BusinessDay 23 Mar 2020

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news you can trust I ** monDAY 23 march 2020 I vol. 19, no 525

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Crisis looms as FG bans cargo flights amid shortage of masks, ventilators T N

FG, states are biggest winners in Nigeria’s new FX reforms

ODINAKA ANUDU & IFEOMA OKEKE

here may be crisis waiting to happen if the Federal Government does not relax its ban on cargo flights to Murtala Mu-

L-R: Suleiman Elias Bogoro, executive secretary, Tertiary Education Trust Fund (TETFUND); Zainab Ahmed, minister of finance, budget and national planning; Kamal Adamu Shuaibu, Sarkin Gabas Abaji, representing Ona of Abaji; Ogho Okiti, MD, BusinessDay Media Limited; Suleiman Adamu, minister of water resources; Femi Adesina, special adviser on media and publicity to President Muhammadu Buhari, and Babatunde Irukera, director-general/CEO, Federal Competition and Consumer Protection Commission, during the 2019 BusinessDay Award of Excellence in Public Service, in Abuja.

Pic by Tunde Adeniyi

hammed International Airport (MMIA), Lagos, and Nnamdi Azikiwe International Airport, Abuja.

The ban is coming into force at a point when Africa’s most populous country is facing short-

ages of face masks, surgical masks and ventilators amid increasing number of Nigerians with the deadly coronavirus.

Surgical masks, face masks and ventilators are imported from China, Cambodia and

other parts of the world, and there is yet no local manufacturer of these critical life-saving medical items.

Prices of these items, includContinues on page 42

... Governors want new rate for FAAC allocations ... CBN to take hit on naira forwards

LOLADE AKINMURELE, MICHEAL ANI & SEGUN ADAMS

igeria’s move to allow its official N306 exchange rate for the naira weaken to a more market-reflective rate is a big boost for cash-strapped Federal Government, states and local governments who could all do with more cash at a time of unstable revenues.

Analysts also say the transition to a simpler and flexible rate is the first step in unpicking the trade-destroying policies that have held back economic growth in Africa’s most populous nation in recent years.

BusinessDay exclusively reContinues on page 42

Inside

Churches record low turnout, Nigerians stock up as Covid-19 cases hit 30 P. 2

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news Churches record low turnout, Nigerians stock up as Covid-19 cases hit 30 ... BRT reduces passengers to 50 per trip OLUSOLA BELLO, JOSHUA BASSEY (Lagos), IGNATIUS CHUKWU (Port Harcourt), REMI FEYISIPO (Ibadan), TONY AILEMEN, INNOCENT ODOH, SOLOMON AYADO & JAMES KWEN (Abuja)

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he Nigeria Centre for Disease Control (NCDC) on Sunday announced that there are now 30 confirmed cases of coronavirus (COVID-19) in the country.

With the rising cases of coronavirus in the country, many state governments, including Lagos, had as at Friday issued directives limiting social gatherings to about 50 persons.

In response, most Catholic

churches in Lagos were shut on Sunday as no Masses were held. BusinessDay gathered that this was in response to a circular from the Archdiocesan secretariat that Masses be suspended for four weeks.

Many others churches where services were held, the congregational gatherings were reduced to reflect the directive of the state government.

In Ojo area of the state where BusinessDay monitored, branches of different churches including the Redeemed Christian Church of God (RCCG), The Apostolic Church Nigeria (TACN), Petal of Love Envangelical Ministries (POLEM), Assemblies

of God, Celestial Church of Christ, among others, recorded low attendance while others had their services split to accommodate less worshipers at a time.

It was also observed that worship sessions in various churches visited were brief as members were seen going home as early 10:30 after commencing services from 9:00am.

Most churches around Alapere, a suburb of Lagos, obeyed the government directive.

Streets that were usually blocked because of worshippers that park their cars on both sides of the roads were all empty as very few people

came for worship service.

The stretch between Ojota Bridge and Ketu that always experienced logjam on Sundays, especially for those going towards Ketu-Mile 12 from Ojota, was very free.

At the Redeemed Christian Church of God, Breakthroughs Chapel, Alapere, there were different services of 20 people in each group.

Meanwhile, Primero Transport Services Limited, operator of the Lagos Bus Rapid Transit (BRT) scheme, says it is reducing the number of passengers on board its buses to 50, a measure aimed at containing the Covid-19

Continues on page 42

Investors’ confidence in Nigeria’s short-term assets shaky … as Eurobond yield curve inverts MICHAEL ANI

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nvestors are seeing Nigerian assets as too risky to invest in the short to medium term as they fear the country lacks what it takes to weather the storm of current economic challenges.

Investors demanded as much as 17.05 percent on Federal Government’s Eurobond with a year maturity period (28-Jan-21), according to FMDQ data. That’s 26.6 percent higher than the 13.40 percent investors demanded on the security with a 10-year maturity period (23-Feb-30), forcing the yield curve in the Eurobond market to invert.

“By having an inverted yield curve, it means the longer economic outlook of Nigeria is better than the short-term economic outlook,” said Johnson Chukwu, managing director and CEO, Cowry Asset Management.

“What this means is that with the heightened economic crisis, people expect that the economic environment would be very volatile in the next one year and, therefore, they are ready to invest in the longer-term instrument so they can lock in on a relatively good yield

for the long term than taking a short-term horizon,” Chukwu told BusinessDay. In a normal yield curve, yields on short-term bills are lower than the longterm bonds. A yield curve becomes inverted when the yields on bonds with a shorter duration are higher than the yields on bonds that have a longer duration.

Analysts say Africa’s largest economy is experiencing an inverted yield curve in the wake of falling oil prices and a depletion of its reserves.

“It’s an abnormal situation that often signals an impending recession,” a renowned economist told BusinessDay. Foreign portfolio investors who have largely been major holders of Nigerian assets are selling off their portfolios and leaving in droves. They fear that the Nigerian economy might not have the ammunition in its arsenal to weather the storm of falling oil prices occasioned by low oil demand due to the coronavirus pandemic as well as failure of Saudi Arabia and Russia, world’s biggest exporters of oil, to reach an agreement on a supply cut and bury the hatchet of an oil price war.

Drug shortages loom as coronavirus stalls input supply, finished products ODINAKA ANUDU & ANTHONIA OBOKOH

Babatunde Fashola (m), minister of works and housing, flanked by Oluyemi Oguntominiyi (3rd l), director, Highways, Construction and Rehabilitation; Godwin Eke (2nd l), director, Highways, South South Zone; Johnson Fadire (r), federal controller of works in Rivers State; Tarilade Enwereama (l), assistant chief engineer, Rivers State Field Headquarters, and others while speaking with journalists shortly after the inspection of the reconstruction of Enugu- Port Harcourt Expressway, Section lV: Aba-Port Harcourt in Rivers and Abia states by the minister.

SGF, finance minister, others bag BusinessDay Excellence in Public Service Awards ... as leaders charged on commitment to developmental programmes HARRISON EDEH, SOLOMON AYADO, CYNTHIA EGBOBOH, GIFT ONYEDINEFU & GIFT WADA, Abuja

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op public servants, including Boss Mustapha, secretary to the government of the federation (SGF), Zainab Ahmed, minister of finance, budget and national planning, and Suleiman Adamu, minister of water resources, were on Thursday recognised and awarded at the third edition of the BusinessDay Excellence in Public Service Award.

The annual BusinessDay Excellence in Public Service Award is used to recognise top public servants who have made their marks in public service. Open to federal ministers, heads of departments and agencies, the award aims to celebrate functionaries

occupying strategic positions in the federal administration who, in the performance of their responsibilities, embody the best values of responsible policy formulation and operational delivery excellence.

Also awarded at the grand event which held in Abuja, Nigeria’s federal capital, were Elias Bogoro, executive secretary, Tertiary Education Trust Fund (TETFund), Mele Kyari, group managing director, NNPC, Aisha Dahir-Umar, director general, National Pension Commission (PenCom), Babatunde Irukera, director-general, Federal Competition and Consumer Protection Commission (FCCPC), among others.

Frank Aigbogun, publisher/editor-in-chief, BusinessDay Newspapers, in his welcome remarks urged www.businessday.ng

Nigerian leaders to adopt innovative strategies to properly manage the nation’s resources and enhance rapid development in the country.

Aigbogun, who was represented by Ogho Okiti, managing director, BusinessDay Media, noted that the country was faced with challenges that required stringent resource management skills to tackle. He described public service as a thankless job that requires commitment and dedication, saying rapid national growth can only be achieved when leaders imbibe hard work.

Aigbogun explained that the public service award was informed by the contributions of awardees to nationbuilding and stability of the country.

“Public service is a thank-

less job. I mean the ministers, the governors, special advisers, heads of government agencies, what you do every day is what I call thankless job,” Aigbogun said.

He said all public servants do thankless job because 100 percent of what they do is all that is required.

“When you work perfectly for 99 percent and the public does not appreciate you, whether it is an error or a mistake, it does not mean you have not done well,” he said.

“So today, we want to recognise the contributions you have been making in public service and for the growth of the country. And this is what it means to be a public servant. You have been carefully selected because of your immense contributions to the development of Nigeria.”

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igeria may experience drug shortages in the coming months if the coronavirus continues its spread into the third quarter of the year, drug makers and experts predict.

More than 70 percent of resins and excipients used by Nigerian pharmaceuticals come from coronavirus-hit Asian countries, particularly China and India, who are now controlling shipments of the raw materials to other countries as a means of self-preservation and due to low economic activities. These countries also account for the majority of imported drugs used in Africa’s most populous country.

Some drug makers are already rationing supplies to pharmacy stores while middlemen are being cautious of selling certain quantity of drugs for fear of the unknown, BusinessDay gathered.

“I think there will be drug shortages in Nigeria @Businessdayng

if coronavirus continues,” Okey Akpa, chief executive of SKG Pharma, a major drug maker, told BusinessDay in a text message.

Akpa said this was why the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria had been advocating support for local drug manufacturers to achieve medicine security for the country.

Nigeria has reported 12 confirmed coronavirus cases, but demand for facemasks and hand sanitisers is currently outstripping supply. There is already panic buying of these items as uncertainty hovers over the cure of the virus. Nigeria’s pharmaceutical industry has capacity utilisation of 47 percent, according to MAN, and is marred by recent shutdown/takeover of Swiss Pharma and Evans Medicals.

“With 120 days turnaround time from order to supply, we may be reaching the bottom in terms of product availability,” said Chidi Okoro, founder, Drugs and Medicaments.

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Abule-Ado gas explosion: Dangote donates N100m cement to victims for reconstruction … as management commiserates with Governor Sanwo-Olu

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angote Cement plc Sunday donated N100 million worth of cement to the Lagos State government, to support the ongoing reconstruction process at the Abule-Ado area of Amuwo-Odofin Local Government of the state, which was affected by a pipeline explosion last weekend.

The donation was made by the chairman of Dangote Cement Plc, Aliko Dangote, represented by the independent non-executive director of Dangote Cement, Emmanuel Ikazoboh, when the executive management of the company paid a visit to Governor Babajide Sanwo-Olu at the Lagos House, Marina.

The team comprised the immediate past group managing director (GMD) of Dangote Cement, Joseph Makoju; the new GMD of Dangote Cement, Michel Puchercos; Emmanuel Ikazoboh, and the chief corporate communications officer, Dangote Industries Limited, Anthony Chiejina.

Ikazoboh, who on behalf of Dangote, commiserated with Governor Sanwo-Olu over the unfortunate incident, said the Dangote Cement company “would be supporting the reconstruction of the Abule-Ado area with N100 million worth of cement”.

He also formally informed the governor of the change of baton at the helm of the cement manufacturing giant, where Puchercos recently took over from Makoju on the retirement of the latter.

He added that the company, and indeed the whole Dangote Group, would continue to support and collaborate with the Lagos State government in its economic development efforts.

Governor Sanwo-Olu, in his remarks, acknowledged the change in management at Dangote Cement Plc, and expressed appreciation at the company’s gesture, which he described as timely.

According to him, “We take seriously your level of support because there is a lot of reconstruction going on at Abule-Ado so that normalcy can be restored. We welcome all the support we have gotten.

“I appreciate the Chairman who has said that the Group will continue to support us. On behalf of the Lagos State Government, we thank you for coming to commiserate with us, and for your gesture of support.

We also thank all Lagosians and Nigerians who have been coming to support us”, the governor added.

In an incident which resulted in several casualties, some parts of Abule Ado along Badagry/Mile 2 Expressway, Lagos were affected by the pipeline explosion, which occurred at about 8am on Sunday morning. The blast forced several residents and Christian worshipers who had gone to church in the area to scamper for safety.

Covid-19: Lagos to recall retired medical personnel, as Eko Hotel shut Joshua Bassey & Anthonia obokoh

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agos State government says it is considering recalling retired medical personnel to strengthen the management of the deadly Covid-19 in the event that the disease blows out of proportion.

Also, the management of Eko Hotel and Suites, Victoria Island, Lagos, has shut the facility, saying the decision to shut the hotel was a difficult one, but had to be taken in the interest of the public.

Also, public servants across the state on grade level 1 to 12 will from March 23, work from

www.businessday.ng

… as NCDC confirms 3 new cases in Lagos home for the next two weeks.

Governor Babajide SanwoOlu, at a news briefing, Sunday, to give an update on the spread of the virus, said additional isolation centres would be created just as he confirmed that the state now have 19 cases of Covid-19.

According to Sanwo-Olu, the additional isolation centres will serve two purposes.

It will increase the capacity of the state to manage the situation should more people get infected and, as well as bring the centres closer to the people so they don’t have to travel long distances to the only existing

centre in Yaba.

Meanwhile, the Nigeria Centre for Disease Control (NCDC) Sunday confirmed three new cases in Lagos as at 05:28pm, taking the tally to a total of 30 cases in Nigeria.

Two cases are returning travellers and one is a contact of confirmed case.

Also, the state government has shut 32 pharmacies and patent medicine stores for offences bordering on illegal operation and operating beyond scope of practice.

Commissioner for health, Akin Abayomi, said the fa-

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cilities had to be shut after reviewing the report of the first enforcement exercise carried out by the Pharmaceutical Inspectorate Unit of the Ministry of Health for year 2020.

The affected premises include those located in Dopemu, Mangoro, Cement, Oniwaya, Ayobo-Ipaja, OrileAgege, Akinogun, Mosan and Ikola axis of Agege and Alimosho local government areas of the state.

Abayomi noted that the sealing of the affected pharmacies and patent medicine stores was in accordance with the provisions of Section C34 of the counterfeit,

@Businessdayng

fake drugs and unwholesome processed foods miscellaneous provision Act of 1999.

Abayomi further explained that the affected pharmacies and patent medicine shops were sealed for offences including operations without licence, engaging unqualified persons to man and dispense drugs to unsuspecting citizens, operating beyond scope through sale of ethical products, displaying and storing drugs in environments not conducive, which compromised the potency of the drugs there by rendering them ineffective.

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In Association With

Closed by covid-19

Paying to stop the pandemic The struggle to save lives and the economy is likely to present agonising choices

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LANET EARTH is shutting down. In the struggle to get a grip on covid-19, one country after another is demanding that its citizens shun society. As that sends economies reeling, desperate governments are trying to tide over companies and consumers by handing out trillions of dollars in aid and loan guarantees. Nobody can be sure how well these rescues will work.

But there is worse. Troubling new findings suggest that stopping the pandemic might require repeated shutdowns. And yet it is also now clear that such a strategy would condemn the world economy to grave—perhaps intolerable—harm. Some very hard choices lie ahead.

Barely 12 weeks after the first reports of people mysteriously falling ill in Wuhan, in central China, the world is beginning to grasp the pandemic’s true human and economic toll. As of March 18th SARS-CoV-2, the virus behind covid-19, had registered 134,000 infections outside China in 155 countries and territories.

In just seven days that is an increase of almost 90,000 cases and 43 countries and territories. The real number of cases is thought to be at least an order of magnitude greater.

Spooked, governments are rushing to impose controls that would have been unimaginable only a few weeks ago. Scores of countries, including many in Africa and Latin America, have barred travellers from places where the virus is rife. Times Square is deserted, the City of London is dark and in France, Italy and Spain cafés, bars and restaurants have bolted their doors. Everywhere empty stadiums echo to absent crowds.

It has become clear that the economy is taking a much worse battering than analysts had expected (see Briefing). Data for January and February show that industrial output in China, which had been forecast to fall by 3% compared with a year earlier, was down by 13.5%. Retail sales were not 4% lower, but 20.5%. Fixed-

asset investment, which measures the spending on such things as machinery and infrastructure, declined by 24%, six times more than predicted. That has sent economic forecasters the world over scurrying to revise down their predictions. Faced with the most brutal recession in living memory, governments are setting out rescue packages on a scale that exceeds even the financial crisis of 2007-09 (see leader).

This is the backdrop for fundamental choices about how to manage the disease. Using an epidemiological model, a group from Imperial College in London this week set out a framework to help policymakers think about what lies ahead. It is bleak.

One approach is mitigation, “flattening the curve” to make the pandemic less intense by, say, isolating cases and quarantining infected households. The other is to suppress it with a broader range of measures, including shutting in everybody, other than those who cannot work from home, and closing schools and universities.

Mitigation curbs the pandemic, suppression aims to stop it in its tracks.

The modellers found that, were the virus left to spread, it would cause around 2.2m deaths in America and 500,000 in Britain by the end of summer. In advanced economies, they concluded, three months of curve-flattening, including two-week quarantines of infected households, would at best prevent only about half of these. Moreover, peak demand

for intensive care would still be eight times the surge capacity of Britain’s National Health Service, leading to many more deaths that the model did not attempt to compute. If that pattern holds in other parts of Europe, even its best-resourced health systems, including Germany’s, would be overwhelmed.

No wonder governments are opting for the more stringent controls needed to suppress the pandemic. Suppression has the advantage that it has worked in China. On March 18th Italy added 4,207 new cases whereas Wuhan counted none at all. China has recorded a total of just over 80,000 cases in a population of 1.4bn people. For comparison, the Imperial group estimated that the virus left to itself would infect more than 80% of the population in Britain and America.

But that is why suppression has a sting in its tail. By keeping infection rates relatively low, it leaves many people susceptible to the virus. And since covid-19 is now so widespread, within countries and around the world, the Imperial model suggests that epidemics would return within a few weeks of the restrictions being lifted. To avoid this, countries must suppress the disease each time it resurfaces, spending at least half their time in lockdown.

This on-off cycle must be repeated until either the disease has worked through the population or there is a vaccine which could be months away, if one works at all.

This is just a model, and models

are just educated guesses based on the best evidence. Hence the importance of watching China to see if life there can return to normal without the disease breaking out again. The hope is that teams of epidemiologists can test on a massive scale so as to catch new cases early, trace their contacts and quarantine them without turning society upside down. Perhaps they will be helped by new drugs, such as a Japanese antiviral compound which China this week said was promising.

But this is just a hope, and hope is not a policy. The bitter truth is that mitigation costs too many lives and suppression may be economically unsustainable.

After a few iterations governments might not have the capacity to carry businesses and consumers. Ordinary people might not tolerate the upheaval. The cost of repeated isolation, measured by mental well-being and the long-term health of the rest of the population, might not justify it.

In the real world there are trade-offs between the two strategies, though governments can make both more efficient. South Korea, China and Italy have shown that this starts with mass-testing.

The more clearly you can identify who has the disease, the less you must depend upon indiscriminate restrictions. Tests for antibodies to the virus, picking up who has been infected and recovered, are needed to supplement today’s which are only valid just before and during the illness (see article).

That will let immune people go about their business in the knowledge that they cannot be a source of further infections.

A second line of attack is to use technology to administer quarantines and social distancing. China is using apps to certify who is clear of the disease and who is not. Both it and South Korea are using big data and social media to trace infections, alert people to hotspots and round up contacts. South Korea changed the law to allow the state to gain access to medical records and share them without a warrant. In normal times many democracies might find that too intrusive. Times are not normal.

A Balkan betrayal Double trouble

Africans with disabilities are at higher risk of HIV And they are less likely to receive treatment

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OMASOMI LIMAKO, who lives in South Africa, was often told that she could not get HIV because she is wheelchair-bound. She had never met a disabled person with the disease, as far as she knew, so she believed the rumour. Then came her own diagnosis. Today the 48-year-old pharmacy assistant knows that her disability actually made her more vulnerable to the disease. Even as covid-19 creates a new public-health crisis, Africa is continuing to grapple with an old one. Studies show that Africans with disabilities are at least twice as likely to get HIV as those without.

One reason is that disability compounds HIV’s other risk factors.

Disabled children are often excluded

from school, so many receive no sex education. Even for those in school, a widespread assumption that disabled people do not have sex means that teachers think they do not need to learn about it. In Ethiopia more than three-quarters of 10- to 24-yearolds with disabilities had never discussed sex with their parents.

Social status matters, too. Even in places where disabled people know more about condoms than everyone else, such as Uganda, they still have higher rates of sexually transmitted diseases. Researchers think this is because the disabled have a tougher time negotiating with their partners about having safe sex.

“When you are disabled and you have HIV, you get double discrimination,” says Miiro Michael, a social worker in southern Uganda. “When you are a woman, you get triple discrimination.” This is because women in much of sub-Saharan Africa, disabled or not, are at higher risk of Continues on page 13

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In Association With

The world economy

How to prevent a covid-19 slump, and protect the recovery

Governments need to be able to dial financial support up and down for people and firms

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N JUST TWO months the world economy has been turned upside down. Stockmarkets have collapsed by a third and in many countries factories, airports, offices, schools and shops have been closed to try to contain the virus. Workers are worried about their jobs and investors fear companies will default on their debts. All this points to one of the sharpest economic contractions in modern times. China’s GDP probably shrank by 10-20% in January and February compared with a year earlier. For as long as the virus rages, similar drops are likely in America and Europe, which could trigger a further downward lurch in Asia. Massive government intervention is required to ensure that this shock does not spiral into a depression. But scale alone is not good enough—new financial tools need to be deployed, and fast.

Western authorities have already promised huge sums. A crude estimate for America, Germany, Britain, France and Italy, including spending pledges, tax cuts, central-bank cash injections and loan guarantees, amounts to $7.4trn, or 23% of their GDP (see Briefing). Yet central banks are responsible for over fourfifths of that and many governments are doing too little. A huge array of policies is on offer, from holidays on mortgage-payments to bail-outs of Paris cafés. Meanwhile, orthodox stimulus tools may not work well.

Interest rates in the rich world are near zero, depriving central banks

of their main lever. Governments typically try to stimulate demand in a downturn but people trapped at home cannot spend freely. History is not much of a guide. The global pandemic of 1918 took place when the economy was wrecked by war.

China has endured a lockdown but its social model is different from the West’s.

What to do? An economic plan needs to target two groups: households and companies. And it needs to be fast, efficient and flexible so that if the virus retreats only to resurge, workers and firms can be confident that governments will dial assistance down and up again as needed. Start with households, where large government spending is needed. One aim is to protect vulnerable people, by subsidising sick pay and ensuring those without insurance have health care. But spending is also

needed to discourage lay-offs at firms running far below capacity, by subsidising workers’ wages—an area where Germany has led the way.

Governments also need to jerry-rig digital systems so they are able to distribute cash to households directly, as Hong Kong hopes to. The aim should be to have the capability to ramp further support up and down quickly.

Many places, including America, rely on sluggish postal services and tax agencies to distribute cash. If funds can be sent instantly through mobile phones or online bank accounts, people will feel more confident and avoid hoarding cash and slowing the recovery when the virus recedes.

All this spending will cost governments dear, but the fiscal stimulus of about 1% of GDP so far across Europe is clearly too low. America’s plan to spend 5% is closer to the mark given the risk of a double-digit

GDP drop. As fiscal deficits balloon, governments will have to issue piles of bonds. Central banks should step in to buy those bonds in order to keep yields low and markets orderly.

Inflation is a second-order concern and there is little danger of it taking off. To prevent a euro-zone crisis, the European Central Bank plans to buy €750bn of assets. But it and European governments should also give a clear guarantee of sovereign support for Italy and other peripheral economies.

The second priority is to get cash to millions of companies, whose failure would damage the economy’s potential. They face a cash drought even as bills fall due. Bond markets are closed to many of them. Mass defaults would fuel unemployment and bad debts at banks, and make it harder for commercial activity to rebound. Most governments have intervened, but in flawed ways. France says nationalisation is an option—which firms will resist. America is propping up the commercial-paper market, but this funds only a fraction of all corporate debt and is used by big firms—not small ones, which employ most people. Germany and Britain have offered loan-guarantee schemes but it is unclear who will process millions of loan applications. The best approach is to use the banking system—almost all firms have accounts, and banks know how to issue loans. Governments should offer banks cheap funding to lend to their clients while guaranteeing that it will bear most of the losses. Borrowers could be offered bonuses for repaying loans early.

Coping with covid-19

How prayer is changing as a result of covid-19 Mosques are closed, sermons are shortened and communion causes anxiety

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OR CENTURIES the adhan, the Muslim call to prayer, has been a changeless feature of life in the Arab world. In war or peace, prosperity or famine, the same rhythmic chant echoes across cities and towns five times each day. Midway through comes an exhortation to worship. But on March 13th a muezzin in Kuwait, his voice plainly cracking with emotion, made a small tweak. Instead of “hayya alas-salah” (come to prayer), he told the faithful “as-salatu fi buyutikum” (pray in your homes). Words that seemed immutable were no longer such.

Covid-19 has already disrupted economic and social life. Across the Middle East it is also changing ancient patterns of worship. There is scriptural precedent for stopping Friday prayers: for example, an uncle of the Prophet Muhammad is said to have urged followers to stay at home during foul weather. But Kuwaitis say this is the first time in their modern history that prayers were cancelled.

Other countries are following suit.

Egypt, the most populous Arab country, first capped Friday sermons at 15 minutes. Then al-Azhar, the Sunni world’s most prestigious scholarly

centre, decreed that they could be halted altogether to stop the virus from spreading. The United Arab Emirates stopped them on March 18th. Jerusalem’s al-Aqsa mosque has been closed indefinitely, though worshippers still gather on the large esplanade outside.

The scene is even more striking in Mecca, the spiritual centre of the Muslim world. In normal times the city’s grand mosque is a teeming mass of humanity, filled day and night with thousands of pilgrims circumambulating the Kaaba, the imposing granite cube that is Islam’s holiest site. On March 4th, though, the authorities in

Saudi Arabia suspended the umrah, a pilgrimage that occurs year-round.

Astounded Saudis swapped photos of the mosque’s white-marble plaza, glittering in the sun—and deserted, save for a few workers spraying disinfectant.

Younger Saudis could not recall ever seeing it so empty; older ones drew a parallel with 1979, when the mosque was seized by extremists and besieged for two weeks. The government has not made any decision about the annual haj pilgrimage, which should begin in late July.

Cancelling it would be a blow both spiritual and financial: it attracts millions of people and contributes more

than $10bn to the Saudi economy.

Pilgrimages are the kingdom’s largest source of revenue after oil.

Coptic churches in Egypt have suspended most activities. Instead of holding one large mass they plan to conduct several, to limit crowds. The Maronite church in Lebanon ordered priests to hand communion wafers to worshippers, instead of placing them on their tongues. Holy water has been replaced with hand sanitiser. In Jerusalem the Western Wall, the holiest site where Jews are permitted to pray, is largely deserted. Rabbis have urged the faithful not to kiss the stones.

Qom on Iran The outlier has been Iran. It has the third-highest number of confirmed cases of the virus, behind only China and Italy. Yet for weeks it refused to close the bustling shrines in Qom, a holy city that is the centre of its outbreak. When the authorities shut them at last on March 16th, small crowds broke through the doors in protest.

A few other congregations have been restive: a mass in Ajaltoun, a village in the mountains north-east of Beirut, had to be halted when worshippers complained about the changes to communion.

Africans with disabilities are at higher risk of HIV Continued from page 12

getting HIV than men. In Burundi women with disabilities are three times more likely to have HIV than those without, and ten times more likely than able-bodied men. In Burkina Faso disabled women have the same HIV prevalence (5.4%) as sex workers.

Trading sex for money is something disabled women are more than three times as likely to do as able-bodied women, according to a study in Cameroon. This is often because they are poor. Across Africa disabled women tend to suffer high levels of sexual abuse, too. In Burundi they are about twice as likely to have endured it as the non-disabled.

Some are victims of “virgin rape”—a crime reflecting the belief that an HIV-positive man can be cured if he has sex with a virgin and transfers the disease to her. Since disabled women are often baselessly assumed to be virgins, they are particularly at risk.

Once the disabled get HIV, treatment is difficult. Travel costs are a big reason. Disabled people also report being turned away by clinics because health workers don’t believe the disabled can get HIV. Moreover, many clinics do not have wheelchair ramps and the like to provide access to people who cannot walk. One study in Uganda found that disabled people were less likely to receive their test results than others. This may have been because they found it difficult to return to a clinic.

Some are trying to improve the situation. A project in Kenya led by Humanity & Inclusion, an international NGO, provides HIV information to the blind using Braille and radio shows. Community health workers in South Africa offer in-home HIV treatment to the immobile. In Rwanda they are taught to communicate the basics about the virus in sign language. Senegal conducted a prevalence survey of disability and HIV—a good step in the “disability data revolution” that advocates say is necessary to tailor future policies.

All but five African countries have ratified the Convention on the Rights of Persons with Disabilities, which pledges them to ensure broad legal equality for the disabled.

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Monday 23 March 2020

BUSINESS DAY

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Giving and misgivings

(Sixth in the series of an address delivered at the Rotary Foundation dinner/dance at the MUSON Centre, Marina, Lagos on 8th February 2020)

Bashorun J.K Randle

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gain, we have Gambo Pori to thank you for showcasing a first-class candidate for membership of the Rotary Club of Maiduguri.

“On Friday 24th January Governor Babagana Umaru Zulum of Borno State was to meet with members of the Mega Schools Committee for an update. The Mega Schools, a conception of Governor Kashim Shettima, are purpose-built public schools, with all the modern appurtenances for conducive learning, targeted to admit mostly orphans and other deprived children particularly from IDP camps. Though the schools were inaugurated by President Muhammadu Buhari in May last year, they were billed to start operating at the beginning of the school year in September.

At the Government House, the same scenario of hope and cheerfulness pervaded the atmosphere. The Governor was not only meeting with the Mega schools’ committee but was also inaugurating the State Education Trust Fund – ceremonies that were clearly a thumbs down to the Boko Haram ideologies that propagates that education is evil. The meeting with the Mega schools’ committee was routine and therefore brief. Many of the schools have gone into operation with the exception of some teething problems that were raised and thrashed.

It is clear that the Governor is bent on keeping the legacies of his predecessor alive and well.

Many bad misgivings on how the state with the problems confronting it would run such large number of schools for the exclusive use of orphans and street children with consistency. These are schools that were well built with boarding facilities, air-conditioned classrooms, dedicated electricity lines with solar inverters on the side with the best available teachers. However, from the briefings and the interchanges that followed, I realised that many of this misgivings were misplaced because there is a robust financial plan in place.

Once these schools succeed they are bound to become beacons to the rest of country and I foresee a rush to emulate them in many states of the federation.”

In a rare display of humility the Nigerian Government invited Bill Gates to address the Federal Executive Council, presided over by President Muhammadu Buhari. Anyone who has ever heard Bill Gates speak will attest to the fact he makes no claim to being the greatest orator on earth. However, on this unique and epochal occasion, he surpassed himself.

This is the blunt message he delivered in his quirky intonation: Bill Gates did not become the world’s richest man by looking the other way when his money or investments are at stake. It doesn’t appear he will start doing so in Nigeria.

Last week, while giving a speech during a visit to the country, Gates delivered some harsh truths to Nigeria’s leaders, including President Muhammadu Buhari. Gates called out the government’s failings and was broadly critical of Nigeria’s health system (he called it “broken” and “not adequately funded”), the struggling education sector and chronic malnutrition among children.

The government’s priorities, Gates said, “don’t fully reflect people’s needs.”

Gate’s bluntness in front of Nigeria’s ruling class (the president, vice president, senate president and house

speaker were all present) was jarring as most tend to address these issues more subtly, at least in public. But, during his presentation which came complete with charts, Gates came off as an investor reviewing a start-up’s progress rather than a philanthropist with bottomless pockets of aid money. And he had a solid basis for that approach: so far, the Bill and Melinda Gates Foundation has committed over $1.6 billion to Nigeria, he said in his speech.

His criticisms and proffered solutions were backed up by data unlike usual government rhetoric that are often lacking in specifics. Gates pointedly broke down each issue with numbers and arrived at the same conclusion: Nigeria’s government must do better.

The good news though is Gates’ data-based approach of demanding more accountability and pushing the government to plan and deliver better on its targets has a better chance of yielding more dividends than delivering platitude-laden speeches. In his words, “it may be easier to be polite, it’s more important to face facts so that you can make progress.”

The approach also ensures that the Gates Foundation gets more bang for their buck as they commit more money to Nigeria. Much of the foundation’s work has been around public health and most notably, the foundation has recorded major success in the fight against polio. Last year, Nigeria recorded no new polio cases in stark contrast to 2012 when Nigeria accounted for more than half of all polio cases globally.

In January, the Gates Foundation also took the unprecedented step to say it will pay off a $76 million loan Nigeria took from Japan for the fight against polio. Unlike, typical national debt forgiveness programs, this repayment was based on conditions which the government met including “achieving more than 80 percent vaccination coverage in at least one round each year in very

‘

It probably won’t surprise you to learn that tech mogul and billionaire philanthropist Bill Gates views the world mathematically.

When it comes to making change, for instance, he watches metrics like child mortality to spot improving health and school attendance to track access to education

high risk areas across 80 percent of the country’s local government areas.” It wasn’t simply about a financial arrangement but ensuring that Gates’ ambitions to completely eradicate the disease have better chance.”

He did not need to add the following vignette by Albert Einstein: “Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”

Rather than dwell on those who criticised Bill Gates for adopting kid gloves instead of the sledge hammer, we should now take stock on how Nigeria has fared as regards the “SDG’s” [Social Development Goals]: It probably won’t surprise you to learn that tech mogul and billionaire philanthropist Bill Gates views the world mathematically. When it comes to making change, for instance, he watches metrics like child mortality to spot improving health and school attendance to track access to education.

As a philanthropist, he’s obsessed with seeing those averages improve because they boost what he calls “human capital”—people’s ability to lift themselves up despite adversity. But he’s also focused on how they can be deceiving.

Take the following statistic: 99 percent of people in low and middleincome countries are seeing year-overyear improvements in child mortality and schooling. That sounds great, but the world is a big place and improvements happen unevenly. Roughly one in 15 people don’t have access to basic healthcare or educational services.

They’re usually clustered in areas already experiencing poverty with women especially marginalised.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

On Convid-19: A common man’s proposal to tackle the global pandemic Corona virus? he first time I think I heard the name “Corona”, it was a Footballer, one of Mexican origin I think, whose surname is Jesus, with his silky dribbling skills and charming personality, I could have sworn then that the name was anything but that an angel of life. It was a name that seemed to exemplify calmness and peace naturally, and would definitely not invoke any nostalgic effect or fear at all. The second time I heard of ‘Corona’, it was a car, I think of Toyota model (not to be mistaken for ‘Corolla’), which seemed to represent modesty and simplicity in vehicular transportation and road navigationease and comfort. But the third time I heard and read of Corona, (three’s the magic I think?) it was nothing reassuring, surely scary and lifethreatening-It was now a barely-known killer virus, infecting people without the slightest of warnings, residing in patient without the slimmest of symptoms and tearing countries of the world apart without the privilege of an advance warning.

Since the virus was first discovered in the town of Wuhan, China late last year, the entire world has been brought almost to its knees as it seems the advance of this dangerous virus has not been halted in the least, nor reasonably curtailed at best. While frantic and desperate reactive measures continue to be adopted in many countries, yet, these panic efforts do not appear capable of themselves to sufficiently aggress the present situation. The general demeanour of people towards this has been that of dread, fear and apprehension. People are panic buying and panic selling; businesses

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are shutting down more and more in unbelievably quick periods. Investment is reaching its lowest ebbs in decades, people are becoming less financially resolute, and as hard as it will be-it seems it is only a matter of when than if, for the next wave of global recession to step in.

While I am-admittedly only but a common lay man in matters of viral infections and the terminology-complex world of diseases and cannot bizarrely or even remotely lay even a pinch-sized claim to any level of expertise on health, I do believe that there are general and specific approaches appropriate for these times and important (non-medical I must say) tips which can help to arrest this situation.

What governments must do Without a doubt, the key and most important piece in solving this giant puzzle is first and foremost the government-One only need compare the examples of South Korea and the U.S to see this clearly. This is because the placement structure of government means that far-reaching and nationally consequent policy choices can and will (need to) be made by government in this period, and a careless, misdirected or ill-thought move will definitely heat the polity, bounce back on the citizens or push the fight further backwards.

As such governments must advance research, tighten containment measures and encourage, entrust, empower and fully support health professionals to do their jobs effectively as all our lives, even that of the elites this time rest in the hands of both the health professionals and government indirectly. Government must also do its best to propose equally beneficial economic measures to cushion the obvious www.businessday.ng

economic strains these times will impose on both businesses and people. Low or interest free Loans/Bailouts may have to be handed out to keep even our most resilient businesses afloat in the days to come and douse the massive flame of huge lay-offs which seem desperately imminent already.

The most vulnerable of citizens-those with no jobs/housing, those who will lose theirs too and even families who seem stable at the moment may have to receive direct government intervention financially to provide for themselves and their kids through these dark times, especially if government directives to stay at home in isolation must be complied with and not become involuntary death sentences. Also, it is important to note that in times of great global concerns such as this- Fear and panic can cause more harm than even the virus itself and it is the place of government to instil confidence in citizens through regular progress updates and confidence-instilling messages in these trying times.

What the world must do The thing about adversity such as this is that- it has both the potential to unite globally and the element of division-as countries may adopt a totally self-preserving policy action which tends to isolate their reaction, instead of a united front- to face this monster together and defeat it jointly. It now goes without saying that this is a critical period in global history, as already-what began and was dismissed initially as a solely Chinese health issue has since gained ignominious footing on each continent of the globe, from Australia, Africa to South America. As such, a singular reaction of

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PETER-COLE ONELE

countries will not address what has become a globally-threatening disease. Thus, the United Nations must respond as one not just through the WHO but also through every cadre of its leadership to forge ahead together and address this unpleasant phenomenon jointly, knowing that this is now a global-sized malady requiring a global-sized remedy.

The truth is that as unfortunate as this incident is playing out, it gives us the opportunity to address and face this headlong from a united front, realizing that a problem that affects all of us will require a solution that will help all of us. The thematic message for this period must be- We are all in this together. Therefore, countries that will make breakthrough in research on vaccinations and cure ahead of others must carry the rest of the world along.

Self-preservation is not a crime, but we must not be selfish with what can save the world.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Peter-Cole has a law degree from the University of Ibadan and attended the Nigerian Law School, Abuja Campus.

He’s passionate about effective and life-changing policies, laws, regulations, sustainable development goals advocacy and cutting-edge research. He can be reached via email at opconele@gmail.com.

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Monday 23 March 2020

BUSINESS DAY

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Positive moves on reforms, plus thoughts on a corona proof portfolio

Patrick Atuanya

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ast week the Central Bank of Nigeria (CBN) essentially bluffed the markets as it dismissed plans to devalue the naira, adding that it was “able and willing to meet all genuine and legitimate FX demand” with the current level of reserves.

In a statement the apex bank said “unscrupulous persons and FX dealers” involved in speculative trading against the currency will be charged for economic sabotage once unravelled by an investigation in collaboration with the Economic and Financial Crimes Commission or EFCC. However by Friday the CBN had to basically eat its words as it devalued the rate at which it sold dollars to Foreign Portfolio Investors (FPIs) to N380.2/$, from around N366/$.

The CBN had been courting these class of investors in a bid to shore up its dollar reserves and maintain price stability.

The apex bank also moved the official rate of the Naira to $360/$ in a bid to reduce the gap between the various segments of the markets.

Global market sentiment as well as domestic realities had forced the CBN into these actions.

The slump in oil prices due to a collapse in demand and excess supply meant there was little or no dollars flowing into the country from the sale of crude.

Another just as serious problem arose however, when there were only N18 billion of bids materialising last Thursday for N150 billion worth of open market operation (OMO) bills the CBN attempted to sell.

Being that FPIs were the major participants in this market, it clearly showed that they were demanding higher rates as well as an exchange rate that cleared closer to the market rate.

The naira had already weakened some 13 percent in the black market and fell to a record low at the Investors and Exporters window the prior week.

The CBNs gross dollar reserves meanwhile dropped below the $36 billion mark last week, a signal of the increasing vulnerability of the bank to global market conditions.

After all most emerging market and commodity currencies had already adjusted lower from the Kazakhstan Tenge to the South Africa Rand.

Godwin Emefiele, the CBN governor had told investors last November that it would take oil prices of $45 per barrel and external reserves of $30 billion to rethink the bank’s exchange rate policy.

As at the time the CBN adjusted the currency on Friday, one of those metrics had already been breached, which is the oil price.

The adjustment undertaken by the CBN is positive for the economy because it is unhelpful to pretend that Nigeria can withstand the more than 50 percent slump in oil prices without adjusting its currency, when oil makes up 95 percent of exports.

Also the Naira was already overvalued according to Real Effective Exchange Rate (REER) measurements, due to the high annual inflation in Nigeria, since 2017.

This adjustment will therefore help to keep some dollar flows in the country, as well as send a signal that the CBN is not rigid or averse to reforms.

There has also been adjustments made to the rate at which international money transfers to Banks are disbursed (now N376/$1), which is positive for diaspora flows.

For the macro-economy the adjustments to the FX rate should act as some form of shock absorber as the FG and sub-national states, and spenders of inflowing dollars get to have a little more naira, which should help plug some of the deficits to FG, States and individual budgets amid the ongoing slowdown.

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As at the time the CBN adjusted the currency on Friday, one of those metrics had already been breached, which is the oil price

Building a corona-proof portfolio While global markets continue to meltdown, there are indeed bargains emerging with some fund managers applying lessons learnt from the last major selloff more than a decade ago.

During that downturn (2008/2009) stocks like Google and Amazon came through relatively unscathed, as investors bet on continued growth for the tech firms.

In Nigeria, while the markets appear broken (as well as several

Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Corona responses aplenty

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he responses to the coronavirus are coming thick and fast.

The most important responses are the ones that deal with the threat of the pandemic of course. I am not an epidemiologist or a public health expert so I will refrain from pretending to be one. All I can say is that we should all continue to listen to the experts and authorities, and of course follow their recommendations.

I can however comment on some of the economic policy responses. The first of which is the reduction in fuel prices.

The government, via the NNPC, announced a reduction to 125 per litre. On the surface the reduction makes sense.

Crude oil prices have dropped to record lows in recent weeks and that naturally should transmit to lower fuel prices. Officially the announcement suggested we are moving to a price-modulating arrangement where the price will change on a monthly basis. But then we know how these things work. The fuel price in Nigeria is a political topic. It is always easy when prices want to go down. Nobody complains. But will the political actors be as willing when prices need to go up? If you look at the PPPRA pricing template, the exchange rate used for this

new price is 307 per dollar which must change. Oil prices will also probably go back up eventually. I would have preferred the government to use this opportunity to deregulate the sector and scrap the whole government fuel price fixing once and for all.

Then there is the rumoured securitisation of “ways and means”. To put that in English, the indirect debt that had been built up by the CBN giving credit to the government will be converted to more formal debt and sold. This is an interesting one. On the one hand there are rumours that the CBNs balance sheet has been crippled by that debt. Rumours because the CBN no longer makes its accounts public. Getting some of that debt off the CBNs balance sheet will likely put the CBN in a better financial position to tackle some of the more serious challenges. As long as they don’t continue the bad behaviour of indirectly funding the federal government though. On the other hand, it will be interesting to see what moving this debt to the federal governments balance sheet does to its accounts. Will 2020 be the year when we see a debt servicing to revenue ratio near 100 percent? Overall, this seems like a move-the-bad-apple-around policy. The www.businessday.ng

stocks), with ugly charts and many sitting at multi-year lows, the fundamentals of some of the companies remain sound.

Therefore in thinking of dipping ones toes to buy at these levels investors must ask themselves what companies are resilient enough to withstand the carnage as well those that may even benefit from social distancing.

Some that come to mind include data providers and Telco’s. There will be growing demand for Voice, internet and data as more employees work from home or get their entertainment from Netflix.

This means the likes of MTNN and Airtel Africa should be looked at especially since they are both selling close to their listing prices.

Financials are another set that have sold off massively in just 2 weeks or thereabouts.

Investors should consider those that are best in class, with solid balance sheets. Banks may gain from more electronic transfers and ecommerce at this time.

Some consumer goods firms may see a surge in demand for provisions and beverages as Nigerians stock up their refrigerators.

Industrial firms that are cyclical in nature are also a sure bet to rebound once the Virus disappears.

One that generates significant free cash flow, as well as is diversified across Africa, with strong balance sheet and large dividend is Dangote Cement. The stock is at a 4 year low!

ECONOMIST bad apples are still there regardless of who is currently holding them.

Next intervention. What better way to respond to cleaning some things off your balance sheet than adding more stuff on it? A N1.1trillion intervention fund from the CBN is reportedly on the way to support “critical sectors”. Where critical is defined as manufacturing and to support import substitution. This one is a bit interesting. Where interesting is defined as nonsensical. Lest we forget, the same CBN raised the CRR rate just a few weeks ago and effective CRR for some banks is now as high as 45 percent. Is the CBN essentially saying that it is a better allocator of credit than the banks?

On the federal government’s side there are plans to cut the budget. The benchmark oil price is being revised to $30 a barrel. The expected revenue from privatisation proceeds will be cut by 50 percent. On the spending side capital and recurrent expenditures is to be cut by 20 and 25 percent respectively. If you have been following my column you will know that even before the current oil crisis I expected most of the budget to be unimplementable, with most of the capital expenditure component not financed anyway. So, a 20 percent cut seems a bit

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NONSO OBIKILI funny. The actions on the recurrent side are interesting too. What is going to be cut? Salaries? Debt servicing costs? All overheads? Other spending like on the amnesty program or the social interventions? The devil is in the details I guess.

The deficit is expected to rise to N3.3 trillion. Still the math does not add up.

There have been others like the reduction in interest rates from CBN interventions, to a change in the moratorium on debt and so on. Overall, and I hate to be the sceptic, but I am not convinced that most of the interventions will amount to much. Especially since some of the inconsistencies which are restricting the economy remains largely in place. And then there is the elephant-sized foreign exchange market problem in the room.

But I guess let it not be like the authorities were not doing something.

Dr. Obikili is the chief economist at BusinessDay

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16

BUSINESS DAY

Monday 23 March 2020

EDITORIAL Frank Aigbogun

Coronavirus-induced reforms long overdue

editor Patrick Atuanya

Rare chance to boldly go for growth

Publisher/Editor-in-chief

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

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he global upheaval caused by covid-19, the novel coronavirus, has shocked authorities in Nigeria to action. While commendable, the ministry of finance and the central bank must be bold and vigilant.

Nigerian authorities must be proactive. They can’t afford to be complacent even if there are only 12 confirmed cases of infections and no death has been recorded. The rate the deadly virus spreads and the economic turmoil it has unleashed around the world are enough reasons to remain alert to respond faster and for further reforms.

The measures taken so far are commendable. A cut in the oil benchmark for the budget to $30 a barrel is realistic, securitising the four trillion naira the federal government owes the central bank is a wise decision and the one trillion naira stimulus to boost local

manufacturing and all critical sectors make sense.

More, however, can and must be done – the coronavirusinduced economic crisis is a once-in-lifetime opportunity to put in place measures that will make the economy less vulnerable in the future. It must make more room for the private sector.

A reduction in the pump price of petrol rather an outright deregulation of the oil sector is a halfmeasure that may come back to hunt the government. Price reduction is not deregulation.

Deregulation takes the government out completely of every business activity in that space; this is time to pass Petroleum Industry Bill. This is the time to make the gas revolution that will power electricity and manufacturing a reality. Level of control in private businesses isn’t over for the FG. Recently, the FG reduced price of fuel to N125 from N145, a way to lessen the burdens of its citizens.

To delay such reforms for

another day or a different government or wait for another existential threat to force change is foolhardy. Waiting to be forced to do what is right when things seem out of control is costly.

This must stop.

Nigeria’s reluctance to make the right policies over the years has put her in a more precarious economic condition. Another pending major reform is the exchange rate. The obsession of the central bank with the naira based on, as it believes, market fundamentals that support its stability are dubious.

The naira is overvalued and the fundamentals show that Nigeria is ill-equipped to keep this artificial value. An adamant defence of naira is complicated by the fast depleting external reserves which now $36 billion, down more than 20 percent.

Micro, small and medium scale enterprises (MSMEs) account for 90 percent of all businesses in the country and contribute to 50 percent of total

goods and services produced.

But these businesses, which run with capital as little as N50,000 to N1million, face the risk of suspending and possibly shutting down their operations because of the coronavirus outbreak .

The ripple effect in the form of job loss and income will be negative and could swell the already bulging number of people in living in extreme poverty. Fiscal incentives that make doing business easier, that reward rather than penalise small businesses for stepping out of the shadows of the informal sector will help these businesses expand and generate jobs.

While Nigerian authorities are preoccupied with churning out short-term measures to combat the effect of covid-19 on the economy, they must not ignore long-term measures; Critical reforms across key sectors that are long overdue. Now is the best time to enact them. they cannot afford to continue living in denial.

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Monday 23 March 2020

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Emir Sanusi’s deposition: What politics gave, politics took back global Perspectives

OLU FASAN

T

he dethronement of the Emir of Kano, Muhammadu Sanusi II, two weeks ago, on Monday 9 March, now pales into insignificance with the Coronavirus that is ravaging the world. But Covid-19 is, however, a subject for another day.

With Sanusi’s dethronement saga still fresh in our minds, allow me to offer some reflections, not least because of what Sanusi represents and what his travails tell us about the nature of Nigerian politics.

Unsurprisingly, being a Muslim, Sanusi Lamido Sanusi attributed his dethronement to the will of God, as he did his earlier enthronement. “The one who gives, has taken”, he said, after the Kano State governor, Abdullahi Ganduje, deposed him for “disrespecting the office of the governor”.

Students of history may, however, say that it was history repeating itself, as Sanusi’s grandfather, Muhammadu Sanusi I, was deposed as the 11th Emir of Kano in 1963 by Ahmadu Bello, the then Premier of Northern Nigeria.

Yet, neither religion nor history can explain Sanusi’s dethronement as the 14th Emir of Kano. In reality, he was, with his enthronement, a beneficiary of partisan politics, and then, with his dethronement, a victim of it. He said, “The one who gives, has taken”, referring to God. But it was politics that gave the throne to him, and it was politics that took it back!

The religious fatalism, common with Muslims, that attributes any adverse thing that happens to us to God ignores the role of human agency and the power of choice that God Himself gives us. In Deuteronomy 30:19, God said: “I have set before you life and

death; therefore, choose life”. And Proverbs 27: 12 says: “A prudent person sees danger ahead and avoids it, but the simple keeps going and pays the penalty”. Of course, being omniscient, nothing happens without God’s knowledge; and being omnipotent, nothing happens if God doesn’t permit it. But that doesn’t mean every adverse occurrence is the will of God! So much for the theology.

Coming back to Sanusi, everyone knows that he enjoyed stirring up a hornet’s nest, and that he took consequential political risks. They once paid off and helped him to become the Emir of Kano; but they have now cost him the throne. This is not a criticism of the former emir for, as he rightly said: “If you have to die, do it standing; not on your knees”. Emir Sanusi certainly “fell” standing! No one can accuse him of cowardice.

Both as Central Bank governor and as Emir of Kano, Sanusi made powerful enemies, driven by a principled conviction to say and do what he felt was right regardless of the cost to him.

In December 2010, Sanusi was given the “Central Bank Governor of the Year 2011” award by The Banker magazine, a subsidiary of the Financial Times. The citation read: “In the 18 months that he has been in office, Lamido Sanusi has salvaged a crumbling financial sector, taken on Nigeria’s powerful and corrupt bank managers and initiated reforms that have put Africa’s most promising market back on the map for investors”.

I was honoured to be invited to the high-profile ceremony at the London Hilton Hotel, Park Lane, attended by several prominent Nigerians, including prominent traditional rulers. But what I took away from the ceremony was his courage and dogged determination to step on toes, if necessary, in pursuit of his convictions.

Sanusi dedicated the award to President Umaru Musa Yar’Adua. He said he went to Yar’Adua and told him of his radical banking reform plans, and that Yar’Adua assured him in the presence of the then chairman of the Economic and Financial Crimes Commission, EFCC, Farida Waziri, that he would back his campaign to the hilt, urging him to prosecute it “without

fear or favour”. He certainly did, with the imprisonment and humiliation of several powerful Nigerians. And he saw Yar’Adua as comrade-in-arms in the anti-graft war!

But not so President Goodluck Jonathan! Sanusi didn’t believe Jonathan was as committed to tackling corruption as Yar’Adua. And he was determined to take the battle to the inner sanctum of the Jonathan administration.

In 2014, Sanusi wrote to President Jonathan alleging that $49.8 billion was missing from the federation account. In her book, Fighting Corruption Is Dangerous, Dr Ngozi OkonjoIweala, Finance Minister at the time, admitted money was indeed missing “but far from the almost $50 billion (Sanusi) was talking about.” She reckoned the amount ranged from “$10.8 billion to $12 billion, perhaps closer to $12 billion, the outer end of that range”. In the end, the amount frequently cited is $20 billion.

Whether Sanusi intended it or not, the allegation of the “missing billions”, coming very close to the 2015 general election, became a powerful ammunition that the All Progressives Congress, APC, used mercilessly against President Jonathan and his party, People’s Democratic Party, PDP. Sanusi became APC’s “poster boy”.

When President Jonathan suspended him as governor of the Central Bank on allegations of “financial recklessness”, APC effectively adopted him as their own. It was during this time that the then Emir of Kano, Ado Bayero, died; at last, Sanusi was on the verge of fulfilling his life-long ambition!

Yet, the contest was fierce.

According to Tanko Yakassai, a leader of the Arewa Consultative Forum, the eldest son of the late emir “was announced as the emir but it was later changed”. But the timing was fortunate for Sanusi, who was the APC’s choice. The then governor, Rabiu Musa Kwankwaso, fell out with President Jonathan and left PDP to join APC. He gave Sanusi the emirship. Truth is, if Kwankwaso was still in PDP and loyal to Jonathan, Sanusi wouldn’t have been the Emir of Kano in the first place.

Sanusi himself admitted this in an

‘

Both as Central Bank governor and as Emir of Kano, Sanusi made powerful enemies, driven by a principled conviction to say and do what he felt was right regardless of the cost to him

interview with the Financial Times in 2018. As the paper wrote: “Jonathan and the governor of Kano were adversaries. Any enemy of Jonathan’s was a friend of the governor. Sanusi got the nod”. Of course, Sanusi saw this as God’s handiwork. But as David Pilling, the paper’s Africa Editor, who conducted the interview, mused: “If God relies on the machinations of Nigerian politics to bring about his will, then He really does work in mysterious ways.”

But Sanusi now says God later changed His mind, orchestrating his dethronement. Yet, in truth, these were the results of cold, calculated power politics. In 2014, Sanusi was on the winning side with Kwankwaso, who rewarded him with the emirship for being a thorn in the flesh of Jonathan and the PDP; six years later, he was on the losing side with the current governor, Abdullahi Ganduje, who deposed him for being a thorn in his flesh!

Although Sanusi was part of the Northern establishment, he was a maverick. He pursued causes, such as the campaigns against child marriage and the Almajiris, that challenged Northern orthodoxies. Tanko Yakassai said the tradition in the North was that “educated and uneducated emirs tend not to speak too much.” But not Sanusi.

He said the elite consensus was about “a culture of silence and complicity”, adding: “We are dealing with an antiintellectual environment”. He was irrepressible, speaking truth to power, ruffling feathers. And paid a price for his convictions, losing the throne he so much cherished!

But Sanusi saw it coming. In 2017, he said in a speech: “The reality is that everything in this world is fragile. Life itself will come to an end”. Then, he added: “Being a coward or a sycophant will not add one day to your life or one day to the term of any things you hold dear”. How true! Sanusi was once a beneficiary of partisan politics, now, a victim of it. But he is a cerebral, highlyrespected global citizen. The world is now his oyster!

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Tenure limits for directors – any demerits?

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here are arguments in favour of term limits for directors. By establishing director tenure limits, organizations make room for rejuvenation and the on boarding of Directors with new skillset and relevant experience. Boards also set tenure limits to allow for membership to be refreshed periodically.

As businesses evolve, the skillsets required for Board effectiveness change. Tenure limits thus enable the Board to respond to change and be refreshed periodically. This is more so in the age of disruption where technology is rapidly changing the nature of business operations.

Also, in favour of tenure limits is the need to safeguard the independence and soundjudgement of directors. When directors stay on the board for too long, there is the tendency to develop an allegiance towards management, engendered by familiarity which could reduce the motivation to criticise management proposals.

In Nigeria, term limits have been typically set by industry regulators via the respective

Corporate Governance Codes. These limits relate to cover Executive, Non-Executive and Independent Directors. The Nigerian Code of Corporate Governance 2018 however leaves the issue of term limits for Executive and Non-Executive Directors to the discretion of the Board, based on the peculiarities of the Company. It however sets term limits for Independent Directors at nine years.

Those who argue against tenure limits note the cost of recruiting new directors as a major demerit of limiting the tenure of directors on the Board. Good directors don’t grow on trees and an effective board will typically undergo a rigorous Director Selection process to replace exiting Directors.

Beyond cost, recruiting a director with the right fit can be time consuming and sometimes the board ends up with a less than optimal choice where it does not have luxury of time or the patience required.

Another argument against tenure limit is the propensity to impact on the presence of institutional knowledge on the Board.

According to Hillman and Dalziel, “Firms www.businessday.ng

ending in financial distress are likely to have Boards with shorter tenures compared to those with longer tenure.

More so, the expertise hypothesis is used to argue that longer tenure is associated with improved director performance, because directors develop more expertise over time and become more willing to criticize management. Setting tenure limits also impacts the Board’s ability to replace non-performing or dysfunctional directors as there is a tendency to allow them run out such fixed tenure.

Bringing it all together, while there are immense advantages that accrue from setting tenure limits, one cannot wish away the demerits of such tenure limits. According to Kennedy Mwengei and David Kosgei, the board that is long tenured without any limit will breed Management friendliness and allegiance and given this atmosphere, the board might lack the effrontery to carry out its oversight function over Management – this is not very healthy for the enterprise.

It is thus important to strike a balance as

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Bisi Adeyemi

contemplated by the Companies and Allied Matters Act which requires one third of directors to retire periodically. The Board can use this to refresh the Board, whilst retaining those Directors that have institutional knowledge and experience required to create the right balance for Board effectiveness.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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Monday 23 March 2020

BUSINESS DAY

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Monday 23 March 2020

BUSINESS DAY

COMPANIES & MARKETS

19

COMPANY NEWS ANALYSIS INSIGHT

Cadbury trims profit growth in 2019 audited scorecard after tax adjustment SEGUN ADAMS

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onsumer goods firm Cadbur y has lowered its profit growth for 2019, taking into consideration effect of a tax increase which left profit still at a five-year high.

Cadbury grew its profit by 30.1 percent for the recently concluded business year. This is lower than 53.9 percent, it had reported in its unaudited result for the period.

The difference in growth rate was on account of a 17 percent in tax payment compared to a 30.5 percent decline it previously noted.

This puts full-year profit at N1.071bn compared to N1.267 previously reported for the year.

With profit at the highest in 5 years, at least, Cadbury Nigeria Plc showed resilience last year in sustaining its recovery from a disappointing 2016 result where Nigeria’s recession hit hard on consumers and firms.

A five-quarter long contraction of the economy between 2016 and 2017 pushed Cadbury into a loss but the food and beverage maker recovered in 2017 and has

...PAT still at 5-yr high stayed afloat despite the sluggish growth in the broader economy.

While early earnings releases by consumer goods firms have been disappointing so far, Cadbury has bucked the trend as it recorded strong earnings to end 2019 financial year.

The consumer goods com-

pany’s bottomline in 2019 crossed the billion naira mark for the first time since the 2016 recession-although growth slowed.

In its 2019 full-year unaudited result, Cadbury shrugged of a harsh operating environment coupled with a cash-strapped consumers to record a 9 percent jump

in revenue to N39.32bn from N35.97bn recorded in same period in 2018.

The revenue growth was largely driven by the contribution of diversified product portfolio, as the company mulls the launch of more market penetrating products.

Revenue from refreshment Beverages, which includes

the manufacturing and sale of Bournvita and 3-in-1 Hot Chocolate stood at N23.15bn from N21.38bn in same period in 2018. Revenue from confectioneries which involves manufacturing and sale of Tom Tom, Buttermint and Clorets, was N11.48bn from N9.53bn and lastly revenue from Intermediate co-

coa products, manufacturing and sale of cocoa powder, cocoa butter, cocoa liquor and cocoa cake dropped slightly to N4.68bn from N5.05bn.

A trend analysis of revenue segments show that confectionary picked up by most since at least 2016 to contribute 29 percent of total revenue.

The company posted a cost of sales growth o.4 percent lower than the 11 percent previously stated which improved gross earnings growth to 4.6 percent at N8.326bn.

Cadbury however noted an increase in operating expenses and a slightly wider EBIDTA decline which pushed operating profit decline to 20.3 percent.

The growth in finance income and absence of interest payments pushed net interest income out of negative territories and supported pre-tax profit.

Listed companies on the Nigerian Stock Exchange (NSE) last year reported their fourth quarter as unaudited and afterwards posted the audited results.

FINANCIAL SERVICES

FSDH Merchant Bank MD calls for more responsibility in banking to build consumer trust MODESTUS ANAESORONYE

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o build consumer confidence and trust in the nation’s banking industry, players in the sector have been called upon to take greater responsi-

bility in all areas of their services. Hamda Ambah, MD/CEO, FSDH Merchant Bank who made the call during an interview with Business Day on the side-line of the 45th Quarterly General Meeting of the Association of Chief Audit Executives of Banks (ACAEBIN) held in

Lagos said players should take responsibility by going all out to provide customers with the right information.

She said the issue is about poor communication between banks and their customers, and therefore we have to take the responsibility to put out the

L-R: Kashim Shettima, member, Senate Committee on Capital Market; Haruna Jalo-Waziri, chief executive officer, Central Securities Clearing System (CSCS) Plc; Mary Uduk, acting director general, Securities and Exchange Commission (SEC); Oscar Onyema, chairman, C Binos Dauda Yaroe, Deputy Chairman, Senate Committee on Capital Market during a courtesy visit to CSCS Plc in Lagos. www.businessday.ng

right information.

“Sometimes, the problem is misunderstanding for lack of the right information because in the absence of information, we get misinformation.”

Ambah said: “you will see some elderly people who are not educated and they will give their ATM Cards to people they don’t even know. Please my daughter, help me, this is the number. If the money now gets missing, is it really the banks fault? It’s not. But what we have to do is to take it as a responsibility to educate them that even if it is your child, don’t disclose your PIN number.”

According to her, this does not end with the non-educated, “I see some senior executives always giving their drivers or PA’s their ATM card to go and make withdrawals for them, instead of transferring the money to the persons account so that he or she could use his or her own ATM cards, she said.

Ambah also identified the issue of fear among bank’s staff, stating that may be for fear of being punished by their

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superiors hide the error they committed against a customer, and by the time it is established the damage has gone far. It is better we accept responsibility at that time, and begin to salvage the situation even before the customer becomes aware.

That is confidence building, she said.

Speaking on theme of the ACAEBIN Meeting: ‘Consumer Protection and the Role of Internal Audit Executives of Banks ’, Ambah said the most basic, yet fundamental ingredient on which banking thrives is trust.

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She noted that formal protection of the consumers of banking products has enormous potential to restore trust in the banking industry.

Ambah, while pointing out that consumer protection entails protecting the right of consumers from injustice and exploitation in the market place, says it goes beyond having catchy phrases that connote customer-centrism in the mission or vision statements, but more about having definitive processes to ensure transparent dealings with the consumers.

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Monday 23 March 2020

BUSINESS DAY

COMPANIES&MARKETS ICT

FINANCIAL SERVICES

United Capital opens N15bn 9mobile outlines business growth strategies for 2020 commercial paper programme HOPE MOSES-ASHIKE

OLUFIKAYO OWOEYE

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n i t e d Cap i tal has announced the commencement of its series 1 and 2 commercial paper issuance under its 20.0bn Commercial paper. The two series have a tenor of 180 and 270 days respectively with an effective yield at 5.7percent and 8percent and discount rate at 7.23percent and 7.55percent across the two tenors.

The size of the tenor is up to N15 billion across both tenors. The offer which opened on 20th March would close on 24th March 2020. According to the company, proceeds would be used to finance its shortterm working capital requirements.

Commercial Paper (CP) is an unsecured, short-term debt instrument issued by a corporation, typically for

the financing of accounts payable, inventories and meeting short-term liabilities.

The bank joins the growing list of corporates taking advantage of the low-interest rate to raise cheaper short term debt.

United Capital is a financial services group in Africa listed on the Nigerian Stock Exchange with operations in Investment Banking, Asset Management, Trusteeship, Securities Trading, Wealth Management and Consumer finance. The issuer is rated A- by DataPro Limited, Bbb+ by Agusto & Co Limited.

United Capital’s 2019 audited financial statement shows revenue of N8.6bn, a 58.0percent Profit After Tax (PAT) margin and total assets of over N150.5bn. Stocks of United Capital traded at N2.41 at the close of trading on Friday with a one year return up 2.63percent.

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i g e r i a’s m o s t c u s t o m e r- f o cused company, 9mobile, has revealed that its business plans would have a trickledown impact on the businesses of its national sales partners and dealers in 2020. This assurance was made during its annual Channel Partners Conference with the theme ‘Facing the future together’.

This event is designed to strengthen the bond between 9mobile and its channel partners and also expand the business opportunities and potentials available in the telecommunications market.

The Director of Sales at 9mobile, Oluwatosin

Olulana, underscored the impact which the economy had on businesses in 2019. “Considering the economic situation that was pervasive in Nigeria last year, we surpassed our expectations at 9mobile.

We took stock of our business activities last year, with forecast and expectations for 2020.”

Olulana outlined some propositions for 2020.

“There will be more focus on simpler propositions, staying through to our promise of delivering better service in terms of data quality and pricing. With the recent expansion of our 4G network, we have increased capacity, which means that we need to do more in terms of deployment. There is a huge potential that we can

take advantage of, and we are very optimistic about meeting our expectations this year.”

According to the managing director of Sonite Communications Limited, Olajide Samson, 9mobile has been resilient despite all the challenges and have come out stronger with a formidable management team who are receptive to the needs of its partners.

They are innovative and proactive to the aspirations of dealers and customers.

9mobile is a company with a bright prospect.”

In the same vein, the managing director, Clickatell, Samson Isa, restated 9mobile’s long history of partnership with his business as well as their supportive disposition. “It is

COMPANY RELEASE

Siemens Nigeria trains fresh Nigerian graduates on Engineering, Field Service Operations IFEOMA OKEKE

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iemens Nigeria has commenced the pilot phase of its Graduate Trainee Engineers and Management program for fresh engineering and sciences graduates from Nigeria universities.

Aimed at tackling the depletion of professionals and skilled field service engineers in Nigeria, the program will focus on hiring, training and grooming local talents to meet the company’s business needs and its sustainability.

Following a series of screening, shortlisting and interviewing of candidates from top Universities in Nigeria by an independent and reputable recruiter, five graduates where chosen and offered employment at Siemens.

T h e p ro g ra m w h i c h kicked off on March 2nd, 2020, will offer these graduate trainees 2-years of world class training from Siemens in-country/on-site facility in Nigeria and Siemens’ Technical Competency Institute (TCI) at product lead centres in Europe and North America.

Commenting on the onboarding of the graduate trainees, Seun Suleiman,

Vice President, Services and Digital, Siemens Nigeria, said “We are excited to onboard these graduates to our field service department where they will be cross-trained across our product lines over the next 2 years.

“Siemens is known as an employer of choice in the power and gas sector in Nigeria and this graduate trainee programme by our services distributed generation oil & gas business unit was driven by our commitment to provide a pool of young, talented and well trained service engineers in compliance with local content act of the Nigerian Government for human capital development.

“It is our goal that by the end of this programme we will graduate multi-skilled engineers who, in the future, will be able to take over from our experienced pool of senior engineers who currently demonstrate the capacity to support our fleet of over 360 gas turbines and compressors across our country. This new breed of engineers will be globally certified across TCP, AGT, SGT & MGT product lines, making them experts in controls & mechanical discipline, which will be of great value to our customers and the industry in general. www.businessday.ng

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one of the telcos that is customer-centric. They are concerned about the profitability of our partnership.

We are here to strategize on our partnership and look at opportunities for growth and align with their business objectives. One of the things I appreciate about the management team of 9mobile is their honesty. 9mobile is always looking at exploring capitalization, network improvement, pricing strategy, data, and improved service quality. I am convinced that we are on the right track and that 9mobile will bounce back strongly and do very well in the telecommunications market.”

9mobile also recognized and rewarded its channels partners at a gala event that held after the conference.

Monday 23 March 2020

BUSINESS DAY

Business Event

L-R: Idowu Oguntona, managing director, Lagos Bus Services Limited; Uwuadileke Chinedu, 10-millionth passenger and winner of the one-month free ticket; Adetoun Gaji, head of corporate services, Lagos Bus Services Limited, and Aluko Kayode, operations manager, Lagos Bus Services Limited, at the LBSL’s commemorative celebration of the 10-millionth passenger Milestone in 10 months of operations, held at Berger Station.

L-R: Grudinel Cagatan, chief officer, Hapag Lloyd; John Trafiero, master, Hapag Lloyd; John Jenkins, managing director, Ports & Cargo Handling Services Limited, and Harrison Evbonaye, operations manager, Ports & Cargo Handling Services Limited during the maiden call of Hapag Lloyd’s Liner (Navious Azure) to Ports & Cargo terminal recently.

L-R: Nirmalya Chowdhury, group marketing head, Sona Group of Industries; Olufunso Seye, medical director, St Shiloh Medical Center; Deepti Mishra, Sona Group, Business Development, and Akinnuoye Olutoyin, proprietress, Katmens School, during the health talk and public sensitization on malnutrition and coronavirus at Katmens school Sango-Otta Ogun State

L-R: Richard Okeowo, chairman, FAE Envelopes Nigeria Limited; Lukman Adams, overall best distributor; Funlayo Okeowo, MD/CEO, FAE Envelopes Nigeria Limited, and Adeleke Adeleye, chief operating officer, at the Annual FAE Envelopes Distributors’ conference held in Lagos. www.businessday.ng

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21

Managing

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Monday 23 March 2020

BUSINESS DAY

Monday 23 March 2020

BUSINESS DAY

GOVERNMENT

23

the Executive Governor of the Nigeria’s eastern State of Taraba

Olamilekan Adegbite

BUSINESS

Minister of Mines and Steel Development

Interview with Public Sector Leaders

Ajaojuta to fire the blast furnace before 2023 - Minister Minister of Mines and Steel Development, Olamilekan Adegbite says he’s hopeful Ajaojuta will fire the blast furnace before the end of President Buhari’s administration by 2023. His optimism is pushed by ongoing efforts to revamp the steel hub which has been in comatose for several years. The minister also notes of efforts at getting Nigeria’s mining sector contribute more to the economy, as he particularly sees the country begin to export gold by the end of the year. Adegbite spoke to a BusinessDay team in this exclusive interview in Abuja. Excerpts...

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alk us through how you are repositioning the mining sector to play a key role in the diversification agenda of govern-

ment.

Well essentially, this administration decided that we wanted to diversify the economy using the agriculture and mining sectors as the major flanks. In mining, the mandate given to me which we are trying to execute is to create employment and at the same time generate revenue for government and that is what we have been doing in earnest. There is a road map that was established by our predecessor which of course is in the same direction and that is what we are following, and it also targets to improve access. Let me first say that in Nigeria, mining is dominated by artisanal miners, we are just trying to cut the majors to come in, but while we decide that we don´t want to criminalize the artisanal miners anymore, the best way is to enhance what they do. So this is another avenue to expand that job base. Essentially we are offering them money, equipment, safer methods of mining and all that to broaden their base, improve their productivity and at the same time government realize its own revenue. So that is a two-pronged attack we increase revenue as we recognize them and bring them into the fold. Secondly, by that they are also recognizing government as an authority in mining by paying royalty, this of course we’ve started in earnest.

On the other side is the steel sector which is also part of mining and we are also working on. When you talk about steel, everybody of course will refer to Ajaokuta which is a government baby, but has been ill, but there are also a few other private sector-led initiatives in steel development which we are also supporting. We have a direct investment of about $600 million in Southern Kaduna, which I visited to encourage and lend support. We have KAM Steel Ilorin which is also producing steel now in a small scale, I have also visited them, they are bringing up new lines to improve their production. So these are some of the activities we are carrying out to fulfill that mandate. Like I said, the two major focus is employment generation and expand revenue base.

How accessible is the fund set up for artisanal miners?

People tend to mix things up. The fund that was set up is a body, SMDF, Solid Mineral Development Fund that is what it is called.

So it actually cuts across and not just for artisanal miners. That body is supposed to be funded with over N250 billion, which, with that kind of money, they become the custodian of the fund and they can intervene in the solid mineral sector, that is why the fund was set up as a body. Now within that, we carved out the sum N2.5 billion to enhance the activity of the small scale miners and artisanal miners. May be that is what you are referring to when you said a fund was set up, the fund is not just the solid mineral development fund but it is a body.

The amount specific that I’m talking about is the money that was set aside to enhance the activity of the small scale miners and artisanal miners and this fund is with the

Bank of Industry and the whole idea was for BOI to put a matching fund of N2.5 billion to make N5 billion for on-lending to people who qualify for it, that is on-going.

The problem that we have had so far, is that I think we have had just two disbursements which is very dismal, that is the poor reckoning but the whole essence is that they need to understand that this money is not a share of the national cake, which is what everybody believes, immediately a fund is made available and it came to their knowledge, it was like let’s scramble for it. The essence of giving that money to anybody, is that you must know the person and that is where the problem was. These people are not organized and because by the nature of their work, they are very migrant, they are here today and they are there tomorrow, once they hear there is something in Osun state they go there, in Zamfara they go there, they move with news, so you can’t give money to such people because you can’t trust them. That has been the difficulty actually in giving out that money.

So we said, organize yourselves into cooperatives which they are doing now and we have had some success stories. I’m trying to introduce some innovation into that to see that they get the money easily by creating a leasing center and a buying centre combined together at the same place, targeted at some specific places. We will take the buying centres to the place the artisans are working and also provide a leasing center. Of course we are using this fund to do that because that is what the fund is meant for. So they’ll have access to equipment which enhances what they are doing and there is productivity on credit, so whatever they realize that paying back to the buying centre and we buy them off.

Note that government licenses them but is not involved in these operations. So individuals who are interested will run the buying centers and we buy from them. But now, because they are sanctioned buying centres, they’ll buy at the correct price, nobody will cheat them, and are given the full value, so the artisanal miners get better value for what they do, and because we give them equipment, their productivity is enhanced, so it is a win-win. All we are saying now is, when you come and buy, you pay for the equipment you leased and you pay government royalty which is 5 percent. So government gets to recognise and support them, and ofcourse get the revenue which we are not getting now, that is the innovation I’m trying to bring in.

There’s a concern that a huge amount of solid mineral leaves this country unaccounted for? What’s the government doing to curb this?

Well there’s a two-pronged attack that government has brought about. Most of these activities are perpetuated by illegal miners, artisanal miners are part of it but there’s a lot of illegality even in the mines itself and this done mostly by foreigners, without mentioning names of particular nationals, they are very fond of that. Government set up the presidential mines surveillance task force headed by the minister of mines, it has at the apex, the Chief Of Army Staff, the National Security Adviser, the IG of Police, the Commandant General of the Civil www.businessday.ng

coming and it was quite a successful move.

Immediately we finished the London thing, there were a lot of enquiries which is still continuing now, in fact we got an enquiry today that we just attended to, it was directly from the London thing. We are getting the commitments, a lot of people want to come into Nigeria and everybody is seeing that Nigeria is serious about mining. The incentives are there, fiscal policies are there to enhance mining, corporate governance in mining is becoming more transparent, our licensing operation activity is now online, and of course we are working on data to de-risk the sector, so everything seems to be crystalizing at the right time. So this is the best time to do mining in Nigeria and people realize that and are latching onto it.

Defense Corp and of course the DG SSS, these are the people at the apex, with the minister chairing that body. A lot of money was put into that, and with the cooperation of these forces, we do patrols, which is not continuous but act as an intervention. We have seen results that the illegal activities reduced though it has not stopped fully, because most of these mining areas are very remote, they are somewhere deep inside the forest, so what we do is, when we hear of an activity somewhere that is illegal, that body moves to intervene. But most importantly, we are working with other agencies because all these mineral we are talking about are mostly gold, and it goes out through our airports illegally. We are educating our people, and that is why I’m saying that the artisanal miners who are also part of this because people taking it out buy from the artisanal miners as well, but mostly the legal miners. We are saying, sell to a recognized buying centre so that even if you are going to export, you just pay the royalty which is usually very small. The royalty that is charged by Nigeria is the cheapest in the world right now, in Ghana the royalty is up to 17 percent, right now. But because we are not known as a mining jurisdiction, we are trying to attract investors so our rate now is between 3-5 percent maximum, so compared to some other jurisdictions, it is cheaper to do what is right because if you declare what you are taking out, we will give you an export certificate, we weigh

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the gold or whatever mineral, assess it, you pay the 5 percent as royalty to the government and the rest is yours, and you can take it out legally.

So because of the illegality going we are also working with the customs, and we are creating awareness at the airports, because a lot of people are not aware. Someone can just tell a traveler to help carry gold without knowing it is wrong, but we are saying it is not illegal to take out the gold but take it out the proper way, declare it, pay your royalty on it and then you have your export permit and you can take it out, that is some of the efforts we are working on. We are also seeing the Comptroller General of Customs to persuade him to work more on his men because they are the last man in the chain. If you manage to do your activity illegally you should not be able to take it out through the airport, there is no way you can take out gold even if it is just 1 kilogram because of the metal detectors there, so if not for collusion, these should not be going out, that is why we are working with such agencies as well to see that they do what is right.

Is the government working towards legalizing mining in Zamfara state?

Yes, the issues in mining activity in Zamfara was not unconnected with banditry in the place then.

We had cases of people who wanted to do illegal mining, causing mayhem, people would scamper for safety, so they would give them access to do whatever they wanted, that was why the government put a ban on it. While the President was in Russia, the governor of Zamfara also came along and made a presentation to the president and he @Businessdayng

then asked for my report which we had written favourably that the ban should be lifted. Now our report is being subjected by the presidency to all the security agencies who should make their input as well, whether they concur with us or not. It is at the end of this exercise that we’ll know whether it will be lifted or not. We went to the field to do investigations, and we think that it’s high time we lifted the ban because there are genuine investors who had actually put in money and have equipment on ground and this ban is affecting them, so we need to lift the ban so that they can get back to their legitimate activity while we continue to enforce our operations against artisanal and illegal miners.

Talk us through your recent trip to London and the outcomes and investment commitments The London thing was a strategic move, we knew that the mining conference in South Africa was coming up in February and that is perhaps the number 2 mining activity on the world mining calendar coming closely after the Canada which we were supposed to attend this March.

So to generate the buzz around Nigeria, we had targeted marketing at the people who move the industry that is what we did in London. We met with the juniors, the majors, the financiers, the fund holders and all that, they were targeted audience and we pitched for them, what’s happening and why they should come to Nigeria and ofcourse that spread the word. That crystalised when we got to South Africa, we got the necessary enquiry and enthusiasm that investors are

What do you see as the barrier to getting investors into the sector?

Mining itself is a risky venture, you do exploration which comes at different levels.

So you do an aero-magnetic survey of this country, and you suspect there is gold at some point for instance, you need to do further exploration on the ground to know the quantum of gold there, to what extent, at what depth? But this exploration costs money, that is the risk because when you do your exploration, you may find that yes, gold is there for instance, but it may turn out that the quantum and the depth is not commercially viable, that is the risk -that the cost of bringing it out and the revenue you are going to realize do not match up, but you would have spent money, that is the major barrier. You could spend over a million dollars, only to find out that it is not commercially viable. That is why a lot of people are not coming to mining, even in Nigeria, a lot of people hold licenses but they don´t have that kind of money and people who have it don’t want risk it. Now what we are doing as a country is to de-risk the sector. The Nigeria government has poured in a lot of money about $50 million into de-risking the sector. We are now doing further exploration, National Integrated Mineral Exploration Project, called NIMEP, which is essentially to de-risk the sector. It’s the result from this NIMEP that people are now confident and they want to come in. NIMEP should wrap this March but the results are encouraging already. We have indicative factors that are beginning to excite investors and they want to come into Nigeria and we hoping that will crystalize very soon.

What is going on in Ajaokuta?

We pray and hope that before the expiration of President Buhari’ś tenure, Ajaokuta will fire the blast furnace because that is the last beat. Steel was produced in Ajaokuta in the past but it was from imported billets but that is not what we want to do. Ajaokuta is an integrated steel plant that is supposed to produce steel from raw materials which Nigeria has. All the raw materials about 14 of them required to make steel is available in Nigeria, so basically what we have come back to now is working with the Russians who are the original builders of Ajaokuta, then it was Soviet Union but it was essentially led by Russia and Ukraine who built and designed it for us, to help us to complete it. The principle we are working on is www.businessday.ng

what we call the government to government thing, that is Nigeria has tried so many approaches in the past especially commercial, concession to this and all that but because when you do this kind of commercial thing, pecuniary gain is uppermost and that is why it has not succeeded. We have had about 2 or 3 attempts at revitalizing Ajaokuta but it was basically concessioned to commercial entities and they have gone the shorter route of importing billets and producing steel just to make money.

Now we are working with the Russian government and the beauty about this project and the proposal is that it will not involve Nigeria putting money or paying back the money, the project will pay for itself. So that is what we are working on now, it is taking a bit because it is government to government thing, there are lots of protocols involved, bureaucracy, things have to be checked properly, we write through the ministry of foreign affairs who transmit to Russia and we get reply through that route as well with note verbale and all that. But it is worth it if we get it right, it is slow, but steady, so Ajaokuta is still on course, we have a program with the Russians and we are working on it.

The MOU has not been signed, we drafted it while we were in Russia in October but we could not drop it and had to bring it back to Nigeria and send through the ministry of foreign affairs. But activities have gone on since then, there have been enquiries, we set up a technical team that responds to the inquiries and we have been exchanging correspondences. The AFREXIM bank who are the major financier, are putting about $1 billion on the line, the Russian export centre is also putting about $460 million on the line. We have a pull of funds of about $1.46 billion to do this work. But there had been a lot of correspondences, they have asked a lot of questions and we have responded, and everything has been going on very well.

Like I said, it is my prayer and hope that before the president lives in 2023, Ajaokuta will be producing steel.

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So what are we bringing to the table?

Afrexim is bringing the money, the Russians are bring the expertise and we have the raw materials to be used. Essentially what the deal proposes is that the Russian government will help us nominate a body that will have the engineering skills to complete the work, and also, possibly the same body to run and manage it for a number of years agreed, so that they can recover their money with reasonable profit and transfer back to Nigeria. It is akin to what we call “Build, operate, transfer”, but this time they are not building afresh, some call it complete, operate, and transfer.

How about the legal issues?

The legal issues are there, but let me just say one issue although the government working on it. It is a situation where the concession was given to somebody and he did not perform and Nigeria terminated, but did not terminate according to the rules so, this corporate body went to arbitration. We are trying to extricate ourselves from that but that is a parallel move, it has nothing to do with the Russian thing, and it is not affecting the Russian thing. These people are already out of Ajaokuta and we are trying to do a coordinated settlement with that , so that legal thing is still on going, efforts are ongoing, particularly headed by the office of the Vice President, while at the same time the issue to revitalize is also going on. At the moment, Ajaokuta has a compliment of staff that has been maintained over the years, they are the ones that are keeping the place alive, otherwise you won’t meet anything in Ajaokuta, you know the way Nigeria is. The first time I visited there I was amazed. Ajaokuta is a lot bigger than the FCT, it is called a steel territory and it’s got vast land, it has its own port, it has an air strip, but not fully developed, everything is there. Right now it has about 10,000 housing units within the place, because it’s supContinues on page 24

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Monday 23 March 2020

BUSINESS DAY

Managing

GOVERNMENT

BUSINESS

Ajaojuta to fire the blast furnace before 2023 Continued from page 23

posed to employ like 10,000 Nigerians when it is fully functional, so everything is going on. The staff that are there presently have maintained semblance of pseudo runs, so that the machines will not rust, they keep oiling it, they do a lot of dry runs, without producing anything they put on the machines, and essentially why its not a looted or ghost town, a vandalized town is because there are people there.

The place is run by a sole administrator.

However, there will be a major hurdle because most of the people that were trained then, this should be over 40 years ago, are aged and some retired, some even died, but we still have some of the old hands there, We might probably just expand that, so it is going to be part of the whole deal to run training as well, that is why they will have to run it for a while. So by the time they hand it over, Nigerians could fully operate it on its own.

Can you speak to the effort at formalizing the activities of the artisanal miners?

Essentially what we are doing, we realized that there is no point to criminalize artisanal miners, because they are mostly subsistent miners, it is just like someone farming to feed; essentially they tell you they need the activity to feed their family. Like I said, they are here today and gone tomorrow, most of them are people who found it in their linage and that is what they have always done, so they know that this thing is under their soil and they just get the crudest equipment like hoes and shovel and just dig the ground until they find something.

So what government has decided to do rather than putting these guys out of work and create more problem is to enhance their activity, essentially is safety first, teach them safer method of mining.

A lot of them die when rocks collapse on them, you could be mining but because you don´t have proper geological data you could hit a water weight, the pit is filled and people drown. Some people realize gold, and gold sometimes comes with other metals like mercury and like what happened in Zamfara which caused some deaths was because of the ignorance. In order to separate the gold and the mercury, they needed to crush using the same mill, whether pestle and mortar that they were using to prepare their food.

They crushed successfully to remove the gold but the mercury stays in their mills, pestle and mortar and all that, so when they bring their grains that they want to eat, the mercury gets to their food, they inject mercury directly, and it cause death.

Mercury can even penetrate your skin and you have mercury poisoning and all of that.

There is a certain level that mercury gets to the body and when it exceed that it leads to problem and that is what kills people, but essentially those that did not die, it damaged their nervous system.

Essentially, that is what this program is all about, to say there are better ways, even when you mine a gold and you find mercury, there are ways to separate them.

So essentially what we are doing with the formalization is after their own safety first, they are citizens of Nigeria and the government cares about them, they don´t have to keep killing themselves. Now we give them equipment and funding so that they can increase their productivity and increase their capabilities. By doing that, government recognizes them and they in turn recognize the government and give government its royalty. That is what we are doing in broad terms, and ofcourse, that

involves a lot of activities, going out there, wining their trust, sensitizing them, get their biometrics, opening bank accounts for them, formalizing them, if they come together and form registered companies, we will give them license. There is what we call the small scale mining license, so they operate legally not illegally like they are doing now, so those are some of the things we are doing.

Can you put a figure to the World Bank’s commitment to this course?

Essentially we are using a lot of intervention funds now from the federal government, which is part of the money why SMDA was created. I can’t really put a figure to that, but the World Bank would come in and support as well, as we go on. In Nigeria today, we have about 95 to 96 percent of mining activity by artisanal miners, so when we are talking probably about 2 million people all over Nigeria.

Can you also speak about the national exploration project and the automation?

Part of the intervention fund I told you the government gave us, that is about N50billion, the ministry was an intervention fund from the natural resource development fund. These are statutory fund with the federal government, it is meant to enhance agriculture, water resources and mining.

The first time the ministry of mining would access that fund was in 2017 when Governor Fayemi was here and the ministry was given N30 billion as intervention fund, and rightly so. About half of that is committed to getting data which is to attract the big miners, it is called NIMEP, I spoke about earlier. It targets some mineral s and develop enhanced data on them, so basically that is what is being done and that is what NIMEP is all about. NIMEP is our poster boy, when we go out to market investors, we tell them we’ve de-risked the sector by investing Nigeria money to get the data that they need, so they don’t have to carry the risk. But we are saying at such level it no longer become free, you don’t just come for license on a place where we have explored like that, we are going to bid rounds at that time. Like you do in the oil industry, when you find the prospect, you have done the homework, it has gone beyond the ordinary level of prospect and you are almost certain, then that is the level NIMEP is taken to, and then when people come in they just do little exploration and they start their mining. So that result will be available for everybody www.businessday.ng

but then, they will have to bid for it, and of course we have to set up some parameters, whoever that is successful, gets the license for that particular mineral in that particular area.

Are there plans on technology transfer to enable us come at par with other countries?

I won’t say come at par but you see, the good thing about this is that everybody has their mineral. South Africa’s mining history is over 150 years old. In South Africa, they have a mine that is about 4 kilometers down, it is so deep and with pressure such that you can’t go down at once, it is a two shaft thing, you go down 2 kilometers, you change to get acclimatized into another level, it’s like when a plane goes up, it is pressurized, so that is technology. The beauty is that as a government, we are not really involved in mining we are just regulators, so Nigerians get the benefit of the latest technology because people who are coming in now get the best. I was in South Africa and was discussing with the mining council, the man was telling me that, yes, with technology now they have been able to reduce mortality. He said throughout last year, the total mortality case they had was about 59, but may be 20 years ago, you are talking of 600 a year. So Nigeria gets to benefit from the latest technology, we might even be able to get zero mortality in years because there are new technologies, even robotics that goes under ground to get these things out. So we are getting the best, we abandoned mining because of oil and gas, when oil and gas was discovered we shifted focus away from mining but now because of the dwindling fortunes of oil and gas due to climate change and all of that we are refocusing back on mining to shore up our economy, so the advantage this time is that we are getting the best technology, we have not been part of the evolution that has occurred from the crude method to the improved technology but we seem to be coming when the best is here.

The miners/investors will bring the technology with them, all we have to do is to attract the investors.

What’s your target on Mining contribution to GDP? We were at 0.3 percent but we are now at 0.5, but if you look at the actual revenue generated by the ministry there has been a steady climb. We came in at over N4billion, in 2019 we have done almost N6 bil-

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lion already but by the time official figures are out, it may be slightly more than that.

However, we’ve come to one realization that what should be credited to mining is not being credited, we are also agitating for that. We contribute so much more than is being credited to us. The cement industry is essentially mining, the fund created by the cement industry is credited to industry and not to mining, meanwhile to make cement about 94 percent of material is limestone which is mining. So essentially cement is mining, and money that cement contributes in terms of VAT, taxes which should be credited to mining and not industry. If you do that you will see that mining is actually doing more because we have got a lot of cement factories in Nigeria now, we have Lafarge, Dangote, Bua, we have so many cement companies all over Nigeria and they contribute so much to the economy and it is not credited to us, if that were to be done, we would actually do better than what is given to us.

Right now as at 2018, we contributed about 0.5 to the GDP, the target is to be able to reach 3 percent by 2025 and this is possible because even without crediting those ones I talked about, we should exceed that 3 percent, because now we are posed for exponential growth, rather than just incremental growth that we had. This will be exponential because a lot of efforts in the past which of course you must also credit my predecessor for, has come to crystallize, there is a proper mining company that is exploiting gold in Ilesha Osun state. That is the first foreign mining investor in Nigeria and they have started building their mine, which is what others are waiting for. If it succeeds and by the grace of God it will, they hope to start exporting gold from Nigeria by the end of this year, the fact that they are here is already attracting other people to come, it is like who dares first. By the time they start exporting gold by the end of the year, it would be an exponential jump for our revenue base, our revenue base is low now because we are chasing all these small people about, but when the big ones come in and everything is properly regulated, we get what is due to us and that is an exponential growth. I see us exceeding the target by the time other companies come in and we’ll be home and dry. I pray and hope that this comes to pass and by the time we are leaving in 2023, we probably would have gone above that 3 percent that we are hoping for in 2025.

What is your major concern for the sector?

The first is the human factor, every Nigerian needs to start thinking beyond self. Nigeria has found herself where it is today because everybody has been selfish, but if we are not careful, we will be pushed to a point that we will just go over the persiphate because there has been growth but not inclusive, that is my concern. I say that because, there is a place in Dubai called Zamfara gold, the gold that are exported out of Nigeria on a monthly basis is nothing less than 500 kilograms, that in itself can fetch Nigeria government a lot of money, that can create employment but it is going out with the government not realizing anything from it, but there is a last man at that point, so every Nigerian will start thinking beyond his pocket. Why will a Nigerian custom officer compromise? It’s because he is thinking of his pocket, by allowing another person to carry the gold out without proper certification, he is thinking of his pocket, how to get money. So that is the major thing. Nigerians need to start thinking beyond their immediate self, because by the time you make that money you may not have a place to spend it. Every Nigerian should start thinking for the collective Nigeria.

@Businessdayng

Monday 23 March 2020

BUSINESS DAY

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cityfile Why we bar foreign participation in 2020 festival - LASG JOSHUA BASSEY

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agos State government has explained that the decision to bar tourists outside Nigeria from participating in 2020 Greater Lagos Regatta and Festival was to check the spread of Covid-19 (coronavirus).

The regatta and festival scheduled to hold during this year’s Easter celebration may, however, be delayed, due to the coronavirus pandemic.

Commissioner for tourism, arts and culture, Uzamat AkinbiIe-Yusuf told journalists that the government was adopting this measure to ensure that local tourists and fun seekers were safe.

The virus which broke out in China on December 31, 2019, has so far claimed over 8,000 lives in countries around the world including United Kingdom, United States, Iran, Italy and fast spreading across Africa, forcing nations to adopt panic measures.

AkinbiIe-Yusuf said that the state government was not cancelling the three-day

greater Lagos festival, but taking steps to ensure the safety of people.

The festival, an initiative of the state ministry of tourism arts and culture, is being organised in partnership with Gradient Hill Company Limited. It is designed to espouse the tourism potential of the state and market the Lagos brand to tourism investors across the world.

“Our intention is to market Lagos tourism to investors beyond the shores of this country, we want them to see and appreciate the rich cultural heritage and Aquatic endowment of the state.

“We are restricted to limit participants for this event to tourists and fun lovers within Nigeria because we do not want to expose Nigerians to the raging coronavirus across the world.

“We are equally going to provide sanitisers to complement other precautionary measures that would still be put in place through our working relationship with the ministry of health, she added.

Lagos State Centre Mosque under lock, during Jumat prayers on Friday, following the directive of Lagos State Government to curtail the spread of Coronavirus.

Why Lagos should privatise water treatment plants FG donates food items to Zamfara IDPs

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he Federal Government has donated assorted grains and other food items loaded in 42 trailers, to Internally Displaced Persons (IDPs), in Zamfara.

The items were presented through the National Emergency Management Agency (NEMA), to the Zamfara government on Friday.

The Director-General of NEMA, Mustafa Maihaja, who presented the items, said that the 29,930 bags of assorted grains were assistance to beneficiaries across 14 local government Areas of the state.

Represented by Umar Sani, Maihaja said that the items comprised 15,000 25 kg

bags of Sorghum, 9,938 25 kg bags of Gari, and 5,000 50 kg bags of millet.

The items were facilitated by the lawmaker representing Maru/Bungudu federal constituency, Shehu Ahmad.

The senior special assistant to Governor Bello Matawalle on State Emergency Management Agency (SEMA), Aliyu Maradun, commended the Federal Government for the gesture, saying that the assistance was timely as many households had been rendered hopeless after banditry attacks.

He said that the state government had been supporting IDPs and other victims of various disasters across the state.

Covid-19: NGO distributes 1m sanitisers to Kogi communities

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non-governmental organisation, ‘Waves of Success Foundation’ at the weekend commenced the distribution of one million bottles of hand sanitisers to schools and communities in Kogi East.

John Ocheja, executive director of the foundation, said at the flag-off of the first phase of distribution that it was part of measures to curtail the spread of Corona virus (COVID-19) within the communities.

Distributing the sanitisers at Ejule, Ofu local government on Friday, Ocheja said the exercise would complement the efforts of federal and state governments at preventing the spread of the virus.

The executive director stressed the need for students and the public, especially those at the grassroots, to be hygiene conscious.

Ocheja called on wellmeaning Nigerians to join hands with government at all levels to check the deadly pandemic, rather than watch it seize the land and the people.

Among the school that schools that benefitted from the gesture was Community Secondary School, Ejule.

The team also extended same gesture to Roman Catholic Missionary Schools I and II, Ugwolawo, as well as United Evangelical Church Primary and Secondary School Ugwolawo, all in Ofu local government. www.businessday.ng

ANTHONIA OBOKOH

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anaging director of Law and Logan Energy and Engineering Ltd, Ajiboye Oyeleke has advocated the privatisation of modullar water treatment in Lagos, saying this would greatly enhance the quality of health of the residents.

Oyeleke, in an interview with BusinessDay, said modular water tanks would provide an effective and affordable approach to water treatment as well

as generate clean water in a community without having to run long pipes that yield little or no result.

According to him, with an increasing population of Nigeria, having access to clean water has become more challenging in urban areas like Lagos.

He noted that the menace of contaminated water has become a major concern globally, especially in underdeveloped/developing countries, and measures were required to deal it.

According to World Health organisation

(WHO) 3.4 million people, mostly children, die annually from water-related diseases. But the disease is almost unheard of in places where basic water supply, sanitation and hygiene prevail.

“One of the most effective means of treating water is by putting in place modular water treatment tanks,” he said.

According to Oyeleke, these modular water tanks can be used in housing development, environmental remediation, industrial parks, day-care centers, schools, religious centres,

among others.

He argued that although the Lagos State has put in place a pretreatment water system, it was not really as effective as it should be.

“In light of this, we encourage the government to work towards its privatisation so that individuals can have access to clean and potable water.”

“We also urge Lagosians to cooperate with the government on this by not partaking in water pipe vandalisation and other hazardous activities,” he said.

Coronavirus: Kano residents advocate community surveillance … say self-isolation ineffective ADEOLA AJAKAIYE, Kano

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ome residents of Kano have called for proactive surveillance in high density settlements to ensure effective prevention and containment of the Coronavirus (Covid-19) pandemic in the state.

Residents of the state in separate interviews at the weekend said such measure was required to stay safe.

Mukhar Muhammad, a resident of Dorayi Quarters in the metropolis not-

ed that isolation of persons with suspected infections would be difficult in such highly congested settlements due to poor town planning.

He said most settlements in the suburbs of the metropolis were poorly designed which made them prone to transmission of infectious diseases.

“Residential homes in most settlements are cluster in traditional settings which negate spacing between houses, thus prone to transmission of communicable diseases.

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“It is desirable to adopt sound surveillance measures to monitor the situation and contain spread of the disease,” he said.

Another resident, A m i nu Ib ra h i m, a l s o called for introduction of surveillance and monitoring mechanisms in religious places of worship, markets, parks and other strategic public places.

Isa Tanko and Halima Kabiru, who corroborated earlier opinion, also commended the state government over the closure of schools and enlightenment campaign on the @Businessdayng

pandemic.

They called on the people to adhere to medical advice on preventive tips of the disease and imbibe good personal hygiene habits.

Recall that the Kano State government last week directed the closure of public and private schools with effect from Monday, March 23.

The ministries of health and information also embarked on a joint community sensitisation exercise to create awareness and contain the spread of the disease.

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Monday 23 March 2020

BUSINESS DAY

INSIGHT

Zainab Ahmed, a factor-of-management type change in Nigeria Zainab Shamsuna Ahmed, the Honourable Minister of Finance, Budget and National Planning, makes an economic manager that is really hard to find; she is almost naturally providing and initiating outstanding reforms that have seen Nigeria toe the path of undeniable growth, and facilitating the future development of the country, writes Yunusa Tanko Abdullahi

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ince the viral outbreak of coronavirus (COVID-19) in China, with its attendant index case of the viral virus in Nigeria, the entire world has literally come to a sudden halt. With major societies shutting down, canceling events all over the world, the economies as a whole are experiencing the strain of the global pandemic. However, it could be easy to forget how the Nigerian economy has fared, since the first, immediate impacts of COVID-19.

When a nation seeks to transform, it is to ask public servants to stand on the edge of a precipice from the known to the unknown. It is to ask them to take a huge — scary — leap of faith. Then the people would like to hear what happened after all.

Many economies across the world are seriously strained as a result of the menace of COVID-19 and the impact of the virus is whacking aloud, giving economic managers real headache.

Although now is not the time to celebrate success, yet it is reasonable to follow with a conversation about success; about how some managers, like Zainab Ahmed, the Honourable Minister of Finance, Budget and National Planning, walk a very tightrope to get the economy going.

Nigeria nay the world would want to see what next in the light of the fact that: “When you change a system, you make big, wholesometype-change.” All this is for the reason that, it is really very hard to be a change-maker in government.

But Ahmed, going by the ways she has been working at thrashing the COVID-19 issue, has made one of thousands of personalities in governments all over the world trying again and again to press beyond the status quo. No wonder the management of BusinessDay Media Limited, the leading economic and business intelligence daily in West Africa, has found her worthy of being honoured.

Ahmed has been seeking to create positive change by iterating out slowly, edging closer to seeing the country through by which feat she is worthy to be celebrated for her perseverance, tenacity and dogged determination. She sees working in government as an opportunity to make a better life for the people — a huge responsibility; she understands that doing so requires strength of purpose and dedication to falling down and getting back up, over and over, until that moment when there is success. Achieving success and recognition has come

Zainab Ahmed

in leaps and bounds for Ahmed who only recently was honoured by her alma mata, the Olabisi Onabanjo University, AgoIwoye, Ogun State with a Honorary Doctorate Degree (Honoris Causa).

The Honourable Minister is part of the Presidential Committee set up to review the impact of COVID-19 on Nigerian economy. In view of the weight of the responsibility of the Committee, she states that: “This committee that has been set up by the President to review the impact of COVID-19 as well as the crash of crude oil price has gone just now and had a short meeting with the President in which we filed an interim report and the President has directed that we should consult and come back to him with an update next week.”

What the Committee to which she belongs has been mandated to do is to ensure that the business of government continues to run as much as possible normally, that government agencies are funded.

But there must be continuous investments in critical infrastructure that would ensure continuous growth and also concentrate on programmes and projects that will enhance employment of our people.

According to her, “We are looking at ways and means in which the revenue of government will be stabilised and that we are able to fund the states through the FAAC process at a level that is averagely expected www.businessday.ng

and planned for both the federal as well as the national budget.” She, with her team, works very hard to secure approvals and to inform the public of the specific approvals that she has been able to obtain from His Excellency the President.

In terms of the volume of trading at the time as this, she would say, “yes China is one of our largest trading partners. So even though COVID-19 is just one of the two cases that have been imported here, we feel the impact in the economy because of the trade volume.”

“But we have seen already that China is beginning to go back to work. Of course, there is a lag period

‘

Without overstating the fact, the economic performance in recent times, in spite of the many challenges, has been on the grounds that Ahmed has initiated many of the reforms that have put Nigeria in good stead since the last recession in 2016

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for what has happened. Already, the crude oil period has moved from $30 per barrel to $36 per barrel. So, there will be a recovering... So, we will manage the economy by prioritizing what we do for the period that there will be slow activities so that when things pick up everything will go back to normal,” she also says.

By dint of hard work, she had presented the fourth quarter Gross Domestic Product (GDP) report, saying: “As at 2019 Q4, the GDP was 2.55 percent and full year was 2.27 percent, but since then, because of the start of the COVID-19 pandemic, which caused a run on the crude oil price, we had to step back and make an assessment of the impact of this pandemic as well as the impact of the crude oil price decline on the Nigerian economy.”

She was pleased to report that “just a day after His Excellency had approved a number of measures for us to implement. These measures include the introduction of Premium Motor Spirit (PMS) price modulation mechanism. The reason being that at the low crude oil price of $30 to $32 per barrel, there is no under recovery. The under recovery is right now zero; in fact, we are at an over recovery stage, meaning the PMS price will be reduced to reflect the reduced price of the crude oil in the international market.”

So far Nigerians have witnessed a reduction in the pump price, certainly following her report. Mr. President had also approved that, “we should cut down on the size of the federally funded upstream projects of the petroleum sector. The reason being that we want to be able to get more revenue, by less reductions from the Nigerian National Petroleum Corporation (NNPC). The reduction of the crude oil price from the $57 per barrel that we budgeted to $30 means that we are going to get so much less revenue, almost 45 percent less than we planned, and because of that, we have to amend a lot of projections in the budget as well as in medium term expenditure framework (MTEF) to reflect our current realities.”

As stated in Ahmed’s report, the President had also agreed that the Committee should do a scenario to reflect what the actual position will be with a $30 crude oil price. That is, they were to anticipate what will be the worst case scenario, and they have worked on that scenario and this scenario necessitates that quite a number of expenditures needed to be cut down, “even as we review how we can enhance revenues that @Businessdayng

are not directly affected by the crude oil price decline.”

Sleeplessly working to ease the impact of COVID-19 on the economy, the Honourable Minister and her team are looking at enhancing production to make sure that at the minimum the 2.18 million barrels stated in the budget as production volume is realised, and NNPC has directives to that effect. In her words: “We also need to adjust the revenue from the Nigerian Customs Service (NCS), which has been budgeted for at N1.5 trillion. But we are adjusting it downwards because we anticipate that trade volumes will reduce, and once trade volumes reduce, Customs revenue will be significantly impacted as a result.”

Ahmed would not relent in her efforts as she has also secured approvals to reduce the projected revenue from privatisation proceeds by as much as 50 percent because, again, with the slowdown in economic activities, “we are anticipating that the sale of independent power plants might not be fully realized as planned for in the budget.”

On the expenditure side, she had appealed to the President to procure a cut down of the capital expenditure budgeted by 20 percent across ministries, departments and agencies (MDAs) and also a 25 percent cut of all government owned enterprises. And these include the ones that are in the national budget: “The ones that we included in the 2020 budget, and also the ones that we did not include in the budget.

All the government own enterprises will have their recurrent expenditure and capital expenditure cut down by 25 percent.”

By this measure, it clearly shows Ahmed expects that the operating surpluses that will accrue to the federation will increase, because when their operational expenditure reduces, the operating surpluses that they remit to the treasury will also increase significantly. The rest of her actions provide evidence of better macroeconomic management by the present government.

Without overstating the fact, the economic performance in recent times, in spite of the many challenges, has been on the grounds that Ahmed has initiated many of the reforms that have put Nigeria in good stead since the last recession in 2016.

Yunusa Tanko Abdullahi is special adviser, media and communications to the Minister of Finance Budget and National Planning.

Monday 23 March 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

27

• Utilities • Managing your Tax

The Corona Virus and your personal finances investment choices. Risk tolerance and risk capacity change over time and it is important to know how much risk you can absorb.

If the current market volatility is causing you sleepless nights, you do need to review your investment portfolio and consider rebalancing if necessary.

Remember that by selling in a bear market and amid so much uncertainty, you only crystallise your losses.

The question to ask before investing is why are you investing in the first place? Bear in mind that stock market investments require a long-term perspective with an investment goal in mind. In the short term the market can be volatile.

Diversify your investments If all your money is in one asset class, it is almost impossible to mitigate risk. Diversification is one of the best ways to manage risk. With a well-diversified investment portfolio including a variety of asset classes including stocks, bonds, cash, real estate, business interests etc. that take into consideration your investment goals, you will be in a better position to ride the market volatility without being forced to sell at a loss.

Diversification also involves investing across geographies and currencies so that you reduce foreign exchange risk in at least part of your portfolio.

www.businessday.ng

‘

Try to look on the bright side; this could be a time to plan to spend more time at home with loved ones, or alone doing the things that you haven’t had much time for; reading, resting, playing games, reflecting, writing Mutual funds offer easy access to the stock market as well as a variety of funds, professional management, and a diversified portfolio in both local and foreign currency. Always think long term in your investment strategy.

Seize Opportunities Uncertain times usually present opportunities.

A market decline is a good time to take advantage of falling stock prices. If anything, this should be considered an opportunity to invest in strong companies at significant discounts. Sadly, people do the exact opposite and sell at painful losses. Before investing, seek professional advice; you do however need to develop your own knowledge, as ultimately you are responsible for your money.

Invest in yourself When last did you invest in yourself? Don’t wait for your employer to develop you; indeed, many

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W

e all crave a level of certainty and predictability in our lives; these clearly are uncertain times and it is easy to become anxious.

We cannot be in control of everything that happens around us, but what we can and should do, is to be proactive about taking charge of our personal as well as our financial lives.

Health is wealth.

The Corona Virus has shown what an interdependent world we live in and in such a graphic way.

We all have an individual responsibility to follow the clear guidelines set by the Ministry of Health. Wash hands frequently, keep a social distance and avoid crowds, practice self-isolation if necessary, and call the hotlines if you need help. These are critical measures that we do have some control over.

Whilst you must stay informed, try not to be overwhelmed by all that you hear including the fake news. Keep abreast of the evolving situation as it affects us all directly.

To break the cycle of this deadly virus, each one of us has a role to play. We must be disciplined and considerate.

Here are a few tips regarding your personal finances: Cut back on your spending During times of crisis such as this, we simply need to cut back on spending and be frugal and disciplined. This is where good old budgeting comes into play. Track your expenses and prune down those indulgencies for now. Develop a strict spending plan or budget for essentials so that you are accountable for all your spending.

Do you have an Emergency Fund?

An emergency fund provides you with a cushion during emergency situations. Job security

will be affected as some companies may have to cut salaries, reduce work hours or lay off staff due to falling demand as people stay away from public places.

Financial experts recommend having a financial safety net of six to twelve months’ worth of basic living expenses. Ask yourself; how would you cope if you lost a significant chunk or all of your monthly income? Could you live off your savings for 6 months? For many people this will sound absurd but just start by saving enough to cover one month’s living expenses and then build up from there bit by bit. Having some funds to fall back on gives one a sense of security and some peace of mind.

Don’t panic buy Panicking and taking drastic action without careful thought will only make your situation worse. Keep in mind that this crisis is affecting everyone and not only you. This is not the time to stock up on things you don’t need; it only creates false scarcity and increases your costs even further in an environment of high inflation. Of course, there are some essentials you do need but not to last a year!

Don’t panic sell Usually, when market moves cause you to panic or over react, it may well be that your risk tolerance level does not match your

companies have cut back on training. You are your greatest asset and you owe it to yourself to continue to improve yourself by reading widely and learning constantly. Fortunately, there is so much information and great material on line; some of it free of charge.

If you find yourself at home for an extended period, use the valuable time efficiently. Consider finding an appropriate learning opportunity so that at the end of this period, you come back even better equipped.

Remote working Working from home, where feasible, saves your workforce considerable sums in transport costs. It also reduces stress as they avoid the congested rush hour commute and keeps them save from the risks associated with crowded public transport. Once there are clear KPIs, deadlines and targets in place,

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this may be a useful solution at this time if appropriate for your business model.

Stay in touch Invest in your network.

Networking provides you with new ideas, opportunities, and contacts. Make those calls; networking need not be physical. Ideally you should be networking all year round and not only when you need something. These timetested strategies will hold you in good stead during times of uncertainty and when things get back to normal.

Don’t get derailed by all the bad news at home and abroad. Stay focused and approach your personal finances with clarity. Try to look on the bright side; this could be a time to plan to spend more time at home with loved ones, or alone doing the things that you haven’t had much time for; reading, resting, playing games, reflecting, writing. These challenging times will end, but even before they do, you can take deliberate steps to come out stronger at the other end.

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

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Monday 23 March 2020

BUSINESS DAY

real sector watch

Backward integration projects put Dangote, Olam, FMN in driver’s seat ...amid imminent FX crunch ODINAKA ANUDU

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he backward integration projects (BIPs) of Dangote Group, Olam Nigeria, Flour Mills of Nigeria (FMN) and several similar companies have put them in advantage as the country nears another foreign exchange crisis resulting from falling crude oil prices.

The spread of covid-19 and the oil price war between Russia and Saudi have forced a dramatic drop in crude oil price. Brent crude price was $30.57 per barrel at 11.20am on Friday—almost $27 from $57 budget benchmark. WTI crude oil price was $27.45 per barrel.

Though these represented a rise from $22 per barrel few days before, the situation still portends danger for an oildependent Nigeria. The current situation is worse than 2016 situation and could batter Africa’s largest economy.

Falling oil price is bad news for Nigerian manufacturers who depend largely on foreign exchange from crude oil to import raw materials. With foreign reserves falling below $36 billion mark last Wednesday, many manufacturers will struggle to stay afloat when the inevitable foreign exchange crisis starts.

But those of them with advanced backward integration projects could be in driver’s seat as that could make it easy for them to

source local inputs from their own projects.

Backward integration occurs when a company buys its suppliers or internally produces segments of its supply chain.

Dangote Sugar currently imports raw sugar, but its sugarcane plantations could enable it to source raw sugar for onward refining at its Apapa, Lagos, plant.

The company is investing billions in sugarcane plantations in states such as Taraba and Nasarawa.

It plans to produce 1.5 to 2 million tonnes of refined sugar annually from sugarcane plantations covering more than 150,000 hectares of land across a number of sites in Nigeria.

“ This step will move D a n g o t e S u g a r f ro m a port-based refining to fully integrated sugar production within Nigeria, thereby helping Nigeria to achieve self-sufficiency in sugar production, and create over 100,000 new employment opportunities,” the company says on its website.

Apart from its projects in sugar, which gulp over N50 billion, FMN has oil palm plantations at Ugbogui and Iguiye near Benin City in Edo State. It has expanded to 4,000 hectares (ha) of established palm in the first phase of local palm oil production needed to support the upstream needs of the group’s oil refining operations in Ibadan.

FMN ’s Sunti G olden Sugar Estates features 17, 000 hectares of irrigable farmland and a sugar mill processing 4,500 metric tons (MT) of sugarcane per day.

At full capacity, the estate can produce 1 million tons of sugarcane which roughly translates into 100,000 tonnes of sugar yearly.

John G. Coumantaros, chairman of FMN, said at the 2019 annual general meeting that the Sunti Golden Sugar Estates achieved its first development target of 2,836 hectares of land under cane in July 2018.

FMN merged Golden Sugar Company with Sunti Golden Sugar Estates Limited in 2019.

Through its Caraway

Oluwatoyin Akomolafe (L), national president, Nigerian-American Chamber of Commerce (NACC) presenting a plaque to Dikko Umaru Radda, director-general, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) at the NACC breakfast meeting on sustainable entrepreneurship held recently in Lagos.

Foods International Nigeria Limited, Olam Nigeria is developing a strong tomato value chain to enable it get fresh tomatoes for onward production of concentrate and paste.

The company started a pilot project in September 2019 on 20 hectares of farmland across three locations in Kano and Jigawa states, which will be expanded to 500 hectares later this year. It plans to commence a larger out-growers programme to engage 1,000 farmers to be trained and provided with seeds that will deliver the same kind of output the pilot farms are recording.

“It is a very proud moment for us to say that our products are 100 percent locally made and also because it provides employment,” said Prashant Thakur, regulatory head for Caraway Africa Nigeria limited, who is also heading the tomato backward integration project.

Olam also has BIP projects in its cereals across Nigeria.

More so, PZ Wilmar, which is a subsidiary of PZ Cussons, has over 50,000 hectares of oil palm plantation in Cross River State. The firm acquired the defunct Calaro Oil Palm Estate, formerly owned by Cross River government, as well as the 12,805-hectare Kwa Falls oil palm plantation, formerly owned by Obasanjo Farms.

It also bought the 5,450-hectare Ibiae Oil Palm Estate and another 8,000 hectares estate in Biase.

Many manufacturers have established partnerships with local suppliers to save costs and beat FX crunch. They are willing to avoid the mistake of 2016 which saw 54 manufacturing firms shut down and 222 small businesses go under as a result of FX crisis.

Guinness Nigeria plc works with more than 30,000 farmers of sorghum who supply the brewer with the commodity regularly.

“We have a team that works with a wide range of partners to provide technical services, farming knowledge, financing, insurance, processing and harvesting to enable over 30,000 smallscale farmers move from basic to more efficient and productive yields,” Baker Magunda, managing director of Guinness Nigeria plc, told BusinessDay in an exclusive interview. “The team helps them to get high yielding seeds and to have confidence in financial matters so that when they get money, they can make better choices,” he further said.

Nigerian Breweries is also working with Psaltery Limited for sorghum supply.

Similarly, FrieslandCampina has a BIP project in Oyo State where Fulani herdsmen supply raw milk to the company.

Analysts say companies without BIP projects or plans to source locally may struggle as FX crisis nears.

Nigeria has failed to diversify and relies on oil for over 90 percent of FX earnings and 70 percent of revenue.

Will CBN palliative measures spike innovation in pharmaceutical industry?

Gbemi Faminu

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he Central Bank of Nigeria (CBN), in its move to alleviate the challenges faced by players in the private sector, has opened intervention programmes to support the business community.

The apex bank particularly opened loans to the pharmaceutical industry in order to help them expand or establish drug manufacturing plants in the country.

Apart from N50 billion, the CBN also announced a N1.1 trillion stimulus package that would include

loans to support the manufacturing sector to enable players recover from the impact of the virus.

The question that many industry watchers ask is, will the intervention fund spur more innovations in the pharmaceutical industry?

A lot of innovations have gone on in the local pharma industry.

Juhel, an Awka, Anambra State-based drug maker, recently unveiled its new Oxytocin injection for pregnant women, the first of its kind in Africa.

Drugfield Pharmaceuticals Limited also came up with Chlorhexidine gel, which caters for www.businessday.ng

the umbilical cord. It is one of the World Health Organisation(WHO)’s requirements for child care.

Similarly, SKG Pharma has locally produced Amino Acid and Vitamins, first in Africa. Moreover, Daily Need Industries has produced Amoxicillin Dispersible Tablets (DT), used for the cure of Pneumonia.

Also, May &Baker entered into a joint venture project with Federal Government to produce vaccines locally. It was gathered that the drug maker and FIIRO entered into an understanding for the commercialisation of a sickle cell supplement produced by the institute.

One industry watcher said he expected the funds to enable the industry produce more of hand sanitizers and face masks.

Umeh Frank, a media owner based in Enugu, said he expects the industry to start research around covid-19.

“They need to show that Nigeria has the capacity to provide solutions to global health problems,” he said.

A chief executive of a pharmaceutical firm, however, said the industry consistently needs an intervention funds to scale.

Covid-19 has infected over 150,000 people across the world and 12 people in

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Nigeria have contracted it already.

Nigerian pharmaceutical companies have faced various challenges ranging from foreign exchange shortages to poor access to credit. Capacity utilisation in the industry sits at 47 percent, according to Manufacturers Association of Nigeria (MAN).

The pharma industry grew its revenue by 12 percent in 2018, which represents a decline of 11 points from 23 percent achieved in 2017.

An industry article by McKins e y & Company themed, ‘Winning in Nigeria: Pharma’s Next Fron@Businessdayng

tier’ states that the Nigerian pharmaceutical industry has the potential to contribute significantly to the economy. But it stresses the need to build infrastructure to support the industry.

“The value of the Nigerian pharma market could rise by as much as nine percent a year over the next 10 years to reach $3.6 billion by 2026 (exhibit), making it as large as the South African market today,” the report says.

“Over the same period, Nigeria could contribute between $1.9 billion and $2.2 billion to pharma sales growth, 55 percent of it from prescription drugs,” it adds.

Monday 23 March 2020

BUSINESS DAY

Start-Up Digest

29

In association with

Mark Essien reaps fruits of resilience as Hotels.ng waxes stronger ODINAKA ANUDU

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ark Essien is reaping the fruits of hard work and resilience as his Hotels.ng continues to wax stronger.

Hotels.ng is an online hotel booking platform where anyone can browse through thousands of hotels and book their desired rooms.

Mark Esssien founded Hotels.ng in 2013, and the organisation has turned out to become Nigeria’s largest hotel booking website.

The 40-year-old Essien studied in Germany and returned to set up Hotels.ng, having found that this was a virgin area at that time.

He raised $250,000’s seed fund from Jason Njoku’s SPARK in 2013, but the fund almost got exhausted along the line because most of it was going into salaries. But it is a different story today, having secured more international funds.

The online portal allows people from all over the world to book rooms from a selection of over thousands of hotels. It is easier and convenient for tourists

and those who need hotels, meaning that there is a high potential for growth.

Like Uber, Bolt and many others who provide carhailing services without owing one car, Essien’s Hotels. ng rakes in millions from bookings without owning a building.

His ingenuity could be traced to Germany where he acquired his university education. Mark Essien has a Bachelor of Engineering (B.Eng) in Computer Hardware Engineering from Beuth Hochschule Berlin, Germany and M.Sc. in Computer Science from Freie Universitat, Berlin, Germany.

While in Germany, Essien developed a file sharing software, Gnumm, which was later acquired by Snoopstar.com. He worked briefly with the firm before becoming a freelance software developer. What he learnt from this firm helped in the formation of Hotels.ng.

He created the first version of Hotels.ng in 2012 which was just a list of hotels at the time. He observed a heavy traffic from people across the world, convincing him that he was in good business.

Mark Essien

Hotels.ng has launched Hotel.africa and a corresponding flights service, Fly.africa. It has over 30,000 hotels across Africa, covering Nigeria, South Africa, and Kenya, among others.

Hotels.ng and Spark.ng invested in an online startup, OgaVenue, in 2016. This is an event venue booking

platform with over 8,000 event venues across Nigeria.

Essien is a man with sound business acumen. In 2017, he Tweeted a quote that is popular among Nigerian entrepreneurs.

“If one client is 50 percent of your revenue, you are not a business, you are a department,” he had posted.

His logic is that business

revenue should be spread to avoid shocks that could lead to shut-downs if the client was no more available for business.

Essien is estimated to be worth $10million. He has over 150 staff members who are constantly searching for new opportunities and serving hotels and customers across Nigeria.

He recently co-founded HNG Internship, a firm that provides free internship to Africans interested in coding. He stepped down as CEO of the firm in August 2019 and was replaced by Seyi Fade, an expert in coding.

HNG internship programme lasts basically for three months. It remotely recruits and trains the most talented software developers across Africa. The internship is free.

Essien said the vision of the company was to “massively accelerate Nigerians and Africans becoming software developers.”

Forbes said the HNG Internship started when Essien wanted to hire three local developers.

“The search was challenging, however he eventually found three talented individuals who were also

keen to develop their technical skills,” Forbes said.

“The next year, he decided to advertise the programme and 170 people applied. Rather than filtering through CVs, he gave the applicants a technical task and each day he eliminated the weakest 10.

Eventually, he was left with 10 candidates who proved to be exceptional interns,” Forbes further said.

With a huge number of people across the world booking hotels on daily basis, Essien’s business is seen as the right one.

Booking.com is one of Hotels.ng’s biggest competitors.

Booking.com’s revenues for the second quarter of 2019 stood at $3.9 billion, a 9 percent increase from the prior year.

Tivago, a hotel booking firm owned by Expedia, earned revenues of $1.008 billion in 2018. Expedia raked in $11.2 billion in 2018.

Trip Advisor earned $1.56 billion in revenue in 2019.

Hotels.ng is wax ing stronger and it is seen as a million-dollar online company already—with more growth potential.

Coronavirus: SMEs find solace in CBN’s interest rate reduction, N50bn facility …call for transparent implementation Josephine Okojie and Gbemi Faminu

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perators of small and medium enterprises (SMEs) in the country have lauded the central bank for its interest rate reduction on intervention funds from nine to five percent and the N50 billion facility meant to help those hit by the effect of the novel coronavirus outbreak.

The operators say that the measure is the right step and will help businesses survive the difficult moment of the outbreak and low oil prices.

“It is a very initiative from the central bank, especially now that the coronavirus

impact is greatly felt by businesses in the country,” said Femi Egbesola, national president, Association of Small Business Owners of Nigeria (ASBON).

“The problem is implementation and ensuring that SMEs are the ones accessing the fund, and it would not be politics as usual,” Egbesola said.

He noted that most previous intervention facilities similar to this never got to the operators of small businesses but were usually hijacked by politicians for their selfish interests.

He stated that if there was transparency in the disbursement of the funds, it would be the best thing the government had done.

Since December when www.businessday.ng

the outbreak of the virus was reported in China, it has spread to 166 countries with over 200,000 cases and 9,000 deaths. Nigeria, Africa most populous country, has reported 12 cases of the coronavirus.

To contain the pandemic, cities and regions across in Europe and Asia have been shut down, halting economic activities and obstructing supply chain as well as trade between countries.

Many SMEs operators in Nigeria are feeling the heat as they rely for imports for their raw materials used in production.

In a move to protect them from the economic disruptions amid the coronavirus spread, the country’s apex bank announced a N50bil-

lion facility through the Nigeria Incentive –Based Risk Sharing System for Agricultural Lending (NIRSAL) microfinance bank for households and Small and Medium-sized Enterprises (SMEs) that have been hit by the COVID-19.

“It is a good intervention especially with the coronavirus. The one moratorium and interest rate slash will help protect SMEs in the country,” said Degun Agboade, president and chairman of council, Nigerian Association of Small and Medium Enterprises (NASME).

“Lots of us are currently finding things difficult now as we cannot import the raw materials we need for production from China because of the virus but these inter-

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ventions will help cushion the effect,” Agboade said.

However, as the apex bank continues to roll out palliative policies for the various businesses, there are questions around how the businesses will manage, especially the MSMEs that engage actively in wholesale and retail trade.

There are concerns on currency stability, and disruption to global supply chains remains critical despite the slowdown in the spread of the disease in China which might improve the latter.

A national survey of MSMEs conducted by the National Bureau of Statistics (NBS) in 2017 shows that the country has 41.5 million MSMEs scattered across @Businessdayng

various sectors. The data also affirms that about 73 percent of these MSMEs fully engage in wholesale and retail trade activities with China as a principal partner.

Bongo Adi, a Lagosbased economist, said this was a bleak period for many companies, especially the MSMEs, because no country had been able to arrest the virus neither did anyone know when it would be over.

“MSMEs will experience a bad period because no one has been spared from the hit of the virus. It is going to cause a vicious cycle as people are apprehensive and very soon will refrain from buying, and this will affect the sales of these businesses and their revenue as well,” Adi said.

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Monday 23 March 2020

BUSINESS DAY

Start-Up Digest

Lifebank: More pints for Nigerians after Jack Ma’s $250,000 grant Odinaka Anudu

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igerians and Africans can get more pints of blood after Lifebank won Jack Ma’s $250,000.

Lifebank founder Temie Giwa-Tubosunwwon the Chinese billionaire’s $250,000 Africa Netpreneur Prize Initiative (ANPI) in Ghana in November 2019.

She plans to expand to ensure that Africans have access to blood and other medical products.

Lifebank works with hospitals to provide blood and lifesaving medical products for Nigerians in the required quantity.

The start-up has saved many lives, providing blood and other health services during emergencies. The start-up has an app that connects hospitals with available blood supplies, and has developed what is known as SmartBag tag, a blockchain-powered system that tracks the safety record of the blood. It likewise has an app that allows blood donors to register and book appointments at blood banks closest to them.

“I look forward to continuing my journey to solve

Giwa-Tubosun

problems and make a significant impact on the future of Africa,” Giwa-Tubosun said after the prize in Ghana.

The start-up has moved 20,397 products, registered more than 5,000 donors, and worked with over 1043 hospitals to save more than 7,314 lives, BusinessDay found.

“We believe that no African should die from a shortage of essential medical products at the Hospital level, and we are on a mission to solve it,” Lifebank says on its website.

“Our goal is to deliver needed medical products such as blood, blood products, oxygen, as well as vaccines to hospitals across Africa. We are on a mission to save one million lives,” it further says.

One Mrs Alake said in 2017 that she would not have been alive if not for Lifebank’s support.

Blood shortages are common in Africa’s most populous country. In 2018, the World Health Organisation (WHO) examined 191 differ-

Experts advocate policies to foster sustainable entrepreneurship Gbemi Faminu

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xperts in the organised private sector have called for the implementation of policies that will foster sustainable entrepreneurship and help the micro, small and medium scale enterprises (MSMEs) to thrive.

Speaking at the NigerianAmerican Chamber of Commerce (NACC) breakfast meeting themed, ‘Sustainable Entrepreneurship- a Win-win Strategy for the Future’ in Lagos, Oluwatoyin Akomolafe, national president, NACC, said entrepreneurship was one of the drivers of a growing economy. He said when business activities were sustainable, firms would grow and develop the country and its economy.

Akomolafe, who was represented by Adebayo Idowu, board member & chairman, Government & International Liaison Committee, NACC, said sustainable entrepreneurship would create employment, enhance products, processes, and establish incipient companies while changing people’s lives.

“Most importantly, it

should be noted that entrepreneurship for sustainable development is supposed to result in more than economic prosperity,” he said.

“Sustainable entrepreneurs endeavour to manage the ‘triple bottom line’. In other words, they balance economic health, social equity, and environmental resilience through their entrepreneurial demeanour.

Sustainable entrepreneurship is not only associated with the promise of more traditional concepts of entrepreneurship but additionally has the best potential both for society and the environment,” Akomolafe said.

Dikko Umaru Radda, D.G, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), in his presentation, described MSMEs as economic growth drivers responsible for driving innovation and competition in developing economies, contributing significantly to improving living standards and substantial local capital formation.

He said despite their impact, some of these businesses could not survive due to various issues around lack of funds, economic meltdown, www.businessday.ng

low patronage, inadequate power supply, among others. He further said that these businesses needed support in terms of adequate power supply, reduced tax rate, financial access and security, among others.

“Sustainable entrepreneurship is the key required to open the country to global competitiveness that will elevate Nigeria to be among the most economically advanced nations in the world. There is a demanding need for all activities that border on MSME development to be properly coordinated, monitored and measured for impact,” he said.

“MSMEs, therefore, need all the support they can muster from all stakeholders in order to survive in this era of open markets, competition and global economic crisis,” Radda recommended.

Radda also said that SMEDAN would continue to support strategic and sustainable entrepreneurship as it was a guaranteed strategy for economic development, adding that sustainable entrepreneurship development was a winning strategy for the socio-economic development of the country.

ent countries on their health system and ranked Nigeria 187 out of the 191 countries examined.

The concerns over blood safety have risen in recent times, and Lifebank is ensuring that blood transfusion is smooth-sailing.

In 2018, it closed a $200,000 seed round. It involved investors such as EchoVC Partners, a Lagos-based venture capital firm and Fola Laoye, an angel investor with over 20 years of experience in Nigeria’s healthcare industry.

Co-Creation Hub, Nigeria’s tech hub, where LifeBank incubated few months after launch, was part of the funding round.

As of 2018, LifeBank had moved products valued at $360,000 and earned revenues of nearly $100,000 from charging fees for delivery.

Giwa-Tubosun is a 2017 Quartz Africa Innovators honouree.

LifeBank has two platforms: one allows hospitals to request for blood while the other allows voluntary donors to indicate their willingness to donated bloods. LifeBank directs donors to the nearest blood bank in one of the over 25 blood banks in Lagos, where blood is collected and stored.

Coronavirus: NASME postpones 18th MSMEs conference as Nigeria records 12 cases Josephine Okojie

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he Nigerian Association of Sma ll a n d Me dium Enterprises (NASME) has postponed its 18th micro, small and medium enterprises summit and exhibition scheduled to take place next Tuesday and Wednesday in Owerri, Imo state amid coronavirus spread.

This was made known

by Eke U. Ubiji, executive secretary of NASME, in a statement made available to BusinessDay. “This is to inform the general public that due to the recent coronavirus pandemic currently making waves across the globe and in line with directives from government on social distancing, NASME has officially postponed the 18th MSME Summit and Exhibition originally scheduled to hold next week,” Ubiji said.

“We were also informed that the Owerri airport has been closed down,” he said.

“We appreciate numerous corporate organisations that have put in their full weight behind this year’s summit and exhibi-

tion,” he added.

He stated that the association is watching the situation and will announce the new date for the summit in due course.

He added that NASME expresses its sincere apologies to any inconveniences the postponement decision might have caused its members, par tners and corporate sponsors, among others.

Since December when the outbreak of the virus was reported in China, it has spread to 166 countries with over 200,000 cases and 9,000 deaths. Nigeria, Africa most populous country has reported 12 cases of the coronavirus.

To contain the pandemic, cities and regions across in Europe and Asia have been by and large shut down, putting halt to economic activities and obstructing supply chain as well as trade between countries.

Nigeria has recorded 12 cases with Lagos having nine, ogun two and Ekiti a single case.

Imo, where the NASME summit would have held next week, is yet to record any case.

SMEs need information, network to thrive — Oshoniyi Gbemi Faminu

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he number of micro, small and medium scale enterprises (MSMEs) may be rising, but their chances of thriving in a tough environment like Nigeria is slim due to age-old challenges.

Such hiccups include poor funding, infrastructure deficit, high production cost, among others.

Seun Oshoniyi, head, membership relations, Lagos Chamber of Commerce and Industry (LCCI), said the problem of MSMEs dwelt more around lack of information, poor people network and inadequate access to expert advice.

Oshoniyi spoke with BusinessDay at a business information session for entrepreneurs themed ‘How to boost your business,’ hosted by the LCCI. Sh e sa i d d e sp i te t h e myriad of challenges in the business environment, part of which was access to funding, the major problems of MSMEs were lack of necessary information and business management skills. “ T h e maj o r p ro b l e m MSMEs have in Nigeria is

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poor access to the right information that can help them grow their businesses and scale,” she said.

“Many entrepreneurs are not aware of the adequate structure they need to put in place for their business as well as the importance of technology,” she further said.

Oshoniyi explained that entrepreneurs needed competent accountants to file their books, seasoned lawyers to help them make major decisions and documentations, a board of advisors, and personnel managers to help source employees.

“If they do not have these handy professionals, there is a limit to what grants and loans can do,” Oshoniyi said.

Speaking on the funding challenge, she said a lot of MSMEs struggled to get funds in many financial institutions because they were seen as high risk investments.

She also urged the government to establish policies to help them thrive in the country.

“We need more favourable policies to create an environment whereby SMEs can thrive, and the chambers are always advocating for these SMEs,” she said. @Businessdayng

She advised entrepreneurs to regularly engage experts and consultants before making decisions and also be knowledgeable and aware of economic and global happenings, adding that if they were properly equipped with information they would be more inclined to steer their business onto the right path.

Oshoniyi said for entrepreneurs wishing to be members of the chamber, the requirements they needed included certificate of incorporation. Companies less than five years would need to have a proof of management account for at least six months while businesses over five years would present their audited reports as well as reference letters from the bank and notary public.

She added that the chamber admitted members round the year but had its inductions twice a yea—in April and October.

Akinbo Akin-Olugbade, MD, Kawai Technologies, told the participants that evolution and innovation were key to the growth of businesses, adding that every successful business needed a team of professionals in order to avoid wrong decisions.

Monday 23 March 2020

BUSINESS DAY

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Start-Up Digest Babajide Esho: Moving school processes from analogue to digital Josephine Okojie

N

igeria’s educational sector is confronted with a combination of issues ranging from inadequate funding and obsolete organisational structures to lack of quality teachers and limited access to information.

To change this narrative in the country’s educational sector and ensure that schools adopt technological solutions in carrying out its processes, Babajide Esho is using technology to redefine the sector.

Babajide Esho is the founder of Skoolkive, an online educational platform that helps schools automate and effectively manage their processes. The platform helps school administra-

tors and parents to easily receive and make payments through a single channel.

The business, through its biometric features, also helps record students’ clockin and clock-out, which can be sent to parents to enable them to effectively and efficiently monitor their children in secondary schools.

Jide was inspired to establish Skoolkive to help address some of the challenges in Nigeria’s educational system. He established the business in early 2017.

Jide and his partners pooled funds from personal savings and secured a preseed funding from Procyon Group, which cumulatively amounted to over N2.5 million.

The Actuarial Science graduate tells Start-Up Digest that the business has grown since starting over two years ago. He says that

Babajide Esho

the business has experienced early adopters of its technology in parts of Lagos and has signed a partnership deal with the regional sections of National Associations of Proprietors of Private Schools.

It has not all been rosy for the University of Lagos graduate’s Skoolkive startup business, as access to relevant data has remained a key challenge confronting it.

“Access to the relevant data, which is critical to

our business, was a very big challenge when we started.

There weren’t enough data we could access on key figures in education such as updated number of schools in Nigeria and number of student enrolments for the past five years among others,” the young entrepreneur says.

Jide wants the government to take more radical approach to data collation, emphasising the relevance of data in planning and decision-making. He also notes that such data should be made available in the public domain.

The young entrepreneur stresses that it is the various challenges in the education sector that has made the country lose over $4 billion to other countries from Nigerians schooling aboard, adding that if the government has invested

heavily to develop the sector the estimated dollar spent would have helped in growing the Nigerian economy.

“Some of these propositions include our partnerships with financial technology companies, which allow partner parents to access loans that will enable them pay school fees via salary deductions. This is an initiative we believe will keep us in business for a long time,” he discloses.

When asked his advice to other younger entrepreneurs, he says, “Understanding that you might fail many times before you eventually get it right is one piece of advice entrepreneurs need to always remember. I lost count of many things I failed at a particular project because I always kept on trying to build something amazing that people want.”

Why entrepreneurs must take trust, will seriously — Makinde Omobola Makinde is the MD/CEO of GTL Trustees Limited. She is a member of the Nigerian Bar Association and an associate of the Chartered Institute of Secretaries and Administrators of Nigeria. Makinde is also a member of the Society of Corporate Governance of Nigeria. In this interview with Odinaka Anudu, she speaks about trust and will, and why entrepreneurs and other individuals must take them seriously.

Tell us a few things about your organisation?

TL Trustees Limited was incorporated in 1991 but commenced operations in 2000 as Afribank Trustees and Securities Limited. It was then a subsidiary of the now defunct Afribank Nigeria Plc. Since the start of our operations, the company has had two name variations.

The final evolution came in 2016 when Skye Bank Limited had to divest its holding in the Company in compliance with the directive of the CBN to all banks to divest from their non-core banking subsidiaries. This led to the sale of its ownership to a group of investors and the resultant change in name to GTL Trustees Ltd.

G

What trust and why is it so important for entrepreneurs?

A trust is an arrangement that enables a third party to hold assets on behalf of a beneficiary or beneficiaries.

The person or institution that holds the assets is the trustee while the person that sets up the trust is called the settlor.

The primary consideration of a settlor in a trust relationship is to make provision for the welfare and upkeep of the settlor’s intended and named beneficiaries. Setting up a trust helps in ensuring the confidentiality of the settlers’ wishes and also avoids undue cost which may be associated with other means of devolving assets to beneficiaries. A

trust arrangement makes the assets easily and immediately available to the beneficiaries.

In the converse, a trust may be set up solely to benefit the settler for instances of incapacitation.

What is the difference between a trust and a will?

The major difference between a trust and a will is that a will only takes effect after the demise of the testator (the person who made the will).

Prior to the testator’s death, the will remains just a mere intention. Thus, no one has the authority to distribute the assets of a testator while the maker of the will is still alive.

On the other hand, a trust becomes operational during the lifetime of the settlor and this is referred to as the living trust which is also a vital offering of the company.

Another difference between a trust and a will is that whereas a single person, group of people or an organisation can create the trust, only a single person can write a will. Once a trust is set up, there is deemed transfer of the titles of the settlor to the trustee which is the foundation of the fiduciary relationship between the settlor and the trustee.

What do you think Nigerians, including entrepreneurs, are not open to the idea of writing wills or even setting up trusts?

Well, most Nigerians do not want to think of their morwww.businessday.ng

tality and therefore when the issue is discussed, you hear such statements like ‘It is not my portion’ and you ask ‘then whose portion is it?’ Some would tell you that ‘yes, I know that I will die but not now’ as if they have a signed contract with death and they know when the contract would terminate.

The other inhibiting factor is that people are not comfortable divulging details of their assets and this makes it difficult or near impossible to set up a proper trust account for them. We understand this may be an offshoot of the deep-rooted culture and beliefs of Nigerians. However, this ideology needs to change. For us at GTL Trustees, we work to reassure our existing and potential clients that GTL Trustees is a highly regulated institution with

strict rules against unauthorised information disclosure.

We recognise the fiduciary responsibilities that exist between our clients and the company and would always ensure that we are guided and operate within the scope of those responsibilities.

Also, some people think that only those who have significant assets need to have a Will. This is not true because you need to preserve even the little you have for your loved ones. Interestingly, the provision of the Pension Reform Act, 2014, (as amended) requiring pension fund contributors or retirees accessing pension under the contributory pension scheme to have a will has further debunked the assertion that you need to have significant assets before writing your will. This has led to our RSA will offering.

Omobola Makinde https://www.facebook.com/businessdayng

You earlier mentioned that you help in preparing RSA wills. What is an RSA will?

RSA is an abbreviation for Retired Savings Account. An RSA will is our simple will offering that takes care of pension contributions and bank balances. The Pension Reform Act 2014 (as amended) implores all employees and contributors under the pension scheme to make a will so that beneficiaries of a deceased employee can easily access their pension contributions. The RSA will makes it easier for the beneficiaries listed under the will to have access to the funds in the RSA account in the event that the worker/pensioner dies. It is necessary to correct the notion often held by people that once you have named a certain individual as your ‘next of kin’ in the plan document, then the named individual is the beneficiary.

It is important to know that the named ‘next of Kin” does not automatically become the beneficiary of a deceased person. You still need to have a will in which the beneficiaries are specifically listed.

At GTL Trustees Limited, we offer to draft the Simple RSA Will at a very affordable cost. However, where it is found that the client has more assets outside their RSA balances, we advise such clients on the need to have a Comprehensive Will that encompass all their assets and not just the balances in @Businessdayng

their RSA. What offerings do you have for SMEs or those operating in the retail sector?

In making our professional capabilities available to customers on the retail end as well as working with clients to address specific financial pain-points, as initially mentioned, we help to prepare RSA wills for our individual clients in order to facilitate seamless transfer of their pension contributions to their named beneficiaries when they pass on. Other offerings targeted at our retail clients include some tailor-made offerings for individuals wishing to save for the education of their wards. Such products are: Education Investment Plan (EIP), Kiddies Investment Club (G-Kiddies) and GTL Investment Club (G-Sic).

Why should the general public patronize GTL Trustees?

For us at GTL Trustees, we believe that the taste of the pudding is in the eating. We render top-notch services to our clients and continually strive to add value to them through our offerings.

We engage our clients and remain with them until their respective trust or wealth management objectives are achieved. We also have very tight rigorous compliance and risk processes aimed at ensuring that all assets under our custody are safe and secure.

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BUSINESS DAY

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Monday 23 March 2020

BUSINESS DAY

MARKETS INTELLIGENCE

35

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Nigeria’s low market Cap to GDP ratio shows stocks are cheap BALA AUGIE

A

s of today, the Total Market Index is at $30 billion or N13.50 trillion, which is about 8.76 percent of the last reported GDP, as stocks are increasingly becoming cheap.

The country’s market cap to GDP ratio in 2019 was 9 percent of nominal GDP, compared to 9.20 percent in 2018. The data reached an all-time high of 29.7 percent in Dec 2007 and a record low of 3.0 percent in Dec 1985.

As pointed by American billionaire investor Warren Buffett, the percentage of total market cap (TMC) relative to the US GNP is “probably the best single measure of where valuations stand at any given moment.”

The stock market capitalization-to-GDP ratio otherwise known as the Buffet indicator is a ratio used to determine whether an overall market is undervalued or overvalued compared to a historical average.

It is a measure of the total value of all publicly traded stocks in a market divided by that economy’s gross domestic product (GDP).

If the valuation ratio falls between 50 and 75 percent, the market can be said to be modestly

undervalued.

While the Nigerian stock market begun the year on a positive note, it has continued its bearish run as the NSE ASI recorded a negative year to date of -17.3 percent.

The outbreak of the coronavirus that is increasingly crippling the global economy and the sharp drop in oil price due to disagreement between Saudi Arabia and Russia has further damped investors’ appetite for the country’s equity market.

Analysts say aside lack of clarity on policies for sustainable economic growth, a major risk facing Nigerian capital markets in 2020 stem from recent policies of the Central Bank of Nigeria (CBN) and their possible negative impact on banking sector profits.

Following CBN’s announcement barring non-banking corporates as well as individuals from accessing the OMO market, increased liquidity in the secondary debt market as well as auctions has since sent yield crashing.

The hike in Loans to Deposit ratio to 65 percent and the slash in charges by apex bank have crimped lenders earnings as gleaned from their 2019 audited financial statement.

The equities market was in the negative region of -17.80 percent in 2018 and 14.60 percent in 2019

as the, devaluation of the currency and sustained pressure on oil in the mid 2014 convulsed investors and kept them out of the market.

Expectedly, foreign portfolio investment (FPI) interests in Nigeria’s risky assets have been stagnated.

Reflecting the subdued participation of foreign investors in the local bourse, data from the Nigerian Stock Exchange (NSE) showed that foreign inflows from January to November 2019 declined 28 percent to N397.44 billion from N553.47 billion in the same period in 2018.

The data further revealed that net outflows from January to November increased 62 percent to N84.53 billion from N52.07 billion in the same period in 2018.

Despite the macroeconomic uncertainties as evidenced in rising inflation that has continued to pressure consumer wallets and undermine company profit, the stock market valuation remains compelling.

Across Emerging Markets (EMs) and Frontier Markets (FMs), Nigerian equities remain unarguably the cheapest.

The ASI had a price to earnings (PE) ratio of 6.48 x compared to MSCI EM and MSCI FM of 15.4x and 10.6x respectively. African peers like South Africa,

P.E

SHORT TAKES N312m

Egypt and Morocco traded at trailing PE ratios of 15.7x , 11.8x, and21.1xrespectively.

On the local bourse, banks’ stocks are the most attractive as Zenith, GTBank, Access Bank, UBA, and First Bank are trading at a price multiples of 1.83, 2.63, 1.99, 2.02, and 2.81.

However in the short term there are negative prognoses for the country’s stock market as the coronavirus pandemic has forced governments across the globe to announce shut down of schools and restaurants while workers now most work from home.

The airlines industry has grind to a halt while conferences across the globe have been cancelled.

The price of Brent-the international oil benchmark has more than halved to $30 per barrel.

That has hurt Nigeria’s revenue as external reserves fell below $36 billion mark, touching the lowest in 29 months. That cast a pall on the ability of the country to weather external shocks.

The central bank has been under immense pressure to weaken the currency amid global macroeconomic uncertainties. The apex bank has moved the foreign exchange sales to FPIs to N380.20/$, from N366./$, in a move that suggests the defacto devaluation of the currency.

After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

5 The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early.

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Monday 23 March 2020

BUSINESS DAY

MARKETS INTELLIGENCE

Coronavirus proves lethal to 3 year old Trump rally in US Markets ...Wuhan virus wipes out all tax cut gains in US since 2017 ...governments scramble to stablize markets with stimulus packages IFEANYI JOHN

T

he fatality rate of coronavirus may be among the lowest of any health pandemics but for the Trump tax cut rally, the Wuhan virus has proved lethal. Since setting a record close of 29,551 points on the Dow Jones Industrial Average Index on February 12, Dow Jones

‘

In Nigeria, the Central Bank will support the manufacturing and other key sectors of the economy with about N1 trillion, with a N100 billion in loans to the health sector

’

Index has now dropped by around 9,652 points, sending the index down about 33 percent as a deepened selloff triggered by an global health pandemic and oil price war has caused the US stock market to contract by one third in just 36 days.

At market close yesterday, the Dow Jones Index

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closed at 19,898 points barely 1,000 points above the DJI level on the day Donald Trump won the US elections on November 8 in 2016.

Dow Jones Index closed at 18,867.93 points the following day after the new President was announced.

Between November 9th, 2016 and February 12th, 2020, the Dow Jones Index

rallied about 57 percent as investors cheered the ascension of a pro-business President to power.

“While it took the market almost 4 years to approach the 30,000 mark on the Dow Jones Index since the oil price recovery which began in 2016, it has taken Mr. Market less than 2 months to reverse all the gains made

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within this period,” one equity analyst told BusinessDay. At the current level, the Dow Jones Index is now less than 200 points away from dropping below the level it was on the day Trump took office on January 19, 2017 when the market closed at 19,732 points on that day. The Dow Jones index

@Businessdayng

is already more than 4,000 points below its level on the day Trump’s tax cut was introduced into law in December 2017.

Analysts say they expect the market to continue to decline further as more cases of coronavirus are reported in United States, increasing downward pressure on US markets. The oil price meltdown will only cause steeper declines in the stock market as more shale companies file for bankruptcy as crude oil prices nosedives significantly below production cost.

The coronavirus outbreak continues to take a toll on global economies and stock markets as governments and central bankers unleash record level stimulus packages to avoid a global recession. The Dow Jones Index has now dipped by over 31% since the first case of Covid-19 was reported in the US, while in Nigeria the NSE has declined about 22% since the first case was reported on the Friday 28th January.

In efforts to combat the effect of covid-19, the trump administration has proposed a $1.2 trillion rescue plan with $300 billion going towards helping small businesses avoid mass layoffs, $50 billion to help rescue the airline industry and $150 billion to prop up other sectors, and the Federal Reserve send $2,000 to every American adult and $1,000 to every American child until the crisis ends.

In Nigeria, the Central Bank will support the manufacturing and other key sectors of the economy with about N1 trillion, with a N100 billion in loans to the health sector. The apex bank earlier in the week approved a one-year moratorium on all principal debt repayments from March 1, and reduced to 5% from 9% the interest rate on central bank intervention loans that are given directly to agriculture and commerce.

Monday 23 March 2020

BUSINESS DAY

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Live @ The Exchanges Market Statistics as at Friday Friday 20 March 2020

Top Gainers/Losers as at Friday 20 March 2020 LOSERS

GAINERS Company MTNN

Company

Opening

Closing

Change

N99.5

N103

3.5

PRESCO

N18

N19.5

1.5

FLOURMILL

JBERGER

N22.3

N23.7

1.4

STANBIC

NASCON

N8.55

N9.4

0.85

DANGCEM

N129

N129.7

0.7

CAP

PZ ZENITHBANK

Opening

Closing

Change

N40.45

N36.45

-4

ASI (Points) DEALS (Numbers)

N21.4

N19.3

-2.1

N28.25

N26.5

-1.75

N4.45

N4.05

-0.4

VALUE (N billion)

N12.15

N11.85

-0.3

MARKET CAP (N Trn)

VOLUME (Numbers)

22,198.43 4,669.00 379,482,642.00 3.423 11.568

Bearish session to continue as Coronavirus rattles markets Stories by Iheanyi Nwachukwu

T

he bearish trading session seen in the week ended Friday March 20 will no doubt continue on Monday March 23 when dealing members assemble for stocks trading on the Nigerian Stock Exchange (NSE).

Investors had in the face of declining crude oil prices, growing risk of currency devaluation as well as the rapid spread of the Coronavirus in the country, shunned stocks’ buying, which led to increased supply side in Nigeria’s equities market and subsequent loss of about N280billion in the review trading week.

The market will continue to react to events in the crude oil market as well as news surrounding the Coronavirus, according to Lagos-based research analysts at Vetiva. They noted that local bourse record-

L – R: Oscar N. Onyema, chief executive officer, The Nigerian Stock Exchange presenting a replica of the closing gong to Ibikunle Amosun, CON, chairman, senate committee on Capital Market during the Senate Committee on Capital Market’s courtesy visit to The Exchange.

ed another negative week-onweek (WoW) performance “as overhanging uncertainties in the global and domestic spac-

es continue to weaken investors’ confidence.”

Despite its positive close on Friday, the Nigerian stock mar-

Senate Committee commends NSE on contributions to national development

T

he Senate Committee on Capital Markets has commended the Nigerian Stock Exchange (NSE) on its efforts to create a truly sustainable exchange hub for wealth creation and capital formation in Africa.

This was expressed by the Chairman of the Committee, Senator Ibikunle Amosun, during an engagement session with the Council Members and Executive Committee of The Exchange and other capital market stakeholders on Thursday, 19 March 2020.

In recognising the NSE’s collaborative approach to delivering on the capital market’s mandate to enable efficient allocation of resources and spur growth and development, Senator Amosun said, “We have met a very professionally run Exchange during this visit and we encourage you to keep up the good work.

The Nigerian Stock Exchange has been a critical player in the development of the Nigerian economy.”

He said, “Your efforts have culminated in moving Nigeria out of a monolithic phase and we thank you for all the good work. On behalf of the Senate Committee, I assure you that we will continue to create that enabling environment that will support you in growing our market and providing Nigerians innovative opportunities to create wealth.”

At the meeting, the Chief Executive Officer, NSE, Oscar N. Onyema expressed a positive outlook on the Nigerian economy and the NSE’s commitment to national development stating, “Nigeria remains an attractive investment destination as Africa’s most populous country, positioned to be a top 20 economy by 2030 and top 10 by 2050. The Exchange www.businessday.ng

is, therefore, committed to engaging stakeholders to set the Nigerian economy on a positive trajectory. To successfully do this, we will continue to advocate for the right economic policies that will ensure that both issuers and investors in our market can reap real value.”

The NSE has achieved significant results through its advocacy efforts especially its notable contributions to the Financial System Strategy (FSS) 2020. These efforts gave rise to: the incentives to encourage companies to list, leading to the listing of MTN Nigeria and Airtel on The Exchange; the launch of the Growth Board to facilitate the listing of companies with high growth potential; the proliferation of financial literacy and awareness of financial system products and services through the X-Academy and NSE StockTown.

ket declined by 2.35percent in the review trading week as financial markets remain fragile. Month-to-date (MtD) the stock market has decreased by 15.33percent while this year only it has dropped by 17.30percent.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) depreciated from weekopen high of 22,733.35 points to 22,198.43 points as at Friday March 20, 2020. Also, the value of listed equities on the Nigerian Bourse decreased by N279 billion, from N11.847trillion to N11.568trillion.

Afrinvest research analysts had expected this record bearish performance “as the economic outlook of the country remains uncertain.”

With the current outbreak of Coronavirus (COVID-19), the world is witnessing an unprecedented health situation and global uncertainty. Brent Crude traded at $28.42 per barrel as at 3pm Nigerian time on Friday.

Global market indicators FTSE 100 Index 5,184.11GBP +32.50+0.63%

Nikkei 225 16,552.83JPY -173.72-1.04%

S&P 500 Index 2,364.49USD -44.90-1.86%

Deutsche Boerse AG German Stock Index DAX 8,896.05EUR +285.62+3.32%

Generic 1st ‘DM’ Future 19,714.00USD -161.00-0.81%

Shanghai Stock Exchange Composite Index 2,745.62CNY +43.49+1.61%

NASD’s remote trading goes live

D

etermined to enhance speedy, efficient, transparent and global service delivery, NASD Plc has announced full commencement of remote trading in consonance with its business continuity policy.

As a practical proof of its capacity and readiness for seamless remote trading, leveraging on modern Information and Communications Technology (ICT) equipment, the company’s staff operated from their respective homes on Friday.

Coming on the heels of global concerns on the need for social distancing following outbreak of coronavirus, market watchers at the weekend commended the company, describing the full blown transition to remote trading as timely and historic.

In a statement forwarded to securities dealers at the weekend, NASD’s Managing Director and Chief Executive Officer, Bola Ajomale explained that the company had capacity to operate irrespective of the current challenges militating against businesses globally.

Bola Ajomale, NASD’s CEO

“NASD is today running a Business Continuity Planning Test. Your market successfully opened at 10 a.m and will run remote throughout the day with all staff operating from their respective homes!

This is a routine but timely exercise to confirm our ability to deliver a fully remote trading environment and to ensure hitch free operations if there is an instruction to step up self-isolation.

“We do not anticipate any difficulty but should you need to contact us, all our communication channels remain fully operational and open. We encourage everyone to stay safe and implement necessary steps to ensure safety and limit exposure to illness during this period”, said Ajomale.

Coronavirus: More NSE listed companies to reschedule Annual General Meetings

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any listed companies that hitherto planned their annual general meetings (AGMs) in the near future (this March and April) have either rescheduled or making new plans to reschedule for new dates, BusinessDay has learnt.

There decisions are driven by heightened risk of Coronavirus pandemic and the effort being made to tackle spread of the dreaded virus.

Greif Nigeria Plc, a company listed on the Nigerian Stock Exchange (NSE) has postponed its earlier sched-

uled Annual General Meeting (AGM). The company which has already announced a travel ban for all its employees, also advised that meetings with larger groups of participants (5+), external or internal, should be avoided and large gatherings discouraged.

“Greif is concerned with the safety and health of its employees, their families and the general public at large.

As a result of this, the Company’s Annual General Meeting (AGM) which is scheduled to hold on Tuesday March 31, 2020 has now been postponed by the Board of the Company

and rescheduled the meeting to hold on Tuesday June 23, 2020. Greif believes that the only way to truly reduce the spread of the virus is with social distancing for as long as possible until this recedes,” the company said in a recent notice to shareholders.

The Nigerian Stock Exchange (NSE) has advised all listed companies to strictly adhere to communications and advice from the health authorities at the Nigeria Centre for Disease Control (NCDC), World Health Organisation (WHO) and Lagos State and Federal Ministries of Health.

Cedar to acquire additional 39.62% equity stake in Union Diagnostic

U

nion Diagnostic and Clinical Services Plc has informed the Nigerian Stock Exchange (NSE) and the investing public that the Company received a binding offer from Cedar Advisory Partners Limited (Cedar) to acquire a total of 1,407,855,051 ordinary shares of 50 kobo each held by all mi-

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nority shareholders.

This represents 39.62percent of the Company equity stake at an offer price of 35kobo per share through a Scheme of Arrangement.

Cedar is an investment firm and has over the years carved a niche in the healthcare business landscape, working with major industry players across @Businessdayng

various levels of the healthcare value-chain.

Cedar currently holds 711,916,612 ordinary shares representing 20.04percent equity holding in the Company. Subsequent upon the conclusion of the transaction, Cedar will hold a combined 59.66percent equity holding of the Company.

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Monday 23 March 2020

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: March 20 – March 27, 2020

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.55

Q4 2019 — higher by 0.27% compared to 2.28% in Q3 2019

Broad Money Supply (N’ trillion)

36.48

Increased by 2.9% in Nov’ 2019 from N35.45 trillion in Oct’ 2019

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

26.41 2.20

Increased by 2.18% in Nov’ 2019 from N25.85 trillion in Oct’ 2019 Increased by 7.17% in Nov’ 2019 from N2.06 trillion in Oct’ 2019

Inflation rate (%) (y-o-y)

12.20

Increased to 12.20% in February 2020 from 12.13% in January 2020

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

35.98 24.82 1.79

March 18, 2020 figure — a decrease of 0.78% from March start March 19, 2020 figure— a decrease of 25.13% from the previous wk February 2020, figure — an increase of 1.64% from January 2020 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

20/3/20

13/3/20

NSE ASI Market Cap(N’tr)

22,198.43 11.57

22,733.35 11.85

Volume (bn)

0.38

0.73

Value (N’bn)

3.42

10.22

MONEY MARKET NIBOR Tenor

Friday Rate

Friday Rate

(%)

OBB O/N CALL 30 Days

Indicators

Change(%)

(%)

20/3/20

13/3/20

4.8000 5.3000

3.2900 4.0000

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) (48.24) Agriculture Cocoa ($/MT) (66.49) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Change Gold ($/t oz.)

Silver ($/t oz.)

(Basis Point) Copper ($/lb.)

(2.35) (2.35)

5.6000

10.4167

(482)

10.9613

218

Tenor

(N/$)

Friday

1 Month

(N/$)

Rate (N/$)

20/3/20

13/3/20

20/2/20

Official (N) Inter-Bank (N) BDC (N)

307.00 370.00 0.00

306.95 367.74 0.00

307.00 364.85 0.00

Parallel (N)

380.00

380.00

360.00

3-Year 5-Year 7-Year 10-Year 20-Year 30-Year

Friday

Friday

Change

(%)

(%)

(Basis Point)

13/3/20

0.00 8.81 11.30 11.54 12.85 13.04

0.00 8.39 11.34 11.91 12.08 13.96

24.82 1.70

(25.13) (9.09)

(61.50) (44.37)

2247.00 115.00 55.86 11.13 545.50

(9.87) 5.65 (5.53) (5.28) 8.56

16.06 (11.67) (27.92) (27.40) 25.84

1504.00 12.84 223.05

(3.79) (17.90) (8.87)

14.15 (25.31) (31.96)

0 42 (4) (36) 78 (92)

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

Friday

Change

(%)

(Basis Point)

20/3/20

13/3/20

1 Mnth 3 Mnths

2.33 2.58

3.22 3.09

(89) (51)

6 Mnths 9 Mnths 12 Mnths

3.17 3.76 4.53

4.13 4.58 5.59

(96) (83) (106)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

AVERAGE YIELDS

20/3/20

(%)

Friday

BOND MARKET Tenor

YTD Change

(%)

(%)

FOREIGN EXCHANGE MARKET Friday

1-week Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS 151 130

13.1382

Market

20/3/20

Friday

Friday

Change

(%)

(%)

(Basis Point)

20/3/20

13/3/20

Index

3,625.18

3,640.80

(0.43)

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%) YTD return (%)(US $)

11.33 7.56 47.58 -0.30

11.38 7.62 48.21 -7.60

(0.44) (0.79) (0.63) 7.30

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day

2,000

2.49

18-Mar-2020

182 Day

8,385.20

3.78

18-Mar-2020

364 Day

37,176.06

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

5.3

18-Mar-2020

Global Economy The Bank of England cut its key interest rate to 0.1% at a special meeting which held last week.

This rate cut follows a 50-basis point reduction two weeks ago, bringing borrowing costs to a fresh record low. The central bank said the spread of Covid-19 and the measures being taken to contain the virus will result in an economic shock that could be sharp and large but should be temporary. The central bank also announced it will increase its holdings of UK government and corporate bonds by £200 billion. Elsewhere, the Central Bank of Brazil lowered its benchmark interest rate by 50bps to an all-time low of 3.75% last week, in a bid to mitigate the effects of the coronavirus spread. This is after it cut its rate by 25 bps at its February meeting. The monetary authority noted that the coronavirus pandemic is causing a significant global growth slowdown and that economic conditions necessitates stimulative monetary policy. The Committee said that it would continue to use its entire arsenal of monetary, exchange rate and financial stability policies to fight the crisis. Policymakers added that currently it is appropriate to keep rates at its new level and that new information will be essential to define its next steps. In a separate development, the US current account deficit contracted by $15.6 billion to $109.8 billion in Q4 2019 according to the U.S Bureau of Economic Analysis, mainly reflecting a reduced deficit on goods that was partly offset by an expanded deficit on secondary income. The Q4 2019 deficit was equivalent to 2% of GDP, down from 2.3% in Q3 2019. Considering 2019 full year, the current account deficit expanded by $7.4 billion, or 1.5%, to $498.4 billion in 2019, equivalent to 2.3% of GDP, down from 2.4% in 2018.

Domestic Economy The National Bureau of Statistics (NBS), revealed that the Federation Accounts Allocation Committee (FAAC) disbursed the sum of N716.3 billion among Federal, States and Local Governments in January 2020 from the revenue generated in December 2019. The amount distributed was from the statutory account, value added tax (VAT) and exchange gain allocation comprising of N600.31 billion, N114.81 billion and N1.18 billion respectively. A breakdown of the sum disbursed among the three tiers, revealed that the Federal Government received N287.93 billion, states received N191.3 billion and the local governments received N143.7 billion. The oil producing states received N50.28 billion as the 13% derivation fund. Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received a N5.24 billion, N9.64 billion, N4.47 billion, respectively as cost of revenue collection.

In a separate development, inflation rate for February 2020 printed at 12.2% year-on-year from 12.13% in January 2020. Prices rose for both food and core inflation. Food inflation climbed to 14.9% in February from 14.85% in the prior month. Highest increases were recorded in prices of fish, meat, oil and fats, bread and cereals and vegetables. Food inflation on a year-on-year basis was highest in Sokoto state (17.12%) and lowest in Bayelsa state (11.89%). Core inflation rose 9.43% in February, up by 0.08% compared to 9.35% reported in the prior month. Highest increases were recorded in prices of pharmaceutical products, non-durable household goods, catering services, passenger transport by air, repair of furniture, maintenance and repair of personal transport equipment, water supply, carpet and other floor coverings, major household appliances, dental services, hospital services and vehicle spare parts Stock Market Trading activities on the Nigerian Stock Exchange remained volatile amidst global fears as the coronavirus scourge fuelled the bear market, resulting in the seeming sell-offs across high cap stocks. Consequently, the all share index dipped 2.35% to close at 22,198.43 poi nts from 22,733.35 points the prior week. Similarly, market capitalization trimmed 2.35% to N11.57 trillion

from N11.85 trillion the prior week. This week, the market will likely remain skittish on concerns over the impact of coronavirus on consumer spending and business investment.

Money Market Liquidity in the money market tightened slightly, an aftermath of the Retail Secondary Market Intervention Sales (SMIS) held the preceding week. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates settled higher at 4.8% and 5.3% from 3.29% and 4% previous week. The slightly longer dated instruments such as 30-day and 90-day Nigeria Interbank Offered Rate (NIBOR) closed at 13.14% and 13.26% from 10.96% and 11.44% the prior week. Rates are expected to dither around current levels as Federation Account Allocation Committee (FAAC) payments flow into the system.

Foreign Exchange Market The local unit depreciated against the greenback across most market segments. The official rate marginally declined ending at N307/$, a 5 kobo drop from the previous week. The local currency at the Nigerian Autonomous Foreign Exchange (NAFEX) window lost N2.26 to close at N370/US$ from N367.74/US$ the prior week. The loss in value stemmed from demand for funds outweighing supply at the Investors and Exporters (I&E) window as the dollar scarcity experienced the preceding week persisted. The parallel market remained unchanged week-onweek at N380/US$. Given recent comments from the government about possible convergence of the nation's exchange rates and data showing that the CBN sold FX to foreign portfolio investors at N380.2/US$ last week from N366.7/US$ previously, we anticipate some major news on a new FX policy direction by the monetary authority.

Bond Market The bond market witnessed frenzied activities following the coupon payments that hit the system as participants reinvested the fixed income proceeds. Subsequently, average yields dropped as yields on the seven-, ten- and thirty-year debt papers finished at 11.30%, 11.91% and 13.04% from 11.34%, 11.91% and 13.96%, respectively. The Access Bank Government Bond index lost 15.62 points to settle at 3,625.18 points last week. We anticipate that the buying sentiments might persist given expected inflow of N12 billion in coupon payments.

Commodities Crude oil price remained pressured last week as Saudi Arabia announced plans to boost its oil exports to 10 million barrels per day from May, which is 3 million bpd more than it exported in February. Bonny light, Nigeria's benchmark crude fell 25.13% or $8.33 to close the week at $24.82 per barrel due to an over supplied market and coronavirus continuing to cause disruptions to supply chains around the world. Similarly, precious metal prices slipped further. Investors preference to save capital is weighing on bullion counters.

Consequently, gold tapered 3.79% to close at $1,504 per ounce while silver dropped 17.9% to $12.84 per ounce. This week oil prices might gain respite on word that the Trump Administration could take actions intended to force Russia and Saudi Arabia to back down from their plans to flood global oil markets. Precious metals may get some support from a pick-up in investment demand given its safe-haven appeal. The lowered interest rates also offers excellent opportunity for investors to buy bullion assets.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Mar’20

Apr ’20

367

366

365

Inflation Rate (%)

12.20

12.25

12.27

Crude Oil Price (US$/Barrel)

33

35

40

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

www.businessday.ng

https://www.facebook.com/businessdayng

May ’20

Exchange Rate (NAFEX) (N/$)

@Businessdayng

Monday 23 March 2020

BUSINESS DAY

39

news

Again, Apapa suffocates as trucks leave holding bay for bridges CHUKA UROKO

I

ncreasingly, Apapa is getting messier and suffocating with each passing day. The past two to three days, spanning Wednesday to Friday, were particularly tough for motorists, and commuting to the port city was no longer better than journeying to hell.

Virtually all the trucks were being ‘poured’ on to the roads from Lilypond Trucks Terminal to the bridges by an over-zealous worker who, BusinessDay learnt weekend, released over 60 trucks to the road at once without any arrangement to monitor their movement to the ports.

“This is against our usual operational procedure. Normally, we release trucks from Lilypond in batches of 10 at a time; but somebody who was deputising for another person went in there and released 65 trucks at once and when he could not control them, he ran away leaving us in this mess,” a traffic controller who did not want to be named told BusinessDay. Because of this “human error,” it had been a ‘highway to hell’ for motorists whether they were driving on the Apapa-

Ijora Bridge or the Mobil-Marine Beach Road. It has come to point when five hours are no longer enough time to commute to Apapa.

Workers in these few days spent quality man-hours on the road. Apart from their health condition, which is now at risk, productivity in their various offices dropped and businesses were at the receiving end.

When contacted, Kayode Opeifa, the executive vice chairman of the Presidential Task Team on Apapa gridlock, assured that the congestion on the road would be cleared by the weekend, disclosing that they had been holding series of meetings with relevant stakeholders to address the problem.

Opeifa noted that a major cause of the persisting gridlock emanated from the ports, which he said were also congested due to sub-optimal operations of the terminal operators, especially AP Moller.

According to Opeifa, most of the trucks and even tankers get stuck at Eleganza because they cannot enter the ports, thereby causing a huge backlog that affects other road users on their way to Apapa.

Access Bank issues first Dual Listed Bond on NSE, LuxSE Iheanyi Nwachukwu

T

he successful listing of Access Bank’s N15 billion Green Bond on the Luxembourg Stock Exchange (LuxSE) represents a major milestone in the development of sustainable financing in Nigeria.

The cross-listing of the 15.50 percent fixed rate green bond with five-year maturity has enjoyed many firsts, including the first-ever climate bonds standard certified corporate green bond to be issued in Africa, the first to be listed on The Nigerian Stock Exchange (NSE) in 2019, and now, the first successful cross-listing of a bond born out of the partnership between NSE and LuxSE. “The cross-listing of the bond will make a material contribution to address climate change and provide institutional investors with access to a deep pool of green capital domestically and internation-

ally,” Herbert Wigwe, GMD, Access Bank plc, said.

The top five risks in the world today closely related to climate change issues, according to the World Economic Forum’s Global Risks Report.

There is, therefore, an increased urgency to reverse recent environmental trends such as ravaging bushfires, extremes of temperatures, floods, cyclones and season disruptions that have made the effects of climate change even more real. These developments have thrust the concept of sustainable financing into the limelight, allowing products like Green Bonds to gain increasing significance.

The green bond market has witnessed tremendous growth globally with a total of $181 billion raised from global investors in 2019 representing a 14-fold increase from the $13 billion raised in 2013. On the demand side, there has been heightened consideration of Environment, Social and Governance (ESG)

factors in the demand for profitable investment products.

Looking at the Nigerian market, notable milestones have been achieved through the collaboration of public and private stakeholders. In 2016, NSE boldly reached out to the Ministry of Environment with a proposal for the issuance of a Green Bond which was embraced and championed

by Amina Mohammed, then minister of environment. This move led to a series of partnerships and innovations that have delivered gradual uptake in this market segment.

These include first ever Green Bonds conference which held at the Stock Exchange House, Lagos and was headlined by the Vice President Yemi Osinbajo; the issuance of the first five-year N10.69bn sovereign and certified green bond from the Nigerian government under its Ministry of Environment and the Debt Management Office (DMO);

the listing of Access Bank plc’s N15bn Green Bond and North South Power Company Limited’s N8.5bn Corporate Infrastructure Green Bond, among others.

The Green Bonds market presents great opportunities to reap value if it continues to enjoy the unwavering commitment of key capital market stakeholders. Access Bank has pledged its support to the global climate change mitigation and adaptation agenda which seeks to promote responsible green lending globally.

The NSE on its part has expressed its resolute commitment to the development of a sustainable capital market in Nigeria.

“We will continue to maintain a dedicated sustainable market segment which provides issuers, asset managers and investors, access to green, social, sustainable, or ESG-focused securities,” Oscar N. Onyema, CEO, NSE, has been reported to have said.

Primero reduces passengers to 50 per trip Joshua Bassey

O

perator of the Lagos Bus Rapid Transit (BRT) scheme, Primero Transport Services Limited, says it is reducing the number of passengers on board its buses to 50, in a measure aimed at containing the Covid-19 (Coronavirus) pandemic.

So far, Nigeria has recorded 30 cases of the virus, which broke in December 2019, and has claimed 12,000 lives in different countries around the world.

BusinessDay had last Thursday raised concerns about the number of passengers being conveyed in BRT buses, which ply majorly Ikorodu-12 MileCMS routes amid increasing cases of Covid-19 in Nigeria’s commercial city.

The Lagos State government had announced restriction on social gatherings above 50 people and directed strict compliance by all.

Fola Tinubu, managing director of Primero Transport Services Limited, said on Sunday that the company was complying with the directive as well as adopting other measures to guarantee safety of passengers

and bus crew.

“As we continue to ensure there are no disruptions in our service delivery, we have also put in place some precautionary measures to safeguard our customers and staff.

“These include disinfecting all of our buses daily before they commence operations making them devoid of any germs or virus whatsoever.

“Our bus drivers, inspectors and ticketing officers will be required to wear protective masks and gloves. In addition, prior to commencing operations, temperatures of each staff will be checked with a digital hand thermometer. Any staff found with above normal temperatures will be asked to get a medical clearance before they can return to work,” Tinubu said.

He further noted that “we have reduced the maximum number of customers allowed on the bus to 50 or less.

“This translates to 42 passengers seating and eight standing. We are appealing to all our commuters to work with our staff and cooperate with our ticketers to ensure that we keep the passenger numbers at the recommended limits.”

Covid-19: Deeper Life clarifies position on government ban SEYI JOHN SALAU

D

eeper Life Bible Church has made its position clear on government ban on public gathering issued to maintain social distancing following the increasing rate of Covid-19 in Nigeria.

In a rejoinder issued by the church following an online publication tagged, ‘Covid-19: Pastor of Deeper Life holds crusade despite government ban’. The said publication, according to the church, was a misrepresentation of the

church’s special monthly service.

The power night service which was streamed online to all Deeper Life locations was referred to as a crusade by the said publication.

“Generally, it is not our practice to join issues with media outlets, but as a responsible and law-abiding church, we believe that we need to set the record straight as the content of the articles which went viral online, was misleading, mischievous and totally untrue,” the church said. www.businessday.ng

L-R: Tayo Ayinde, chief of staff to the Lagos State governor; Obafemi Hamzat, deputy governor, Lagos State; Babajide Sanwo-Olu, governor, Lagos State; Hakeem Muri-Okunola, head of service, and Gbenga Omotoso, commissioner for information and strategy, during a news conference on the update on Coronavirus (COVID -19) by governor in Lagos, yesterday.

UBA empowers 400 entrepreneurs in Emirates reverses decision to suspend Onitsha with capacity training all flights from March 25

U

nited Bank for Africa at the weekend held a Micro Small and Medium Enterprises (MSME) capacity training in Onitsha where about 400 small and medium scale business entrepreneurs in Onitsha, Anambra State, benefitted immensely from the impactful training.

The beneficiaries were trained in record keeping, cost reduction, stock compiling, financial and taxation planning, maximising opportunities, financial planning and projections.

UBA’s regional head of Anambra II Anyanuno Ozioma, who flagged of the MSME training, said the capacity development workshop is intended to add value to customers’ businesses through improving their knowledge and skills. It was also conceptualised to fill the existing gaps observed in business and allay beneficiaries’ hitherto fears of expanding their businesses.

He said: “Modern day business requires that an average businessman regularly updates

his knowledge to cope with the changing economy. Besides, this is an internet/ technology driven age and our customers need to learn new ways of doing business and how to package their businesses for increased patronage.”

Anyanuno said the turnout was a demonstration of the bank’s acceptance by the traders and the importance they attached to the workshop. He promised a repeat of the exercise to accommodate more people.

Head of E-banking Babatunde Ajayi said the programme was part of the bank’s Corporate Social Responsibility (CSR) in furtherance of its responsiveness to customers’ needs while also assuring that the bank is 100 percent committed to the overall growth and success of its customers.

Entrepreneurs who spoke after the training commended and appreciated UBA for such a novel initiative which they noted is the needed impetus their businesses truly needs to succeed.

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... will fly to UK, US, 12 other countries IFEOMA OKEKE

E

mirates Airline has reversed its initial decision to suspend all passenger flights from March 25 in order to contain the coronavirus.

The airline said it would now operate passenger flights to the UK, Switzerland, Hong Kong, Thailand, Malaysia, Philippines, Japan, Singapore, Australia, South Africa, South Korea, USA and Canada.

The management of the airline initially announced that from March 25, passenger operations will be suspended but cargo operations would continue to provide critical logistics as the world battles to contain the coronavirus.

But less than two hours later, it said it had to reconsider its decision after pleas from some countries not to suspend all flights.

“As a global network airline, we find ourselves in a situation where we cannot viably operate @Businessdayng

passenger services until countries reopen their borders, and travel confidence returns.

“Having received requests from governments and customers to support repatriation of travellers, Emirates will continue to operate passenger and cargo flights to few countries until further notice, as long as borders remain open, and there is demand.

“We will operate passenger flights to UK, Switzerland, Hong Kong, Thailand, Malaysia, Philippines, Japan, Singapore, Australia, South Africa, South Korea, USA and Canada. The situation remains dynamic; travellers can check flight status online.

“We will continue to watch the situation closely, and will reinstate our temporarily suspended passenger services, as soon as feasible. These are unprecedented times for the airline and travel industry, but we will get through it with your support,” Ahmed Al Maktoum, Emirates CEO, said in the statement.

40

Monday 23 March 2020

BUSINESS DAY

news

NEPZA takes step to make Calabar FTZ world-class industrial park HARRISON EDEH, Abuja

A

cting managing director of Nigeria Export Processing Zones Authority (NEPZA), Bitrus Dawuk, has assured that the management of the Authority under his watch will make Calabar Free Trade Zone (CFTZ) a world-class industrial park.

The managing director’s assurance was given as he commissioned a 500KVA transformer at Esuk Utan Community and flagged off this year’s first quarterly investment forum at the conference room of the Calabar Free Trade Zone Authority.

At the commissioning ceremony of the 500KVA transformer recently, the acting managing director of NEPZA also said the authority was working to ensure permanently that the issue of power was put to rest in the zone.

“I was the general manager of finance in the Authority, and in that capacity, I knew a lot about the problem facing the zone. Let me state here that it is our resolve to take Calabar Free Trade Zone to a world-class zone,” he assured.

It would be noted that

before the advent of the present administration, NEPZA’s capital votes from the Federal Government was N2 billion.

However, with the advent of the current administration, their allocation for critical infrastructural development rose to N100 billion, which saw to the expansion of infrastructural development of Free Trade Zones in the country with Calabar being a key beneficiary.

BusinessDay findings reveal that because of capital votes, infrastructural transformation, renewal and upgrading have started in the CFTZ as well as the Kano Free Trade Zone, which are two public or Federal Government-owned Free Trade Zones in the country.

NEPZA said as a result of this development, investor confidence in the zones had never been higher, adding that the presidential support had impacted the sector positively.

In his address of welcome, the head of CFTZ, Godwin Ekpe, lauded the acting managing director and his team for commissioning the 500KVA transformer and declaring open the first quarterly investment forum, despite his busy schedules.

FG’s annual 1.4% agric budget fails to improve farmers’ productivity – Report Josephine Okojie

T

he Federal Government’s annual average of 1.4 percent budgetary allocation to the agricultural sector in the last six years has failed to improve farmers’ output as low yield per hectare of most food and cash crops persists, according to a report by Oxfam, a global aid agency.

The yearly poor budgetary allocation to Nigeria’s agriculture cannot at the barest minimum address issues relating to mechanisation, insurance, and research and development, among others that have continued to impact farmers’ productivity negatively, the report said.

Nigeria in 2019 reduced its budgetary allocation to the agricultural sector by 47 percent to N107 billion, from N203 billion in 2018, despite the government’s claim that it is working towards attaining food security, data from the report show.

The government says it is reviewing downward its 2020 budget by N1.5 trillion amid oil price fall triggered by outbreak of coronavirus.

“If the Federal Government had implemented the 10 percent Maputo Declaration benchmark, the national agriculture and food indices would probably have been better,” Oxfam said in the report.

In 2003, Nigeria signed the Maputo agreement to allocate 10 percent of its annual budget to the development of agriculture in a bid to promote food security and

maximise growth, but the country is yet to implement the treaty.

“At the sub-national level, budgetary allocation to agricultural interventions is grossly inadequate.

In nearly all the states where this study was carried out, agricultural investment is remarkably low, and falls short of the 10 percent Maputo declaration recommendation,” it said.

The report said the sector has fallen short of N3.65 trillion investment if the country had adopted the 10 percent agric funding treaty it signed in the last six years. It said the shortfall is about six times the amount allocated to the sector within the period.

The report noted that states’ reliance on donor financing of their agricultural sector remains an unrealistic revenue projection.

“It is worth noting that in Katsina and Taraba, the share of spending to agriculture is projected to rise by 2019-2021 (to 8.2% and 9.6% , respectively), but much of this increase is driven by ambitious, perhaps unrealistic revenue projections and reliance on donor financing that may not materialise largely due to the inability of the state to match the required counterpart funding for agricultural initiatives,” it said.

On budget implementation, the report stated that owing to the persistent late passage and assent of the Appropriation Act, the agric allocations are usually released late, noting that the utilisation of the allocation has been low due to late disbursements and poor absorptive capacity.

Covid-19: Port business still ongoing in line with laid down measures – NPA AMAKA ANAGOR-EWUZIE

F

ollowing the escalating cases of Coronavirus in Nigeria and measures put in place by the Federal Government to contain its spread, the Nigerian Ports Authority (NPA) said on Sunday that vessels were still allowed to call Nigerian ports with imports and to take export cargoes.

According to the authority, the decision to keep the port business alive was based on the information received from the Port Health, which comprises of experts in health matters.

Ada m s Jatto, g e n e ra l manager, corporate and strategic communications of NPA, told BusinessDay on phone that port business was still going on because, the authority had not received any contrary v i e w o r a d v i c e to cl o s e down the port from the Port Health.

“We are monitoring the situation and making sure that the port business goes on in line with the measures put in place by the Federal Government. The NPA cannot bring in any ve ss e l to b e r t h w i t h ou t

Telcos task FG on hitch-free telecom services throughout Coronavirus crisis JUMOKE AKIYODE-LAWANSON

W

orried about the possible economic lockdown in Nigeria, in an attempt to curtail the spread of the deadly Coronavirus (Covid-19), telecoms operators under the aegis of Association of Licensed Telecoms Operators of Nigeria (ALTON), at the weekend, rose from an emergency meeting where it took far-reaching decisions and made strong recommendations on how best to manage telecoms operations throughout the Coronavirus outbreak.

Gbenga Adebayo, chairman of ALTON, who gave a rundown of the global effect of the Coronavirus that has claimed the lives of many, said Nigerian government might likely declare partial or complete lockdown of its economy, like other economies of the world, following the recent measures taken by Federal Government to address the situation, like the closure of all schools in the country, suspension of the National Youth Service Corps (NYSC) programme, and placing travel ban on 13 countries.

Adebayo said the fear of possible lockdown of the economy, compelled ALTON to hold an emergency meeting in order to make recommendations to the telecoms regulator, the Nigerian Communications Commission (NCC) and the federal and state governments on how best to ensure hitch-free telecoms services throughout the period

of the Coronavirus outbreak.

Thomas Gbolahan, head, corporate and regulatory services at Smile Communications, joined other telecoms operators present at the meeting to make suggestions and recommendations, which formed part of the communiqué that was released after the meeting.

In the communiqué, which was made available to the media, members agreed that all telecom companies must be committed to increase their network capacities to enable them provide quality service throughout the period of Coronavirus.

It was recommended that the NCC should facilitate the process of getting approval for Right of Passage (RoP) for all telecoms operators, from the federal and state governments, to allow for easy movement, should there be a partial or total lockdown of the economy as a result of Coronavirus.

Members also recommended that NCC should facilitate the process of RoP for logistics companies involved in supplies of goods and services to telecoms operators in order to allow free movement in the event of economy lockdown resulting from the effect of Coronavirus.

According to the communiqué, telcos must also support government through their corporate social responsibility (CSR) initiatives to provide safety materials that will protect the public against Coronavirus effect.

They also suggested the need to sensitise the public

about safety tips on Coronavirus in different languages, through the Interactive Voice Response (IVR) and other channels.

ALTON recommended that government should establish a front desk at all Emergency Communication Centres (ECC) to provide information about the virus.

Members equally urged NCC to seek support from law enforcement agents to protect telecoms facilities throughout the period of Coronavirus outbreak, and the NCC should consider stepping down Number Portability during the period of the Coronavirus outbreak in order to reduce pressure on networks, when subscribers tend to migrate from one network to another.

Members suggested that NCC should call on government agencies to put a stop to all government orders, directing the closure of telecoms sites, to enable the proper management of telecoms sites throughout the period of the outbreak.

It was agreed that NCC and the state government should reduce the frequency of physical meetings all through the period of the outbreak and deploy alternative meeting platforms, in order to reduce the risk of contracting the virus during travels for meetings.

In the area of network sharing, the communiqué stated that members agreed that telecom operators should collaborate to share resources among themselves in times of difficulties throughout the period that the virus will last.

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clearance from the Port Health,” he said.

According to Jatto, the situation has not warranted t h e au t h o r i t y t o c l o s e d down the port, until they get contrary view from the port health.

“The Port Health is on top of the matter to ensure that the virus does not come into our country through the seaport, but as soon as we get contrary o p i n i o n f ro m t h e m, w e would know what to do,” he assured.

It would be recalled that Rear Admiral David Adeniran, the flag officer, Eastern Naval Command, had said the Nigerian Navy was tracking all vessels coming into Nigeria to prevent the spread of coronavirus.

Adeniran disclosed this recently during the tour of facilities of the command by the Senate Committee on the Navy led by George Sekibo.

According to Adeniran, the command had facilities like the Falcon Eye and the RMAC, which it deployed to monitor all inbound vessels, just as it had stepped up its coronavirus surveillance at all entr y points within the Eastern Naval Command.

Monday 23 March 2020

BUSINESS DAY

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news

CBN says Covid-19 stimulus amounts to N3.5trn ...Emefiele declares FX at N380, adjustment not devaluation ...says all oil firms to sell FX to CBN not NNPC ...identifies pharmaceutical companies to get naira, FX

Hope Moses-Ashike

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entral Bank of Nigeria (CBN) on Saturday said the total package to stimulate the economy against the impact of coronavirus, rapidly spreading, had amounted to N3.5 trillion.

Godwin Emefiele, governor of the CBN, disclosed this at an extra-ordinary Bankers’ Committee meeting comprising of bank CEOs and CBN directors, held in Lagos on Saturday.

Part of the stimulus package is the N1.5 trillion InfraCo project for building critical infrastructure, N1.5 trillion loan to boost local manufacturing and production across critical sectors, among other packages.

The CBN had earlier announced a six-point palliative to ameliorate the continued impact of the coronavirus on the Nigerian economy.

He said the exchange rate of N380 per dollar at the Investors and Exporters (I&E) forex window was not devaluation but an adjustment.

“CBN has a responsibility to see to adjustment in currency. What you have seen is an adjustment in currency.

We have also been accused that we have a hand. We don’t have a hand,” Emefiele said.

The CBN on Saturday devalued the naira as official exchange rate is now at N360 per dollar. The official rate, which stood at N307 per dollar as at Friday, is now pegged at N360, according to data from the CBN website.

Razia Khan, managing director, chief economist, Africa and Middle East Global Research, Standard Chartered, said devaluation now would help to boost fiscal receipts in naira, helping to compensate for the weaker oil price.

“Having seen the I&E FX rate trade higher, we think this also demonstrates a more proactive stance to exchange rate management

on the part of the authorities,” Khan said in an email response to BusinessDay. The official FX rate denotes the rate at which the CBN buys FX from oil companies. It is also the rate at which Nigeria uses to calculate oil revenue in the budget.

Charles Robertson, 2019 Renaissance Capital’s Global chief economist, said it was a very smart and helpful move by the central bank, which will improve the flow of naira to Nigeria’s states.

“It helps avoid more stringent budget cuts that countries like Saudi Arabia have to do because they cannot move their currency,” Robertson told BusinessDay by email.

Taiwo Oyedele, head of Tax and Corporate Advisory Services at PwC, said, “I thinks adjusting the official naira exchange rate to N360 is the right thing to do and this should have been done long ago.

“I will not consider it a devaluation, but a removal of the discount to better reflect economic reality. In fact, the CBN should harmonise all exchange rates into one, this will boost confidence in the foreign exchange market and block the loophole for arbitrage.”

At part of efforts to improve FX supply, the CBN on Saturday directed that all oil companies (international and domestic) and all related companies (oil service) to sell FX to CBN and no longer NNPC. The committee identified a few key local pharmaceutical companies who shall be granted naira and FX funding facilities to support procurement of raw materials and equipment required to exponentially increase local drug production in Nigeria.

These include but are limited to Emzor, Fidson, GSK, May & Baker, Unique Pharma, Swiss Pharma, Neimeth, Sagar, Orange Drug, and Dana Pharma.

NASD’s remote trading goes live ...company’s staff operated from home Iheanyi Nwachukwu

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etermined to enhance speedy, efficient, transparent and global service delivery, NASD plc has announced full commencement of remote trading in consonance with its business continuity policy.

As a practical proof of its capacity and readiness for seamless remote trading, leveraging modern Information and Communications Technology (ICT) equipment, the company’s staff operated from their respective homes on Friday.

Coming on the heels of global concerns on the need for social distancing follow-

ing outbreak of coronavirus, market watchers at the weekend commended the company, describing the full-blown transition to remote trading as timely and historic.

In a statement forwarded to securities dealers at the weekend, NASD’s managing director/CEO, Bola Ajomale, explained that the company had capacity to operate irrespective of the current challenges militating against businesses globally. “ NA SD i s to day r u nning a Business Continuity Planning Test. Your market successfully opened at 10am and will run remote throughout the day - with all staff operating from their respective homes,” he said.

PPPRA board fails to give clarity on full deregulation of downstream sector DIPO OLADEHINDE

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meeting of the full board of the Petroleum Products Pricing and Regulatory Agency (PPPRA) expected to proffer solutions to the challenges of pricing template facing Nigeria’s downstream sector ended weekend with more confusion and less certainty, BusinessDay learns.

The gathering was held amid strong support for deregulation received from the nation’s state governors who met last Wednesday and insisted that henceforth NNPC would have to price the 450,000 barrels of crude oil taken out daily for domestic consumption at ruling international oil price.

Stakeholders had hoped that the meeting called to draw up a new pricing template and also offer clarity as to the real intentions of the government when it cut the price of petrol last week ended with more uncertainties.

Although some oil marketers saw the latest price cut as signposting deregulation, others are not so sure and many now believe that there

seems to be a resistance in some quarters in government to implementing the change.

According to sources at the meeting, “what was clear is that there exists no expertise within the PPPRA secretariat to guide the board or manage this new pricing approach.”

Doubts have also been expressed as to whether the PPPRA’s executive secretary and chairman of the board have a full understanding of the reform the government unfolded last Wednesday.

Some marke t e r s t o l d Bu s i n e s s Day t h e y w e re losing confidence in the regulator because of the deteriorating situation in the downstream sector of the Nigerian petroleum industry, and want it to live up to its responsibilities.

The meeting started with the PPPRA’s chairman directing board members to validate a number of positions, including the numbers allegedly provided by PricewaterhouseCoopers (PwC), a multinational professional services firm, relating to agreed margins along the value chain.

The board did not take

kindly to being directed like a rubber-stamp board, a source at the meeting said.

After much deliberation, it was decided that the Price Mo d u l at i o n C o m m i t t e e should meet March 24 to 25 to finish its job of reviewing the PwC report, which was not circulated to board members prior to the meeting.

Discussion also centred on how to price the PMS stock currently held at the depots as well as that in transit and discharging vessel.

BusinessDay learns that it was resolved at the meeting that the NNPC would bear the price differential, but this would not be the same with stock held at petrol stations as this could not be ascertained.

At the end of the meeting, it was agreed that the Price Modulation Committee meet March 24 to 25, while the board will meet March 27 by 3pm to fix prices that would be effective from April 1.

While addressing journalists in Abuja about the outcome of the meeting, PPPRA’s executive secretar y, Abdulkadir Saidu, noted that the price an-

nounced on Wednesday, March 18, would apply till March 31, and a new price might come into effect after the review, adding that henceforth, PPPRA would be undertaking a review of petroleum products prices every month.

“From the 1st of April, PPPRA will be modulating a monthly price of petroleum products based on the market fundamentals. What the new pricing regime is going to be doing is going to be looking at the actual market price. It is going to be a reflection of what the market is doing,” Saidu told journalists.

He dismissed claims by oil marketers that they were not consulted before the review of the pump price of PMS, and expressed reservations at some of them who have not yet complied with the new directive.

The NNPC is represented on the board, and so are the oil marketers association whose members have been strident in their demand for cost-reflective margins for their business and that of thousands of their dealers scattered around the country.

Seyi Makinde (m), governor, Oyo State, briefing Oyo State Government House correspondents on update of coronavirus in Ibadan late Friday. With him are Olubamiwo Adeosun (l), secretary to the state government, and Bashir Bello, commissioner for health.

NAN

NNPC posted 34% increase in trading surplus in December 2019 OLUSOLA BELLO & HAREISON EDEH

… as PPMC records N337.63bn products sales

he Nigerian National Petroleum Corporation (NNPC) has announced an increased trading surplus of N5.28 billion in its December 2019 operations compared to the N3.95billion surplus posted in November last year.

Kennie Obateru, the corporation’s group general manager, group public affairs division, explained that details of the surplus were captured in the December 2019 edition of NNPC’s Monthly Financial and Operations Report (MFOR), which, among others, showed that the 34 percent increase for the period resulted from improved performances by some of its entities both in

the upstream and downstream sectors.

The release listed NNPC’s subsidiaries with notable improved positions to include: Integrated Data Services Limited (IDSL), Nigeria Gas Marketing Company (NGMC), Nigerian Pipeline and Storage Company (NPSC) and Duke Oil Incorporated.

It explained that in general terms, the performance was impacted positively by the reduced deficit posted by NNPC corporate Headquarters during the period under review; adjustments to previously understated revenues by IDSL and Duke Oil; and reduction in the costs of pipeline repairs/Right of Way

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maintenance and gas purchases

by NPSC and NGMC, respectively.

In the gas sector, out of the 239.29billion Cubic Feet (BCF) of gas supplied in December 2019, a total of 148.32BCF of gas was commercialized, consisting of 34.78BCF and 113.54BCF for the domestic and export market respectively.

According to the report, this translated to a supply of 1,121.77Million Standard Cubic Feet per day (mmscfd) of gas to the domestic market and 3,662.70mmscfd of gas supplied to the export market for the month.

The corporation noted that 62.22 percent of the average @Businessdayng

daily gas produced was commercialised, while the balance of 37.78 percent was re-injected, used as Upstream fuel gas or flared, adding that gas flare rate was 7.78 per cent for the month under review i.e. 598.03mmscfd, compared with the average gas flare rate of 8.56 per cent i.e.

678.02mmscfd for the period December 2018 to December 2019.

The report stated that gas supply for the period December 2018 to December 2019 stood at 3,105.48BCF out of which 466.00BCF and 1,369.90BCF were commercialised for the domestic and export market respectively, explaining that gas re–injected, Fuel gas and Gas flared, stood at 1,269.59BCF.

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news FG, states are biggest winners in...

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ported last week that Nige-

producing, and many are asking their staff to go and work from home,” Ohunayo said.

“So, everyone is offering skeletal services, but I believe that if there are essential things that are needed as a nation, such flights will be allowed to land but all other non-essential cargo flights may be restricted for now,” he said.

Ohunayo said the country may eventually get to a total lockdown.

“We shouldn’t look at the commercial side of things now but safety. Government should rather look for palliative measures to help key sectors like aviation so that airlines can survive after the situation,” he said.

Seyi Adewale, chief executive officer, Mainstream Cargo Limited, an indigenous freight forwarding company, said he believed essential cargoes would still be allowed to operate.

He noted that the only challenge, even with essential cargoes being allowed, was that there might be delays in return time caused by poor connectivity arising from restrictions on flights from other countries as a result of the outbreak of

COVID-19.

Ayabae of PMG-MAN, however, said drug makers were already seeking ways of responding to the crisis.

The Central Bank of Nigeria (CBN) had last week unveiled N50 billion and another N1.1 trillion to support firms, including drug makers, to stay afloat or come up with products relating to COVID-19.

“CBN has seized the opportunity to make some money available for manufacturers to invest. We have the capacity to produce all these items, but we are not manufacturing them because it is uninteresting and unprofitable to do so. The economy is open to all kinds of imported products which will make local products expensive,” Ayabae said.

Okey Akpa, CEO of SKG Pharma, said this was the time for the country to take manufacturing more seriously to make Nigeria achieve medical sufficiency.

Akpa had earlier said that medicine was so critical for a nation to be left for exporters, stressing the need to check unbridled import of drugs to save the country in cases of emergency.

ria’s central bank will allow the N306 rate it has kept for four years to weaken to around N360 as part of steps towards collapsing the country’s multiple rates into a single rate as the pressure from tumbling oil prices forces Abuja’s hand on long-delayed currency reforms.

Adjusting the naira to a market-determined rate puts more cash in the hands of the federal, state and local governments, who depend mainly on oil receipts to carry out their fiscal obligations.

Allocations to the three tiers of governments had been made at N306 per dollar despite the market rate being much weaker at above N360.

However, an exchange rate of N360 per dollar means all three tiers of government would receive additional revenue of N54 for each dollar in revenue allocations.

In 2019, N54 for each dollar would have put an extra half a trillion naira in the hands of the federal, state and local governments, according to BusinessDay’s calculations.

Some N2.93 trillion was shared between the three tiers of government using an exchange rate of N306 per dollar in 2019. That’s $9.58 billion.

When converted to naira using the N360 rate, that comes to N3.45 trillion, a difference of N520 billion compared to the actual amount that was shared using the N306 rate.

The states are already eyeing higher revenues from federal allocations after finance commissioners of the states rejected the official conversion rate of N306 for February allocations.

This created a stalemate and led to the FAAC meeting held Wednesday be declared inconclusive by Hassan Dodo, director of information, Ministry of Finance, Budget and National Planning, who did not give a reason for the abrupt end of the meeting.

Sources familiar with the matter say the states are already aware that the Federal Government has approved a

her name in print told BusinessDay that many people avoided service because of the social distance prescription.

“This church used to be filled to the brim but you can see that as much as 40 percent of the worshippers had failed to come for service,” she said.

The same was observed at Living Faith Church in Jikwoyi, Abuja.

St. Mary’s Catholic Church, Karu, one of the biggest parishes in Abuja, recorded low turnout in both the first and second Masses. The practice of shaking hands as a sign of peace was jettisoned.

Joy Aernan, a worshipper at St. Donald’s Catholic Church, FHA Karu, said she did not go to church because she was afraid of being in-

fected with coronavirus.

“On normal Sundays, I don’t miss Mass, but today, I did not go because there was information that three persons were confirmed with coronavirus in Abuja. Even though I love God, I cannot take such risk,” she said.

In some churches where service was in full swing, the congregants were made to use hand sanitisers before entrance.

The 50,000-capacity Dunamis International Auditorium, Airport Road, was filled with worshipers in the three services. However, hand sanitisers were compulsorily used while the general overseer, Paul Enenche, who is a medical doctor, sensitised the congregation on safety measures.

In virtually all parts of Abu-

ja, including the highbrow Maitama, Asokoro, Wuse, Garki, Utako and Jabi areas, among others, churches were filled with worshippers as if they were not mindful of the coronavirus outbreak.

Some of the worshipers explained that they went to church because they had faith that none of the church members would be allowed by God to be infected with the virus.

In FCT Area Council, many churches scaled down service time, while also introducing safety measures to protect members. Churches in the FCT are shifting to intensify Home Cell Service, Small Prayer Cells and Whatsapp Prayer Groups preparatory to a possible enforcement of ban on public gathering.

St. Kizito Catholic Church Iju- Station, Ifako Ijaye Local Government, Lagos, under lock following the Lagos State directives over Pic by Olawale Amoo coronavirus in Lagos, yesterday.

Crisis looms as FG bans cargo flights amid...

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ing hand santisers, are already rising as demand outstrips supply.

As of 6:00pm on Sunday, the number of COVID-19 cases in Nigeria had risen to 30, and there are feelers the number might increase in the coming weeks.

Sam Adurogboye, spokesperson of the Nigerian Civil Aviation Authority (NCAA), confirmed to BusinessDay that cargo flights would be banned from coming into the country.

“NCAA will, on Monday [today], ban anything that flies. However, on a caseby-case basis there will be exception for emergency and essentials flights,” Adurogboye said.

The closure of international flight operations at the Lagos and Abuja airports is in addition to the three other international airports in Kano, Enugu and Port Harcourt shut for flight operations on Saturday.

“It is a crisis moment.

There is nobody manufacturing these masks and ventilators. All of them are

imported,” Fidelis Ayabae, chairman, Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), said.

Ikechi Uko, a travel expert and consultant, told BusinessDay that since the coronavirus crisis started in other countries, no single country has banned cargo flights because medical supplies would be needed to help manage the situation.

“If we ban cargo flights, how are we going to get medical supplies and replacements? Nigeria doesn’t produce these things. So we need to be careful when making critical decisions as this,” Uko said.

Olumide Ohunayo, an aviation analyst, told BusinessDay that restriction of importation of cargoes would affect the economy negatively. For instance, he said, when cargo flights are restricted, industries and other services supporting the ground handlers at the airport, the agents, transporters and customs would also be affected.

“We have companies that have stopped operating and

Churches record low turnout, Nigerians stock ...

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pandemic.

BusinessDay had on Thursday raised concerns about the number of passengers being conveyed in BRT buses, which ply majorly Ikorodu-12 MileCMS routes amid increasing cases of Covid-19 in Nigeria’s commercial city.

Fola Tinubu, managing director, Primero Transport Services Limited, said on Sunday that the company was complying with the government directive restricting social gatherings to less than 50 people.

“We have reduced the maximum number of customers allowed on the bus to 50 or less. This translates to

42 passengers seating and 8 standing. We are appealing to all our commuters to work with our staff and cooperate with our ticketers to ensure that we keep the passenger numbers at the recommended limits,” Tinubu said.

In Abuja, many churches witnessed perhaps one of their lowest turnouts. While some worship centres were filled to capacity, many worshippers did not attend church service due to fear of the outbreak.

The pews were empty in some of the churches visited. It was gathered that offering and tithes dropped drastically.

At the Living Faith Church Katamkpe, one of the worshippers who did not want www.businessday.ng

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@Businessdayng

weaker official exchange rate and are keen to start reaping the higher revenue benefits as soon as possible to help cushion lower revenues in the coming months as a result of the slump in global oil prices and reduced demand.

“The move to adopt a weaker official exchange rate has saved the FG and states from a financial catastrophe as the expected surge in federal allocations will help cushion the impact of falling crude oil prices on revenues,” Ayodeji Ebo, managing director at Lagos-based advisory firm, Afrinvest Securities, said.

The rate convergence will also help boost foreign direct and portfolio inflows into the country, according to Ebo. But he has his reservations over whether the N380/$ rate which the CBN now sells dollars to FPIs is fair enough.

“The rate may need to weaken a bit more to around N400/$ for it to be marketreflective,” Ebo said.

Other analysts said the naira should trade around N400-N450 to reflect its true value.

While the FG, states and local governments are set to benefit from a devaluation, it’s a different story for the CBN which may have to take a haircut of close to N200 billion in its naira-settled OTC FX Futures contracts that have been entered at a cheaper exchange rate.

“With over $10 billion in outstanding OTC FX Futures contracts, the devaluation could cost the CBN some N180 billion or more,” a senior banker told BusinessDay. The one-year FX Futures was priced at N371 per dollar Thursday before it was suspended Friday. That leaves a difference of N9 per dollar compared to the new N380 rate at which foreigners will now access dollars.

On the flipside, however, there are some benefits from the change of tack for the CBN. Nigeria’s apex bank is feeling the heat of the global oil price slump to below $30 per barrel from a peak of $65 per barrel this year. The pressure on the CBN has been made worse by its weak buffers. The bank’s external reserves are down more than 20 percent this year alone to a paltry $36 billion.

With a devaluation, the CBN would spend less trying to defend the naira, although this is dependent on how close the new rate for naira is to its true value.

There has been a consensus among analysts that Nigeria’s multiple rate exchange system was inefficient, unnecessarily complex, and prone to corruption.

The International Monetary Fund (IMF) has often criticised the practice and tagged it inimical to foreign investment inflows and sustainable economic growth.

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COMMENTARY

A disaster foretold: Leadership in the time of covid-19 TAYO FAGBULE

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esterday, Sunday (March 22), made it exactly two years Bill Gates stood in the banquet hall at Aso Rock with President Muhamadu Buhari, members of the Federal Executive Council and other government officials, and told them to face facts: Nigeria’s potential to become an economic powerhouse is as strong as the sickest Nigerian.

The following month (April 27), Bill Gates was the guest speaker at a yearly lecture organised by the Massachusetts Medical Society and New England Journal of Medicine.

He delivered a speech: Epidemics Going Viral: Innovation vs Nature, where he said the world was unprepared for a pandemic because, “the health infrastructure we have for normal times breaks down very rapidly during major infectious disease outbreaks. This is especially true in poor countries.” Countries with poor leadership are even more vulnerable.

Both events are playing out as covid-19 upends social and economic lives and governments and scientists grapple its impact.

No country saw the novel coronavirus coming, though experts had warned that an unknown pandemic from a virus was possible. Bungled responses by countries and international organisations to swine flu (H1N1) in 2009 and Ebola in 2014 showed how unprepared local and global health systems were. Over 21 months, Ebola spread rapidly across West Africa ravaging 11,315 lives; countries that lacked the leadership and health system were hit hardest.

The poor state of Nigeria’s public health system Nigeria was spared, fortunately. Health has never been a concern of past and present governments – Nigeria is one of the most dangerous places to give birth. In Abuja that Thursday, Gates told Nigerian leaders in the room to invest in the health and education of the greatest resource of the country: human capital. He warned that their choices could make or mar the ambition for growth.

Specifically, Gates noted that one of the three strategic objectives of the Economic Recovery & Growth Plan, designed to revive the economy after the recession in 2016, was unmatched by the projects it prioritised. Gates said they “don’t fully reflect people’s needs, prioritising physical capital over human capital.” Bridges roads and ports are useless without healthy and skilled people.

We all applauded him for speaking bluntly but soon forgot and moved on.

At his lecture on epidemics, Gates shared with his audience the likely outcome of a simulated scenario of an airborne virus outbreak originating from South East Asia. The model assumed there was no immunity, that health systems were unprepared and there was no vaccine – 33 million people die in six months.

Gates funded this research initially to help his foundation better understand and tackle polio but applied it to see how a pandemic like the Spanish flu, the 1915 pandemic, would spread in our time; it showed the disease could spread to all cities in the world in 60 days.

Why? We live in global, fast moving times. Our world today is the perfect environment for such a disaster. www.businessday.ng

We are witnessing the onslaught of covid-19 has it upends the social and economic lives. And its laying bare different shades of leadership.

In the US, Canada, the UK and UAE, for instance, Donald Trump, Justin Trudeau, Boris Johnson and Mohamed Ibn Zayed have accepted the reality and reached out to their citizens on TV and Twitter. Trump and Johnson now give daily press briefings daily on the contagion.

Emmanuel Macron, the President of France, has said his country is at war. President Buhari is yet to speak. His spokespersons have even scolded the National Assembly for daring to ask him to address the country.

In a time of uncertainty, fear and doubt, in a country with a sham-

“

More worrying that the rate of reproduction of an infectious disease is the unpreparedness of rapidly urbanising countries with poor health care systems like Nigeria

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bolic health infrastructure that the president and his family don’t rely on, at a time when the country is divided because of distrust, the president has chosen to be absent, to sit and not be counted. Goodluck Jonathan, his predecessor delayed taking the lead during the Ebola outbreak too. Both their responses in the face of crisis reveal Nigeria’s unique brand of democracy. Here the elected government acts in its own best interest not that of the electorate. Nigerians are an afterthought, undeserving of leadership in trying times whether it is a war against Boko Haram or a deadly contagious disease.

This attitude will undermine the ability of Nigeria to cope with the covid-19 contagion which is no ordinary crisis. The central bank in the US is pumping $850 billion into the economy to forestall a recession.

In Nigeria, a paltry 50 billion naira fund – small change that independent oil companies can cough up as a coronavirus donation – was announced before bolder reforms were made public. How rapidly and responsibly government responds matters.

Epidemiologists, scientists whose job is to figure out how contagious a disease is, describe the speed with which it spreads by an R-rate, the higher the rate the faster the contagion. Covid-19 spreads from one person to two or three on average which makes it more contagious than other viruses. It is also more lethal than the common cold.

Chances of survival depend a lot on the quality of health care system.

More worrying that the rate of reproduction of an infectious disease is the unpreparedness of rapidly urbanising countries with poor health care systems like Nigeria. A @Businessdayng

country that devotes little or nothing to health is a risk to itself and other countries. Or, as covid-19 has shown, viruses can elude countries with modern laboratories, testing equipment, and medical personnel. Italy, with over 3,000 dead from covid-19, has overtaken China.

Pandemics are deadlier than wars – it is believed that infectious diseases like the Spanish flu in 1915 which killed more than 50 million people have taken more lives than all the wars and non-infectious disease and natural disasters in the world put together.

Pandemics, one of the oldest enemies of humanity, are to a large extent predictable because they happen again and in history (e.g.

Ebola, Zika, SARS, MERS). Yet the time it takes to understand a new outbreak, how it spreads, and the measures required to stop it such as competent medical personnel, a functioning health system and trusted leadership are factors that determine whether governments will win the fight against covid-19.

We didn’t need Bill Gates to remind us that the primary health care system in Nigeria is broken and inadequately funded. Neither do we need an existential threat like coronavirus to remind us that Nigeria lacks leadership and is the feudal republic of anyhowness.

Thousands of unnecessary and avoidable deaths of children at birth every year and thousands more possibly from covid-19 this year are both painful reminders that investment in health and education are the best bet the leaders of Nigeria can make if it is to achieve its potential.

Fagbule is chairman of BusinessDay Editorial Board

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abujacitybusiness Comprehensive coverage of Nation’s capital

20,000 Abuja residents benefit conditional cash transfer in 2019 James Kwen, Abuja

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o fewer than 20,000 residents of the Federal Capital Territory (FCT), Abuja have benefited from the Conditional Cash Transfer of the Social Investment Programme of the Federal Government (SIP) in 2019.

FCT Minister of State, Ramatu Aliyu who disclosed this during a one day Conditional Cash Transfer Co-responsibility Engagement Stakeholders forum in Abuja said, in addition, the programme has established savings groups for the beneficiaries to engage in various livelihood

activities that would lift them out of the depth of poverty.

The Minister who was represented by her Special Assistant on Technical Matters, Mubdiyu Mustapha noted that the components of the SIP were carefully planned to encapsulate the administration’s cardinal objective of eradicating extreme poverty, and also providing security and developing the economy of Nigeria.

She however, observed that despite the milestones recorded, Nigerians are not yet where they need to be in the fight against poverty, stressing that there are a lot of things that

could be done differently within the social protection circle.

“Specifically, we need more research, we need more young people venturing into the social protection field, and we need to improve our results chain. We need not reinvent the wheel and we must ensure we learn from past mistakes, by documentation and analysis for future references.

“We must continue to work to checkmate unemployment, bring down the numbers of out of school children, provide vocational training opportunities especially in the grassroots where they are needed, and above all,

continue to strive to ensure all human lives matter”, the Minister added.

In his remarks, the Head of FCT State Cash Transfer Unit, Luka Ayuba described the introduction of the Social Investment Programme as the best programme of government geared towards tackling extreme poverty in Nigeria.

He stated that the programme has covered three Area Councils of Abaji, Kuje and Kwali, revealing that the unit will scale-up its activities in the other three Area Councils of Abuja Municipal Area Council (AMAC), Bwari and Gwagwalada in the next phase.

L-R: Adetokunbo Kayode, president, Abuja Chamber of Commerce and Industry (ACCI); Aminu Waziri Tambuwal, governor, Sokoto State, and Abba Yusuf, president, Katsina Chamber of Commerce, after briefing the governor on ACCI’s preparations of first Halal Expo in Nigeria held in Sokoto Government House.

Pic by Tunde Adeniyi

Economic activities to surge as Loko- Oweto bridge near completion Gift Wada, Abuja

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he Minister of Works and Housing, Babatunde Fashola said the completion of Loko Oweto bridge, linking Nasarawa and Benue States will promote economic activities between the northern and southern parts of the country.

Fashola who stated this during an on- the - spot assessment of the bridge which is already 96% completed, said it would lessen the travelling hours, especially for those travelling from the Eastern part of the country to the Northern part.

The Minister while expressing optimism that the bridge is strategic and has huge economic importance said it’s connectivity between the Northern and Southern Part of the country is key in driving ease of doing business and lifting millions of businesses out of poverty.

“This is the Loko Oweto bridge that connects the North and South Nigeria, Benue loko Oweto side to Loko nasarawa and links you to the federal capital. this is a major strategic transport route to connect this part of the country and all those coming from east of Nigeria.

“This is going to rewww.businessday.ng

duce the journey time to Eastern Nigeria, the federal capital, and Nasarawa and neighbouring states by many hours.

Now you can make this connection in about six hours from the east of Nigeria to Abuja, this is a journey that used to take over a day, so this is a major impact in business including the cost, time and improving the ease of doing business.

“The last time I visited no vehicle was passing because the connection was not complete but what has happened is that even as the the road is not completed, we have seen trucks moving on the

route because the route is evidently shorter, it has become a major route for moving yams from venue to nasarawa and to other parts of Nigeria. so it is going to develop into major economic growth for Nigeria for farming produce for farmers and agriculture produce”, he noted.

Also, Ahmed SaboUmar, Emir of Loko commended President Muhammadu Buhari for the economic development the project has brought to the community as it now links economic activities between the Northern part and the Eastern part of the country.

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FCT Minister urges private sector to invest in conference tourism James Kwen, Abuja

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he Federal Capital Territory (FCT) Minister, Muhammad Bello has called on private organisations to consider investing in the conference tourism sector of the FCT by building world class international conference centers and five star hotels in the nation’s capital.

Bello, represented by his Chief of Staff, Muhammed Mai-Borno made this call when he received a delegation from the Nigeria Council of the Society of Petroleum

Engineers on a courtesy visit to the FCT Administration.

The Minister said the FCT Administration was willing to provide land for investors that have the intention of providing world class conference facilities in the Territory.

Earlier, the Chairman of the Nigeria Council of the Society of Petroleum Engineers, Joe Nwakwue disclosed that the Society intended to bid for the hosting of either the 2027 or 2030 SPE International Annual Technical Conference and Exhibition and solicited for the cooperation of the FCTA to bring this plan to fruition.

ABCL holds leadership seminar for Abuja Councillors James Kwen, Abuja

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buja Civic Leadership Centre (ABCL) has charged Councillors in the Abuja Municipal Area Council (AMAC) to embraced Effective leadership that is focused on engaging the members of the community in order to address their basic challenges.

ABCL made the call during a two day practice leadership workshop for Councillors in AMAC with the aim of “diagnosing” major impediments to good leadership in Nigeria and proffering practical solutions to the problems.

Speaking on the title:’Practical Leadership for Community Development’, ABCL team leader, Edbert Adebe said the theme was carefully selected after properly conducted research which revealed that there were obvious misconceptions and lapses in leadership and the right approaches to be

used in addressing community challenges.

According to him, leadership was; “not to be seen as a tittle or position, but an an activity, behavior and/or action that improves the lives of the people, and the society at large”.

Citing the recent outbreak of covid 19 epidemic, Adebe maintained that “it will take individuals with genuine leadership traits” to proffer solutions to the such endemic challenges, or to strike major strides in both human and material development.

On his part, AMAC Chairman, Abdullahi Candido, represented by Abiodun Essiet, urged members of Abuja Municipal Area Council to “know their rights” in engaging members of the legislative council and conveying their needs and challenges to the legislature so that: “they can also performing their leadership rights and responsibilities to the members of their constituency”

Nigerian Military establishes Directorate of Media Operations Godsgift Onyedinefu, Abuja

T

he Nigerian Military has established the Directorate of Defence Media Operations (DMO), which is the latest strategic innovation of Defence Headquarters to ensure that the Armed Forces of Nigeria communicate its operational activities through one channel to the general public.

The Chief of Defence Staff, Gabriel Olonisakin said the need to tackle uncoordinated release of information informed the creation of the Directorate which will serve as the only channel to communicate for the armed forces and facilitate interface with the media and the general public on all Armed Forces or @Businessdayng

military operations both internal and external.

Speaking at the unveiling of the Directorate in Abuja, Olonisakin who was represented by John Enenche, Coordinator, Defence Media Operation said the purpose of the Directorate is to curb misinformation and disinformation.

He said the new Directorate is now the clearing house for all information relating to the operational activities which will provide authentic information on all issues bothering on military operations.

The Defence chief further stated that, the Nigerian military will continue to review and restrategize so as to tackle the security challenges in the country, so as to ensure adequate security of lives and property.

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FT

Monday 23 March 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Why coronavirus could hit Iran harder than US sanctions The outbreak may throttle many of the new trading relationships on which Tehran depends Andrew England and Najmeh Bozorgmehr

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or almost two years, Iranian leaders have vowed to resist the “economic war” the US is waging against their country as American sanctions have strangled the Islamic republic’s economy ever tighter. President Hassan Rouhani even suggested that the mission had been accomplished when he addressed the nation in February.

“Never in our history have we experienced an economy without oil,” Mr Rouhani said with an undisguised hint of pride. “We have come to realise we can govern without oil.”

His message was clear: a nation with some of the planet’s largest crude and gas reserves had been forced to break its addiction to oil.

And it had survived.

Three days later, Iran reported its first cases of coronavirus. The outbreak not only triggered a health crisis, but also exposed the fragility of Iran’s survival mechanisms. Some argue the outbreak is succeeding where US President Donald Trump’s sanctions failed: throttling many of the regional trading routes the republic has become more dependent on over the past two years.

In the weeks since, the number of infections has soared to 20,610 as of Saturday and the official number of those who have died has reached 1,556.

As a result, the republic is more isolated than ever and appealing

for international aid, including a $5bn loan from the IMF, while complaining that sanctions are crippling its ability to respond to the crisis.

Many of its neighbours — including Iraq, Turkey, Pakistan, Afghanistan and Armenia — have closed their borders or imposed restrictions on crossings and trade. Only one foreign airline, Qatar Airways, still flies to Iran.

“Coronavirus has struck a more severe blow to Iran’s economy than US sanctions over a very short period,” says Saeed Laylaz, an Iranian economist.

Iran’s survival strategy has been threefold since Mr Trump withdrew the US from the 2015

nuclear deal Tehran had signed with western powers and then imposed the “toughest ever” sanctions. It has sought to bolster domestic production, particularly in key sectors such as petrochemicals, steel, cement, agriculture and manufacturing, while attempting to boost non-oil exports, including face masks to China. It also shifted its focus to regional markets, both as a destination for Iranian goods and as transshipment hubs.

Iranian businessmen tell apocryphal tales of middlemen traversing the region with suitcases packed with hundreds of thousands of dollars; of developing a complex web of trading routes; and setting up offshore offices and

front companies to keep goods and finances flowing, albeit at a higher cost and with longer delivery times.

The republic produces enough food for its 80m population and exports to neighbours. Iranian companies account for about 70 per cent of the country’s pharmaceutical needs, with the remainder — either finished medicines or inputs — imported. Neither sector is sanctioned, but the difficulty of conducting financial transactions, with few banks willing to touch anything connected with Iran, has led to a shortage of some specialist medicines, such as cancer drugs — and now equipment to fight coronavirus.

Even before the outbreak, Iranian officials knew they could not disguise the damage the US sanctions have wrought, particularly on poorer Iranians, as oil exports have plunged from 2.8m barrels a day two years ago to a few hundred thousand. The IMF estimates the economy contracted by 9.5 per cent last year; the rial lost more than 50 per cent of its value in the months after Mr Trump unilaterally withdrew from the nuclear deal, inflation soared above 40 per cent and foreign companies fled the country.

But there was a growing belief, at least among officials, that Iran was proving it could absorb the shocks. Supermarket shelves have remained full during the coronavirus outbreak, partly because in its preparations for sanctionsrelated shocks the republic has built up food reserves, Iranian analysts say.

“They say, sanctions are like a knife. The more you use it, the blunter it becomes,” Mohammad Nahavandian, vice-president for economic affairs, told the Financial Times before the extent of Iran’s coronavirus crisis was clear.

“There was a time that just one sentence in a statement made by an American official, president or otherwise, could send waves of worry in the Iranian economy.

Not any more.”

From its shrunken base, growth was expected to be flat this year, the IMF predicted. And in the absence of foreign competition, some Iranian businesses were in expansion mode.

Investment veterans try to get to grips with ‘broken’ markets Simultaneous collapses in stocks and government bonds are a radical break from norms

Tommy Stubbington and Colby Smith

T

he early stages of the coronavirus shock to markets followed a familiar script: stocks fell hard while the government bonds that investors crave in times of stress shot higher. It was painful for many fund managers but a standard response to the risk of a looming global recession.

But that pattern has begun to break down, with big slides in safe assets at the same time as historic drops in equities. This week that intensified, creating a “sell everything” mindset that stunned industry veterans. “[It] was mind-boggling,” said Bob Michele, chief investment officer at JPMorgan Asset Management. “I have been doing this now for almost 40 years, and this is the strangest market I have ever seen.” The lack of a reliable asset that rallies in bouts of nerves is unprecedented, he said.

Prices of government bonds, usually financial markets’ ultimate safe

harbour and a key reference point for assets across the world, flailed wildly over the past five trading days. They frequently tumbled in tandem with stock markets as investors yanked money out of funds at a record pace and portfolio managers scrambled to sell whatever assets they could.

In the early stages of the pandemic, investors piled into government bonds, pushing the US 10-year Treasury yield to a record low of less than 0.4 per cent on March 9.

The reaction was similar across the Atlantic: 10-year yields in Germany, Europe’s ultimate haven, collapsed to an unprecedented minus 1 per cent.

Since hitting those troughs, yields have climbed sharply, a rise that accelerated last week in erratic trading. As investors resigned themselves to a deep global recession, the 10-year Treasury yield peaked at nearly 1.3 per cent on Thursday, with Germany’s equivalent surging to minus 0.2 per cent.

A lot of fund managers had been www.businessday.ng

set for a quiet year of steady returns.

Instead, the value of their assets is plunging and many are being forced to hand money back to clients who would rather shelter in the safety of cash deposits.

“The industry as a whole is facing outflows,” said Andrew Wilson, chairman of global fixed income at Goldman Sachs Asset Management.

“Our primary responsibility is generating the liquidity our clients want.

All of us are having to sell the things we can, rather than the things we would want to sell in a calm market environment. That’s why this ripples right across everything.”

Bond fund managers complain of a lack of liquidity, particularly for riskier corporate bonds, as banks and other trading houses step back from markets. That means many are forced to offload more heavilytraded government debt in order to hand cash back to clients.

Central banks have been compelled to provide backstops for fixed-income markets, which have

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arrived at dizzying speed. After the Federal Reserve’s announcement of at least $700bn of asset purchases last Sunday failed to calm markets, the European Central Bank followed with €750bn on Wednesday and the Bank of England with £200bn on Thursday.

The recent losses for government bonds have called into question their traditional role in investors’ portfolios, where they typically serve as a counterweight that rallies as riskier assets fall.

“The value as a hedge is just not there,” said Rick Rieder, BlackRock’s chief investment officer of global fixed income. He said he had sold US government bonds over the past two weeks even as stock markets were melting down, judging that there was little potential upside in owning them — but plenty of room for declines.

With the Fed cutting rates to near-zero and relaunching bond purchases, 10-year Treasury yields look attractive based on valuations, @Businessdayng

but the volatility is off-putting, Mr Rieder said on Thursday. “Now it makes sense to just own risk assets in smaller sizes and nothing else. The best hedge in our portfolio is cash.”

The world’s largest asset manager is not alone in this dash for liquidity.

Investors pulled a record $109bn out of bond funds in the week to Wednesday, according to data from EPFR Global. Money market funds, which invest in cash-like short-term debt, have had record inflows. Treasury bills, which mature in one year or less and are seen as more akin to cash, have been in such high demand that yields turned negative this week.

Despite the recent rises, government borrowing costs in the big developed economies remain low by historical standards — largely thanks to central banks’ efforts. Bonds recovered some of their losses on Friday, although they did so together with a steadying of stock markets. The true test of bond markets’ solidity will come if and when there is a renewed dive in equity markets, analysts say.

Monday 23 March 2020

BUSINESS DAY

58

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Wall Street takes late tumble as US shutdown widens European and Asian shares rallied but calmer mood did not last Jennifer Ablan, Mamta Badkar, Philip Georgiadis and Daniel Shane

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all Street failed to record two consecutive days in positive territory, succumbing to a late sell-off that sent the S&P 500 down 4.3 per cent on Friday and left the index nursing a 15 per cent decline for the week, even as equity markets elsewhere staged a recovery.

While another flurry of central bank support provided investors with some heart, particularly in the eurozone, it was countered by the decision by Andrew Cuomo, New York governor, to order most of the state’s workforce to stay at home, to check the spread of the coronavirus.

That order, on top of a similar move to enforce sweeping social distancing measures in California the previous night, threatened to exacerbate the financial and economic consequences of the virus, which already seems certain to plunge the US into recession.

Goldman Sachs on Friday warned US gross domestic product would decline at an annualised rate of 24 per cent in the second quarter due to the pandemic. The group also said the disruption caused by the outbreak suggests jobless claims could hit more than 2m, an unprecedented level, in the next weekly report on Thursday.

“The avalanche of economic sudden stop news hitting the markets reached a tipping point, triggering another wave of forced selling despite central bank expanding some of their circuit breakers,” said

Communal workers clean and disinfect a street in the city of Lviv, Ukraine © Markiian Lyseiko/EPA/Shutterstock

Mohamed El-Erian, chief economic adviser at Allianz.

People are frightened going long equities into the weekend Mark Grant, B Riley FBR chief global strategist Illustrating investors’ anxiety over the impact from the pandemic, the Cboe Volatility index — known as the market’s “fear gauge” — remained elevated at the 65 level. That’s down from its year-high of 85.47 but far from its year-low of 11.75. The yield on the US 10-year Treasury bond fell 0.26 percentage points to 0.88 per cent.

“People are frightened going long equities into the weekend,” said Mark Grant, chief global strategist at investment group B Riley FBR. “People are holding on to as much cash as possible, following all of the lockdowns news . . . Nobody knows when we are getting out of this.”

The latest sell-off fixed the S&P 500’s weekly decline at 15 per cent,

and it is on track for its worst month in decades. The benchmark closed 0.5 per cent higher on Thursday, the first day it had moved less than 1 per cent in 14 sessions, but normal service of late resumed on Friday. The Dow Jones Industrial Average also moved sharply, ending down 4.6 per cent, and the tech-heavy Nasdaq Composite was off 3.8 per cent.

European markets did record their second consecutive day of increases, although not all could hold on to early gains of more than 5 per cent.

London’s FTSE 100 was up 0.8 per cent, while the composite Stoxx Europe 600 rose 1.8 per cent. The regional benchmark has recovered roughly 10 per cent from its lows this week, but has still lost more than a third of its value since pandemic fears picked up one month ago. Meanwhile, Asian markets rose overnight, with gains for Australia, China and South

Korea.

Global stocks have been unable to hold on to any gains over the past month, and traders warned that any rebound could be temporary until there were signs that the pandemic’s spread was stalling.

“Stocks continue to react positively to central bank actions, which seem faster than what we saw in the global financial crisis,” said Kristina Hooper, strategist at Invesco. “However, I believe we should expect continued volatility as news flow — especially around fiscal stimulus — will continue to move markets up and down.”

Central bank interventions have sought to stem the economic hit from the spread of coronavirus, and problems in financial markets that have resulted from the sudden change in fortunes for borrowers. The Federal Reserve on Friday said it would support the US municipal bond market at a time when city and state governments

are spending heavily on the public health emergency, by backstopping money market funds that invest in municipal debt.

It was reported on Friday that BNY Mellon had stepped in this week to support one of its money market funds, buying $1.2bn of assets from the Dreyfus Cash Management fund as it suffered outflows.

The European Central Bank, Fed and Bank of England have this week announced measures ranging from buying hundreds of billions of euros of bonds, to swap lines and interest rate cuts. Norway’s central bank on Friday slashed its main rate by three-quarters of a percentage point.

Trading volumes on Wall Street jumped on Friday because of “quadruple witching” — a day that brings the simultaneous expiration of options and futures for indices and stocks.

US benchmark West Texas Intermediate crude oil for April delivery plunged more than $5 a barrel, or 21 per cent, to $19.84 a barrel in a wild last day of trading before expiry. Other oil futures contracts also fell, with May WTI off $2.27 at $23.64 a barrel.

Brent crude oil, the global benchmark, briefly rose above $30 a barrel, pushed higher by reports that US President Donald Trump could intervene in the Russia-Saudi price war. However, it settled down 5.2 per cent at $26.98 a barrel.

For their part, currencies calmed after being upended by a surging US dollar earlier in the week as companies and banks hoarded dollars. Sterling gained 1 per cent to trade at $1.16, picking up from multi-decade lows touched earlier in the week.

Wells Fargo asks Fed to lift cap on growth in wake of virus crisis

Scandal-hit bank pitches reprieve so it can lend to customers facing income shortfalls Laura Noonan and Stephen

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ells Fargo has made a pitch to the Federal Reserve to remove an asset cap introduced in the wake of its fake accounts scandal, saying it would allow the US bank to extend support to businesses and customers hit by the economic fallout of the coronavirus pandemic.

People familiar with the situation said the San Francisco-based bank approached the Fed about a temporary or permanent lifting of the $1.95tn asset cap, which has been a curb on its growth and profitability since its imposition in 2018.

Removing the cap has been a priority for Charles Scharf, an outsider brought in as chief executive in October, and the issue has become acute as the Fed tries to encourage banks to extend credit to customers who have seen their revenues and incomes plummet this month.

Charles Scharf, chief executive of Wells Fargo, at a congressional hearing in Washington earlier this month © Bloomberg

Wells represents 9 per cent of the US loan market and 9 per cent of deposits, according to Bank of America analyst Erika Najarian.

It had a $1.927tn balance sheet at the end of December. Adding a meaningful amount of either deposits or new loans would mean the bank bumps up against the cap, www.businessday.ng

assuming it did not offset that by selling other assets such as market securities.

In a note to clients earlier this week, Ms Najarian said Wells would probably benefit from deposit growth during the current crisis as savers flock to safer institutions. “In our view, now is not

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the time for a big bank to pick and choose deposit growth for the sake of an asset cap,” she said.

Ms Najarian’s note was entitled “Five ways the Fed could stem the panic”, one of which was to “remove Wells Fargo’s asset cap for now”.

The cap was imposed in 2018 after the mis-selling scandal exposed widespread risk and compliance failures. Since then Wells’ leadership team has substantially changed, most recently with the appointment of a new chairman, Charles Noski.

Mr Scharf was one of the bank chief executives who met President Donald Trump to discuss the coronavirus crisis on March 11. He told the president “we are all here to help . . . whether it’s to help them (customers) through issues with their fees, payments, or to be there to lend”, according to a transcript of the meeting.

A spokeswoman for Wells Fargo said: “During these challenging times, we are very focused on do@Businessdayng

ing all we can for our clients while operating under the constraints of the asset cap.” She would not comment on talks with regulators.

The Federal Reserve declined to comment.

Mr Scharf’s predecessor Tim Sloan had hoped to the cap would be lifted in the “first part of 2019” as the bank brought its risk management and controls up to the standards demanded by the Fed after its 2016 discovery that Wells flattered its performance by falsifying records to open millions of unauthorised accounts.

Wells continues to face considerable political pressure following the scandal. California congresswoman Maxine Waters, who chairs the House of Representatives financial services committee, said at a recent hearing that the bank “is not ready to be America’s bank again. Absent significant reduction in Wells Fargo’s footprint [it] will never be able to rein in the culture of customer abuse.”

Monday 23 March 2020

BUSINESS DAY

FT

59

ANALYSIS

Coronavirus: the moment for helicopter money Economic taboos are being broken to finance the huge government deficits needed to fight the crisis Martin Sandbu

T

he Covid-19 pandemic that is ravaging lives and livelihoods around the world has also claimed a more subtle victim: conventional taboos in economic policy thinking are swiftly being swept away.

Economic proposals that a week ago looked radical now appear timid. Fiscal packages bigger than anything seen in years are considered too small only a few days after they were announced.

Robert Chote, the head of the watchdog charged with monitoring UK fiscal discipline, said this week the government should not worry about short-term deficits because it was facing something like a “wartime situation”.

“This is not a time to be squeamish about one-off additions to the public debt,” he told MPs. There has been a “recognition that this shock is absolutely different” from previous crises, says Beatrice Weder di Mauro, an economics professor and president of the Centre for Economic Policy Research. “Things are moving very fast, and minds are too.”

The result is that a series of policy ideas which were once the province of a small number of mavericks and limited to purely theoretical discussions are taking centre stage.

The most important of those unorthodox approaches is the “helicopter drop” — printing money and handing it out to everyone, with no strings attached.

Ms Weder di Mauro has co-edited two ebooks on the economics of the virus crisis in as many weeks.

She observes that the mainstream of economics has moved very fast towards the view that the best policy would assure that “nobody should lose their job or their income because of the virus”.

Even supporters of this once unthinkable approach acknowledge it will be expensive. “We have to be willing to accept fiscal deficits on the scale of 2009,” says Adair Turner, the former head of the UK’s Financial Services Authority.

Given the need for large fiscal deficits, the debate about helicopter money really involves two separate policy questions, he says. The first is how to finance the stimulus — should the central bank pay for it through direct monetary financing, effectively printing money, or should governments borrow in the usual way? The second is how the money is then distributed, whether through cash handouts or other government spending.

As it is, economists and policymakers are warming to radical answers to both questions.

Central banks have not yet explicitly offered to monetise deficits, but they have opened the taps on big new asset purchase programmes to buy the glut of bonds governments will soon issue. In the eurozone, there are live discussions about issuing a joint “corona bond” or ramping up credit lines from the European Stability Mechanism,

the monetary union’s rescue fund for sovereigns, in the expectation that the European Central Bank would keep the cost of such borrowing low.

Some economists now call openly for explicit helicopter money in the sense that central banks should directly fund government deficits. “I do think the time is right for monetary finance,” says Lord Turner. “There would be a clarity of assuring people that there is no limit on the money available.”

Monetary finance was popularised as a theoretical possibility by Ben Bernanke, former US Federal Reserve chair. Since leaving the Fed, Mr Bernanke has publicly argued that “under certain extreme circumstances” monetary financing of fiscal deficit spending “may be the best available alternative”.

This had long been an unacceptable view among economists, who were scarred by the stagflationary 1970s and worried about the dangers of hyperinflation that had ravaged countries in interwar Europe and more recently in the developing world. This changed with the global financial crisis, when central banks engaged in massive money creation without inflationary effects. Warnings about hyperinflation lost their bite.

As for direct cash handouts, they are already happening. In February, the government of Hong Kong decided to transfer HK$10,000 ($1,270) to all residents financially affected by the virus outbreak. Singapore’s latest budget, too, provides for small cash payments to all adult Singaporeans.

In the US, support is building for sending cheques directly to all Americans. Former economic advisers to presidents Barack Obama and George W Bush support the idea. President Donald Trump and his Treasury secretary Steven Mnuchin have proposed it, www.businessday.ng

and senators have included it in the stimulus bill currently going through Congress.

One reason why these unconventional ideas are gaining traction is because the financial crisis, growing inequality and the fear of technological automation causing unemployment had already triggered growing interest in new policy approaches. “There is a bit of ‘I always wanted this’,” says Ms Weder di Mauro.

Betsey Stevenson, an economics professor at the University of Michigan and a former economic adviser at the Obama White House, points to the broad coalition of people all supporting cash handouts: “People on the left . . . saying this is great, people on the right . . . wanting to help the middle class; those who like the administrative simplicity of it; and then people who realise time is of the essence.”

A second factor behind the interest in these ideas is that they are not entirely without precedent. The financial crisis and its aftermath forced central banks to take actions that brought them closer to monetary financing.

Helicopter money is already here in the sense that “a central bank gives transfers to the private sector”, says Eric Lonergan, a macro fund manager. He adds that the ECB now offers loans to banks at a lower interest rate, under certain conditions, than banks receive on reserves held on deposit with the ECB. That margin is an outright money-financed fiscal transfer.

Mr Lonergan argues this can be expanded and tied to conditions that in effect would transfer the subsidy to individuals.

Lord Turner says that there is no hard distinction between outright monetary financing and central banks’ existing practice of buying government bonds. “Every year the Bank of Japan buys Japanese government debt equal to the gov-

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ernment deficit. So the volume of bonds owned by the private sector does not rise. That is permanent monetary finance,” he argues.

Governments have also sent no-strings-attached cheques to all citizens before. “[President George W] Bush did direct cash handouts,” says Ms Stevenson. The difference is that in the 2001 and 2008 recessions the intention was to stimulate demand, today it is to “put money in the hands of people who will lose their jobs” and prevent a “cascading economic downturn”.

Aside from precedent, the most important reason for the interest in helicopter drops — both as monetary finance and as direct cash payments — is the scale of the economic challenge.

“If anybody had told you at Christmas that this year would be one [with] an enormous symmetric shock hitting all the advanced countries and that this would cost something like 50 per cent of GDP for a few months or maybe longer . . . the kind of thing that happens in a war, everybody would have said you are crazy,” says Ms Weder di Mauro. “There was no imagination to see where something like this could come from.”

Governments now find themselves needing to spend much more, and to do so much faster, than they are accustomed to. “The attitude should be we’re at war with this pandemic, we’re going to win this war,” and double-digit deficits are a price worth paying, says Ms Stevenson. “If we win the war, we can recoup that money.”

Ms Weder di Mauro says “our institutions are not built for this”.

For good reason, governments have designed systems to direct spending to those who need it the most and to avoid “moral hazard”, where individuals or companies receiving public money are rewarded for poor behaviour.

In the current crisis, however, @Businessdayng

these disciplines have become obstacles to pursuing the right policy. One case for direct cash payments is that it will reach more people faster than the existing benefit system. Ms Stevenson says the US’s state-level unemployment insurance system will struggle with the flood of claims about to hit it.

“It is quite possible they will have to process 1m [claims] a week, but they are not staffed up to process that,” she says. “It’s too hard to figure out who really needs it. Get money into everybody’s hands, then we can clean it all up later.”

There are some countries where direct cash handouts are considered less important because they have more sophisticated and generous benefit systems. Germany and other countries have had success with subsidising Kurzarbeit, where employers are paid to keep employees on their payroll while temporarily cutting their shifts.

Yet even in a country like Norway, some economists have called for universal cash payouts to avoid convoluted processes of meanstesting.

As for helicopter money, governments and central banks are not quite there yet. It could even be that faced with the prospect of outright monetary finance, the more hawkish eurozone leaders will prefer joint guaranteed borrowing — through a eurobond — which they have previously opposed but may consider a lesser evil. Either way, past taboos are rapidly evaporating.

“The fiscal-monetary distinction may break down” if the crisis is long-lasting, says Ms Weder di Mauro. “In wartime, all sorts of distinctions break down.”

But, she adds: “The instruments still have to be adjusted to how severe the problem turns out to be.

Whatever it takes doesn’t mean you shoot everything you have in the beginning.”

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Monday 23 March 2020

BUSINESS DAY

FT

NATIONAL NEWS

How Singapore waged war on coronavirus Timely preparation, aggressive testing, tracing of carriers and luck Stefania Palma

S

ingaporean lawyer Iman Ibrahim was enjoying her snowboarding holiday in Italy, Switzerland and Austria this month when the coronavirus outbreak in Europe suddenly turned the trip into a race home.

With borders and mountain resorts closing around her and her flight back to Singapore cancelled, she drove to Germany and caught whatever plane she could back to the south-east Asian city state.

“The situation was changing every few hours . . . but once you’re back in Singapore you know everything is efficient and you will be looked after,” she said.

Ms Ibrahim did not know just how lucky she was to have made it home to the city, an international financial hub known for its quasi-authoritarian but effective government. Three days after her return, she tested positive for the coronavirus.

Singapore reported its first two deaths from the pathogen only this weekend, despite being one of the first countries to be hit by the outbreak outside China two months ago. That has made it one of the safest places in the world for patients of the disease, which has already killed more than 13,000 people globally.

The city’s success in dealing with the outbreak is attributed to the government’s speed in imposing border controls soon after the disease first erupted in China, meticulous tracing of known carriers, aggressive testing, a clear public communication strategy and a bit of luck.

“There is nothing they should be doing differently,” said Ying-Ru Jacqueline Lo, the World Health Organization representative to Malaysia, Brunei Darussalam and Singapore.

After controlling the first infections, Singapore now faces a sec-

Singapore adopted aggressive measures early on, including imposing border controls soon after the outbreak started in China in January © HOW HWEE YOUNG/EPA-EFE/Shutterstock

ond wave of cases from returning travellers, such as Ms Ibrahim.

Authorities tightened travel restrictions and social distancing measures after the number of cases doubled to 455 in the past week. Yet many analysts believe Singapore will also bring the second wave under control.

Some of the city-state’s advantages in confronting the outbreak are difficult for larger western countries to replicate, such as its small population of 5.7m. It also learnt from its experience of Sars in 2003, which forced it to strengthen its healthcare system.

But similar to some Asian neighbours, such as Taiwan, South Korea and Hong Kong, which have also managed to slow infection rates, Singapore’s example could contain lessons for the US and Europe, which have been caught wrongfooted by the virus.

As soon as information about the disease emerged from Wuhan, the city at the centre of China’s outbreak, Singapore began pre-

paring by ramping up laboratory capacity for mass testing and developing its own test kits. This was seen as instrumental to containing infections and not overwhelming hospitals, a problem faced by countries such as Italy.

As of March 20, Singapore had conducted 38,000 tests, or about 6,800 examinations per million population, the health ministry said. That rate outpaced South Korea, the region’s poster child for fast and expansive testing, which had administered about 6,100 tests per million population in the same time frame.

There’s a higher degree of acceptance of being monitored by the state. That makes some of the more invasive methods for contact tracing easier Chong Ja Ian, National University of Singapore “We used the lead time that China gave us by its massive shutdown to really refine our readiness,” said Dale Fisher, professor of infectious diseases at the National

University of Singapore. “By the time we had one of our cases, we were able to do tests and within a week, tests were available in all major hospitals.”

Some experts say the fact most patients in the city have been below the age of 65 also helps explain the low number of deaths.

But Leo Yee Sin, executive director at the National Centre for Infectious Diseases, which was set up after Sars and is helping spearhead Singapore’s response to the coronavirus, said: “I don’t consider us lucky. We are just giving the best of critical care to those affected.”

She said 15 per cent of confirmed cases were on ventilators in intensive care units, with two undergoing ecmo treatment, whereby blood was drained out of a person’s body and oxygenated in a machine.

The country’s business community also moved quickly. Soon after Singapore reported its first cases, banks divided their teams between offices, home working

and emergency trading floors, many of which were in an outlying industrial area near the city’s Changi airport.

But while government measures to contain the first wave of infections were effective, they also raised questions about the invasiveness of the state. Surveillance cameras, police officers and contact-tracing teams have helped the government find 7,957 close contacts of confirmed cases, who have all been quarantined.

The government on Friday launched TraceTogether, an app that uses bluetooth to record distance between users and the duration of their encounters. People consent to give the information, which is encrypted and deleted after 21 days, to the health ministry.

The department can contact users in case of “probable contact” with an infected individual.

“There’s a higher degree of acceptance of being monitored by the state,” said Chong Ja Ian, associate professor of political science at the NUS. “That makes some of the more invasive methods for contact tracing easier.”

But, he added, once such mechanisms are in place, “it opens the door for someone five to 10 years down the road to make use of this space in ways that are perhaps less noble”.

The government has also used a tough new online falsehoods law to correct misinformation in posts about the coronavirus, which critics have argued gave authorities too much latitude to censor.

And even though Singapore has been successful so far, the battle is far from over. To deal with a potential second wave of infections, the government on Sunday banned short-term visitors from entering or transiting through the country. Returning residents will have to undergo quarantine for 14 days at home or risk a fine of up to S$10,000 ($6,900) and/or six months in jail.

Corporate borrowing costs soar amid default fears

Interest rates for even highly rated companies double from levels of days ago

Joe Rennison and Eric Platt

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orrowing costs for companies around the world are rising dramatically despite central bank interest rate cuts as rating agencies warn that the economic impact of the coronavirus will lead to a surge of corporate downgrades and defaults.

Fears about creditworthiness are prompting investors to put their money in the most easily traded securities — such as shortterm government debt — raising borrowing costs for more highly

rated corporate borrowers and choking off credit to riskier ones.

Rating agency Moody’s estimates the default rate for speculative-grade companies could hit nearly 10 per cent, with energy companies particularly hard hit. That is up from 2.3 per cent a year ago, and a historical average of 4 per cent.

“I think the pandemic coupled with the oil price crash and the asset price declines are creating a severe and extensive credit shock across regions, sectors and markets,” said Anne Van Praagh, a researcher at www.businessday.ng

Moody’s.“The combined credit effects are unprecedented. This is not like anything we have seen before.”

Even highly rated companies that have been able to sell bonds during the outbreak have agreed to deals that will increase their total financing costs by hundreds of millions of dollars as revenues are threatened by an economic downturn.

The average yield for investment-grade corporate debt has risen from a year to date low of 2.26 per cent two weeks ago to 4.7 per cent on Friday, according to

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an index run by Ice Data Services.

“It’s brutal. We have never seen such a big move in such a short amount of time,” said Monica Erickson, a portfolio manager at DoubleLine. “This is the quickest and most severe I have ever experienced, and I was around for 2008.”

For higher-risk “junk” rated companies, the sell-off has been even more severe, with the average yield on an index run by Ice doubling this month to over 10 per cent.

Companies have scrambled to raise as much cash as possible, @Businessdayng

with roughly $60bn of bonds sold by investment grade companies this week in the US, including more than $16bn on Friday.

The companies selling debt are all high-quality names, such as a $5bn bond sale for Coca-Cola and an $8bn deal for Intel, with those outside the very top tier still shut out from capital markets.

“Companies are focused on increasing liquidity, drawing down revolvers and accessing cash wherever possible. They are preparing for the worst because we are in an unprecedented environment,” said Ms Erickson.

BD Money

Monday 23 March 2020

BUSINESS DAY

Investing

PERSONAL FINANCE

Cover Story

economy

Low priced stocks offer entry points for investors

Retailing 101 in a Coronavirus pandemic Curbing the Coronavirus spread is gradually seeing more Nigerians social-distance. Customers staying at home is not what retailers like.

FOREX 1.0: Here’s a guide to FOREX trading for beginners What is FOREX FOREX simply means trading for the buying and/or selling of currencies over the counter for the benefit of profit.

Here’s why E-commerce may see online orders boost While a lot of industries have been disrupted globally by the coronavirus outbreak, the e-commerce market is among the few that is likely find to be favoured by the pandemic.

Global stocks rebounded on Friday as investors appeared willing to put their faith in vast stimulus moves from central banks and governments to shore up economies against the fast-spreading coronavirus pandemic.

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Monday 23 March 2020

BUSINESS DAY

Investing

Low priced stocks offer entry points for investors

OLUFIKAYO OWOEYE

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lobal stocks rebounded on Friday as investors appeared willing to put their faith in vast stimulus moves from central banks and governments to shore up economies against the fast-spreading coronavirus pandemic.

However, the gains were not enough to offset the previous days’ rout as stocks were still headed for a weekly loss.

The US (DJIA: -13.4percent; S&P: -11.1percent) and European (STOXX Europe: -0.4percent; FTSE 100: -1.8percent) shares were on track to close the week in the red. Asian shares (Nikkei 225: -5.0percent; Shanghai SE: -4.9percent) made a partial comeback from the global rout on Friday but still nursed massive losses for the week. Emerging markets (MSCI EM: -14.0percent) and Frontier markets (MSCI FM: -8.0percent) were not immune to the global rout, with significant losses in South Korea (-11.6percent) and Kuwait (-6.6percent) weighing down the respective indices.

In Nigeria, despite the massive sell-off

in the equities market amid the double whammy of tumbling oil price and devastating effect of the coronavirus, opportu-

nities abound in the local bourse for medium to long-term investors.

As at Friday, Month-To-Date and Year-

To-Date losses increased to -15.3percent and -17.3percent, respectively. Given the effectiveness of social distancing measures to fighting the spread of COVID-19 and its wide adoption in globally, there are chances that economic activities would kick start by second half of the year which would support crude oil prices and market performance.

The current low price provides a gradual entry approach into the Nigerian equities market given the uncertainties both on the global and domestic fronts.

According to some investment houses, top picks include a collection of liquid stocks with high dividend yields and strong fundamentals. These include GUARANTY, ZENITH, STANBIC, FLOURMILLS, UBA, MTNN, NESTLE, OKOMU, DANGCEM, UCAP, ACCESS, and NASCON.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Olufikayo Owoeye; Graphics: Fifen - Famous www.businessday.ng

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PersonalFinance

Retailing 101 in a Coronavirus pandemic BUNMI BAILEY

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urbing the Coronavirus spread is gradually seeing more Nigerians social-distance. Customers staying at home is not what retailers like.

Currently schools have shut down and some companies have or are considering shutting down, only allowing people to work for their homes.

For retailers and grocery stores, this may be mean bad news as people may not be able to go out and buy from them thereby making them lose sales.

In a Coronavirus pandemic, these retailing best practices can help you keep sales up and customers patronizing you.

Click and collect model An isolated consumer would want to make an order online but no physical contract with his or her delivery.

This is where retailers would have to leverage on e-commerce platforms. The e-commerce sector has opened opportunities for retailers, wholesalers and consumers alike providing convenience and flexibility.

The click and collect is a new delivery method that combines online shopping with real-life transactions. A lot of e-commerce retailers are now testing the this model, where customers can make a purchase online and choose to collect their purchase at a pre-chosen location, rather than have it delivered to their home.

It offers customers full control over the delivery of their products with e-commerce players providing different options for collection fulfillment.

This model eliminates unprofessional delivery services and comes with zero or minimal added delivery costs.

The customer is also able to check the quality of the product and return it to the store in case of any problem or if the product does not meet the required standards.

Focus or stock more essential and food items For countries like U.S, China, Canada etc currently observing self-isolation, consumers’ appetite for discretionary shopping has decreased substantially.

Focus is more on essential needs from groceries, pharmacy and household items.

This development might also happen in Nigeria if self-isolation takes full effect.

Retailers should focus and stock up

“

Grocery stores will become a frequent place for most consumers, that is why it is necessary to conduct a thorough cleaning and disinfecting of your store

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their stores with food, drugs and cleaning items that are needed on a daily basis. The non-essential retailers might likely be the losers.

Health is Wealth; Frequent cleaning and disinfection of all surfaces in stores Grocery stores will become a frequent place for most consumers, that is why it is necessary to conduct a thorough cleaning and disinfecting of your store.

This will attract more consumers to patronize you the more.

The virus is spread mainly through person-to-person contact, though people can also catch it from droplets exhaled when an infected person coughs or sneezes.

Those droplets can stick to surfaces, and the virus can survive for hours or days, according to health officials. it is enough to clean frequently with soap, alcohol or bleach-based products.

Ensure Customers follow the safety rules Retail stores like grocery ones usually have a large number of people which is a not a good place to shop especially in this coronavirus pandemic.

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No consumer would be attracted to such stores.

Foreign stores like Costco wholesale and Wegmans Food Markets have implemented measures to preventing overcrowding in their stores.

For Costco wholesale, their managers and employees are watching and encouraging people to keep socially distant by giving carts early, to make it easier to main a safe space in the snaking lines and limiting how many customers are allowed in the store at the same time, using a “one-in, one-out” policy.

Wegmans Food Markets are telling customers to stand behind a red line until the customer being cashed out is done. If paying in cash, customers will be asked to place the money down on the signing shelf eliminating any hand to hand contact with the cashier.

The cashier will then put the receipt in the bag. Once the transaction is complete, the cashier will then completely sanitize the area before the next customer is allowed to unload their groceries and begin the check-out process.

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Monday 23 March 2020

BUSINESS DAY

Monday 23 March 2020

BUSINESS DAY

Cover Story

Economy

FOREX 1.0: Here’s a guide to FOREX trading for beginners MICHAEL ANI

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What is FOREX OREX simply means trading for the buying and/or selling of currencies over the counter for the benefit of profit.

The Forex, or FX, is an abbreviation of the term “Foreign Exchange”, and represents the world’s largest financial market.

According to the Bank of International Settlements (BIS), FX market trades more than 5 trillion US dollars daily and dwarfs all other financial markets in size.

For comparison, the daily turnover of the New York Stock Exchange is around $28 billion, about 190 times less the amount traded on the Forex market.

The Forex market is the marketplace of the world’s currencies.

Since this is an over-the-counter market, there is no centralised exchange on which to trade currencies, such as with stocks; instead, currencies are traded during FX trading sessions, of which the most important is the New York session, the London session, the Tokyo session, and the Sydney session.

Since these sessions are located all around the world spanning across different time zones, FOREX traders can trade on the market around the clock, Monday through Friday.

A large number of market participants is one of the main reasons why the Forex market has such a large daily trading volume.

From large investment and commercial banks, governments and central banks, to companies, individual traders, and investors – they all participate in the Forex market and all have their own objectives.

Investment and commercial banks exchange various currencies on a daily basis and some of them even speculate on exchange rate movements, while governments and Central banks buy and sell currencies to manage their monetary policies.

Similarly, companies sell their products abroad in foreign currencies and need to repatriate their overseas earnings, and individual traders and investors try to profit from movements in exchange rates.

While it was extremely difficult to enter the Forex market a few decades ago, entry barriers have been lowered with the advance of information technology and the Internet.

In addition, up until 1973 and the end of the Bretton Woods Agreement, most major currencies were pegged to the U.S dollar which in turn was pegged to the price of gold.

This meant that currencies didn’t fluctuate against each other and the Forex market didn’t exist as we know it today.

With the end of the Bretton Woods Agreement, countries started to adopt a free-float-

ing currency regime, and exchange rates are now determined by the supply and demand forces of the market.

Today, all you need to start trading on the world’s largest financial market is a computer with Internet access, a brokerage account, and a trading platform installed on your computer.

What is Forex trading?

Forex trading represents the act of buying and selling currencies to make a capital gain.

Similar to stock traders who try to buy a stock cheap and sell it later at a higher price, Forex traders want to buy a currency cheap and sell it later for a profit. However, traders can also profit from a fall in price by shortselling the currency.

All currencies are quoted in pairs, with the exchange rate representing the price of the first currency expressed in terms of the second currency.

In Forex jargon, the first currency is called the base currency, while the second currency is called the counter currency.

For instance, if the EUR/USD (Euro vs US dollar) pair trades at 1.30, this means that £1 costs $1.30, or it takes $1.30 to buy £1.

If a trader thinks that the exchange rate will rise in the future, i.e., the euro will become more expensive in dollar terms, they would buy the EUR/USD pair and sell it later for a profit if their analysis proves correct.

FOREX traders can also profit from overnight swaps, which are credited to their account on a daily basis if they buy a currency that carries higher interest rates and sells a currency that carries lower interest rates.

At this point, it’s worth mentioning that any time one buys a currency pair, one is basiwww.businessday.ng

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cally buying the base currency and selling the counter currency.

For example, buying the EUR/USD pair would mean that you buy the euro and sell the US dollar simultaneously. On the other hand, if one sells the EUR/USD pair, one is basically selling the euro and buying the US dollar simultaneously.

Myths about forex trading Like any other trade, FOREX trading isn’t without its fair share of myths. These myths can potentially affect any trader, seasoned or novice; so knowing and staying clear of these myths can save one from unnecessary frustrations.

1. Forex trading is easy This is the most common of the myths about forex trading. “Read a book or two, set up a brokerage account and you are ready to make daily profits in the FOREX market.”

Well, if you are thinking about jumping into trading forex, it takes a lot more than just reading a book or two.

If you are dreaming about a quick buck trading in the FOREX market, you’re in for a rude awakening! Some might suggest, “Download and set up an Expert Advisor Software and you’re sure to make big money trading FX.” Installing a piece of software may be easy, but being able to use the program effectively for maximum profit requires a certain level of understanding of the market.

The successful traders in FOREX not only put a lot of effort into what they do, but they also have acquired years of experience to be able to place winning trades.

2. You need a degree in economics to trade forex

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It is true that foreign exchange requires an understanding of world economics to a certain extent and that having a general idea of economic concepts is helpful in trading forex.

Nevertheless, it is not necessary to have an advanced degree in economics and understand every economic principle to be trading currencies.

Many forex traders come from diverse academic backgrounds. To be a successful trader, what you need is a good head for numbers, and intuition to help you guesstimate where the market is heading and the ability to react quickly to market-moving events.

3. You need to predict what is going to happen in order to make money in forex Since geopolitics has a big influence on the FOREX market, the traders who make money are the ones who are quick to react to the things happening around the world, rather than the ones making predictions.

Trading predictions can sometimes be made. This may be possible by analysing the charts and recognizing certain patterns that have occurred in the past and assuming they might occur again.

But for the most part, it is rather the quickness of reaction that makes trader money instead of novice predictions which may or may not come true. A good trader is always alert, reads and interprets the news and is always willing to learn and evolve.

4. You need a large sum of money to trade in the forex market There was once a time when only larger international banks and financial institutions could access and trade in the foreign exchange market. Thanks to the advent of electronic trading, those days have come and gone.

Instead of launching a full-blown and costly brokerage firm or bank, a small organization can simply launch a FOREX white label and be able to run a FOREX trading business very economically.

Furthermore, now that the FOREX market has become accessible to small traders through FOREX brokerage accounts, anyone with a reliable internet connection and a relatively small amount of money can trade currencies online. Nowadays, a brokerage account can be opened with as little as $25.

Of course, trading with $25 will probably not bring in as many profits as trading at $25,000. Nevertheless, a novice trader can hone his/her trading skills with smaller amounts first.

5. You need to watch the market 24 hours a day to be successful The forex market is open 24 hours a day and requires a lot of commitment from traders who want to succeed. But that doesn’t necessarily mean that you need to watch the market 24 hours a day to make money.

Some traders even have regular jobs. They manage to allocate a little time from their daily schedules to trading, which allows them to execute some trades at the end of the day – and still make a good income doing so. You don’t really need to sit in front of a computer staring at charts all day long.

Besides, there are automated software packages available in the market that does a lot of the work for you.

6. Being unconventional improves your chances of success Being conventional or unconventional does not have much to do with a person’s chances of success trading

@Businessdayng

Here’s why E-commerce may see online orders boost FOREX as much as one’s understanding of the FX market, its drivers and the factors that influence foreign exchange rates.

Rather than trying to be unconventional, good traders learn and adapt to the changes in the market, which improves their chances of success.

7. The higher the leverage, the better Trading FOREX on margin carries a high level of risk.

A good trader knows that the higher the leverage, the higher the level of risk because the multiplicative effect of the trades is higher.

Trading with relatively smaller amounts of leverage reduces the possibility of losing all your funds, while trading with high leverage could lead to large losses that even exceed your invested capital.

It is true that you can get lucky and have higher leverage work in your favour, but the reality is that you have an equal chance that it can work against you. Why take that chance?

8. You can get rich quickly in FOREX In Forex, there are quite a few short term speculators who jump into the market hoping to get rich quickly with very little effort. Unfortunately, quick prosperity is rare even in the world’s richest market.

Trading takes a fair amount of effort to master, as well as significant patience and consistency. The impulsive gambler mentality seldom works in the realms of foreign exchange.

9. The more complex the strategy, the better The complex is not always better. Although complicated trading strategies may sometimes bring you big returns quickly, it rarely ever happens. In fact, complex strategies in trading often prove much more difficult to execute and earn a profit.

Good traders often stick to simple strategies; strategies that make them money.

In forex, even the best trader wins only a few more times than he loses, making a profit from the difference. Consequently, tweaking strategies to make them more complex may be detrimental and only increase the overall risk.

10. The market is rigged When too many bad trades are made, some traders often complain that the market is rigged or that the brokers are corrupt. While it is true that a country’s currency can be controlled by governments and central banks to a certain extent, forex, as a market, is not a scam.

The truth is that forex is too liquid and volatile to be rigged. Forex rates change often and disciplined traders are there to take advantage of the fluctuations using winning strategies. If you are making too many losing trades, think about the most likely culprit: that you need to spend more time learning to trade rather than the market is rigged.

ENDURANCE OKAFOR

W

hile a lot of industries have been disrupted globally by the coronavirus outbreak, the e-commerce market is among the few that is likely find to be favoured by the pandemic.

Like other countries around the world, Nigeria is gradually observing a partial lockdown with many of its citizens undergoing self-imposed quarantine.

This is expected by industry experts to boost demand for online shopping and quick delivery services.

According to a recent report by Quantum Metric, a SaaS platform provider, the number of online shoppers has increased 8.8 percent since the outbreak began and online sales have surged 52 percent from a year ago.

The firm analyzed 5.5 billion anonymous and aggregated online and mobile visits to retailer websites from Jan 1 to Feb 29.

Ayo Ibaru, COO /Director - real estate advisory, Northcourt is optimistic that Nigeria’s e-commerce industry will benefit from the virus outbreak.

“E-commerce is expected to grow due to the virus outbreak,” Ibaru said adding that the growth of the e-commerce industry in Africa’s largest economy will also lead to an increase in the demand for last-mile warehousing.

According to consulting and research firm Technomic, 52 percent of consumers globally are avoiding crowds and 32 percent are leaving their house less often because of coronavirus.

It will be recalled that the ravaging coronavirus had been declared a pandemic by the World Health Organization, WHO, leaving most countries of the world to scamper for solutions to contain the virus.

After confirming 12 cases of the virus, Nigeria like most countries in the world was forced to implement a particle lockdown as a precautionary measure on coronavirus.

Federal Government imposed a travel ban on 13 high-risk coronavirus infested countries, the House of Representatives also mandated it to ban open worship and other public gatherings until further notice.

Churches and mosques have been advised to lockdown as schools are shut in Lagos and the nine states in the Northwest.

The National Universities Commission

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(NUC) on Friday ordered the closure of all universities in Nigeria to prevent further spread of coronavirus.

“As part of the measures to contain and prevent the spread of the coronavirus (covid-19) throughout the country, approval has been granted for the closure of all schools,” NUC’s deputy executive secretary Suleiman-Ramon Yusuf said in a circular.

Lagos and Ogun state governments announced that any gathering of 50 persons and above should be suspended with immediate effect.

Before the virus outbreak, Nigeria’s ecommerce industry was already on a growth trajectory as McKinsey projected the size of the industry to stand at $75billion by 2025,

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N58 billion higher than the current worth estimated at over $17billion.

The expansion of the industry is buoyed by the country’s young population coupled with the mobile phone penetration estimated at 89 percent by Global System for Mobile Communications (GSMA).

According to the 2019 data by GSMA, 50 percent of the total 89 percent of mobile phone users in Nigeria have access to the internet.

With broadband of 40 percent Nigeria has about 184.4 million mobile phone subscribers as of December 2019, as compiled from data by Nigerian Communications Commission (NCC).

Nigeria’s growing cashless economy which began in Lagos in 2012 which has since improved with digital payment and electronic banking implemented in phases across 27 states of the federation is another catalyst of the growth recorded by the country’s e-commerce industry.

Apart from the popular online stores like Jumia, Nigeria’s version of amazon.com, PayPorte, Deal Dey, Gloo.ng and others, a lot of informal online stores have sprung up through the help of social media platforms like Instagram, Twitter, and Facebook.

Nigeria’s e-commerce industry is expected to leverage on the number of persons who will be avoiding the shopping malls and markets due to the fear of contracting the virus to post growth in the next few months, as compiled from industry experts.

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Monday 23 March 2020

BUSINESS DAY

Economy

Four Things to note from February inflation data SEGUN ADAMS

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igeria’s Consumer Price Index, (CPI) which measures inflation rose for the sixth straight month to a 22 month-high of 12.20 percent (year-on-year) in February 2020, 0.07 percent points more than it stood in January.

The increase came after the new VAT rate of 7.5 percent came into effect in the month.

Food index rose to 14.9 percent on an annual basis in February from 14.85 percent in January.

Food pressure is easing: The rate of change in food inflation, which stood at 14.9 percent, was the weakest since the border closure in August of 2019, with annual food inflation rising by 0.06 percent points in February compared to an average increase of 0.29 percentage points since September last year.

On a monthly basis food inflation rose by 0.87 percent, the least in exactly one year.

Health Inflation is on the rise: Price of health items and services tracked by the National Bureau of Statistics (NBS), rose 9.94 percent on an annual basis in February, the fastest since July 2018 when it rose by the same rate.

NBS tracks changes in price level of Pharmaceutical services, Medical Services, Dental Services, Paramedical Services and Hospital Services.

On a month-on-month basis health inflation fell to a 5-month low of 0.8 percent,

the same rate it rose by in October last year.

Bauchi maintain highest inflation, Kwara least: Consumer price rose by 14.47 percent year-on-year in Bauchi, the most among the 36 states including Abuja for February.

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Annual inflation for the state stood at 15.88 percent in January.

Niger took Sokoto to see second-highest inflation rate nationwide at 14.06 percent while Plateau, Sokoto, Kano saw inflation print at 13.98 percent, 13.96 percent and

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13.86 percent each.

On the other hand, states with the lowest rate are Kwara (9.59%), Abuja (9.68%), Borno (10.46%), Bayelsa (10.83%), and Imo (10.85%).

Devaluation poses risk to price stability: A currency devaluation if implemented could add pressure to price levels, analysts at Lagos-based Cordros Capital said in a note to clients in which they estimated that a 10 percent devaluation would move the naira closer to its fair value.

“We expect inflation to hit 15.89 percent in December, and average 13.21 percent over 2020,” the analysts said.

In 2016, consumer prices rose by 18.3% just four months after the Central Bank of Nigeria began officially devaluing the Naira quoted at N200/$.

The surge in price levels was due to Nigerians tendencies to import foreign goods – a leaning Nigerians still have.

At a rate of, say, N360/$, items will be imported into the country at around 18% higher, other things being equal.

More importantly is the pass-through effect on price level from higher production cost to manufacturers in a country where reliance on abroad for raw materials is high.

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BUSINESS DAY

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FixedIncome Inter-bank rates to moderate as N76.22bn NT-bills mature this week HOPE MOSES-ASHIKE

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he Nigerian inter-bank rates are expected to remain moderate as the Treasury bills worth N76.22 billion will mature via Open Market Operation (OMO) this week.

The overnight inter-bank rate, which is the rate at which Deposit Money Banks (DMBs) borrow and lend to each other, declined by 0.60 percent to close at 5.30 percent on Friday from 5.90 percent the previous day.

Also, the Open Buy-Back (OBB), the money market instrument used to raise short term capital, declined by 0.40 percent to close at 4.80 percent on Friday from 5.20 percent the previous day.

“We expect interbank rates to moderate amid anticipated boost in financial system liquidity,” analysts at Cowry Asset Management Limited said.

The Central Bank of Nigeria (CBN) last week refinanced matured T-bills worth N65.56 billion via Primary market at lower rates for all maturities; stop rate for the 91day bill fell to 2.30 percent (from 2.49%), the 182-day bill decreased to 3.40 percent (from 3.78%) and the 364-day bill fell to 4.60 percent (from 5.30%) respectively. N344.50 billion worth of treasury bills matured via OMO which, combined with the primary market maturities (N65.56 billion), resulted in total inflows worth N410.12 billion.

In the OMO market on Friday the average OMO yields declined by 9 basis points (bps) to 16.49 percent as against 16.58 on Thursday.

Buying interest was witnessed across long-term maturities, with the average yield compressing by 30bps. However, average yields across short-term and medium-term maturities increased by 9 bps and 30 bps respectively.

Yields on 33 bills fell with the 26-Jan-21 maturity bill recording the highest yield decline of 275 bps, while yields on three bills advanced with the 27-Aug-20 maturity bill registering the highest yield increase of 247 bps.

The CBN offered a total of N150 billion to investors the three tenors comprising of N130 billion for 362-day, N10 billion each for 180-day and 98-day tenors but there was no sales.

While there was no interest in the short

term OMO bill, investors subscribed to the medium and long term bills to the tune of N2 billion and N16 billion respectively.

The bid at a range of 17-18.25 percent for the long term bill and 16 percent for the medium term bill but the OMO auction result obtained by BusinessDay showed no sales.

Ayodele Akinwunmi, relationship manager, corporate banking, FSDH Merchant Bank Limited, said the bid rates the market participants wanted to buy the OMO were high.

“And I suspect the CBN thought there was no justification for such high rates.

Therefore there was no sale. Remember that it is the CBN that pays for the cost of managing the liquidity using the OMO as an instrument. In the last few days the rate at the the secondary market has increased,” he said.

Akintunde Olusegun, financial market analyst at Polaris Bank Limited, said the level of subscription on the mid and long tenor was abysmally low while the range of bid was also very high.

He opined that the CBN might have

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been uncomfortable with both parameters. Total subscription on the 182-days bill was N2 billion against N10 billion that was offered while the total subscription on the 362 days bill was N16 billion against N130 billion that was offered. There was no subscription on the shorter tenor. The low level of subscription is as a result of lack of interest on the part of the FPIs. The current economy realities and secondary market rates was priced into the range of bids submitted by the few investors that bid. The sudden increase in rate at the secondary market was due to sell-off by Foreign Portfolio Investors (FPIs) who are running to safety on the back of the continued fall in oil price and the impact of corona virus on global economy.

At the foreign exchange market, dollar closes at N380 after trading on Friday in some parts of Lagos black market. This represents N3 loss compare to N375 traded in the morning of the same day.

The depreciation in value of the naira was attributed to increased demand for dollar by end users occasioned by speculation

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that the Chinese have resumed business and importers of finished goods are buying dollars to meet their needs.

“Since we heard that the Chinese have resumed, dollar started to go up,” one of the black market operators said. However, in some area like Apapa, Lagos, dollar closed stable at N377.

In its foreign exchange management policy, which commenced in 2016, the Central Bank of Nigeria (CBN) had restricted access to forex, to some 43 food and non-food items, that can be produced in the country.

At the Investors and Exporters (I&E) forex window, dollar was quoted at N372, losing N1.65kobo from N370.35/$ traded the previous day, data from FMDQ show.

On Thursday with dollar appreciated by 67 kobo to an average rate of N376 from N376.67k per dollar traded in the morning of same day at the black market.

The CBN on Friday moved the FX sales rate to Foreign Portfolio Investors (FPIs) to N380.2/$, from N366.7/$, in a move that suggests a technical devaluation of the naira, Bloomberg terminal reports.

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Monday 23 March 2020

BUSINESS DAY

Market Wrap-up Here’s how the market performed last week

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total turnover of 2.804 billion shares worth N32.559 billion in 31,715 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 3.964 billion shares valued at N43.703 billion that exchanged hands preceding week in 26,054 deals. The Financial Services industry (measured by volume) led the activity chart with 2.508 billion shares valued at N25.292 billion traded in 23,243 deals; thus contributing 89.44% and 77.68% to the total equity turnover volume and value respectively. The Conglomerates followed with 60.873 million shares worth N105.948 million in 767 deals. The third place was Services

industry, with a turnover of 51.296 million shares worth N117.545 million in 350 deals. Trading in the Top Three Equities namely, Zenith Bank Plc, Guaranty Trust Bank Plc and FBN Holdings Plc (measured by volume) accounted for 1.635 billion shares worth N21.282 billion in 15,631 deals, contributing 58.32% and 65.37% to the total equity turnover volume and value respectively.

The NSE All-Share Index and Market Capitalization both depreciated by 2.35% to close the week at 22,198.43 and N11.568 trillion respectively. All other indices finished lower with the exception of NSE Banking, NSE Insurance and NSE Oil/Gas which appreciated by 0.29%, 2.80% and 0.22% while

NSE ASeM Index closed flat.

Thirty-five (35) equities appreciated in price during the week, higher than two (2) equities in the

previous week. Twenty- seven (27) equities depreciated in price, lower than sixty- four (64) equities in the previous week, while one hundred

and one (101) equities remained unchanged, higher than ninetyseven (97) equities recorded in the preceding week.

Chart of the week

WeekAhead Ahead Week

DuringAhead the week, the headline by 7bps to April, 12.20%2019) year-on-year in February. Also, the Week (Monday, 8thinflation April – rose Friday, 12th

Nigeria’s inflation rises to 12.2% in February, the sixth consecutive increase

Nigerian government announced plans to slash its 2020 budget by NGN1.5 trillion to NGN9.09 trillion (excluding GOEs: NGN8.21 trillion). This is due to the coronavirus outbreak and its negative impact on global economic activities, together with the recent decline in oil prices. The Federal government intends to cut 20.0percent and 25.0percent of its recurrent and capital expenditures, respectively.

From N7.00 trillion, the FGN is now looking to expend N5.24 trillion in recurrent (including debt servicing). On the other hand, a total of NGN2.34 trillion is now expected to be spent on CAPEX. Given the scale of things thus far, a NGN1.5 trillion cut is a drop in the ocean Assuming a 90percent implementation rate, we expect the budget deficit to settle at NGN4.87trillion, on an optimistic NGN4.17 trillion retained revenue forecast. With the previously planned Eurobond suspended, the FGN’s domestic debt issuance is likely to run ahead if we are to see meaningful implementation.

Capital markets Equities Nigerian stocks suffered another week of losses as worries deepened about the impact of the novel coronavirus outbreak and as oil prices fell to 17-year lows during the week. The ASI declined by 2.4% w/w, led by selloffs in DANGCEM (-15.2%) and NESTLE (-7.1%). The decline pushed the index well into bear market territory, with the ASI falling over 25% from its recent peak to its Thursday low. Accordingly, the MTD and YTD losses increased to -15.3% and -17.3%, respectively. Sectoral performance was mixed as the Industrial Goods (-4.9%), and Consumer Goods (-3.2%) indices fell sharply, while the Insurance (+2.8%), Banking (+0.3%) and Oil & Gas (+0.2%) indices rebounded.

Looking ahead, there is sizeable legroom for further downslide in risk assets as investors continue to run towards safety in the face of the fast-spreading coronavirus pandemic and the rout across global markets.

Fixed income and money market Money market The overnight (OVN) rate contracted by 478bps, w/w, to 5.3% as inflows from OMO maturities (NGN304.75 billion) and FGN bond coupon payments (NGN90.97 billion) outweighed outflows from the FX Wholesale auction.

In the coming week, the OVN would trend southwards as inflows from FGN bond coupon payment (N18.12 billion) and OMO maturities (N76.22 billion) will offer a boost to system liquidity. www.businessday.ng

Nigeria’s Consumer Price Index, (CPI) which measures inflation increased to 12.20 percent (year-on-year) in February 2020 making it the sixth consecutive rise according to the data from National Bureau of Statistics released Tuesday morning.

This gives an increase of 0.07 percentage points from 12.13 percent in January, according to the Bureau.

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Monday 23 March 2020

BUSINESS DAY

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Monday 23 March 2020

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Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 20 March 2020 Company

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BUSINESS DAY Monday 23 March 2020 www.businessday.ng

Ardova plc: Will rebranding change fortune?

OLUFIKAYO OWOEYE

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i g e r i a’s d o w n stream sector of the oil and gas industry is laden with several industry headwinds. Despite the discovery of crude oil in Nigeria some 64years ago, the sector is still evolving and yet to reach its potentials.

The challenges includes inappropriate product pricing, bridging product supply, insecurity, irregular gas supply, pipeline vandalism, inadequate pipeline infrastructure, non-functional/ under functioning refineries just to mention few.

The downstream sector entails petroleum product refining, storing, marketing and distribution. Like most players in the downstream sector, Ardova Plc formerly Forte Oil had its own share of the ups and downs in the industry.

At an extra ordinary general meeting held on December 17 2019, Shareholders of the company ratified a change of name from Forte Oil to Ardova Plc. This is the second time in nine years it is rebranding.

The company was incorporated on 11 December 1964 as British Petroleum. It became African Petroleum through the nationalization policy of the Federal Government of Nigeria in 1979, and in May 2007 the shareholding structure changed as Incorporated Trustees of NNPC’s Pension Fund divested its stake to Zenon Petroleum and Gas Limited owned by Femi Otediola thus making him the majority shareholder in the company. To reflect the new ownership, it changed its name to Forte Oil Plc in December 2010.

Surprisingly, in a notice sent to the Nigerian Stock Exchange dated 24th December 2018, the then majority shareholder, Billionaire businessman, Femi Otedola, announced that he had reached an agreement with Prudent Energy investing through Ignite Investment Commodities Limited to divest his full 75% in the company’s downstream business the deal was closed last week.

With the completion of the rebranding exercise, shareholders are waiting for the new management to turn the tide and deliver value on their investment.

Navigating through challenges Last year the energy firm announced the decision to sell its upstream services and power business in Nigeria and also divest from debt-ridden Ghana

operations and focus on its core fuel distribution operation in the country.

During the period ended 30th June 2019, Ardova Plc disposed its subsidiaries Amperion Power Distribution Company Limited, and Forte Upstream Services Limited, resulting in a gain of N1.55 billion and N1.23billion respectively totalling N2.78billion. Conversely, the disposal of AP Oil and Gas Ghana, resulted in a loss of N108 million thus resulting in a net gain of N2.67billion For industry watchers, the sale and resulting loss on the sale of its Ghana operations did not come to many as a surprise.

The Ghanaian operations have been insignificant at both the top and bottom lines. AP Oil and Gas Ghana accounted for just 0.9percent of the Group’s revenues of N148.6 billion in 2016 and 3.6percent of Group revenues of N129.4 billion in 2017.

The Ghanaian segment made a loss before tax of N59 million in 2016, and a profit before tax of just N29 million in 2017. Forte made an equity investment of N670 million in AP Oil and Gas Ghana, in addition to cumulative

preference shares worth N424.9 million. Interestingly, before the decision to put the Ghanaian subsidiary on sale, the company had taken several impairments on its investment. Impairments of N547 million were taken in 2016 and N410 million in 2017 respectively.

2 0 1 9 re s u l t : Ea r n i n g s buoyed by subsidy and divestment In its full year 2019 result for the period ended 31 December 2019, Ardova printed a 31.07percent growth in revenue to N176.55bn. The impressive topline growth rode on the back of a Q4:2019 standalone turnover of N53.00bn, the highest in 2019.

Unsurprisingly, fuels sales was the key driver of topline, contributing N159.25bn about 90.20percent of total revenue, this implies segment growth of 31.78percent and speaks to Ardova’s effective product rationalization amidst the headwinds in the Nigerian downstream sector.

The Lubricants and greases segment also saw improved Year-on-Year performance, as sales printed a 25.71percent expansion at N17.25bn as against

‘‘

For industry watchers, the sale and resulting loss on the sale of its Ghana operations did not come to many as a surprise. The Ghanaian operations have been insignificant at both the top and bottom lines

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With the completion of the rebranding exercise, shareholders are waiting for the new management to turn the tide and deliver value on their investment N13.72bn in 2018. Contribution from Lubricants was relatively flat, Year-on-Year as it formed only 9.77percent of revenue compared to 10.19percent in 2018.

The Solar system segment however pitched in lower than 2018, with a Year-on-Year decline of 360.73percent to contribute a meager N0.04bn to topline. Liquefied Petroleum Gas (LPG) and Cylinder Sales printed a smaller N0.02bn.

Operating profit rose by 83.81percent Year-on-Year to settle at N4.93bn, albeit spiked

by Ardova’s gain on disposal of subsidiaries which came to NGN2.67bn. Finance costs rose by 35.72percent to N4.83bn, as the company discounted its promissory notes.

There was a significant 306.61percent gain in finance income at N4.56bn, as the FG

addressed non-payment of FX differentials on subsidy to the company, which contributed 86.66percent at N3.95bn to total finance income. Net finance costs for 2019 plummeted to 0.27bn as against N1.9bn in 2018, supporting Pre-tax earnings growth of 513.56percent at N4.65bn. Net income settled at N3.92bn, a Year-on-Year increase of 983.11percent Results of players in the downstream sector mirrors industry challenge For Eternal Plc, another player in the downstream sector, figures from its 2019 result shows profit-after-tax plunged to N85.52million in 2019 from N1.01billionn in the previous year while Profit before tax fell sharply from N1.9 billion in 2018 to N125 million.

Revenue fell from N251.8 billion to N229.4 billion in 2018 while the cost of sales also reduced to N224 billion in 2019 from N247.2 billion in 2018. The company was able to reduce its trade and receivable from N30.8 billion in 2018 to N12.7 billion in 2019.

Revenue from fuel also increased to N55.7 billion from N50.8billion in 2018, revenue from lubricants increased to N8.6 billion from N5.7 billion in 2018.

MRS Oil Plc, a major oil marketer, results for the 12 months ended December 2019 shows that revenue fell from N89.5 billion in 2018 to N64.7 billion in 2019. The firm made a loss before tax of N1.58 billion, as against a loss before tax of N1.42 billion in 2018.

Proceeds from petroleum products, which accounted for about 74percent of the oil firm’s total top-line, plummeted 33percent to N46.6billion, from N62 billion recorded a year before, while revenue from Aviation Turbine kerosene (ATK) increased to N8 billion from N6.4 billion recorded in the previous year.

Revenue from Automotive Gas Oil (AGO) reduced to N5.8 billion in 2019 compared to N9.4 billion in 2018, while revenue from Lubricant increased to N3.9 billion, compared to N3.4 billion recorded in the previous year.

Outlook With Prudent Energy’s acquisition of a controlling stake in Ardova, and the completion of its 6,000MT LPG plant in Delta State in 2019, would buffer growth of the LPG sub-segment of Ardova. According to analyst, Ardova would seek to expand its presence in LPG, Aviation Fuel and leverage its alliance with Prudent in logistics and storage.

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