks into the new Congress, senior Democrats say they want changes to the trade deal signed by Donald Trump with Justin Trudeau, Canada’s prime minister, and Enrique Peña Nieto, Mexico’s former president, in November last year.

Some Democrats believe the agreement does not include strong enough provisions to enforce labour and environmental standards. Others also lament that the Trump administration has failed to lift steel and aluminium tariffs on its neighbours along with the deal. Without those modifications, Democrats are warning that “new Nafta” — rebaptised the US-Mexico-Canada Agreement by Mr Trump — could fail to win enough of their votes to clinch congressional approval.

“I appreciate the efforts to renegotiate Nafta but the president is not even close to being in the right place on Nafta,” Sherrod Brown, the Ohio Democratic senator and possible contender for his party’s 2020 presidential nomination, said on NPR radio this month. He stressed the importance of adding enforcement provisions to the deal.

As Democratic opposition to the deal has mounted, Mr Trump has threatened to issue a six-month withdrawal notice from the existing 1994 Nafta agreement to force Democrats to back off — essentially an ultimatum to choose between his deal or a return to the rules that governed trade in North America more than a generation ago.

“No matter how good something is, they might not want to approve it,” Mr Trump told the US farm lobby in a speech this month.

The mounting tussle over the ratification of the USMCA is making officials in Ottawa and Mexico City uneasy. Last year’s deal was reached after months of fraught negotiations.

Although imperfect for both countries, the settlement with Mr Trump was met with relief because it averted a complete breakdown of Nafta. The concern is that this could now be back on the table, at a time when Mr Trudeau is facing a general election and Andrés Manuel López Obrador, Mexico’s new president, is in his first year in office.

“We’re trying not to get involved but obviously we are keeping a close eye on it because issues with ratification are relevant to us,” said one Canadian official. “We negotiated a deal that we were happy with, and it’s been signed. It’s hard to speculate on what could possibly happen.”

Luz María de la Mora, Mexico’s economy undersecretary told the Financial Times: “For us, this agreement is closed.”

Trade experts in Washington say the changes demanded by Democrats might not require a wholesale renegotiation and could be addressed in an annex or a side letter that would prove easier to deal with. At least one of the demands — that Mexico revamp its labour laws to cut the ties between political parties and trade unions — is expected to be approved soon by the

Wednesday 23 January 2019

Mnangagwa loyalists say impeachment attempt failed as tensions remain high

Investors in debt-laden companies face messy workouts Byzantine debt structures will lead to lengthy, litigious and very costly bankruptcies Sujeet Indap

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t the time, it appeared lifesaving surgery for Toys R Us. In 2016, a trio of private equity firms that had paid almost $7bn for the toy retailer 11 years earlier offered owners of about $600m of unsecured bonds new debt that came sweetened with a stronger claim on the company’s assets.

As a result, the deadline for debt that had been due to mature in the next couple of years was pushed out to beyond 2020, giving the battered retailer a shot at recovery.

Salvation never came though, and in September 2017 Toys R Us filed for bankruptcy.

Fierce competition from the likes of Amazon took most of the blame for the company’s demise.

But observers also pointed to a $5bn debt structure so complex it made a job-destroying liquidation the best choice for Toys R Us’ creditors. The company could have pursued a reorganisation, but its web of debt and other liabilities was simply too tricky to untangle.

That kind of messy denouement will not be the last, warn bankruptcy and restructuring experts, after a decade in which private equity firms have put together a string of buyouts fuelled by cheap money and with weak protections for debt investors.

“There are now companies whose once-conventional capital structures have been turned partially upside down,” said Joshua Feltman, a partner at law firm Wachtell, Lipton, Rosen & Katz in New York. “That’s going to make workouts much more difficult to get done.”

The consequence may be a sharp divide in the type of corporate bankruptcies the next US recession delivers. On the one hand will be smaller companies not owned by private

equity firms, which can reorganise themselves relatively swiftly. On the other will be billion-dollar companies with private equity owners, such as Toys R Us, whose byzantine debt structures will lead to lengthy, litigious and very costly bankruptcies.

The workout of Toys R Us, for example, cost $200m in adviser fees.

These battles may appear to be waged between private equity owners and often sophisticated credit hedge funds, but individual investors are likely to get caught in the crossfire too.

In recent years, leveraged loans, a favourite funding tool for buyouts, have become more popular with retail investors, lured by a buoyant market and relatively few defaults.

That extra demand has stretched balance sheets, as companies have piled on debt. Private equity-backed borrowers had an average ratio of first-lien debt (a company’s most senior obligation) to ebitda of just under four times in 2005 and 2006, according to Fitch. But that had jumped to nearly six times by the third quarter of 2018.

“Going into the last cycle, leveraged loans and high-yield bonds were mainly held by institutions,” said Bruce Bennett of Jones Day, referring to the banks and insurance companies that previously dominated ranks of buyers.

But between the start of 2016 and the end of 2017, more than $20bn flowed into retail leveraged-loan funds, according to Lipper. Such investors “may not be ready for the effects of higher rates, larger spreads and increased default rates”, said Mr Bennett.

Another factor adding to complexity: documents on the bonds and loans underpinning buyouts have been written loosely enough to allow companies to move corporate assets out of reach of senior creditors,

or to sell them, for the benefit of the private equity owner.

Take intellectual property. Perhaps the most notable case was J Crew, the US fashion chain, which shunted $250m of intellectual property to a new subsidiary out of the reach of senior creditors in 2016. That entity then issued debt to repay holders of the junior debt, which had been trading at distressed levels.

Other retailers have since done similar deals; Neiman Marcus was the most recent.

However, lawyers are warning that credit hedge funds and mutual funds are increasingly likely to pursue legal action to challenge such transfers of assets.

In the case of the 2015 bankruptcy of the Caesars casino chain, for instance, an independent examiner found that the private equity sponsors breached their fiduciary duties to creditors by selling assets perhaps $4bn too cheaply. The sponsors, Apollo and TPG, ultimately settled with bondholders out of court, while denying any wrongdoing.

“The norms that used to restrain managers of distressed firms from declaring all-out war on creditors have been fading since the financial crisis,” wrote Jared Ellias, of the University of California, Hastings, and Robert Stark, a lawyer, in a recent paper entitled “Bankruptcy Hardball”.

A huge wave of defaults may not be imminent. Moody’s, the rating agency, expects that the US corporate default rate will edge up to 3.4 per cent by year’s end, from 2.8 per cent at end-2018.

However, when a slowing economy does eventually trip up overleveraged companies with convoluted capital structures, the battle to carve up whatever spoils are left will be messy, said Jim Millstein, a restructuring veteran who now co-chairs Guggenheim Securities.

No-deal Brexit would trigger Irish ‘hard border’: Brussels European Commission says without UK deal peace process would be ‘at risk’ Alex Barker

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he European Commission has explicitly acknowledged that a no-deal Brexit will lead to the return of “a hard border” on the island of Ireland, a scenario Brussels and Dublin have deliberately avoided discussing until now.

In unusually candid remarks, Margaritis Schinas, the commission’s chief spokesperson, said it was “pretty obvious” that Britain’s exit from the EU without a deal would prompt the return of border infrastructure, even at the risk of undermining peace in Northern Ireland. He made clear the commission’s willingness to discuss the issue reflected the increased possibility of a no-deal Brexit.

“If you want to push me on what would happen in a no-deal scenario in Ireland, I think it is pretty obvious.

You would have a hard border,” Mr Schinas said at the commission’s daily press conference. “Our commitment to the Good Friday Agreement . . . will have to inevitably take into account this fact.

“Of course we are for peace. Of course we stand behind the Good Friday Agreement,” he added. “But that is what a no-deal scenario entails. I will not speculate on this plan B because we are for plan A.” The question of the hard border is one of the most sensitive in Brexit negotiations, both for its potential impact on the peace process and the shape of the Brexit agreement, which includes a backstop arrangement to maintain an open border under all circumstances.

Leo Varadkar, the Irish premier, has said that “ no preparations whatsoever” have been made to introduce a hard border on the island,

saying such contingency planning would become “a self-fulfilling prophecy”. While EU diplomats have avoided discussing the subject, many privately admit the EU would have no choice but to require Ireland to enforce checks on trade to protect the common border of the single market.

British ministers have been advised that no systematic checks would be required for revenue collection purposes on the island — a recommendation that Brexiters have pointed to as proof that no “backstop” compromises are required in order to maintain the open border.

The EU has released detailed contingency plans for a no-deal exit covering all sectors of the economy, but no specific arrangements have been made public regarding Northern Ireland, the only open UK/EU land border.

Joseph Cotterill

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imbabwe remained on edge on Monday following a violent crackdown on protests over the country’s mounting economic crisis, with President Emmerson Mnangagwa set to return home after cutting short an overseas trip to deal with the tensions and continuing arrests of protesters.

Witnesses reported that Harare, the capital, was largely calm but that soldiers remained on the streets.

Security forces were still detaining activists, including Japhet Moyo, secretary-general of Zimbabwe’s trade union congress, whose call for a three-day strike over fuel prices partly inspired last week’s protests.

Meanwhile, speculation swirled over an attempt by members of Mr Mnangagwa’s Zanu-PF party to oust him from office.

Mnangagwa loyalists in the ruling party said unnamed opponents had failed to muster the numbers needed to unseat him in an impeachment motion.

“They threatened to kill me and my family . . . the plot is foiled, they lack numbers for impeachment,” Justice Mayor Wadyajena, an MP and ally of Mr Mnangagwa, said.

Terence Mukupe, another loyalist Zanu-PF MP, said: “Come get me and do as you please but my president is not going anywhere.”

The president said on Sunday he would cancel his planned visit to the World Economic Forum in Davos this week to return home early “in light of the economic situation”.

Zimbabwe faces a crippling shortage of US dollars, and the doubling of fuel prices overnight earlier this month exploded into days of mass demonstrations.

“The first priority is to get Zimbabwe calm, stable and working again,” he said.

Mr Mnangagwa set out to use his overseas trip to promote his message that “Zimbabwe is open for business”, made after he replaced Robert Mugabe, the longtime former leader, following a 2017 coup.

But there are growing signs of a split within his party, and in the security forces that helped him to power, over the fallout from days of beatings and arrests carried out by soldiers against opposition and civic activists.

NGOs have called the so-called “days of darkness” the worst state violence since the Mugabe era. They say at least 12 people have been killed and hundreds detained during the protests as soldiers, police and Zanu-PF youth militia roved cities under cover of an internet blackout.

Zimbabwe’s biggest opposition party, the MDC Alliance, said that at least six of its legislators had been detained.

The crackdown has been overseen by Constantino Chiwenga, Mr Mnangagwa’s deputy and who has significant influence as the former army commander who led the 2017 coup. There have long been rumours of a split between the two men over divergent business interests. They have denied tensions.

Wednesday 23 January 2019

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BUSINESS DAY

43

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

‘Flawed’ retail data hits assessment of UK economic strength Measures struggle to adapt to fragmented sector where shoppers are increasingly moving online Jonathan Eley and Gavin Jackson

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K retail sales in December were the weakest in a decade, barely rising from a year before.

So said the industry’s lobby group, the British Retail Consortium. Statisticians at the Office for National Statistics said they were up 2.7 per cent over the same period.

The discrepancy highlights the difficulty in trying to track retail sales in an industry that remains highly fragmented in some quarters, and where more trade is moving online.

Retail sales are a vital indicator in an economy such as the UK where consumer spending plays an outsized role. Wholesale and retail trade accounts for roughly one-tenth of the economy, more than the entire manufacturing sector.

Yet measuring growth in the industry accurately is far from straightforward. “The problem is that all retail sales series are flawed to some degree,” said Nick Bubb, an independent retail consultant.

As well as the BRC and the ONS, the CBI business lobby group produces figures and so does the accountancy firm BDO. Barclaycard and Visa publish estimates of consumer spending and other indicators include the “footfall” data supplied by Springboard, which measures shopper traffic.

The obvious problem with footfall is it does not capture online sales — around one-fifth of the total, according to the ONS data — and that it cannot tell whether shoppers are spending or just looking. But all of the measures are struggling to adapt to a transforming high street where shoppers are not only constantly changing how much they buy, but also how they buy it.

The BRC, assisted by advisory services company KPMG, asks retailers to enter sales figures each week via an

online portal. Food retail figures are fed in by consultancy IGD. The figures are “cleaned”, according to Rachel Lund, head of insight and analytics at the BRC. But there are no revisions to previous months’ figures and no seasonal adjustments.

BRC figures are widely reckoned to be representative of food retailers’ sales; Ms Lund said the data captures about four-fifths of the grocery market, which is highly consolidated and where most sales are still made in shops.

But economists regard the BRC’s numbers for online and non-food sales as less reliable. “It’s mostly just about the big retailers who are members of the BRC,” said Mr Bubb.

“It’s fairly widely known that Amazon does not supply its figures,” he added — even though the online giant is now a member of the organisation. The supermarket Tesco, which withdrew from the BRC last year, still contributes food data but not general merchandise numbers.

“The BRC non-food numbers are disproportionately aligned to the likes of Debenhams, House of Fraser and New Look that have underperformed the market. Of the top 10 pure online retailers, they probably have two or three,” said another economist who looks closely at the numbers.

Ms Lund said the BRC captured about two-fifths of the non-food market. “We do receive data from retailers who are not members of the BRC, and we have added new sources in recent years,” she said. However, she added that the BRC could not disclose individual companies owing to confidentiality agreements. Tesco and Amazon also decline to comment.

The ONS monthly survey is mandatory. “We sample all large retailers,” said Rhian Murphy, ONS head of retail sales. Along with a survey of 4,000 small businesses, it means about 5,000 shopping chains are included in the sample, including all the major online retailers.

Five US market regulation forecasts for 2019 Davis Polk lawyers expect changes to Volcker rule and guidance on cryptocurrencies Annette L Nazareth and Gabriel D Rosenberg

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hile the new Democratic-controlled House of Representatives makes legislative reforms in financial regulation very unlikely, we predict the financial regulators will continue to effect change in key areas.

1. Volcker rule reforms The Volcker rule has been one of the most controversial marketsrelated regulations stemming from Dodd-Frank. Congress recently exempted community banks and made other small changes to the statute. Nonetheless, many flaws remain in the implementing the rules, as evidenced in the debate around amendments proposed by the regulators in 2018.

There are likely to be some amendments in 2019, but their scope and content remain unclear.

Of greatest impact will be the decision made on the proposed intro-

duction of a new “accounting test”.

In its proposed form, and absent any significant changes or exclusions, the test would drastically increase the scope of financial instruments subject to the rule.

Market participants have warned that such an approach could decrease market liquidity, and have noted the disconnect between the proposal’s accounting test and the short-term focus of the statute.

Expect significant debate on this issue, likely resulting in amended regulations that are better tailored to the statute. Most of the other amendments to marketsrelated provisions of the rule, such as changes to detailed marketmaking and hedging standards, will probably be finalised largely as proposed.

2. Further developments in regulation of digital assets The early focus by US regulators on cryptocurrencies and digital assets was largely on fraud and

Stocks falter after IMF cuts global growth forecast

Brussels fines Mastercard €570m for restricting competition Sterling reclaims $1.29 after reassuring jobs data Credit card group limited banks’ ability to ‘shop around’, EU says Rochelle Toplensky

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russels has fined Mastercard €570.6m for limiting banks’ ability to shop around between member states to offer lower fees, thereby restricting competition between banks and raising the cost of card payments for both retailers and customers.

Mastercard levies a so-called interchange fee on transactions between the cardholder’s bank and the retailer’s bank. Historically the rates varied considerably between member states but in December 2015 the EU passed a regulation capping the cost and levelling the playing field within the bloc.

“By preventing merchants from shopping around for better conditions offered by banks in other member states, Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU,” Margrethe Vestager, the bloc’s competition commissioner, said on Tuesday.

The fine was reduced by 10 per cent because the company co-operated with the European investigation and acknowledged both the facts of the case and the breach. Retailers and customers

can seek damages from Mastercard through the courts based on the commission decision.

EU officials have been cracking down on credit card company fees for more than a decade. In December 2015 the bloc’s interchange fee regulation capped the fee charged by the US payment group and its rival Visa within the European Economic Area to a maximum of 0.2 per cent of transaction value for debit cards and 0.3 per cent for credit cards.

The US payment group also had a seven-year antitrust dispute over its cross-border fees to retailers.

The commission decided in 2007 that the company had restricted competition and inflated charges — the European court upheld that decision in 2014.

Mastercard said: “Today’s decision by the European Commission puts an end to a legacy investigation concerning Mastercard’s European central acquiring rules that [had been] in place until 2015.”

It added: “This decision relates to historic practices only, covers a limited period of time of less than 2 years and will not require any modification of Mastercard’s current business practices.”

manipulation. We are hopeful that a second wave of innovation in digital assets will facilitate the adoption of the technology more broadly.

These may include the possibility of short-dated futures contracts in bitcoin that function as a regulated spot market, new payments methods through stablecoins, and the development of compliant infrastructure to support offerings and trading of security tokens.

But these types of innovations will need some help from regulators, as the existing rules do not work neatly for digital assets, and regulatory uncertainty has made compliance with the requirements difficult.

For example, the Securities and Exchange Commission could provide guidance on key issues, such as how a broker-dealer can satisfy its custody and record-keeping obligations for on-blockchain assets, and how non-security assets such as bitcoin should be treated when held by a registered broker-dealer.

Michael Hunter and Alice Woodhouse

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all Street’s S&P 500 was expected to to slip while European stocks were steadier after wider losses in Asia following reduced world growth forecasts from the IMF, adding to a sense of caution among investors.

Cutting its world growth forecasts for 2019, the IMF cited risk factors including the slowing Chinese economy and fears over Brexit. It set a cautious tone to trade, which left major stock indices shy of the monthhighs touched last week.

Losses in Asia steepened on concern that hopes for improved trade relations between the US and China were fading and in the wake of remarks by China’s president, Xi Jinping, on a series of domestic political risks.

A report that the US plans to proceed with a request for the extradition of Huawei executive Meng Wanzhou from Canada left hopes for a breakthrough on trade looking overstated after they helped stocks to monthhighs last week. Ms Meng’s arrest late last year became a flashpoint between Washington and Beijing as trade tensions deepened.

The CSI 300 index of mainland China’s stocks fell 1.3 per cent. Hong Kong’s Hang Seng index fell 1 per cent, hit by consumer cyclical stocks and the technology sector.

The selling was narrower overall in Europe, with the region-wide Stoxx 600 down 0.2 per cent. London’s FTSE 100 fell 0.5 per cent, with Frankfurt’s Xetra Dax 30 down 0.6 per cent. There were steeper declines for sectors more exposed to the Chinese economy in particular. The index tracking miners fell 1.1 per cent, while the equivalent benchmark for industrial metals stocks fell 1.6 per cent.

US futures pointed to a fall of 0.8 per cent for Wall Street’s S&P 500 when it returns on Tuesday from a long weekend break, in line with the cautious mood.

President Xi said China’s ruling Communist party was facing “the sharp and serious risks of lazy spirits, lacking ability, distance from the people and being passive and corrupt” and that it faced challenges to its long-term rule.

Robert Carnell, an ING economist, said the comments showed Mr Xi was worried about the economy and suggested more stimulus was to come. “But propping up GDP numbers through infrastructure spending

whilst private sector firms are going bust because traditional financing isn’t reaching them in sufficient quantity is unlikely to provide the stability Xi needs,” he added.

Japan’s Topix was down 0.6 per cent.

Forex and fixed income The pound bounced back above $1.29 mark after UK jobs and average earnings data came in above forecasts, although investors continued to view the UK’s febrile Brexit politics as the main factor affecting the currency. It rose 0.2 per cent overall to $1.2907.

“Against a backdrop of rising inflation, today’s labour market data will provide some much-needed positivity for households, with signs that wage growth is persisting in certain sectors. This should support a pick-up in activity across the UK this year — that is, if the Brexit impasse is eventually broken.”

Dean Turner, UK Economist at UBS Wealth Management The dollar index held near a threeweek high, up 0.1 per cent at 96.429.

Yields on the 10-year US Treasury were down 2 basis points at 2.759 per cent, while that for German Bunds over the same maturity was flat at 0.255 per cent.

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Wednesday 23 January 2019

ANALYSIS

Russia: Vladimir Putin’s pivot to Africa

Moscow is building influence on the continent, to the chagrin of former colonial powers

Henry Foy and Nastassia Astrasheuskaya and David Pilling

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s protests raged in Zimbabwe’s cities last week, with police firing live ammunition at crowds who barricaded roads with burning tyres, the target of their anger was 8,000km away.

President Emmerson Mnangagwa, who had sparked the unrest by raising fuel prices amid an economic crisis in the southern African country, was instead strolling through the Kremlin for talks with President Vladimir Putin, the first of what Moscow hopes will be many visits by African leaders this year.

Amid deteriorating relations with western countries, a diplomatic campaign to win new friends and partners in Africa is at the forefront of a sweeping foreign policy pivot by Moscow, as it seeks fresh alliances to bolster its global geopolitical clout.

From Algeria to Uganda, Russia is building influence in Africa, lending support to embattled strongmen, taking on natural resource projects in conflict-racked states and positioning itself as a new powerbroker without the baggage of former colonial powers.

As well as warm words from Mr Putin, Mr Mnangagwa left Moscow with something more tangible — agreements for Russian investment in Zimbabwe’s diamond industry, a fertiliser supply contract and two financing deals worth $267m.

While lacking the financial firepower of China or the longstanding trade relations of former colonial powers, Russia has sought to use its military exports, security apparatus and state-controlled natural resource companies to gain footholds across the continent.

Across Africa, Moscow has deployed teams of military instructors to train elite presidential guards, sent arms shipments and assisted shaky autocrats with election strategies. It has also promised to build nuclear power plants and develop oil wells and diamond mines.

These diplomatic outreaches to old Soviet allies or countries previously overlooked by Moscow are aimed at both increasing its sway and unsettling rivals such as the US, Britain and France in a region where

they have long held influence.

Chart showing total arms exports from Russia to Africa Christian Malanga, an opposition politician in the Democratic Republic of Congo where Moscow has hailed Felix Tshisekedi as the winner of the recent presidential election despite evidence of voting fraud, says Russia was building on old Soviet ties. “It’s the cold war 2.0,” he says, adding that Russia complemented China in what he saw as a strategy to challenge western influence. “China is the money and Russia is the muscle.”

The need for new alliances has become acute since 2014, when western sanctions were imposed against Moscow after its annexation of Crimea.

“Russia has been re-evaluating its diplomatic policy since the western sanctions came into effect,” says Olga Kulkova, senior fellow at the Africa Institute of Russia’s Academy of Sciences. “Moscow realised it needs new partners.

“Russia has managed to jump into the last carriage, all our partners are already there. But it can compete well by offering both unique and cheaper services to African nations,”

she adds.

Western countries are taking note. In December, US national security adviser John Bolton announced a new strategy to combat Russia and China in Africa, accusing Moscow of buying off African nations.

“The predatory practices pursued by China and Russia stunt economic growth in Africa, threaten the financial independence of African nations . . . and pose a significant threat to US national security interests,” he said.

It was the brutal murder of three Russian investigative journalists in the Central African Republic last July that thrust Moscow’s African endeavours into the spotlight. Shot dead in an attack on their jeep while driving through the countryside, the reporters were investigating the activities of Wagner, a Russian paramilitary company, in a country where Moscow has expanded its presence rapidly over recent years.

Their murders, which local officials blamed on a robbery but subsequent Russian investigative reports suggest may have been orchestrated, focused international attention on the role of Russian security assets — both state and private — in the Kremlin’s outreach to African countries.

Map of selected Russian projects in Africa “Western analysts, myself included, only really woke up to this at the sudden appearance of significant clusters of Russian armed men,” says Alex Vines, head of the Africa programme at the Chatham House think-tank in London. “It was like: ‘My God, what have we missed and why have we missed this?’”

Moscow has sent planeloads of arms to the country, alongside five armed forces personnel and more than 200 private military contractors to train hundreds of elite troops.

Valery Zakharov, a former Russian intelligence official, is the national security adviser to CAR president Faustin-Archange Touadéra, and Russia is setting up a team inside CAR’s defence ministry.

This month, during a visit to Russia, CAR’s defence minister told

state media that there was a “possibility” of Moscow opening a full military base in the country.

Such actions have unnerved France, CAR’s former colonial ruler and traditionally its most prominent foreign ally. Roland Marchal, a Russia-Africa expert at Sciences Po, says Moscow’s approach of supporting African leaders through government-backed defence and industrial deals is straight out of the “Françafrique” playbook of the 1970s and 1980s, when the state and commercial interests of Paris were intertwined.

“It’s pure Françafrique. Change the flag and you have the same methodology,” he adds.

A senior European diplomat in Moscow says: “We don’t know exactly what they are doing in the Central African Republic, but we don’t like it too much. We are not sure that the [CAR] government is completely controlling everything.”

While the Central African Republic has dominated the headlines, Russia’s activity is increasing across the continent. In 2017, Russia’s trade with Africa rose 26 per cent to $17.4bn.

Russia sold twice as much weaponry to African countries in 2017 as it did in 2012, according to the Stockholm International Peace Research Institute. Between 2013 and 2017, Russia supplied 39 per cent of Africa’s imported arms — compared with 17 per cent from China and 11 per cent from the US. In 2014, Zimbabwe concluded an arms-for-platinum deal with Russia worth a reported $3bn, bypassing both a European arms embargo and its lack of hard currency to swap rights to the Darwendale platinum concession for the provision of an undisclosed number of MiG-35 fighter jets.

The list of Russian commercial engagements with Africa is long.

Russian aluminium group Rusal mines bauxite in Guinea. Alrosa, the Kremlin-controlled diamond miner planning to enter Zimbabwe, already has assets in Angola and Botswana.

Rosatom, the state-run nuclear monopoly, is working in Zambia and Rwanda. Russian geologists

are active in Madagascar, Algeria, Libya and Ghana. Rosneft, Russia’s largest oil company, is developing oil and gasfields in Egypt, Mozambique and Algeria, and rival Lukoil has projects in Nigeria, Ghana and Cameroon.

“Moscow and Beijing are clearly competitors over natural resources, but the Russians will not beat China in Africa,” says Mr Vines. “It is minor league in comparison.

“But with the US retreat, there is space for Moscow to be mischievous. It is about optics and, to a certain extent, smoke and mirrors to present itself as a global power,” he adds. “The Russians are looking for areas where they can unnerve western opponents . . . some of whom are truly shocked at what is happening.”

Take South Africa. Last October, former finance minister Nhlanhla Nene told an inquiry into so-called “state capture” that he had been sacked in 2015 because of his refusal to sign guarantees for a R1tn ($70bn) nuclear deal with Rosatom . His replacement with someone considered more pliable triggered such a sharp fall in the rand that the incident came to be known as “Nenegate”.

Mr Nene said the deal would have been ruinous for South Africa, but would have benefited some of former president Jacob Zuma’s associates, including the Gupta family at the centre of allegations of state capture. The Guptas owned a uranium deposit, though both they and Mr Zuma have denied any wrongdoing.

In 2015, Mr Zuma flew to Russia for emergency medical treatment, and it was during his recovery that he is reported to have struck the nuclear deal with Mr Putin.

“Russia had never had a very strong presence in South Africa until Zuma got into power,” says Lumkile Mondi, a senior lecturer at the University of Witwatersrand.

“Through him they were trying to get in and gain control, given that historically the Anglo-American countries have been our partners.

Then the Brics countries came in and Russia wanted a piece of the pie.”

Wednesday 23 January 2019

BUSINESS DAY

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PIGB, 30 other bills may wait for 9th Assembly KEHINDE AKINTOLA, Abuja

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here are strong indications that the Petroleum Industry Governance Bill (PIGB) and over 30 other bills which President Muhammadu Buhari declined assent to may not be transmitted to him before the expiration of the 8th Assembly.

BusinessDay investigations reveal that over 30 harmonised bills passed by both the Senate and House of Representatives were not assented to by President Muhammadu Buhari since assumption of duty on May 29, 2015.

Some of the bills include critical economic legislative framework, namely, Petroleum Industry (Governance) Bill, National Transport Commission Bill 2018, Federal Roads Authority Establishment Bill 2018, Revenue Mobilisation Allocation and Fiscal Commission Bill 2018, Bankruptcy and Insolvency Bill 2018, and Maritime Secu-

rity Operation Coordination Board Amendment Bill.

BusinessDay gathered that currently, no serious action may be taken on these bills until the 9th Assembly comes on board as political campaigns have taken centrestage. Nigerians will go to the polls on February 16 to elect a president and legislators for the next four years. Both President Buhari and many members of the National Assembly are seeking re-election in next month’s polls.

Edward Pwajok, chairman, House Committee on Rules and Business, who spoke exclusively with our correspondent, disclosed that the PIGB particularly has been referred to the House Committee on Petroleum Resources (Upstream) for further legislative action.

Standing committees have also been given the mandate to review the various issues raised by President Buhari in his letters communicating his decision to decline assent

to the bills.

When asked of the timeline given to the standing committees to conclude the review of various issues raised by President Buhari in the letters, Pwajok said, “There was no timeline.”

It would be recalled that in a letter to the National Assembly declining assent to the Revenue Mobilisation Allocation and Fiscal Commission Bill 2018, Buhari explained that the Bill would interfere with the smooth running of federal revenue-generating agencies and also cited drafting issues that affect the clarity of the purpose of the bill.

Other bills President Buhari declined assent to are the Electoral (Amendment) Bill 2018, Energy Commission Amendment Bill 2018, Federal Polytechnic Amendment Bill 2018, National Broadcasting Commission Amendment Bill 2018, Bill for an Act to Establish Police Procurement Fund, Bill for an Act to amend the Environmental Health

Officers Registration, Bill for an Act to Establish the Chartered Institute of Loan and Risk Management of Nigeria, Bill for an Act to Establish the Chartered Institute of Public Management of Nigeria, Bill for an Act to Establish the Chartered Institute of Treasury Management, Bill for an Act to Establish the Nigerian Council for Social Work, and Bill for an Act to Amend the Currency Conversion of Prison Orders.

In line with Section 58 (4) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), President Buhari via a letter dated June 21, 2018 also conveyed to both the House and Senate his decision to decline assent to four bills, namely, the National Child Protection and Enforcement Agency Bill 2018, Courts and Tribunals (Standard Scale of Fines) Bill 2017, Corporate Manslaughter Bill of 2018, as well as Agriculture Credit Guarantee Scheme Fund (Amendment) Bill 2018.

L-R: President Muhammadu Buhari; Bukola Saraki, Senate president, and former President Olusegun Obasanjo, at the National Council of State meeting at the Presidential Villa, Abuja, yesterday.

EFInA appoints Esaie Diei as CEO

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FInA (Enhancing Financial Innovation and Access) has announced the appointment of Esaie Diei as its CEO. In this capacity, Diei will be responsible for leading EFInA and ensuring that the organisation continues to advance on its mission of facilitating the emergence of an all-inclusive and growth-promoting financial system in Nigeria.

Diei brings a deep experience of working at senior level in financial inclusion and in financial markets; strong relationship management experience with the ability to effectively engage with diverse stakeholders; and a strong understanding of the operation, challenges, technical and political context of the Nigerian financial system.

He has over 30 years professional experience in man-

agement, product development, marketing and digital innovation. He is an alumnus of ESCA (Ecole Superieure de commerce d’Abidjan), a highly rated Business School in Cote d’Ivoire in partnership with the University of Brighton (UK).

He began his career at IBM in 1998 as a sales manager before moving to United Bank of Africa (UBA) in 1999, as head, Card and Payments. In 2009, he was appointed group head, Prepaid Card Business and in this capacity he played an

important role in UBA’s digital banking transformation.

Commenting on the appointment, Segun Akerele, EFInA’s Board chair said, “Esaie has the right mix of experience in leadership, digital innovation and management needed to lead the next phase of EFInA’s growth. We are happy he has agreed to join us as he shares the values and aspirations of this company and its donors. On behalf of the Board of Directors, I wholeheartedly welcome Esaie to EFInA and wish him every success.”

In response, Diei said, “I am excited to join this wonderful team of highly driven individuals who are investing their skills and efforts in advancing access to financial services and opportunities for the poor in Nigeria. I am confident that working together with our stakeholders we will be able to achieve our goals and meet Nigeria’s Financial Inclusion targets by 2020.”

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Wednesday 23 January 2019

JC International records zero Top tech experts to discuss lost time incident in 2018 digital transformation at

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C International, Nigeria’s inspection, training and fabric maintenance services provider, recorded zero Lost Time Incident (LTI) in 2018.

In a statement, the company described the achievement as a pointer to its strong commitment towards ensuring a safer work environment for personnel and assets.

Speaking on the achievement, Peter Nkemdirim, manager, Health, Safety and Environment, JC International, commended the employees for working safely in 2018, while urging them to repeat the feat in 2019.

“It is a huge accomplishment for us as employees; and a direct reflection of the value our company places on safety in operational activities”, he said. He further explained that the achievement shown the company’s dedication to its safety objective tagged: Goal Zero.

“We were able to attain zero lost time record in 2018 due to Management’s commitment to a safer work environment for employees and clients through anticipation of risks, accident prevention programmes, compliance to safety laws and regulations as well as its long-standing safety awareness initiatives for staff and other stakeholders,” Nkemdirim said.

He advised other organisations to adopt an inclusive Occupational Safety and Health (OSH) framework to boost employees’ participation and contributions towards attaining a safer workplace.

He also urged employees of other organisations to see safety as their core individual responsibilities and desist from taking shortcuts, while pointing out that safety required total avoidance of shortcuts but needed strict adherence to all safety guidelines.

Nerds Unite conference

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ver 500 of Africa’s most innovative technology minds, from 200+ companies and 10+ countries will convene in Lagos, Nigeria, February 8, for the annual Nerds Unite conference, a tech event targeted at MainOne’s global, enterprise and start-up ecosystem. This invite–only tech conference will foster dialogue on game-changing technological breakthroughs in the areas of artificial intelligence, cloud and cybersecurity and technology start-ups, which will be presented at the conference.

Themed ‘Accelerating Digital Transformation,’ Nerds Unite will also host an interactive Connected Everywhere session, with a global players discussing tools, infrastructure and partnerships required to benefit from a connected Africa.

Nerds Unite will feature over 20 speakers from global and African tech players who will provide insights into how technology is disrupting Africa, the role of connectivity and cloud services in driving this growth, and the opportunities to digitally transform businesses, economies and nations.

Speaking ahead of the event, Tayo Ashiru, MainOne’s head of marketing, says, “Nerds Unite 2019 will be exciting, with a fantastic line-up of speakers and partners. We expect senior representatives from our global partners, infrastructure providers, enterprises and start-ups who will share insights into the disruptive technologies happening in Africa and the need to upskill quickly to meet the demand of digital transformation within the continent.”

NSE CEO urges higher governance standards at WEF, commends Sahara Group on SDGs

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EO of the Nigerian Stock Exchange (NSE), Oscar Onyema, has called on African businesses to embrace higher governance standards to facilitate the inflow of funds needed to position the continent to leverage gains of the Fourth Industrial Revolution (4IR).

Onyema made the call at the ongoing 2019 World Economic Forum in Davos in an interview with Asharami TV, a Sahara Group thought leadership platform. Sahara Group is a leading energy and infrastructure conglomerate with operations in over 38 countries across Africa, Asia, Europe and the Middle East.

The NSE boss told Asharami TV’s Pearl Uzokwe that the NSE had since established a governance regime that required premium companies

to abide by globally accepted best practice in terms of its reporting, operations, processes as well as commitment to the Sustainable Development Goals (SDGs). He said the platform had inspired businesses to revamp their governance machinery, with particular emphasis on self-appraisals, peer reviews and continuing stakeholder engagement.

“The quest for good governance is now a global force that is driving the movement of investible funds and shaping the narrative for investors seeking to expand their frontiers.

To adequately leapfrog into the Fourth Industrial Revolution, Africa needs to ramp up its level of digitalizsation and this would require huge funds.

Good governance is now the only sure way to growth and the NSE is working with listed com-

panies and other stakeholders across the globe to deepen compliance,” he said.

Commending Sahara Group for playing a frontline line role in galvanizing private sector involvement in driving the SDGs, Onyema said the movement of talent, investment and goodwill is increasingly being determined by how much a business is committing to embracing Environmental, Society and Governance (ESG) tenets.

“In addition to strong financial performance and profitability, businesses must be involved in enhancing the well-being of the world. There is no doubt that the only assurance that a business will be around for a sustained period will be a function of how invested they are in promoting the SDGs in collaboration with various stakeholders.

Wednesday 23 January 2019

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Lessons for Nigeria as Saudi Arabia plans refinery, petrochemicals plant in South Africa DIPO OLADEHINDE

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ews of Saudi Arabia’s plans to build an oil refinery and a petrochemicals plant in South Africa as part of $10 billion of investments in the country will probably send shivers down the spines of Nigeria economy managers. For many of these managers, the economy has taken a backseat, no thanks to distractions from next month’s general election to which they have exposed themselves.

When it comes to investment in Africa’s oil and gas sector one would predict the frontrunner to be the continent’s biggest oil-producing country. Nigeria has the requisite production capacity, huge oil reserves and massive gas reserve. However Nigeria

is not the first-choice country for such as purpose, and understandably so. Nigeria is fast losing its competitiveness to other countries with lower oil productions but simpler oil and gas legislation and better business environment.

Although South Africa currently has six refineries with two using synthetic fuels as feedstock, while the other four use crude oil, with Royal Dutch Shell, BP, Total and Sasol being the major operators. However, for about a decade, South Africa has been making plans to build an extra refinery but has been unable to agree on commercial terms with investors.

Saudi Energy Minister, Khalid Al-Falih, said in his comments after a meeting with South African Energy Minister Jeff Radebe few days ago in Pretoria that the

planned refinery would be run by state-owned energy firm Saudi Aramco using Saudi’s oil.

Ministers Jeff Radebe and Al-Falih have already signed a Memorandum of Understanding (MoU) to cooperate on oil and gas undertakings. Under the MoU, projects will be launched in South Africa, managed by Saudi Aramco and the South African National Oil. Radebe said that the exact location of the refinery and petrochemicals plant would be finalised in the coming weeks.

“Saudi Aramco and South Africa’s Central Energy Fund are moving forward with the feasibility study and identifying the parameters of the project,” Al-Falih told reporters in Pretoria, South Africa’s administrative capital.

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BUSINESS DAY

Covenant University to hold roundtable discussion on 2019 budget TELIAT SULE

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entre for Economic Policy and Development Research (CEPDeR), Department of Economics and Development Studies, Covenant University, Ota, Ogun State, will on February 8, 2019, at the CUCRID Building hold a national roundtable and panel discussion on the 2019 budget.

The roundtable discussion, which has the theme: “2019 Budget, Pertinent Issues and Sectoral Impacts,” aims to appraise the distribution of resources in the 2019 budget and their effects on firms and individuals operating in the different sectors of the Nigerian economy.

The programme and similar others that will come up this year are in line with the mail goals of CEPDeR,

which is to link economic and development research to policy and practice by contributing to evidencebased policy processes in Nigeria.

“Given the current state of the Nigerian nation and many other African countries, Covenant University is proffering workable solutions to facilitate economic development in the continent. This role is being achieved through the concerted and coordinated research activities in the Centre for Economic Policy and Development Research (CEPDeR) - an offshoot of the Department of Economics and Development Studies in Covenant University.

“CEPDeR is a world-class hub and innovative platform for evidenced-based economic policy research and consultancy. CEPDeR’s development research initiatives are strategically ar-

ticulated, coordinated and executed,” Covenant University said.

Renowned industry and policy experts expected at the roundtable discussion include Ayoola Olukanmi, an ambassador and director general, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), who is the keynote speaker.

Other discussants include Frank Aigbogun, CEO/publisher, BusinessDay; Francis Iyoha, a professor of accounting; Olawale Rotimi, CEO, JR Farms; Isaiah Olurinola, a professor of economics, and Wolesola Kukuyi, medical director, Ace Medicare Clinics.

Aigbogun, as the publisher of West Africa’s premier business and financial newspaper, is to discuss business and investment issues in Nigeria in relation to the 2019 budget.

Nigeria joins, signs African pact on economic implementation

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Vice President Yemi Osinbajo (2nd r), and Kayode Fayemi, governor, Ekiti State (r), during the inauguration of Tradermoni and Micro Small and Medium Enterprises (MSMEs) clinic in Ado-Ekiti.

mid growing interests on the outcomes of the forthcoming elections, Nigeria has agreed to join a major pact to support the focused delivery of its Economic Recovery and Growth Plan (ERGP) at the 3rd International Conference on the Emergence of Africa (ICEA) in Dakar, Senegal, January 19.

Convened by a network of African countries together with the United Nations Development Programme collaborating with the African Development Bank, the World Bank, and the Government of Senegal, the ICEA also marked the formal launch of the African Network of Presidential Delivery Units (ANPDUs), a high-powered intra-African body to focus on sustained and continued delivery and implementation

of economic transformation programmes.

Leaning on the emergence of an increasing number of African economies into the fastest growing economies’ league, the ANPDUs is mandated to rapidly implement the sharing of successful practices on accelerating high-impact programs towards industrialisation, socio-economic transformation, and poverty alleviation.

The ICEA, attended by Presidents of several countries including the President of Malaysia, Mahathir Mohammed, Macky Sall of Senegal, Kenyatta of Kenya and the President of Mali, was anchored by a former Malaysian cabinet minister in charge of performance and delivery, Idris Jala, who is internationally recognised as an economic transformation and performance expert.

FG’s policies making impact in reducing poverty - budget minister NPA assures investors of enabling business environment for growth INIOBONG IWOK

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inister of Budget and National Planning, Udoma Udo Udoma, says Federal Government poverty alleviation initiatives are making an impact in reducing poverty.

Udoma says the implementation of the programmes has made many Nigerians, particularly the poor and vulnerable, to feel directly the impact of governance.

His appraisal was contained in a release signed by Akpandem James, special adviser (media) to the minister.

He recalled an event last Sunday, organised by the Ministry of Information at which some of the beneficiaries of the Federal Government’s Social Investment Programme

gave “very moving testimonies” of how their lives have been impacted by the programmes.

“Listening to these testimonies brought home to me the importance of the work we are doing and how real lives are transformed by these interventions. This work is important, and we must all work hard to do more. Step by step we are helping to reduce poverty and ameliorate the plight of the poorest of our citizens,” he said.

Udoma further said although the programmes have been impactful “we must continue to intensify the implementation of these laudable programmes so that the benefits may touch more and more Nigerians.”

The statement said Udoma was speaking at an International Social Protec-

tion Cross-learning Summit in Abuja on Tuesday, where he said the determination of the Buhari administration to continue its work to substantially reduce poverty among Nigerians are the major reasons for the Summit; to see how the lessons from implementing government’s social protection programmes can be applied to further improve the lives of the poor and vulnerable.

The Summit was said to have been organised by International Development Partners working with the Ministry of Budget and National Planning.

He explained that the objective of the summit is to deepen stakeholders’ awareness and understanding of the benefits of continuing the investments we are making in social protection related programmes in Nigeria.

AMAKA ANAGOR-EWUZIE

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anaging director of the Nigerian Ports Authority (NPA), Hadiza Usman, has pledged the Authority’s full commitment to the provision of enabling environment for business to grow in the maritime sector.

Usman stated this on Tuesday while receiving Jesper Kamp, the Danish ambassador to Nigeria and his team, who paid her a courtesy visit in the corporate headquarters in Marina.

Represented by Sokonte Davies, executive director, Marine and Operations of the NPA, Usman called for continuous engagement on the way forward in the maritime sector.

She told the Danish ambassador that the Authority was committed to the development of Deep Seaports across Nigeria in line with the

development of global economy.

“Efforts are ongoing to increase the depth of the draught of Onne port to 11 meters as a way of encouraging bigger vessels. As a leader in the maritime business, the Authority will always tap from the wealth of experience of the Danish government,” she said.

Earlier, Kamp told the management of the NPA that the visit was part of his efforts to promote Danish-Nigerian trade relations and attract investment to Nigeria.

According to Kamp, beside facilitating investment in infrastructure to Nigeria, there have been cautious efforts towards mobilising Danish companies to come and invest in Nigeria, as exemplified by Maersk Line and other companies.

“Danish companies operate 30 commercial vessels in the Gulf of Guinea, and we are concerned about security

within Nigerian maritime domain. Our government is collaborating with the Nigerian Maritime Administration and Safety Agency (NIMASA) and the International Maritime Organisation (IMO) on training of marine cadets and maritime security personnel,” he said.

Gildas Tohouo, managing director of Maersk Line, who accompanied the Danish ambassador, thanked the management of the NPA and other stakeholders for their support to Maersk Line and for efforts at increasing the depth of the channels leading to Onne port.

He also reiterated the willingness of Maersk Line to patronise Onne Port the moment the port channel is deepened by additional one meter as being proposed, stressing that the Maersk Line operation will eventually increase the revenue base of the port by $2 million.

48

BUSINESS DAY

NATIONAL DISCOURSE

JOSEPHINE OKOJIE

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or Nigeria to have an all-inclusive and sustainable growth there must be a holistic approach by the Federal Government.

The People’s Democratic Party (PDP) presidential candidate, Atiku Abubakar has laid lots of emphasis on the need for restructuring through the regional thinking approach in directing the affairs of the country in driv-

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Wednesday 23 January 2019

Nigeria and PDP restructuring plans ing all-inclusive and sustainable growth and development.

The former vice-president has stated that the fastest way to achieve this is by reducing powers and roles of the federal government by returning some items on the concurrent list to the states.

History has shown that the failure of the Federal Government to create a framework for states to exercises certain authority to allow them run a system within the ambits of the law has continued to limit growth and development at state and local levels.

For instance a few years ago, Lagos state wanted to create its owing police force to address the high rate of insecurity and by so doing, creating employment for the youths and boosting investor confidence in the state. But this was prevented by the Federal Government because the powers of establishing a state police are not vested on the state constitutionally.

Analysts have always attributed this to the autonomous powers concentrated at the central government. The analysts say that for the country to have allinclusive growth, more powers must be devolved to the states and local governments.

This is what Atiku, Nigeria’s former vice president and PDP’s presidential candidate is planning to do if elected next year.

Atiku’s plan of restructuring is expected to be carried out in phases and one of the motives is to reduce the powers of the central government.

He argues that with more powers devolved to the states or geopolitical zones, governors will assume greater responsibility in developing their regions or states.

If this happens, political analysts say that regional inequality in the country which is already a huge structural problem will gradually be addressed and in no time be totally eliminated.

Currently, the poverty index

in the North-East and NorthWest regions of the country is rising and does not show any signs of decreasing owing to youth restiveness and the high rate of insecurity.

Recently, the United Nations said that over seven million people in the North-Eastern region urgently need food and livelihood assistance as a result of long term social and economic exclusion, along with violent conflict in the region.

The UN also stated that seven out of 10 people in the region were living below the extreme poverty line before the security crisis rocking the region that has forced farmers to abandon their farmlands.

With the PDP’s restructuring plan of realising more powers to the states, governors would begin to look inwards and depend less on the Federal Government for monthly revenue allocations.

“At the moment, the Federal Government has too much on its plate and it is not able to pay

attention to all parts of the country. My belief is that by devolving more power to those states and regions, they are closer to the people, particularly in areas such as education, health, infrastructure and so on. I want to see a lean Federal Government,” Atiku said recently when speaking of his restructuring plans.

According to analysts, with restructuring, states will begin to generate more revenue and explore natural resources within their jurisdiction.

Currently, the Internally Generated Revenue (IGR) of most states in the northern region is poor compared to other regions in the country.

The region depends on the Federal Government for revenue and has failed to explore natural resources. But with restructuring, there will be completion and each region will begin to exploit opportunities to drive investments and development of various sectors at the state and local levels.

Roads: Terminal illness in search of ‘physician’ MIKE OCHONMA

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igeria has the 29thlongest road network (193,200 km, both paved and unpaved) in the world, buts ranks abysmally low on the table of countries with good motorable roads year in, year out, according to the Federal Ministry of Works.

The top 10 countries by road network size are: United States, China, India, Brazil, Russia, Japan, Canada, France, Thailand and South Africa.

In Africa, Namibia has the best roads with a score of 5.2, ranking 23; followed by South Africa (score 5.0) ranking 29; Rwanda (score 5.0) on 33rd; Cote D’voire (score 4.7) squaring, 42 and Mauritius (score 4.7) ranking 44.

Others are Morocco (score 4.4), on 55th position; Kenya (score 4.2) on 61st; Cape Verde (score 4.1), ranks 66th and Senegal (score 4.0), ranks 71st.

Nigeria is termed the giant of Africa and as such should appear as one, but the reverse is the case in terms of the road network. This is a strong pointer to the fact that there is a very huge deficit in terms of good road infrastructure.

Because of its intensive use of infrastructures, the transport sector is an important component of the economy and a common tool used for development.

Almost on daily basis, the frustrations in the Nigerian sys-

tem can be likened to harrowing experiences of road users, who have difficulties reaching their destinations because the road upon which they have to travel is an experience in hardship.

The high rate of accidents and premature deaths on Nigerian roads caused by the bad condition of the roads, reported to be one of the highest in the world, is a mirror of the morbid statistics that says the average life expectancy in Nigeria is 53 years.

At the aggregate level, efficient transportation reduces costs of many economic sectors, while inefficient Nigeria is conspicuously missing among the top 10 African countries with quality roads according to the World Economic Forum (WEF) global ranking competitive report: Road quality index 2016-2017.

Nigeria’s occupation of low position of the ladder in terms of good road infrastructure is worsened by long years of abysmal failure and total of decay of the rail mode of transportation.

This has put pressure on the already deplorable portions of the road that are littered with rickety and unroad-worthy tankers and trailers and other decrepit condition of the road.

The country is celebrating the construction of a multi-billion dollar standard gauge train from Lagos-Kano at a time countries move at geometric progression by migrating from standard gauge to speed train, to bullet train.

ANALYSIS Figures released by National Bureau of Statistics (NBS) in March 2018 gave the full year passengers’ traffic for 2017 at 13,394,945, of which 6,693,687 at arrivals and 6,701,258 at departures.

The Nigerian Civil Aviation Authority (NCAA) statistics shows that eight domestic airlines ferried 7,646,075 as inbound and outbound passengers, out of the estimated 200 million population.

According to the Federal Roads Safety Corps revelation in 2017, bad roads are a major cause of road accidents. On Abuja-Jos road to Mararaban Jamaar in Jos South, there are 1,674 potholes, while along the Onitsha-Enugu highway, Aba-Port Harcourt road and from Kaduna to Kano, the number of portholes is double the figures.

High and sustainable priority attention on roads infrastructure for Nigeria’s expanding population appears to be the most pressing national emergency in Nigeria today because as Kelly Nwosy, a safety advocate said, even if the country increases its agricultural produce, fix electricity problems, provide the necessary funding and tools to improve our education and abandon the roads, the missing link between one region and the other as well as the bridging of that gap between the rich and

the poor will remain elusive.

With few weeks and months to the general elections and politicians of the different political parties jostling for different offices at both the state and federal levels, they should be aware of this hydraheaded problem affecting the economic and social existence of the country.

Those at the centre of policy formulation must note that both the federal and state governments must have the political will to fix the arterial roads and other roads.

Part of the short, medium and long terms solution to this will be a strong collaboration between qualified road contractors with credible track record in building quality roads infrastructure.

It requires a synergy involving both the private and public sector, which will help achieve safety on the roads, instead of leaving everything to the ministry of works that may not have the required skill- set to build good roads.

Government should begin a strategic engagement with the private sector and investors to carry along all relevant roads infrastructure while at the same time removing bottlenecks and obstacles through policies to support massive investments on roads.

Now the question is; why do roads collapse and what are the causes of bad road. Among the real causes of bad and substandard road is corruption.

Top on the lips of majority of Nigerians for many years is: What do Nigerian politicians have against good roads? What do they have against well tarred roads, beautiful streets and effective drainage systems? This problem with roads has existed through various political comings and goings.

Nigerian politics is afflicted with many ills, but if there is one thing nearly all politicians have in common. It is their collective disdain for good roads. Good roads seem to hold a special place of discontent for the average politician.

This ‘Bad Road Syndrome’ has been a thorn in the side of every Nigerian commuter for a very long time and politicians just seem to look away, like a callous man refusing to listen to the complaints of his downtrodden wife.

This big problem in Nigeria is that officials concerned are pretending to work when they are doing nothing. Contracts for roads and drainages in most parts of Nigeria are usually split in half; one for the corrupt officials and the other for the road. It is worse when money is not paid in full, which denies the citizenry of good roads and drainages.

Other cause of road decay is lack of discipline. Nigeria lacks discipline as a people. Citizens blame the government for everything. Yes, government may have their own flaws, but what about the governed?

Wednesday 23 January 2019

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Use your PVC wisely, Fashola tells voters CHUKA UROKO

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igerians who are eligible to vote by way of having attained voting age or acquired their permanent voters cards (PVCs) have been told to use the PVCs wisely as the country warms up for its forthcoming general elections.

Babatunde Fashola, Nigeria’s minister for power, works and housing, who gave the advice, also told the people to go out and vote according to the dictates of their conscience and vote for the party that has done something that impacts on their lives positively.

Nigeria and its citizens will be going to the polls to elect their president and members of the national assembly on February 16. So many Nigerians have offered themselves to serve as president but the contest seems to be between the incumbent president, Muhammadu Buhari, and the main opposition part, the Peoples Democratic Party (PDP) whose flag bearer is former Vice President Atiku Abubakar.

Babatunde Fashola

Each of the two candidates is formidable in his own right, but Fashola woos the electorate to vote the incumbent president who is of the All Progressives Congress

(APC) which rose into power in 2015 through a well oiled electioneering campaign machine and a change mantra that swayed votes to them.

The minister insisted that the gov-

2019: I will resist APC rigging plans - Agbaje Iniobong Iwok

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imi Agbaje, the governorship candidate of the main opposition People’s Democratic Party (PDP) in Lagos State, has said that the PDP would resist the alleged attempts by the ruling All Progressives Congress (APC) to rig the forthcoming general election.

Agbaje added that PDP was determined to prevent the rigging that robbed him and other candidates of the party victory in 2015 general election.

Agbaje, who narrowly lost the gubernatorial election to incumbent Governor of Lagos State, Akinwunmi Ambode, in 2015, promised to follow in the footsteps laid by Second Republic Governor of Lagos State, Lateef Jakande, whom he praised for making landmark innovations in the educational sector and in the provisions of infrastructure like potable water and roads across the state.

According to him, “Unlike the current dispensation that had spent the last 19 years and colossal budg-

ets that had not led to remarkable improvement in the lives of the Lagosians, Jakande’s four years had been replete with unforgettable achievements in several areas.

In Eti-Osa, Agbaje met with members of the Lekki Estates Residents and Stakeholders Association (LERSA) who placed some demands before him, while also meeting with a cross section of traditional rulers, members of the PDP as well as business and community leaders in Kosofe on Monday.

Addressing his audience in Ogudu, headquarters of Kosofe Local Government, Agbaje stated that the people of the state should resolve to guard and protect their votes in the election.

He lamented the fact that the people of Lagos were in dire need of potable water, promising that when elected, his government would make conscious efforts towards resuscitating the moribund mini-water works across the state.

The governorship hopeful had on Sunday assured residents of the

various communities in Lekki axis of the state that his government would build a new coastal road and demolish the toll gate on the Lekki-Epe Expressway.

He further lamented that the people of Lagos were in dire need of potable water, promising that his administration would make conscious efforts towards resuscitating the moribund mini-water works across the state.

According to him, “The governorship election is a process that would lead to the freedom of our people. It is a process that would free us from tyranny, graft and waste. APC members know that they have been rejected by the people and the only option left for them to remain in power is to rig.

“This time, we are ready for them.

There won’t be any opportunity for them to rig the coming election. I am urging our women to come out.

You know if the women prevent you from wrongdoing and you try to venture into it, it would fail. We will vote peacefully and make sure that our votes count at the end of the day.”

ernment has done well enough in the last four years to deserve a return to power a second time, pointing out that “the coming election is about your future; get your PVC and vote according to your conscience”.

He explained that he was in Lagos to sensitise the people about the election in the hope that each of those who were there was an influencer who could discuss the election with his neighbours, family and friends, church members, peer groups, etc and let them see why they should go out and vote.

“You now enjoy electricity and drive on smoother roads such as Herbert Macaulay, Third Mainland Bridge, Costain, Western Avenue, Lagos-Ibadan Expressway, etc. Your generators have been taken away and replaced with cleaner energy; that tells you that government is working”, he said.

He added that the federal government was constructing roads in every state of the federation just as they were building rail tracks to ensure that trucks that are presently carrying containers would no longer be seen on the roads.

The minister drew attention of the

people to the new voting process, explaining that this time, unlike before, voting would follow immediately after accreditation. In the old order, people would come, do their accreditation, go back home and return to do the voting proper at a given time.

Fashola told the youths, who complained of not getting the attention of the federal government in terms of jobs and scholarships, that government was no longer giving direct jobs to the youth, but rather creating the right environment for the private sector to operate optimally and create jobs.

“Our duty is to support business to function by providing power and other infrastructure so that cost of production can come down and demand can increase to enable industries to create jobs”, he disclosed.

Continuing, he said, “the most important thing now is for the youth to identify where there are opportunities to earn income instead of waiting for the government; the traditional jobs are changing and people who need jobs have to realize this; the youth should think of technology and the limitless opportunities it can offer”.

RBM backs Buhari, says OBJ’s allegations are frivolous

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pro-Buhari group, Re-elect Buhari Movement (RBM) has asked Nigerians not to be distracted by the recent allegations leveled against President Muhammadu Buhari by former president Olusegun Obasanjo.

According to the RBM, the action is nothing but a failed plot to demarket the President ahead of the coming polls.

The group however, said that the action would not affect Buhari negatively as the former president was known for “his antics”.

The RBM in a statement signed by its Convener, Emmanuel Umohinyang, particularly noted that Obasanjo himself knows that he has no electoral value.

This is even as the RBM predicted that Akwa Ibom State where Obasanjo endorsed its governor for second term last year despite a woeful performance would fall to the All Progressives Congress (APC) in the coming elections.

It posited that the issue has been made worse with the defection of Senator Godswill Akpabio, the im-

mediate past governor of the state to the APC, which has altered the political equation of the state.

“We have said it before that Nigerians have since turned their backs on OBJ and his antics, especially his illinformed tirades against the Buhari administration,” Umohinyang said.

According to him, “The state of Akwa Ibom in particular has fallen to the APC with Akpabio’s defection, and that tells you the picture of things to come. With Akpabio’s defection, the people have also moved which shows the deep love they have for him.

“We have also told you that though he represents Ikot Ekpene Senatorial District, he has successfully impacted on other constituencies by way of constituency projects, even in districts controlled by the PDP “Even the governor’s Eket senatorial district is a major beneficiary of Akpabio’s benevolence, so, for the governor to have gone to the senator’s Senatorial District to campaign for another candidate is an aberration.

for,” it said.

According to the group, “Unemployment has not only worsened under this APC government; most Nigerians wonder where the next meal will come from.

“The government is busy compromising institutions of state, from security agencies and anti-corruption bodies to INEC. They have been turned into tools in the hands of the APC for intimidation and persecution of the opposition.”

The group identified women, youths and children as the worst hit

category of the Nigerian masses under the present government, calling on the electorate to vote massively for the PDP candidate.

“In all of this, it is the women, youth and children who are worst hit by the effects of APC’s poor governance. The sheer numbers of women registered in the IDP camps spread across the country as a result of violence, terrorism and insecurity only goes to show thee callous negligence of their responsibility to protect life and property,” it further said.

Women group drums support for Atiku/Obi, condemns APC Innocent Odoh, Abuja

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women group, the Grassroots Women for Atiku and Obi (GW4AO) has drummed support for the political aspiration of Atiku Abubakar, the presidential candidate of the People’s Democratic Party (PDP) in the forthcoming election.

The group, which spoke in Abuja on Tuesday in a communiqué signed by its National Coordinator, Amina Jambo, said during its

national conference that only the emergence of Atiku and his running mate, Peter Obi, could salvage Nigeria from myriad of its current socio-economic problems.

It blamed the ruling All Progressives Congress (APC) for the spate of insecurity, unemployment, economic hardship as experienced by citizens of the country.

“We all are familiar with the current state of affairs of our nation and the many challenges the leadership and citizens are grappling with on a day-to-day basis.

“It is beginning to appear to us that the APC-led administration is determined to run this nation aground and place its citizen under persistent hardship.

“Our debt profile has risen to unprecedented heights in a way never seen before, borrowing and spending bazaar witnessed by any administration in Nigeria history.

“The APC-led administration has so far borrowed in 4 years surplus of what the PDP borrowed in 16 years with most if not all of what they borrowed can’t be accounted

PrivateEquity & fundraising 50

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Companies&Market

PE firms eye more assets but margin concerns remain ...40% of PEs reported drop in margin for past two years Stories by MICHEAL ANI

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layers in the Private Equity (PE) space have shown optimism in acquiring more assets this year however, high operational expenses that are eroding their margins, remains a very big constraint, according to key findings from a survey by Ernst&Young.

The survey which is the sixth annual survey of the Londonbased management consulting firm captured the views of Chief Financial Officers (CFOs) from 103 PE firms, who showed great strides in launching new products and investments in new technological solutions, but expressed concerns on continuous growth in expenses growing as fast as the growth in their assets.

Nearly 40 percent of CFOs reported that margins have worsened over the past two years, and are doing everything possible to reduce expenses from cutting of staffs, to exploring technology and outsourcing to mitigate the pressure On the other hand, about 28 percent of the respondent said they saw their margins improve in this period of asset growth.

“CFOs face different paths for altering their operational infrastructure and achieving sustainable growth,” says Denise Davidson, Associate Partner, Wealth and Asset Management, EY. “Determining the right balance of technology, talent and outsourcing is not a one-size-fits-all approach.

While CFOs are divided on which path is the best fit for their aspirational goals, one thing is certain: they must act quickly to achieve a competitive edge” Attentiveness in PE looks bright, with 76 per cent of CFOs saying that asset growth is the top priority for their firm. What is shocking is the level of competition that the PE industry poses to hedge funds.

Currently, 18 per cent of the typical investor’s alternatives portfolio is made up of traditional PE investments, and nearly 40 per cent of investors expect to allocate more capital to PE firms.

Taking advantage of this momentum and displaying optimism, over half of CFOs noted that they expect to raise a new fund in 2019 and 65 per cent expect that the new fund will be larger than their last.

The survey also found that while CFOs begin to prioritise the cost-effective and competitive advantage of outsourcing to boost their bottom lines, they are acutely aware of the talent necessary to grow their firms.

Forty-six percent said they are renegotiating fees with vendors, 39 percent are implementing technology solutions, and 37 percent have increased outsourcing of certain functions.

A little over a quarter of firms have reduced headcount, and just under quarter has added junior people rather than making senior hires.

“The pressures facing private equity managers are well-known — fee pressure and growing expenses, to name a few,” EY said in the survey. “This environment is straining the economics of almost every manager,” they continued.

Last year, private equity firms raised about $681 billion in assets – and falling margins aren’t keeping them from further fundraising.

According to EY, it’s also the third year in a row that the majority of firms planning to raise a fund expect that fund to be larger than its predecessor.

At the same time, firms are facing fierce competition for investors, even as most of them are increasing their private equity allocations. To appeal to a broad range of clients, firms are offering more customized services, the report the report said. In particular, smaller firms, without well-known name brands, are offering separately managed accounts and single-investor funds to stand out from the competition.

In addition, private equity firms, which have long escaped investors’

ire when it comes to high costs, are also facing pressure on fees, according to the survey of 103 CFOs. To attract new clients, 59 percent of CFOs said they have either adopted or are considering adopting a non-traditional fee structure, including expense caps and a giving investors the choice between paying a higher management fee and lower carry or vice versa.

Of those firms that have nontraditional fees, 64 percent said they offer a performance-fee only option. Fifty-six percent reported offering fee breaks based on investor commitments, while 23 percent and 18 percent offered tiered management fees and tiered carry rates, respectively.

Some private equity firms are also competing for clients by giving them fee breaks on separate accounts and single-investor funds.

Sixty-four percent reported that they are providing some kind of fee cut, with 16 percent offering discounts of more than 100 basis points.

Despite historical underinvestment in technology, most PE CFOs

note that their firms have recently made or are planning to make investments in technology across a wide array of functions.

Over the past two to three years, PE managers have made technology investments in the areas of fund accounting (66 per cent), investor relations (62 per cent), accounts payable/time and expenses (57 per cent), and compliance and regulatory reporting (56 per cent).

Unfortunately, most report that the payoff has yet to be seen. The tax and accounts payable finance functions have received the biggest benefit thus far, with 33 per cent and 40 per cent of CFOs reporting net decreases in operating expenses in these areas, respectively. The hurdles include the need to enter clean data, integrate systems and fully enable the workforce.

As the workforce is evolving, approximately half of CFOs have changed the profile of the candidates that they evaluate, interview and ultimately hire relative to 5 to 10 years ago. Now, more than ever, they recognise the role diversity plays in fostering different perspectives that can positively impact investment decisions. Because of this, 79 per cent of CFOs seek to improve gender diversity and 63 per cent seek to increase cultural diversity.

Even as technology plays an increasingly critical role in a fund’s operations, there is no substitute for quality people. Investors expects talent programs to develop future leaders, increase diversity of skill sets and maintain employee satisfaction to minimise disruption caused by turnover are commonplace.

In fact, 78 per cent of investors request information about a firm’s talent management program during the due diligence process, and, of those that request information, 68 per cent say that is it critically important to them. Managers need to heed these requests, as more than half (54 per cent) of PE CFOs surveyed do not yet have a formal talent management program in place.

Vectis, AGL seals $12 million investment deal in Leventis

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consurtium of investors led

by Vectis, a Nigerian private equity firm and AGL, a Nigerian Conglomerate has sealed up a $12 million investment deal into Leventis Foods Ltd, BusinessDay has learnt.

The deal will see Vectis, control a majority stake in the Fast Moving Consumer Goods Firm while AGL will maintain minority stake.

The transaction is awaiting regulatory approvals. Calls put across to get proper clarification proved abortive as both parties did not respond immediately as at the time BusinessDay filed this report.

Nigerian based ACAS and KGDl from Athens were legal advisers to the deal.

Following this investment, Leventis Foods has a very strong financial position and coupled with its technical know-how will further enhance its product portfolio, manufacturing and logistics infrastructure and distribution.

New Board and Management with vast execution experience in Nigeria and Africa will bring the Company to a new level to become the leading flour-based food and snack producer in West Africa.

Leventis Foods started in Nigeria in 2002 and launched the first packaged bread, Val-U bread, which grew to become the best quality product of its category enjoying high awareness in Lagos and the South part of the country. Salty snacks Meaty, Hotty and sweet snacks Diamond Cake, 4me Choco, BOSTON DONUT comprise its portfolio.

It operates out of a fully functional 12,000 sq.m. factory and employs 200 people with strong manufacturing knowledge.

Furthermore it distributes frozen products through an

exclusive cooperation with the US Company RICH’s. RICH’s is known globally for more than 70 years as the founder of the NonDairy segment of the frozen food industry and leading supplier to the foodservice, in-store bakery and retail marketplaces.

AGL is a large Nigerian Conglomerate founded in 1937. AGL has played a significant role in the Nigerian economy as a diversified operator and investor.

Has acted as the founder of very successful and now independent companies like Nigerian Bottling Company (the local Coca Cola franchise), 33 Beer,

Beta Glass, Cummins Nigeria and others. Currently AGL is active in automotive (Volkswagen and Foton trucks) and real estate (portfolio throughout Nigeria).

Vectis is a special situation Private Equity Deal Shop active in SE Europe since 2000 and first came to Nigeria in 2008. It has been working with European institutional investors and has made numerous investments across sectors with combined enterprise value in excess of USD 2billion. Its investments are of long-term nature and sectors of expertise are Financial services, retail and food manufacturing.

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Live @ the Stock exchange Prices for Securities Traded as of Tuesday 22 January 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. 161,996.64 5.60 0.89 178 26,997,462 UNITED BANK FOR AFRICA PLC 247,945.80 7.25 -1.36 200 21,963,295 684,443.56 21.80 1.40 355 10,894,702 ZENITH BANK PLC 733 59,855,459 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 262,035.64 7.30 -1.37 268 16,944,684 268 16,944,684 1,001 76,800,143 BUILDING MATERIALS DANGOTE CEMENT PLC 3,237,696.41 190.00 -2.11 42 687,320 109,285.20 12.60 1.61 78 879,060 LAFARGE AFRICA PLC. 120 1,566,380 120 1,566,380

EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 317,760.06 540.00 1.89 60 359,745 60 359,745 60 359,745 1,181 78,726,268 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 15,876.20 5.95 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 3,312.39 103.20 - 0 0 VALUEALLIANCE VALUE FUND 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 78,220.62 82.00 - 8 85,259 PRESCO PLC 60,000.00 60.00 -3.23 8 401,357 16 486,616 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,530.00 0.51 - 3 121,000 3 121,000 19 607,616

DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 820.66 0.31 - 0 0 JOHN HOLT PLC. 186.79 0.48 - 2 6,100 1,903.99 2.93 - 0 0 S C O A NIG. PLC. 50,809.99 1.25 2.46 98 7,488,335 TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. 25,643.54 8.90 1.14 53 2,206,807 153 9,701,242 153 9,701,242

BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 37,488.00 28.40 - 20 106,347 ROADS NIG PLC. 165.00 6.60 - 0 0 20 106,347 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,287.35 1.65 - 4 1,366 4 1,366 24 107,713

AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,135.72 1.55 - 1 55 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 155,517.18 71.00 - 32 45,491 INTERNATIONAL BREWERIES PLC. 260,024.82 30.25 - 7 57,105 NIGERIAN BREW. PLC. 639,752.16 80.00 -1.23 99 771,610 139 874,261 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 33,000.00 6.60 0.76 51 527,859 DANGOTE SUGAR REFINERY PLC 174,000.00 14.50 - 25 56,446 FLOUR MILLS NIG. PLC. 79,752.38 19.45 - 46 174,663 HONEYWELL FLOUR MILL PLC 9,912.75 1.25 0.81 25 640,838 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 703.89 3.95 - 1 1,100 NASCON ALLIED INDUSTRIES PLC 47,689.89 18.00 - 12 154,270 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 160 1,555,176 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,782.02 10.00 - 29 579,906 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 - 28 32,047 57 611,953 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,680.24 4.49 2.05 35 431,087 35 431,087 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 47,050.15 11.85 - 35 185,634 UNILEVER NIGERIA PLC. 212,565.20 37.00 - 26 109,428 61 295,062 452 3,767,539

BANKING DIAMOND BANK PLC 48,173.61 2.08 0.48 93 71,584,117 256,893.72 14.00 - 39 5,676,938 ECOBANK TRANSNATIONAL INCORPORATED FIDELITY BANK PLC 60,557.33 2.09 3.47 96 12,805,835 GUARANTY TRUST BANK PLC. 944,740.85 32.10 1.26 226 26,567,915 15,616.05 0.53 - 12 1,171,924 JAIZ BANK PLC SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 58,732.45 2.04 -0.49 87 3,698,125 UNION BANK NIG.PLC. 196,565.08 6.75 - 29 90,970 UNITY BANK PLC 10,169.72 0.87 - 7 173,319 WEMA BANK PLC. 23,916.17 0.62 1.64 29 2,660,206 618 124,429,349 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,504.63 0.65 3.17 14 638,300 AXAMANSARD INSURANCE PLC 19,530.00 1.86 - 4 14,048 CONSOLIDATED HALLMARK INSURANCE PLC 2,660.00 0.38 - 0 0 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 1 10,000 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 GUINEA INSURANCE PLC. 1,412.20 0.23 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 2 1,705,000 LAW UNION AND ROCK INS. PLC. 2,148.17 0.50 - 1 5,000 LINKAGE ASSURANCE PLC 5,360.00 0.67 9.84 14 2,953,000 MUTUAL BENEFITS ASSURANCE PLC. 1,600.00 0.20 - 4 67,380 NEM INSURANCE PLC 13,201.26 2.50 -3.85 61 1,512,341 NIGER INSURANCE PLC 1,857.48 0.24 - 0 0 PRESTIGE ASSURANCE PLC 2,745.10 0.51 2.00 1 100,000 REGENCY ASSURANCE PLC 1,467.13 0.22 - 0 0 SOVEREIGN TRUST INSURANCE PLC 1,834.98 0.22 -8.33 15 2,293,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 2 200,000 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 3,050.67 0.22 - 0 0 WAPIC INSURANCE PLC 5,353.10 0.40 -4.76 26 828,845

145 10,326,914

MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,429.96 1.50 2.74 6 609,000 6 609,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 2,719.14 0.24 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,120.00 4.06 0.74 32 264,847 CUSTODIAN INVESTMENT PLC 38,232.12 6.50 5.69 26 454,524 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 36,436.99 1.84 0.55 57 2,845,062 1,492.16 0.29 7.41 4 586,500 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 481,305.99 47.00 - 19 150,007 UNITED CAPITAL PLC 18,060.00 3.01 1.01 66 1,939,155 204 6,240,095 973 141,605,358

HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 923.82 0.26 -3.70 6 665,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 6 665,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 7,425.00 4.95 - 2 13,000 FIDSON HEALTHCARE PLC 14,350.52 12.00 -0.42 37 556,324 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 2,401.00 2.45 - 6 72,500 1,329.41 0.70 4.48 19 547,150 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 64 1,188,974 70 1,853,974

COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 1 100 1 100 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 - 0 0 381.11 0.77 - 0 0 TRIPPLE GEE AND COMPANY PLC. 0 0 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 0 0 E-TRANZACT INTERNATIONAL PLC 13,650.00 3.25 - 0 0 0 0 1 100 BUILDING MATERIALS BERGER PAINTS PLC 2,246.13 7.75 - 7 6,005 CAP PLC 22,050.00 31.50 - 15 69,437 328,587.52 25.00 -7.06 52 1,595,592 CEMENT CO. OF NORTH.NIG. PLC FIRST ALUMINIUM NIGERIA PLC 654.21 0.31 - 0 0 313.43 0.59 - 1 500 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 75 1,671,534 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,170.38 1.80 - 5 16,703 5 16,703 PACKAGING/CONTAINERS BETA GLASS PLC. 27,498.46 55.00 - 3 952 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 952 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 83 1,689,189

CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 3 1,328 3 1,328 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 3 1,328 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 26 1,709,113 26 1,709,113 INTEGRATED OIL AND GAS SERVICES OANDO PLC 58,427.64 4.70 6.82 111 1,755,935 111 1,755,935 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 - 11 6,431 CONOIL PLC 16,134.39 23.25 - 9 2,536 ETERNA PLC. 5,673.03 4.35 - 23 335,820 FORTE OIL PLC. 39,074.43 30.00 - 86 754,682 MRS OIL NIGERIA PLC. 7,055.81 23.15 - 8 7,194 TOTAL NIGERIA PLC. 66,206.76 195.00 - 11 13,931 148 1,120,594 285 4,585,642 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 19,988.83 2.05 - 1 348 1 348 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,829.58 4.80 9.09 11 255,405 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 4 68,444 15 323,849 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 3,159.77 1.52 - 0 0 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 46,362.46 6.10 - 1 117 1 117 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 LEARN AFRICA PLC 956.60 1.24 1.64 8 503,829 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 862.82 2.00 - 3 28,749

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South Africa: Saudi Arabia plans oil refinery, petchem plant in South Africa Page 53 GAS

Debrief

Tunisia: Tunisia set to double gas production this year Page 54 Market Insight

New projects, planned upgrades highlight outlook for refineries in Africa FRANK UZUEGBUNAM

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Oil reaches 2019 -high on strong China crude use Page 58 OPEC weekly basket price DAY

PRICE

18/1/19

60.9

17/1/19

59.63

16/1/19

59.52

15/1/19

58.24

14/1/19

58.39 Source: OPEC

ew refinery projects and planned upgrades highlight the outlook for refineries in Africa for 2019. Countries where planned upgrades feature include Nigeria, Angola, Ghana, Cameroon, and Algeria Nigeria’s Warri refinery, along with two Port Harcourt refineries, were shut early October 2018 for what was termed turnaround maintenance. The plants were due to restart by the end of October. Thought the Warri refinery restarted, the upgrade work was not carried out. For the two Port Harcourt plants, they remain offline with no indication when they will restart. However, Nigeria’s state oil company, Nigerian National Petroleum Corporation (NNPC) is still in talks with prospective financiers to carry out major overhaul of its four ailing refineries

Angola’s Luanda refinery remains completely shut down for maintenance works that started in October 2018. The works were originally expected to take around 45-60 days to complete but the refinery still has not come back online again. Sonangol, Angola’s state oil company is also planning to build a fluid catalytic cracker at the Luanda refinery, with the unit expected to come online mid-2021.

Ghana’s only oil refinery Tem has been offline since November 29, 2018 as it has run through its reserves of crude.

Prior to the recent shutdown, the plant was running at 28,000 b/d and was processing Nigerian crude.

Cameroon’s sole refinery, Limbe is still not operational following its maintenance and upgrade. Maintenance started in April 2018 and it is meant to include increasing the refinery’s capacity to 72,000 b/d from 45,000 b/d.

Sonatrach, Algeria’s state oil

company will aim to complete the upgrade of its Algiers refinery by early 2019 while Zambia’s Indeni refinery has been looking for an equity partner as it seeks to boost capacity.

The new projects are expected to come online in Nigeria, Algeria and South Sudan.

The 650,000 b/d Dangote refinery in Nigeria has made considerable progress with projection that it will be commissioned in 2020. Already, it has taken delivery of one of the major components of its refinery equipment, the Regenerator for the Residual Fluid Catalytic Cracker (RFCC) which is widely used to convert the high-boiling, high-molecular weight hydrocarbon fractions of petroleum crude oils into more valuable gasoline, olefinic gases, and other products.

South Sudan’s first oil refinery is expected to be operational by January 2019 as the world’s newest nation hopes to reduce its reliance on imports. Russia’s

Safinat Caspian Oil Refining Company is building the refinery near the oil fields in Unity State, which will have an 8,000 b/d capacity.

Angola’s Sonangol revived plans for its Lobito refinery project, saying it will build a 200,000 b/d plant in the coastal city by 2022 while Ghana’s ministry of energy is in the process of submitting a proposal to build a new refinery in Tema.

Meanwhile, Uganda signed an agreement with a consortium to build and operate a 60,000 b/d refinery in the west of the country. The $4 billion facility is expected to process 30,000 b/d of crude initially, before its capacity doubles in the second phase of development. The project was expected to come on stream by 2020. Also Sonatrach said it received seven technical offers from international companies or groups for the realization of the new Hassi Messaoud oil refinery in eastern Algeria.

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Outlook

South Africa: Saudi Arabia plans oil refinery, petchem plant in South Africa

S

audi Arabia plans to build an oil refinery and petrochemicals plant in South Africa as part of $10 billion of investments in the country, Khalid al-Falih, Saudi Energy Minister said after talks with his South African counterpart, Jeff Radebe.

The announcement is

a much-needed vote of confidence in a country, where its President, Cyril Ramaphosa is trying to attract $100 billion of new investments to rekindle growth.

The new refinery would reduce the need for refined product imports and cement Saudi Arabia’s dominant position in South Africa’s oil sector.

53

The Gulf kingdom already supplies 40 percent of the crude oil consumed in South Africa.

“Saudi Aramco and South Africa’s Central Energy Fund are moving forward with the feasibility study and identifying the parameters of the project,” Falih said in Pretoria.

Jeff Radebe, South African Energy Minister said

a location for the refinery and petrochemicals plant would be finalised in the coming weeks. The capacity for the refinery is yet to be determined.

South Africa has talked about building an extra refinery for a decade, but it has struggled to agree commercial terms with investors. It has six refineries, four using crude oil and two synthetic fuel as feedstock. Royal Dutch Shell, BP, Total and Sasol are among major refinery operators.

Falih said Saudi Arabia had held discussions with Ramaphosa’s predecessor, Jacob Zuma, about building a refinery in South Africa but the proposed location was not attractive.

The two governments are now considering Richard’s Bay in KwaZuluNatal province, home to South Africa’s major coal export terminal, among potential locations for the refinery.

State oil giant Saudi Aramco is also studying whether to use South African oil storage facilities in Saldanha Bay, while Saudi power firm Acwa Power is looking at investing in South Africa’s revamped renewable energy programme.

Brief

Africa: Tullow Oil reveals plans for Africa for 2019

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he UK-based oil and gas company, Tullow Oil Plc, has revealed its plans for the coming year regarding its operations in Africa.

The news was revealed in a Trading Statement & Operational Update, covering plans in East and West Africa, as well as new ventures.

The firm will invest $68.8m in its operations in the Kenyan market as it prepares for commercial production, which will begin in 2022. Along with partners Total and CNOOOC Ltd, the company aims to finalise the farm-down with the Government of Uganda.

In Ghana, Tullow expects its full year average net production for 2019 to reach 35,000 barrels of

oil per day (bopd) from Jubilee. The company also anticipates to drill and complete seven new wells in the TEN and Jubilee fields.

“Tullow is well-placed to deliver on its growth ambitions,” stated Paul McDade, CEO of Tullow Oil Plc. “In 2019, we will increase oil production in West Africa, target Final Investment Decisions in East Africa and drill the first wells in an exciting exploration campaign in Guyana.”

“Despite a volatile oil price, Tullow’s improved balance sheet, low cost production and strong cash flow generation, even at lower oil prices, will allow us to both invest for growth and pay a sustainable dividend.”

oilfield briefly in December, as well as cuts to Algerian production as part of the new deal between OPEC and other producers to reduce output has given similar grades in West Africa a boost.

Adding to the bullish tone of the market, exports of Qua Iboe will drop to 215,000 bpd in March, from 238,000 bpd in February, traders said.

There are still about 15 cargoes left for sale from the February Nigerian programmes, but most major grades were said to have sold out already,

traders said earlier this month.

Meanwhile, Angola’s state oil company Sonangol issued its preliminary March loading programme with 46 cargoes, up from February’s 42. The country’s state oil company allocated 13 March-loading cargoes to term customers; three term cargoes to Unipec, seven to Sinochem, two to Indian Oil Corp. and one to Phillips66, traders said. With traders are still awaiting their term allocations of Angolan crude, spot trade evaporated.

Nigeria: Bonny, Qua Iboe offered at 10-month highs

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igerian crude oil has been offered at its highest levels in almost a year, traders said, citing cheaper freight rates and shorter supply of competing grades such as Libyan crude.

Major grades such as Bonny Light and Qua Iboe have been offered as high as $2 a barrel above dated Brent, their strongest since March last year, traders said.

Lower supply of light, sweet Libyan crude from the force majeure that closed the Sharara

54

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ENERGY intelligence

Brief EIA lowers spot gas forecasts for 2019 on robust US production, injections

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he Energy Information Administration has lowered its spot natural gas price forecasts in 2019, predicting that production growth will keep pace with demand and export growth, and that inventory builds will outpace the five-year average.

The agency, in its January Short-Term Energy Outlook, lowered its forecast for Q1 Henry Hub natural gas spot prices by 57 cents to $3.03/MMBtu, while the Q2 forecast was trimmed 13 cents to $2.73/MMBtu. The fullyear 2019 price estimate also fell 22 cents to $2.89/ MMBtu, while the new 2020 estimate sees spot prices averaging $2.92/ MMBtu. The agency bumped up its natural gas consumption estimates in the US by 1.46 Bcf/d to 99.4 Bcf/d for the first quarter of 2019, and by 0.76 Bcf/d

Bcf/d to 82.65 Bcf/d, and forecast consumption will average 83.55 Bcf/d in 2020. Production is expected to build on the records set in 2018.

The agency raised by 0.05 Bcf/d to 96.33 Bcf/d its natural gas marketed production estimate for the US in Q1 and by 0.08 Bcf/d to 97.23 Bcf/d for Q2. The full-year 2019 estimate rose by 0.19 Bcf/d to 97.28 Bcf/d, and 2020 levels were put at 99.68 Bcf/d.

While inventories were forecast to reach 1.405 Tcf at the end of March 2019, 15 percent below the fiveyear average for that time, EIA expected injections would exceed the average rate, as production outpaces consumption in late March through October. That would bring inventories to 3.758 Tcf at the end of October 2019, just above the five-year average.

Increasing the pull on

Tunisia: Tunisia set to double gas production this year

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unisia will almost double production of natural gas to about 65,000 barrels of oil equivalent per day this year, the industry and energy minister, Slim Feriani, said.

“We will raise our production by about 30,000 barrels of oil equivalent when Nawara gas field comes onstream in June,” Feriani he said.

This project will be jointly owned by Austria’s OMV and Tunisian National Oil Company ETAP

with investments of about $700 million.

Feriani also said Tunisia was seeking to attract about $2 billion in foreign investment to produce 1,900 megawatts (MW) of renewable energy in three years. “We will start launching international bids for the production of renewable wind and sun energy.

We aim to produce 1,900 MW by investment of up to $2 billion until 2022,” he said. This would represent about 22 percent of the country’s electric-

ity production.

Tunisia also plans to raise production of phosphate from 3 million tonnes to 5 million in 2019, he said. Raising the output will boost economic growth and provide revenue to revive its faltering economy, the minister said.

Phosphate exports are a key source of foreign currency reserves, which have dropped to levels worth just 82 days of imports, according Tunisia’s central bank.

Tunisia produced

about 8.2 million tonnes of phosphate in 2010 but output dropped after its 2011 revolution. Annual output has not exceeded 4.5 million tonnes since 2011.

Feriani said lower production has caused Tunisia to lose markets and about $1 billion each year.

Phosphate exports were hit by repeated protests in the main producing region of Gafsa, where unemployed youth demanding jobs blockaded rail transport.

Global gas output hit record in a decade in 2018

T

to 71.44 Bcf/d for Q2.

“EIA forecasts power sector consumption of natural gas to remain largely unchanged in 2019 and then rise by 3.3 percent in 2020 because of continuing increases in natural gasfired electric generation capacity,” the agency said.

It also raised the consumption estimate for the full year 2019 by 1.08

natural gas, the outlook forecasts that exports will increase by more than 50 percent from 2018 to 2020.

“EIA attributes this historic growth to LNG exports more than doubling over the same period and to new US infrastructure coming online during 2019,” Capuano said, noting US will likely continue to be a net exporter in the coming years.

he oil and gas industry achieved a net production increase of 164bn cubic metres (bcm), which represents the highest production growth since 2010, according to research by Rystad Energy.

“Year-on-year growth was clearly driven by North America, which accounted for 71 bcm, followed by the Middle East with 39 bcm. Europe was the only region that experienced a reduction in 2018,” Espen Erlingsen, Rystad Energy partner said.

Rystad Energy forecasts the supply surge will continue in the coming years. Expected average annual growth from 2018 to 2021 is 115 bcm, which would outpace the aver-

age annual growth from 2011 to 2017 by 90 percent.

“Going forward, global growth will be driven primarily by North American gas, which is going through an LNG development phase,” Erlingsen added.

Rystad Energy, the independent energy research and consulting firm headquartered in Norway with offices across the globe, expects that US gas production will reach almost 1,000 bcm per year (94 bcfd) by 2025.

The weakest global annual growth was observed in the 2015-2016 cycle, when global gas output grew by only 12 bcm. This was also the only period in which North America experienced a year-onyear reduction in gas production growth.

Wednesday 23 January 2019

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ENERGY intelligence

C

ôte d’Ivoire has prioritised a comprehensive programme of economic reforms aimed at achieving a sustainable balance of payment position. One of the target areas in this reform agenda is the energy sector, a critical growth area for the country.

In this transaction, the government has restructured the debt of Société Ivoirienne de Raffinage (SIR), the national oil refinery, with a $658 million debt financing facility.

The facility is in place to help SIR repay historical obligations on crude supply, provide access to longer debt tenures and reduce the all-in interest rate on its stock of debt.

The facility included both a Euro-denominated tranche (with a nine-year maturity) and a West African CFA franc tranche (with a seven-year maturity). The financing will

enable SIR to upgrade its plant and to align it to international environmental emissions standards with a view to business expansion.

To support the government’s drive to manage the debt sustainably of this vital company, the Africa Finance Corporation (AFC), the Sole Mandated Lead Arranger, and a London-headquartered specialist credit and political risk insurance broker, Texel Finance Ltd (Texel), approached African Trade Insurance Agency (ATI) to provide comprehensive credit risk insurance cover on the transaction.

The project brings together two African multilateral institutions partnering to provide a viable solution to arguably one of the most pressing challenges facing African governments: access to competitively priced and long-term infrastructure financing.

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Côte d’Ivoire: Energy sector forms part of economic reforms programme

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Ghana: Ghanaians told to ignore speculation of 60 percent electricity tariff increase

G

hana’s Public Utilities Regulatory Commission (PURC) has urged Ghanaians to disregard the speculation of 60 percent increase in electricity tariffs following recent media reports.

However, the Commission stated that the public should expect a review of utilities’ tariffs on 1st February, according to Bawah Munkaila, the Commission’s head of public affairs and external relations.

According to reports, in the past, some minority parliamentarians have lamented that the energy sector is in crisis, claiming the Electricity Company of Ghana (ECG) debt was inching towards $407 million, a situation that would increase electricity tariffs by 60 percent.

Munkaila, however, expressed optimism that the Commission is not going to announce any “huge” increment,

adding that PURC is engaging with various stakeholders to reach reasonable water and electricity tariffs.

“We have completed our public hearing on tariffs adjustment in Tamale, Kumasi and Accra to enable service provid-

ers to present their proposal before stakeholders for consideration after which all these would be evaluated before any announcement is made.

“The commission still welcomes opinions from individuals and civil so-

ciety groups in written or verbal,” he said.

He also explained that the takeover of ECG would also not result in any excessive increase in electricity tariffs in future, because it is the Commission that has the mandate to adjust tariffs.

Sierra Leone: Bumbuna II Hydroelectric power project receives financial aid

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lectriFI has committed $3.5 million of development capital to finance 50 percent of Sierra Leone’s 143MW Bumbuna II Hydroelectric power project’s external development expenses.

According to a company statement, these expenses are needed to reach financial close of the project.

Joule Africa, the project sponsor, signed a 25-year PPA with the Government of Sierra Leone in August 2017 and selected a preferred EPC contractor to construct the project in February 2018. Mandated Lead Arrangers for the debt finance will be selected by Joule Africa shortly and construction is scheduled to begin by

the end of 2019.

Andrew Cavaghan, Founder and Executive Chairman of Joule Africa Limited, said: “We are delighted to have secured the support of ElectriFI at this critical stage of development as we ramp up to finalise the financing and start construction. Our team is now focused on completing the remaining activities so that the construction of this important project can begin.

“When complete, Bumbuna II will provide much-needed, affordable, reliable and clean power for the people of Sierra Leone where access to electricity is currently under 20 percent.”

Dominiek Deconinck, ElectriFI Fund Manager, commented: “Bumbuna II

is crucial for the Government of Sierra Leone to stimulate its energy sector and support its economic growth strategy. Bumbuna II will double the national generation capacity; indirectly encourage investments in transmission and distribution network; and allow the Government to show it is capable of managing large international infrastructure investments such as this.

“Joule Africa has demonstrated its capabilities as a professional, dedicated project developer, taking its role seriously, in particular by urging the adequacy of capacity in the Government and by pursuing net gains for the communities and the environment affected by the Project.”

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Wednesday 23 January 2019

POLICY

Trading of LNG derivatives to benefit industry STEPHEN STAPCZYNSKI & DAN MURTAUGH

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ith natural gas demand growing faster than for any other fossil fuel, LNG futures may be finally taking off.

Derivatives represented about 2 percent of global LNG production at the beginning of 2017 as an array of contracts around the world struggled to

gain traction. But by the end of last year, volumes had grown to almost 23 percent, led by a burgeoning Intercontinental Exchange contract based on S&P Global Platts’ Japan-Korea Marker spot price assessments.

While volumes are a long way off established global energy benchmarks such as Brent crude -- where trade dwarfs worldwide oil production many times over -- the accelerating growth in LNG derivatives illustrates how the market is maturing. An explosion in

Snapshot The need for a liquid LNG benchmark has been the subject of much debate. Traditionally, when oil was used more commonly in power generation and production, it was almost exclusively valued relative to crude oil and brought and sold under long-term contracts

supply, from the U.S. to Australia, is bringing more market participants and a shift away from traditional pricing.

“There’s more short-term physical trading indexed to JKM and new counterparties active in the market,” said Tobias Davis, head of LNG–Asia at brokerage Tullett Prebon. “This creates more liquidity and in turn, builds more confidence in trading the swap and using it as a viable hedging tool.”

There are now at least six derivative contracts for LNG, ranging from US Gulf Coast futures on ICE to Dubai-Kuwait-India on Singapore Exchange. The most established by far is ICE’s Japan-Korea Marker, launched in 2012. More than 17,000 contracts traded in December, a 10-fold increase from January 2017. The next most active is CME Group’s futures contract, also based on S&P Global Platts’ JKM assessment. Its monthly volume peaked in November last year at 3,335 contracts.

The need for a liquid LNG benchmark has been the subject of much debate. Traditionally, when oil was used more

commonly in power generation and production, it was almost exclusively valued relative to crude oil and brought and sold under long-term contracts. One advantage of that system is that oil has a liquid and established futures market that gives market participants visibility and the confidence to hedge.

But oil and gas don’t move in lockstep and buyers have become increasingly reluctant to be tied to crude markets. The expansion in global supply, most notably with the development of shale reserves that transformed the U.S. into a major natural gas exporter, has opened up other options and stimulated a shift to more spot trading.

About 27 percent of LNG was sold under spot- or shortterm deals in 2017, up from 12 percent in 2003, according to the International Group of LNG Importers.

That just increased the need for a reliable price benchmark and liquid futures market for hedging. Regional gas benchmarks such as Louisiana’s Henry Hub, the U.K.’s National Balancing Point or Dutch Title

Transfer Facility reflect local fundamentals and therefore may not be ideal proxies for the global LNG trade, where the vast majority of sales are in Asia. So that’s where LNG futures come in.

JKM “is much more trusted, much more accurate, and the paper market is helping make it be more responsive to price movements,” Gordon D Waters, the global head of LNG at ENGIE, said by phone on Friday.

JKM contracts could reach the level of NBP or TTF “most likely within the next 5 years.” NBP and TTF volumes both averaged about 37,000 contracts a day in 2018.

There is still a long way to go.

ICE JKM is still much smaller than other global oil and gas benchmarks. Exchange open interest, or the amount of outstanding bets at the end of every day, accounted for about $2 billion at the end of 2018, compared with $36 billion for US natural gas and more than $100 billion for Brent oil, according to Bloomberg estimates.

Culled from www.worldoil. com

Wednesday 23 January 2019

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ENERGY intelligence Brief

Saipem bags $1.3b Saudi Aramco deal

S

aipem has secured two EPIC contracts (Engineering, Procurement, Installation, Construction) with Saudi Aramco worth approximately $1.3 billion.

The contracts are part of a long-term agreement for offshore activities in Saudi Arabia and cover work on offshore fields in Berri and Marjan, located in the Arabian Gulf, Saipem revealed.

Saipem’s workscope

under the deals includes the design, engineering, procurement, construction, installation and implementation of subsea systems in addition to the laying of pipelines, sub-

sea cables and umbilicals, platform decks and jackets.

Saipem recently revealed that it and Petrobel had negotiated an offshore contract addendum worth more than $1.2 billion for EPCI (Engineering, Procurement, Construction and Installation) activities in relation to the ramp up to plateau phase of the Zohr development.

During the same month, Saipem, in joint venture with Renaissance, was awarded a new onshore E&C project in the Russian Federation worth $2.5 billion.

Saipem describes itself as “one of the world leaders in drilling services, as well as in the engineering, procurement, construction and installation of pipelines and complex projects, onshore and offshore, in the oil and gas market”.

The company employs 32,000 workers and operates in more than 60 countries, according to its website.

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Nestoil receives new ISO certification in quality management JOSEPHINE OKOJIE

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estoil Limited and its sister companies, B&Q and Impac recently received the prestigious ISO 9001:2015 certification in Quality Management System.

The certification was issued by Germanybased DQS, a leading certification body which officially confirms that Nestoil, B&Q, and Impac have put people, processes and systems in place to ensure quality delivery of products and services to customers.

Nestoil is among the first set of companies to successfully transit from the earlier certification of ISO 9001:2008 to ISO 9001:2015 in the country, a statement states.

In a statement made available to BusinessDay, Ernest Azudialu Obiejesi, group manag-

ing director of Nestoil said the certification further underscores the fact that the firm and its affiliated companies in the Obijackson group are committed to global best practices in the delivery of services to respective stakeholders.

Obiejesi urged em-

ployees to remain firmly committed to delivering the highest quality standards to customers and clients at all times.

Quality Management Systems (QMS) based certifications are often prerequisites in bidding for public sector jobs especially in the Oil & Gas

industry.

With over 1,500 direct employees, Nestoil continues to redefine industry standards in pipeline construction, repairs and maintenance with associated facilities for dredging, river crossing and shoreline protection.

BP set to take its seismic tech to Angola, Brazil

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uoyed by the success of seismic imaging that found an extra billion barrels of oil in the Gulf of Mexico, BP is looking to take its latest technology to Angola and Brazil. The software used in the Gulf, based on an algorithm created by Xukai Shen, a geophysicist straight out of Stanford University, led to BP discovering the crude in an area where it had long thought there was none to be found.

In both Brazil and Angola, oil deposits are locked under thick salt layers. Brazil’s deepwater oil fields comprise one of the world’s fastest-growing basins in terms of production. BP last year signed a partnership with Brazil’s national oil company Petrobras to develop resources there.

Industry experts said the scale of the discovery 8 km below BP’s Thun-

der Horse field, marked a major leap forward for deepwater exploration,

a costly business known for its low success rate and high risk. It is an ex-

ample of how technology is helping deepwater make a comeback after a decade when the industry has focused on advances in onshore shale.

The new deposit was found with software known as Full Waveform Inversion (FWI), which is run on a super-computer and analyses reverberations of seismic soundwaves to produce highresolution 3D images of ancient layers of rock thousands of meters under the sea bed, helping geologists locate oil and gas.

It is more accurate than previous surveying methods, BP said, and processes data in a matter of days, compared with months or years previously.

While the discovery marked the biggest industry success for digital seismic imaging, the British

oil major’s rivals are hot on its heel with similar techniques.

BP scientist John Etgen, the company’s top adviser on seismic imaging, said it aimed to retain its edge with a new machine it has developed, Wolfspar, to be used alongside FWI. The submarine-like Wolfspar is dragged by a ship through the ocean and emits very low frequency soundwaves, which are particularly effective for penetrating thick salt layers that lie above rocks containing fossil fuels, he added.

Billion-barrel oil finds are rare, particularly in mature basins like the Gulf of Mexico. But the scale of output from deepwater wells means they can compete with the most low-cost basins in the world, in particular US shale.

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ENERGY intelligence

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(bpd), up 6.8 percent from the previous year.

The strong oil demand figures came despite China’s 2018 economic growth slowing to the weakest in 28 years, at 6.6 percent versus 6.8 percent in 2017.

Although the slowdown

was in line with expectations and not as sharp as some analysts had expected, the cooling of the world’s No.2 economy casts a shadow over global growth.

Despite this, analysts said supply cuts led by the

Organization of the Petroleum Exporting Countries (OPEC) would likely support crude oil prices.

“Brent can remain above $60 per barrel on OPEC+ compliance, expiry of Iran waivers and slower US output growth,” J.P. Morgan said.

Energy consultancy Wood Mackenzie said that it expected Brent prices to average $66 per barrel in 2019, adding that despite the OPEC-led supply cuts there would be “ample supply through to the end of 2019.”

In the United States, energy firms cut the number of rigs drilling for oil by 21 in the week to January 18, taking the total count down to 852, the lowest since May 2018, energy services firm Baker Hughes said in a weekly report. It was biggest decline since February 2016, as drillers reacted to the 40-percent plunge in US crude prices late last year.

IEA sees oil demand growth defying economic slowdown

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lobal oil demand remains on course to be stronger this year than in 2018 as a boost from lower fuel prices counters slowing economic activity, according to the International Energy Agency (IEA).

“We have seen prices fall very significantly since the peak at the beginning of October, and that is providing some relief to consum-

ers,” Neil Atkinson, head of the IEA’s oil industry and markets division, said. Still, in its monthly report the agency acknowledged “the mood music in the global economy is not very cheerful” and the outlook could change.

Crude prices remain almost 30 percent below the four-year peak reached in October amid concerns over economic growth in China and the US, the

Wednesday 23 January 2019

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Oil reaches 2019-high on strong China crude use rude prices rose to their highest so far in 2019 after data showed refinery processing in China, the world’s second-largest oil consumer, climbed to a record last year despite a slowing economy.

International Brent crude oil futures hit $62.75 per barrel, up 5 cents, or 0.1 percent, from their last close. Brent earlier rose above $63 for the first time in 2019. US West Texas Intermediate (WTI) crude futures were at $53.87 a barrel, up 7 cents, or 0.1 percent. WTI earlier advanced above $54 a barrel for the first time this year.

Traders said the price rises came after data released by China’s National Bureau of Statistics showed crude oil refinery throughput climbed to a record 603.57 million tonnes in 2018, or 12.1 million barrels per day

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world’s two biggest oil users, who remain locked in a trade dispute. To prevent markets tipping into oversupply, the OPEC cartel and its partners have announced substantial production cuts.

Oil consumption will expand by 1.4 MMbpd, about 1.4 percent in 2019, slightly higher than last year’s expansion of 1.3 MMbpd, according

to the Paris-based IEA, which advises most of the world’s major economies on energy policy. Brent crude traded near $62/ bbl in London, having surpassed $86 in October.

Faltering manufacturing and slumping exports have stirred concerns that China’s economy, the oil market’s engine of growth for more than a decade, is slowing. A prolonged trade battle with the administration of US President Trump is only darkening the outlook.

“Our expectation for slightly faster global demand growth in 2019 is maintained even though economic growth is likely to be slower than in 2018,” the agency said. “The impact of higher oil prices in 2018 is fading, which will help offset lower economic growth.”

Output cuts planned

by OPEC and its partners should stabilize world markets, though the process will be slow, the IEA said. To fully implement its agreed cutbacks, OPEC would need to cut by a significant 900,000 bpd this month, with its allies reducing by a further 370,000 bpd.

OPEC Flakes OPEC urges redoubling of efforts to achieve oil market balance

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he Joint Ministerial Monitoring Committee of the OPEC and nonOPEC coalition has called on its members to redouble their efforts to ensure the oil market remains balanced in 2019.

The JMMC, which is responsible for closely monitoring the market and recommending appropriate response measures, also confirmed that it would meet on March 18 in Baku, Azerbaijan for its 13th meeting.

The producer group and its allies in December agreed collectively to cut 1.2 million b/d for the first six months of 2019 to prevent a supply glut after prices plummeted.

The committee also confirmed and published the production-cut tables for all its participants under which OPEC agreeing to cut 812,000 b/d while its 10 non-OPEC allies committed to a reduction of 383,000 b/d.

Saudi Arabia, the world’s largest crude exporter, has committed to a 322,000 b/d cut from its October level while Russia has vowed to cut output to 11.19 million b/d from its baseline of 11.42 million b/d.

OPEC pumped 32.43 million b/d in December, but the 11 members with quotas under the output cut deal would need to cut another 950,000 b/d to be in compliance. The deal exempts Iran, Libya and Venezuela.

Compliance levels of the participating countries were 98 percent in November compared with 104 percent in October, it added. The overall conformity of the coalition since it agreed to work together on production policy was 116 percent, the statement said.

OPEC, allies finalize next meeting for Apr 17-18 in Vienna

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PEC has finalized a date of its next full ministerial meeting, April 17 in Vienna, with Russia and nine other non-OPEC allies joining the talks the following day.

The OPEC gathering will be billed as an extraordinary meeting, an official said, adding that a regular meeting could still be held in its usual month of June.

The OPEC/non-OPEC coalition is expected to discuss whether to extend its 1.2 million b/d output cut agreement, which is set to expire at the end of June.

The extraordinary meeting is being called so that OPEC can more proactively respond to the market in deciding on the future of its supply agreement.

Sanctions waivers the US granted to eight countries to continue buying Iranian oil also expire in May, with the Trump administration yet to tip its hand on whether they will be extended, adding to OPEC’s motivation in moving up the meeting

date.

The coalition is still finalizing the date of its monitoring committee meeting, but it will likely be March 17-18 in Baku, Azerbaijan, the official said.

The committee, composed of ministers from Saudi Arabia, Kuwait, Venezuela and Algeria from OPEC and Russia

and Oman from the nonOPEC nations, is tasked with assessing market conditions and tracking the group’s compliance with production quotas.

Azerbaijan, a non-OPEC producer who is part of the coalition, would join the monitoring committee proceedings as host.

Wednesday 23 January 2019

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ENERGY intelligence

59 talking points BUSINESS DAY

Outlook for natural gas, LNG optimistic on cleaner energy demand …China, India markets to drive base demand, LNG spot market deals to rise STEPHEN ONYEKWELU

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atural and liquefied natural gas markets will remain bullish in 2019 due to the International Maritime Organisation 2020 regulation limiting high sulphur products and China’s decision to consume more LNG and liquefied petroleum gas (LPG).

Under the new IMO 2020 regulation, ships cannot use fuels with more than 0.5 percent of sulphur, compared with 3.5 percent now, unless equipped with so-called scrubbers limiting the emissions.

Natural gas consumption continues to expand across China’s economy, with base demand supporting growth. Adoption of low-sulphur fuels will accelerate LNG growth in countries such as China and India with elevated carbon footprints.

China’s current five-year plan calls for shifting the generation mix to 55 percent

coal by 2020 from 67 percent today, with natural gas the biggest beneficiary, according Bloomberg Intelligence report.

Shandong province plans to become a hub for LNG imports by increasing storage capacity to 4 billion cubic meters while constructing enough regasification capacity to handle 34.3 million tons a year across seven terminals by 2020.

China’s natural gas investment is focused on increasing supply. China Petroleum is targeting $22 billion to offset domestic declines while boosting output, as the Belt and Road initiative fuels spending on ports, railways, pipelines and producing assets.

The expansions will provide strategic reserves and natural outlets for equipment built by Chinese manufacturers and shipyards. The Belt and Road strategy aims to create trade links across Asia, Africa and Europe, while allowing China to control investment, infrastructure, job creation and full-cycle economics.

The capture of critical reserves is im-

portant for China to be self-sufficient in natural gas, given growing European and Asian LNG demand.

China is focused on increasing consumption of LNG and liquefied petroleum gas (LPG) by taking a multipronged approach of investing in pipelines, infrastructure, long-term contracts and gaining control of reserves in the South China Sea. China’s domestic natural gas production will be hindered by complications of depth and location, elevating costs. The Beltand-Road Initiative remains the driving principle of the infrastructure build out and supply-chain diversification.

There is also rising LNG spot market activities which point to availability and possible oversupply, which in turn imply downward pressures on prices. However, energy experts in Nigeria suggest this may not impact significantly on Nigeria’s LNG exports because Africa’s largest crude oil producer has long-term sale and purchase agreements (PSAs) on its cargoes with buyers.

“Except the situation lasts for much longer, this will not impact significantly on Nigeria Liquefied Natural Gas (NLNG) Limited’s exports” Ayodele Oni, energy partner at Bloomfield Law-Practice said.

Traditionally, the LNG market was dominated by long-term off-take contracts.

Without such arrangements it would not have been possible to make the significant capital investments in extraction, transportation, storage and re-gasification that are all necessary to build the LNG supply chain.

“Global LNG market is currently soft due mainly to natural gas supply glut in the United States of America. Economic growth in China, India, South Korea and South East Asian countries are also critical factors. Slow economic growth in Asia will dampen the market” Wumi Iledare, professor of energy economics at the Centre for Petroleum, Energy Economics and Law, University of Ibadan, said on a phone interview. “The spot market will not replace futures market in the long run though.”

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Opinion The existential in the crisis of Nigerian public service

TUNJI OLAOPA Professor Olaopa is Executive Vice Chairman, the Ibadan School of Government and Public Policy ISGPP tolaopa2003@gmail.com tolaopa@isgpp.com.ng

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l l a c ro ss t h e world, the public servant is usually the butt of crude a n d v i o l e nt j o ke s t hat bother on the bureaucratic ineffectiveness and inefficiency of the public service and of the government of the day. This is so easy to understand—the public service is the most functional arm of the government; it is the institution that the citizens relate with and encounter on a regular basis. The experience of this encounter varies from one administrative context to another.

In the highly industrialized countries where the government respects the social contract between the government and the governed and thrives on the strength of its performance, the government and its public service have become highly efficient and hence highly responsive to the infrastructural demands of their citizens.

Indeed, it is the public service in these countries that determine the dynamics of good governance. The opposite is the case in the underdeveloped countries, especially in Africa and in Nigeria, where the state is neither developmental and is therefore still struggling with the reform of the public service to bring it up to the level of reform efficiency and capability readiness that will transform the infrastructural framework of those states and make democratic governance empowering to the citizens.

The encounter between the citizens and the public servants in, say, Nigeria is a much more volatile one. And it is volatile precisely because the public service is not optimally efficient, and hence the infrastructural framework is not empowering to the citizens. We visit the PHCN office, we encounter the police and the road safety marshals on the roads and highways, we are forced

to renew our car license and international passports regularly, we meet health officials at the general hospitals, we confront education officers at the ministries of education, and so on. All this comes at a specific quantum of disempowering frustration and impotence. For example, the PHCN collects tariff and yet there is no sustainable electricity supply to justify the money collected. When we get to the passport office, we pay an inordinately huge amount of money that is way beyond the official amount in the book. At every point that we encounter the bureaucracy in Nigeria, we are compelled to service its corrupt system.

The picture I have painted above cast the citizens as the victims of the corrupt and domineering bureaucracy. Unfortunately, the dynamics is much more complex than this. It is much more appropriate to say that the citizens and the public servants are both the victims of a dysfunctional institutional framew o rk t hat u n d e r m i n e s both. The received wisdom which fuels the hatred of the average public servant in Nigeria is that he or she is the recipient of corrupt largesse which the average citizen is forced to pay against his or her will. The policeman or road safety official catches an erring motorist and collects bribe rather than booking the offender. The bureaucrat asks for money before taking an urgent file upstairs to the boss, and so many other corrupt enriching instances involving the public service. I bid us think about a different scenario in which the public servant him or herself is caught in a grip of misgovernance and the existential dilemma in which the average Nigerian is also trapped.

Peter Enahoro, that intrepid gadfly of the Nigerian society, gives us a graphic explanation that seeks to dissect the existential meaning of “civil service” within the context of the Nigerian society. According to him, the status of the Nigerian civil servants should be regarded as that of those trapped by the complex dynamics of their own institution. They are neither civil, nor do they provide any meaningful service. Rather, “Civil servants are…a compromise between incivility and servitude. They are inherently

uncivil and economically servile. The civil servant is underpaid, which makes his service equivalent to servitude. On the other hand, the civil ser vant takes a razor-sharp tongue to work with him and will snap like the jaws of a crocodile at the least provocation. Thus, while he is not civil, he is a servant. It is a rare compromise.” In this piece, I am interested in the concept of servitude as an existential state within which the Nigerian condition has trapped the public servant, and has therefore made him or her incapable of living a good life without having to cut corners, much less of achieving a capability readiness that will enable performance and the transformation of Nigeria’s productivity.

Servitude is a pathetic state in which a person is held as a slave and contrary to such a person’s own desires and preferences.

In such a state, the person under servitude has lost all sense of autonomy that enables him or her to determine the condition for his or her own existence. In other words, the being of a person in a servile condition has been taken over by another. This is essentially what Enahoro was gesturing at. It takes little reflection to see how uncivility would be the consequence of servitude for the public servant. When we say a hungry man is an angry man, we immediately capture Enahoro’s public servant as a victim of existential deprivation.

Hunger takes away all the cultured finesse of civil interaction, and basically turns the hungry person into a similitude of a beast.

The condition of servitude is one that is not strange to the third world, to Africa, and indeed to Nigeria. Underdevelopment derives from a governance disequilibrium in which there is a disconnection between government policies and the empowerment of the citizens.

Governance is ‘good’ to the extent that the policy ma ki ng p ro c e ss e s a n d the institutions are tied towards making and implementing decisions that leads, in the final analysis, to the betterment and empowerment of the citizens.

But when governance fail, the public servants themselves are thrown into a condition which the existentialists see as anxiety.

In existentialism, anxiety

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Underdevelopment derives from a governance disequilibrium in which there is a disconnection between government policies and the empowerment of the citizens. Governance is ‘good’ to the extent that the policy making processes and the institutions are tied towards making and implementing decisions that leads, in the final analysis, to the betterment and empowerment of the citizens goes beyond the condition of nervousness that comes from apprehension. On the contrary, anxiety as the existentialist uses it speaks to a state where the very existence of the anxious person is challenged by the possibility of death. Anxiety, that is, confronts a person with the impotence of his or her finitude. You feel a sense of helplessness when you are confronted with existential anxiety.

This is one of the consequences of the institutional dysfunction that characterize the public service in Nigeria. I will take just one instance of this dysfunction, and it is an instance that strikes deep to the heart of the existence of the public servant—pay and incentive, and importantly, in the absence of social security.

When pay is not empowering for the public servant, anxiety becomes immediate. This is because pay and incentives are what lowers the existential pressures and tensions under which most of us labour. In a condition of anxiety, the first thing that is affected is motivation. The relationship between pay and performance in the Nigerian pubic service system undermines all the assumptions in motivation theory.

Consider first Frederick Herzberg ’s motivationhygiene theory. Similar to Maslow’s theory of the hierarchy of needs, Herzberg explains that at the workplace, workers should not be seen as being just amenable to the satisfaction of lower-order needs like receiving minimum wage. Rather, what matters for deep satisfaction is the gratification of higher-order needs ranging

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from achievement and advancement to recognition and responsibility. Herzberg’s two-factor theory of motivation therefore postulates that different sets of work features lead either to job satisfaction or dissatisfaction. In other words, satisfaction and dissatisfaction are not issues that are inversely proportional.Managers and administrators must therefore attend to the two sets of conditions simultaneously if performance and productivity are to be achieved.

This understanding of motivation and pay only just goes to show that the relationship between pay, motivation and the existence of the public servant is a complex one which the institutional reform in Nigeria has not yet addressed sufficiently. Or, we should rather say that the government has not shown the political willingness to grasp the bull of public sector reform by its stubborn horns. This assertion is true to the extent that Nigeria has been battling with the reform of the pay and productivity correlation in the public service since the Udoji Commission Report of 1974.

This was the first reform effort, since the Nigerian civil service system was inaugurated in 1954, to see right through the relationship between Nigeria’s low productivity profile and the urgency of the need for a performance management reform. But the reform recommendations were essentially politicized to the extent that its wage component became the high points of its implementation.

The result of this myopic implementation by the

military was the overburdening of the workforce structure of the civil service. Quantity overcame quality to the extent that government neglected the p er for mance pr inciple that demands that thirty expert and professional public servants could be recruited and appropriately incentivized to perform and increase productivity over a hundred mediocre public servants who are simply occupying space.

When the 1975 purge of the civil service finally happened, it was not only the inevitable consequence of the over-bloated workforce, it was also the occasion for the aggravation of the existential crisis of the public service. With the purge, the civil service lost its ethical compass and the culture of deferred gratification which ensured that even with low pay, the public servant achieved the satisfaction that Herzberg insists comes with achievement, respect and recognition. On the one hand, the public servants immediately recognized that since the government ha s n o e s s e nt i a l p o s tretirement package for him or her, it is better to ensure ex istential survival through backhanded corrupt means. And on the other hand, industrial relations dynamics took on an adversarial posture that ensure that government will not be able to reduce the workforce and make it sufficiently lean to achieve performance and productivity.

This all goes to show that consecutive Nigerian government have not paid fundamental attention to how the existential crisis of the average public servant in Nigeria has led to inversion of the logic of performance and productivity.

The public servants are not deriving deep satisfaction from their vocation. Most do not even any longer see the profession as a vocation but rather as a means of livelihood that could be subverted and undermined as long as they can survive their existential anxiety. As a way out, the institutional reform of the public service must commence from the urgency of making the public servants in Nigeria existentially fulfilled human beings who are motivated to do great things for the public service, even beyond the satisfaction of compensation.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.