BusinessDay 23 Jan 2020 by BusinessDay

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news you can trust I ** thursDAY 23 january 2020 I vol. 19, no 483

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More disruptions await businesses, travellers if US expands travel ban … as Trump set to impose restrictions on Nigeria, others IFEOMA OKEKE & SEGUN ADAMS

igerian businessmen and women who have connections with the United States and travellers who frequent the country for tourism are likely to experience difficulContinues on page 38

Health minister pledges to probe BusinessDay/ TheCable investigation findings on ‘Yaba Left’ Ibrahim Adeyemi

he minister of state for health, Osagie Ehanire, has pledged to look into allegations of corruption and underwhelming patient care raised against the Federal Neuropsychiatric Hospital, Yaba, by a collaborative investigation of BusinessDay and TheCable Continues on page 2

Inside

Old Mutual, TransCorp to headline BusinessDay’s P. 2 Economic Outlook Conference New Imo will prosper under my watch - Uzodinma P. 2

L-R: Akinola Akintunde, patron, Nigerian-British Chamber of Commerce; Bismarck Rewane, MD/CEO, Financial Derivatives Company Limited; Bisi Adeyemi, deputy president, Nigerian-British Chamber of Commerce; Dapo Adelegan, patron, Nigerian-British Chamber of Commerce; Harriet Thompson, British deputy high commissioner; David Brown, principal analyst, Dbrownconsulting, and Malan Davies, deputy president, Nigerian-British Chamber of Commerce, at the chamber’s 2020 Economic Outlook Breakfast Meeting.

Lebanese crisis may foretell Nigeria’s fiscal fate If needed reforms don’t happen

LOLADE AKINMURELE

f there is one thing Nigeria can learn from the small matter of Lebanon’s economic crisis, it is that paying over the top to attract foreign portfolio investors could quickly backfire and prove damaging for the economy. Economists have said 2020

is likely to register Lebanon’s first economic contraction in 20 years, with some saying the economy will contract by 2 percent. Others have predicted a long depression unseen since independence from France in 1943, or during the 1975-90 civil war. Lebanese companies have laid off workers and business

has grounded to a halt. A hard currency crunch has prompted banks to restrict access to dollars and the Lebanese pound trades a third weaker on the parallel market, driving up prices. Lebanon’s capital controls have made the currency too strong to allow for cheap imports and that has resulted in a current account deficit.

Credit-rating agencies have downgraded the country’s sovereign rating and the ratings of its commercial banks on fears of default on public debt that has spun out of control. The economic crisis has triggered wide protests against the ruling class. Lebanon now has to find a Continues on page 38

Thursday 23 January 2020

BUSINESS DAY

news Old Mutual, TransCorp to headline BusinessDay’s Nigerian Economic Outlook Conference 2020 on January 28 SEGUN ADAMS

Juliet Anammah (r), chairwoman, Jumia Nigeria/ head of institutional affairs, Jumia Group, and Jeremy Hodara, group co-CEO, Jumia Group, at the Jumia 2020 vision media briefing in Lagos.

Pic by Pius Okeosisi

Farmers say one-off FG actions not enough to boost long-term productivity ... Border closure has helped, but not sustainable – PAN ... Cassava growers, industrial off-takers sign MoU for 3m tons CALEB OJEWALE

deal signed between cassava growers and some industrial processors in Nigeria, as disclosed to BusinessDay, has a firm commitment for 3 million metric tons expected to contribute towards saving up to N1 trillion spent importing ethanol, industrial starch, sweeteners and other industrial derivatives from cassava. Rice producers just had what could be described as their best December in decades, likewise poultry farmers and others, yet, some of this ‘good news’ may yet stand on shaky ground unless producing in Nigeria becomes competitive post-

reopening of the borders, and a better engagement with the private sector. With the border closure, Nigerian farmers may have had better opportunities to sell locally. However, preexisting challenges that made it difficult for madein-Nigeria farm produce to compete still exist. These challenges are also likely to remain whenever the borders are re-opened unless those issues are strategically, and purposively addressed. “Border closure cannot be permanent, in fact it shouldn’t exceed one month as the negative impacts will likely outweigh any positive ones,” says Ezekiel Ibrahim, president, Poultry Association of Nigeria (PAN), whose industry is

a major beneficiary of the border closure. Although Nigeria has huge agricultural resources and potential, the challenges of lower yields, communal conflicts, poor market access and storage facilities, poor quality and standards and high cost of doing business continue to limit growth of the sector. In the two years prior to a 2019 policy brief by the Nigerian Economic Summit Group (NESG), it was noted for instance, that the sector only grew by 3.5 percent in 2017 and 2.12 percent in 2018, a far cry from over 6 percent growth experienced in 2014. Even though government at both the federal level and many states have appeared to give more attention to the agric sector,

BusinessDay has through interactions with some subsector national leaders in the sector, felt the pulse of the industry, which today is hyped up and full of optimism, yet, lacking sufficient engagement. Stressing the need for more engagement with the private sector in the formulation of programmes and policies for Nigeria’s agric sector, experts and major stakeholders told BusinessDay that a more participatory process is required, in other to ensure policies fully align with the expectations of those actually operating in the sector. Government needs to “walk the talk and listen more to players,” states Ade

Continues on page 38

n five days, economists, business experts, policymakers and stakeholders from various sectors of the Nigerian economy will meet at BusinessDay’s annual economic outlook to deliberate on the possibilities for Africa’s biggest market, in a decade said to be “make or break.” The outlook which is an annual event organised by BusinessDay to prepare participants for the year ahead follows a topsy-turvy decade for Nigeria and would herald big themes for the coming years. Enormous economic optimism, following above 5 percent average economic growth in early 2010’s and subsequent decline in oil price from 2014, which led to the 2016 recession, have set the tone for the next ten years- a period where several predictions have been made concerning Nigeria including World Bank’s warning about hosting a quarter of the world’s poorest. However, at the 2020 outlook, BusinessDay would consider “The Nigeria’s prosperity Ahead 2030: population, data, productivity.”, choosing to look at the trajectory of the country till 2030 instead of just one year. The theme shows and

reflects the levers through which Nigeria’s economic prosperity will be determined in the coming decade. For instance, Nigeria’s population dynamics has been on the rise for a long period. However, it is becoming desperate as we continue to overtake many previously higher populated countries, become the poverty capital of the world, and set to become the third most populous country in 2050 if the trend continues. Keynote Speakers at the event sponsored by Old Mutuals Limited and Transnational Corporation of Nigeria (TransCorp) will include BusinessDay’s Managing Director and renowned economist Ogho Okiti, as well as Andrew S. Nevin, Chief Economist at PwC. The events will hold on Tuesday, January 28, 2020, at the Africa + Asia + America Room, Eko Hotels & Suites, VI Lagos, will bring together industry experts, analysts and policymakers who would, in interactive sessions, deliberate on challenges and opportunities around data, population and technology in driving Nigeria’s new decade and where investment opportunities will lie in the coming years.

•Continues online at www.businessday.ng

Health Minister vows to probe findings of... Continued from page 1

Newspaper Journalism

Foundation. After altering his looks and taking psychiatric lessons every day for one-week, investigative journalist ‘Fisayo Soyombo had gone under cover at the hospital, popularly known as ‘Yaba Left,’ for three weeks in November 2019, including 10 straight days on ward admission. His investigation, published on Wednesday, unveiled the “decrepit state of hospital facilities, gross short-

age of critical staff despite a bloated workforce widely believed to be populated by ghost workers, low quality of service delivery, arbitrary charges on patients — all stemming from personal and institutional corruption and the hospital’s implicit stigmatising of its very own patients”. Reacting to the story via his Twitter handle, Ehanire wrote: “This will be looked into immediately.” Only the first part of the story has been published. The second and final part is due to be released on Friday.

New Imo will prosper under my watch - Uzodinma … pledges to focus on mainstream macro-economic programmes … says State Economic and Rehabilitation Council will redress fiscal, infrastructural deficits Iheanyi Nwachukwu

overnor of Imo State, Hope Uzodinma, has assured that the state will prosper under his watch. The newly sworn-in governor also said the era of Executive Lawlessness and neo-feudalism in the state was gone forever. Addressing the people of Imo in his maiden broadcast on Wednesday, Governor Uzodinma enumerated policy measures his administration intends to apply to achieve the dream of a New Imo. They include restoration of due

process, financial discipline, re-invigoration of the heath sector and security of lives and property. According to the governor, his vision of a New Imo State is predicated on freedom, security and shared prosperity welded into good governance, stressing that the evidence on ground indicates that Imo State requires fundamental reform to forge a new trajectory. To achieve his vision of Rehabilitation, Reconstruction and Recovery, he directed the overhaul of the bureaucratic structures to entrench strict adherence to extant laws, procedures and

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statutes to achieve efficient service delivery. He assured of prompt payment of salaries, pensions and other statutory obligations. On education, he said a highly functional, qualitative and science-driven education system, focused on skills acquisition, innovation, manpower development and entrepreneurship code-named Imo State Education Opportunity Programme (ISEOP) shall be established with a view to producing a new generation of graduates equipped for immediate employment and self-reliance. For the health sector, the

Imo governor promised to pursue a policy of comprehensive Medicare with primary and preventive components which shall achieve 75percent coverage of the populace across the 27 LGAs within the first two years. In this vein, the state shall recruit 850 Community Health Workers, renovate and equip Community Health Centres in the 305 wards, procure modern diagnostic equipment, including CT scan and mobile X-ray as well as provide Rapid Response Ambulance Services (RAMS) at the Zonal Hospitals and Central Rural health Centres he said.

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The governor explained further in his statement signed by Oguwike Nwachuku, Chief Press Secretary/Media Adviser that the IMSU College of Medicine and the Teaching Hospital at Orlu, the Public Health Laboratory and the Specialist Hospital in Owerri shall be equipped for lesser surgeries, as well as serve as Regional Medical Infomatics Centres for the South East Region. The abandoned MRI and other sensitive scanning machines mysteriously transferred from IMSUTH Orlu to ‘Ochiedike” shall be rehabilitated and restored for service. To channel the economy to massive growth and job creation, Governor Uzodinma pledged to focus on Mainstream Macro-economic programmes based on his “3R @Businessdayng

Algorism”—Recovery of damaged economic structures, re-construction of core infrastructure and rehabilitation of component micro-economic institutions with the overall aim of achieving rapid economic diversification through ‘Backward integration’ involving a synergy of Ruralurban paradigm shift from a core public-sector-driven economy to Public-PrivatePartnership (PPP). Governor Uzodinma also announced the establishment of a State Economic and Rehabilitation Council (SEDARC) to redress the fiscal and infrastructural deficits militating against economic development in the state.

•Continues online at www.businessday.ng

Thursday 23 January 2020

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Thursday 23 January 2020

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$1.1bn Malabl: Drama as counsel to EFCC feigns ignorance why Adoke, 6 others were in court Felix Omohomhion, Abuja

ala Sanga, the prosecution counsel to the Economic and Financial Crimes Commission (EFCC), Wednesday, caused a stir at an Abuja High Court sitting in Gwagwalada, Abuja, during the arraignment of former Attorney-General of Federation and Minister of Justice, Mohammed Adoke, when he feigned ignorance as to why they were in court. Adoke and the other respondents were brought to court to be arraigned on a fresh 42-count charge over their alleged complicity in the $1.1bn Malabu oil deal. But when the case was called, Sanga said he did not know why the respondents were in court as the commission had not served them any arraignment notice. The drama started when a representative of the 4th respondent, Malabu Oil, announced that he was not sure the oil company received any arraignment notice. He however informed the court that their lawyer was not in court because he was not aware that the matter was coming up Wednesday. According to him, he was only at the court to make enquiries about the case when he learnt that the matter was coming up that afternoon. When asked if the fourth respondent was served he said he could not tell. However, counsel to the EFCC, Sanga, told the court that the fourth defendant was yet to be served. He further stunned the court when he said he did not know why Adoke and others were in court. “We only served 5th, 6th and 7th respondents,” he said, adding that, “We don’t know why we are here”. He added their counsel will be in a better position to explain why they came to the court. While giving the hint that the commission had planned the arraignment of the defendants for Friday this week, the EFCC lawyer said, “We are at a shock as to how they got here”. While the EFCC had brought Adoke who has been in their custody since December 2019 to court in their own vehicle, the second and third defendants came to court on their own. The fourth to seventh defendants are however corporate entities. He however did not explain why the first to fourth respondents are yet to be served, particularly Adoke and the third respondents, who are in the custody of the EFCC. Sanga was to tell reporters that he feigned ignorance of their arraignment because there are multiple cases against Adoke, noting currently five other cases pending in various courts in Abuja are hanging on his neck. With the consent of all the counsel, Justice Idris Kutigi, adjourned till Thursday the arraignment. The Federal Government filed fresh 42-count charges

... arraignment flops against Adoke and six others over alleged fraud in the $1.1b Malabu oil deal. The Federal Government in a document with charge number CR/151/2020, filed at the High Court of the Federal Capital Territory, accused Adoke and others of receiving gratification to allegedly carry out a fraudulent oil deal. According to the federal government, as AttorneyGeneral, Adoke mediated controversial agreements that ceded OPL 245 to Shell and Eni who in turn paid about $1.1 billion dollars to accounts controlled by an ex-convict and former petroleum minister, Dan Etete. Etete, now at large, was Petroleum Minister under the regime of General Sani Abacha. Since he left the country after the administration of former President Goodluck Jonathan, Adoke only returned into the country on December 19, 2019 from Dubai, United Arab Emirates, into the waiting arms of operatives of the EFCC at the Nnamdi Azikiwe International Airport, Abuja. Adoke who fled the country in 2015, has pending criminal charges brought against him by the EFCC for alleged abuse of office and money laundering in respect of the granting of the Oil Prospecting License (OPL) 245 to Shell and ENI. In the charge dated 14th January, 2020 and filed on the 15th January, the federal government also charged Rasky Gbinigie, A. Abubakar, Malabu Oil and Gas Limited,

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Massimiliano reveals business plan for 2020 as new Jumia CEO Jumoke Akiyode-Lawanson

umia has announced the appointment of Massimilano Spalazzi, as the new CEO of its Nigeria operations. Spalazzi, who is taking over from Juliet Anammah, is expected to help drive up numbers and achieve its goals, as the publicly listed company works towards profitability. Jeremy Hodara, cofounder, Jumia Group who announced the new appointment while speaking to journalists in Lagos on Wednesday, said Anammah, who has headed Jumia Nigeria since 2016, will now take up the roles of head of institutional affairs for Jumia Group and chairwoman, Jumia Nigeria. The company which listed on the New York Stock Exchange (NYSE) in April 2019 opened up Africa’s ecommerce space to the world, creating more awareness to foreign investors on Africa’s technology eco-system and waking up other players to see the benefits of listing internationally or locally to raise substantial capital for business growth. “Jumia app became the most downloaded e-commerce app in 2019, and the company hired over 1000 new employees, including 30 at management level and above,” Anammah said, listing the company’s achievements. This is despite challenges faced and declined share prices after being accused of fraud by Citron.

Speaking on plans for 2020, Spalazzi the new CEO for Nigeria, who is also the executive vice president for marketplace, said Jumia which operates in three eco-systems as a market place, Logistics Company and payment space is doing everything to make sure that its platform is sustainable in all countries of operation for years to come by working towards profitability. “We are going to focus of increasing frequent usage of the Jumia platform by selling frequently used products at the best price. We would also work on our customer experience to grow usage and accelerate on our past profitability. Jumia pay will also be a main focus point for us to drive the adoption, and Nigeria will be at the forefront of this because it is our largest market,” he said. The online retail company has plans to intensely play in the fintech space with JumiaPay which got 50 million euro investment by Mastercard last year. JumiaPay will help Jumia reduce the numbers from payment on delivery and spread its payment platform across other markets. Industry experts say the payment platform has the potential to increase efficiency of business and help financial inclusion penetration if made available to third party platforms. Responding to questions on how well the company is prepared for the Fintech space, Hodara said he is posi-

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tive about the growth and acceptance of JumiaPay which is benefiting by riding on the back of the e-commerce plan. “In the Fintech world, there are not so many players that have succeeded. In terms of fintechs that have billions of users, we have PayPal which was a success because of ebay, and then moved on to becoming successful on its own. Then we have AliPay which became successful because of Ali Express, an e-commerce platform and I believe that because there is Jumia ecommerce that creates a good reason for people to use the payment platform, JumiaPay will be successful in Africa and beyond,” Hodara said. Spalazzi, who has fully resumed his position as CEO Jumia Nigeria said the vision for the company this year is; increasing purchasing power of customers, empowering entrepreneurs to grow their business on the platform, working and growing the best logistics companies and empowering the Jumia team. Speaking on her new role, Anammah said, “ I am still here as Chairwoman of Jumia Nigeria, supporting Massi to ensure that that I respond to things that require institutional decisions, regulatory oversight, etc, while he runs the day to day activities of the company. The second part of my responsibility is to ensure smooth operations across the whole of Africa, because we have realised that we are no longer a start-up.”

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737 MAX to remain grounded for longer than Boeing envisaged MIKE OCHONMA

S aerospace giant Boeing reported on Tuesday that its 737 MAX single-aisle airliner would remain grounded for longer than the company had hoped. The grounding of the aircraft was imposed after two fatal crashes, in late 2018 and early 2019, which killed a total of 346 people. A system fitted to the 737 MAX, the Manoeuvring Characteristics Augmentation System (MCAS), has been implicated in both crashes. The MCAS was developed for the 737 MAX series because this has different aerodynamic characteristics to all previous 737 types. “We are informing our customers and suppliers that we are currently estimating that the ungrounding [sic] of the 737 MAX will begin during mid-2020,” said Boeing in its statement. “This updated estimate is informed by our experience to date with the certification process. It is subject to our ongoing attempts to address known schedule risks and further developments that may arise in connection with the certification process.” The company also noted that the regulatory authorities were “rightly” applying “rigorous scrutiny” in their review of the aircraft’s flight control system. The same standards were also being applied by the Joint Operations Evaluation Board, which established the requirements for the training of pilots.

Thursday 23 January 2020

BUSINESS DAY

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Thursday 23 January 2020

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NLNG strikes sales contract deal with Total for 10 years Olusola Bello

igeria LNG Limited (NLNG) and Total Gas & Power (TGP) on Wednesday signed a LNG Sale and Purchase Agreement (SPA) for some of the remarketed volumes from NLNG’s Trains 1, 2 and 3. The agreement is for the supply of 1.5mtpa for a 10- year-term on a delivered Ex-ship and Free on Board (FOB) basis. The SPA with TGP advances the plans by NLNG to remarket volumes from three trains. The SPA is expected to boost the company’s global presence and market reach, in line with its corporate vision of being a “global LNG company, helping to build a better Nigeria”. Tony Attah, managing director/CEO of NLNG, signed on behalf of the company while Thomas Maurisse, senior vice president LNG, signed for TGP. He said the agreement was in line with NLNG’s drive to continue to de-

liver LNG globally in consolidation of its position as one of the top-ranking LNG suppliers in the world. The shareholders of the company, Nigerian National Petroleum Corporation (NNPC), Shell, Total, and ENI in late December last year signed the final investment decision (FID) to give the go-ahead for the construction of Train 7 of the NLNG project. The FID was finally taken on the commencement of the project that will expand the plant’s production capacity by 35 per cent and boost Nigeria’s competitiveness in the global LNG market. “It will allow the expansion to increase the capacity of NLNG’s six-train plant from the extant 22 million tonnes per annum (MTPA) to 30 MTPA,” Tony Attah, managing director/ CEO of NLNG, said during the signing ceremony. Train 7 is the crux of a growth agenda, which will ensure the Company’s position as the 5th major supplier of global LNG is

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maintained, increasing value to its shareholders and other stakeholders, as well as further reducing the gas that would otherwise have been flared, in fulfilment of its vision of ‘being a global company, helping to build a better Nigeria. With the award of contracts for the engineering, procurement and construction activities to follow the closure of the bank and Export Credit Agency (ECA) financing, and the finalization of some key supporting commercial agreements is expected in early 2020. The actualisation of the Train 7 Project comes as NLNG celebrates 30 years of its incorporation and 20 years of safe and reliable operations since exporting its first LNG cargo in 1999. Also, the project will help create over 12, 000 jobs, which will be created during the peak of construction, with trade and commercial activities within the Niger Delta region equally receiving a boost as a result.

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Thursday 23 January 2020

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Thursday 23 January 2020

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Nigeria fell 7.2% in 2019 democracy index – EIU … scores lower than Ghana, South Africa … global score for democracy fell to 5.44

Hope Moses-Ashike

igeria felled by 7.2 percent in democracy index by the Economist Intelligence Unit (EIU), scoring 4.12 point in 2019 from 4.44 in 2018 and 2017, and 4.50 points in 2016. Africa’s largest economy was below some of its peers in the index, like Ghana with (6.63) points, South Africa (7.24) and was higher than Rwanda with (3.16) points and Ethiopia with (3.44) index points. Nigeria held its general elections in February 2019, where President Muhammadu Buhari was elected to run for second term. Although it was deemed to be broadly free and fair, the February general election in Nigeria was held during an extremely testing period, as the poor security situation (owing to violent attacks by Boko Haram or other militants) hampered the voting process and was a key reason for a low voter turnout, at just 34.8 percent. The failure of successive presidents to deal with the threat from extremist insurgents or to tackle endemic corruption has led large rows of the population to lose hope that anything might change for the better, the report stated. In the 2019 Democracy Index the average global score for democracy fell from 5.48 in 2018 to 5.44 (on a scale of 0-10). This is the worst average global score since the index was first produced in 2006. The 2019 result is even worse than that recorded in 2010, in the wake of the global economic

...instruments record 300% oversubscription

and financial crisis, when the average global score fell to 5.46. From 2011 onwards the average global score recorded a gradual, modest annual improvement, but in 2015 and 2018 the score stagnated, and in 2016 and 2019 it declined. The decline in the average global score in 2019 was driven by a sharp regression in Latin America and Sub-Saharan Africa, a lesser one in the Middle East and North Africa (MENA) region, and by stagnation in the remaining four regions covered by the Democracy Index. Latin America was the worst performing region in 2019, recording a fall of 0.11 points in its average regional score compared with 2018, to 6.13. Starting from an already low base, the regression in SubSaharan Africa was also striking: the average regional score fell by 0.10 points year on year, to 4.26. Sub-Saharan Africa (SSA) is populated by a large number of “authoritarian regimes” (encompassing half of the region’s 44 countries scored in the Democracy Index). Worse still, the region experienced a significant democratic regression in 2019. The overall average regional average score in the Democracy Index fell to 4.26 in 2019, from 4.36 in 2018; 23 countries registered a decline in their scores, which offset marginal improvements in 11. This is the lowest average score for the continent since 2010, in the aftermath of the global economic and financial crisis, when every region of the world registered a democratic regression in the Democracy Index.

Unilever Nigeria appoints Carl Cruz as MD

oard of Unilever Nigeria plc has appointed Carl Cruz as its new managing director (MD). Cruz takes over the management and leadership of the company effective February 1, 2020. He comes with extensive career in Unilever D&E Markets in Asia (Philippines, Thailand, India and Sri Lanka). Until this appointment, Cruz served as chairman, Unilever Sri Lanka. Cruz has over 26 years’ experience working in customer development and in marketing roles across home care, beauty and personal care and foods. As chairman of Unilever Sri Lanka, Cruz successfully steered the business to a sustainable and competitive growth trajectory. He holds a Bachelor of Science degree in Marketing from De La Salle University, Philippines. Speaking about the business, Cruz said, “Nigeria is an important market with exciting opportunities. Unilever Nigeria has a great team and our ambition is to satisfy consumers’ needs and make sustainable living commonplace.” The new leadership reflects Unilever’s focus on strengthening its operational effectiveness and reinforces the commitment of the company to its contribution to the socio-economic develop-

Investors jostle for FG bonds as liquidity surge persists

ment of Nigeria. Over the years, the company has contributed to Nigeria’s socio-economic development by building a large employment footprint in its ecosystem of suppliers, distributors and merchandisers as well as through skills development, investing in local manufacturing operations, building local capacity for regional export and ensuring full compliance with fiscal regulatory requirements. Unilever Nigeria brands aim to improve social conditions, health and wellbeing while the company reduces its environmental footprint and works to increase the local content used in its goods wherever it can.

Carl Cruz www.businessday.ng

Onyinye Nwachukwu, Abuja

nvestors who, apparently have been desperately looking for outlets to push in their cash following huge liquidity in the market scrambled for Federal government three tenored bonds auctioned on Wednesday. The Debt Management Office (DMO) confirmed that the first bond for the year was oversubscribed by more than 300%. The DMO offered N155bn three Instruments

of 5-Year, 10-Year and 30Year tenors to investors at the Auction. Subscriptions received through Competitive Bids for the three instruments at the Auction amounted to N624.498 billion, while the sum of N1.83 billion was received through NonCompetitive bid making the total subscription received the sum of N626.328 billion. Investor appetite for the 30-Year Bond remained strong, with subscription of N341.77bn or 621% com-

pared to the amount offered of N55bn. Subscription for the 10year Bond was N201.98bn and was oversubscribed by 404% when compared with the N50bn on offer. Consequently, bids were allotted at the rate of 9.8500% for the 5-Year; 11.1250% for the 10-Year; and 12.5600% for the 30Year Bonds. This indicates a significant decline from the rates of 11.0000%, 12.0000% and 13.0000% for the 5-Year, 10-Year and 30-Year Bonds, respectively, at the De-

cember 2019 FGN Bond Auction. The total amount allotted for Competitive Bids was N409.992 across the three (3) tenors. In addition, the sum of N1.83 Billion was allotted through Non-Competitive Bid for the 30-year Bond at same rate with the Competitive Bids. O verall, the sum o f N411.822 Billion was allotted to investors at the Auction through both Competitive and Non-Competitive Bids.

L-R: Niyi Adebiyi, director, corporate communications, Visa West Africa; Divine Oduduru, Nigerian track and field athlete; Kemi Okusanya, country manager/vice president, Visa West Africa, and Seun Adaramola, director, marketing, Visa West Africa, at the signing of Divine on to the team Visa programme for the Olympic Games Tokyo 2020, in Lagos, yesterday. Pic by Olawale Amoo

Datapro assigns Baobab MFB long-term rating of BBB

a t a P r o, Ni g e ria’s innovative C re d i t R a t i n g Agenc y (CRA) recognised and approved by the Securities and E xchange Commission (SEC), has in its latest report assigned Baobab MFB long-term rating of BBB with a stable outlook for the year 2019/2020. The BBB rating indicates that the MFB has a fair financial strength, operating performance and business profile when compared to the standards established by DataPro. It further indicates that the MFB has the ability to meet its on-going obligations, subject to adverse changes in economic conditions. The DataPro Rating Committee approved the rating after assessment of the bank’s Capitalization, Earnings Profile, Liquidity, Corporate Governance, Regulatory Risk and Sustainability of its current healthy profile in

the medium to long-term period. According to the Rating Agency, Baobab Microfinance Bank’s Issuer Default Rating (IDR) is supported by its very good liquidity, good capitalization and good asset quality. The rating took note of the fact that the MFB’s Capital Adequacy Ratio (CAR) for the reviewed period was 35% which is well above the regulatory requirement of 10%. Baobab MBF subsequently got a short term rating of A2. This reflects the bank’s capacity for timely payment of financial commitments. DataPro notes that the rating carries a maximum shelf life of 12 calendar months, in line with international best practice. The rating is therefore not an offer to trade in securities and a substitute for the user’s judgement. It is meant for reference purposes.

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Access Bank, Wigwe honoured at THISDAY Silver Jubilee celebration

ccess Bank and its group managing director, Herbert Wigwe, were honoured as the ‘Bank of the Decade’ and ‘Banker of the Decade,’ respectively, by THISDAY Newspaper at its 25th anniversary celebration held in Lagos. The Silver Jubilee celebration was witnessed by dignitaries including former Commonwealth SecretaryGeneral, Emeka Anyaoku; Afenifere chieftain, Ayo Adebanjo; founder of Dangote Group, Aliko Dangote; managing director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, and former Governor of Anambra State, Peter Obi. Receiving the awards, Wigwe attributed his success to the collective effort of all employees of the bank and customers, saying, “It is an honour to be recognised by such a prestigious platform, renowned for its work in unbiased and qualitative reportage. This award is dedicated to all members of staff who have worked tirelessly to ensure the growth and success of the @Businessdayng

Bank and all its subsidiaries. Furthermore, we thank all 32 million of our customers who trust us as we continue our journey to being Africa’s gateway to the world.” Over the past decade, Wigwe has overseen the growth of Access Bank, from a relatively small bank into Africa’s largest retail bank. Wigwe has closed a series of strategic high-profile mergers, while pushing and driving participation in community-focused initiatives that have endeared the bank to its customers. Since the completion of its merger with Diamond Bank, Access Bank’s customer base has grown from about 13 million to 32 million. With subsidiaries and rep offices in 13 countries – Ghana, United Kingdom, UAE, China, Lebanon, India, Sierra Leone, Gambia, Rwanda, Zambia, Congo, Cameroon and most recently Kenya – Access Bank continues to defy critics, strengthening its place as a powerhouse in the Nigerian and indeed African banking industry.

Thursday 23 January 2020

BUSINESS DAY

RESEARCH&INSIGHT A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

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CPI climbs to a nine-month high on border closure ISAAC ESOWE

t has been over three months since the Nigerian government closed its land borders. It was a move aimed at curtailing smuggling activities around the borders, as well as stop the outflow of subsidized fuel. The policy equally aims at impeding the influx of some foreign goods, especially, rice, among other commodities. A decision which in real term has a rippled effect on the economy at large and also, creates opportunities for local producers of commodities such as – rice, vegetable oil, palm oil and other agricultural produce, and again, while encouraging consumption of locally made produce. The implication of this is that, as the country’s land borders remain closed; aggregate demand for locally produced products is gathering more pressure on the prices of commodities. This is evident in the prices of some selected food items, for example, the average price of 1kg of tomato on month-on-month basis increased by 7.64 per cent to N251.21 in November 2019 from N227.50 in October 2019. Similarly, the average price of 1kg rice (imported high quality sold loose) increased year-on-year by 18.27 per cent and month-onmonth by 16.44 per cent to N445.45 in November 2019 from N382.57 in October 2019, while locally produce goods followed suit. And since the Nigerian land border was partially closed in August 2019, there has been a noticeable increase in the Consumer Price Index (CPI), which measures the average change over time in prices of goods and services consumed by people in the country. The nation recorded an increase in its CPI from 11.02 per cent in August 2019 to 11.24 per cent in September 2019. This represents a 0.22 per cent increase over the period. This, however, is expected to increase further if aggregate consumption, investment, and government spending exceed the value of what the economy can produce at its full employment. Demand for naira will beat against the limited supply of producible goods and services; this will variably bid up prices of commodities. In the short run, the implication of the policy thrust exerted pressure on the nation’s inflation. Within the

Source: NBS, BRIU

space of two-month, CPI was up by 0.24 percentage points from 11.61 per cent in October 2019. Similarly, during the reference period, headline inflation which measures the total inflation within an economy, including commodities such as food and energy prices, which tend to be much more volatile and prone to inflationary spikes on month-on-month basis, recorded an increase of 1.02 percent in November 2019, which is 0.05 per cent rate lower than the rate recorded in October 2019 (1.07) percent, as shown

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in the National Bureau of Statistics (NBS) report on CPI for Q4, 2019. The report also shows that the percentage change in the average composite CPI for the twelve-month period ending November 2019 over the average of the CPI for the previous twelve-month period was 11.35 percent, representing a 0.05 percent point from 11.30 percent recorded in October 2019. Core inflation, is the change in the costs of goods and services but does not include those from the

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food and energy sectors. That is, it excludes the prices of volatile agricultural produce. During the reference period, the variable stood at 8.99 percent in November 2019, an increase of 0.11 percent when compared with 8.88 percent recorded in October 2019. Core sub-index on a month-onmonth basis recorded an increase of 0.79 per cent in November 2019. This represents a 0.05 percent increase when compared with 0.74 percent recorded in October 2019. According to NBS, the highest

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increases were recorded in prices of cleaning, repair and hire of clothing, hospital services, hairdressing salons and personal grooming establishments, glassware, tableware and household utensils, vehicle spare parts, repair and hire of footwear, shoes and other footwear, clothing materials, other articles of clothing and clothing accessories. The list also included medical services and passenger transport by air. The average 12-month annual rate of change of the index was 9.19 percent for the twelve-month period ending November 2019; this is 0.06 percent points lower than 9.25 percent recorded in October 2019. On the other hand, the food sub-index on a month-on-month basis increased by 1.25 per cent in November 2019 but slightly declined by 0.08 per cent points from 1.33 per cent recorded in October 2019. The average annual rate of change of the food sub-index for the twelve-month period ending November 2019 over the previous twelve-month average was 13.65 per cent, 0.11 per cent points from the average annual rate of change recorded in October 2019 (13.54) per cent. The composite food index rose by 14.48 percent in November 2019 compared to 14.09 percent in October 2019. The rise in food index is believed to be caused by an increase in prices of commodities such as bread, cereals, oils and fats, meat, potatoes, yam, rice and other tubers, and fish. There is a general consensus that excess aggregate demand can, and often has been a major cause of the rise in prices of commodities. Food and energy are necessary staples, meaning demand for them doesn’t change much even as prices rise. For example, gas prices may rise with the price of oil, but you will still need to fill up the tank in order to drive your car. Similarly, you won’t be pushing off buying your food items just because prices are rising at the store. It is observed that the large portion of the aforementioned commodities and more are legally and illegally passing through the land borders that connect Nigeria with some of the west African countries like – the Benin Republic, through its commercial city of Cotonou; Niger, Ghana, among others. Nonetheless, these activities have fairly added value to the country’s fiscal projections over the years.

Thursday 23 January 2020

BUSINESS DAY

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Nigeria & love for Chinese debts; Love is blind! And…The Amotekun affair!

ik MUO

hen I first discussed the issue of Nigeria’s obsession with Chinese loans (Nigeria+ China; Till debts do us part), we consulted the legendary Shakespeare who had advised: neither a lender nor a borrower be (Julius Caesar). Today, I am still in the Shakespearean mood and once more, I take recourse to the sage who declared years ago “love is blind and lovers do not see the pretty follies that they themselves commit” ( Merchant of Venice) These lovers do FOOLISH things but do not see them as foolish because they are entangled by emotional cobwebs. However, the onlookers see the follies. Surely, there is an element of blindness in this our love affair with China or else, we should not have embraced the conditions which the Tanzanian President, Magfuli has forcefully argued “can only be accepted by MAD people,” since it amounted to selling the country to China. This Nigeria-Chinese debt-driven love affair is not even blind. China knows what it is doing and Nigeria is just acting as the blind partner because the individuals involved in this debt-love affair are not actually blind; they also know what they are doing. However, the onlookers see the REAL picture and know the truth. So, when IMF recently said that our debts are below the African average, a narrative vigorously marketed by our Debt Management Office, I shuddered. It is like an Engineer telling the house owner: the walls are cracking, some parts of the decking are giving way but at least, the pillars are still standing. In connection with this, I consulted Fela in the spirit and he gave me a one-sentence answer: “Teasher, don’t

teash me nonsense”. Yes, debt to GDP ratio is an outrageous high of 234 percent in Japan, 181 percent in Greece and projected to soon hit 80 percent in Ghana but you can only compare apples with apples. Our people also say that the sheep that wants to grow horns should develop a thick skull meaning one has to know the capabilities of his brethren before asking them for financial bailout. In effect, you don’t do things because others are doing; you do what you can do! And when Bismarck Rewane said that we have revenue problem, not debt problem, (another emergent government narrative) I also wondered. What about the sinful opulence, criminal pensions and 1001 SAs appointed by the political class, opaque security votes, over bloated contracts, criminal cost of governance et al. I believe that surely, we have expenditure problems and when we manage the expenditures, the revenue side is enhanced We ended the earlier treatise (Till debt do us part) with a barrage of questions, which boiled down to one: Why are Chinese loans so attractive for China and for African governments? I have gone into my darkroom (not coldroom please!) and have found some of the reasons. It is because of the high ease of looting index! Chinese government do not ask many questions and Nigerian/African borrowers can jolly well do what they do with the loans. That is why we are dutifully servicing the Abuja CCTV loan, even when there is nothing to show for it. We also have low volatility (citizens activism) index Nigerians love life and they are not willing to ask serious questions or risk their lives, except when the politicians pauperizing us mobilise us with N500 apiece. There is also high Elite Acquisitive Index. So, any deal, from which we can ACQUIRE more and more, goes. There is also a high Elite Acquiescence Index, such that while some elites and rabidly acquisitive, the other elites look the other way in acquiescence. We have a low legal and justice capability index because when busybodies dare ask questions in court (Like Prof Awojobi of blessed memory), the judges will

readily agree with the lawyers that the matters are not justiciable, that it is an abuse of court process and that the appellant lacks locus standi. We also have low diligent negotiation index; we lack the capability to strategically analyse these deals to know those that are ideal and those that are baits. The Case of I& PD and even the case of Mambila project are glaring examples. At times, the other indexes mentioned above undermines this particular index, when the best are deliberately side-lined or when the negotiator deliberately sells out. Do not ask me the econometric foundations of these indexes but for sure, they are the reasons why Chinese loans have become increasingly addictive for Nigeria and African Countries. Meanwhile, the debt appetite of the Buhari-APC government is alarmingly atrocious. Our total debt stock for September 2019 is N26.215 trillion while debt service is expected to gulp N2.140 trillion in our 2020 budget, in which N2.031 trillion projected for capital expenditure. More loans are on the drawing board and the NASS has just approved further $30 billion loan. Pundits posit that what we have borrowed in the last 3 years is more than what we have borrowed in the past 30 years. This is bad enough but the argument that there is no cause for alarm in Government quarters and among the informed opinions, except lone voices like that of Professor Tella, is quite unfortunate. Other matters: Amotekun: The travails of a weird federation The Amotekun affair has brought to the fore, once more, the challenges of the weird federation that we practice in Nigeria. During the 3rd Goddy Jidenma Lecture, Professor Aliagwu declared without any equivocation, that there is nothing like true federalism because the nature and scope of federalism depends on the peculiar circumstances of its practitioners. (See Ik Muo; Professor Elaigwu, Federalism & Contingency Theory. BusinessDay, 19/11/13). However, one fact remains sacrosanct as far as federalism is concerned: decentralization is fundamental to its theory and practice. However, the Nigerian version of federalism is built upon absolute

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Yes, debt to GDP ratio is an outrageous high of 234 percent in Japan, 181 percent in Greece and projected to soon hit 80 percent in Ghana but you can only compare apples with apples

centralization, to the extent that even the only things our governors can freely do, paying salaries and squandering of common wealth, depend on the goodwill of the federal government. They are able to pay salaries because they collect monthly ‘allawees’ from Abuja; they are able to steal their states dry because the institutions at Abuja look the other way while they do so! The South-West States, jointly established the Amotekun Security Network and immediately after its launch, the federal government criminalized the outfit by declaring it illegal. While the Amotekun debate rages and while even me as a spirit and a prophet, cannot foresee where it will end, two key issues are pertinent: equity and our practice of federalism. The issue of equity rests on the fact that there are in existence, several para-military and non-federal institutions across the country as at today. For instance, the Amotekun affair happened two weeks after the Hisba Police in Zamfara had the temerity to arrest a serving police officer for spending his time and money the way he deemed fit. Around the same time, the Jigawa Hisba announced how it arrested 24 gays, 12 rapists, 200 prostitutes, and 20 fornicators, among others in 2019. The Civilian JTF has grown in fame and fortune that the Nigerian Soldier has even absorbed a good number of them. (I wonder whether that was a part of its normal recruitment programmes and how other states were represented in the federal character template). Of course, Lagos state has its KAI brigade, LATSMA and Neighbourhood Safety Corps. Across the states, and even across the local governments, there are several uniformed folks, whose job mostly is to make life difficult for ‘we the people’. In any case, OPC has been operational across the West. So, why is Amotekun different? Is it the name, the timing, the scope or the sponsors? Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Impact of free trade area in Africa will be huge

ember States of the African Union (AU) have a combined population of over 1.2 billion people and gross domestic product of more than $3.4 trillion – yet the continent accounts for less than 3 percent of world trade. Within this, intra African trade accounts for only 15 percent of the continent’s total trade. The African Continental Free Trade Area (AfCFTA) is an ambitious project to unite this group of countries, individuals and economies under a single market with freedom of movement of goods, services, capital and people. The AfCFTA is expected to contribute significantly to trade liberalisation across Africa and thus foster and further develop the economic relations among African states, which will benefit from integrated value chains, cheaper raw materials and economies of scale. The AfCFTA Agreement is the first Free Trade Agreement (FTA) or international investment agreement covering the whole of the African continent. The impact of a single unified framework for trade and investment will be significant in a region with multiple existing regimes which divide African regions into blocs, and allow for highly differential terms of trade and investment on a bilateral basis between countries.

The AfCFTA Agreement seeks to harmonise trade across Africa against a backdrop of several existing regional FTAs, each providing for different rules and standards within segmented groups of African nations. The existing picture is further complicated by a huge number of Bilateral Investment Treaties (BITs) between states, both intra African and with third party states. Regional agreements have so far spurned treaties with third party blocs, for example between the Southern African Development Community and European Union. In parallel, investment protection in Africa occurs through a multi layered and varied patchwork of legal provisions across the continent – made up of the investment provisions of treaties supplemented by national laws. Beyond this, the Pan African Investment Code (PAIC) is a non mandatory code, still in draft form, that has been developed in recent years and aims at setting out guidelines for intra African investment rules. While economic integration via bilateral and regional agreements is in many ways a sign of progress, observers have raised concerns regarding the fragmentation of the continent’s trading system into exclusive blocs, especially in the context of relatively low intra regional trade. For this reason, the

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AfCFTA agreement is the next logical step in the continent’s journey to economic integration. Once fully implemented, the AfCFTA will constitute a single market covering both trade and investment, liberalising both of these aspects across Africa. The AfCFTA Agreement aims to align policy, reduce costs, promote integration and realize sustainable and inclusive development across Africa. In essence, the AfCFTA is a modern agreement that will provide significant levels of legal certainty to traders, while improving transparency and allowing for a more predictable trading environment in Africa. At this stage, the investment protection implications of the AfCFTA are unknown – but we can draw a few conclusions regarding the likely approach of negotiators. Following in the footsteps of recent Bilateral Investment Treaties (BITs) and regional agreements, and in light of a prevailing trend towards balancing investor and state obligations, we can expect to see a compromise between encouraging investment by creating a stable legal and economic environment, while also reflecting Member States’ concerns regarding the impact of traditional investment protections. This could be reflected in carve

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ANDREW SKIPPER & THOMAS KENDRA outs to substantive investment protections, obligations on investors, or overt recognition of states’ rights to regulate. It is also not yet clear whether we will see Investor State Dispute Settlement in its traditional form of international arbitration, or another institutional setup – perhaps leaning towards African dispute resolution institutions. Overall, there is still plenty of work to be done. Some have cautioned that the goal is a long term one, which will require patience and a sustained commitment to removing both tariff barriers as well as “invisible” nontariff barriers. But ultimately, this ambitious program has the potential to create one of the largest free trade areas in the world. Achieving this goal will undoubtedly require a significant investment from African Union Member States – but if successful, the impact on Africa and the rest of the world will be huge. Andrew Skipper &Thomas Kendra work at Hogan Lovells

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Thursday 23 January 2020

BUSINESS DAY

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How Nigerian leaders destroy institutions under the guise of fighting corruption

CHRISTOPHER AKOR

n the night of Tuesday, March, 22, 2005, former President Obasanjo commandeered all radio and television stations in the country to make a prime-time broadcast in which, without restraints, he accused the Senate President, Adolphus Wabara, and six other lawmakers of demanding and collecting a bribe of N55 million naira from the Minister of Education in order to increase the ministry’s 2005 budget. He also accused his Education Minister, Fabian Osuji, the permanent secretary and five other directors in the ministry of collusion to bribe members of the National Assembly. He promptly fired Osuji, suspended the civil servants and referred all of them to the Economic and Financials Crime Commission (EFCC) and the Independent Corrupt Practices and other related commission (ICPC) for onward prosecution. The publicity and praise for the ‘anticorruption war’ of the former President was unprecedented. Nigerians and foreigners alike praised Obasanjo to high heavens and condemned the corrupt officials. The Nigerian media, for weeks, analysed the matter with most passing the “guilty” verdict on the accused. Very few, if any, bothered to question the motive of the president and why he had to be the prosecutor and judge on

the same case. Besides, perhaps only few perceptive Nigerians saw the incident as an embarrassment and negative publicity Nigeria did not need at the time. If the president had concrete evidence(s) of corruption against the officials, he should have passed it/them over to the police or better still, the anti-corruption agencies to do their work and not embarrass the nation before the world with such an uncouth broadcast that portrayed Nigeria as a haven of corruption. Interestingly, the allegations have not been proved till this day. When the civil servants were investigated by the Federal Civil Service Commission prior to their being disciplined and sent for trial, they were found innocent. None of them was charged to court for the alleged offence and they all returned to their duty posts. For the six lawmakers charged to court, none of them was convicted. The cases were all thrown out of court for lack of evidence. One thing most Nigerians missed at the time however was that the broadcast coincided with Obasanjo’s meeting with officials of the World Bank and IMF over the debt relief Nigeria was seeking at the time. What better way to convince them that he was the no nonsense anticorruption Czar they yearned to see in Nigeria? Besides, later events were to prove that the whole drama was part of Obasanjo’s grand scheme for selfperpetuation in office. For the scheme to work, he had to control the National Assembly, which is responsible for amending the constitution. Obasanjo therefore kept instigating leadership changes in the National Assembly just to get a pliant legislature. Similarly, in May 2010, after it appears that the then National Chairman

of the People’s Democratic Party (PDP) was not in support of President Jonathan running for the presidency and wanted the party to honour its zoning arrangement that zoned the presidency to the north in 2011, he was promptly arraigned at an Abuja High Court on a 17 count criminal charge of N107 million fraud he was alleged to have committed in 2001 as a Minister. Of course, he promptly resigned (which was the real intent anyway). In 2014, he was discharged and acquitted. His co-accused, Emeka Ebilah, was however unlucky as he was found guilty and given a five-year jail sentence. Not to be outdone too, Buhari, in 2015, instigated a false case of false declaration of assets against Bukola Saraki for defying him to emerge Senate President. It took Saraki real political sagacity to survive as Senate President and all of three years to clear his name at the Code of Conduct Tribunal. However, in all their meddling with political institutions, previous leaders have been careful not to blatantly interfere with the judiciary especially with personnel of the highest echelon of that arm of government. But not so with Buhari. I recounted his decimation of the judiciary in this page on December 19, 2019 thus: “On October 8, 2016, the Department of State Security, in total disregard of all extant rules and procedures for the disciplining of erring judges, invaded the houses of three justices of the Supreme Court – Walter Onnoghen, Sylvester Ngwuta and John Okoro – as well as two judges of the federal High Court – Adeniyi Ademola and Nnamdi Dimgba – in the dead of the night, ostensibly based on tip offs of judicial misconduct. But while the real reasons

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most Nigerians missed at the time however was that the broadcast coincided with Obasanjo’s meeting with officials of the World Bank and IMF over the debt relief Nigeria was seeking at the time. What better way to convince them that he was the no nonsense anti-corruption Czar they yearned to see in Nigeria?

for the invasion of the houses of the Supreme Court justices was not immediately clear, it was later discovered that Justice Ademola and Dimgba drew the ire of the DSS for ordering the release of suspects in the custody of the outfit, an order that they failed to comply with anyway. Many lawyers and analysts foolishly supported the action of the DSS thinking Buhari was really interested in fighting corruption in the judiciary even when high-ranking members of the All Progressives Congress (APC) were granting interviews and singing a different tone. Shortly, after the arrest of the judges, the national chairman of the APC openly criticised the arrested judges for not granting judgments in favour of the party on the election case in Rivers state. “I still find the judgement on the Rivers state governorship election totally astonishing. There is something fundamentally wrong in the judiciary,” Oyegun was quoted as saying. However, Oyegun later revealed his real intentions and desire further when he openly confessed that: “We have lost very important resource-rich states to the PDP. No matter how crude oil prices have fallen, it is still the most important revenue earner for the country.” Similarly, many of his party members – prominent among which is the Lagos publicity secretary, Joe Igbokwe, have been openly abusing the Supreme Court and labelling its justices as ‘corrupt’ and ‘fraudulent’ with some calling on the President to probe the Supreme Court for daring to deliver judgements against the party’s candidates. Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng

In (non) remembrance

o entity can thrive without memory, be it human, national or institutional. Some of us would have watched movies where the main character has lost their memory after a major trauma, and wanders around clueless, much to the distress of friends and family who have suddenly become strangers. Shared memories and celebrations are what build family life, community, nations, and even companies. The biblical patriarchs of old were always erecting memorials where significant events had taken place: a life-changing meeting with the Almighty, the site of a mighty miracle or battle won. Indeed, remembrance and commemoration were an integral part of life in both the Old and New Testaments. Waveline Growth Partners, the micro lender I have been running for over 2 years, held its first AGM recently. I have shared this and other milestones on social media, conscious of the need to build institutional memory. Recall First Bank ‘s 125-year tag line from 2019: Woven into the Fabric of Society. Also last year, KLM Royal Dutch Airlines celebrated 100 years and much of its inflight programming was a walk down memory lane of how far the airline had come since 1919. The United Kingdom are masters of the art of remembrance. Not a month goes by, it seems, without a commemoration of some battle in the First or Second World War, some tragedy, triumph or ancient landmark event. In 2015 they commemorated the signing of the Magna Carta 800 years before! It is clear that these memorials are instrumental in moulding the identity of this island nation to succeeding generations. Nigeria, by contrast, does its best to run away from its past. 2014, the centenary of Nigeria as an entity, passed with barely a whimper. Commentaries, such as they were, mainly seemed to express regret at the Nigerian experiment, blam-

ing Lord Lugard and his masters at the Colonial Office in London for our plight. But however ambivalent we may feel about the Nigerian project, the fact remains that this country had existed continuously for a century, and more should have been made of it. Commemorations cannot only be about the good times. Indeed, less savoury events may provide deeper opportunities for reflection and course correction. And now, 50 years after the most momentous event in our history, the Nigerian Civil War, it is entirely possible to live in this country and be totally unaware of the fact. Kudos to Channels Television for featuring the war this week, to mark 50 years since the war ended on January 15, 1970. If I didn’t catch coverage of the “Never Again” conference on TV, I could have forgotten about this anniversary entirely. Kudos also to Business Day, which published a piece relating to the civil war on January 15. Until this year I had no idea that Armed Forces Remembrance Day coincided with the day the war ended all those years ago. In this year’s commemoration in Abuja, I don’t recall any reference to the war in the President’s speech. There is a loud silence from the Federal Government, which has encouraged a deliberate policy of turning its back on our history. I heard the alarming statistic this week that only 9 percent of Nigeria’s population was alive during the Biafran War. I was a young girl at the time, but that statistic makes me feel ancient! My family was in Lagos, far away from the theatre of war, but I have vivid memories of wartime propaganda on TV, the “to keep Nigeria one is a task that must be done” slogan, and relatives returning from the warfront greeting each other with “Happy Survival “. That statistic says a lot about our burgeoning youth population. It also makes it all the more imperative that we

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consciously seek to engage with our past: we need to confront it, speak the truth about it to ourselves, learn its bitter lessons, and move forward to build a stronger foundation for our continued coexistence. South Africa had the Truth and Reconciliation Commission to help heal the wounds of the apartheid era; Rwanda had a similar body post the 1994 genocide. Nigeria, by contrast, has resolutely refused to engage with its past, the good, the bad and the ugly. And because we refuse to do so, blocking the study of our history in schools, it keeps coming back to haunt us like an angry ghost. The fact that 50 years after, we are still having Biafran separatist movements, tells us loud and clear that something is not right somewhere. Official response to these agitations is often brute force; this is akin to shovelling a few spades of sand on a corpse and expecting the stench not to rise up and assault the senses a few days later. Every American child is drilled with the history of its founding fathers. It is unthinkable that their UK counterpart would not be familiar with how Britain, standing virtually alone for a season, repelled Hitler in the darkest days of the Second World War (some may argue that this is so much a part of the national consciousness that it helped to fuel the nationalism that gave rise to Brexit). But it isn’t only the victors who confront their past. Japan regularly remembers the devastating atomic bombs that were rained on them, the only victims of such unspeakable horror. The atomic bomb played a large part on their conversion from a warlike imperialist aggressor to the pacifist nation that emerged after WW2. On a recent visit to Germany, I was pleasantly surprised that those I met were more than willing to discuss the Nazis and that sorry chapter in German history, and even admit the Nazis leanings of some family members. Fifty years ago, there ended one of the defin-

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Taba Peterside ing wars of the 20th century, and it was fought right here on our soil. I understand that war led to the founding of the Nobel peace prize winning Doctors Without Borders. I learnt this from the Channels coverage. How many of us know this, or that up to 2 and half million Nigerians are said to have lost their lives? As with the civil war and other aspects of our history, we must own our past. Commendable as the commemorations in the press and civil society have been (to even acknowledge “Biafra” this year), the government must lead this engagement with the past if we are to build a strong united nation and forge a Nigerian, as opposed to our prevailing ethnic, identity. The thinking may be that this will harm nation building and needlessly reopen old wounds. But what if those wounds have not healed in the first place, and that the passage of time has just acted like a band aid? On the contrary, we must own our past and courageously confront it if we are to build, in the words of our old national anthem, a nation where in brotherhood we stand and no man in oppressed. As the saying goes, those who ignore history are condemned to repeat it. May this not be our fate! Taba Peterside is the Founder and CEO of Waveline Growth Partners, a microfinance institution delivering credit and other financial services to micro and small businesses and individuals.

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BUSINESS DAY

Thursday 23 January 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

On the growth of consumer credit in the economy

egulatory pronouncements and competitive activity have combined to boost financial inclusion in the Nigerian economy as banks compete with nonbank financial institutions to offer consumer credits. As they advertise it, citizens can now get up to N5 million in loans within 24 hours of applying. It is a brave new world for financial institutions, the Central Bank and the man on the street seeking financial assistance. There are many opportunities and threats in this new world with potential consequences for us all. Nigerian banks ignored customers for several years. Bank loans were out of reach and required the equivalent of the proverbial camel passing through the eye of the needle. Collaterals required by banks were lengthy and became the staple of humour when Nigerians lamented the situation of their country. Nevertheless, the banks

made strenuous efforts to acquire customers aggressively. Some even opened accounts for minors without charge and with exciting incentives. It all looked promising until a customer required a loan to tackle a project, overcome financial shortfalls etc. The story would change instantly, and the bank would become hostile until recently. New financial technology (fintech) enabled non-bank financial institutions to jumpstart the credit bonanza. Convergent mobile phones are the primary tool. Customers can apply on their phones, the fin-tech institutions do verification with credit agencies and the customer gets his loan within two days at most. The traditional banks have joined. They are offering as much as the non-bank institutions. They are also staking their pedigrees as part of the attraction. Speed, broad reach, the convenience of technology and many are the citizens who have acquired these loans. The Central Bank’s directive on loan to de-

posit ratio is driving the traditional banks. BusinessDay welcomes the new era in consumer credit in the country. Many positives attend this development, including increased access by citizens to financial resources. Lack of finance and access have always featured as impediments to growing economic prosperity in the country, particularly for the ordinary citizen and small-scale enterprises. Credit is now available. With the availability of credit, there is a call for a higher degree of restraint and regulatory efficiency. Increase in the incidence of non-performing loans even with these small sums is a possibility against which the regulator must watch. Interest charges remain high in line with the rest of the economy. The banks advertise monthly interest charges that lure citizens who do not see the larger picture of the full-year costs. Nigeria stands at the threshold of evolving a credit culture. Credit should stimulate growth in the local economy. It all depends

on what borrowers do with their loans. The new situation of availability of credits would require consumer education and acculturation. The loans are unsecured. However, the evolving credit ecosystem coupled with technology linking everyone means that the lenders can track borrowers. The security architecture in support of credits keeps getting better by the day. Citizens must be watchful, so they do not fall into the trap of debt peonage. They need education on the management of these funds so that they can repay their loans. The interest rates are deceptively affordable until the time for repayment. It is critical to teach borrowers to deploy their loans to projects that would repay and not merely to consumption. The loans are not free funds, nor are they part of their share of the national cake. Handle with circumspection, professionalism and the more significant interest of the economy and society.

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong

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Thursday 23 January 2020

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The absurdity the Supreme Court wrought on Imo State The Public Sphere

CHIDO NWAKANMA

“O, what a tangled web we weave when first we practise to deceive!” -Sir Walter Scott will be forthright and upfront. No amount of legal hocus pocus can remedy the damage the allocation of more votes than voters has done to the Supreme Court judgement on Imo State. They wrote fiction. Seven justices of the Supreme Court on January 14, 2020 enthroned Mr Hope Uzodinma, candidate of the All Progressives Congress in the March 9, 2019 gubernatorial election in Imo State, as the governor of the state. The Supreme Court upturned the verdicts of the election tribunal and the court of appeal. They also moved Hope Uzodinma’s position on the voters table for that election from number four to number one. To do so, they performed magic.

They engaged in legal skulduggery, including upturning the precedents the Supreme Court set only a few months back in similar cases. Unfortunately, they ignored the most important element. The justices of the Supreme Court failed the mathematics of the election, ending with a verdict that delivered more votes than voters. It is scandalous. It reminds of the 1927 election in Liberia. Charles Dunbar Burgess King won the presidential election with over 15 times more votes than there were voters. His feat is captured in the Guinness Book of World Records for its infamy. He scored 234, 000 votes while the electorate numbered only 15, 000. Before January 14, the results declared by INEC and upheld by two courts showed the following scores. Emeka Ihedioha had 273, 404 votes; Uche Nwosu of AA scored 190, 364; Ifeanyi Araraume (APGA) had 114, 676 and Hope Uzodinma of APC had 96, 458 votes. Others got 59, 803 votes. By the time the Supreme Court finished its reworking, Hope Uzodinma moved from 96, 458 votes to 309, 753. The Supreme Court got this magical number by adding votes from 388 polling units Hope Uzodinma demanded that the courts add. Curiously, all the votes bar none in those units went to Hope Uzodinma. There was no subtraction or addition to the votes of any other candidate. Does not make sense, right?

Before the Supreme Court, INEC recorded Imo State as having 823, 743 accredited voters while 714, 362 voted. After the Supreme Court, accredited voters remained at 823, 743 while votes went up to 927, 630. There were 3, 523 polling units (PU) for the election in Imo State. INEC credited Uzodimma with 96, 458 votes from 3,153 PUs. Through the Supreme Court, he scored 213, 295 votes from only 388 PUs. Magical realism. Lawyers are coming up with multifarious reasons why the Supreme Court is right or wrong on the judgement. As is the tendency of that clan, some suggest that you need a legal education to see the logic in the illogicality of the Supreme Court. It will not fly. More significantly, we must tell the lawyers that law and the courts are too consequential for us to leave to only those who understand Latinic expressions and arcana. They matter to all of us. Supreme Court Imo 2020 reminds me of the famous OJ Simpson trial years ago in the United States. The trial of OJ Simpson came down to the gloves that the prosecution claimed he wore to kill his wife Nicole Brown Simpson and her friend. OJ had to wear the gloves to prove his guilt or innocence. He did. Defence counsel Johnnie Cochran famously declared, “If it doesn’t fit, you must acquit”. It did not fit, and the court acquitted

‘

At the end, the judgement hinged on the arithmetic. So, it is irrelevant whatever other considerations. It was the sum of the votes that counted. Unfortunately, all seven justices of the court failed elementary mathematics. They had an answer but were unable to do the work that yields that answer

Extreme ownership, the secret for sustainable productivity

ne of the characteristics of high performing organisations is the consistency in achieving results and creating value for the stakeholders. The results are not just consistent but are delivered in a manner that is sustainable year-on-year. The value chain components of achieving sustainable results and building high performing organisations are the staff, the culture, service, and the leaders’ perspective. We have identified perspective as the difference between great leaders and those who are followers even with top-level positions. One universal fact is that all leaders want to achieve results and create a stellar image and performance for their companies. In my series on fit to lead, I have positioned that not putting your team first as a leader will not only jeopardise your influence but will also create the Mourinho’s swing in your results. Focusing on your team as an essential tool for achieving the result is crucial in this emotional age. There can be no leader without a team, and no sustainable result is expected where the team’s focus is at deviant with the company’s direction. Thus, the number one secret of leaders who achieve sustainable results in profitability, brand image, growth in customer base and other stakeholders’ value is their ability to create teams with an extreme ownership mindset. In Q2 of 2019, my team at Mentoras Limited engaged three organisations in a series of programme tagged institutional legacy and leadership advancement with “think and act like the owners” as the payoff. We focused on the staff and the entire team in our clients’ business to act as leaders and owners of the company toward delivering the budgets and other identified performance indices like customer penetration, brand awareness, zero service failure and above is creat-

ing a culture of ownership and stakeholder mindset in the workplace. Within 90 days of our engagements, we received two testimonials of increase in sales figure and volume coupled with positive behavioural changes leading to reduced absenteeism and sick notes from the doctors. Employees became happier and fulfilled with the intervention and think with a leadership mindset. The secret behind our success is the ability to infuse extreme ownership thoughts and actions in the system despite noticeable shortcomings. Extreme ownership is not a new concept. It is the same as creating a great place to work where most of the staff are connected to the journey of the company and are ambassadors of the brand on and off duty. It is synonymous to having a pool of engaged employees in an environment where performance and teamwork are the primary work tools with an appropriate reward system. In their book, Extreme Ownership: How U.S Navy SEALs Lead and Win, Jocko Willink and Leif Babin who are former U.S Navy SEAL officers with experience in leading some of the most dangerous combat operations including the battle of Ramadi in Iraq shared their experiences and lessons from the battlefields. They aim to train leaders within the U.S Navy SEAL and in the business world on the foundational principle for winning and achieving set objectives upon which all other factors rest. The principle is for leaders to take extreme ownership of the task and their teams. According to Jocko and Leif, no success can be achieved without all the team members believing in the task at hand with total commitment and most importantly is their belief in the leaders they are to follow to accomplish the mission; be it in the battlefield or the business market place. In the book, they classify leaders as ef-

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fective or ineffective based on the results they are achieving through the teams. Without instilling extreme ownership and stakeholder’s mentality in your team members, you cannot win the war in the marketplace, even with the most potent strategy. Hence, we are back to our starting point in my fit to lead series for 2020. The most armoury for a leader is his or her team. For companies, the slogan: staff is our most valuable asset is correct but not in its entirety. The staff of organisations are not just assets, and they are the companies without which all the investment in branding and equipment are but a waste of the shareholders’ resources. How do you instil the spirit of extreme ownership in your team? The function of doing this is essential for leaders who are keen on delivering on their numbers and the brand promise to the market. Achieving the ownership mindset is difficult in an environment where there is no alignment of the value of the company with the staff aspirations. However, this is not an excuse for any leader that wants to succeed. It’s like a game of football where the coach gets rewarded or fired for results since he or she has the right to choose, hire and fire players in the purpose of winning matches. In football, there is no one to blame, and the leader must accept responsibility for all, including his or her failure. The first port of call is to win the battle win. The war within is the war of divergence in what the organisation claims to be and what they are to the staff first, next are the customers and other stakeholders. A leader must, no matter the culture aligns his or her team with the task at hand. The influence of the leader is one major factor that will determine if his or her team is willing to give it all or none to the task at hand. I have been in an environment that is less conducive to achieving the set objectives of the company. However, the person

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Simpson. In the matter of the Supreme Court judgement, we must assert, If the sums do not add up, we reject it as garbage judgement. At the end, the judgement hinged on the arithmetic. So, it is irrelevant whatever other considerations. It was the sum of the votes that counted. Unfortunately, all seven justices of the court failed elementary mathematics. They had an answer but were unable to do the work that yields that answer. In mathematics, once you miss a step or two you will get null answers. Note also how the justices sat on this case for only one day and passed judgement. Amazing speed. The seeming agreement of all seven justices was a fig leaf meant to deceive people into thinking there was unanimity and therefore reasoned judgement. The deception has failed. The judgement of the Supreme Court has gifted Imo State with a governor whose party did not win one single seat in the State House of Assembly. It is the nature of strange judgements. Walter Scott was right. The Supreme Court has weaved a tangled web because the motive was wrong ab initio. Absurd. Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Positive Growth with Babs

Babs OlugbemI

of the leader and his influence was so potent that the team came out with a slogan “all it takes”. The team posited to do all it takes to protect their leader from failing and ignore the imperfection in the organisation to preserve respect and the integrity of their leader. Their mindset is a form of extreme ownership that will produce results for the leader in the short term, and the long run leaves the organisation in the valley of poor performance. This is because it only takes the leader to move on before the reality of the divergence in the workplace environment begin to influence the staff behaviours southward and consequently, the result they are delivering to the system. There are many ways of ensuring your team exude extreme ownership of their job and performance. We will explore that and more on the work of Jocko and Leif in the subsequent episode. Before then, please know that your extreme ownership mindset as an individual leader will influence your staff and department. No matter how little the influence is, it will have an impact on your company’s leadership once you have a result to show for it and this will inevitably influence the institutional direction if you are consistent and keep growing as a leader. Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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Thursday 23 January 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

NSE premium stocks on steroids deliver early above-market return to investors SEGUN ADAMS

ou r ave rag e return should be nearly two times the broad market gain in 2020 if you have invested exclusively and equally in these stocks: Dangote Cement, Access Bank, First Bank, UBA, Wapco, Zenith, and MTNthey are NSE’s premium stocks. NSE premium stocks are up 18.39 percent as of Tuesday compared to the wider market’s 9.76 percent gain year-to-date. The stock market is up almost double-digit in the year despite Tuesday’s profit-taking bring muchneeded relief to investors in the previously bearish market where the loss in 2019 narrowly missed 15 percent. The premium stocks are among NSE’s best performing in 2020. So far, UBA has gained 23.78 percent, Zenith

bank has surged 23.12, MTN has jumped 22.38 percent, First Bank has gained 21.95 percent, Dangote Cement has rallied 21.83 percent, Wapco has gained 10.13 while Access Bank has moved up by 6 percent. This leaves Seplat as the only premium stock with a sub-zero return. Analysts say NSE’s rally has been on the back of early positioning in stocks that pay high dividend compared to their perunit price, and expectations ahead of the announcement of full-year results for 2019. On the other hand, thinning yields in treasury bills with negative real return has forced big local investors to look elsewhere for gains. Na t i o n a l P e n s i o n Commission (PenCom) data as of 30 November shows an increase in equity exposure of local fund managers to 5.36 percent,

up from 4.85 percent at the end of October. Given that domestic equity exposure remains below levels before the start of NSE’s bearish run in 2018, analysts say the premium stocks are among the favourite for investors returning to the market. However, the consensus is that fundamental issues that weighed on equities last year still abound and the direction of equities in 2020 would depend largely on the trajectory of the economy. In the year, Cornerstone stands out as NSE’s best performing with a return of 26.67 percent as of Tuesday. Following closely, C&I Leasing has gained 24.58 percent while UACN, MTN and Ekocorp have surged 22.67 percent, 22.38 percent and 22.35 percent each. On the other hand, NCR has lost 18.89 per-

cent, Unilever is down 18.18 percent, Omatek has shed 18 percent while Fidson and Neimeth have lost 17.74 percent each. Launched in 2015, the Premium Board features

companies that meet the stock exchange’s most stringent listing criteria of capitalization, governance and liquidity. Accordingly, the Premium Board Index

serves as a benchmark for investors looking to track the performance of large firms with excellent corporate governance and sustainable business models.

L-R: Folashade Buoro, head, Cars45 Autopreneur Network; John Egwu, VP, supply chain management, Cars45; Abdulrazak Oshiorenua, recipient of the first EasyShipDirect vehicle, and Imuwahen Egbe, head, International Trade, at the presentation ceremony in Lagos

AVIATION

Boeing seeks $10billion loan as 737 Max crises bite harder …loses top spot to rival Airbus OLUFIKAYO OWOEYE

.S-based aircraft m a n u f a c t u r e r, Boeing is talking with some financial institutions about borrowing $10billlion loan facility as the aircraft manufacturer continues to battle with a surging cost after two deadly crashes to its 737 Max Jetliner. The company announced Monday that its assembly line in Renton has stopped building Boeing’s bestselling plane. The company had said in December it would halt production at some point this month. “MAX production has now been temporarily suspended inside the 737 factory. The Renton site remains open as our teams focus their work on several quality initiatives,” Boeing

said, referring to its facility in Renton, Washington. Boeing has also lost the title of the world’s biggest plane manufacturer to its rival Airbus after its aircraft deliveries slumped to a record 11-year-low. In a recently announced program deliveries for its commercial products for the fourth quarter and 2019, the fourth quarter and full-year figures show a 66.8percent and 52.9percent slump, respectively, in commercial shipments. While its close rival, Airbus delivered a record 863 commercial aircraft to 99 customers in 2019, up 8percent from 2018 deliveries. The ten-month grounding of the 737 Max has hurt Boeing’s deliveries as it had to shut down production of the jet at the beginning of this month.

The order backlog for its long- and short-distance commercial jets at the end of December stood

at 5,400. Aircraft manufacturers receive most of their revenue when jets are de-

livered - minus accumulated progress payments - making final delivery crucial for their financ-

es. Reports said Boeing has lost around $1 billion (Dh3.67bn) a month on the back of the grounding.

L-R: Assistant Corps Marshal, Zonal Commanding Officer, Federal Road Safety Corps 9FRSC), RS2 HQ Lagos, Samuel Obayemi; Sister of the newly promoted Chief Route Commander, Egwunye Adeola, and the newly promoted Chief Route Commander, FRSC, RS2 HQ Lagos, Adeyinka Murphy Ajayi, during the decoration of newly promoted officers of the Lagos Sector Command of FRSC in Lagos.

Thursday 23 January 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

OIL & GAS

Focus on access to power, Sahara Group urges investors in UK OLUSOLA BELLO

eading energy conglomerate, Sahara Group has urged participants at the UK-Africa Investment Summit to explore committing resources towards addressing the energy needs on the continent that is home to about 1.3 billion people. The Summit which held on January 20, 2020 in London, was hosted by the Prime Minister, and brought together businesses, governments and international institutions to showcase and promote the breadth and quality of investment opportunities across Africa. Sahara Group said UK and African businesses need to commit more funds to grid electricity development while ramping up investment in renewable energy to bring electricity to over 600 million people, a figure that is 10 times the population of the United Kingdom. According to Kola Adesina, Executive Director, Sahara Group, access to power in Africa is crucial to ensuring sustainable economic growth and seamless transition to the fourth industrial revolution.

“Investment in off-grid electricity will light up homes and small businesses in rural and poor communities, mostly in Sub Saharan Africa. This is an auspicious time for investors in the UK and across the globe to explore this opportunity which promises a win-win situation for all,” he stated. Adesina said apart from having the potential to promote access to clean energy, off-grid electricity from renewable energy sources, including solar, wind and hydro, has the potential of becoming more affordable for more Africans in the long run. “The aspirations of Africa’s youth population, some 400 million people aged between 15-34 which is about twice Europe’s entire population - rest on the decisions UK and African investors take at this summit. We can promote the agenda of bringing energy to life through enhanced access to electricity in Africa and Sahara Group is committed to spearheading this cause through more investment and collaboration,” he added. Adesina stated that Sahara Group, with its profile as one of the largest private power business operators in Africa, was already in partnership with the United Nations

Development Programme (UNDP) on a project aimed at boosting access to sustainable energy in Africa. He concluded that governments and businesses must work together to develop and implement a plan to transform regulatory and operational issues in the power sector. “We also need a sustained awareness plan to change the mindset of Africans to navigate from consumption to production; this will require reliable and affordable electricity. Sahara Group remains passionate about electrifying Africa and believes the time for all stakeholders to act is now.” According to the International Energy Agency (IEA), despite being home to 17% of the world’s population, Africa currently accounts for just 4% of global power supply investment. The IEA’s World Energy Outlook 2019 report found that achieving reliable electricity supply for all would require an almost fourfold increase, to around $120 billion a year through 2040, noting that mobilising this level of investment would require huge investments and thorough policy and regulatory measures to improve the financial and operational efficiency of utilities.

L-R: Abisola Atat, digital imaging services manager; Kehinde Bello, chief financial officer; Morenike Alder, marketing and communications director; Ayo Adegboye, MD; Chioma Odum, chief technical officer, and Folake Ogunleye, human resources manager, all of BCX Nigeria at the company’s business diner in Lagos

L-R: Chris Ubosi, MD, Megalectrics Limited; Okey Oramah, president, African Export–Import Bank (Afreximbank); Kojo Annan, founder, Africa 10, and Ken Onyeali Ikpe, group CEO, Insight Redefini Group, at the just concluded Creative Africa Exchange (CAX) Conference in Kigali, Rwanda

COMPANY RELEASE

EFInA receives part of £320m package to launch new phase of financial sector development

FInA, a financial sector development organization that promotes financial inclusion in Nigeria, has announced additional funding commitment from UK Aid, part of a £320m that will initiate an ambitious new phase of financial sector development across the continent. The deal which was announced ahead of the UKAfrica Investment Summit in London, includes additional funding for 9 existing Financial Sector Deepening Programmes (FSDs) and to set up and scale new FSDs in high-priority markets, including Ethiopia, Ghana, Sierra Leone and the West African Monetary Union. Segun Akerele , chairman of EFInA’s board, said, its catalytic and strategic collaboration with financial service regulators, operators and providers has contributed to 28 million additional Nigerians accessing formal financial services since EFInA was established in late 2007. Through research, advocacy, capacity building, and promoting innovation, EFInA has provided the critical support required to expand access to affordable, relevant financial services to all Nigerians, including under-served groups such as women and Northern Nigerians.” In the wake of this new commitment, Ashley Emmanuel , head of programs, EFInA, said EFInA will build on its foundational work pro-

moting financial inclusion and identify linkages with other sectors, such as agriculture, health, and education, that can drive progress toward meeting the Sustainable Development Goals in Nigeria. The £320m commitment provides funding for ambitious programmes that create financing solutions for the opportunities and challenges faced across Africa’s economies, from individual households and micro-enterprises to business and infrastructure investment. This means addressing the entire system of finance from savings groups to capital market development and operating more closely to the interface between finance and the real world. Alok Sharma, UK International Development Secretary said Africa’s substantial investment potential is clear, with many African countries outstripping global economic growth in recent decades. The UK is already the top financial exchange for Africa’s businesses and we want investors to seize the exciting opportunities that Africa offers. These new initiatives, announced ahead of the UK-Africa Investment Summit, will make it easier, greener and more secure to invest in Africa, mobilising billions of pounds of sustainable investment to help end poverty.” The £320m package also marks an important step for-

ward for the FSD Network. After nearly twenty years of operation and UK aid support, the FSD Network today comprises 9 active FSD programmes, with a strong track-record of impact, unparalleled local insight with applied research, and a powerful network of relationships with local regulators, policymakers, industry bodies, and low-income households. The new FSDs will join the Network, enabling them to benefit from, and contribute to, continentwide knowledge sharing and cross-border collaboration. Betty Wilkinson, Chair of the FSD Network Council, commented on the commitment: ‘On behalf of the nine existing members of the FSD Network and those new FSDs in formation, our sincere gratitude to the UK Government for this generous, constructive, and thoughtful five-year commitment. We pledge to broaden and deepen our innovative work across Africa to make money work for low-income families, women, youth, the excluded, and those who need financial services the most. This new package will enable us to apply finance - in all its forms - to the challenge of the Sustainable Development Goals. The FSD Network will enhance livelihoods for poor people; improve access to basic human services where finance is a barrier; and enable a sustainable future, particularly addressing the financial aspects of climate change and illicit capital flows.

L-R: Tomi Coker, commissioner for health, Ogun State; Chris Isokpunwo, director/head of Nutrition, Federal Ministry of Health; Coulibaly Aboubacar, dairy business manager Nestle Nigeria plc; , Karima Babangida, representative of the Honorable Minister of Agriculture; Mauricio Alarcon, MD, Nestle Nigeria Plc; Lukman Agunbiade, Alagbara of Agbara, and Olubola Aikulola, permanent secretary, commerce and industry, Ogun State, at the Golden Morn relaunch and factory tour as part of activities to celebrate their 150th Anniversary in Nestle Nigeria, Agbara Factory, Ogun State

L-R: Emeka Udeze, chairman, Enugu Coalition of Business and Professional Associations (ECOBPA); Godwin Anigbo, permanent secretary, Enugu State ministry of finance; Simon Otuanya, secretary to Enugu State Government, and Ugochukwu Chime, chairman of the occasion, at the launch of the revised Enugu State Business Agenda of ECOBPA, in Enugu

Thursday 23 January 2020

BUSINESS DAY

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Thursday 23 January 2020

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,186.09 1,315.51

395.47

130.37

591.44

246.74

2,064.24

1,285.38

1,149.10

404.55

126.95

578.74

248.15

2,055.99

1,204.73

1,124.24

2.30

-2.62

-2.15

Week open (10– 1–20)

29,415.39

N15.175 trillion

2,412.58

1,209.85

734.99

Week close (17– 1–20)

29,618.52

N15.256 trillion

2,505.46

1,180.65

734.99

Percentage change (WoW) Percentage change (YTD)

0.69 10.34

3.85 18.39

-2.41 2.50

0.00

0.66

0.00

11.69

13.37

0.90

-2.38

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

0.57

-0.40

-6.27

-2.16

-5.48

12.06

12.01

18.39

Cordros analysts favour banking, cement, telecoms, agric sector stocks …foresee volatile fixed income market Iheanyi Nwachukwu

esearch analysts at Lagosbased Cordros Capital Limited have urged equity investors to “buy” with a long-term view, noting that short-term expectations remain bleak. Led by Jolomi Odonghanro, head, research and strategy, Cordros, the analysts in their presentation themed “Nigeria in 2020: At the cliff’s edge” noted the sector stocks to watch –namely banking, cement, telecommunications, and agriculture. Cordros wants investors to build strategic exposure to equities through the year, “but also target dividend season”. Their equities market return scenarios show bull case at +23.7percent, base case of (-1.7percent), and bear case of (-19.8percent). They foresee a little more room for equities to fall in 2020. “Themes for the equities market in 2020 remain the same as in 2019, with domestic and external factors as the major drivers. With no respite to global trade tension, inflows to emerging and frontier market equities are expected to remain weak. Market-friendly reforms are lacking,” the analysts added. In the Fixed Income (FI) market, they expect the market to be quite volatile in the year 2020 “as the market forces pressure yields throughout the year”.

“Activities in the fixed income market are to decline significantly. Foreign Portfolio Investors (FPIs) will be wary of liquidity, potential for trading gains.

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“However, we do not expect significant capital flow reversals. Overall, we expect yields to pare by 100 basis points (bps)-150 basis points (bps) for both Treasury bills

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and bonds.” Cordros analysts believed that high modified duration bonds offer capital appreciation opportunities; “corporate issuance is to rise and will offer opportunities. Corporate bonds still offer an opportunity above market levels.” On their expectations for 2020, they do not see a strong case for a material change to Nigeria’s external position over the rest of 2019, however “we are concerned with: a sustained current account deficit picture, and the impact of diminishing capital importation on the CBN FX reserves, and by extension, the naira over 2020.” “For one, the trade surplus is expected to moderate in 2020 as we expect exports (-5.1percent yearon-year (y/y) to decline faster than imports (-2.2percent y/y). On the export leg, our crude oil production and price forecasts for 2020 imply there is little scope for a sizeable expansion in exports. “Also, recent policies restricting FX for food imports will cap nonoil imports. On balance, we expect the current account deficit to touch $8.90 billion (2019: $7.90 billion annualised), translating to 3.8percent of Gross Domestic Product (GDP). Also, our analysis forecasts that capital flows will remain tepid,” Cordros team of analysts told INVESTOR during the presentation. On the foreign exchange (FX) reserve, the analysts estimate the FX reserves to settle at circa $35 billion by

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June 2020, translating to an import cover of 8.6x (8 months), a premium to the IMF recommendation of 6.0x On monetary policy, they foresee monetary authorities standing pat on interest rates over 2020. “ We e x p e c t t o s e e m o re unconventional policy surprises, as the Central Bank of Nigeria (CBN) hopes to reflate the economy in the absence of fiscal stimulus, and we expect the Monetary Policy Committee (MPC) to focus on repairing the monetary policy transmission mechanism. Overall, we expect the monetary authority to leave the monetary policy rate (MPR) unchanged at 13.5percent over 2020”. Looking at their 2020 budget key notes, Cordros expects overall budget implementation rate of about 90percent. “We forecast FGN’s total retained revenue to settle at N4.08 trillion. This would translate to a fiscal deficit of N3.55 trillion in 2020. Fiscal reliance on ways and means will be extended in 2020.” Also on their oil price forecasts and risks, they noted that supply adjustments will support prices in 2020, “but demand will be the primary driver going forward”. “Demand forecast to rise by 1.3 million barrels per day (mb/d), from non- Organisation for Economic Cooperation and Development (OECD) Asian regions. As such, we forecast Brent crude price will average about $60 per barrel in 2020”, the analysts added.

Thursday 23 January 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Investor’s Square

United Capital Investment Views

Equities market: Nigerian bourse sustains uptrend

he equities market closed last week on a positive note as the Nigerian Stock E xchange (NSE) All Share Index (ASI) gained 0.7percent to close at 29,618.5 points. Investors gained N81.8billion as market capitalisation closed at N15.3trillion. In terms of activity, the average value traded declined by 19percent and the average volume traded declined by 22percent. The daily performance of the local bourse was mixed as profit-taking and continued decline of yield on treasury bills drove returns. The performance of the sectors under our watch was mixed as three sub-indices out of the five closed on a negative note. Starting with the gainers, the banking sector (+2.3percent) gained on the back of GTBank (+4.9percent) and UBA (+4.8percent). In like manner, the oil & gas sector (+0.6percent) gained on the back of a major uptick in Forte Oil (+21.9percent) which offset losses in Seplat (-0.25percent).

especially Access Bank which recently got CBN’s approval for an expansion into Kenya, and key counters such as Dangote Cement, to sustain momentum in the market. Additionally, the demand for the dividendpaying stock ahead of full-year results should continue to drive demand Money Market: NTB stop rates touch 2percent levels Similar to prior weeks, the level of system liquidity remained buoyant, as naira injections outweighed outflows. Specifically, inflows from OMO maturities (N434.7billion), NTB maturities (N152billion), Bond coupons (N106.3billion) and FX retail refunds, more than offset corresponding outflows from OMO auction (N201.3billion), NTB auction (N225.5billion) and FX retail auction, during the week. In the primary market, the NTB auction which held during the week was oversubscribed at N417.6billion, compared to DMO’s offer which was worth only N225.5billion. Accordingly, average stop rates dropped by 55basis

On the other side of the spectrum, the Industrial goods sector (-6.3percent) bled, as BUA Cement (-12.2percent) offset gains in Dangote Cement (+1.7percent). The Insurance sector (-2.6percent) declined on the back of Chi Plc (-7.7percent) and Sovereign Trust Insurance (-9.1percent). The consumer goods sector (-2.1percent) also trailed the losing path with Honeywell (-3.74percent) and Cadbury (-5.21percent). I n v e s t o r s’ s e n t i m e n t tilted negative, indicated by the market breadth of 0.4x (previously 3.2x). Specifically, 14 stocks gained while 36 stocks declined. This week, we expect interest in Tier-1 banks,

points (bps) across all tenors offered (91-day: 2.95percent, 182-day: 3.95percent & 364day: 5.09percent). Notably, the 91-day bill received the most interest, with a bid to cover at 8.9x. Elsewhere, the CBN floated an OMO auction, offering N200billion, with N407.6billion subscribed. Only the 362-day (bid to cover: 2.3x) was sold, at a stop rate of 13.2percent, lower by 5bps from the previous auction. At the secondary NTB market, the average yield declined by 75bps w/w to 3 . 5 p e r c e n t . H o w e v e r, the value of NTBs traded declined by 20percent w/w to N57.5billion. On the other hand, bears took the lead at

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the secondary OMO market, as average yield increased 37bps, closing the week at 13.11percent. Similarly, the value of OMO bills traded declined by 45.1percent w/w to N829.8billion. This week, we expect system liquidity to remain elevated, given inflows from OMO maturities (N433.7billion) as well as Bond Coupon payments from the Jan-2026 (N38.2billion) and Jul-2030 (N29.6billion). As such, we expect the CBN to maintain its liquidity tightening stance and float at least one OMO auction. Bond Market: Secondary market yield inches upwards Sentiments in the bond market were a bit tepid as average yields inched upward by 5bps w/w, to close the week at 10.46percent. In addition, the value of bonds traded declined by 43.5percent w/w, to N262.4billion. Notably, during its meeting with all Primary Dealer Market Makers, the Debt Management Office stated its plans to raise N565billion in Q1-2020, to take advantage of the current lowinterest-rate environment. A total borrowing of N1.6trillion is estimated for the 2020 financial year. In the Eurobond space, Nigeria’s sovereign debt continued its weekly rally, as average yield declined 2bps, to 5.9percent. This was expected, given the positive sentiments from the final signing of the U.S.China Phase one trade deal, coupled with w/w increases in crude oil price. Similar to what was observed in the preceding week, Eurobonds across emerging and developing African countries under our coverage, all rallied. Also, the average yield on Corporate Eurobonds declined by 2bps to 5.12percent. Looking ahead, we expect demand for the upcoming bond auction to be strong, as the DMO is scheduled to offer between N45billion-N55billion on the 5-year and 10-year bonds, as well as N50-N60billion on the 30-year bond. Currency Market: Naira firms against the US Dollar as reserves climb 14bps Across the three main FX windows, we track, the naira saw an increase in value, save for the parallel market.

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

CardinalStone Research:

Nigerian Fixed Income: A tale of two markets

e expect liquidity injections from OMO maturities that cannot be rolled over to drive a mean 350 basis points (bps) year-on-year (YoY) moderation in government bond yield by end of 2020. For bills, we envisage yields bottoming out between 4-5percent in first-half (H1) 2020 (versus 5.8percent currently) before a potential reversal. The aforementioned yield moderation is likely to slightly taper in second half (H2) 2020 on lower maturity inflows and possible change in capital allocation in favour of nonfixed income instruments as negative real yield widens. Elsewhere, the interest rate on OMO, which could remain exclusive to FPIs and banks, is likely to be dictated by external financing conditions, attractiveness of carry trade, and Nigeria’s economic risk profile. Our base case expectation is for yields in the OMO space to remain within +/50bps of current level, aiding foreign portfolio investor (FPI) participation as CBN extends liquidity support and ensures the availability of hedge instruments for FPI’s. Huge system liquidity to paper over “macro cracks” In our view, yields moderation is likely to subsist in the near term despite sustained macro weakness, high inflation, and inadequate fiscal consolidation. Precisely, although higher inflation and widerthan expected fiscal deficit (c.4percent of GDP in 2020E) s h ou l d o rd i na r i ly have necessitated an upward repricing of government yields, bloated system liquidity level is likely to sustain the current yield moderation. Si nc e t h e OMO ba n , yields on Nigerian T-Bills and bonds have plummeted by 850 bps and 313 bps respectively compared to an average monthly change of 41bps and 36 bps in the prior 6 months. The liquidity impact has been pivotal in determining borrowing costs and we expect this effect to continue into the first quarter of 2020 with an additional N4.0 trillion worth of OMO bills due to domestic and nonbank corporates maturing.

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The scheduled size of OMO maturities in 2020 alone is c.2x the projected fiscal deficit for the year, with a potential N1.2 trillion in new pension contribution likely to further magnify the liquidity glut. We believe the liquidity deluge from maturing OMOs and fresh funds (that is FAAC allocations, SMIS refunds etc.) would continue to compete for limited FG debt offering and drive yields down for most of Q1’20. However, we may see this downward trajectory in yields reverse in H2’20 as OMO maturities dry up significantly and domestic fund managers adapt to other high yielding investment options. How much lower can yields go in 2020? Nigeria has endured spells of negative real yields on government instruments in the past, with the three-year spell between 2008 and 2010 particularly notable. Within the referenced period, average negative real yield widened to -6.5percent from -1.2percent as the CBN embraced dovish orientation in response to international monetary easing aimed at combating the global financial crisis. The implied liquidity injection in the domestic market pressured nominal yields lower by as much as 600 bps (to nominal levels of c.3percent on some tenors) between 2009-2010, before a reversal in 2011 following pressures on inflation, foreign reserves, and the exchange rate. Given that the negative real yield environment is expected to coincide with economic frailties such as rising inflation and weak fiscal position, a few market participants are projecting a reversal in yield trajectory in the coming year. To this point, we note that the downward yield trajectory @Businessdayng

is primarily liquidity driven as market players continue to price their bids higher in a market where traders are reluctant to sell. While we expect further inflows into government t re a s u r i e s a s i nv e s t o r s continue to rotate out of OMO instruments in the more immediate term, we expect to see a reversal of downward yield pressures between quarter-two (Q2) 2020 and Q3’20 as the intensity of OMO maturities tapers and the effect of higher demand for domestic borrowing and inflationary concerns comes to the fore. Fo r c o n t e x t , av e ra g e maturities over Q2’20 and Q3’20 (N618 billion) pales in comparison to average OMO inflows of N1.5trillion since the OMO ban in October 2019. Specifically, maturities in Q4’19 and Q1’20 were elevated at N5.4 trillion and N4.7 trillion respectively. In addition to expected OMO maturities, our argument in favour of a reversal in yield trajectory is also hinged on expectations that institutional investors would eventually become averse to sustained negative real yield and get more acclimatised to other alternative investments by mid-2020. Indeed, there is precedence showing that Pension Fund Administrators (PFAs) had been comfortable with high equity allocations in prior years (example 14percent in 2009 and 17.6percent in 2010) for example. In addition, the provisions of the multi-fund structure allow PFAs to have maximum exposure to variable income securities (such as ordinary shares and collective investment schemes) of 75percent, 55percent, and 20percent for Fund I, Fund II, and Fund III respectively.

Thursday 23 January 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

After a disappointing 2019: Will investors find solace in 2020? ecently, the Chief Executive Officer of the Nigerian Stock Exchange (NSE), Oscar N. Onyema presented the key performance of the Exchange in 2019 and gave a prognosis for the market in the New Year 2020. The event had in attendance the stockbroking community, analysts, media and other stakeholders. During the year 2019, the performance of the Nigerian capital market mirrored that of the larger economy, which continued its moderate path of recovery, growing by 2.28percent in the third-quarter (Q3). The pace of the Nigerian economy remained fragile as the economy continued to grow below population growth, leading to per capita income and unemployment challenges. From an international investor’s perspective, the Nigerian bourse had to compete

formance Although the Nigerian Stock Exchange’s All Share Index (ASI or All Share Index) posted a negative return of -14.60percent to close the year at 26,842.07 points, the ASI reached a year high of 32,715.20 points in February 2019. Furthermore, the equity market capitalisation increased by 10.55percent to N12.97trillion from N11.73trillion in 2018, largely due to sustained primary market activities throughout the year, most notably the listings of MTN Nigeria Communications Plc and Airtel Africa. NSE indices also posted negative returns during the year with the NSE Consumer Goods Index being the most impacted, declining 20.83percent, followed by the NSE Main Board Index and NSE Lotus Islamic Index, which dropped by 20percent and 17.87percent respectively. The NSE Insurance Index and the NSE Premium Index were the least impacted, declining by 0.52percent and

with developed and emerging capital markets which saw riskbased assets priced and valued more competitively. In the review year, investors contended with: the macroeconomic landscape; fiscal and monetary policy direction and; a wait-and see attitude given trends in Foreign Portfolio Investments (FPIs). Despite welcomed stability in the FX market due to the CBN’s intervention, concerns around the stability of the Naira remained prevalent. In regards to corporate performance, their earnings were moderate as at first-half (H1) 2019. These aforementioned factors impacted the equity market negatively during the year 2019, however the Fixed Income market performed exceptionally well in 2019, reflecting a flight to safety. NSE equity product per-

3.59percent respectively. Equity market turnover decreased by 19.70percent yearon-year (YoY) from N1.2trillion recorded in December 2018 to N960billion in December 2019. The Financial Services Sector which accounted for over 50percent of total activity remained the highest traded in volume and value, as was the case in 2018. To support the equity market in 2019, the NSE rolled out various new initiatives such as a new market structure to enhance liquidity and ensure overall market stability alongside efficiency, as well as launched the beta version of the X-Mobile App (a dynamic and user-friendly mobile app) to boost retail investors’ participation. NSE Fixed Income Product Performance Our fixed income market performed exceptionally well

Iheanyi Nwachukwu

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in 2019, as market capitalisation increased by 20.42percent to N12.92trillion from N10.72trillion in 2018. Turnover also increased by 389.26percent when compared to 2018. Capital raising was dominated by the Federal Government, being responsible for 60percent of bond issuances during the period in a bid to finance fiscal and infrastructure deficits. The year 2019 saw the groundbreaking listing of Access Bank Plc’s N15billion Green Bond, the first of its kind to be issued by an African corporate. The market also saw the listing of North South Power Company Limited’s N8.5billion corporate infrastructure Green Bond, which was oversubscribed by 60percent, with firm commitments from twelve institutional investors including nine pension funds. Capital raising by corporates increased by 321.61percent with a total of N132.68billion raised in 2019. In addition to these accomplishments, the Exchange signed an MoU with the Luxembourg Stock Exchange (the largest Green Bond listing platform in the world). The MoU is geared towards promoting cross-listing and trading of Green Bonds in Nigeria and Luxembourg. The NSE believes relationships of this nature, which foster competition further enhances its ability to deliver greater value to our stakeholders. NSE ETP product performance The Exchange Traded Fund (ETF) market saw the listing of Greenwich Alpha ETF from Greenwich Asset Management Limited which tracks the NSE 30 index. Despite the 61.37percent YoY decline in trade volumes, 46.43percent fall in turnover, there was a 7.43percent YoY increase in market capitalisation to close the year at N6.58billion. The best performing ETF was the NEWGOLD ETF as it returned 31.75percent indicative of the shift towards more stable investment securities. Also, to optimise investors’ returns, the Exchange partnered with Afrinvest Securities Limited to launch two new factor indices; the NSE-Afrinvest Banking Value Index and NSEAfrinvest High Dividend Yield Index. Similarly, it partnered with Meristem Securities Limited to launch the NSEMeristem Growth Index and NSE-Meristem Value Index to provide a benchmark for the market to gauge the performance of value stocks and growth stocks listed on The Exchange. Securities Lending/ Investor Protection The Exchange worked with securities lending agents to develop a securities lending pool currently worth about N1.07billion. It also sensitised stakeholders on the possibilities that abound with securities lending. Pursuant to the

Exchange’s strategic focus on Investors Protection, the NSE facilitated restitutions and recoveries of shares worth N1.436billion for investors in 2019. “The Exchange showed commitment to achieving its strategic objectives during the year under review. We focused on our key targets to continue to execute on the NSE’s 2018 - 2021 Corporate Strategy, inclusive of restructuring the organization, onboarding new financial instruments and developing the market, as well as focusing on customer centricity. A key aspect to our Vision of becoming Africa’s Preferred Exchange Hub is to successfully demutualise the organisation.

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“Having met the necessary requirements of the Securities and Exchange Commission (SEC), The Exchange has obtained a letter of ‘No Objection’ to enable us proceed to the final stages of the demutualisation process. We have also sensitized our stakeholders on the process of demutualization and will continue engagement throughout the process. In anticipation for derivatives trading on The Exchange, the NSE released a derivatives market rule book that will serve as a guide for trading derivatives on the bourse”, said Oscar Onyema, CEO, NSE. The outlook for 2020 The year 2020 has started on a good note with circa 10percent returns year-to-date (ytd). @Businessdayng

The NSE said it intends to work closely with its stakeholders to sustain this growth trajectory. The NSE CEO is optimistic that market sentiments will be buoyed by a steady and stable recovery in the domestic economy, alongside continued sustainability in monetary policy. “The signing into law of Nigeria’s Finance bill 2019 and implementation of the 2020 budget may have a positive impact on companies’ earnings as well as consumer spending”, he added. Accordingly, the Exchange said it will continue to advocate for business-friendly economic environment, working in conjunction with both the Public and Private Sectors.

Thursday 23 January 2020

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

A better way to develop and retain top talent MARGARET ROGERS

CONNECTING ser-centered design principles show us how placing the user top of mind is essential to ensure success. That is especially true when it comes to employee development. While training is often necessary to teach people new skills, it’s only the first step toward a more distant end. In my experience, the most impactful development happens not through formal programs, but through on-the-job learning opportunities that are wholeheartedly catered to the worker’s unique needs and challenges. It might seem impossible to offer every employee this kind of personalized training, but any company can do so at scale when managers create a learning environment. Here’s how: 1. START BY ASKING MORE QUESTIONS TO GAIN INSIGHTS ON EMPLOYEES: Empathy and understanding are fundamental principles of user-centered design. Managers must understand what their employees need to give them ideal learning opportunities. Asking questions is the best way to do this. Start by scheduling regular one-on-one meetings

with your team members. Ask them what skills they would like to develop. Inquire about areas that feel especially challenging. 2. CREATE MORE ON-THEJOB OPPORTUNITIES: Classroom-style training is a stellar foundation, but it can lose its effectiveness if it isn’t applied readily. Treating a challenge your employee faces as an opportunity for growth — a “learning moment” — is an easier way to move the needle. Imagine one of your employees is uncomfortable having tough yet necessary conver-

sations. In a one-on-one meeting, he might express frustration about a peer who he is struggling to collaborate with. You could take this opportunity to create a “learning moment.” This might look like role-playing a tricky conversation or writing down a step-by-step plan of action. The next time he comes across a similar situation, he will have tools to overcome it. 3. VARY LEARNING EXPERIENCES: Part of keeping the “user” top of mind is considering which experience will best cater

to a person’s needs. Factors such as the employee’s tenure, experience level and adaptability are all variables that could impact that decision. Smaller opportunities — say, participation in projects where the employee can rely on more experienced peers for support — are best when a team member is unfamiliar with or newer to a necessary skill. Bigger opportunities that require employees to take risks and stretch beyond their comfort zones are more suited to individuals who have prior experience.

4. PROVIDE REGULAR FEEDBACK: Feedback is perhaps the most valuable aspect of the learning process, and it starts with setting clear expectations. As your team continues to carry out onthe-job opportunities, work with employees to set goals to strive toward. Provide regular feedback on what they are doing well and where you see opportunities for improvement. 5. MANAGE YOUR TIME: Employee development can be overwhelming, especially when you have a larger number of direct reports. Before shaping opportunities, determine how much bandwidth you have. What level of involvement and support are you capable of giving? Setting realistic expectations for yourself is critical. In some cases, you may consider distributing some of the coaching tasks among various mentors, managers and senior leaders. By making an effort to implement these user-centered principles in interactions with employees, leaders will be able to effectively engage and retain top talent. It’s time to open the communication channels and address each employee personally.

Margaret Rogers is a vice president at Pariveda Solutions.

To achieve big goals, start with small habits SABINA NAWAZ TIME

igh achievers are programmed to “go big or go home” and set big audacious goals. But big goals are more burdensome than they are motivational; they require daunting effort to accomplish and sustain in our busy lives . Falling short of a lofty goal creates a negative spiral of discouragement deterring future action. It’s great to dream big, but the way to achieve big is to start small — through microhabits. By breaking down an ambitious job into smaller, more achievable ones that you build over long periods of time, microhabits help you complete big goals. For example, when I first started running, my microhabit was to lay out my gym clothes the night before and get into them first thing in the morning. When I eventually made it to the gym, my next microhabit was to simply walk on the treadmill for 10 minutes each day. Two years later, I ran my first 10K race. To succeed with microhabits, you must be deliberate and choreograph steps to sustain them. Consider these five steps for getting

started: — IDENTIFY A ‘RIDICULOUSLY SMALL’ MICROHABIT: It usually takes my workshop participants a while before they come up with something small enough to be considered a microhabit. You will know you’ve reached the level of a microhabit, when you feel the urge to say, “That’s so ridiculously small, it’s not worth doing.” Aim for small. — PIGGYBACK ON A DAILY TASK:

No matter the size of the task, it’s easy to get distracted, make excuses or forget about it. To get around this issue, perform your new action at the same time as (or right before) an action you do without thinking. Meditating for 30 seconds each day? Check that off your list while waiting for your coffee to brew. — TRACK YOUR PROGRESS: As the saying goes, “What gets measured, gets done.” Many of my

coaching clients use a Yes List requiring 20 seconds a day to complete. Write down the desired action and under each date, simply list a Y or N to indicate if you completed the task. — HOLD STEADY FOR A LONG TIME: It’s hard to think small to begin with; it’s even harder to stay small. Make sure you don’t enlarge your goals unrealistically fast. You’ve stuck with your original mi-

crohabit long enough when you feel bored with it for at least two weeks in a row. Then increase it only by about 10%. — SEEK HELP IN HOLDING YOU ACCOUNTABLE: It might sound strange to enlist a partner to monitor your daily reading of one paragraph or doing two push-ups. But having people support you and hold you accountable can cement new behaviors, and it helps them in return. Consider asking three to six friends who are also interested in making a change if they’d be willing to exchange Yes Lists every week. Make sure you curate a small group rather than just one person. This creates a stronger bond of accountability in case one person peters out. The simple act of accounting for not achieving your microgoal can be a motivator. When you want to change behavior, jumping headlong into a major goal with both feet is often a waste of time. Instead, make tiny, incremental adjustments until they are part of your muscle memory. By starting small, you can attain big results. Sabina Nawaz is a global CEO coach, leadership keynote speaker and writer.

Thursday 23 January 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Investment Implications of the Supreme Court Judgement on the Imo State Gubernatorial Elections EMEKA OPARA

n Tuesday, 14th January 2020 the Supreme Court of Nigeria delivered judgement on the appeal brought by Hope Uzodinma against Gov. Emeka Ihedioha on the Imo State Gubernatorial elections. While many Nigerians were shocked by the judgement and pondered the political implications of the judgement, what was not immediately apparent is the direct impact the judgement is going to have on all facets of business in Nigeria, including international trade, foreign direct investment, international contracts and the perception of Nigeria in the eyes of the international community. Leaving politics aside, every Nigerian business person and every person or body anywhere on the surface of the earth interested in doing business either in Nigeria or with a Nigerian person or entity must be concerned about this judgement. And the reasons are legion. Two calls I received over the weekend, one from Finland and the other from California, US, highlight this concern. The Finland caller, the head of a group seeking to invest in a state in Nigeria, said that their lawyers have raised urgent concerns about the safety of their investment. He dispensed with niceties. “We hear that once your government is interested in a court case it instructs the judges on what to do.” I tried to draw him out. He mentioned the Atiku case and then, more emphatically, “We hear that an elected Governor was thrown out a few days ago and that your public documents can now be subverted by any other document brought by anybody.” When I tried to assuage him, he asked, “What if they change the governor [of the state they are negotiating with] and the new governor declares our contract invalid? How would we prove our documents valid if the courts cannot even rely on your public documents? What if a new governor brings a forged document? Would your courts be of help?” The second caller, a man who has made several visits to Nigeria, after some preliminaries informed me that they are seriously considering the safety of their investments in Nigeria owing to concerns on the “growing official interventions in court cases and the uncertainty of your judges. Your judges appear cowed.” How did we get to this point? Courts, especially the lower courts and up to the Court of Appeal, rely on precedents in making decisions. In fact, the Court of Appeal and all lower courts are bound by the

decisions of the Supreme Court. They cannot deviate from any such decision; else it would be said to be wrong or to have been arrived at in ignorance of the law. This decision of the Supreme Court is taken as the latest declaration of the state of the law on the issues it decided, and the lower courts are not permitted to choose between an earlier decision of the Supreme Court and a latter one on similar issues. They are bound to follow the latter, except they can find a way to say that the issues are different or to distinguish it, In their latest decision on the Imo gubernatorial elections, the Supreme Court appears to have inadvertently made some bad decisions with far-reaching implications. Their lordships seem to have been pre-occupied with politics and maybe technical law, without adverting their minds to the wider implications. The Evidence Act 2011 clearly states that only the original or a certified true copy of a public document is admissible as evidence. A public document is defined in Section 102 of the Act as documents forming the official acts or records of the official acts of public bodies named therein and public records kept in Nigeria of private documents. The reason for the exclusion of any other type of evidence other than an original (counterpart) or a certified true copy is to protect the integrity not only of public records but also of the judicial system. If any other type is made admissible chaos may be thrown into our judicial system. Indeed, it is for this reason that Section 104(1) of the Act provides mandatorily that “Every public officer having the custody of a public document which any person has a right to inspect shall give that person on demand a copy of it on payment of the legal fees prescribed in that

respect, together with a certificate written at the foot of such copy that it is a true copy od such document or part of it as the case may be.” Nigerian Evidence Act goes back to 1945. Before then the common law and certain ordinances which provide basically the same had been in use. The Supreme Court and all other courts of the land have therefore for decades followed the normal practice with respect to the admissibility of public documents which is applicable in all the countries of the Commonwealth and the whole civilized world. What this means is that by relying on those 366 number Form EC8A which were not certified the Supreme Court has overruled a long line of its own authorities spanning several decades. A person can now, in reliance of this dangerous precedent set by the apex court, come to court flourishing any document as one obtained from a public office. He would not need to certify it. Indeed, the court would have to accept it for what he says it is. In admitting and relying on uncertified 366 Nos. Form EC8A, a public document, the Supreme Court has by implication opened the door to lower quality of documentary evidence to be admissible in Nigerian courts. This seems to be not only contrary to the Nigerian Evidence Act and other laws but runs against the practice in all Commonwealth and other civilized countries. In practical terms, a Dangote may lose his real estate investment in a certain place because someone or group came up with an uncertified Certificate of Occupancy without any certification from the Lands Registry on it. This may happen even if Dangote holds the original document. If this can happen to a Nigerian, what would happen to a foreign investor? Better put, what would this judgement do

to the confidence of an investor in Nigeria? Just like some rogue could go online and download CAC Form CO7 Particulars of Directors and CO2 (Particulars of Shareholders) and fill in his details as owners and directors of Globacom. The courts will now be compelled to allow his uncertified Form CO7 & CO2 in evidence and could indeed award Globacom ownership to him. It will have to take appeals upto Supreme Court before it could be reversed which may span a period of 5 – 10 years. The law presumes regularity of acts of and documents from public offices and the onus is on who asserts the contrary to prove. A mere assertion and production of a document that does not satisfy the Evidence Act should not suffice to shift this onus. Let us take it further. Commercial contracts. What would be the effect of a mere assertion and production of a contrary document without proof in a dispute over a commercial contract? Would the court rule in favour of the person who produces any kind of document even if he does not relate his assertions or claims to the document? What role should the court play in assessment of documentary evidence? If reliance on a document leads to absurd results would the courts still rely on it even if it falls short of evidential standards? This is what happened in the Uzodinma v. Ihedioha case. The document which the Supreme Court relied on to cause this international furor had serious defects that made them unreliable, to say the least. Whereas about seventy parties contested the gubernatorial election, only four parties were mentioned and awarded votes in the 366 Form EC8A tendered by Uzodinma. The rule is that even if a party did not score any

vote, zero should be entered for it because zero is a score. Apart from this obvious omission, in almost all the exhibits only the alleged score of APC (Uzodinma’s party) was visible. Uzodinma himself and all his other witnesses including DCP Husseini could not read the scores of the other three parties when asked to do so on cross-examination. One cannot exactly put one’s finger to it, but there appears to be some kind of choreography at play. Should the court shift the onus when a party on whom the onus lies has failed to discharge it? It is difficult to fathom how the Supreme Court will rationalize its judgement. Which brings me to another issue. The Supreme Court is yet to issue the reasons for its decision. It just delivered a short judgement, the parties to await. It heard the appeal and delivered a short judgement the same day, on such a serious matter. It is within its power. Similar matters on the Sokoto and Kano gubernatorial elections were adjourned for one week after hearing, before judgement, so that the Court could consider. The Supreme Court has by its decision overruled the clear provisions of the Electoral Act which forbids unaccredited votes and over-voting. Investors are wondering. The certainty of the law is something investors want to be clear about. In this case the law was somehow certain until this point, but the Supreme Court has darkened the legal horizon with a dark cloud. That, to most investors, forebodes doom. The problem cannot just go away. No matter how we all try, the fact that in relying on the spurious 366 Form EC8As the total votes cast has overshot the accredited number of voters by more than one hundred thousand, that it is these additions that made Uzodinma overleap all the three candidates ahead of him in the INEC declared results, and that the new number added to Uzodinma is less than the number above the accredited number of voters (meaning that without these doubtful votes he could not win) are issues which no one can spin away, even by advanced sophistry. This judgement is generating a lot of bad image for Nigeria in a time the country badly needs foreign investment. Investor confidence is at the nadir. The Supreme Court can make this nightmare go away, perhaps by ordering fresh elections in the affected units. That way it may begin to attend to its image and that of the judiciary as a whole without appearing to lose face.

Emeka U. Opara is a Lagos-based attorney and consultant.

Thursday 23 January 2020

BUSINESS DAY

LEGALINTEL

LegalBusiness

Proper exercise of the powers of FIRS to freeze defaulting taxpayers’ accounts

ection 31(1) of the Federal Inland Revenue Service (Establishment) Act, 2007 (the “FIRS Act”) empowers the Federal Inland Revenue Service (“FIRS” or the “Service”) to, by notice in writing, appoint any person to be the agent of a taxable person; if the circumstances specified in section 31(2) of the FIRS Act make it expedient to do so. The agent so appointed may be required by the FIRS to pay any tax payable by the taxable person, from any money held by the agent on behalf of the taxable person. In addition, section 8(1) (g) of the FIRS Act empowers the Service to adopt measures to identify, trace, freeze, confiscate or seize proceeds derived from tax fraud or evasion. In exercise of this power, the FIRS has evolved the practice of directing banks to restrict taxpayers’ accounts on the ground that such taxpayers have outstanding tax liabilities to settle. In response to such directives of the FIRS, the banks, usually, do not question or investigate the legality of these directives before acting pursuant thereto. The banks simply proceed to restrict the taxpayers’ bank accounts until the alleged outstanding tax liabilities have been resolved between the taxpayer and the FIRS. Hence, on March 15, 2019, the FIRS issued a public notice informing the general public of its intention to resume, from that day, the freezing of the bank accounts of alleged defaulting taxpayers. The public notice was targeted at taxpayers with a minimum annual turnover of One Hundred Million Naira (N100,000,000) who had allegedly failed to register for taxes but who had been collecting Value Added Tax (“VAT”) and Withholding Taxes (“WHT”) on payments made by or to third parties; without remitting same to the FIRS. In the recent case of Ama Etuwewe, Esq. (Carrying on legal practice under the name and style of Ama Etuwewe & Co.) v Federal Inland Revenue Service & Guaranty Trust Bank Plc (“Ama Etuwewe”), the plaintiff, a legal practitioner operating under the name and style of Ama Etuwewe & Co. – a registered business name – was assessed to tax by the FIRS. In a bid to recover the assessed tax, FIRS appointed the commercial bank with whom the plaintiff maintains an account

(“the bank”) as a collecting agent for the purpose of deducting the alleged unpaid tax from the plaintiff’s account and for remitting same to FIRS. Following the appointment, the bank placed a restriction on the plaintiff ’s account. The Issues in Ama Etuwewe Aggrieved, the plaintiff filed an action at the Federal High Court (“FHC” or the “Court”), challenging the validity of the Assessment and the restriction placed on his bank account. The plaintiff contended that the restriction violated his constitutional right to fair hearing and was illegal, because he was not afforded an opportunity to be heard and that the tax assessment upon which FIRS’ accountfreezing and agent-appointment directives were based, was in respect of Company Income Tax (“CIT”). It was further contended that being an individual who carries on legal practice in Nigeria as a registered business name and not an incorporated company, the plaintiff is not subject to the Companies Income Tax Act (“CITA”) and hence not liable to pay CIT. The plaintiff also argued that the action of the bank in freezing his account on the directive of FIRS, without recourse to him, was in negligent breach of the fiduciary duty of care owed to him by the bank. He argued further that the placement of the restriction on his account was illegal and void, having been done without an order of a court of law. The plaintiff also challenged the validity of the appointment of his bank as collecting agent by FIRS. The plaintiff premised his argument on the fact that section 28 of the FIRS Act vests the power to appoint an agent squarely on the Board of FIRS or www.businessday.ng

the Service itself and therefore, the agent-appointment letter signed solely by the Chairman of FIRS is ultra vires the powers of the Chairman and was as such void and ineffective. Hence, the plaintiff sought reliefs jointly and severally against FIRS and the bank. FIRS, as the 1st defendant in the suit, argued that an unincorporated body, such as a business name, though not liable to pay CIT, is under statutory obligation to withhold taxes at the appropriate rates when making payments to companies and remit same to the FIRS. It was also argued that a registered business name carrying on legal practice, is not among the list of exempted businesses under the VAT Act and is therefore subject to the payment of VAT. It was then contended that, where a person (including a registered business name) having a duty to make deductions for WHT and to remit same appropriately fails in this statutory duty, the FIRS is empowered by the law to recover the accruable tax from the person who so fails, by way of substitution (as provided in section 31 of the FIRS Act). Also, it was contended that the FIRS has statutory powers to request for information from any bank, including bank statements of suspected tax defaulters, for the purpose of investigation, establishment and recovery of tax debts. Further to this, it was argued that, the FIRS has powers to appoint a bank as tax recovery or collecting agent. In support of this position, FIRS referred the Court to relevant sections of the Companies Income Tax Act (“CITA”), Companies Income Tax (Rates etc., of Tax Deducted at Source (Withholding Tax)) Regulations, 1997 (“WHT Regulations”), VAT Act and the FIRS https://www.facebook.com/businessdayng

Act. The bank, which is the 2nd defendant in the suit, contended that its actions, by obliging the FIRS and freezing the plaintiff ’s account did not amount to a breach of the fiduciary relationship between the bank and the plaintiff. It was argued that, while it is unarguable that banker-customer relationship imposes a fiduciary obligation on a bank to maintain confidentiality of its customers’ information and transactions and to prevent such from unauthorized access by third parties; the fiduciary obligation is qualified by certain exceptions. The bank asserted that the said exceptions had been laid down in relevant statutes such as the FIRS Act and that the position had been given judicial imprimatur. On the whole, the issues decided by the Court can be summarized into the following: • Whether the plaintiff was a company liable to pay CIT; • Whether the bank owed the Plaintiff a duty of care and was negligent in the exercise of that duty; and • Whether FIRS’ powers to appoint a tax collecting agent was legally and validly exercised.

• VAT is a consumption tax payable on goods and services and not chargeable on turnover in the plaintiff’s bank account; • The plaintiff only receives payment of professional fees from his client and does not make payments to companies and is therefore not under a statutory obligation to deduct and remit WHT; • Freezing of the plaintiff ’s bank account without recourse to him violated his right to fair hearing, was negligently done in breach of the bank’s fiduciary duty to the plaintiff, and was illegal without the backing of an order of court; and • Only the Board of the FIRS or the Service itself is statutorily empowered to appoint an agent under the FIRS Act for the purpose of recovering and collecting tax debts and as a result, the Chairman of FIRS cannot solely sign an agent’s appointment letter. Commentary In the first analysis, we are of the opinion that the Court may have missed the point of the FIRS’ arguments in Ama Etuwewe as it was not contended that the

The Decision of the Court After hearing arguments of the parties, the Court came to the conclusion that the FIRS, acting through the bank, did not follow due process in exercising its statutory powers and that the rights of the plaintiff were negligently breached by the bank. For these reasons, the Court awarded damages jointly and severally against FIRS and the bank. The FHC specifically held that: • The plaintiff, not being an incorporated company, is not liable to pay CIT; @Businessdayng

Continues on page 25

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

Thursday 23 January 2020

BUSINESS DAY

YOUNG BUSINESSLAWYER

LegalBusiness

Who is “They”?

recently convinced myself that a lot of young lawyers are without clear understanding of our mandate as lawyers. This, I say with all due respect knowing that I have to clearly explain why I choose to zoom in this way. For clarity, the aim of this inquiry is to reset the outlook young lawyers adopt in engaging the legal services community and to outline a key strategy for augmenting the quality of practice experience. This is both an introspection and a charge, so I invite you to walk this page with me without blame. Often, young lawyers act like they live borrowed lives and that prerogative and choice have been ceded to one almighty deity known as “They”. When asked to define “They”, there is no clarity! I have made an attempt to describe “They” as “this transcendent being that has the ability to seize and control every single aspect of our lives and career, stealing our ability to choose and generally just messing things up”. Interestingly, “They” is the author of chaos, only shows up in bad situations because if things are going well, “They” is never at work. If we all take count, I am sure, we have a long list of situations where we alluded a failure of responsibility to almighty “They”.

There comes a time in the life of every lawyer where he or she has to own up to the fact that he/she is responsible for the trajectory of his/ her life and career and the earlier that is, the better. Let me expatiate, the Council of Legal Education, the Body of Benchers, the Supreme Court mutually agree on the day of our call and enrollment that we are worthy

of the call and qualification and they back this up with certificates and attestations. The not-so subliminal message to society is that as a lawyer, you are ethically, morally and technically enabled to engage and in the terms of the lay-man, do business. This is an overwhelming amount of confidence reposed in us by these esteemed bodies, but when juxtaposed with the seeming

helplessness we exhibit, it is to say the least, absurd. The legal services community is a critical bastion of society and as young lawyers, we carry the baton of responsibility to ensure that the serving of law that is available is equivalent to the demands of society. We hold the compass; we determine mother law’s end. Personalizing this, whether we grow or wane, is largely driven by us. You and I are the drivers! It is not the law firm where we work or our location or the magnamity or cruelty of colleagues and patrons. We have to enter into the consciousness of who we are as lawyers. We need to augment our thinking and improve our outlook to the work we do. The proverbial “They” is a myth, it is often, our hiding place when we refuse to take responsibility. We need to get confident: What we have as lawyers is the privilege of enlightenment and we have to use it to benefit our world. This benefit is eroded when we choose to stay mentally lazy or rely on external motivation to propel us to action. I have been there, and I know it like the back of my hand, this mindset is regressive. We need to get responsible: “They” are not called, YOU are called; what are you going to do

with it? We have to explore until we get it, push, challenge and propel ourselves without motivation. Take self seriously and take ownership. In my first few years in practice, if I kept a coin for every time, I heard the words “take ownership” I would be wealthy. Learn tact: Like with babies, the ways of men are learnt. Learn by books, by association, by factfinding, but learn you must. As we proceed to give the market what it demands for, we must ensure that we tooled up and discard the excuses that “They” so often give us. I trust you get the message and wish you all the best! OYEYEMI

OYEYEMI ADERIBIGBE is a Senior Associate at Templars. She is also the current Vice-Chairman of the Young Lawyers’ Forum of the Nigerian Bar Association Section on Business Law and the Young Lawyers&#39; Committee Liaison Officer of the African Regional Forum of the International Bar Association. Feedback – Oyeyemi.aderibigbe@templars-law.com; yemiimmanuel@yahoo.com.

INDUSTRYFILE

Friends of Olumide Akpata sponsor 30 lawyers to Practice Preparation Course in Lagos

ecently, a group under the aegis of Friends of Olumide Akpata called for applications from interested and qualified lawyers across Nigeria for sponsorship to the 2020 Practice Preparation Course organised by law career centre, ‘Legally Engaged’ in Lagos. The sponsorship which is in sustenance of Olumide Akpata’s long-standing support for, and sponsorship of, capacity building and professional development programmes for young lawyers is expected to contribute towards expanding the frontiers of law practice by exposing the participating lawyers (who all have between 2 to 7 years post call experience) to various topical areas of law practice such as taxation, Fintech, renewable energy, media & entertainment, intellectual property, new face of dispute resolution, capital markets, banking, etc. At the end of the application period, over 300 strong and very competitive applications were received by the evaluation committee and the following 30 applicants from across various branches of the NBA were shortlisted. The shortlisted candidates who arrived Lagos on Saturday January 11, 2020, and on Sunday January 12, 2020 were taken through a number of special introductory focus sessions. They will be resum-

ing today at the Lagos Court of Arbitration for the two-week long intensive training. The sponsorship by Friends of Olumide Akpata is all-expenses paid and covers (a) the course fees; (b) travel costs to, and from, Lagos; (c) accommodation, within Lagos, for the duration of the course; (d) feeding, course materials and other associated costs and logistics. Candidates who made the shortlist were from several branches across the country. Among these were three candidates from Abuja branch; one from Aba branch; one from Asaba; and two from Benin. Other branches, were Calabar (2); Enugu (2); Ibadan (1) Ikeja(2); Jos (1); Kaduna (2); Kano (2); Lagos (3); Makurdi (1); Nsukka (1); Onitsha (1); Osogbo (1); Owerri (1); Port Harcourt (1); Uyo (1); Warri (1); The shortlisted candidates include, Ogbonna Igwenyi Richard, Melah Ibrahim Yusufu, Isioma Onwaeze, Vivian Ovie-Whiskey, Ejike Willians Asinyirimba , Jude Osasere Ogbeide, Uchenna Bridget Okoh, Emmanuel Akpan Assam, Deborah Ada Okey, Adaugo Sochima Ugwu, Ifeanyi Chukwunonso Ogbodo, Idowu Joseph Olamide , and Caleb Agyoh Terzungwe. Others were, Agatha Chikodi Mcmadu, Winnifred Wa’akat Daboer, Sulaiman Musa, Nasir Ibrawww.businessday.ng

JEE Partner and Course Facilitator, Chinyere JEE Partner, Chinyere Okorocha (L) facilitating a course at the training which Okorocha (L) with Yimika Adesola, founder, Legally ended in Lagos yesterday. Engaged.

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A cross section of trainees

him , Faisal Lawal Hassan, Sani Ammani, Uzochukwu, Babatunde Olawunmi Akinbobola, Emmanuel Deblois Ugbor, Ijeoma Favour, Chukwudubem @Businessdayng

Emmanuel Ezeh , Frederick C. Ifezue, Abiodun Ayotunde Sonaike, Daniel Odiba Ojonugwa, Ogbom Goodluck Ogbom, Ubongabasi Fidelis Onwioduokit, and Anderson Djegbada Ogaga.

Thursday 23 January 2020

BUSINESS DAY

THE BAR

LegalBusiness

NBA Lagos branch rises up to the challenge for the Nigerian training element of the CIArb/ NBA collaboration on Associateship certification courses. According to the Chairman of the CPD Committee of the Branch, Tobenna Erojikwe, the Branch had earlier announced the successful negotiation of a reduction of about 50% of the costs of the training and the sponsorship will go to the first

DESMOND OGBA

n 7 January 2020, a member of the Nigerian Bar Association (“NBA” or the “Association”), Jake Okechukwu Effoduh, stirred the hornet’s nest when he tweeted that he had just paid the sum of fifteen thousand naira (N15, 000 .00) for his Bar practicing fees for the year. He also noted that he has been paying his practicing fees for the past nine (9) years and wondered what the NBA has done for him and the many others who pay these annual fees, statutorily required of all members of the Association. Rather than overlook the tweet, which understandably went viral and resonated with a number of young lawyers, the tweet gave me cause to pause and truly consider what the NBA does for the thousands of its members, and more importantly, what the NBA can do for its members. The NBA is the umbrella professional association of all lawyers admitted to practice in Nigeria and as stipulated in the Constitution of the NBA 2015 (as amended), part of the aims and objectives of the Association include the maintenance and defence of the integrity and independence of the Bar and the Judiciary in Nigeria; the promotion and advancement of Legal Education, Continuing Legal Education, Advocacy and Jurisprudence, etc. The NBA is made up of 125 branches across the country, 3 professional sections, 2 specialised institutes, 3 forums and 8 practice-cadre forums. The National Secretariat of the NBA is managed from the Abuja office and the Association has an organisational structure which consists of a National Executive Committee, a National Officers/Management Board, Sections, Forums, Committees, Working Groups and a National

Yemi Akangbe, Chairman, NBA Lagos branch (Premier Bar)

Secretariat. The NBA organises annual conferences in August of every year and holds its general elections to elect its national officers every two years. As well as the Association has arguably done, there should be no argument that it has not lived up its massive potentials, and can clearly do more. ”It is for this reason that one cannot but wholeheartedly commend the Lagos Branch of the NBA (aptly christened ‘the Premier Bar’) under the Chairmanship of Yemi Akangbe for the Continuing Professional Development (CPD) agenda of the Branch. The Premier Bar has in recent times made it a cardinal principle of investing directly in the members of the Branch especially the young lawyers, giving them hope of a better professional future and providing platforms for their upliftment by promoting their social mobility as essential building blocks for the development of the Bar of our dreams.

The Branch has taken up the mantle of the promotion and advancement of Legal Education and Continuing Legal Education in Nigeria and it is one of the few branches in the country, if not the only one, that has a dedicated and focused CPD committee. This CPD committee has organised many innovative trainings, and mentoring initiatives all of which have been made available to members for free. The committee has had A-list speakers speak on topical issues at each of the last 26 monthly meetings of the Branch; introduced the group/speed mentorship initiative and a 1-1 mentorship programme; coordinated law firm led trainings and other collaborative initiatives. This week, the Branch raised the stakes a notch higher when it announced the approval of part sponsorship for 100 members of the Branch in the sum of Four Million Five Hundred Thousand Naira at Forty-Five Thousand Naira, each

of 30 young lawyers drawn from different parts of the country who were fully sponsored to attend by Friends of Olumide Akpata, who has for long been a vanguard of similar capacity building programmes. It is hoped that other well-meaning members of the Bar will key into this crusade and sponsor similar trainings/programmes.

“The Branch raised the stakes a notch higher when it announced the approval of part sponsorship for 100 members of the Branch in the sum of Four Million Five Hundred Thousand Naira at Forty-Five Thousand Naira, each for the Nigerian training element of the CIArb/ NBA collaboration on Associateship certification courses.” 100 (60 young lawyers and 40 others) members that make the £60 payment for the UK online assessment element of the training. We have also been assured that in the coming months, the CPD Committee will be launching the Branch’s Career Development Center and the Law Firm Mentorship Initiative. This is highly commendable and resonates with me as one who is deeplyrooted in such intiatives. Consistent with the excellent spirit prevalent at the Branch, some private individuals have also taken it upon themselves to sponsor young lawyers to various career development trainings. Indeed, there is currently a Practice Preparation Course organised by ‘Legally Engaged’ and part of the participants are a group

As a business law practitioner and an advocate for specialisation, I call on the young lawyers in the Branch to take advantage of this glorious opportunity. I also urge the NBA Lagos Branch to continue to blaze the trail and for the other branches of the NBA to match or surpass this. Above all, I call on the national body of the NBA to contribute to this discourse so that when next the likes of Jake Okechukwu Effoduh and other well-meaning young lawyers, demand to know what the NBA has done, and can do for them, we can at least point to this and hopefully other achievements. Desmond Ogba is a member of the NBA Lagos Branch

NBA Rotational Presidency Policy

... Why the bar must not permit the manipulation of history by ‘emergency geographical equality advocates’ ORJI A. UKA

the South West to produce the next NBA President. The view has also been expressed that anything short of that will amount to the promotion of inequity and might defeat

n the famous words of Aaron Levenstein, “Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital.” The same can be said of history, particularly when manipulated to achieve a desired end. The Nigerian Bar Association (NBA) Election campaign seasons are typically characterized by a proliferation of different opinions/ articles/posts most of which are designed to achieve a partisan end. Regrettably, election into national offices of the association is not immune to such. Accordingly, as election campaigns get set to begin for the 2020 elections into national offices of the NBA, we have already started to see such articles. ”One of the tales currently being spun is that the South West geopolitical zone of Nigeria MUST produce the next NBA President to give every zone a sense of belonging, and to ensure that there is no predominance of people from one inner-bloc to the detriment of others. In support of this position, one

“The electorate for the NBA elections is a highly educated and well-informed electorate. Orji Agwu Uka

of the illustrations referenced is the “fact” that the “Western Bloc” is divided into two inner components, the South West and the SouthSouth/MidWest components. And that in 2008, when it was the turn of the Western Bloc, Nigerian lawyers elected the current Governor of Ondo State, Rotimi Akeredolu, SAN from the South West, while the MidWest produced NBA President in 2014 in the person of Augustine Alegeh, SAN, hence it is the turn of www.businessday.ng

the very purpose for which the rotational presidency applicable in the NBA was introduced. The above represents the classic example of how to manipulate history. Thankfully the electorate for the NBA elections is a highly educated and well-informed electorate. It is for that reason, and that alone, that I considered it imperative to provide the fuller facts and circumstances to enable Nigerian lawyers make up their minds for themselves. It is important to state from the outset that there is indeed a policy

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of rotational presidency applicable in the NBA. More than being a mere policy, the above is now clearly provided for under the express provisions of the extant Constitution of the Nigerian Bar Association 2015 (as amended). By a combined reading of Section 9 of the NBA Constitution and paragraph 2 of the second schedule thereto, the NBA for the purpose of elections of National Officers is divided into three geographical zones namely – Northern zone, Eastern zone and Western zone, and the offices of President and General Secretary of the Association are to rotate among the three zones. The Constitution also provides that where a position is zoned to any particular geographical zone, the position shall be rotated and held in turn by the different groups and/or sections in the geographical zone. It is instructive to note that while the Constitution clearly spells out what is meant by geographical zone and stipulates what States are comprised in each zone, there is no attempt to explain what is meant by “group and/or section in the geographical zone.” For that reason, @Businessdayng

it becomes pertinent to take a trip down memory lane to determine how the rotational presidency policy has been applied in previous NBA elections. The rotational presidency policy, albeit not expressly provided for under the NBA Constitution until 2015, was resorted to as part of the panacea for the crisis that engulfed the Association between 1992-1998 when NBA had no President and was run at the Branch level only. After the election of Chief T. J. O. Okpoko in 1998 and the expiration of his tenure in 2000, the successive Presidents of the NBA are represented in the list below. • 2000-2002 O. C. J. Okocha, SAN (Rivers) EAST • 2002-2004 Wo l e O l a n i pekun, SAN (Ekiti) WEST • 2004-2006 Bayo Ojo, SAN (Kogi) NORTH • 2006-2008 Olisa Agbakoba, SAN (Anambra) EAST • 2008-2010 Rotimi Akeredolu, SAN (Ondo) WEST • 2010-2012 Joseph Bodunrin Daudu, SAN (Kogi) NORTH Continues on page 26

Thursday 23 January 2020

BUSINESS DAY

LegalBusiness

Proper exercise of the powers of FIRS ... Continued from page 22

Plaintiff, an unincorporated body carrying on legal practice in Nigeria as a registered business name, is liable to CIT under the CITA. The argument of FIRS was that the Plaintiff, though not subject to CIT under the CITA, was subject to WHT obligations under the CITA and the VAT Act. The Assessment raised on the plaintiff related to alleged VAT and WHT collections by the plaintiff that were not remitted to the FIRS as required by law. The Court should therefore have limited its decision on this point to the question of whether the Service had successfully proved the allegation and not whether the plaintiff is subject to CIT under the CITA. In addition, the Court’s view that the appointment powers of the FIRS under section 31 of the FIRS Act can only be exercised by the FIRS Board (the “Board”) or the Service

itself, and not the Executive Chairman of the Service, appears to have no clear basis in law. Whilst it is not contestable that the FIRS (or the Service), the Board and the Executive Chairman of FIRS are three distinct personalities created separately under the FIRS Act and with clearly specified powers and functions; it should be noted the powers of the Board specified under section 7 of the FIRS Act relate only to matters of general policy guidelines and do not include the power to appoint agent. Similarly, the functions of the Service, as provided under section 8 of the FIRS Act, include matters relating to tax assessment, audit, collection, investigation, and collaboration with law enforcement agents for purposes of tax debts recovery. In exercising its powers, the Service either acts through its Board or its Executive Chairman or any other officer properly so delegated. Specifically, section 53 of the FIRS Act provides that

anything done or required to be done by the Service in pursuance of any of its powers or duties under the FIRS Act or under the law may be signified under the hand of the Executive Chairman or under the hand of an officer authorized by the Board for the particular purpose. The above notwithstanding, the FHC decision is noteworthy as it clarifies a thorny issue that has become of serious concern to taxpayers in Nigeria: that is, whether the FIRS can restrict or direct the restriction of alleged defaulting taxpayers’ bank accounts without recourse to the judicial process of the courts. The decision in Ama Etuwewe has authoritatively determined this question in the negative (in accordance with previous decisions of the FHC in Megawealth Limited v Securities & Exchange Commission (2017) 13 NWLR (Pt. 1583) 345, 380 and Guaranty Trust Bank Plc v Akinsiku Adedamola & 2 Ors. (Unreported judgment deliv-

ered on March 1, 2019 in Appeal No. CA/L/1285/2015)). In other words, while the powers of the FIRS, to restrict defaulting taxpayers’ bank accounts and appoint third parties (such as banks) as tax collecting agents, under the provisions of sections 8(1)(g) and 31 of the FIRS Act, is not in contest, it is our considered view that the powers must not be exercised arbitrarily. At any rate, section 31 of the FIRS Act does not empower the Service to restrict or direct the restriction of alleged defaulting taxpayers’ banking accounts. It only empowers the FIRS to appoint a third party as tax collecting agent in respect of a taxpayer’s property where the tax sought to be collected has become legally “payable” and whereupon the agent will be required to pay over to the FIRS the amount of the tax which has become final and conclusive, from any money held by the agent which belongs to the taxpayer. It should

be noted that tax is legally “payable” where the assessment has become final and conclusive. That is, (i) no valid objection or appeal challenging the assessment was lodged by the taxpayer within the time allowed by law, or (ii) any such objection or appeal has been finally determined by the courts with right of appeal completely exhausted. As the FHC decision in Ama Etuw ew e has establishe d, where a taxpayer’s banking account is unlawfully restricted by a bank on the appointment or directive of the FIRS, the remedy available to the aggrieved taxpayer is to seek declarator y and injunctive reliefs against both the Service and the bank at the FHC. It is therefore incumbent on the FIRS to lawfully and diligently exercise its statutory power of substitution, through appointment of tax collecting agents, in order to minimize potential crises in our tax administration.

Thursday 23 January 2020

BUSINESS DAY

LEGALINSIGHT

LegalBusiness

Subpoenaing a Clergyman: a review of the Nigerian law

Subpoena is a formal instrument issued by a court of law; a grand jury, a legislative body or committee, or a duly authorized administrative agency commanding an individual to appear before it at a specific time to give an oral or written testimony, in a matter. There are two major types of a subpoena command. They are: a. Subpoena ad testificandum: A command on a person to testify before the ordering authority. It may be the case sometimes that the testimony may be given over the telephone or in person; b. Subpoena duces tecum: A command on a person or organization to bring physical evidence before the ordering authority or face punishment. This is often used for requests to mail copies of documents to requesting party or directly to court. Whilst the general principle is that nobody is above the law, there are however certain categories of persons protected by the law and on whom an ordering authority cannot issue such command. These categories of people would include Priests (of the Catholic Churches and others provided for in the Evidence Act). This used to be the position in England until recently. Suffice to add that the issuance of a subpoena against clergymen by Nigerian courts is not illegal; the Court has the inherent powers to summon anyone, subject to a few exceptions descried above, to give useful evidence in the determination of a suit before it. In Nigeria, the law had been unclear (until recently) whether a clergyman who, in the course of carrying out episcopal assignment, can be summoned/subpoenaed by the courts to give evidence in a divorce proceeding. Put simply, whether the courts can summon religious leaders to disclose information

made available to them during counselling; noting that the role of spiritual counselling and mediation of matrimonial disputes is as old as the institution of the Court itself. In a recent divorce proceeding, a Petitioner moved the High Court of Lagos State to issue a subpoena ad testificandum commanding the lead Pastor (‘Pastor Godman Akinlabi’) of one of the leading Pentecostal churches in Nigeria, The Elevation Church, to give evidence in the said proceeding. Whilst the ambit of the evidence sought to be obtained from the said Pastor was not (expectedly so) stated on the face of the subpoena, a reasonable deduction drawn was to have the Pastor disclose otherwise confidential information to the public. In his application challenging the subpoena order of the Court, the Applicant through his lead Counsel, Tolu Aderemi Esq of Messrs Perchstone & Graeys LP, challenged the propriety of this command and invited the court to determine whether indeed it was appropriate to have a religious leader testify in a divorce petition; a principle synonymous with the priest-penitent privilege. In his submission, Aderemi con-

tended that the priest-penitent privilege shields clergymen from court summons to disclose confidential information made available to them in the course of their episcopal duties. Aderemi further noted that whilst this is a Common Law principle which was first recorded in the Randolph’s case of 1413, as reported by Sir Edward Coke in his book, The Second Part of the Institutes of the Laws of England published in 1681; it would appear that this privilege made its way out from the Common Law in the 18th century. Ordinarily, where stretched appropriately, the provision of Section 31 of the Interpretation Act (which makes Common Law principles applicable where there is no local legislation) ought to have been applicable to protect religious leaders. However, recent English decisions appear not to favour this position. Perhaps, this may explain why it was t left out of the Evidence Act. The silence of the law on the priest-penitent privilege notwithstanding, the subpoena issued against the lead Pastor of the Elevation Church, was challenged on the following grounds to wit; a. that disclosure of information

shared within matrimonial confines are not admissible without the consent of the other party; b. on the grounds of inadmissibility of evidence ‘without prejudice’; and c. of the vagueness of the command. In his submission, the Applicant contended that by the virtue of the provision of Section 164 of the Evidence Act 2011, a priest does not have the capacity to lead evidence to disclose information exclusively made to him by two persons legally married without the consent of the other party. In particular, the section provides that: “No husband or wife shall be compelled to disclose any communication made to him or her during marriage by any person to whom he or she is or has been married; nor shall he or she be permitted to disclose any such communication, unless the person who made it, or that person’s representative in interest, consents…” Aderemi further submitted that, giving a purposive interpretation of the above, the Court must necessarily come to the conclusion that the provision of the section does not apply to the couples only, but to third parties such as the Applicant, who was made part of the communication between the parties in this suit by virtue of his position as a clergyman and a counsellor. A further question being, whether such information made without prejudice, is relevant and consequently admissible in evidence. In Akanbi V. Alatede (Nig.) Ltd (2000) 1 NWLR Part 639 125page 146, para B the Court of Appeal noted that “The doctrine that statements made “without prejudice” in the settlement of a matter out of court is not admissible in evidence extends to all third parties who act as mediators with a view to enabling the parties reach a settlement or compromise whether or not that

Akhigbe Oserogho and Temidayo Adewoye are both of Perchstone & Graeys LP

advocates for geographical equality that it be reserved for the other components of the Western zone. When next the NBA Presidency was zoned to the Western geographic zone in 2014, while I cannot claim to have first-hand knowledge of what transpired, there have been several credible accounts of a meeting where lawyers from the MidWest requested that the Presidency be reserved for them but this was flatly rejected. The above is fortified by the fact that, contrary to the dishonest impression that the NBA Presidency was zoned to the MidWest in 2014, there were in deed 3 very distinguished lawyers from the South West on the ballot to wit, Mrs Funke Adekoya, SAN, Deacon Dele Adesina, SAN and Mr Niyi Akintola, SAN. Thus Mr Augustine Alegeh, SAN emerged as NBA President in spite of, and not because of, the lack of an arrangement between the MidWest and the South West. In light of the above incontrovertible facts, all of which transpired in our lifetime as opposed to some ancient era, it is therefore curious to contend, as some have done, that Nigerian lawyers ought

to ensure they elect only a core Yoruba man as the NBA President and that any candidate who is not from the South West geopolitical zone cannot fit into this equation. For the same reason it is at best fanciful, to declare with magisterial authority that the MidWest has taken its turn in the NBA Presidency. In the final analysis, we must not permit the manipulation of history by the emergency geographical equality advocates even if they are Law School lecturers. The wider Nigerian socio-political environment is facing serious existential problems especially in the area of lack of respect for the fundamental rights of citizens and the rule of law. There is a general consensus that as one of Nigeria’s pre-eminent organisations, the Nigerian Bar Association has not truly lived up to its potentials in this regard. As the 2020 elections approach, it would be counterproductive for lawyers to elevate the tribal question above competence and the substantial issues begging for attention. This is a new decade, let us get it right so that when our history is told, unlike statistics it will not conceal anything vital.

third party is a legal representative...” In Obo-Odu v. Duke (2006) 1 NWLR (Pt. 961) 375 at 400 - 401 (CA) the Court held that: A subpoena not necessary to obtain any evidence relevant to a case will be set aside. A subpoena which is vague and applied for frivolous grounds or where the evidence sought to be obtained will amount to an invasion of the witness’s personal right and private affairs will be set aside. The above in view, Applicant’s Counsel therefore submitted that the subpoena issued by the Petitioner on the Applicant was vague and must be set aside. The High Court of Lagos State coram Oyebanji J, granted the Applicant’s prayers and accordingly set aside the subpoena. The consequence of this laudable decision was that the Applicant (‘Pastor Godman Akinlabi’) was permanently released from giving evidence in respect of the divorce petition before the Court. Whilst the decision of the Court is commendable, it must be reiterated that religious leaders (at the two sides of the major religious divides), play an important role in alternative dispute resolution. Indeed, the Court must continue to recognize the role this role and provide protection for that institution from wanton destruction. Exposing the heads of these religious groups to such command will erode the confidence of their congregation and consequently direct increased litigation to the docket of our Courts. Counsel must also remind itself of the very important role(s) religious leaders occupy and therefore exercise restraint in moving Courts to subpoena such clergymen to give such evidence.

NBA Rotational Presidency Policy Continued from page 24

• 2012-2014 Okey Wali , SAN (Rivers) EAST • 2014-2016 Augustine Alegeh, SAN (Edo) WEST • 2016-2018 Abubakar Balarabe Mahmoud, SAN (Kano) NORTH • 2018-2020 Paul Usoro, SAN (Akwa Ibom) EAST Even a cursory look at the list above will reveal that the rotational presidency policy of the NBA has been successful, at least in the sense of being respected for the last two decades. A closer examination of the list however highlights some interesting facts. Under the second schedule to the NBA Constitution, the Eastern geographic zone comprises the States in the South East geopolitical zone in Nigeria together with a part of the South-South i.e. Akwa Ibom, Bayelsa, Cross River and Rivers States (all of which were part of the old Eastern Region of Nigeria at the time of Independence). The Western geographic zone comprises the South West

geopolitical zone together with the rest of the South-South i.e. Edo and Delta States (all part of the old Western Region of Nigeria at the time of Independence) while for the purposes of the NBA Constitution, the North comprises the entire North-Central, NorthEast and North-West geopolitical zones (all part of the old Northern Region of Nigeria at the time of Independence). In the Northern geographic zone, prior to the election of Abubakar Balarabe Mahmoud, SAN (Kano) in 2016, both slots for the North were filled by two indigenes of Kogi State, Bayo Ojo, SAN (2004) and J. B. Daudu, SAN (2010). There was no suggestion whatsoever that their elections contravened the rotational presidency policy of the NBA, as long as both belonged to the North. In the Eastern geographic zone, to those familiar with NBA politics, there was an unwritten internal arrangement (under the auspices of the Eastern Bar Forum) between the South East and the South-South components of the Eastern geographic zone to rotate the Presidency between the two

components. Interestingly, the first two times that it was the turn of the South-South component of the Eastern geographical zone to produce the NBA President, both Presidents O. C. J. Okocha, SAN (2000) and Okey Wali, SAN (2012) hailed from Rivers State and this presented no difficulty at all. The unwritten internal arrangement between the South East and the South-South components of the zone to rotate the Presidency between the two zones was religiously followed until 2018 when the incumbent President, Paul Usoro, SAN from the South-South component contested, defied the odds and won the election. Interestingly, some of those who supported his candidature are also part of those singing the ethnic tune in the build up to the 2020 election. The position in the Western geographic zone even makes for more compelling reading. The first two times the Presidency was zoned to the Western zone, the South West (Ekiti and Ondo States in 2002 and 2008 respectively) produced the President. Again there was no agitation by the emergency

Thursday 23 January 2020

BUSINESS DAY

BUSINESS TRAVEL Emirates projects margins growth in 2020 Stories by IFEOMA OKEKE

mirates will conclude 2019 with a successful string of product, network, and customer experience highlights. The airline will usher in 2020 with a continued focus on strengthening its business across operational, commercial and customer experience metrics, and excitement for Expo2020 – the world’s greatest show which will open its doors to global visitors from October. Remarking on 2019’s milestones and highlights, Tim Clark, President Emirates Airline said: “This was a year of recalibration in terms of our fleet and network plans, when it became clear that the A380 programme will cease. “Emirates’ dynamic approach to capacity deployment – during the southern runway renovation at Dubai International, as well as in response to the capricious forces of politics and socioeconomics throughout the year – demonstrated our agility and yielded results. We’ve also stayed focussed on delivering our “fly better” promise to customers through enhancing our product and service proposition at every touchpoint.” Commenting on Emirates’ outlook for the year ahead, Tim said: “In 2020, we’ll con-

tinue to leverage our partnerships to provide even more connectivity and value for our customers. And we look forward to welcoming the world to Dubai for Expo2020, where we will showcase the future of aviation at the Emirates Pavilion.” Connecting the world to and through Dubai In the 12 months since January 2019, the airline has carried close to 58 million passengers on its modern and efficient fleet of Airbus A380 and Boeing 777 aircraft. Emirates operated over 3,500 flights on average per week, or over 186,000 flights in 2019, travelling more than 885 million kilometres around the globe, which is the distance equivalent of more than 2,300 trips to the moon and back. The airline served nearly 63 million meals on its flights departing Dubai, and han-

dled over 35 million pieces of baggage in Dubai alone. The airline reinforced its global network of 159 destinations in 2019, with the addition of three new passenger routes: Dubai to Phnom Penh via Bangkok, facilitating a new connection between Cambodia and Thailand; a non-stop service to Porto, the airline’s second destination in Portugal; and most recently, a new service to Mexico City via Barcelona. In addition, Emirates uplifted frequencies and upgraded capacity to 12 points within its network. Emirates also expanded customer choice, connectivity and convenience by growing its partnerships. The airline ended 2019 with 26 codeshare partners and 156 interline partners in 200 countries, extending its network by over 1,800 unique desti-

nations. New partnerships forged in 2019 include with China Southern Airlines, Africa World Airlines, LATAM Airlines, SpiceJet and Interjet. The airline expanded its A380 network with the introduction of scheduled services to Riyadh, Cairo and Muscat. The Emirates A380 also operated seasonal services during the summer to Boston and Amman, offering more customers the opportunity to experience its flagship aircraft. Strategic fleet investments for the future At the Dubai Airshow 2019, Emirates placed an order for 50 A350-900 XWB aircraft and confirmed a full purchase agreement for 30 Boeing 787-9 aircraft. In line with its long-standing strategy to operate modern and efficiency wide-body aircraft, the airline’s latest US$ 24.8 billion investment in its future fleet

will expand its operational flexibility in terms of capacity and range, and allow it to further develop its network proposition beyond 2020. Cutting-edge customer focused initiatives Placing customers at the heart of its business, Emirates delivered another year of trendsetting product and service initiatives to provide an unmatched travel experience in the air and on the ground. In April 2019, the airline completed its US $150 million refurbishment of 10 Boeing 777-200LR aircraft, offering a two-class cabin with wider Business Class seats in a 2-22 format and a fully refreshed Economy Class cabin. Emirates’ customers continue to be spoilt for choice with over 4,500 channels on ice – the airline’s award winning inflight entertainment system, which clinched its 15th consecutive Skytrax win in 2019 for Best Inflight Entertainment as well as its 3rd consecutive APEX Passenger Choice award for Best Entertainment. This year, Emirates elevated the inflight entertainment experience by introducing playlist synching. Customers can now browse the extensive content on offer, create personalised playlists ahead of their flight, and sync it to their seats once on board their flight, using the Emirates App. Since its launch, more than

180,000 unique playlists have been created, and the airline is expanding this function progressively across its entire fleet. Emirates continues to invest over US$ 27 million annually to operate inflight connectivity systems, serving the expectations of modern travellers. More than 13 million Wi-Fi connections were made on-board Emirates flights in 2019, as customers increasingly expect the ability to stay connected to family and friends when they fly. Providing a stress-free, end-to-end customer experience, Emirates launched its first remote check-in terminal outside of the airport, to provide smooth connections for cruise passengers in Dubai. These Emirates check-in counters, located at Port Rashid, allow passengers who are disembarking from their cruise ships to check in for their onward Emirates flight and enjoy a hassle-free stopover visit in the city. The airline also launched biometric boarding and facial recognition technology at its departure gates for customers flying from Dubai to any of its 12 destinations in the U.S., reducing the time taken for identity checks to two seconds or less. More biometric technology will be rolled out in the coming year, in coordination with partners at Dubai International airport.

IATA commends Air Peace for upholding safety standards

Quorum Aviation, 328 Dornier unfold $2bn investment in aviation

igeria’s private sector airline, Quorum Aviation Limited and United Kingdom based 328 Dornier have unveiled two billion dollars investment portfolio for the country’s aviation sector. This huge capital outlay was disclosed today when the two firms signed a strategic collaboration agreement to support the growth of new regional connectivity in Nigeria and West African region. 328 Support Services GmbH, a wholly owned subsidiary of Sierra Nevada Corporation (SNC) is the type certificate holder of the Dornier 328 aircraft. The Dornier 328 is a modern regional turboprop airliner with 30 seats. The aircraft got it’s certification in October 1993. Initially it was produced by Dornier Luftfahrt GmbH. In 1996 Fairchild Aircraft acquired the Dornier Luftfahrt and formed a new company named Fairchild Dornier GmbH. The agreement would pro-

he head of account management, West and Central Africa, International Air Transport Association, (IATA), Samson Fatokun, has commended West Africa’s leading carrier, Air Peace, for upholding high standards of safety in its flight operations. Fatokun, who gave the commendation while presenting the third IATA Operational Safety Audit, (IOSA), certificate to Allen Onyema, the chairman of Air Peace, congratulated the Air Peace team for achieving the rare feat. He declared that many airlines had started the safety audit but were unable to

complete it. He said: “It gives me joy to present this certificate today because I know it’s the fruit of painstaking effort of your team”, adding that scaling through this third safety audit process is a testament to Air Peace’s commitment to maintaining high safety standards in its operations. Fatokun, noting that safety is IATA’s number one priority, asserted that for any airline to pass the safety audit, its safety compliance must be hundred percent, and Air Peace has met this prerequisite. “Many airlines are not able to achieve this because they don’t have the discipline and

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hard work which have consistently earned Air Peace this safety recognition. The certificate gives the airline a global recognition as a hundred percent safety-compliant airline”, Fatokun averred. In his remarks, Onyema affirmed that the IOSA certificate is something to be proud of, adding that Air Peace is becoming the emerging force in Africa’s aviation landscape. He expressed gratitude to the IATA team and commended the entire Air Peace team for a successful safety audit. He also assured that the airline would always align with global best practices and safety standards.

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vide the basis for the start of a new chapter in Nigerian aviation sector as the United Kingdom based aviation support group would supply aircraft for Quorum Aviation AbujaKaduna air shuttle service project which was previously announced by the Nigerian company and the Kaduna State Government in 2019. The deal also provides opportunity to Quorum to be engaged in the selling of Dornier 328 aircraft in Nigeria and West Africa aside the setting up of aircraft maintenance centre among other aviation related services in the country. Aside that, Quorum Aviation is shifting its focus by using smaller, fuel efficient and cost effective airplanes by developing a niche market for itself described as money spinner for airlines. Speaking in Lagos after both firms inked a deal in Lagos, Lukman Abiola Lawal, founder and managing director of Quorum Aviation Limited, said his firm had been planning to partner with @Businessdayng

the right aircraft manufacturer over many years and felt now was the right time to connect more cities and towns and with potential of Dornier 328 aircraft which he said is the right aircraft for its niche market. According to Lawal, “The investment that this strategic partnership will drive and bring to Nigeria aviation and indeed West African region is massive; aircraft, parts, maintenance, training plus the potential to build an internationally recognized MRO to provide regional support for the expected growth of the re-energised Dornier 328 programme is very exciting especially as the company approaches the start of the next generation Dornier aircraft”. “While the cooperation agreement involves the acquisition of aircraft, the other aspects and potentials of this cooperation agreement is very positive for Nigeria and Africa aviation and we look forward to sharing more details as we execute the plan’, he added.

Thursday 23 January 2020

BUSINESS DAY

FINANCE ACT, 2020

CHAPTER 5

Financial Services Industry Impact Analysis

he financial services industry (FSI) covers a broad range of operations, such as banking, insurance, asset and investment management, payment and credit solutions, etc. The industry typically plays a pivotal role in the development of any economy and Nigeria is not an exception in this regard. Notwithstanding this, despite the strategic nature of the industry, some of its key performance indicators are yet to be met in Nigeria. For example, the insurance sector penetration in Nigeria stands poorly at 0.33% compared to South Africa, Morocco and Kenya which have attained 12.89%, 3.88% and 2.37%, respectively. This gives a broad indication that the Nigerian insurance sector is in dire need of stimulation to contribute to Nigeria’s economic growth. While the National Insurance Commission recently issued a directive for the recapitalization of the insurance sector by June 2020, the prognosis is that not many of the current insurance companies can meet up with that deadline. Hence, there have been ongoing waves of business restructuring and reorganisation by insurance companies, possible mergers and acquisitions and more inflow of foreign direct investments are expected in the sector. The depth of financial intermediation by the commercial banks for the real sector of the economy has been a major concern for the Central Bank of Nigeria (CBN) as highlighted by its recent policy to restrict participation in the open market operations and improve loan-to-deposit ratio to 65% by 31 December 2019. It remains to be seen how this directive will impact the real sector. More so, the recent fall in interest rates for bonds and treasury bills have made the erstwhile lucrative bonds and treasury bills market, where banks invest heavily, less attractive. These interesting dynamics will automatically alter the income profile of many banks who typically have significant investment in these instruments. Similarly, the microfinance sector has continued to lag behind in achieving its core mandate of driving financial inclusion among artisans, traders and other small/micro players. Hence, the CBN has issued a directive requiring microfinance banks to recapitalise by April 2020 - 2021 with an objective to deepen financial inclusion and ensure a more vibrant microfinance sector. The Government has set up several regulatory measures to revamp the Nigerian FSI. While these measures are commendable, it is also important to address the potentially inimical existing tax law provisions. The Finance Act sets out to do this and we have examined the impact of the relevant provisions on the industry below

ness-related uses. Banks will typically request for the TIN of companies and registered business names before opening a bank account for them. Therefore, this amendment will simply transform the practice into law and augment government’s efforts to bring more businesses into the tax net. The amendment will also extend the practice of the banks to other financial institutions, such as depository, custodial investment and insurance institutions/ companies. It is interesting to note the impact that this requirement would have on banking activities and how existing accounts without TIN would be regularised and managed going forward. This is particularly as the Act does not stipulate a penalty for failure to comply. 5.1.2 Exemption of services rendered by microfinance banks from VAT The Finance Act has now modified the VAT Act to clarify the VAT exempt status of services rendered by microfinance banks. Prior to the CBN’s directive in 2005 for all community banks to recapitalise and convert to Microfinance Banks (MFBs), the services of community banks were exempted from VAT in line with the First Schedule to the VAT Act. However, after the statutory mandate to convert to MFBs, there was no corresponding amendment to the VAT Act to confirm the continued exemption to the renamed banks, which have the same objectives as the com-

munity banks. Thus, this amendment is welcomed as it removes the uncertainty and brings a final clarification to the nonapplicability of VAT to services rendered by microfinance banks. By implication, services rendered by unit, state and national microfinance banks will be clearly exempt from VAT. In our view, this will be a win-win for both the government and taxpayers as grassroots taxpayers will enjoy reduced cost of MFB services, and it will inevitably align with the government’s drive for financial inclusion. 5.1.3 Amendment of the Stamp Duties Act The Finance Act amends Section 2 of the Stamp Duties Act to accommodate electronic and digital transactions in the definition of “stamp”, “stamped” and “instrument”. Based on the provisions of the Finance Act, instrument would now include electronic documents. The Finance Act also introduces a new section [Section 89(3)] to impose stamp duty of N50 on all electronic receipts / transfers above N10,000 for all types of account. This validates and extends the current practice of banks in this regard and puts an end to ongoing debate on the legality of the stamp duty charged by banks on electronic transfers. 5.2 Insurance Sector The insurance industry has long canvased

5.1 Banking Sector 5.1.1 Requirement to obtain the Tax Identification Number (TIN) of new and existing customers The Finance Act imposes a requirement on banks and other financial institutions to request the TIN of a prospective business customers (companies and individuals), prior to opening any account for their business operations. For continued operation of an account, banks and other financial institutions are required, within three months from passage of the Finance Act, to obtain the TIN of business customers who had not provided this information at the time of opening the account. This requirement is not expected to influence the activation or maintenance of retail bank accounts set up for personal, non-busiwww.businessday.ng

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for amendments to the taxation framework for insurance businesses under the CITA to bring them at par with other businesses. This is because the erstwhile framework introduced by amendments to CITA in 2007 contained rather onerous provisions for taxation of insurance business, when compared to the tax regime for other businesses. Thus, insurance companies: a) were only allowed to carry forward tax losses for a maximum of 4 years of assessment whereas other companies under the same CITA could carry forward their tax losses indefinitely. b) were prohibited from taking a full tax deduction for unexpired risk provision as it relates to their operations in the financial year. Unexpired risk provision is limited to 25% of total premium for marine cargo insurance business and 45% of total premium for other general insurance businesses. c) were required to limit tax deductible claims and other outgoings to 25% of total premium for general business and 20% of gross income for life business. This is contrary to the general provisions in the CITA that permits companies to claim as tax-deductible all expenses that were wholly, reasonably, exclusively and necessarily incurred for the purpose of generating profit, without limitation. The rules on restriction of allowable deductible expenses for insurance companies, inadvertently subjects insurance companies to a deemed minimum tax regime which is contrary to the CITA provisions for determining minimum tax for companies in other sectors. d) engaged in life insurance business suffered tax on the investment income and income relating to policyholders thereby resulting in double taxation. The Finance Act, therefore, repeals the detrimental insurance taxation provisions and replaces them with similar tax provisions applicable to other companies taxable under CITA. We expect that the amendments would improve the fortunes of the insurance industry and make it more viable. In addition to the above, the Finance Act also introduces a new minimum tax regime for general and life insurance companies which will be computed as 0.5% of gross premium for general insurance companies and 0.5% of gross income for life insurance business, respectively. This has effectively reversed the inequity between insurance companies and other companies taxable under CITA. However, the Finance Act does not include

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Thursday 23 January 2020

BUSINESS DAY

CHAPTER 6

transactions

a specific definition for “gross premium” for the purpose of computing minimum tax for general insurance companies to take into account the peculiar accounting requirements for insurance businesses. Generally, insurance companies are required to recognise in their financial statements, the amounts customers agree to pay over the financial period (Gross premium written) and the actual amounts of this premiums that are earned (Gross premium income) when the insurance company fulfills its performance obligation, typically over time. Both Gross premium written, and Gross premium income are reflected on the income statement of an insurance company; hence, it is necessary to clearly define “gross premium” for the purpose of insurance minimum tax calculations to avoid ambiguity in the application of this provision. It is therefore necessary that future review of the Finance Act introduce a definition of Gross premium. This definition should also be reflective of the actual turnover earned by the company, i.e. Gross premium written, to ensure insurance companies are not faced with onerous minimum tax compliance requirements. 5.3 Capital Market 5.3.1 Exemption of dividend distributed by Unit Trust from WHT Dividends, being franked investment income, are only subject to 10% WHT as the final tax under CITA. However, while in one vein, CITA exempted dividends distributed by Unit Trusts from WHT, it required Unit Trust companies to deduct WHT on dividends paid to the beneficiaries in another vein. The effect of this was the inadvertent reversal of the tax exemption provided to Unit Trust beneficiaries. The Finance Act proposes to resolve the conflict in CITA provisions by removing the requirement on Unit Trusts to deduct WHT on dividends paid to their beneficiaries to ensure consistency with the CITA provision exempting distributions to Unit Trust beneficiaries from WHT. 5.3.2 Introduction of a tax framework for securities lending

The introduction of securities lending to the stock market in 2012 was an initiative of the capital market regulators to improve market liquidity and boost activities in the stock market. Securities lending involves a temporary transfer of securities (shares or bonds from a lender to a borrower. The borrower provides collateral in return for the loan while the lender retains the economic benefits associated with ownership of the loaned securities. The borrower is contractually obligated to return the securities in the final transaction term. Based on the erstwhile provisions of the law, transactions carried out under this arrangement were taxable based on their legal form, rather than their economic substance. This created the risk of multiple taxation of the same income streams and thereby made securities lending transactions unviable. The Finance Act introduces a tax framework that eliminates the multiple taxation risk and ensures that securities lending transactions are taxed based on their economic substance rather than legal form. It is reasonable to assume that capital market operators will take advantage of the new tax framework to ramp up the volume of securities lending transactions on the stock exchange. Ultimately, the enabling framework for securities lending transactions introduced by the Finance Act should deepen the capital market and raise tax revenue. 5.4 Conclusion The amendments contained in the Finance Act will significantly impact the FSI. For instance, we expect a significant improvement in the current insurance industry penetration of 0.33% and a boost in the insurance industry growth rate of 6.69% as at Q3 2019, given that the various onerous provisions in the extant CITA have been addressed by the Finance Act. Also, the exemption of services rendered by microfinance banks from VAT should significantly improve affordability of microfinance bank services and further improve the rate of financial inclusion which was 36.8% in 2018. This should also translate into improvement in the national gross domestic products (GDP) as more funding should be available for growth of small and medium enterprises through financial inclusion. The Nigerian FSI grew by 3.72% in nominal terms (year-on-year) and contributed 2.40% to nominal GDP and 2.49% real GDP by Q3 2019. It is expected that the various amendments of CITA by the Finance Act, including those relating to Unit Trusts and Securities Lending, should lead to improvement in capital market activities, increase in government revenue and overall growth of the Nigerian FSI. Overall, the Finance Act is a welcome development for the Nigerian FSI.

Ajibola Olomola and Nike James, Partners www.businessday.ng

Oil and Gas Industry Impact Analysis

ver since crude oil was discovered in Nigeria in 1956, two key issues that have plagued the industry are the seeming opacity of the operations of certain key regulators in the sector, and the alleged unfairness to the country by the international oil companies (IOCs) in their operations. Unfortunately, these concerns were not addressed before more worrying issues surfaced: crude oil theft (which could average as much as 30% of some operators’ output), pipeline vandalism/insecurity and uncertainty of fiscal terms (particularly for offshore oil field development). It is against this backdrop that operators and key stakeholders in the industry have clamored for a complete overhaul of both the regulatory landscape and fiscal framework governing the industry. The outcome was the proposed Petroleum Industry Bill (PIB), which was later split into four Bills – the Petroleum Industry Governance Bill, the Petroleum Industry Fiscal Bill, the Petroleum Host and Impacted Communities Development Bill and the Petroleum Industry Administration Bill. These Bills were at various stages of deliberation by the 8th National Assembly before their tenure ended in May 2019. On inauguration of the 9th National Assembly, the lawmakers promised to give attention to these issues but, so far, they have only amended one of the pieces of legislation which the PIB was supposed to repeal, the Deep Offshore and Inland Basin Production Sharing Contract (DOIBPSC) Amendment Act.. The DOIBPSC (Amendment) Act only sought to increase government’s take in oil operation (in particular deep offshore oil field operation) at the expense of government’s partners in joint venture/PSC arraignment, most of whom are the IOCs. The amendments introduced a twotier royalty regime under which deep offshore operators would have to cough out a minimum royalty of 10% on oil production that, hitherto, was royalty-free. It is against this context that we have evaluated the impact of the Finance Act on the oil and gas industry as a whole. 6.1 Removal of tax exemption on petroleum profits dividends. The Finance Act revokes the Withholding Tax (WHT) exemption on income or dividends paid out of after-tax petroleum profits, provided for under section 60 of the Petroleum Profits Tax Act (PPTA). It is important to note that the exemption under section 60 of the PPTA was introduced as a palliative to upstream oil and gas investors whose profits suffer tax at a higher rate of 85% for Joint Venture operations, and 50% for PSCs, compared to the 30% corporate income tax rate applicable to non-oil and gas businesses. Therefore, revoking the exemption will further aggravate the tax burden of the upstream oil and gas companies. A worsening tax profile for upstream investors, combined with the uncertainties surrounding the Petroleum Industry Fiscal Bill (PIFB) and the impact of the recently enacted DOIBPSC (Amendment) Act , would make the Nigerian

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upstream sector less competitive and attractive to both foreign and local investors vis-a-vis other oil producing jurisdictions, such as Ghana, Mozambique and Angola, that have substantial oil and gas reserves with lower tax profiles than Nigeria. 6.2 Amendment of the Gas Utilisation (Downstream Operations) Incentive provisions The Gas Utilisation (Downstream Op ration) Incentives contained in the CITA confer some benefits on companies in the downstream sector of the Nigerian oil and gas industry. These incentives include a tax holiday for maximum of five (5) years, additional investment allowance and accelerated capital allowance utilisation. The Finance Act provides for the following amendments: 6.2.1 Removal of the requirement to obtain approval from the Minister of Finance prior to claiming interest expense as a deductible expense The requirement to obtain ministerial approval prior to claiming interest expense as tax-deductible was viewed as a disincentive by beneficiaries of the incentive. This is because companies operating in other sectors of the economy do not have similar obligations. The removal of this requirement is, therefore, a welcome development. 6.2.2 Restriction on the number of tax incentives that can be claimed on the qualifying capital expenditure The Finance Act clarifies that companies enjoying gas utilization incentives in respect of their qualifying capital expenditure shall not enjoy any other tax incentive including the Pioneer Status Incentive on the same project/assets. By so doing, the Finance Act has limited the potential of further tax revenue loss to the government through a double-dip tax incentive claim. 6.3 Conclusion The main objective of the Finance Act is to raise revenues for the Government through various fiscal measures. The Act has also clarified grey areas in the erstwhile legislation which should help to improve the ease of doing business in Nigeria. However, for an industry that has not witnessed any significant exploration and development funding in the last decade, the government should rather be developing policies that will boost investment in the Industry. Therefore, while these amendments may increase government revenue in the very short run, the resulting reduction in investors’ returns in the short to long term may lead to diversion of the much-needed foreign direct investment to more competitive jurisdictions in Africa.

Adewale Ajayi and Ayo Salami, Partners Continues tomorrow @Businessdayng

Thursday 23 January 2020

BUSINESS DAY

ENERGYREPORT

Oil & Gas

Power

Renewables

Environment

Govt, NNPC, and burden of ineffective security on product pipelines Olusola Bello

he issue of pipelines vandalism became more pronounced with the unfortunate incident at Jesse in Delta in 1998 when over 1000 Nigerians were roasted because of pipeline explosion while they were scooping fuel. Since that time it has been a recurrent decimal as hardly can six months go by without any serious records of pipeline vandalism recorded especially in the southern part of the country. Several deaths have occurred on account of subsequent pipeline explosion as well as the environmental degradation that follows. It is often an harvest of death in Arepo in Ogun state each time the vandals are unlucky and their activities result in fire outbreak, at Atlast cove, Ijegun, in Lagos State,

Osisioma in Abia State the story is all the same. In the oil-rich Niger Delta, the situation is not different as the vegetation and rivers in that area have turned to different things. The rivers are no longer drinkable any

because they are polluted. The issue of pipeline vandalism is more than 30 years old. The problem is, why has each government that comes to power failed to address this issue and deal with it once and for all.

L-R: Abdulrazaq Isah, chairman, Waltersmith Petroleum Oil Limited; Gabriel Mbaga Obiang Lima, honourable minister of Mines and Hydrocarbons, Equatorial Guinea, and Simbi Wabote, executive secretary, Nigerian Content Development and Monitoring Board (NCDMB), during the Minister’s visit to the Waltersmith Modular Refinery at Ibigwe, Imo State, being developed with equity investment from NCDMB.

he Nigerian Content Development and Monitoring Board (NCDMB) and Waltersmith Petroleum Oil Limited will assist Equatorial Guinea to develop modular refineries in the central African nation, so it can process some of its crude oil and derive increased value from the hydrocarbon resources. The bi-lateral cooperation was confirmed on Saturday after the Executive Secretary of NCDMB, Simbi Wabote and Chairman, Waltersmith, Abdulrazaq Isah hosted the Minister of Mines and Hydrocarbons, Equatorial Guinea, Gabriel Mbaga Obiang Lima at the 5000 barrels a day Waltersmith modular refinery being developed at Ibigwe in Imo State, with 30 percent equity investment from the NCDMB. Commending stakeholders of the Nigerian petroleum industry for the achievements recorded so far with modular refineries, the Minister stated that his country plans to replicate the initiative, so it can stop the wholesome export of its crude oil and begin to add value to the resources. He said: ”we believe that with this cooperation and experience between our country and Waltersmith and the Nigerian petroleum industry, we should be able to replicate it.” Noting that Nigeria had Olusola Bello, Team lead,

vast experience in the hydrocarbons industry, Lima added that Equatorial Guinea would also understudy the commercial aspects of the modular refinery project to ensure that its planned investments would be economically viable. He underscored the need for knowledge and experience sharing amongst African countries, particularly in the petroleum sector, stating that ”there are a lot of things we can learn from brotherly countries and in this case-Nigeria. Rather than go to Europe or United States or Asia, we decided to visit our neighbour, to see what they do.” He expressed delight that a new dawn had come in the African oil industry and nations needed to start utilizing their crude oil resources more efficiently. ”We cannot continue to export crude oil. We should start processing our products and we are watching what Nigeria is doing and we want to replicate them.” In his remarks, the Executive Secretary NCDMB described the cooperation between Nigeria and Equatorial Guinea as a perfect example of the benefits of the recently signed Africa Continental Free Trade Agreement (AfCTA), which encourages African countries to trade and cooperate among themselves. He maintained that governments and businesses in Africa needed to cooperate closely and lift the continent

Graphics: Joel Samson.

out of its present state, rather than depending on foreign assistance and aid. Wabote highlighted the local content benefits of the Waltersmith modular refinery, noting that ”it is being built by a local company and 90 percent of the workers are Nigerians. Most of these will be replicated to create jobs and put young people out of idleness.” Welcoming the Minister, Chairman Waltersmith Petroleum Oil Limited informed that the company participated in an international tender in Equatorial Guinea and was declared the winner in one of the offshore blocks. Isah thanked the Government of Equatorial Guinea for the opportunity to participate in the tender, be properly evaluated and declared winner of the asset and explained that ”part of what we indicated to them was our capacity to plan and execute projects and we have submitted that to them.” He also assured the Minister of Waltersmith’s commitment to invest in Equatorial Guinea and support the development of the hydrocarbons industry, adding that “we see a lot of opportunities and similarities about our two countries and we are going to share our experience, capacity, technology and knowledge base that we have as Nigerians who have operated in this industry in the last 50 years.”

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The oba of Lagos urged the group managing director of NNPC, Mele Kyari to employ modern technology that could easily prompt an alert of notify security officers if anybody . This is not the first time NNPC top shots would agree that they would adopt such technology and failed. He remarked that nobody is exonerated in this act of pipeline vandalism. He accused the communities, security agents and even officer of the Nigerian National Petroleum Corporation Fu n s h o Ku p o l o ku n , Abubakar Yar’Adua, Austin Oniwon, Andrew Yakubu have all at one time or the order during their tenures agreed that the way to go is to install instruments that would easily detect any infraction on the pipelines but failed to do anything. Nigeria is today suffering from the inactions of the government as innocent people are been killed with proper-

ties worth several million of naira burnt, because of some greedy fellows that want to make quick money. It is high time the government address the issue of pipeline vandalism to a logic conclusion, if not, it would keep repeating itself with its attendant human and material losses. Drones can be deplore as part of the surveillance system for the pipelines The security operatives and the communities around the pipelines are also accomplice most times. The government must devise a means of checking mating the activities of security men also help themselves with trucks of stolen petroleum products. The government, NNPC most take some drastic decisions against both the perpetrators and their accomplices to serve as deterrents to others. But more importantly, the necessary technologies should be deployed to moni-

SAIPEC conference to attract global operators in oil and gas

NCDMB, Waltersmith to support Equatorial Guinea on modular refinery development Olusola Bello

With modern technology the issue could have been brought to the barest minimum and reduce the human catastrophe often associated with it by the Nigerian National Petroleum Corporation (NNPC).

lobal oil and gas industry will converge in Lagos to discuss issues of global concerns, as the SubSaharan African International Petroleum Exhibition and Conference (WAIPEC) will return to Lagos for its fourth edition on 25-27 February, 2020. It is designed specifically to be a solutions conference and a platform for the very best representatives from across the Sub Saharan Africa energy industry to come together and discuss, deliberate and share their insight and knowledge towards creating beneficial strategies for the betterment of all areas of the industry. The event formerly known as West African International Petroleum Exhibition and Conference (WAIPEC), was

renamed SAIPEC at the end 2019 edition. SAIPEC is already projected to attract more than 200 exhibiting companies and 6,000 visiting professionals from across West Africa, Europe, Americas and Asia and has a 90 per cent sold out of its exhibition stands – with its programme poised to set the standards on content, delegates and industry support for all conferences in the Sub-Saharan African petroleum sector. It stands as not only one of the largest event in Sub Saharan Africa’s oil and gas hub, but also the only truly industry led event, held in partnership with the country’s petroleum sector and hosted by the Petroleum Association of Nigeria (PETAN). A mix of technical and stra-

tegic sessions will specifically address: the future of the global oil and gas industries and implication of the trend; how Nigeria and African oil and gas industries can compete effectively in today’s challenging industries; funding local content; service company – operator collaboration models – drawing on experience from other oil provinces. A leading steering committee and speakers to build on the discussions of 2019 and to provide real value and insight for all delegates led by Bank Anthony-Okoroafor, Chairman, PETAN; Ranti Omole, Publicity Secretary, PETAN; Ademola Adeyemi-Bero, Managing Director, FIRST Exploration & Petroleum Development Company Limited and Nigerian Independent Oil Companies.

Alex Nachi Tarka is new-NAPE President

lex Nachi Tarka has been inaugurated as the President of the Nigerian Association of Petroleum Explorationists (NAPE). Tarka was sworn in as the 42nd NAPE President at the 37th NAPE Annual International Conference of the Association (NAICE) on Thursday 21st November 2019 at the Eko Hotel & Suites, Victoria Island, Lagos. At his inaugural address, he committed to continue the NAPE legacy of advancing geoscience academic excellence across all demography, institutions and subsectors of

Alex Nachi Tarka

the economy. He also stated his resolve to support NAPE– Industry–Academia interactions to enhance knowledge sharing and relevant skills development.

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

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A thoroughbred oil man committed to the efficient exploration and production of petroleum and a strong advocate for the improvement of Geosciences education in Nigerian Universities. He has served in the Association as Treasurer and Financial Secretary prior to becoming the President-Elect and Chairman of Conference Planning Committee (CPC) of the 37th NAICE. Tarka is the current Manager, Shell Joint Venture (NNPC/SPDC JV) & OML-98 Assets of the Nigerian Petroleum Development Company (NPDC) in Benin-City.

Thursday 23 January 2020

Innovation

Apps

BUSINESS DAY

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

TECHTALK

Broadband Infrastructure

Bank IT Security

How to turn RoW hike into an opportunity for Nigeria Stories by FRANK ELEANYA

he Right of Way (RoW) hike by fourteen states in Nigeria may have given the Minister of Communication and Digital Economy, Ali Isa Pantami a new sense of purpose and perhaps presented him with a golden opportunity to finally lay to rest the agelong problem in the telecommunication sector. It may also be a good time to dig in and push for a sector reset in the new decade. Nigeria has already kicked off the decade with the renaming of the Ministry of Information and Communication Technology as the Ministry of Communication and Digital Economy towards the end of 2019. The change of name, according to the minister, is to propel the ministry to reposition its strategic objectives as laid out in the priority areas of this administration while accelerating growth and social inclusion. The name also means Nigeria is thinking along the same lines as countries like Singapore, Thailand, Scotland, Benin Republic and Burkina Faso which not only have digital economy affixed to their ICT titles but are accelerating investments in technology in order to boost their economy in the new decade. Nonetheless, success would only depend on how serious the Nigerian government is to address the challenges operators and consumers of ICT services face by judiciously implementing all its plans. The ministry under Pantami plans to launch a new National Broadband Development Plan by March 2020. The plan is expected to review the target for broadband penetration in the country to about 70 percent and serve as a template to driving a digital economy for the country. Previous national plan

didn’t fare very well. Ten years ago when Nigeria turned 50, ICT was also postured as one of the priorities of the government. Like this decade, there were expectations of digitising the country’s economy. The previous decade saw the commencement of the national SIM card registration, Indian telecommunication company Bharti-Airtel bought controlling stake in Zain Africa which Zain Nigeria was a part, and the federal government through the Goodluck Jonathan administration taking social media more serious as it started to broadcast it’s activities on Facebook. The President Muhammadu Buhari administration stepped up it’s government service automation work which has seen significant improvment in ease of doing business. The country has also made a lot of progress in several areas in the last decade including mobile

phone penetration, internet access and broadband penetration moving from less than 10 percent to 38 percent by the end of December, 2019. But the challenges still remain. State government are a big part of the puzzle. Earlier in January, 14 of the states hiked the price of RoW from N300 and N500 to 3000 and N5000. Over the years, engagements between the federal and state governments over harmonisation of the RoW fees have failed the yield results. However, the Minister of Communication and Digital Economy says it is beginning to take more practical steps to resolve the problem, including holding regular meetings with the governors of the state. “It is disheartening to hear that some states have decided to disregard these resolutions and have, in some cases, increased the RoW charges by over 1,200%,” Pantami said recently during a meeting with Kayode Fay-

emi, governor of Ekiti State and chairman of Nigeria Governors Forum (NGF). “This will, no doubt, impact negatively on the efforts being made by the federal government. It is established that there is a strong correlation between a country’s broadband penetration and its gross domestic product (GDP).” New engagement with the governors could consider options for zero fees on Right of Way and collaboration between electricity distribution companies (DisCos) and fibre cable operators. DisCos and the operators can use the same RoW ensuring that both share the cost of laying their cables. Previous administration of the Nigeria Communications Commission (NCC) have tried to engage the DisCos through consultants without success. Given that the DisCos are currently overstretched in terms of the cost of infrastructure, a renewed contact with improved incentives might provide a different

mutually beneficial outcome. Experts also say the government and stakeholders can begin to think of alternatives in deploying fixed wireless internet to Nigerians. The Fixed Wireless Access Technology is being seen as the most viable option for telecom operators struggling to deploy services to customers in demand of connectivity speeds associated with fixed connectivity (on fibre technology). “As an early use case for 5G, FWA will likely drive faster penetration for broadband, and likely get the regulator to reach its broadband penetration targets faster than on Fibre,” said Ifeanyi Akosionu, Business Director responsible for Telco, Media, Energy and Technology at Verraki Partners, a business solutions company. “The question is; would fibre connectivity serve only the metro and backbone use cases and less on access where the RoW issue is most challenging to operators?” Apart from FWA, there is also satellite broadband technology which some operators like MainOne and Avanti Communications are beginning to deploy. Satellite broadband operates by sending and receiving broadband signal to a satellite about 22,000 miles in space. Because the satellite sits high up in space, it can provide equal quality of coverage to every home or business in its footprint. It is much more ideal for rural communities where fibre cables would not be able to reach. Nigeria has made significant investment in satellite technology. The country currently have three functional satellites that are orbiting the earth and have largely been underutilised in view of the Nigeria’s space exploration ambitions. The ministry could leverage the assets to provide pervasive broadband services to rural communities.

Partial internet service continues as repair of subsea cables delay

epairs on the two subsea fibre cables, SAT 3 and WACS, which on Thursday caused widespread internet blackout and slow speed may take days to repair, said Tenet, an institution that secures internet services for South African universities and research institutions. “With regard to the WACS and SAT-3 remediation, the loading of spares at Cape Town harbour is delayed due to the wind situation,” Tenet noted in a Twitter post on Monday. “When the vessel has loaded and departed, the expected duration to location of the break is around 6 days. Fixing the break will take another week at least.” Openserve/Telkom and Global Consortium Engineers who were mobilised from South Africa to attend to the damage on the two ca-

bles could not move from the Cape Town harbor due to strong winds. On Tuesday however, Tenet confirmed that the coast was clear however the cable vessel expects to shift to the cable depot quay soon. They are waiting on go-ahead from Cape Town harbour. A fault was found on the SAT-3 submarine cables which broke down near Libreville, Gabon, while the fault on the WACS was found off the coast of Congo. Cable repair ships are also said to be on site off the coast of GabonNigeria to repair the fault. The two undersea cables, the West Africa Cable System (WACS) and South Atlantic 3 (SAT 3) connect Nigeria and other african countries to the global internet. The damage on Thursday affected many internet service providers (ISPs), major

networks such as MTN Nigeria and most Nigerian banks’ services were also affected as a result. The largest telecommunication company had on Saturday apologised to millions

of subscribers in the country on the slow internet speed they experienced. Nigeria’s Minister of Communication and Digital Economy, Isa Ali Pantami also confirmed the loss of

services across the country. “The quality of internet has been ineffective these days due to a cut on Sat3 and WACS submarine cables in London & Congo,” Pantami said. “Any customer using the same route could experience the poor quality. Effort is being made to resolve the issue.” NetBlocks.org, a non-profit organisation that tracks internet shutdowns noted that about 12 African countries were affected by the internet outage. Apart from Nigeria, other countries that were impacted include Ghana, Cameroun, Ivory Coast, South Africa, Angola etc. “The cable vessel is still awaiting authorization to shift with an expectation to move to the cable depot quay during this afternoon or evening to start the loading of the WACS/SAT-3 spares,” Tenet said.

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

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Thursday 23 January 2020

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

consumer spending

Consumer goods stocks fail to deliver value to investors despite market rally OLUFIKAYO OWOEYE

fter a disappointing 2019 the equities market has regained its mojo since the beginning of the year as investors take positions ahead of the earnings season. Also the recent move by the central bank to ban individuals and local corporates from the Open Market Operations (OMO) window means that current maturities cannot be rolled over, this has led to increasing liquidity in the system. With the current abysmal rates on sovereign bonds and government short-term debt instruments often called treasury bills, investors are left with no other option than to seek alternative assets classes to invest their funds, and it appears the equities market is now the logical destination of any discerning investor. The resurgence has seen a surge in the market indexes, however, the same cannot be said of the consumer

goods index, the gauge used to measure the performance of consumer goods stocks, as at Tuesday 21 January, the index is down 5.12percent. Amid increasing challenges, Nigeria’s market size is its biggest case for consumer companies to invest in the nation, sadly, weak consumer disposable income and high poverty rates had made the case for growth less compelling. Additionally, the country’s tough operating environment; decrepit infrastructures, porous borders, double-digit inflation and sluggish economic recovery, have further compounded sector players woes as they struggle to break-even. To address the current dismal performance of consumer goods companies in the country, and given the critical role, the sector plays as a core component of real sector and part of the employment generating sectors in the economy, stakeholders in the industry have suggested ways to restore the sector on the path of profitability. At the NSE-CEO Con-

sumer Goods Sector Interactive Session, organised by the Nigerian Stock Exchange (NSE) held recently players in the industry lamented the current tepid performance of the sector and also suggested ways to turnaround the fortune of the sector. Some of the ways include tax incentives--to create long-term and sustainable value creation in tax collections, consolidating efforts in the public-private

partnership, especially as regards infrastructure, more emphasis on de-risking the consumer goods sector to drive down costs of production to improve margins of companies. According to a report by CSL stockbrokers, the effect of the border closure will weigh on the full-year earnings of consumer goods companies. The closure has made access to raw materials for manufacturers of cocoa

beverages, for example, more difficult. Prior to the closure of the border, cocoa beverage manufacturers imported cocoa from neighbouring countries like Ghana through trucks via the land borders rather than through the seaports. However, report from CSL revealed that the closure of the border forced these manufacturers to move their raw materials through the seaports which according

to them makes freight more expensive. “Importing and exporting goods via the seaports has exposed more FMCGs to the Apapa menace,” CSL said. As a result, the border closure would most certainly, feed into FMCG’s fourthquarter earnings scorecards of 2019 in the form of pressured revenue, higher production cost, and higher distribution cost. “While we note that the percentage of export revenue to total revenue for local FMCGs is not significant, the fact that domestic consumption is still significantly pressured makes the situation worse for FMCGs,” CSL explained further in the report. Outlook for FMCGs in 2020 remains bleak as the Nigerian federal government still maintain stance on closed borders which will mean these firms will be left with two choices; incur further cost or pass the cost down in terms of higher prices to consumers who already are feeling the brunt of rising inflation and shrinking wallets.

company

La Casera’s strategy unlikely to restore lost market leadership BUNMI BAILEY

here is a big poss i b i l i t y t hat L a Casera, the pioneer apple drink in Nigeria may not win back their market share in the carbonated drinks market. According to experts in the consumer and soft drinks space, the aggressive attempt through a conversion strategy to increase consumers demand and shift their attention from competitors like Bigi, Pepsi, Coca Cola, and others may not help to restore their initial market share of 10-20 percent. “It is just simple and easy strategy of driving consumer convention that is, trying to stir consumers away from other drinks. Right now their market share is like one percent from the 10-20 percent they were years before in the

carbonated drinks market,” a carbonated drinks experts who wishes to be anonymous said. “This will help them drive their revenues and increase their market share at a minimum percent of about 3-4 percent,” the expert added. On October 10, 2019, La Casera Apple Drink announced the launch of a new under the crown consumer promotion tagged “Refresh & Connect” which is aimed at rewarding the brand’s esteemed consumers and to further strengthen the existing bond with the consumers. The promo which ran for three months encouraged consumers to partake in the promo to win various prizes like smart TVs, smartwatches, laptops, mobile phones, Bluetooth headsets, La Casera products and airtime worth millions of naira. According to Ayorinde www.businessday.ng

Akinloye, a consumer analyst at CSL Stockbrokers, they are trying to acquire consumers because the drink has less brand position in the market. “Over the five years, there have been a lot of competing carbonated drinks in the market. And I feel it will struggle to attract consumers because they consider taste more and when you

look at one of the reasons la Casaca lost its brand position which is the rumours that the drink is unhealthy, and those sentiments still remains around consumers and it will be difficult to turn around. If at all they gain increase in market share, it will be very minimal,” Akinloye further added. In early 2000s, there was a market disruption as the La

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Casera Apple brand made it entry into the Nigeria market. It is also noteworthy that it was the first to introduce pet plastic in its packaging. Nigerian consumers across all ages and social classes “fell in love” with the drink, owing to its affordability and convenience of consumption as an on-the-go drink. But this was short lived as its other competitors

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(Coca-Cola and Pepsi) reacted with the launch their own pet bottle drinks into the market in 2004. And also another direct competitor, Bigi Apple drink challenged the dominance of La Casera in the apple drink segment. “A lot of multinational companies were pushing out a lot of drinks and consumers had the mindset that the drink can only go with snacks, unlike other drinks which can go with any meal and that is a lot of revenue they are losing,” the carbonated drinks expert said. Abiola Gbemisola, a Consumer analyst at Lagosbased investment firm, Chapel Hill Denham suggested that for the drinks company to get back at the top they should focus on their target market, be innovative by pushing more products with different flavours and try to sell them to the target market at lower price points.

Thursday 23 January 2020

BUSINESS DAY

Corporate Social Impact

Cogent Takeaways from the 2019 LBS Sustainability Conference Stories By ONUWA LUCKY JOSEPH

he concept of sustainability does need some getting used to as it spans an extensive and near infinite area of human mediated activities. The Nigerian corporate sector, mired as it is in short term thinking resulting largely from short term financing and limited self-generated funding, not to mention inhospitable government policies, tends to think, understandably, more about their own immediate survival than any ‘grandiose’ concept of sustainability which to their mind has more visionary than practical applicability. But what can be merely visionary or idealistic about something which dire effects are already upon us? Into this miasma comes the Lagos Business School (LBS) Sustainability Centre to help put, on a sustainable basis, a theoretical framework and application models that guide its adoption and practice by Nigerian businesses. LBS being the world renowned institution that it is (it has been a recurring name on the Financial Times Executive Education rankings for 13 consecutive years), has, as it were, a captive market in the C-Suite executives who regularly attend its programmes which tout the imperative of sustainability as a core business practice. Not for to tamp down the profit motive but to help businesses take a longer term view of their business decisions which because of its short term and individualistic thinking is the driving force for the bulk of the environmental issues that plague the world today. But when the thinking is done with the collective in view having a broader ambit that encompasses alongside profits, people and planet as well, the triple bottom-line redounds to humanity on an ongoing basis. It was in the spirit of further propagating and imprinting this urgent message that on November 27 last year, the LBS Sustainability Centre held its 2019 international Sustainability Conference (ISC), which was promoted as “an annual dialogue-to-action forum that brings various stakeholders

Joseph Nnanna, Chief Economist, Development Bank of Nigeria

Chris Ogbechie, Professor of Strategic Management and Director, LBS Sustainability Centre

Panel Discussion on _How Can Sustainable Business Models End Poverty_

Enase Okenedo, Dean, Lagos Business School delivering her welcome address

together to advance sustainable development through business. This conference is a platform to inspire business leaders to embed sustainability and responsible business practices in their strategy and operations for positive impact not only on business performance but on the society as well”. There you have it. The theme of the conference was ‘Innovating for Inclusive and Sustainable Growth’, and it featured a sustainability exhibition and case presentations from three companies on the topics Disruption for Impact: (1) Innovation for Plastic Recycling and Reuse (by DOW Chemicals); (2) Creating Shared Value in the Supply Chain (by Nestlé Nigeria), and (3) Funding to Reduce Energy Poverty (by Arnergy Solar Ltd). The keynote address, delivered by Prof Joseph Nnanna, was on Inclusive Business: Africa’s Force for Good, followed by a fireside chat moderated by the Director of the LBS Sustainability Centre, Prof Chris Ogbechie. The conference concluded with a panel discussion on the topic ‘How Can Sustainable Business Models End Poverty?’ And the conversation was

rounded up with a vote of thanks by Oreva Atanya, the conference lead and sustainability associate, Lagos Business School. Conference Conversations The world population will hit 8.3billion by 2030. In effect, there will be a need for 50 per cent more food, 45 per cent more energy and 30 per cent more water needs. Sustainability thinking can lead to long-term business success while at the same time contributing to economic and social development, a healthy environment and a stable society. Nigeria is beginning to focus on innovations that advance the good of the society rather than merely adapting technology from other countries, with issues such as energy poverty, plastic waste and financial inclusion at the forefront. There is a huge consumer base at the bottom of the pyramid that can be harnessed for impact and profit. Any company seeking to do impact this key segment of society must innovate to meet the needs of this underserved market. Technological innovations are providing solutions to challenges such as lack of access to healthcare,

pollution, poverty and lack of education. As a result, they are laying the groundwork for a more sustainable future and also transforming Africa’s economic potential, creating new target markets and unprecedented consumer choice. Recommended Actions Going Forward In addition to a greater number of innovative and sustainable businesses, Nigeria also needs to create an eco-system that nurtures them. The government can play a major supporting role in advancing sustainable growth. They can increase sanctions for environmentally-unfriendly policies and review archaic laws that touch on sustainability. There is also a need for strict enforcement of existing sustainability policies. Research institutions and financial institutions can also play a role in advancing sustainability through their own programmes. There is a large amount of funding available globally for sustainable businesses. Funding opportunities such as value capital, strategic equity and private equity, should be maximised. We need to erase the myth

that accessing finance is impossible or too difficult. There must be an end to the mismatch of financing long-term projects with short-term loans. There is also the need for reorientation on the issue of insurance, which is a subset of the sustainability model. There is a need for executive buyin for long-term sustainability initiatives in organizations, to ensure that sustainability thinking is adopted by all members of the organisation. Organisations cannot be satisfied with what they are doing at the moment. Decision-makers should continue to monitor and evaluate sustainability initiatives in order to measure impact and improve implementation for long-term impact. All – government, civil society, etc. – must ponder on their role in building a sustainable society. Businesses have to act as a force for good if they wish to attain sustainable growth and must focus not on short-term profit, but long-term, sustainable profit. Speakers and Contributors to the forum included Prof Enase Okonedo, Dean, Lagos Business School; Prof Chris Ogbechie, Director, LBS Sustainability Centre; Prof Joseph Nnanna, Chief Economist, Development Bank of Nigeria; Dr Ijeoma Nwagwu, Faculty, Strategy and Sustainability, Lagos Business School; Oreva Atanya, Sustainability Associate, Lagos Business School; Dr Abijah Nyong, Portfolio Leader, Dow Oil, Gas and Mining, Sub Saharan Africa, The Dow Chemical Company; Victoria Uwadoka, Corporate Communications and Public Affairs Manager, Nestle Nigeria; Femi Adeyemo, Co-founder, Arnergy Solar Ltd; Dr Godwin Ehigiamusoe, Managing Director, LAPO Microfinance Bank; Dr Godwin Nwabunka , Chief Executive Officer, Grooming Centre; Mrs Abimbola Akeredolu SAN, Partner, Banwo and Ighodalo; Chidinma Maduka, Head, Human Resources and Shared Services, Falcon Corporation Ltd; Dr Jubril Adeojo, Managing Director, SMEFunds Capital; and Jude Obidiagha, Kingson Elendu, Angela Omiyi, Munachiso UgoEmeribe, Arinze Modebe and Uche Emeagwali, all of the LBS Sustainability Centre.

Financial literacy program for Primary school students: Prudential Zenith Life Insurance partners Junior Achievement Nigeria (JAN)

rudential Zenith Life Insurance Limited, a leading life insurance company in Nigeria, is collaborating with Junior Achievement Nigeria to promote financial literacy skills and a savings culture. The partnership, which was facilitated by Junior Achievement Africa, will deliver ChaChing, an educational program designed to provide primary school students between ages 9 to 11 with access to information and activities to develop financial literacy skills. The program will boost the low levels of financial literacy among young people, including those who have had fewer opportunities than others to learn about the financial world outside of school. Prudential Zenith Life Insurance and Junior Achievement Nigeria believe that good financial literacy is key to empowering people to make good financial decisions. ChaChing aims to provide young children with a good

understanding of money management, ensuring they make ‘moneysmart’ choices throughout their lives which will benefit the development of Nigeria. Staff of Prudential Zenith Life Insurance are volunteering to facilitate the exact delivery of the program. They will teach the lessons, coordinate group activities with children and act as mentors for pupils. The goal is to reach 500 primary school students in Nigeria www.businessday.ng

by July 2020. Jim Ovia CON, Chairman of Prudential Zenith Life Insurance Limited, whose foundations, the ‘Jim Ovia Foundation’ and the ‘Youth Empowerment & ICT Foundation’, foster social and educational inclusion through support of educational scholarships and ICT empowerment programs in Nigeria, said: “The Cha-Ching program aligns with our corporate social responsibility objective and will go a

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long way to improving the financial literacy and educational development of Nigerian children.” Speaking on the partnership, Sena Quarm Goka, Grants and Programs Manager, JA Africa said “the Cha Ching financial literacy program was first piloted in Ghana back in 2016; and on the heels of that success, expanded to Kenya, Uganda and Zambia in 2017. To date, over 4000 primary school students across the four countries have been trained on the essential financial concepts of “Earn, Save, Spend and Donate”, to educate them on how to make smart money management decisions”. She further stated that “Financial literacy education is especially important for young children because the opportunity exists to correct knowledge gaps proactively, rather than retroactively. We’re grateful for the opportunity to expand the Cha Ching @Businessdayng

program to Nigeria this year, due to the generous support of Prudential Insurance UK.” The Director of Marketing and Innovation, Junior Achievement Nigeria, Ms. Oduolayinka Osunloye, while commenting on the partnership said that the collaboration with Prudential UK through JA Africa, was borne out of the social exigency to educate young minds about financial literacy noting that it is a critical factor necessary to becoming future conscientious business leaders. She stated that “Junior Achievement Nigeria is delighted about the partnership as it provides engaging, academically enriching and experiential learning sessions which will help students begin to apply financial literacy and critical thinking skills to make wise money management decisions and ultimately prepare them for a financially secure future.“

Thursday 23 January 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Junior Interns Nigeria is seeking corporate takers

Stories by ONUWA LUCKY JOSEPH

ack in the day, vacation jobs were all the rage. Most students looked forward to the holidays when they could, for a very short period, be pretend adults in some organisation. Of course, not everyone got the opportunity for a job, but it was a good way of gently seguing youngsters into the workforce. It is the way it’s done in most other parts of the world. Kids don’t just jump from school to the employment line. They do so with some experience under their belt. Things have changed; changed so badly that even youth corps members sometimes can’t get placement in the corporate organisations they are posted to for their primary assignment. So it always comes as a surprise when the private sector calls our young people unemployable. How will they be employable without any record of previous exposure to any kind of corporate culture? Good thing that some young folks in Abuja, having seen the gap, are taking the bull by the horn and pushing for internships to be a

Zainab Haruna

Amina Abdulmalik

corporate norm in Nigeria. Zainab Haruna and Hadiza Abdulmalik, founders of Decipher Solutions have quite a sound, growing practice that “in co-operation with the public sector, private sector and NGOs, works to improve access to quality in education for teenagers and youths”. Decipher also touts itself as supporting “small businesses with requisite knowledge and resources to support sustainability”. One of their many initiatives,

Junior Interns Nigeria, had an inauspicious beginning last year. They were able to place three youngsters with corporate organisations which Oluwadara Falade, Decipher Program Manager insists were those with a definable corporate culture. Decipher is not looking to place in random shops or sole proprietorships that are run entirely on the whimsical fancies of the owner. Rather, they want a formal setting, with a deeply ingrained corporate culture where

Nonso Momah, intern, with the CEO of The Sublime Hub

interns can learn and run with the best practices acquired therefrom. In this second year of the initiative, Decipher is looking to place at least 50 students (SS1 to Undergraduate level) ‘in Abuja only’, they say. But that’s for now. Over time, they hope to widen the net and place willing students with willing organisations nationwide. Decipher is requesting that corporate organisations indicate their interest by applying for interns – SS students for one-month

periods and Undergraduates for longer. Visit their website at www. deciphersolutions.org for more information. The hope is that this will be a sustainable process, with students doing repeat internships and getting steeped in the corporate culture ready for when their real working days begin. Here’s calling on corporate organisations in the Abuja area to see this as a responsibility thing. You owe it to the new generation to groom them for

Ekuku-Agbor Renaissance Initiative (EARI) lifts Ekuku-Agbor grammar school

t used to be that self-help projects were the norm in most Nigerian communities where individuals through the formation of associations endeavored to raise the profile of their communities via the provision of basic infrastructure. It was the tried and tested system that facilitated the further education of most early Nigerian graduates who were empowered and sent forth by their communities in the belief that their education would benefit everyone in the immediate and wider communities. That spirit slouched off somewhat in recent times with a more individualistic approach taking its place. As people got better educated and exposed to other ways, they relocated and turned their backs on their roots. But in recent times, there seems to be a re-ignition of that spirit. Old students are doing their bit in different schools. Not enough, we must say; but better than nothing. As well, communities are rekindling the bonds of yore, setting up meetings over WhatsApp and other social media channels to deliberate the way forward for the lands of their birth or childhood. And there’s some informal peer review ongoing as one group’s success goads other communities into starting their own. That, ultimately, is the way to go.

It was in this newly rediscovered communal spirit that Ekuku-Agbor Grammar School in Ika South Local Government Area got gifted 200 units of threeseater chairs by the Ekuku-Agbor Renaissance Initiative (EARI). This caused quite a delightful uproar amongst the students as, before then, according to the Acting principal, Mr M.E Okonta most of them had sat on the bare floor to for school sessions. The coordinator of the group, Engr Ken Olowo while making his speech, enumerated other areas of intervention to include Renovation of dilapidated Health care Centre with a well to supply it water; organisation of annual football competitions to unite the community, (alongside the competition comes medals, cash gifts and awards presented to the three best teams); Award of scholarship to two students from the community; and renovation of the Ekuku-Agbor police station as well as donation of a Hilux van to them – both borne by a member of the Association, Pharm Isaiah Okoh. The elated acting principal, after gushing his thanks could not help doing the Oliver Twist by requesting for help with other areas of need: Fencing of the school compound, Provision of a borehole to aid water supply,

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and help with mitigating the shortage of teachers and nonacademic staff. Maybe the association can help, maybe it can’t. But most probably it will, in stages. The important thing is the spirit that’s lit up and burning bright and which attracted the who’s who in Ekuku-Agbor. This spirit of communalism is one Nigeria needs because as we fix our communities so shall we fix our country. And even more, we will begin ever more to demand accountability from our elected leaders hopefully quickly getting to a point where it is those who have proved their mettle in developing, on an ongoing basis, their smaller spaces, that go on to mount the bigger stages of leadership. That way, we are sure the resources entrusted them will not be frittered away as is today the case. (Adapted from an original story by Ewere Okonta) IT’S DAVOS SEASON AGAIN! “There is no alternative to stakeholder responsibility. The moral obligation of business is not just to make profits. People won’t work for companies who harm the environment or hurt social causes.” – Klaus Schwab (Founder of WEF, Davos)

Thursday 23 January 2020

BUSINESS DAY

Garden City Business Digest Taxpayers are development partners, not enemies – Rivers Revenue boss • Presents certificates to 100 best taxpaying companies •Companies want more engagement sessions Ignatius Chukwu What Norteh told taxpayers he present administration in Rivers State sees taxpayers as development partners, not enemies. This position was disclosed by the executive chairman of the Rivers Internal Revenue Service (RIRS), Adoage Norteh, who said the ease of doing business committee created by the state government few days back was part of efforts to make Rivers State a destination of choice for investors an business operators. Norteh made the assertion when he presented certificates to 100 companies described as best taxpayers at the moment. The executive chairman made it clear that the certificate of commendation was not necessarily to companies paying the highest taxes but also for those with best tax response behaviours coupled with compliance actions. He said a night would soon be set aside to fete such companies to show appreciation beyond certificates. Some of the companies that received the commendation certificates that conferred on them the status of

Adoage Norteh, rirs boss

tax-responsible corporations include Belemaoil, SPDC, Airtel, APCON, Bristol Helicopters Ltd, Caverton ltd, CBN, Chevron, DPR, Eco Bank, Eroton E&P, Fidelity Bank, First Bank, Halliburton and Indorama. Others include Intels, International Breweries, Julius Berger, MTN, Nestoil, Agip, NLNG, NDDC, NNPC, NPA, Notore, NDDC, PHED, PHRC, PRODECO, Saipem, Slumberger, SNEPCo, Siat, Siemens, Total E&P, GTB, Zenith Bank. Compliance may be the biggest factoas Norteh said; “They will get certificates of

registration in RIVTAMIS to get RivTIN, and later get certificates of appreciation at a dinner event.” RivTIN is tax identification number series generated by the RIRS for tax payers in the state. Urging the companies to do more, Norteh warned that the certificate does not stop the RIRS from shutting down any company that chose to later default. “Anyway, I understand the mindset of taxpayers because I am a taxpayer too. I am still a taxpayer (from both pubic office income and my private earnings) and I will

continue to pay tax. Workers often have side businesses and should pay tax on them. I have reason to pay tax.” He warned against what he called ‘off-payroll’ manipulation whereby some companies choose to reduce in the payroll what workers earn so as to reduce tax on their real income. He said the RIRS was carefully watching such practices. Interaction & questions Officials of corporations in the state have commended the tax engagement exercise series adopted by the RIRS saying it has created huge awareness and compliance. They however asked for more. Officials from Ascension Consulting Services at the event who called for more of such meetings, however, wanted to know why the RIRS stopped the digital tax filing system, thereby confusing the taxpayers. Jones Okoye of FCMB wanted to know if the demand notice on road tax was genuine and actually from the RIRS. An official from Halliburton not only supported the call for more engagements but thanked the RIRS boss for pushing for ease of doing business in the state through harmonious tax administration. He raised issue with over $400,000 he said his firm paid in error into City Bank for tax

but that this has been hanging for over one year because it is paid in foreign currency. He regretted that both the RIRS and his firm have been denied access to the huge sum for a whole year. An official from Solar Turbines Ltd appealed to the Revenue Service to help draw attention of the government to bad roads leading to most taxpaying companies; while officials from the Niger Delta Development Commission (NDDC) appealed for resolution of the protracted dispute between them and the RIRS that is now in court. They blamed their failings on government bureaucracy. Answers Responding, Norteh who said he was hurrying to attend the first meeting of the Ease of Doing Business Committee headed by the deputy governor (Ipalibo Dagogo Harry), confirmed that the road tax demand notice was from his office and wondered why the local councils were creating some mix-up in certain taxes. On aspects from some ministries dabbling into tax collection, he made it clear that it is the RIRS that has the legal mandate to assess taxes and not the Ministry of Commerce. He promised that the EoDB committee would have to resolve a lot of things to make the

business community happy to operate and pay more taxes. On manual and digital filing of annual returns, he clarified that resort to manual filing won’t happen in 2020. He noted, however, that it was caused by taxpayers. He told the company that lodged dollars with City Bank that government would look into it because it was wrong for the bank to sit on the money. He replied those asking for infrastructure to note that Rivers State is now a construction yard. He noted that the projects to some peoples locations did not come from their own particular tax money. For the NDDC, he replied that bureaucracy was no excuse for the matter and that the Commission’s tax audit has never been carried out. “If the NDDC would comply with tax rules, it would get the best of RIRS management.” Conclusion: Officials from the 100 taxpaying companies seemed to depart ith a lot smiles and pledged to offer more compliance as they expected more relaxed tax atmosphere in Rivers State. Rivers is now the fastest growing and second highest IGR state in Nigeria with one of the most tax-friendly regimes in the country. The state has fought touting and cash lodgments to a standstill.

PH car owner squeals on why the police killed his mechanic; and the IG is livid •The autopsy from the pit of hell Port Harcourt by Boat

IGNATIUS CHUKWU

obody would probably have known the brutal evil going on in Mile One police division where a special police team code named Eagle Crack Squad (E-Crack) created by the new commissioner of police in Rivers State operates from, until a citizen exposed it. His long narrative post running on many social media platforms and causing anger said it all. He said he gave his car to his usual mechanic to repair. Some days later, he got information that the car and the mechanic (plus his apprentices) were being held at the Mile One police division. He went there and saw it was true. He now launched into a story that wrenches

the heart, a story of tragedy of the policing system in Nigeria, daily deteriorating and degenerating into pure brutality and criminality. By his account, his mechanic named Chima was testing the car while his apprentices brought along another car ready for testing too. As they were driving round the garden city to test them, they took one way route in the face of many traffic jams in the city as a result of three flyover construction projects going on at the same time at the cost of N21Bn. The police (E-Crack) arrested them. After some search, the police found a total of N150,000 on them. The case allegedly turned into cultism and armed robbery one (as if armed robbery still existed anymore). Thus began what was termed the worst torture sessions in recent history, all to make the suspects accept these charges and probably forfeit the sums found on them and face the task of freeing themselves in court for a case that wont stick, anyway. In the process, the main mechanic (Chima) died. One of the younger boys cracked and confessed to whatever his torturers wanted him to admit, just to survive. It was when the car owner said he came into the case that things began to go wrong for the e-crackers. He came with an air-force officer and the police team leader began to act a bit professionally. At fist, they said Chima was missing, then later said he died. The police image maker (image?) said Chima died of

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high sugar level. Who knows if there is a new technique that makes a corpse to come down with high sugar. The car owner proved that he was the true owner and that his car was not robbed from him. He collected it back, but Chima has no life to collect back from the E-Crack. The other four boys have been charged with car robbery and cultism. But the uproar caused by the revelation of the car owner has risen to the ears of important leaders in Abuja and the IG is said to have intervened. He is said to have asked the CP to bring the E-Crack leader and all the operatives involved in the Chima killing saga. Chima is said to be a damn good mechanic trusted by the spare parts dealers of Ikoku area who have already embarked on demonstrations. The police on Monday rose to stop them and shot severally in the air. His brand new wife is said to be pregnant. Hints of threats to family members of the deceased to keep shut have been heard. Cause of death? The police have come down with a verdict of excess sugar, but the survivors have decaying wounds to show that something more than sugar hit them. Another breach; the family was not part of the autopsy. A lawyer has been standing for Chima but autopsy was done in his absence and without the knowledge of the family. The say they have not even been allowed to see the corpse. Many suspect that the corpse may not be good to look at. That could

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be what high sugar level can do. Some of the strongest human rights activists and those who organized anti-SARS protests have joined the media to fight to the last man on this matter. Like the Apo 6 killings of spare parts traders in Abuja many years back, the Diobu killing may emerge as Nigeria’s newest act of brutality by the police. The sage started on December 20, 2019. According to the car owner, there seems to have been any serious investigation or crosscheking of what the suspects said as is down everywhere else. If occupants of two cars taking one way are apprehended and suspected, there are very inviting angles of investigation. There seemed to be no effort to trace the car owner until he came to the police himself. The owner of the second car is a good source too. In the absence of guns and without the arrest taking place in the heat of any robbery, there was still no effort to trace any robbery that took place in the city that week let alone who committed it. It appears to the public that everything about the ‘investigation’ was about pounding the legs of the suspects, piercing their penis, and other forms of horrible treatments known to man. Is this all the training that Nigeria’s fine officers do learn at Scotland Yard and other top police training academies around the world? IG, the world is waiting and they don’t have long to wait. Anger is in the air!

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Thursday 23 January 2020

BUSINESS DAY

Investing in Rivers State Eroton E&P dazzles Okrika with N270m projects

Unveils ultra-modern town hall, ICT centre, science labs, foreign postgraduate scholarships •Shore protection project, fish pond, many more ongoing Ignatius Chukwu

ndigenous oil company, Eroton Exploration & Production (E&P) Company Limited, took all of Friday, January 17, 2020, showcasing development projects it has so far executed in Okrika local council area of Rivers State. The projects include a multi-million naira ultra-modern town-hall centre at Okochiri described by officials of the cluster board as the pride of Okrikia, the best event centre in Rivers State, and the mother of all projects by the board. It is said to sit 1500 guests in its twin halls. Others projects which seemed to dazzle guests include the successful construction and equipping of science Labs at Comprehensive Secondary School, Ibaka; renovation of a six classroom block at Okrika National Secondary School; a solar-powered water project at Community Secondary School, Okochiri; and the construction of ICT Centre and Library with renovation of school hall at Ibaka town. Others that were mentioned on the day include renovation and completion of Ofiomina Ama Public Health Centre; construction of four concrete fish ponds at Okochiri; construction of Ofiomina Ama Concrete Walkway Bridge; purchase and installation of 38 desktop computers, computer workstations & swivel chairs at Ibaka. There is a shore protection project at Offiomina Ama Community said to be ongoing, aimed at protecting the community from surging waves of the ocean-linked waters. Already, there has been distribution of textbooks to secondary schools in Okrika as well as making of 1000 desks to secondary schools in Okrika plus supply of chairs for students and teachers in the local council area, according to the secretary of the WCDB, a private legal practitioner, Benebo Tamunosisi Alayineka, who took officials round. He confirmed that the board gets N45m per year in the past six years to execute projects under the global memorandum of understanding (GMOU) scheme inherited from SPDC. Eroton E&P executed the projects in partnership with the Nigeria National Petroleum Development Corporation (NNPC), which is a joint venture (JV) arrangement. The projects were handled by the Wakrike Cluster Development Board (WCDB) with about N270m in the past six years since the divestment of SPDC in Oil Mining Lease 11 (OML 11) which covers the Alakiri and Orubiri fields. The cluster board led by the chairman, an Okrika chief, Dean Sandy Tonyesika, led the NNPC/NAPIMS team headed by an official from Public Affairs Department, Tolulope DerinAdefuwa, who represented the Group Managing Director, Mele Koko kyari, in Okrika, and officials of Eroton led by the chief security officer, Peter Abere, to the project sites. The king of Okochiri, Ateke Michael Tom, attended the grand-finale at the mega town hall centre and cut the tape to unveil it. Sunday K Amiesimaka Kala Owolo, chairman, Okrika

R-L Tolulope Derin-Adefuwa of NNPC and Peter Abere (in glasses) of Eroton cutting the tape for water project

NNPC, EROTO officials with chief of Ibaka at the water tank

L-R: King and Amanyanabo of Okochiri, Ateke Michael Tom, Okrika lGA chairman, Philemon Kingoli, and Ibaka Okrika chief, Isaac Bome

Divisional Council of Chiefs, commissioned the renovated six classroom block at Okrika National Secondary School and described it as a welcome development. Another chief, Isaac Sinari Bome, chairman, Ibaka Town Council of Chiefs, commissioned the laboratories at Ibaka Community Secondary School. NNPC’s Derin-Adefuwa, who www.businessday.ng

flagged off the water project on behalf of the GMD, described it as a worthy CSR project by the JV. She remarked that water brings life. She also made suggestions on how to protect the lifespan of the project. She said she expects the project to serve the community well. At the main event at the town-hall unveiling, she explained why the

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NNPC takes front burner in JV projects, saying the corporation brings 55 per cent of project costs which the JV operations partners execute. She went on: “NNPC is a torch-bearer in community development. They carry out projects in education; also in infrastructure such as roads, electricity, water, buildings, etc. Over the years, the NNPC has supported development in the north also through the National Independent Power Projects (NIPP). We hope these projects just commissioned would be protected by the communities. We commend you for providing the peaceful atmosphere that delivered these projects so far.” Speaking, Eroton MD, Ebiaho Emafo, who spoke through the CSO, Peter Abere, expressed delight in the type of cooperation the company has so far received in Okrika. “Much more is expected to accomplish these projects.” The Okrika local council chairman, Philemon Iwoloma Kingoli, who is also an Okrika chief, commended the projects but appealed for provision of light in Okrika area considering that the gas from the area was being sent to Bonny (NLNG). In his address, the Wakrike Cluster Development Board chairman, Tonyesika, said: “The citing of this building here was divinely ordained and we thank God for bringing this project to a successful completion. When the project was conceived in 2011 as a legacy project by SPDC, Okochiri was chosen as the best place for its location and today, it stands as a symbol of beauty and authority in this kingdom. “The town-hall started as a PreGMOU legacy project by SPDC and was subsequently handed over to a formal GMOU arrangement between NNPC/ SPDC JV financing and carefully managed by the Wakrike Cluster Development Board (WCDB. However, when SPDC divested and some of its assets in 2014/15, Eroton (E&P) Company Limited took over operations in OML 18 which covers Alakiri and Orubiri fields in Okrika. By this arrangement, the new JV and Cluster Board worked hard to deliver this project. “We thus thank both NNPC and Eroton E&P for their commitment at ensuring that this project is completed. When I say completed, I mean both in structure and equipment. The hall is ready for use and can seat 1500 persons in two conducive halls. There is none like it in Rivers State for now. “I recall how His Royal Majesty occasionally toured this environment to see the progress of work all this while. Thus, your encouragement and advice were key factors that spurred the Board with purpose and commitment to accomplish this. These town hall and facilities in and out of it are selfsustaining. Your Majesty, it is my request that the proper management of this facility should be your interest so that this kingdom derives maximum benefit from it. There are many other projects beyond this town-hall that would interest everybody and show how hard the Board has worked so far.” @Businessdayng

Women Urged To Embrace Entrepreneurship

omen of Rivers East Senatorial District have been called upon to embrace entrepreneurship as a way of boosting their economic as well as political powers. The call was made recently during an entrepreneurship training g organized at Ulakwor Etche, Etche LGA for zero or low income women of the area. Facilitating the training which was organized by Centre for Environment, Human Rights and Development, (CEHRD) with support from the Embassy of the Netherlands in Nigeria, Joseph Etang (PhD), an entrepreneurship expert, noted that in addition to making wealth, entrepreneurship takes care of key issues like self-reliance, self-promotion, and improving community standards, among others. He added that through entrepreneurship, women can be lifted out of poverty and economic enslavement. He told the participants, who were mostly artisans, local farmers, petty traders, house wives, that they did not need any educational qualifications to become entrepreneurs. He said; “What you need are business ideas, discipline, determination and good character to succeed as an entrepreneur”. He added that through entrepreneurship trainings, skills required to become a successful entrepreneur could be acquired. It includes hard work, planning, human relations, leadership, and research skills, among others. He advised the participants to study the environment where they intended to establish their business or where they are operating to ensure they identified and operated the type of business suitable in the area. According to him, a good business idea must be business or profit oriented, realistic or achievable, innovative, capable of fulfilling identified needs, honest or non fraudulent and timely. In his own presentation, the cofacilitator of the training, Nelson Franklin, noted that cleanliness and safety consciousness also help businesses to succeed. He introduced the participants to some basic health and safety needs that are important for the over all health of the business. Declaring the training open, Queen Agba, a Programme Officer at Centre for Environment, Human Rights and Development, CEHRD disclosed that the training was part of a human rights project of CEHRD aimed at empowering women to begin to assert their socio-cultural and economic rights. She recalled that some women had earlier been trained on women participation in politics. In the course of the training, Women In Governance Network (WIGN) was formed to encourage women to participate in governance at all levels. She stated that the entrepreneurship training was incorporated in the project to empower women economically to enable them have the economic strength required to pursue political power. She urged the participants, who were mainly peasant farmers, artisans and petty traders drawn from the WIGN to take the training, serious, saying that there may be opportunities to link the participants who may want to invest in business to some funding sources.

Thursday 23 January 2020

BUSINESS DAY

news

Opportunities abound for foreign investors in Africa’s infrastructure Gbemi Faminu

ne of the major problems prevalent in the African economy is the lack of infrastructure, especially in its biggest economies. This is also a problem that has continued to affect economic growth and investments. However, this also is an opportunity that should interest foreign investors. Speaking at the London Stock Exchange (LSE), Akinwumi Adesina, president, African Development Bank (AfDB), said Africa’s infrastructure deficit was an open door for investors, especially considering the large market it provided. “Africa’s unmet infrastructure demand is worth $68 to $108 billion a year, which offers huge opportunities for global investors, also African economies are growing strong and the prospects for greater wealth creation are compelling, “Last year 17 African countries grew by 3-5 percent and 20 countries grew by 5 percent and above, six of the fastest-growing economies in the world are in Africa,” Adesina said. He urged the LSE to partner the AfDB and reform UK-Africa trade and investment, especially on infrastructure. Adesina also said investors who tapped early into information and communications tech-

nology infrastructure in Africa had started to reap benefits of those investments, which have also become game-changers for Africa. Data from AfDB show how much multinational thrive in Africa as it note that Africa has 700 companies with annual revenue of more than $500 million each and the total revenue of the 700 totals $1.4 trillion, also 27 percent of the 700 companies are multinational corporations. The AfDB’s preliminary report ‘Africa-to-Africa Investment: a first look’ says that “Countries, companies and communities stand to benefit from increased investment flows. Investments coming into a country that has a pro-business climate can bring in capital, increase tax revenue and be channelled into infrastructure and development projects. Companies investing in businesses across borders can tap into new markets and clients, helping to meet growing consumer needs among Africa’s middle class and urban population. The report also states that the factors promoting investments are prevalent in many African countries and Regional Economic Communities, which will be further boosted by the African Continental Free Trade Area (AfCFTA).

Africa needs massive capital investment in power, HR to drive economic growth – Elumelu

hairman, United Bank for Africa (UBA), and founder, Tony Elumelu Foundation, Tony Elumelu, has advocated massive private capital investment as well as increased support to youth development as catalysts for driving the much needed economic growth on the continent. Elumelu said this while speaking on a panel at the UK-Africa Investment Summit 2020, in London, stressing the need to invest in critical sectors of the economy such as electricity and human resources, noting that this will galvanise the continent, taking into consideration the huge population which Africa currently boasts of. According to Elumelu, “Africa needs massive private capital investment to enable us drive the sectors that will develop the economy, especially sectors like power. Access to electricity is very critical if we are to develop our continent. We have a huge youth population in Africa and I think that is our biggest resource as a continent. So, in order to talk about the development of our continent, we must prioritise this segment and focus on how to empower them. “Empowering the youths will help us create jobs and alleviate poverty and I think that this empowerment must start from creating an enabling environment, from making sure we have roads, mass transportation systems and most importantly, fixing the problem of shortage of electricity on the continent. If we do all of this, we will unleash the enormous potential that

resides in Africa and in these young people.” Through his foundation, the Tony Elumelu Foundation, (TEF), in the past 5 years, over 9,600 youths have been empowered across the continent with seed capital, mentoring and networking to grow their businesses and enable them contribute to economic development. Throwing more light on what TEF has been able to achieve, he said, “During lunch, I interacted with some alumni of the Tony Elumelu Entrepreneurship programme who said they were beneficiaries of $5,000 support in 2015 from the TEF, and today, they have just completed raising $3million becoming one of the biggest food chain providers in Rwanda. These are some examples of what such interventions can do. We support, give them an enabling environment, provide a platform and think of our prosperity in a sustainable fashion,” he explained. Other speakers on the panel include the President of the World Bank Group, David Malpass; the CEO, Development Partners International, Runa Alam; and the Group CEO, Vodafone Group, Nick Read. On his part, the World Bank President, Malpass, spoke of more focus on digital financial services, stating that investing in Africa will help to take the continent to another level, adding that there is need for more availability of electricity and good trade policies that will boost businesses on the continent. www.businessday.ng

Basscomm Nigeria Limited visit to Ajao Estate Junior High School, Anthony Village, Lagos, to donate school items in celebration of their CEO - Demola Onanuga’s 50th birthday.

Why Amotekun is necessity - Tinubu ... urges S/West governors to dialogue with FG on way forward Joshua Bassey

fter two weeks of silence since the launch of SouthWest’s security outfit codenamed “Amotekun,” which has been declared illegal by the Federal Government, Bola Tinubu, national leader of the ruling All Progressives Congress (APC), has backed the formation of the outfit, saying the governors are seeking to fulfil their mandate to protect lives and property within their states. However, to resolve the current logjam and move forward, the former governor of Lagos State recommends that governors of the South-West states sit in private discuss with the powers in Abuja. Tinubu, in a long statement titled “The public discourse over Amotekun,” on Wednesday, said, “The formation of the security outfit does not constitute a risk to the fabric of

the nation.” He, nevertheless, warned that fabric could be torn by “dangerous rhetoric of those who should know better” if not well handled. According to Tinubu, either the South-West governors or Abubakar Malami, minister of Justice and Attorney-General of the Federation, who earlier said that his office was not consulted before the formation of Amotekun, can initiative the dialogue to resolve their differences. He observed that “those claiming that this limited, inoffensive addition to security threatens the republic have taken themselves upon a madcap excursion. “Those claiming that the Federal Government seeks to terribly suppress the Southwest have also lost their compass. Those who occupy these two extremes have sunk into the dark recesses of fear and political paranoia that can undo a nation if such sentiments are

allowed to gestate.” He noted that the current logjam on Amotekun cannot be resolved on the pages of newspapers, even as he disagreed with those who have introduced politics into it. He said: “It has been turned into a political tug-of-war. Fierce, often unthinking rhetoric, for and against, has crossed the lips of too many Nigerians. More subjective talking than objective thinking has been the fuel of this outburst. “Question those in favour of Amotekun. Most have but the vaguest notion about it. They know few details yet vigorously attribute to its opponents the most negative intentions. Ask those who oppose Amotekun. They are equally ignorant of its provisions. They oppose the initiative not on its merits but merely because it was proposed by their political opponents or because they don’t see an avenue for personal gain from it. “While colourful, the rhetoric has been disconcerting.

How people have mishandled this matter demonstrates that we still have far to go in perfecting this democracy.” Too much energy has been spent distorting issues around the formation of Amotekun instead of seeking a resolution that supports local enhancement of security while keeping the constitution intact, he said. He added: “If this becomes the standard for how we handle disagreements then we will obscure Nigeria’s path forward with our own rubbish.” He said the issue presents an opportunity to more clearly define federalism, but that one cannot attain this better, more functional definition through overblown, emotional language, as objectivity and calmness are required. “To a significant degree, the enduring quality of our republic will be established by the sagacity with which we handle disagreements regarding the division of power between federal and state governments.”

Old Ikoyi remains investment destination as land value rises 20% in 2019 CHUKA UROKO

s economic activities pick up in the New Year and many investors think of where to invest and get good value and high return on their investment, Old Ikoyi in Lagos comes handy as a compelling destination. Investment analysts argue that investors will always get good value from their investment if the investment is done in the right place at the right time and for the right reason. According to them, bonds, treasury bills, equities, mutual funds, etc, are all good investment asset classes but cannot compare favourably with real estate in terms of reliability, flexibility of use and potential for value appreciation over time. Though both residential and commercial properties in Old Ikoyi are struggling with high vacancy rates, land in this highbrow location embodies the above potential and, therefore,

attracts good value and high yield in terms of return on investment. This was why despite challenges in 2019 when the real estate sector exited recession in the first quarter of the year but returned to negative growth territory in second and third quarters of the year, a recent report by Northcourt Real Estate notes that land values in Old Ikoyi appreciated by as much as 20 percent. Year-on-Year, the report says, landvalueinthislocationrosefrom N363,000persquaremetrein2018 to N436,667 per square metre in 2019. This contrasts sharply with value appreciation in Ikeja GRA and Magodo, which are upperclass markets on the mainland. While land value appreciated of 6 percent from an average land price of N110,000 per square metre in 2018 to N116,700 per square metres in 2019, Ikeja GRA recorded only 0.7 percent increase from N261,000 per square metre in 2018 to N262,945 per square metre in 2019. “Land in both Victoria Island

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and Abraham Adesanya axis did well in the outgone year, according to the report. Whereas VI recoded 17 percent value appreciation from N300,000 per square metre in 2018 to N351,912 per square metre in 2019,AbrahamAdesanyaincreased 31percentfromN24,000persquare metrein2018toN31,468persquare metrein2019,”saidAyoIbaru,COO at Northcourt. Ibaru explained that while other segments of real estate really struggled with low demand, low prices and high vacancy rates, land appreciated in value due to its reliability, flexibility of use and potential for value appreciation over time. He explained further that land prices in Argungi and Abraham Adesanya axis rose because of the developments in the Lekki Free Trade Zone. “Speculation is one of the factors driving land price growth, especially as the Dangote refinery nears completion,” he said. Overall, Ikoyi, Victoria Island and Lekki, the three island @Businessdayng

locations, constitute the core of high end submarkets in Lagos. Though land or built up property are very expensive in these locations, analysts insist they offer real value and good returns to investors. “But to invest wisely and profitably in these locations, an indepth analysis of each location’s strengths, weaknesses, opportunities and threats (SWOT) should be done,” Udo Okonjo, CEO, Fine and Country West Africa, said. According to Okonjo, potential investors have to understand that “real estate investment is not a get-rich quick scheme; understand your investment parameters; be thorough in assessing opportunities; seek professional advice; do due diligence, and if the deal is not right, walk away.” As an investment destination, Ikoyi’s strength is in its excellent location, ease of obtaining approvals for development, high rents and return on investments (ROI) based on demand and desire to be in a serene environment.

Thursday 23 January 2020

BUSINESS DAY

news More disruptions await businesses, travellers... Continued from page 1

ties if Nigeria is included in

the controversial list of seven countries that would face expanded US travel restrictions when President Donald Trump makes public a final list on or before Monday. Barely two years after Nigerian visa applicants started having difficulties in getting or renewing their visas, the situation took a negative turn with the suspension of the drop-box service a year ago by the US Embassy in Nigeria. The new restrictions, coming three years after Trump’s initial travel ban that zeroed on majority-Muslim countries, wouldapplytotravellersandimmigrants from Belarus, Eritrea, Kyrgyzstan, Myanmar, Nigeria, Sudan and Tanzania, Trump administration officials tipped US-based Wall Street Journal. The implication may not be a total ban on all travellers or immigrants from affected countries, but could have restrictions placed on specific types of visas, such as business or visitor visas, administration officials said. Students and those who have established “significant contacts” in the US are expected to be exempted from the restriction. Speaking on the development, Bernard Bankole, president, National Association of Nigeria Travel Agencies and managing director/CEO of Finchglow Travels Limited, says if Nigeria is included on the list of restricted countries, it means they are telling Delta Airlines, the major US carrier that flies into Nigeria not to operate in Nigeria again. “Delta Airlines has sold tickets as far as May 2020. Are they going to refund to all the people they have sold ticket to,” Bankole asks. However, Tayo Ojuri, CEO of Aglow Limited, an aviation support services company, says there wouldn’t be much difference if the restriction is extended to Nigeria because the US had earlier put in modalities to limit the number of Nigerians coming into the country. “When they changed the application procedures about a year ago, it reduced the number of people processing visa and increased the refusal rate. So, this recent development is only to reiterate the position of President Trump,” Ojuri states. The drop-box, introduced years ago, offers interview waiver at the US embassies across the country to applicants seeking visa reissuance under the B1/B2, F, M, L and H visa classes. However, after the suspension, when many applications were rejected and visas cancelled without plausible reasons, every visa applicant in Nigeria was subjected to strict security, especially interview, which was hitherto waived under the drop-box. The development impacted on the visa processing system, especially the number of applications and time of processing them. Already, Lagos handles over 2,000 applications a day, while Abuja handles from 500 a day.

The US State Department refused more than 37,000 visa applications in 2018 due to the Trump administration’s travel ban, which affected people from Iran, Libya, Somalia, Syria and Yemen, up from less than 1,000 the previous year when the ban had not fully taken effect, according to agency data released on Tuesday. For existing and intending Nigerian students, a visa ban on Nigeria may not adversely jeopardisestudies,ifhistoryisaguide. Restrictions on citizens of Iran, Somalia, Yemen, North Korea, Libya, Venezuela and Syria from entering the US in the 2019 did not affect students who are nationals of those countries given the exemptions of student visas, including the US F-, M-, and J-class study visas to the restriction policy. Only students from Syria and North Korea were reported to have been affected. However, data from New York-based Institute of International Education (IIE), a 501 organisation that focuses on International Student Exchange and Aid, Foreign Affairs, and International Peace and Security, show a decline in the number of students in US schools from some of the countries affected by the ban. The number of students from Syria dropped 22 percent to 566 in 2018/19. This shows a steep decline compared to 827 in 2016/2017. Similarly, Yemen has seen a decline from 658 students in 2016/17 to 398 in 2018/19. Last year, the number of students from the country dropped by 23 percent. Libya, Yemen, Iran and North Korea share similar trend while Somalia has been an exception. The trend is consistent with press reports about the psychological impact of the visa policy on international students in Trump’s America. Meanwhile, Nigerian students in US rose 5.8 percent to 13,423 last year. This is higher than 11,710 enrolled in 2016/17. This is also as the US President Trump on Wednesday warned that the US will impose painful tariffs on imports from the European Union unless the bloc agrees to a trade deal. “Europe has been very, very tough to deal with,’’ Trump told US broadcaster, CNBC at the World Economic Forum Summit in the Swiss town of Davos, one day after meeting European Commission President Ursula von der Leyen there. This development may also affect Nigeria, as Nigeria is a major exporter of cocoa, animal skins, cashew nuts, sea foods and rubber to Europe, Asia and America. Trump complained that EU countries have been exporting significantly more into the US than the other way around. He claimed that he had restrained himself so far because he was concluding the recent trade deal with China first. “Look, if we don’t get something, we’ll have to take action and the action will be very high tariffs on cars and other things that come into our country,’’ Trump said. www.businessday.ng

L-R: Bibiana Okereafor, vice president, Association of Securities and Exchange Commission Retired Staff (ASECRS); Edward Okolo, acting executive commissioner, corporate services, SEC, and Sylvester Akele, president, ASECRS, during a meeting between management of SEC and retirees in Abuja, yesterday. Pic by Tunde Adeniyi

Lebanese crisis may foretell Nigeria’s fiscal... Continued from page 1

solution for a $50 billion economy that carries $80 billion of debt, the servicing of which consumes nearly 50 percent of annual budget, thanks to less than $15 billion in annual revenues. “A lot of mistakes made in Lebanon are being made in Nigeria and the similarities are obvious,” an economist told BusinessDay. Nigeria’s $400 billion GDP suggests it can cope with a debt of less than $50 billion. But a paltry $10 billion in annual revenues, which the government is trying to increase by raising taxes, with debt serving costs gulping some 60 percent of government revenue, puts a strain on public finances. Also, while most countries generate external reserves from exports and Foreign Direct Investment (FDI), Lebanon’s are dominated by the issuance of foreign-denominated government debt that attract very high interest rates in a bid to attract dollars.

In the last few years, the worsening geopolitics in the region has cut dollar inflows and that has seen Lebanon offer higher interest rates on the dollar debt to help attract other foreign investors to fill the gap. But to pay the increasing interest bill, the Central Bank in Lebanon has eaten into reserves that have fallen to $20 billion from $35 billion in two years. The 13 percent dollar return on Lebanese bonds is only affordable if the Central Bank can attract fresh dollar inflows, economists say. The high debt servicing cost has crippled public finances and limited the ability of government to invest in the productive sectors of the economy with growth hovering around 1-2 percent. A similar scenario is at play in Nigeria where costly foreign exchange and petrol subsidies have eaten deep into public funds and leaves the government with little or no cash to invest in badly needed infrastructure. That has showed in

Farmers say one-off FG actions not enough... Continued from page 2

Adefeko, chairman, Agric Trade Group, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), further stressing the need for government to organise an agric stakeholders conference to marshal out long term areas of intervention for the agric sector. “It should not be government being prescriptive but players making inputs into any plans,” says Adefeko in a phone interview. “We should focus on crops we have competitive advantage in; maize, soya, cashew, sesame, rice.

The meat/poultry value chain as well as dairy require emergency intervention.” Segun Adewumi, national president, Nigeria Cassava Growers Association (NCGA), also reiterates “there is need for more engagement,” however, noting “cassava growers are very lucky because the potentials of cassava have caught the attention of the CBN governor, who is very passionately pursuing cassava programme.” The Central Bank of Nigeria, according to BusinessDay’s findings, convened a meeting between cassava producers, proces-

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weak economic growth, which has remained below 2.5 percent since 2015, lower than population growth. The Central Bank of Nigeria (CBN) has prioritised foreign portfolio inflows over Foreign Direct Investment and local investment, paying as much as 14 percent to foreigners holding its short term Open Market Operations (OMO) Bills. Local investors from pension funds to money managers who were banned from participating in the high yielding OMO market last year complain of financial repression by the CBN. The move by the CBN means local investors are left with an option of piling cash into T-Bills, which at an average of 5 percent, yield below inflation (12%) and offer negative real returns. Nigeria’s $38 billion external reserves as at January may be made up of close to $20 billion of hot money, which economists say helps explain why the Central Bank is fixated on dollar inflows from portfolio investors to keep things ticking, especially in the FX market.

The naira has been stable against the dollar for two years in Nigeria, but that has come at a steep cost to the Central Bank, which spent some $36.6 billion defending the naira in 2018 alone, according to a recent report on its website. “The lesson for Nigeria in all these is that relying on hot money to prop up your books can backfire and have big consequences,” notes Egie Akpata, a director at Union Capital Markets. “I’m not sure how Lebanon can have its standard of living with such low internal GDP,” Akpata says. Lebanon may now need a $20-$25 billion bailout including International Monetary Fund (IMF) support to emerge from its financial crisis, according to former Minister of Economy Nasser Saidi. Lebanon’s crisis has shattered confidence in its banking system and stoked concerns among investors that a default could loom for one of the world’s most indebted countries, which has a $1.2 billion eurobond due in March.

sors and end users, where a deal was struck for farmers to cultivate 150,000 hectares of land, with an estimated output of 3 million metric tons that will be mopped up by the local processors. BusinessDay exclusively learnt about a memorandum of understanding (MoU) signed between NCGA and some major processors of cassava derivatives in the country, guaranteeing that everything produced is mopped. Cassava derivatives such as Ethanol, Industrial starch, and sweeteners are mostly imported into Nigeria, as local capacity lagged for years. The deal this year, according

to NCGA’s estimates would contribute towards saving N1 trillion that would have been spent importing cassava derivatives. For Ibrahim, president of PAN, the prospects for 2020 in the poultry industry are good, but“theeconomicdynamicsare a bit confusing and challenging”. According to him, “When you want to expand growth, and at the same time increase taxes, it may boomerang.” Barring the unpleasant security challenges and unfavourable weather, farmers are expecting to have a financially fulfilling year, but they also want government to listen more and carry them along in decision-making.

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Thursday 23 January 2020

BUSINESS DAY

Markets + Finance

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

Bank stocks are attractive despite CBN’s stringent regulations ing then to lend to extend credit to risky sectors is tantamount to rising Non-Performing Loans (NPLs). Nigeria banks are still reeling from bad loans in their books, thanks to the precipitous drop in the crude oil price of mid 2014 that stoked a severe dollar scarcity that paralysed business activity. Last year, the central bank hiked the minimum loans to deposit ratio (LDR) from 60 percent to 65 percent with a December 2019 deadline. As of September 2019, there were a few banks well behind the new floor – GUARANTY (54.0 percent), FBNH (54.2 percent), ZENITH (55.8 percent), WEMA (60.0 percent) and UBA (62.1 percent). “By our estimation, these banks would need to create an aggregate of N2.11 trillion to meet the new floor, in which case we expect CBN penalties, said analysts at Cordros Capital Limited. “We maintain our view regarding the level of risk be-

BALA AUGIE

espite the stringent policies by the apex bank, Nigerian largest banks have a compelling valuation as there has been strong growth in profitability, revenue, and assets over the years. They also have the ammunitions to surmount the “winter”, even amid a low yield environment. Winter in G.R.R Martins best seller novel “Game of Thrones (GOT) epitomises a period of turbulence whereby a city is beset by famine and wars. The five largest banks have an attractive valuation, as investors are upbeat that these stocks will rally during an economic boom. Zenith Bank, Guaranty Trust (GTBank), Access Bank, United Bank for Africa (UBA), and First Bank Holdings, have an average price to earnings ratio of 3.11 times, lower than the 8.41 times price multiples for the Nigerian Stock Exchange (NSE) and All Share Index (ASI). The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple. Interestingly, banks are value stocks as their market capitalisation is lower than the book value of assets. For instance, the cumulative total market capitalisation of the big five is N2.56 trillion – which is 1.60 percent of Nigeria’s GDP, is lower than the 3.22 trillion total shareholders fund. Value investing is the practice of buying stocks in

companies that have market capitalisation lower than the book value of the asset. The market capitalisation of a firm is derived by multiplying the share price of a stock by its total number of ordinary shares while book value is total assets minus total current liabilities. Value stocks are a safe bet for investors as they provide good returns over a period and are considered fundamentally more stable. The total assets of the largest banks stood at N26.55 trillion as at September 2019, which is 16.25 percent to the country’s GDP, while liquidity and capital adequacy ratios are within the regulatory threshold. The recent stringent policies announced by the Cen-

tral Bank of Nigeria (CBN) shouldn’t stoke investors fear as lenders have a way of making money even when other sectors are capitulating to a tough and unpredictable

macroeconomic environment. Firstly, between 2014-16, the devaluation of the currency was a boon for them as dollar denominated assets ballooned, adding impetus to profit, thanks to income from foreign exchange revaluation gains. Second, between 2017-18, they took advantage of a high yield environment to augment revenue in the face of receding interest income loans and advances. However, analysts say CBN’s new rules could expose lenders to systematic risk, though they are forced to resume their traditional role of banking. Analysts argued that forc-

ing introduced to the system. We expect the cost of risk across the industry to spike going towards 2021FY, and NPL moderation to temper as well following an initial dip that will follow the significant loan growth,” said analysts at Codros Capital. The Apex bank also enacted other policies that will impact banks in 2020, including (1) limiting of borrowing clients (corporate and individuals) of banks from accessing OMO auctions, and (2) stopping domestic corporates and individuals from purchasing OMO bills in both the primary and secondary markets. As mentioned earlier, Nigerian largest banks otherwise

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known as Tier one lenders have the ammunition to fend off the effects of CBN’s draconian laws. Guaranty Trust Bank, the largest lender by market capitalization, has remained resilient in 2019 and is on track to post a good full year (2019) financial performance, supported by its industry-best efficiency (CIR). While GTBank’s has the third largest bank by market capitalization, its market capitalization of N is the highest among peer rivals, which means it is sweating its asset in generating value for shareholders. Analysts are sanguine that United Bank for Africa (UBA) record strong earnings in 2020 as they bet on contributions from the lender’s African businesses (ex-Nigeria). Zenith Bank has maintained a strong level of performance through 2019, similar to recent years. The bank’s performance in 2019 was propelled by improved efficiency as top-line growth was muted during the year. Analysts say this is encouraging and should be positive for trickledown to the bottomline as the bank expands its risk asset portfolio over 2020. FirstBank Holdings’ NPLs have declined precipitously in 2019, thanks to years’ long sterilization of the bank’s loan portfolio. It was able to reduce its legacy debts, most which were incurred during the economic downturn of 2016. Analysts say earnings will get a boost in 2020 as the lender has drastically reduced loan loss expenses. Access Bank has now grown into the largest Nigerian bank by asset size (NGN6.61 trillion) after its merger with Diamond Bank PLC. An excellent risk management strategy resulted in a reduction in NPLs despite inheriting huge bad debts from Diamond bank. Last week, Access Bank acquired Kenya’s Transnational Bank, as it seeks high interest asset across the continent. The largest lender by assets has operations in seven African countries and Britain as wells as representative offices in China, United Arab Emirates, Lebanon and India. It plans to expand to Cameroon, Mozambique and Sierra Leone this year following the acquisition, the bank’s spokesman said.

Thursday 23 January 2020

BUSINESS DAY

news

Construction of Lekki Port Breakwater reaches 50% completion stage AMAKA ANAGOR-EWUZIE

L-R: Binay Saraf, chief financial officer, Lekki Port LFTZ Enterprise Limited (LPLEL); Adesuwa Ladoja, relationship group director, Lekki Port LFTZ Enterprise Limited (LPLEL); Kunle Famidiye, manager, Landside Infrastructure, Lekki Port LFTZ Enterprise Limited (LPLEL), and Steven Huekelom, technical director, Lekki Port LFTZ Enterprise Limited (LPLEL), during a media tour of the Lekki Deep Sea Port project held in Ibeju Lekki, Lagos, yesterday.

First time ever, Nigeria misses out in latest ranking on World’s, Africa’s most powerful nations … Egypt, South Africa, Morocco, three others make list BUNMI BAILEY

or the first time since 2016, Nigeria, Africa’s largest economy, has missed out of the world’s most powerful ranking list, according to the 2020 Best Countries ranking compiled by the US News and World Report. Egypt, South Africa, Morocco are listed among the top most powerful countries in Africa. Other African countries on the list are Kenya, Ghana and Tunisia. Ever since the rankings started in 2016, Nigeria has always been represented – however at the bottom side. In 2016, the country was ranked 57th most powerful country, out of 60 nations that were considered. In the 2017 edition, it occupied the 77th

position in a list of 80. In 2018, it went up one place to collect the 76th spot among 80 nations. Damilola Adewale, a Lagos-based economist and independent consultant, said, “I think Nigeria has lost its relevance as far as social development in Africa is concerned. We are just parading ourselves as the Giant of Africa. Having the largest population and market size is not just what counts. We are still backward.” The report and rankings are based on how global perceptions define countries in terms of a number of qualitative characteristics, impressions that have the potential to drive trade, travel and investment and directly affect national economies. The report covers perceptions of 73 nations. On why Nigeria missed out on the ranking, Deidre McPhil-

ips, the senior data editor at US.News, said for a country to be evaluated in the ranking, it must meet all four criteria. The criteria are top 100 countries in terms of GDP in 2017; top 100 countries in terms of foreign direct investment inflows in 2017; top 100 countries in terms of international tourism receipts in 2017, all based on World Bank data, and top 150 countries in the United Nation’s Human Development Index, based on the 2017 report. The study and model used to score and rank countries were developed by BAV Group and The Wharton School of the University of Pennsylvania, specifically David J. Reibstein, in consultation with US News & World Report. A set of 65 country attributes – terms that can be used to describe a country and that

are also relevant to the success of a modern nation – were identified. Attributes by nation were presented in a survey of more than 20,000 people from across the globe. Participants assessed how closely they associated an attribute with a nation. Attributes were grouped into nine sub rankings that rolled into the ranking, which are adventure, citizenship, cultural Influence, entrepreneurship, heritage, movers, open for business, power and quality of Life. “Their foreign policies and military budgets are tracked religiously. When they pledge, at least some in the international community trust they will keep it,” usnews.com said. The top five most powerful nations are Switzerland, Canada, Japan, Germany and Australia.

Experts see human capital redefining insurance business post recapitalisation Modestus Anaesoronye

ome the end of 2020, insurance industry would have completed its ongoing recapitalisation exercise with a lot of funds to play with, but experts say the fund may not do the magic without the right calibre of people. According to them, what will drive optimal utilisation of the injected funds is the quality of human capital that organisations are able to attract. Edwin Igbiti, managing director/CEO, Niger Insurance plc, says the year 2020 is significant for the insurance industry because the sector is confronting a new capital regime. According to Igbiti, in the midst of an economy that is not growing with the level of expected returns, then the challenge would be capital allocation restructuring, which has to be

done internally. “In that aspect, we need not only money, we need skills. And therefore, the companies that will have their head lifted above waters are those that have the right human capital, which is the skill to drive the ‘bullet’ capital we are going to face,” he states. He notes that the insurance industry was yet to occupy its rightful position in the economy, but with the operators trying to attract the best heads, quality human capital, pay attractive earnings, and then it will not be too long to get to where we should be. “Whether we like it or not, what will drive the so called N18 billion and N20 billion is men,” he states. He also notes that insurance is not going to be business as usual any more, charging the operators to wear their thinking cap, as “we want a new thing, our www.businessday.ng

input should be new, we want a new thing, our thinking should be new also.” Owolabi Salami, executive director at Allianz Nigeria, had told BusinessDay in an interview that the new capital injection would help the insurance industry attract quality people, pay the right wages and acquire the right technology to growth the market. Salami noted that the industry was yet to invest in human capital enough to drive change, pointing out that was one of the things that these ongoing recapitalisation would do for the industry. He also noted that the capital would provide resources to embark on awareness creation, spend on advertising and campaign. With an estimated N160 billion expected into the Nigerian insurance industry after the

ongoing recapitalisation by underwriters, the sector is hopeful to emerge stronger, contribute reasonably to the economy and also able to offer good returns to investors. Industry experts believe that the sector post consolidation will have enough resources to attract qualitymanpower,acquirenecessary skills to underwrite big ticket risks, increase retention in the local market, and be able to take advantage of untapped potentials to create shareholder value. The National Insurance Commission (NAICOM) had in a circular issued on Monday, May 20, 2019, announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion, and Reinsurance companies from N10 billion to N20 billion.

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romoters of the Lekki Port project located at the Lagos Free Trade Zone say it has achieved 50 percent completion of the Breakwater, the largest and critical part of the port construction. Steven Heukelom, technical director, Lekki Port, who disclosed this on Wednesday in Lagos during a media tour of the Lekki Port site, said work had reached advanced stage of the breakwater with about one kilometre work done out of the full length of 1.9 metres projected. Heukelom said after completion, the deep seaport would have three containers berth of 680 - metre long and 16.5-metre water depth, one liquid and one dry bulk terminals. He said it would also have capacity to berth large containerships of 18, 000 TEUs. “We are now somewhere almost half way in the breakwater construction. We have done 900 metres. We will also dredge the channels going up, the channels will be around 11 kilometres long before we reach the natural depth of 16.5 metres and then we are good to go.” According to Heukelom, the phase two of the project, will see deepening of the basin in the channel to 19.5 metres due to the liquid jetties. “The maximum size of container vessel that we can receive will be 18, 000 TEUs. So, you can understand that having big ships like this in the port will be a game changer,” he added. Also speaking, Kunle Fa-

dunmuye, landside infrastructure manager of Lekki port, said 30,000 X-blocks were being produced to reduce the wave impact along the Lekki port breakwater. “There are three types of Xblocks, we have the three meter, two meter and the five meter. We are using sulphate resisting cement to build the X-blocks. The three meter X-blocks are 7.2tons, the two meter X-blocks are 4.2tons while the five meter X-blocks are around 13tons, he explained. According to him, the breakwater is like an egg and its edge comprises of the X-blocks while the core consist of quarry rocks. “We will be having the whole 50 hectares of Lekki port floor covered with interlocking blocks. Presently, we are doing what is called the Dynamic Compaction to increase the bearing capacity of the soil, he said. Stating that they are building Breakwater that will stand serious wave impact, Fadunmuye stated that aside the Breakwater, that they were also constructing the Groynes to complement the work of the Breakwater. Adesuwa Ladoja, project media counsel/relationship group director, explained that efforts are ongoing between the project promoters and the Federal Government to connect the port by rail. “The Federal Ministry of Transportation has written to us concerning linking the port to the national rail system, and efforts are being put in that direction to ensure we do not repeat the mistakes of Apapa port,” Adesuwa stated.

26 states adopts Administration of Criminal Justice Act - CLEEN IDRIS UMAR MOMOH, Benin

entre for Law Enforcement Education (CLEEN) Foundation on Wednesday said 26 states in Nigeria had adopted the Administration of Criminal Justice Act (ACJA) 2015. Benson Olugbuo, executive director of the Foundation, made the disclosure at a two-day step-down training workshop on the Administration of Criminal Justice Act for officers and men of zone 5 of the Nigeria Police Force. Olugbuo, represented by Ruth Olofin, programme officer of the Foundation listed states that have enacted the Act as Lagos, Anambra, Ekiti, Enugu, Rivers, Delta, Kaduna, Cross River. Others are Akwa Ibom, Ondo, Oyo, Kogi, Ogun, Plateau, Bayelsa, Edo, Benue, Adamawa, Jigawa, Nassarawa, Bauchi, Kano, Yobe, Kwara and Osun states. He said 20 officers would be trained across the 12 police zonal commands for a period of six months, saying training had already been conducted for police commands in six zonal commands of Kano, Lagos, Benue, Abuja, Abia and @Businessdayng

Osun, respectively. Olugbuo noted that the Act was designed to not only preserve and strengthen existing legal frameworks but also to enhance the efficiency of the institutions within the criminal justice system and the protection of human rights of citizens such as suspects, defendants and victims. The Act is to introduce a national criminal procedure law that will regulate the investigation and prosecution of offences throughout the federation, he said. According to him, findings from public perceptions surveys CLEEN Foundation conducted in 2017 and 2018 respectively to monitor the Administration of Criminal Justice Reforms Process indicate amongst other things, a low level of awareness amongst criminal justice institutions. “Including the police and with the increase in the number of states adopting the law, it is expedient to ensure adequate awareness on the provisions of the law and their applicability in criminal proceedings,” he said. The Act is only applicable to the Federal Capital Territory and to Federal courts and other federal institutions including the Nigeria Police, he said.

Thursday 23 January 2020

BUSINESS DAY

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Thursday 23 January 2020

BUSINESS DAY

POLITICS & POLICY Supplementary elections: INEC assures political parties, candidates of credible elections in Benue BENJAMIN AGESAN, Makurdi

ndependent National Electoral Commission (INEC) has fixed 25th of January, 2020 for the supplementary election for Ohiminin constituency of the Benue State House of Assembly. The Returning Officer of Ohimini State constituency election had cancelled two polling units due to over-voting. The returning officer had returned Christopher Adaji in election held on the 9th of March, 2019 with a total vote of 6,522 when the total number from the two cancelled units were 1, 056. In an Appeal Court judgment in Makurdi on the 8th of November, 2019 which

ordered supplementary election in the two cancelled registration areas and polling units based on the principle of margin of lead in Agadagba and Onyagede Icho polling units with a margin lead of 397 votes, was to determine the final outcome of the election. The Benue State Resident Electoral Commissioner, Nentawe Yiltwada, briefing newsmen on the expectations of supplementary election fixed for 25th of this month, said a total number of 16 candidates representing various parties will be participating in the forthcoming election. The Resident Electoral Commissioner explained that only the political parties which participated

Mahmood Yakubu, INEC chairman

Malami’s letter on Oyo LG’s: Matter is subjudice - Makinde REMI FEYISIPO, Ibadan

overnor Seyi Makinde of Oyo State has said that the letter credited to the Attorney-General of the Federation, Abubakar Malami on the matter of Oyo State Local Governments was subjudice. Babatunde O duyoye, special adviser on Strategy and Political Matters to the Governor, Seyi Makinde, who made the statement said as far as the matter was still before the Court of Appeal, no one is expected to take extra-constitutional measures, except such a person is nursing ulterior motives. “The matter is in court and as far as we are concerned, it is subjudice,” the Political Adviser said adding that Malami must have committed an obvious blunder by taking a step against the interest of the judiciary and the Constitution he was meant to protect. According to Oduyoye, the Government of Oyo State was not oblivious of the intent of some elements in the main opposition party in the state, the All Progressives Congress (APC) to plunge the state into crisis and possibly make it ungovernable. According to the former Chief Whip of Alliance for Democracy (AD) in the House of Representatives,

the purported letter from the office of the Minister of Justice and AttorneyGeneral of the federation, Abubakar Malami (SAN), was part of the grand plot to frustrate the Makinde Government, thereby preventing him from delivering the dividends of democracy to the people of Oyo State. In a statement he personally signed, the Political Adviser said that the APC’s plan to fight Makinde to a standstill and create tension in Oyo State, thereby forestalling the monumental developmental objectives of his administration would come to naught because, according to him, the people of Oyo State have seen through it all. Oduyoye maintained that intelligence reports had already indicated that leaders of the APC had marked Makinde as their public enemy number one due to his soaring public image. “We are aware that a number of politicians are unhappy with the growing popularity of Governor Makinde and especially the recent launch of the Western Nigeria Security Network popularly known as Amotekun. “The APC in Oyo State has, ever since it lost the March 9, 2019 governorship election, been hell-bent on retaking the seat through the illegal means. We are aware of the several underhand means and dirty tactics they have deployed and were at a stage www.businessday.ng

christened ‘Pakute Politics.’” Oduyoye further stated that through the statement made by a serving Senator of the APC, who indicated that his party had set traps for Governor Makinde, it became clear that the desperation of APC elements knows no limits. He warned the Federal Government and its agents to be wary of their actions especially as they affected the local government debacle in Oyo State, as the matter was still in court. He said: “We have read a letter being circulated in the social media by elements of the APC in which the Minister of Justice and AttorneyGeneral of the Federation, Abubakar Malami (SAN), gave a directive to Governor Seyi Makinde to reverse the House of Assembly’s decision to suspend the 68 illegal chairmen of local governments in Oyo State. “That directive, apart from being unconstitutional and misplaced, is part of the APC’s grand plot to cause a major crisis in Oyo State in order to destabilise the Government of Governor Makinde and ultimately make the State ungovernable. “We have intelligence report over series of meetings held by APC leaders, who now feel threatened by Governor Makinde’s soaring profile. They are worried at the manner in which he defeated the APC at the polls and were ashamed that the

Supreme Court thwarted their organised attempt to steal his mandate. “Makinde’s enemies in the APC have also found it repulsive that his stance on the Western Nigerian Security Network, popularly named Amotekun, was driving the security outfit to success. “We are really not surprised by the desperation of the APC to destabilise Oyo State, ever since it failed in the Governorship election, it has been employing underhand tactics to steal Makinde’s mandate and one of its senators, Teslim Folarin, had even gone as far as saying that the APC had set two traps for the Makinde Government. “Let us warn those elements who are pushing to destabilise Oyo State through the unholy resurrection of the sacked Council Chairmen that the people of Oyo State will not be used as a tool by unscrupulous elements. “The Federal Government also needed to be reminded that Nigeria is a federation, with constitutionally guaranteed democratic systems. We urge the government at the centre to await the decision of the court on the matter of Local Government councils in Oyo State rather than use attempt to resort to illegality and measures that are not backed by the Constitution of the Federal Republic, 1999.”

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in the 9th of March, 2019 election will participate as the result of the various candidates obtained in the previous election will be brought forward and added to the votes they will receive in the supplementary election. Recall that the results of 9th March 2019 Ohiminin State constituency election as presented had Christopher Adaji of PDP with 6, 522 votes which has the highest votes cast and was followed by Musa Alechenu of the APC with 6,125 votes and Sunday Mark of APGA with 2, 138 votes. The REC explained that on the 24th of January, movement of materials will be done until the completeness of sensitive materials and will be escorted by

armed policemen to Ohiminin LGA INEC office after party agents of party political parties and observers including the press must have inspected the materials. Yiltwada, the REC, warned against vote-buying, stating that camera and phone camera will not be allowed within the voting cubicle. He maintained that the vulnerable group will be allowed to vote before other voters as the polling unit have been made convenient for them. Meanwhile, the state police commissioner, Garba Mukkadas, also hinted that adequate policemen will be deployed to the polling units, assuring that only those with PVC will be allowed to vote.

IMO: Apologise to CJN, Supreme Court - BMO tells PDP

he leadership of the People’s Democratic Party (PDP) should apologise to the Chief Justice of Nigeria, the Supreme Court and Nigerians generally over its behaviour on the outcome of the Imo State governorship election petition. The Buhari Media Organisation (BMO) described PDP’s reaction to the Supreme Court judgment as irresponsible, adding that allegations raised against the Jurists in the course of the recent protest to the Supreme Court, after it declared Hope Uzodinma of the All Progressives Congress (APC) as the duly elected governor of the state, were puerile and childish. In a statement by its Chairman Niyi Akinsiju and Secretary, Cassidy Madueke, the group said the protest was an insult to Nigeria’s judiciary and showed the contempt PDP has for the nation’s institutions. “Holding a protest to denounce the verdict of the Supreme Court, and further making unfounded allegations of wrongdoing against the Justices of the country’s apex court, is offensive to the country, and democratic principles which the country operates. “The protests and comments made by the PDP were also outright reprehensible. For persons who had @Businessdayng

been privileged to enjoy the management of the nation’s affairs for 16 years - albeit in the worst manner - and its democratic institutions, the least expected from them is respect for these institutions. “More surprising is that the so-called opposition figures demanded that the Supreme Court reverse itself, aside from demanding the resignation of Chief Justice Tanko Muhammed,” it added BMO further said: “PDP is led by cry-babies, spoilt with unpunished bad behaviour, hence their irresponsible and ridiculous protest against the Supreme Court. Whenever the party is awarded a victory by this same Supreme Court, PDP praises the Judiciary but whenever the same court delivers a judgment that does not favour the opposition, these people wail like spoilt brats. “Only a few months ago, the same Supreme Court ruled against the All Progressives Congress (APC) and favoured PDP on Zamfara and Rivers States. The Apex Court was lauded and hailed by the PDP. Similarly, in the judgments of the court in the most recent election petition matters, the Supreme Court decided in favour of PDP in Bauchi, Sokoto, Adamawa and Benue States. To PDP, this is justice because it favoured them. That is the height of irresponsibility.”

Thursday 23 January 2020

BUSINESS DAY

cityfile Oyo to procure more equipment for OYSROMA REMI FEYISIPO, Ibadan

yo State government is to inject more funds and procure more equipment for the Oyo State Road Maintenance Agency (OYSROMA) within the first quarter of the year 2020, for better services Kamil Akinlabi Mudashiru chairman, OYSROMA who disclosed this in Ibadan, said Governor Seyi Makinde was poised to ensuring the operations of the agency get to other parts of the state as quick as possible in order to ease traffic flow as well as movement of goods, especially farm produce from the hinterlands. “There are roads in the hinterland around the state that are begging for attention and we are using this opportunity to again assure the people of the state of the readiness of the government to repair them,” he said. Mudashiru noted that the increase in funding to the agency with the provision of necessary equipment would enhance job quality, better efficiency and supervision of projects being carried out by the agency. He, therefore, charged the management and staff of the agency to be more alive to their duties, stressing that their dedication to work would further improve the productivity of the agency. “I want to use this medium to implore our staff to be alive to their duties, be more dedicated to work so that we can achieve more than what we had last year.”

Abia to utilise dry season for road construction

ob Ogu, commissioner for works, says Abia government will take advantage of the dry season to build more roads in different parts of the state. Ogu said this in an interview with newsmen in Umuahia, adding that government was determined to alleviate the sufferings usually experienced by motorists during rainy season. He said that the state government had identified roads that would be completed before the rainy season would set in. The commissioner said: “There are about six roads that the state government is targeting. “The roads include Eziukwu Road, Osusu Road, Aba-Owerri Road and Immaculate Road, all in Aba. “Emelogu Road is on stream and we are looking for how to connect it to Ngwa Road by East to ease traffic on the Ogbor Hill side of the road to Ikot Ekpene. “The contractors are back on site. We are trying to see how we can do the drains, so that by the time the rains come the roads would have been completed,” Ogu said. He expressed satisfaction with the completion of the first phase of Aba Road in Umuahia, adding that the road was designed to last for at least 10 years. According to Ogu, the second phase of the road was on course. He said that the soil strength had been tested to ensure that the road would be designed to accommodate all manner of traffic. He said: “The first phase of Aba Road, which is 2.1km, has been completed and it started from Eastern Comfort to the railway crossing, while the second phase, which is 2.4km, will continue from the railway to Enugu-Port Hacourt Expressway at Ubakala Junction.” He said that the contractor handling the Osisioma Flyover had been given the funds needed for the continuation of work on the project. He said that government had introduced “Operation zero pothole” to ensure that motorists did not encounter difficulties. Ogu said that the government had commenced the desilting of the drains in different parts of the state. “If you do a road and the drains fail, definitely the road will fail at the end of the day.

Sympathisers making efforts to salvage a burning commercial car at Aleshinloye Market in Ibadan.

NAN

A’Ibom plans new power substation in Ikot Abasi ANIEFIOK UDONQUAK, Uyo

kwa Ibom State government has approved the construction of a new power station in Ikot Abasi urban to boost electricity supply in the area. The area which hosts the state-owned Independent Power Plant has experienced power outages for a long time, which prompted youths in the area to embark on a protest. The protest by the youths is said to have disrupted operations at the power plant as workers were prevented from having access to their offices. Meyen Etukudo, managing director of Ibom Power Company who confirmed the dis-

ruption of operation, in an interview, said the state government has approved the construction of the new power station in a deliberate effort to restore power supply in the area. Etukudo said it was regrettable that when Ibom Power Plant was established, there was no provision of a substation to step down the power supply from the generating plant for the consumers in the community. According to him, without any substation, there was no way the host community could have benefited from the Ibom power plant. It was gathered that apart from the new substation which will ensure the availability of electricity in the area, electricity consumers in the area were in default of

paying their electricity bills which forced the Port Harcourt Electricity Distribution company (PHEDC) to cut off the area from public power supply. Further checks reveal that it took the intervention of the governor after settling part of the bill owed by the community. Etukudo who thanked the governor for approving the substation to improve power supply to the company’s host community, said Ibom Power Company was not responsible for the inability of the host community to enjoy electricity supply. He appealed to the youths to embrace dialogue in resolving all grievances adding that the power generating company would continue to work with the community and all stakeholders to ensure peace.

FCT engages traditional rulers to check fire outbreaks JAMES KWEN, Abuja he Federal Capital Territory (FCT) Department of Fire Service has taken anti-bush burning campaign to traditional rulers as dry season farming begins in the nation’s capital. The department said this measure was to reach out to the farming population through the traditional institutions as well as prevent fire disasters. Director of the department, Julius Opetunsin who led a team of fire fighters to the palace of Ona of Abaji on Tuesday said the proactive measures were adopted to save lives and property. Opetunsin noted that while the flag off of the campaign started at Abaji area council, the message would also be spread to all rural communities in the

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remaining seven area councils. “The choice of Abaji for this year’s flag off is to bring the campaign to the grassroots where most farming activities take place. This is because destruction from fire outbreaks in farms and other property are always colossal, and therefore all hands must be on deck to curtail its occurrence. “The department is calling on all the farming community, our royal fathers and their subjects to desist from indiscriminate bush burning. We therefore advise that in case you want to adopt bush burning approach as an alternative, let it be controlled burning so as to protect your property and that of your neighbour. “As we flag off this campaign, I wish to stress that officers from the department will be visiting the various domains in the area council to sensitive the local com-

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munities”, he stated. Acting coordinator of Abuja Metropolitan Management Council (AMMC), Suleiman Abdulrameed stated that the FCT administration’s ban on indiscriminate farming activities within the city centre was still in force. Abdulrameed, who was represented by AMMC’s director of legal services, Isa Abdullahi noted that enforcement of the ban was not to deny residents of legitimate means of livelihood, but to ensure sanity and adherence to the city’s master plan. The Ona of Abaji, Adamu Yunusa, however, urged the department of fire service to show more commitment in the discharge of its statutory duties. He also called on the FCT administration to replace ageing fire equipment as well as acquire new ones for the fire station in Abaji.

@Businessdayng

Thursday 23 January 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 15 January 2020

Top Gainers/Losers as at Wednesday 15 January 2020 LOSERS

GAINERS

Company

Opening

Closing

Change

0.55

JBERGER

N21.45

N20

-1.45

N8.75

0.25

FLOURMILL

N23.5

N22.65

-0.85

N6.2

0.15

NASCON

N15.7

N15

-0.7

N3.6

N3.7

0.1

WAPCO

N17.35

N16.8

-0.55

N1.08

N1.17

0.09

N22.35

N22

-0.35

Company

Opening

Closing

Change

UACEMENT

N36.45

N37

UBA

N8.5

UBN

N6.05

OANDO HONYFLOUR

ZENITHBANK

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

29,458.21 4,392.00 315,667,737.00 3.639

Global market indicators FTSE 100 Index 7,571.92GBP -38.78-0.51%

Nikkei 225 24,031.35JPY +166.79+0.70%

Generic 1st ‘DM’ Future 29,171.00USD -8.00-0.03%

Deutsche Boerse AG German Stock Index DAX 13,515.75EUR -40.12-0.30%

S&P 500 Index 3,327.56USD +6.77+0.20%

Shanghai Stock Exchange Composite Index 3,060.75CNY +8.61+0.28%

15.173

NSE promotes better understanding of securities lending with interpretative guidance Stories by Iheanyi Nwachukwu

he recently released Securities Lending and Borrowing report from the Nigerian Stock Exchange (NSE) shows that a total of 20.8 million shares are available to the investing public for lending. The securities available include Presco, MTN Nigeria, Okomu Oil, Dangote Cement, United Bank for Africa, Dangote Sugar, Nigerian Breweries, Flour Mills, Chemicals and Allied Products (CAP) and Guaranty Trust Bank. Securities Lending allows investors to borrow shares at an agreed fee, with the borrower agreeing to return the securities to the lender at the end of the loan term. It usually requires the borrower to collateralise the transaction with cash or other securities of a value equal to or greater than that of the lent securities. In order to protect the lender against counterparty credit risk this transaction is done through a Securities Lending Agent (SLA) who stands as an intermediary

between the lender and borrower. The SLA stands as borrower to the lender and as a lender to the borrower. Jude Chiemeka, Head, Trading Business Division, NSE said Securities Lending presents significant benefits to investors in a bull or bear market. “Whether you are a speculative investor looking to make quick gains, or a long-term investor holding stocks, securities lending provides a strong potential to deliver benefits to all market players through capital gains and low-risk incremental income. It also plays an important role in capital market by providing liquidity, which in turn reduces the cost of trading

and promotes price discovery,” he said. In 2017, the Exchange amended its original Securities Lending Guidelines that were first published in 2012 and the amended guidelines were approved by the Securities and Exchange Commission (SEC) in 2017. Additionally, The Exchange recognised the need to include retail investors in the Securities Lending Program to enable their participation and widen the pool of securities available for lending giving rise to The Rules Governing the Inclusion of Retail Participants in Securities Lending Transaction which was birthed and approved by SEC in 2016. The Guide-

lines and Rules were given an effective date of 7 January 2019. To further provide clarity on these guidelines, the Exchange released the Interpretative Guidance on Securities Lending in December 2019. This consolidated Interpretative Guidance – which can be found on the website of The Exchange highlights areas including general standards, legal titles, corporate actions, governing laws, collateral management, and stakeholder roles, amongst others. Emphasising the importance of the Interpretative Guidance, Chiemeka said, “This Guidance document has been prepared to adequately address stakeholders’ expectations in Securities Lending transactions. It is, therefore, important that investors – retail and institutional – properly understand the procedures involved in Securities Lending and implement the necessary controls.” As of October 2019, the country’s securities lending market was valued by the NSE at N1.07 billion ($2.96 million) with five licensed lending agents.

Stanbic IBTC Zero Balance Account gives savers an edge

f you are like the average Nigerian youth who is just starting out and needs an account that allows you to start from scratch and grow your savings while giving you access to your money 24/7, then the Stanbic IBTC Blue Edge Savings Account seems perfect for you. The BluEdge Savings Account, is a product that allows you to open an account with zero Balance, so you don’t need any money to open the account. You can always fund the account at any time to grow your savings. With the Blue Edge Account the minimum account balance is also zero naira, this means that you will not be charged for having zero balance on the account. The BluEdge Savings Account gives students and young Nigerians currently enrolled in the National Youth Service Corps (NYSC) the edge that they need to experience financial confidence and freedom. It takes away the pressure of starting an account with huge funds as it enables them to start

with zero naira while earning an interest on the savings every month. The BluEdge Savings Account can be operated with ease and accessed with a Verve card on Internet Banking, Mobile Banking, ATM, and via USSD. Account owners can also withdraw cash from the nearest Stanbic IBTC Bank branch. The requirements for opening a BluEdge Savings Account are: a BluEdge Savings Account form, passport photograph, BVN and student ID card. According to Wole Adeniyi, Deputy Chief Executive, Stanbic IBTC Bank Plc, “The BluEdge Savings Account is a great opportunity for young people to maintain a savings account conveniently. It proffers solutions to the hassle of savings among youths, and the various benefits are deliberately aimed at encouraging and promoting a savings culture. It can also serve as an avenue for them to pursue their dreams.”

“The SEC is very interested in investor protection and that is why we have rules that the players must obey and all these are channeled towards ensuring that our market is safe for investors. “The smaller the investors the more he/she is protected. We don’t want any investor to go into the market and lose money, that will not be good for our market. Uduk said the SEC has continued to educate and enlighten Nigerians about the investment opportunities available in the market and urged potential investors to engage professionals who

will guide them on relevant products to invest in. “In the past people just go to stockbrokers to buy stocks without having proper knowledge of what to buy but now we are encouraging people to go through the investment schemes. If you don’t know anything about stocks go through CIS and invest in different stocks so that professionals can manage your investments. If I am a welder for instance and I don’t know anything about investments, I can put my money there and professionals will manage it for me,” she added.

Why we encourage retail investors –SEC

he Securities and Exchange Commission (SEC) said it has stepped up efforts to encourage retail investors to invest in the capital market in a bid to create wealth, deepen the market and grow the nation’s economy. Mary Uduk, acting Director General of the SEC who spoke to journalists in Lagos on the sidelines of the recently held ThisDay Awards 2020, urged investors to look into the capital market for future investments as various products abound that would suit their needs. According to her, “You don’t need to have so much

money to be able to tap into the opportunities available in the capital market. For instance, with the government bond, the minimum investable amount is N10,000 and you can buy in subsequent amounts of N1,000. “We have Collective Investments Schemes (CIS), we have the stocks that you can buy through the stockbrokers and those you can invest in with as little as N5,000. So you don’t necessarily have to have a lot of money to invest, all you need is to approach the stockbrokers. They can open an account for you and whatever you have you can pay into the account www.businessday.ng

and give instructions in what kind of investments you want to make. Uduk said it is important for people to understand the workings of the capital market and not have the misconcep-

Mary Uduk, acting director general, SEC

tion that they must have a lot of money before they can invest. “We have to disabuse our minds of it. I think that is what is leading people into putting money into Ponzi schemes and lose their money. So all you need to do is to go to SEC website see the list of capital market operators and approach one of them to open an account” she said. The Acting DG assured investors that the SEC will continue to play its role of providing a good playing ground for investors to ensure that they get the benefits of their investments.

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@Businessdayng

Thursday 23 January 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper DEMETRI SEVASTOPULO AND LAUREN FEDOR

enate Republicans bent but did not break on the first day of Donald Trump’s impeachment trial, as they voted along party lines to reject repeated Democratic efforts to subpoena documents and witnesses in the case against the president. During a marathon session that began at 1pm on Tuesday and ran for 13 hours into the early hours of Wednesday morning, Mitch McConnell, the Republican Senate majority leader, demonstrated his ability to keep his 53-member caucus in line as they defended the third American president to face an impeachment trial. Shortly before 2am on Wednesday, the Senate voted 53-47 to approve the trial rules. The vote was a victory for Mr McConnell who started the trial on Tuesday with a setback. He began the proceedings on Tuesday by backtracking on the rules that he had proposed for the trial the previous evening after they sparked Democratic outrage and some unease among a small group of more moderate Republicans who are being watched closely for signs they might break from their party. At the same time, Democrats worked to build a public case that Senate Republicans were themselves taking part in a cover-up led by Mr Trump, who is accused of pressuring his Ukrainian counterpart to investigate his political rival Joe Biden and debunked allegations that Ukraine interfered in the 2016 US election. Here are the highlights: McConnell gives ground to moderates On Monday, Mr McConnell circulated draft rules for the trial that called for 24 hours of opening arguments to be crammed into two days, virtually guaranteeing that much of the action would take place late at night when most Americans are asleep. Another part of the plan would have required Senate votes to consider any of the evidence uncovered by the House of Representatives before it approved articles of impeachment accusing Mr Trump of abuse of power and obstruction of Congress. Chuck Schumer, the Democratic Senate leader, called the plan “nothing short of a national disgrace”, saying Mr McConnell was “hell-bent on making it much more difficult to get witnesses and documents and intent on rushing the trial through”.

Day 1: Republicans rally around Trump at impeachment trial

The Kentucky Republican at first held firm. But he was forced to reverse course just before the trial started when Susan Collins, a moderate Maine Republican who faces a tough re-election race this year, expressed concern that the rules deviated too much from the model used for the impeachment trial of Bill Clinton in 1999. Mr McConnell agreed to allow opening arguments by each side over three days and to accept the House evidence — an embarrassing setback for the wily Republican who had boasted he had enough votes in the Senate, where the Republicans have a 53-47 majority, to pass the rules over the objections of Democrats. The loss also suggested that Mr McConnell might face difficulty preventing the four Republican defections that Democrats need to call witnesses or seek additional evidence. This will become particularly important after opening arguments are over. Democrats fail again — and again

Mr Schumer introduced 11 amendments to seek documents, subpoena witnesses and make other procedural changes. Ten of the amendments were blocked by all 53 Republicans, while Ms Collins joined with the Democrats on one amendment. Some of the amendments sought documents from the White House, Pentagon, state department, and budget office. Republicans also blocked efforts to subpoena Mick Mulvaney, White House chief of staff, his aide Rob Blair, and Michael Duffey, a budget official. They also blocked a move to subpoena former national security adviser John Bolton. As the trial entered its 13th hour, Mr Schumer introduced a final amendment to require John Roberts, the Supreme Court chief justice who is presiding over the trial, to rule on any motions to subpoena witnesses and documents during the course of the trial. The final motion was also blocked by all 53 Republicans in the Senate. After the amendments, the Sen-

ate approved the rules in a strict 53-47 party line vote, in a move that concluded the first day of the impeachment trial. Mr McConnell then adjourned the proceedings until 1pm Wednesday. While Republicans blocked all 11 amendments, there were signs that a few GOP senators might side with the Democrats during the second phase of the trial. In addition to backing the Democrats on one amendment — that would have provided both sides more time to respond to motions by the other side — Ms Collins earlier said that she would “likely” support calling witnesses after opening statements in the second stage of the trial. Democrats are also hoping that other senators, such as Utah’s Mitt Romney, who has at times been a critic of Mr Trump, will later back calling witnesses. Mr Romney told CNN on Tuesday that the “vote on witnesses that counts is after opening arguments”. A quiet Donald Trump The president was uncharacter-

istically quiet during the first day of the trial. Mr Trump spent Tuesday at the World Economic Forum in Davos, Switzerland, from where he fired off only one terse tweet about the trial. It said “read the transcripts!” — a reference to his July 25, 2019 telephone call with Volodymyr Zelensky, Ukrainian president, which sparked the impeachment inquiry. In brief comments to reporters at Davos, Mr Trump described the Ukraine investigation as a “hoax”. McConnell may still get his quick trial The vote to spread opening arguments by each side over three days has already extended the expected length of the trial. But it is impossible to gauge how long the proceedings will last until the Senate votes next week on whether to call witnesses. If the Republicans successfully block efforts to call witnesses, it is possible that the trial could conclude before the end of the next week, just days before Iowa holds its Democratic caucuses on February 3.

Democrats lose impeachment votes but hatch a strategy LAUREN FEDOR AND COURTNEY WEAVER

he first day of Donald Trump’s impeachment trial may have stretched late into the night, but that did not mean there was any doubt how the session would end: in vote after vote, Democrats were defeated in their effort to subpoena documents and witnesses

the White House has repeatedly refused to congressional investigators. Even though the party-line votes were foregone conclusions — no moderate Republican, including those who had signalled they were open to hearing from new witnesses, backed the amendments — Democrats appeared to be trywww.businessday.ng

ing to do something other than just accessing emails, memos and text messages. They were building a political case that the president’s party was complicit in a cover-up. “So here’s where we are: the Senate GOP won’t subpoena documents from the White House — and won’t subpoena documents from the State De-

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partment,” tweeted Elizabeth Warren, the Democratic presidential candidate who is one of the 100 senators sitting as jurors. “If they truly believe in a fair impeachment trial, why are they hiding evidence?” What we are seeing . . .[is] an effort to obstruct the Senate’s ability to actually know what happened @Businessdayng

Kamala Harris, Democratic senator from California It is not a new argument ; House Speaker Nancy Pelosi has repeatedly accused the president of covering up his actions during last month’s impeachment investigation. But on Tuesday, it quickly become a Continues on page 46

Thursday 23 January 2020

BUSINESS DAY

NATIONAL NEWS

Davos business leaders discover the value of workers ANDREW EDGECLIFFE-JOHNSON

orkers of the world, good news! You have been rebranded as “stakeholders” and your bosses have signed public letters saying that you now matter every bit as much to them as the shareholders on whose returns their bonuses are calculated. If you had any lingering suspicions that the people who have staked more money than you will ever hold might still have the upper hand, let Davos 2020 dispel them. The theme of the World Economic Forum’s 50th annual meeting, taking place in the sparkling Alpine village this week, is “stakeholders for a cohesive and sustainable world”. The executives in suits and snow boots will save all talk of buybacks and tax efficiencies until the next earnings call: this week is about a healthier planet, happier customers — and you. On conference stages, in hotel meeting rooms and at pop-up hospitality venues on the Promenade, business leaders are busy discussing how to make work more inclusive, soothe politicians’ concerns about the gig economy and “upskill” you for whatever career curveballs the robots and artificial intelligence throw your way. Five months after the Business Roundtable in Washington threw its weight behind an already-emerging shift in corporate priorities — away from equity holders and towards employees, consumers, suppliers, local communities and the environment — this is one item on the stakeholder capitalism agenda the upper echelons are rapidly embracing. Two years ago, a Deloitte survey found just 12 per cent of top global executives thought they could play much of a role in educating and training their staff. Sharon Thorne, Deloitte’s global chair, says this year’s poll found more than 80 per cent

claim to be creating a culture of life-long learning. The only problem is that their staff don’t trust them to do so. Another survey, conducted across 28 countries by the PR company Edelman, found that less than one-third of people trust employers to retrain workers — or pay decent wages. Yet 83 per cent are worried about losing their jobs as companies turn to freelancers, automation or cheap foreign competition to boost shareholder returns. “There is a ‘trust but verify’ mood among employees, who are saying ‘show me the training and show me the money’,” says Richard Edelman, the firm’s chief executive. Showing employees more money sounds like one of the purpose/profit trade-offs that risk getting a CEO fired by the shareholders who still wield that power. Yet at private events in Davos this week, several executives insisted social pressure to

pay a living wage and the rising cost of buying in new skills in a tight labour market were changing their calculations about such investments. Companies including Walmart and JPMorgan Chase have launched splashy reskilling initiatives as more businesses conclude they cannot rely on governments to provide workforces with the training they need. Such investments should generate a more lasting return than any share buyback. But so, too, will more modest investments in listening to what employees say about how companies measure up to their rhetoric. Dan Schulman, CEO of PayPal, gave an example of what can be done on this front last year. Having participated in previous Davos discussions about financial inclusion, he decided to find out more about the finances of his own hourly workers and call centre employees. He was

shocked to discover that 60 per cent were struggling to make ends meet each month. PayPal responded by raising wages, cutting the costs of health insurance, giving shares to all employees and offering them financial education. The moves came at an upfront cost, but Mr Schulman is confident that putting employees first will ultimately benefit his other stakeholders. As the late Herb Kelleher, founder of Southwest Airlines, once put it: “A motivated employee treats the customer well . . . It’s not one of the enduring green mysteries of all time.” Numerous studies show few things build consumers’ trust in business like treating employees decently. That should reassure investors that this change of focus can benefit them, too, over time. Business leaders who have been told they must treat a multiplicity of constituents as the equals of shareholders can struggle to set priorities. But em-

ployees are those whose future they can most easily improve. Debates about inclusion and improving social mobility at events such as Davos can feel abstract, but paying your employees a living wage and convincing them that you are listening to them is not. Yet too many at the top seem incurious about the realities of life for people lower down their org charts. YPO, a global network of 28,000 CEOs, found this month that less than 40 per cent of its members had ever measured employee trust within their businesses. As they recalibrate their priorities, the executives in Davos need to reflect on whether they are putting as much effort into hearing their employees’ voices as they are into engaging with investors. Then, after setting the world to rights this week, they can start turning their stakeholder pledges into action much closer to home.w

in November, acknowledged she had “raised concerns” about his attempt to cram 24 hours of debate into two days of Senate sessions. Mr McConnell beat a tactical retreat, scrawling a handwritten change into the rule proposal that would allow opening arguments by each side to stretch over three days instead, ostensibly ruling out impeachment proceedings that extended until 1am. But for the rest of the day, Republicans did not waver, with all 53 voting against amendments by Mr Schumer to subpoena

White House documents, state department documents and Office of Management and Budget documents. The repeated rejections only emboldened Democratic efforts to portray their Republican colleagues as part of a Trumpbacked strategy to withhold evidence from the American people. “What we are seeing, and for hours now . . .[is] an effort to obstruct the Senate’s ability to actually know what happened,” said Senator Kamala Harris, late in the night.

Democrats lose impeachment votes... Continued from page 45 refrain among House managers, Democratic senators, presidential candidates and the Democratic National Committee. “I don’t know how they can deny all witnesses; let’s see what they do after a few days of this,” said Senator Amy Klobuchar, another Democratic presidential candidate who was sitting in judgment, adding she detected guilty looks on the faces of some of her Republican counterparts. “You can’t have a trial with zero witnesses and zero documents.

That’s not how this works.” The strategy may have been long in gestation, but it was helped by Mitch McConnell, the Republican leader in the Senate who handed Democrats red meat on Monday night by proposing impeachment trial rules that would have forced 24 hours of argument into just two days. Chuck Schumer, Mr McConnell’s Democratic counterpart, cried foul, accusing the Republicans of a “egregious departure” from precedent. “The McConnell rules seem to be designed by President

Trump for President Trump,” Mr Schumer told the Senate just before the trial formally began. “It asks the Senate to rush through as fast as possible and makes getting evidence as hard as possible . . . In short, the McConnell resolution will result in a rushed trial with little evidence in the dark of the night — literally in the dark of night.” Even some of the Republican moderates, particularly Maine’s Susan Collins, were squeamish about Mr McConnell’s brazenness. A spokesperson for Ms Collins, who is up for re-election

Thursday 23 January 2020

BUSINESS DAY

ANALYSIS

Saudi’s MBS implicated in hacking of Jeff Bezos’s phone MEHUL SRIVASTAVA

orensic experts hired by Jeff Bezos have concluded with “medium to high confidence” that a WhatsApp account used by Saudi Crown Prince Mohammed bin Salman was directly involved in a 2018 hack of the Amazon founder’s phone. A report on the hack, which has been seen by the Financial Times, says Mr Bezos’ phone started surreptitiously sharing vast amounts of data immediately after receiving an apparently innocuous, but encrypted video file from the prince’s WhatsApp account in May 2018. The file was sent via WhatsApp weeks after the pair exchanged numbers at a dinner in Los Angeles during a trip to the US by the crown prince. While on the trip Prince Mohammed had met a string of top US executives and sought to attract investment to the kingdom. However, the relationship between Mr Bezos and the prince soured after the gruesome murder of Jamal Khashoggi, a veteran Saudi journalist who used a regular column in the Bezos-owned Washington Post to criticise Prince Mohammed’s autocratic leadership. After the newspaper reported on how a Saudi hit squad had killed Khashoggi in the kingdom’s consulate in Istanbul in October 2018 and dismembered his body, Mr Bezos and the Post were targeted by a Saudi Twitter campaign. Mr Bezos’s associates last year said they had high confidence that Saudi Arabia had access to his phone and had gained private information after details of an extramarital affair appeared in a US tabloid. But the recent forensic analysis is the first to directly implicate a WhatsApp account used by Prince Mohammed and is likely to deepen the acrimony between one of the world’s most powerful leaders and its richest man. The allegations will heighten scrutiny of Prince Mohammed’s leadership and methods. The young royal has courted the heads of global tech companies; Riyadh also has ventures with groups such as Japan’s SoftBank as the crown prince seeks international backing for his ambitious plans to overhaul the oildependent economy. But his reputation has been tarnished by the Khashoggi murder and sweeping crackdowns against dissent. “On May 1, 2018, Bezos received a text from the WhatsApp account used by MBS. This WhatsApp message contained a large video attachment that arrived unexpectedly and without explanation, meaning it was not discussed by the parties in advance of being sent.” FTI Consulting’s forensic report The forensic analysis, led by Anthony J Ferrante, a cyber expert at the business advisory firm FTI Consulting, said that within hours of the video file being sent by WhatsApp to Mr Bezos “a massive and unauthorised exfiltration of data from Bezos’s phone began, continuing and escalating for months”. The amount of data hacked from the phone was in the dozens of gigabytes, compared to the few hundred kilobytes

The relationship between Jeff Bezos and Prince Mohammed bin Salman soured after the murder of Jamal Khashoggi © FT Montage/AP/Reuters

daily average in the months before the video file was sent, the analysis found. “It should be noted that the encrypted WhatsApp file sent from MBS’s account was slightly larger than the video itself. We know from a comprehensive examination of the forensic artifacts on Bezos’s phone that within hours of the encrypted downloader being received, a massive and unauthorised exfiltration of data from Bezos’s phone began, continuing and escalating for months thereafter.” FTI Consulting’s forensic report The report does not claim to have conclusive evidence and its findings could not be independently confirmed by the FT. A spokesman for Mr Bezos declined to comment but said he was “co-operating with the authorities”. Saudi Arabia denied the allegations. “Saudi Arabia does not conduct illicit activities of this nature, nor does it condone them,” a Saudi official said. “We request the presentation of any supposed evidence and the disclosure of any company that examined any forensic evidence so that we can show it is demonstrably false.” After the FT published its findings, the Saudi embassy in Washington wrote on Twitter that the allegations were “absurd”, adding: “We call for an investigation on these claims so that we can have all the facts out.” A spokesman for FTI Consulting said all “client work is confidential. We do not comment on, confirm or deny client engagements or potential engagements.” Saudi authorities have previously been accused of hacking the phones of critics and activists, while also using an army of social media trolls to intimidate and harass dissenting voices. Around the same time as Mr Bezos’s phone allegedly received the video file from Prince Mohammed’s WhatsApp account, privacy advocates also tracked attempts to hack

the phone of Omar Abdulaziz, a friend of Khashoggi and a prominent Saudi dissident living in Canada; and two other overseas critics of the Saudi leadership, according to lawsuits filed in Israel and Cyprus, and research by Citizen Lab, at the University of Toronto. The forensic report commissioned by Mr Bezos said Prince Mohammed contacted the Amazon founder unexpectedly via WhatsApp on two occasions after the video file had been sent in a way that suggested that the crown prince had prior knowledge of the businessman’s private discussions. “In addition to digital forensic artifacts, our investigation learned of at least two instances in which texts sent to Bezos from MBS’s WhatsApp account may reveal an awareness of private information that was not known publicly at the time.” FTI Consulting’s forensic report Mr Bezos had already ceased all communications with Prince Mohammed in the wake of the Khashoggi murder. But in February 2019, two days after the billionaire was briefed — via his phone — about the extent of the Saudi online campaign against him, he received another message from the WhatsApp account used by the prince. It said: “All what you hear or told to it’s not true and it’s matter of time will tell [sic] you know the truth, there is nothing against you or Amazon from me or Saudi Arabia”. The forensic analysis of Mr Bezos’s phone could not ascertain what alleged spyware was used. However, the report said: “It is believed that the compromise was likely facilitated by malicious tools procured by [Saud] al-Qahtani”. Human rights activists have accused Mr Qahtani, a former adviser to Prince Mohammed and the crown prince’s enforcer, of directing aggressive social media campaigns against critics. Mr Qahtani was dismissed from the royal court after being implicated by the

Saudi state prosecutor in Khashoggi’s murder and sanctioned by the US. Last month Saudi authorities said he had not been charged due to a lack of evidence. Mr Qahtani was also in charge of a more covert operation — the procurement of hacking software from European and Israeli companies, according to four people who spoke to the FT on condition of anonymity. Leaked emails from an Italian firm, Hacking Team, which sells covert surveillance software designed to penetrate phones remotely, show him using his Saudi government credentials to purchase their services as early as 2015. Mr Qahtani did not immediately respond to a request for comment. In March, Gavin de Becker, Mr Bezos’s security consultant, alleged that “our investigators” had concluded “with high confidence that the Saudis had access to Bezos’s phone, and gained private information”. His claims came after the National Inquirer US tabloid published details about Mr Bezos’s affair with Lauren Sanchez. “Based upon the results of a full forensic examination of the logical file system of Bezos’s phone, including network analysis, and an in-depth investigation conducted over several months, FTI reports with medium to high confidence that Bezos’s IPhone X was compromised via malware sent from a WhatsApp account used by Saudi Crown Prince Mohammed bin Salman.” FTI Consulting’s forensic report Mr Bezos later revealed that the tabloid had sought to intimidate him by threatening to release more intimate photographs, unless he agreed to publicly exonerate them of any political motivations in violating his privacy. American Media Inc, the tabloid’s owner, denied the reports and said its source was Ms Sanchez’s brother, Michael. Saudi officials also denied the kingdom was involved.

Thursday 23 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Siemens offers cautionary tale on responding to climate activists JOE MILLER

oe Kaeser, the camera-friendly boss of Siemens and de facto ambassador for Germany industry, makes his annual pilgrimage to the World Economic Forum this week, where he will again join executives banging the drum for the role business must play in protecting the planet. But rather than providing a blueprint for European peers, his company is fast becoming a cautionary tale. An outcry over a minor contract (roughly 0.02 per cent of annual revenue) to provide rail signalling on the periphery of a controversial Australian coal mine has generated thousands of negative headlines, and could end up causing millions of euros of reputational damage. The problem blew up partly because the company’s “bottomup” risk reporting process failed to alert Siemens’ management board in Munich to the €18m deal in Queensland’s Galilee Basin, which became a flashpoint for environmental protesters as bushfires ravaged Australia. A co-ordinated cross-border campaign, spearheaded in Germany by the Fridays for Future environmental movement and endorsed by Greta Thunberg, appealed directly to Mr Kaeser to abandon the contract, which they argued would facilitate the use of fossil fuels for decades to come. Siemens suddenly found itself facing “an almost perfect storm”, a person close to the company said. Sticking to the contract would provoke further outrage, while axing it without legal justification would set a difficult precedent. In the end, the board opted to honour the contract with Adani, the Indian group developing the mine. In a long, tortured blog post, Mr Kaeser admitted that Siemens “should have been wiser about this project beforehand”. It is a sentiment that will be echoed by angry investors at the company’s AGM in February. Their argument, that having a finger on

Millions of pigs have been culled as African swine fever has cut through China and beyond, devastating global food chains and sending pork prices soaring © AFP/Getty Images

The Fridays for Future environmental movement appealed directly to Joe Kaeser to abandon the rail signalling contract in Australia, but Siemens’ board opted to honour it © Reuters

the pulse of popular sentiment is a fiduciary duty, should be taken seriously in prosperous countries such as Germany, where school-age campaigners with a mature media strategy have the wherewithal to provide corporate scrutiny. “Siemens and other multinationals will need to lower the threshold at which the board discusses controversial projects, especially those related to coal,” said Marcus Poppe, a portfolio manager at institutional investor DWS. More involvement of a savvy corporate communications department in the decision-making process would no doubt help, as will other internal groups such as Siemens’ new sustainability committee, which will have powers to veto contracts. Large industrial groups should also follow the example set by the

banking sector in the aftermath of the financial crisis, when reputational risk committees were installed at regional and multinational levels. Yet identifying the next PR storm is also an unpredictable business. Mr Poppe notes the irony of Siemens, a company that still relies on its oil and gas business for billions of euros in revenues, being targeted over a small rail signalling contract. Energy giants RWE and EON have borne the brunt of activists’ ire, while Germany’s chemical companies, which account for roughly an eighth of the country’s annual CO2 emissions, have come in for less criticism. Then there is the matter of what companies can do when they find themselves in campaigners’ crosshairs. Engagement can only take you so far. In September, Volkswagen chief executive Herbert Diess tried to tem-

per the threat of protests at the car industry’s showcase Frankfurt Auto Show by debating with a prominent activist. Joe Kaeser even offered 23-year-old Fridays for Future figurehead Luisa Neubauer a seat on the supervisory board of Siemens’ energy business. Both attempts fell flat. The auto show is likely to be relocated and rebranded, after it was overshadowed by anti-SUV protests. Ms Neubauer made it clear she had no interest in a Siemens board seat, and has instead travelled to Davos, where she will continue her efforts to apply pressure on the world’s largest polluters. Faced with this climate, multinationals must come clean about their green credentials. According to a study by communications advisory firm Hering Schuppener, only 20 per cent of Dax-listed companies have disclosed clear information

on the integration of sustainability in their corporate strategy. Those that do, such as BASF and software giant SAP, score highly among investors. Bosch has gained the grudging respect of campaigners for its commitment to making itself carbon neutral this year. This clarity of approach looks like a better strategy than Mr Kaeser’s, who equivocated for weeks over how to mollify the public anger that gathered momentum with every passing day. Siemens, which claims its technology helped customers cut 637m metric tonnes of CO2 last year, should have formed a clear position early and stuck to it, according to a person close to the board. “The company,” he said, “missed an opportunity to create an immunisation shot”. The rest of German industry is about to find out how costly this mis-step has been.

Markets rebound as investor fears over China virus ease PHILIP GEORGIADIS

lobal markets staged a broad recovery as concerns eased over the economic impact of a virus which originated in China and has begun to spread to other parts of the globe. Asian markets rebounded from the previous session’s sell-off, while European markets opened higher and futures pointed to a rebound on Wall Street. Hong Kong’s Hang Seng index rose 1.3 per cent, recovering some of Tuesday’s losses, while mainland Chinese shares rebounded off year-lows to close higher.

“The market is rallying on hope that China is handling the outbreak well,” said Sebastien Galy, a strategist at Nordea. In Europe, the composite Stoxx Europe 600 snapped a two-day losing streak to trade 0.3 per cent higher, while Germany’s trade sensitive Dax hit an all-time high. Futures tied to the S&P 500 indicated a rise of 0.4 per cent at the open. The coronavirus has killed nine people and infected at least 440 in China, and has since spread to other Asian countries and North America. Controlling the outbreak has now reached a critical stage as more than 100m www.businessday.ng

Chinese prepare to board trains and aeroplanes to return home for the Lunar New Year. The outbreak has evoked memories of China’s Sars crisis in 2003, but markets have been reassured by a higher degree of urgency and transparency in controlling the disease. “The speed with which this virus has been identified is testament to changes in public health in China since Sars and strong global co-ordination through the World Health Organisation,” said Jeremy Farrar, director of health research foundation Wellcome. In 2003, the Sars outbreak sent Hong Kong into recession and

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the Hang Seng index fell nearly 7.5 per cent in the first quarter, but the market quickly recovered throughout the rest of the year. Economists at Deutsche Bank said the effects from an escalation of the coronavirus would be felt in the local retail, travel and hotel and catering industries, but that these would likely recover quickly and most service, trade and manufacturing activities would not be seriously affected. “Investors are moderating their concerns over the virus,” said the bank’s strategist Jim Reid. Government bonds were stable while the China’s offshore renminbi strengthened 0.1 per cent @Businessdayng

after its weakest day in five months on Tuesday. Elsewhere, Italian assets were under pressure following a fresh bout of political instability, with reports that Luigi Di Maio is poised to step down as leader of governing coalition partner Five Star. The FTSE MIB index fell 0.5 per cent as bank shares hit a six-week low, while Italy’s government debt sold off. The benchmark 10-year bond yield rose by six basis points to 1.427 per cent as investors moved out of the debt, while the premium investors demand to hold Italian debt over Germany’s also widened.

Thursday 23 January 2020

BUSINESS DAY

tax issues VAT compliance threshold: rising dawn in Nigeria Ugochi Ndebbio, Olatoyosi Lawal, and Nnenna Anowai

n January 13, 2020, President Muhammadu Buhari signed the Finance Bill, 2019 into law. The Finance Act contains profound changes to the Companies Income Tax Act, Value Added Tax Act, Petroleum Profits Tax Act, Personal Income Tax Act, Capital Gains Tax Act, Customs and Excise Tariff and Stamp Duties Act. This article addresses a vital component of the Finance Act – the introduction of a VAT compliance threshold to the Nigerian tax system. Developed economies, such as Austria and Hungary, have VAT compliance threshold mechanism in place, particularly for SMEs. Hence, the authors believe that the introduction of the VAT compliance threshold to the VAT system in Nigeria achieves one of the strategic objectives of the Finance Act- reforming domestic laws to align with global best practices. Based on the contents of the Finance Act, a taxable person who has not made or does not expect to make taxable supplies (any transaction for sale of goods or the performance of a service, for a consideration in money or money’s worth) of N25 million, singularly or cumulatively, in any calendar year, would be exempt from: rendering VAT returns; penalties associated with registration, collection of VAT, and submission of VAT returns; issuing tax invoice and penalty for non-issuance. The VAT compliance threshold serves as a simplification measure that allows small businesses to avoid VAT administrative burdens until it exceeds the threshold. However, it is not strange that in the exchange of views on the introduction of VAT compliance threshold, following the introduction of the Finance Bill, a difference of opinion emerged; while some have lauded the initiative others have criticized it. One should reasonably expect the ongoing debate over the success of the VAT compliance threshold to continue. However, given that this move is a significant alteration to existing legislation, the authors have sought to highlight critical issues that should be clarified concerning the VAT compliance threshold. Call for clarity – issues arising We expect that the tax authorities would issue regulations detailing the application of the amendments contained in the Finance Act. The Federal Inland Revenue Service (FIRS) should ensure that the implementation of the VAT compliance threshold is clearly spelt out in its guidelines/information circular. Also, there should be clarity on the issues detailed below: 1. Recovery of input VAT: Section 2 of the VAT Act provides that VAT shall be charged and payable on the supply of all goods and services in Nigeria. The mechanism for charging VAT on the supply of goods and services in Nigeria is to include VAT on the invoice issued

to the customer. Given that the VAT compliance threshold confers on small businesses an exemption from issuing VAT invoice and collecting VAT; it is logical to assume that small businesses are exempt from charging and collecting VAT on their taxable supplies. The VAT compliance threshold may therefore, not be entirely beneficial to certain SMEs such as retailers, distributors and wholesalers. Currently, Section 17 (1) of the VAT Act limits allowable input VAT recoverable from output VAT to the input VAT on goods purchased or imported directly for resale and goods which form the stock-intrade used for the direct production of any new product on which output tax is charged. Hence retailers, distributors and wholesalers who incur allowable input VAT must have charged output VAT before they can immediately recover the allowable input VAT. Going by the strict interpretation of the above section, it appears that these categories of SMEs would be unable to recover input VAT incurred on both imported and local purchases as a credit nor apply for a formal refund, as they have been exempted from charging output VAT. As such, small businesses who fall under this category will perpetually have VAT costs, that cannot be recovered. Cash is king, and lack of it kills any business faster than profit. Effectively, the VAT compliance threshold concept put in place to relieve SMEs creates an additional cost for the affected SMEs. Hence, a question that comes to mind is, can there be an option for SMEs to legally charge and collect VAT on their supplies to claim input VAT? Bearing in mind that the items supplied may not in itself be exempt from VAT, but there is an implied exemption by virtue of the turnover of the supplier. This challenge is, however, not uncommon in jurisdictions with a VAT compliance threshold. In a bid to address the cash flow issues posed by the VAT compliance threshold regime, most countries make the applicability of the special taxation scheme optional for businesses. In Hungary, where a taxable www.businessday.ng

person’s turnover did not exceed HUF12 million in the previous year or, in the case of a new business, the predicted revenue will not exceed HUF 12 million, the taxable person may opt for the small business taxation regime. In the small business taxation regime, a taxable person has a VAT exemption status, but must still be registered for VAT. However, the taxable person neither remits VAT on his supplies nor recovers input VAT on its expenses and purchases. Similarly, in Austria, small businesses whose turnover does not exceed EUR30,000 annually are not required to register for VAT and file a return. The supplies of such businesses are exempt from VAT and cannot recover any input VAT incurred. However, a company may voluntarily decide to register for VAT and charge and pay VAT on its supplies. In Greece also, there is a special scheme for small businesses where taxable persons whose turnover exclusive of VAT during the previous fiscal year did not exceed the EUR 10,000 threshold are exempted from the obligation to file VAT returns and from VAT payment, provided that they apply for and are registered as “small enterprises”. The requirement to apply for the special scheme is also optional. The FIRS may take a cue from the practices in these jurisdictions, by making VAT compliance optional for retailers, distributors, wholesalers and other taxable persons who consider the deduction of allowable input VAT key to their business model. 2. The far-reaching implication of VAT compliance threshold: What is the real intention of the VAT compliance threshold? Does the exemption from charging and collection of VAT by small companies translate to the receipt of VAT-free goods and services by medium and large companies? Or should medium and large companies self-account for the VAT due on goods and services supplied/rendered by small companies? Where the former is the case, there is an implied VAT exemption for medium and large companies by virtue of their business relationship with small companies. Thus, the only benefit to be en-

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joyed by small companies will be relief from the administrative burden of monthly filing obligations as the Finance Act does not include a provision in which small companies themselves would be exempt from VAT. However, where the intention of the law is for SMEs to enjoy both VAT relief and administrative filing obligation, then there should be a clarification that would exempt subjecting small companies to VAT. The Oil and Gas companies, for example, are currently required to deduct VAT at source (except for exempt goods and services) whether or not their contractors have duly reflected VAT charges on such contracts and remit the same to the FIRS. However, based on the VAT compliance threshold, Oil and Gas companies would now receive invoices from small companies that do not include VAT not because the goods and services supplied/rendered are not VATable but because the small companies have been relieved of the obligation to act as a collection agent for the FIRS. As such, it is unclear if these Oil and Gas companies would enjoy an implied VAT exemption by their relationship with small companies or they would still be required to self-account for the VAT. 3. Monitoring: Compliance monitoring is essential for the enforcement of laws. The Finance Act requires that the test for meeting the threshold should be done either singularly or cumulatively in any calendar year. Therefore, the tax authorities must devise a mechanism to monitor small businesses to ensure that they charge VAT once they meet the threshold. The key questions will be: a. whether small companies are required to submit documentation periodically to prove this position b. whether the tax authority will conduct systematic checks when these taxable persons, submit their financial statements when filing their tax returns. The FIRS should also be wary of the possibility that given the burden and costs involved in administering VAT, small businesses approaching the threshold may deliberately suppress their turnover to avoid tipping over into VAT filing and charging requirement. The suppression may be legitimate, for example, electing not to take on further work or investing in equipment that might increase their productivity. Conversely, the suppression could be illegitimate, for example, under-declaring income or seeking to split income between two different periods. It is expedient that parameters are set in place by the revenue authority to monitor small businesses to ensure that they charge and collect VAT once the business achieves the threshold. Taking a cue from Australia, taxable persons whose annual turnover for VAT purpose does not exceed the threshold are required to submit a Business Activity Statement each quarter. They may also opt to submit monthly or annually. Separately, questions around @Businessdayng

how third-party customers can confirm that a business is exempt from charging and collecting VAT need to be addressed. In the UK, businesses are required to state their VAT registration number on their invoices while in Barbados and Kenya, Companies are required to display their VAT registration certificate in their premises. Customers can, through this means, determine if vendors are eligible to charge VAT or not. Both practices are already in place in Nigeria. While this approach may enable a walk-in customer to confirm the VAT status of a company, it may be imperfect for online customers. As such, online customers may have to confirm vendor’s eligibility to charge VAT by making use of the FIRS TIN verification system. Alternatively, customers may call the FIRS Helpdesk to confirm the VAT status of a vendor. In Austria, small businesses must refer to the exemption of VAT on their invoices by either stating “Exempt from sales tax on account of the small business exemption regulation.” Or “this amount does not contain VAT”. In Greece, invoices issued by these small enterprises are issued with no VAT and must display prominently: “Without VAT: special scheme for small enterprises.” Conclusion A reasonably high VAT compliance threshold is a convenient solution for protecting SMEs from problems and costs relating to VAT compliance. However, good practice suggests – providing small business with a choice to opt for the exemption or not. They can decide to charge VAT, even if the value of their taxable supplies is below the VAT compliance threshold, to the extent that they can prove that they are capable and willing to comply. The absence of a clear interpretation of the provisions of a legislative requirement would lead to uncertainty and varying interpretations between taxpayers and the revenue authority. It would also result in an increased number of tax disputes for which taxpayers will either seek an advance ruling from the revenue authorities or judicial ruling by the Tax Tribunal or the Federal High Court. Hence, the need for guidelines/ information circular that provides further clarity on the VAT compliance threshold which should be very detailed and provide the desired clarity on the above issues and general operational guidelines for the VAT exemption threshold. Notwithstanding the above, we applaud the Federal Government’s move to align the Nigerian tax law with global practices. However, in implementing the concept of VAT registration threshold, due care must be taken to ensure that it does not create unnecessary ambiguity or challenges for stakeholders. Ndebbio is senior manager, KPMG Advisory Services; while Lawal and Anowai are both seniors in KPMG Advisory Services.

Thursday 23 January 2020

BUSINESS DAY

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 359,006.78 10.10 0.50 617 60,521,226 299,244.94 8.75 2.94 249 16,856,589 UNITED BANK FOR AFRICA PLC ZENITH BANK PLC 690,722.86 22.00 -1.57 465 25,730,021 1,331 103,107,836 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 269,214.70 7.50 -2.00 213 9,405,883 213 9,405,883 1,544 112,513,719 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,609,448.57 128.20 -0.23 59 297,090 59 297,090 59 297,090 BUILDING MATERIALS DANGOTE CEMENT PLC 2,944,599.68 172.80 -0.12 98 3,317,311 LAFARGE AFRICA PLC. 270,610.96 16.80 -3.17 295 9,952,426 393 13,269,737 393 13,269,737 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 346,005.40 588.00 - 13 11,507 13 11,507 13 11,507 2,009 126,092,053 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 9,072.12 3.40 -2.86 6 194,175 6 194,175 6 194,175 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 6 194,175 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 62,958.06 66.00 - 24 249,439 OKOMU OIL PALM PLC. PRESCO PLC 52,250.00 52.25 - 20 300,292 44 549,731 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,680.00 0.56 -1.75 7 295,755 7 295,755 51 845,486 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 2 890 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,867.43 1.03 -3.74 38 2,768,594 30,397.68 10.55 -0.47 120 5,281,838 U A C N PLC. 160 8,051,322 160 8,051,322 BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 26,400.00 20.00 -6.76 26 608,658 ROADS NIG PLC. 165.00 6.60 - 0 0 26 608,658 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 - 5 43,715 5 43,715 31 652,373 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,124.84 0.91 - 10 427,308 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 66,149.56 30.20 - 26 46,477 INTERNATIONAL BREWERIES PLC. 77,362.76 9.00 - 18 153,264 NIGERIAN BREW. PLC. 415,838.91 52.00 - 37 146,554 91 773,603 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 175,800.00 14.65 - 49 311,091 FLOUR MILLS NIG. PLC. 92,873.60 22.65 -3.62 56 518,134 HONEYWELL FLOUR MILL PLC 9,278.33 1.17 8.33 22 416,241 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,741.58 15.00 -4.46 23 409,053 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 150 1,654,519 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,378.49 10.85 - 17 32,290 NESTLE NIGERIA PLC. 1,093,865.63 1,380.00 - 53 94,037 70 126,327 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 6,254.22 5.00 -0.80 37 1,082,435 37 1,082,435 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,227.29 5.85 - 24 363,914 UNILEVER NIGERIA PLC. 103,410.10 18.00 - 44 279,407 68 643,321 416 4,280,205 BANKING ECOBANK TRANSNATIONAL INCORPORATED 141,291.54 7.70 - 48 1,401,009 FIDELITY BANK PLC 63,744.55 2.20 -1.79 128 13,542,253 GUARANTY TRUST BANK PLC. 947,683.97 32.20 0.62 318 26,459,047 JAIZ BANK PLC 20,035.69 0.68 3.03 24 1,683,700 STERLING BANK PLC. 54,701.79 1.90 1.06 33 1,581,084 UNION BANK NIG.PLC. 180,548.67 6.20 2.48 45 312,870 8,065.64 0.69 - 20 112,049 UNITY BANK PLC WEMA BANK PLC. 28,159.36 0.73 - 20 912,861 636 46,004,873 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 6,098.58 0.88 8.64 45 6,338,338 AXAMANSARD INSURANCE PLC 22,365.00 2.13 - 5 10,001 CONSOLIDATED HALLMARK INSURANCE PLC 2,926.80 0.36 - 2 77,600 CORNERSTONE INSURANCE PLC 8,248.52 0.56 -1.75 11 880,746 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,904.09 0.26 -3.70 9 187,690 LAW UNION AND ROCK INS. PLC. 2,835.58 0.66 10.00 9 877,764 LINKAGE ASSURANCE PLC 3,840.00 0.48 - 3 34,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 6 919,330 NEM INSURANCE PLC 10,561.01 2.00 - 2 50,000 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,906.58 0.54 - 2 51,200 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 2 155,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 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 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,085.44 0.38 2.70 32 1,912,731 128 11,494,400 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,743.97 1.20 - 8 522,744 8 522,744

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,410.00 1.05 5.00 7 260,000 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,796.93 1.39 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 7 260,000 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,200.00 4.60 - 39 2,502,612 CUSTODIAN INVESTMENT PLC 34,997.09 5.95 - 4 22,648 DEAP CAPITAL MANAGEMENT & TRUST PLC 540.00 0.36 - 0 0 38,615.29 1.95 1.04 90 9,025,027 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,697.97 0.33 - 0 0 446,461.11 42.50 - 10 16,577 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 16,200.00 2.70 -1.82 135 7,069,845 278 18,636,709 1,057 76,918,726 HEALTHCARE PROVIDERS EKOCORP PLC. 2,592.72 5.20 - 1 5 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 746.16 0.21 - 3 300,000 4 300,005 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 5,424.54 2.60 1.96 3 115,500 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 7,175.26 6.00 - 21 148,939 3,743.76 2.17 - 22 416,590 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 968.57 0.51 - 5 63,043 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 51 744,072 55 1,044,077 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 -4.17 4 340,566 4 340,566 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,206.13 0.41 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 394.20 3.65 - 12 509,850 287.07 0.58 - 2 8,179 TRIPPLE GEE AND COMPANY PLC. 14 518,029 PROCESSING SYSTEMS CHAMS PLC 1,455.78 0.31 -3.12 15 2,694,750 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 15 2,694,750 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 3 17 3 17 36 3,553,362 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 6 8,240 BUA CEMENT PLC 1,252,981.10 37.00 1.51 57 614,422 17,500.00 25.00 - 19 34,462 CAP PLC MEYER PLC. 244.37 0.46 - 1 1,000 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 1 50 84 658,174 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 -2.87 86 85,000,000 CUTIX PLC. 2,518.69 1.43 5.15 70 1,871,293 156 86,871,293 PACKAGING/CONTAINERS BETA GLASS PLC. 31,948.21 63.90 - 7 7,065 GREIF NIGERIA PLC 388.02 9.10 - 0 0 7 7,065 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 1,000 1 1,000 248 87,537,532 CHEMICALS B.O.C. GASES PLC. 2,060.41 4.95 - 4 400,500 4 400,500 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 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. 77.00 0.35 - 0 0 0 0 4 400,500 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 3 357,192 3 357,192 INTEGRATED OIL AND GAS SERVICES OANDO PLC 45,996.23 3.70 2.78 62 1,107,485 62 1,107,485 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 24 71,898 CONOIL PLC 13,879.04 20.00 - 20 18,158 ETERNA PLC. 4,108.06 3.15 -3.08 36 985,020 FORTE OIL PLC. 26,831.11 20.60 - 51 178,539 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 10 22,115 TOTAL NIGERIA PLC. 39,724.05 117.00 - 17 48,585 158 1,324,315 223 2,788,992 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 1 644 1 644 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 3 50,080 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 - 0 0 3 50,080 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 1 20 IKEJA HOTEL PLC 2,328.25 1.12 - 1 12,000 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 33,821.80 4.45 - 0 0 2 12,020 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,320.00 0.36 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 1 88,090 LEARN AFRICA PLC 933.45 1.21 - 4 38,010 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 539.26 1.25 - 5 80,480 10 206,580 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 745.97 0.45 - 0 0 0 0 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Thursday 23 January 2020

BUSINESS DAY

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industry Insight

BUSINESS DAY Thursday 23 January 2020 www.businessday.ng

How Nigeria can benefit from bilateral, multilateral trade deals ODINAKA ANUDU

igeria has entered into bilateral and multilateral trade deals with many countries, but questions have arisen as to the level of benefits derived from a number of such deals. In some cases, benefits from such deals elude Nigeria because of lack of capacity to compete. In others, the country’s business community lacks the necessary knowledge and finesse needed to gain from them. Even in cases where there are benefits, much of the activity is in oil and minerals, which does not support the country’s vision of revenue diversification. According to European Union data, the volumes of trade between Nigeria and the European Union (EU) were almost €20 billion in 2016, €26 billion in 2017 and €34.4 billion in 2018. This may look expansive and big for a newcomer, but over 70 percent of Nigeria’s export constituted oil while the EU’s were mostly finished products such as machinery, finished shoes, and vehicles, among others. The non-oil export products, which should benefit from such a trade deal, are suffering rejections at the EU borders. The EU rejected 24 exported food products from Nigeria in 2016, according to the National Agency for Food And Drug Administration and Control (NAFDAC). Up till today, groundnuts, beans and several agricultural products are on the EU prohibition list and there is little hope that the bans will be lifted. Many Nigerians often see the bans as an EU conspiracy. While this may be partly true in the light of the role played by Nigeria against the EU-proposed Economic Partnership Agreement (EPA) with West Africa, the truth remains that many exporters from Nigeria fail to follow rules and standards, according to experts. “The exported palm oil did not scale through the EU’s test because it also contained a colouring agent that was carcinogenic,” Abubakar Jimoh, NAFDAC spokesperson, said in 2016. “Beans was banned by EU some time ago but it was illegally exported to European countries. “Beans was initially banned for one year, when EU was not satisfied with our exported beans in terms of quality assurance, it extended the ban by another two years, which expires next year,” he further said. Apart from the EU, Africa’s largest economy and most populous country is benefitting little from the United States- supported African Growth and Opportunity Act (AGOA). In 2000, the US opened its market for sub-Saharan African (SSA) countries through the

AGOA. The idea was that countries like Nigeria would export up to 7,000 products to the U.S. without paying any duty or tariff. The arrangement was supposed to end in 2015 but it was extended to 2025 to enable SSA countries, which did not take full advantage of the first tranche, to do so. Some of the products/commodities eligible for export to the U.S. market are poultry, bees, meat of goats, fresh, chilled or frozen, turkeys, live ornamental fish, other than freshwater, mackerel and sardines. Others are fresh or chilled swordfish other than fillets, milk and cream, yoghurt in dry form, butter, cocoa powder (sweetened or not), guava, apples, ginger, juice and pine apple, among many others. Unfortunately, despite this opportunity, Nigeria is yet to take advantage of the market opening to ship its local products to the U.S. market. Only petroleum products have benefitted from this trade treaty. The US goods and services trade with Nigeria amounted to an estimated $12.1 billion in 2017. Its exports to Nigeria were $4.6 billion, while Nigeria’s exports to the U.S. were $7.5 billion, according to the Office of the United States Representative. In other words, the U.S. goods and services trade deficit with Nigeria was $2.9 billion in 2017. This may look good on the face value until one understands that oil and minerals were basically what Nigeria offered the U.S. In 2014, Nigeria non-oil exports to the U.S. were $2.6 million while South Africa exported in excess of $1.2 billion. Brent Omdahl, former commercial counsellor, US Consulate, Lagos, told BusinessDay in an exclusive interview in 2019 that participating countries, including

Nigeria, needed to understand the concept of AGOA. He said being a participating country and enjoying tax free did not mean not following due processes. Omdahl said products exported to the U.S. would still undergo and pass through necessary regulatory tests, among which are phytosanitary regulations. “There are some minimum standards that countries have to adhere,” he said. “Zero duty access does not mean you have to just start exporting. You have to organise yourself. “In exporting agricultural products, for example, such products would have to be subjected to all of the Food and Drug Administration (FDA) regulations and comply with sanitary and phytosanitary regulations,” he explained. Omdahl pointed out that the U.S. government, through the US Agency for International Development, had some small resources available to help companies locally to develop their expertise in order to take the advantage of AGOA. Omdahl said it was unfortunate that crude oil that had been the biggest beneficiary from the AGOA initiative most, which was against the original intent of the Act. He said the intention of AGOA was to create the pathway for a country like Nigeria to move up the value chain. “It is the Nigerian industry that needs to organise itself,” he noted. Recounting lessons US-Vietnamese bilateral agreement, which is similar to AGOA, Omdahl said Vietnam did a very good job by adding value to their products in order to meet up with the U.S. standards. In doing this, Vietnam at-

tracted investments from Taiwan in the textile sector in order to develop their textile industry as well so as to take advantage of exporting it to the U.S., he explained. The country equally developed its furniture sector and even started importing some hard woods from the US to augment existing local woods, turning them into furniture and sending them to the US to sell in big outlets, he added. “With this arrangement, Vietnam created wealth and employment,” he said. Omdahl said Nigeria had a lot of products that could make it to the U.S. markets if properly harnessed and improved upon. “Nigeria needs to look inwards to find those products, develop them, increase their value addition, export them, and through that, create wealth and employment for the country.” “So, the question for Nigeria is, what are the products that are going to do that? I can think of some. Talk about the shoes. There is a history of making shoes here. The sky is really the limit,” he concluded. Apart from AGOA, the Common External Tariff (CET) agreed upon with West African countries is not working. Due to poor negotiations, pharmaceutical firms in Nigeria initially suffered losses as their raw and packaging materials were levied five to 20 percent tariffs while finished products from West Africa entered Nigeria without duty payment. The textile industry in Nigeria also felt the pains with smuggling hurting the industry between 2016 and 2017. “There were many countries that resorted to self-help,” Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria (MAN), said in an interview with BusinessDay. “We did not negotiate the

process properly, so we were left with incapacity to impose the kind of tariff needed to support our industrial aspiration,” he further said. Apart from the CET, many trade agreements with China are lopsided. While Nigeria sells raw materials and foods to the country, the Asian superpower exports finished products to Nigeria. This is not peculiar to China but extends to the EU, the US and other blocs. Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), believes that the major challenge is lack of competitiveness of manufacturers and exporters due to lack of infrastructure such as power, rail and good roads to aid their production. Africa’s largest economy also lacks cheap capital like China to support its entrepreneurs. South Africa’s Reserve Bank cut repo rate by 25 basis points to 6.25 percent last Thursday. Nigeria’s Monetary Policy Rate (MPR) has sat at 13.5 percent since March 2019. In November 2019, Kenya’s central bank cut its benchmark interest rate for the first time in 16 months to 8.5 percent from 9 percent. In February 2018, Zambia’s central bank cut its benchmark lending rate to 9.75 percent from 10.25 percent. Ethiopia benchmark interest rate is currently 8 percent. At least the benchmark interest rate of most sub-Saharan African (SSA) countries have remained single digit, barring few, meaning that it is cheaper for businesses to access funds in those countries than in Nigeria. Experts call for cheap capital to fund the real sector of the Nigerian economy. Border closure has fuelled inflation to 11.98 percent in December, making rate cuts nearly impossible. Many exporters now move their goods to other countries by sea owing to the closure of Nigerian-Benin border. Analysts call for opening of the border to support the growth of all sectors of the economy—not just agriculture and manufacturing. But they urge proper policing of the border when open, including heavy sanctions on corrupt immigration and Customs officials found to have breached rules. “There is a need for new exporters to go through orientation before starting,” an exporter, Emeka Udeh, advised. He also called for understanding of global and country specificrules of destination countries before embarking on exports. “In a place like Saudi, you cannot bring in kola nuts. In some areas, you cannot import products sold by some small businesses. This is why training and information are important,” he said.

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