BusinessDay 23 May 2019 by BusinessDay

businessday market monitor FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

Foreign Exchange

Biggest Gainer Dangcem N203

Biggest Loser

Nestle 9.73pc N1320 31,145.15

-7.69pc

Foreign Reserve - $45.06bn Cross Rates - GBP-$:1.27 YUANY-N52.27 Commodities Cocoa

Gold

Crude Oil

US$2,413.00

$1,274.20

$70.77

news you can trust I **ThursDAY 23 may 2019 I vol. 15, no 316 I N300

₦2,849,545.74

-0.09 pc

Buy

Sell

$-N 358.00 361.00 £-N 466.00 472.00 €-N 398.00 405.00

www.

Apapa: No longer business as usual as Presidency bares fangs Sets up task force to restore sanity Stakeholders say presidential order welcome, achievable

CHUKA UROKO & AMAKA ANAGOR-EWUZIE or too long, Apapa, Nigeria’s premier port city, has been in the news for the wrong reasons. It has been a city under siege, an occupied territory where the unwholesome activities of trailers and tankers have made all routes to the city impassable, destroyed the environment and literally put the residents in prison. Repeated public outcry and residents’ outrage over the impact of congestion and gridlock in the port city on their businesses and investments have caused stakeholder interventions, leading to the setting up of one taskforce or committee after another which hardly produced any results. This time, a new taskforce has been set up by President Muhammadu Buhari with a matching presidential order to clear ports congestion in two weeks, cause trailers and tankers to vacate port access roads in 72 hours, and start emergency clear-up of the Apapa gridlock.

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

360.80 306.90

-0.32 11.84

NGUS jul 24 2019 361.06

0.00

10 Y -0.14

20 Y 0.00

14.34

14.21

14.36

-0.88 11.88

NGUS oct 30 2019 361.51

NGUS apr 29 2020 362.41

Dangote Cement sees biggest gain in 4yrs on scramble for MTN Iheanyi Nwachukwu & Oluwasegun Olakoyenikan

Continues on page 38

fgn bonds

Treasury bills

Spot ($/N)

MARKETS

angote Cement plc (DANGCEM), the most capitalised company on the Nigerian Stock Exchange (NSE), recorded its biggest gain in over four years on Wednesday. Many analysts had expected that MTN Nigeria would overtake DANGCEM as the most capitalised stock on the bourse if not for the renewed interest in the cement company’s shares witnessed yesterday. Dangote Cement plc rallied Continues on page 38

Inside Lagos power-brokers plan another ‘ugly first’ on Ambode P. 2 DJ Cuppy (r), with Ban Ki-moon, secretary-general, United Nations, at the Global Citizen Live Berlin Festival to celebrate Africa Day. The festival provided a platform for the German and African governments, and other stakeholders to announce commitments that will help empower youths in Africa and help end extreme poverty.

Thursday 23 May 2019

BUSINESS DAY

news Here are SEC-listed fund managers with highest assets in their portfolio Endurance Okafor

tanbic IBTC Asset Mgt. Limited, FBN Capital Asset Mgt, and Asset & Resources Mgt. Co. Ltd topped the list of fund managers with the highest Net Asset Value (NAV) as at the week ended May 10, 2019, according to BusinessDay analysis of the fund managers who control the largest share of the mutual fund assets using data from the Security and Exchange Commission’s (SEC). A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets. Among the 27 fund managers controlling the 84 different funds listed on the securities exchange, FSDH

Asset Management Ltd and AXA Mansard Investments Limited were also in the list of the top five with the largest asset under their portfolio. For the week ended May 10, 2019, Stanbic IBTC Asset Mgt. Limited, a fund manager in charge of 11 different funds, had a total of N327.92 billion as its NAV. The assets managed by Stanbic IBTC Asset Mgt. Limited represented 44.45 percent of the entire mutual funds NAV at N737.74 billion. FBN Capital Asset Mgt, a fund manager and a subsidiary of FBNQuest, has six funds spread across the seven asset classes listed on the securities exchange. BusinessDay analysis of the NAV summed to N172.02 billion, the second manager with the highest NAV in its portfolio. Compared to the

Continues on page 38

CBN pledges continued deployment of measures to enhance domestic production of goods IDRIS UMAR MOMOH, Benin

he Central Bank of Nigeria (CBN) on Wednesday said it would continue to employ policies that would enhance domestic production of goods along with measures that would improve the stability of the financial system. Godwin Emefiele, the CBN governor, made the remark while delivering the 3rd Eminent Persons’ Lecture series of the University of Benin (UNIBEN) with the theme ‘Beyond the Global Financial Crisis: Monetary Policy under Global Uncertainty’. Emefiele assured that the bank would continue to take proactive approach in mitigating the likely adverse effects that might emanate from external headwinds. While calling for an increased coordination between fiscal and monetary policies in deploying measures that will support economic growth and reduce unemployment, he opined that a mix of conventional and unconventional monetary policy measures was needed to combat the multidimensional headwinds emanating from external shocks and the global uncertainties. According to Emefiele, in a globalised world with deregulated capital flows across national borders, the need for increased cooperation among policymakers in the post-crisis era cannot be overemphasised. “Institutions like the International Monetary Fund (IMF) can take the lead in developing a coordinated approach to emerging economic challenges in order to avoid the spill-over effect, whichhappened insome emerging market economies

when the US Fed increased its policy rate,” he said. He argued that strong macroeconomic fundamentals might not be enough to insulate the real economy from the effects of the vagaries in the global economy and contagion of poor financial conditions in other emerging economies. He listed some of the measures to be taken to insulate the Nigerian economy from the potential effects of a slowdown in global growth or a decline in commodity prices to include strengthening of fiscal buffers, intensifying efforts at supporting targeted interventions in the agriculture and manufacturing sectors. Other measures are proactive fiscal actions, specifically, infrastructure investment to reduce the operational and logistical cost of running businesses as well as continued restriction on the importation of items that can be produced in Nigeria and ramping up efforts to curtain smuggling of restricted items into the country. He said these measures would help to support domestic production of goods in Nigeria. The CBN governor further explained that focus on targeted agricultural and industrial sectors was one of the measures that were instrumental in taking Nigeria out of recession, as it contributed over 50 percent to the Growth Domestic Product in 2017. “After five consecutive quarters of negative growth beginning in the first quarter of 2016, a coordinated approach by the fiscal and monetary authorities supported a rebound in the nation’s economy during the second quarter of 2017,” Emefiele said.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Victor Osadolor, CEO, UBA Africa; Wole Soyinka, nobel laureate; Samia Nkrumah, chairman, Ghana’s Convention People’s Party, and daughter of Kwame Nkrumah; Tony Elumelu, group chairman, UBA plc; Awele Elumelu, chairperson, AVON Medical Practice; Djibril Tamsir Niane, Guinean Historian and playwright, and Ayo Obe, legal practitioner/moderator, at the panel discussion themed ‘Africa’s History Redefined, our past, the path to the future,’ organised by UBA to mark Africa’s Day in Lagos, yesterday.

Lagos power-brokers plan another ‘ugly first’ on Ambode JOSHUA BASSEY

arring any last-minute change of mind, Lagos lawmakers backed by powerbrokers in the state are hatching another ‘ugly first’ on outgoing Governor Akinwunmi Ambode to deny him the privilege of signing the 2019 budget of N873.5 billion, BusinessDay has been told. The budget consists of N479.691 billion capital expenditure and recurrent expenditure of N393.841 billion. The lawmakers passed the budget on April 29, after raising it from N852.317 billion originally presented to the House by Ambode in February, but have refused to transmit it back to the governor for assent. Ambode has six days in office as he is constitutionally bound to exit power and hand over to his successor, Babajide Sanwo-Olu, on May 29, 2019.

The lawmakers, BusinessDay gathered, are working in tandem with the leadership of the party, All Progressives Congress (APC), in the state to ensure that Ambode goes down in history as the first governor of Lagos State since 1999 who would not sign a budget prepared by his administration. This new tag on Ambode would be in addition to being the first governor in Lagos to have been denied the support of the leadership of his party to clinch a second term in office in 20 years of Nigeria’s unbroken democracy. His predecessors, Bola Tinubu, who is the national leader of the ruling APC, and Babatunde Fashola, minister of power, works and housing, did first and second terms in office and signed all their budgets. Although neither the constitution of the party nor the 1999 federal constitution guarantees automatic second

term in office for a political office holder, including a state governor, in Lagos, the powerbrokers told Ambode in clear terms he could not seek a second term, a directive the outgoing governor rebuffed. Adetokunbo Mumuni, a legal practitioner and executive director, Socio-Economic Rights and Accountability Project (SERAP), had told BusinessDay in an interview that if for any reason the outgoing governor does not sign the budget before exiting office on May 29, the incoming governor would have to sign it fast upon assumption of office to avoid a constitutional crisis. Although the elections have come and gone, political developments in the state suggest lingering animosity as members of the House of Assembly, believed to be loyal to the power-brokers, have not come clean on why they are sitting on the 2019 budget more than

three weeks after passing it. Until the budget is assented, it cannot be implemented, as it will amount to a breach of the constitution to draw from the budget. Though the previous budget (2018) subsists till end of May, the delay of the 2019 appropriation law, coming from an election year, is taking a toll on general governance in Nigeria’s economic hub. Efforts to get Mudaishiru Obasa,speakeroftheHouse,and Funmilayo Tejuosho, chairman, House Committee on InformationandStrategy,tocommenton theissuehavebeenunsuccessful as both did not pick calls or reply to text messages sent to their cell phones yesterday. When contacte d by BusinessDay, a member of the state executive council lamented that the budget, though passed by the House, was yet to be transmitted to Governor Ambode.

No clarity on NNPC takeover of troubled $2bn OML 11 asset 21 days after deadline …Shell maintains status quo on assets DIPO OLADEHINDE

wenty-onedaysafterexpiration of the deadline given to the Nigerian National Petroleum Corporation (NNPC) by President Muhammadu Buhari to take over operatorship of $2 billion Oil Mining Licence (OML) 11, there is still no clarity over the fate of the oil assets. President Buhari had, in a letter dated March 1, 2019, through the office of the Chief of Staff Abba Kyari, directed the state-owned oil company and its upstream arm, Nigerian Petroleum Development Company (NPDC), to take over operatorship of the entire

oil blocks in OML 11. OML is located in Ogoniland, in the heart of the Niger Delta, where environmental and human rights controversies have prevented Shell Petroleum Development Company from operating over the years. The letter had directed NNPC to take over the assets not later than April 30, 2019 and to also ensure smooth re-entry given the delicate situation in Ogoniland. “NNPC/NPDC to confirm by 2 May 2019 of the assumption of the operatorship,” the letter signed by Abba Kyari, Chief of Staff to the President, said. Twenty-one days after the expiration of the directive,

https://www.facebook.com/businessdayng

however, stakeholders in the oil sector are still in the dark on whether NPDC has taken over or whether Shell is still in possession of the assets. Neither NNPC nor its upstream arm has made any statement in respect of the matter, whileShellhasalsorefusedtotake anystepclaimingit’syettoreceive any directive from government. Sourcesfamiliarwiththeissue told BusinessDay that aside from the fact that the process of getting back the licence for such oil block was tedious, the joint venture partners in OML 11 were not just NPDC and SPDC. They stated that two other international oil companies, Total and Agip, were also partners in the oil block. @Businessdayng

When contacted with inquiries on whether it has transferred OML 11 to NPDC, Shell Nigeria said it cannot comment on a leaked government memo. “On status of OML 11 in relation to the government memo cited, we are unable to comment on a reported internal government correspondence,” Bamidele Odugbesan, media relations manager at Shell Nigeria, told BusinessDay. Joseph Onele, energy lawyer and policy consultant at Bloomfield Law Practice, said it may be too early to judge what steps Shell would likely take to protect its interests in the event a

Continues on page 38

Thursday 23 May 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

NEWS

AXA Mansard celebrates commitment to service

X A Mansard, a member of the AXA Group and global leader in insurance and asset management, celebrates its staff members that have shown long-standing commitment to service. The event was created to reward and recognise employees who have served at AXA Mansard for over 10 years delivering exceptional service to its customers and clients across Nigeria. The event, held at the AXA Mansard head office recently, had the AXA Group CEO, Thomas Buberl, and other executives of AXA Mansard in attendance. Speaking at the event, Omowunmi Mabel Adewusi, human resource director at AXA Mansard Insurance plc, said, “At AXA Mansard, one of our greatest assets

remain our employees who give beyond what is required to ensure that our valued and esteemed customers are satisfied all the time. “We are taking this opportunity to say thank you to our employees who have served selflessly over the years in an effort to meet our customers’ needs and be exemplary ambassadors of the AXA Mansard brand. We commend your hard work and your dedication to the AXA Mansard brand, with these, we can confidently continue to promise customers excellent service and let them know we are here when they need us.” AXA Mansard was incorporated in 1989 as a private limited liability company and is registered as a composite company with the National Insurance Commission of Nigeria (NAICOM).

Manufacturing sector PMI expands to 57.8 points in May Hope Moses-Ashike

urchasing Managers Index (PMI) of the manufacturing sector of the Nigerian economy expanded to 57.8 points in May from 57.7 in the previous month. Godwin Emefiele, governor, Central Bank of Nigeria (CBN) while addressing the media after Monetary policy Committee (MPC) meeting on Tuesday, said the manufacturing and non-manufacturing growth were driven by production level, supplier delivery time and employment level, which grew at a faster rate. The CBN on Tuesday released the PMI report for the month of May, which shows that 13 out of the 14 manufacturing sub-sectors surveyed reported growth in the review month. These include: transportation equipment; electrical equipment; petroleum and coal products; paper products;

cement; food, beverage and tobacco products; plastics and rubber products; chemical and pharmaceutical products; fabricated metal products; furniture and related products; non-metallic mineral products; textile, apparel, leather and footwear and printing and related support activities. The primary metal subsector recorded decline in the review period. At 59.1 points, the production level index for the manufacturing sector grew for the 27th consecutive month in May 2019. The index indicated a faster growth in the current month, when compared to its level of 58.8 index points in the month of April 2019. The composite PMI for the non- manufacturing sector stood at 58.9 points in May 2019, indicating expansion in the non-manufacturing PMI for the 25th consecutive month. The index grew at a faster rate when compared to its level of 58.7 in April 2019.

FG vs. P&ID: No fine awarded against Nigeria - AGF Felix Omohomhion, Abuja

ttorney General of the Federation (AGF) and MinisterofJustice,Abubakar Malami, Wednesday, refutedclaimsthattheFederalGovernmentfailedtopaythejudgment fine in a case between it and the Processes and Industrial Developments Limited (P&ID). Hesaidtherewasnotruthinthe mediareportsthattheFederalGovernmentfailedtopaythefinebefore February 15, P&ID could enforce the award against the country by seizing its assets in the UK. The minister noted that in the first place, P&ID never incurred a debt of $40 million while executing the gas supply and processing agreement (GSPA) entered with Federal Government in 2010 in respect of an accelerated gas development project in Nigeria’s OMLs 67 and 123, adding, “P&ID

never began the construction of the project facility although it alleges it incurred about $40m in preliminary expenses.” In a press briefing, Wednesday, the AGF noted that there was so much misrepresentation in the mediaconcerningtheissuehence the need to put the record straight. The minister said the Ministry would do everything possible to protect the interest of the country in the matter. Malami stated: “My attention has been drawn to series of online publicationsgrosslymisrepresenting facts of the on-going litigation between P&IDvsFederalGovernment of Nigeria & Anor pending before the United States District Court of the District of Columbia, theUnitedStatesCourtsofAppeals for the District of Columbia and the Business and Property Courts of the UK. www.businessday.ng

L-R: Chukuka Chukuma, chairman, Hofstede Insights Nigeria; Egbert Schram, global chief executive office, Hofstede Insights; Okey Okere, CEO, Hofstede Insights Nigeria, and Olu Raheem, trade commissioner, Business Finland, during the launch of Hofstede Insights Nigeria, at the Nordic Nigeria Connect in Lagos, yesterday. Pic by Olawale Amoo

Buhari to focus on job creation in next four years - Udoma Cynthia Egboboh, Abuja

inister of budget and national planning, Udoma Udo Udoma, says the focus of the Federal Government second tenure will be on job creation, as more work need to be done in ensuring a more stabilised economy. The minister, giving account of his stewardship at the End-of-Tenure Press Conference in Abuja on Tuesday, said a lot had been done in the last three and half years but more needed to be done, especially in ensuring job creation for the youths. “We have done a lot in this tenure to achieve the key mandates of this Ministry, which include preparing the annual budgets as well as the medium-term expenditure frameworks, rendering policy ad-

vice to the Federal Government on all aspects of national development, among others. However, the focus of the next level will be on job creation, we will concentrate more on the part of the economy that will create jobs,” the minister said. Speaking further, he said efforts were put in place to ensure that the Budget Office was properly integrated as part of the Ministry by adopting the zero-based approach for budget preparation, which required justification of every budget item for funds allocation. He explained that the online budget preparation was introduced to ensure that the identity of any person inputting any budget item can be ascertained adding that it has improved the integrity of the budget. “Most importantly, we were able to ensure that our executive

‘Private sector investment in upgrading critical infrastructure will boost youths competitiveness’ KELECHI EWUZIE

ndustry experts insist that continuous investment by private sector in upgrading critical infrastructure in the education sector is the best solution for Nigeria, if she hopes to grow the next generation of globally competitive youth population. Bhupendra Suri, managing director, Coca-Cola Nigeria, says private sector involvement in education, especially on learning inside and outside the classroom, will impact positively in shaping the lives of these future leaders. Suri, while speaking at the handover ceremony of a block of five classrooms, 10 units of sanitation facilities, playground and a library complex at the First Baptist Primary School, Ijaye Oja-Ale, Abeokuta, Ogun State, says each decision our company makes is a chance for us to do the right thing. Suri, who was represented by Amaka Onyemelukwe, manager, public affairs/communications, says Coca-Cola Nigeria is relentlessly selfaware of its role in the world and the impact it can have, adding that it is for this reason they are investing to help care for the people and communities they depend on to succeed. Ibikunle Amosun, Ogun State governor, represented by the perma-

nent secretary, Ministry of Education, Science and Technology, Aikulola Olu Ola, lauds the company for their effort, explaining that the project will go a long way in improving the quality of education offered to the pupils of the school while also impacting the community positively. Also speaking at the ceremony, the former commissioner for Education, Science and Technology and Ogun State House of Assembly member-elect, Modupe Mujuota, commends Coca-Cola, Ogun State SUBEB, the School Base Management Committee (SBMC), the entire Ijaiye Community, the staff and pupils of the school for their commitment and tenacity for the successful implementation of the laudable project. Abdul Jeleel Olatunde Okewole, chairman, Ogun State SUBEB in his own remarks, describes the handover ceremony as a testimony of the benefits of public private partnership in bridging infrastructure gap in communities. The project is part of the CocaCola Foundation/UNDP New World Programme in collaboration with Ogun State government and Youth Empowerment Foundation aimed at upgrading critical infrastructural in the school.

https://www.facebook.com/businessdayng

budget proposals are aligned with the strategic policies of government as set out in the Medium-Term Fiscal Framework and Fiscal Strategy Paper, and other governmental programmes and plans”. The minister speaking on the measures adopted to address the economic decline in 2016 said that the initiatives included: the introduction of an expansionary budget in the 2016 fiscal year which was christened, the Budget of Change adding that the budget was designed to reflate the economy and stimulate economic activity. “The first initiative was the introduction of an expansionary budget in 2016 fiscal year, christened ‘The budget of Change.’ The budget was accompanied by a Strategic Implementation Plan (SIP), which set out a number of initiatives and strategies

to boost production and restore growth to the economy. “We followed this up with the development of a comprehensive Medium-Term Plan – the Economic Recovery and Growth Plan (ERGP), 2017-2020 - with the broad of objectives of restoring growth, investing in the people and building a globally competitive economy”. According to Udoma, the ERGP aims to address the country’s economic challenges and lay the foundation for economic diversification and growth with a core vision of ensuring a sustained, inclusive and diversified growth. “The initiatives of the Plan are directed at attaining structural economic transformation. The objective of the Plan is, simply put, to boost national productivity so as to improve the quality of life of all Nigerians,” he added.

Outsource Global extends its BPO service to Japan

he Africa Business Process Outsourcing industry got another boost as a major player in that space, Outsource Global, recently announced their expansion into Japan, in line with its strategic growth plan. Speaking from Japan at the recently concluded Japan IT Week, Amal Hassan, founder/ CEO of Outsource Global, said, “We are particularly excited about this strategic expansion. It not only allows us to serve the Japanese market, it is also an entry point for us to provide a full range of outsourced services to the Asian market. “We are also thankful to ITC SheTrades for facilitating our participation at the Japan IT Week thereby giving us the platform to have these strategic conversations.” Asia is the world’s fastest growing economic region, with an estimated annual GDP growth of 5.7 percent. Within that region, Japan is the second best economy by GDP growth and third wealthiest in terms of GDP per capita. “With Japan being the 23rd @Businessdayng

wealthiest nation in the world, and home to global automobile giants we are confident of our capability to serve this new market. Our over 800 agents are spread across three locations in Nigeria and our facilities have the capacity to cater for over 2,000 remote teams who can work with organisations around the world,” Nusaibah Kofar-Naisa, the COO of Outsource Global, said. The company’s participation at the Japan IT Week was sponsored by SheTrades, an initiative of the International Trade Centre, with a mandate to connect three million women owned businesses to international markets by 2021. Outsource Global is one of the biggest and leading Africa business and knowledge process outsourcing firms based in Nigeria. Their recent expansion to Japan comes on the heels of the earlier announcement of their expansion to the UK where they will provide outsourced data training, software development, telesales and marketing as well as remote professional services to leading organisations across the world.

Thursday 23 May 2019

BUSINESS DAY

news Four years after, aviation ministry delivers 134 Diversity Day: Edo assures rich display of out of 157 projects targeted – minister innovative cultural products at 2019 NAFEST IFEOMA OKEKE

inister of state for aviation, Hadi Sirika says out of 157 projects the ministry targeted in the past four years, it has successfully delivered 134. Some of these projects include the completion of some of the Chinese terminals, the repair of the Abuja runway, the certification of Lagos and Abuja airports, completion of the training centre, among many others. The minister assured that the new Mallam Aminu Kano International Airport (MAKIA) Kano was 90 percent complete and soon to be commissioned and put to use. This is also as he inaugurated the new General Aviation Terminal at Mallam Aminu Kano International Airport executed by FAAN during a tour across airports in the country to inaugurate projects inherited, initiated and executed by President Muhammadu Buhari’s administration between 2015 and 2019. MAKIA is one of the four airports terminals being built from the Chinese EXIM Bank’s investment of $500 million with $100 million counterpart funding

from the Federal Government of Nigeria. Already, the Port Harcourt International Airport (PHIA), Omagwa, and Nnamdi Azikiwe International Airport have been delivered as world-class terminals and put to use, and soon the other two, Lagos and Kano would be delivered. The minister disclosed this while inaugurating some projects executed by the Federal Airports Authority of Nigeria (FAAN), and other agencies on Tuesday in Kano, expressing joy that the Federal Government had completed 134 of 157 projects initiated and executed. “Kano is part of 157 projects initiated and undertaken by the government in aviation sector between 2015 and 2019. Out of these 157 projects, 134 had been completed 100 percent. “Some of them were inherited projects that we finished and most of them were new projects that we started and completed by the grace of God, 100 percent. “The remaining balance is in excess or most of them are in excess of 50 percent completion and very few of them below 50 per cent completion. “We are in Kano today be-

cause in Kano we have done a … warns beware of greedy politicians scheming to fill their insatiable appetite lot. Few of them for example do State governor, God- incarnations will be on display understanding of the values under NiMet, we have comwin Obaseki, says his ad- at the 2019 NAFEST, which of cultural diversity and to missioned the regional office, ministration will exploit will serve as an opportunity advance the four goals of the which Will serve the seven north the hosting of the 2019 National for us to show how through in- UNESCO Convention on the Western states.” Festival for Arts and Culture novative approaches, we have Protection and Promotion He also inaugurated the new (NAFEST) to showcase the continued to preserve our rich of the Diversity of Cultural regional offices of AIB and NiMet state’s rich, innovative cultural cultural heritage bequeathed to Expressions adopted on 20 for the Northwest as well as products to the world. us by our forefathers.” October 2005 to support susthe Instrument Landing SysThe governor gave the asThe governor reiterated the tainable systems of governance tem (ILS) and communication surance in commemoration state government’s commit- for culture.” equipment executed by NAMA of the World Day for Cultural ment to building institutions as Meanwhile, the state govat the airport. Diversity for Dialogue and De- well as leveraging multilateral ernment has urged the Edo “Under AIB we have also the velopment, marked every May partnerships to preserve and people and Nigerians to disoffice which will also serve this 21, by the United Nations and promote its cultural assets, regard the schemes of a few zone and I think AIB has four its various organs. noting, “Our cultural artefacts greedy individuals who have offices in Lagos, Enugu, Abuja The 2019 National Festival and expressions hold unique been angling to corner the and Kano and we have commis- for Art and Culture will be features which speak to and state’s resources for themselves sioned that of Kano. hosted by Edo State from Oc- amplifies our identity as a peo- through the dissemination of “Also, on the part of the tober 19 to 26, 2019. ple. We have set modalities for fake news and rumours in the NAMA, we have commissioned According to Obaseki, “As the building of institutions to media. the DVOR which is the Doppler we mark the World Day for showcase, promote, conserve In a statement, Crusoe Very High Frequency Omnidi- Cultural Diversity for Dialogue and preserve our cultural as- Osagie, special adviser to the rectional Radio Range equip- and Development, we assure of sets for future generations.” Edo State Governor on Media ment and the Instrument Land- plans to showcase the glamorAccording to the United and Communication Strategy, ing System equipment and the ous heritage of Edo people and Nations, “In 2001, UNESCO said those behind the rumours radios for communication. promote our world-renowned adopted the Universal Dec- were a few individuals with “These things that we do in cultural products during the laration on Cultural Diversity an insatiable appetite for the aviation most of them are not 2019 NAFEST. There is no de- and in December 2002, the UN people’s collective patrimony things that the passenger or nying that Edo State occupies General Assembly, in its resolu- and should be disregarded by travelling public can notice and a pride of place in the cultural tion 57/249, declared May 21 to members of the public. see because there are remote map of the world as a result of be the World Day for Cultural H e s a i d , “ T h e y h av e away from site but they make our peculiar heritage in arts, Diversity for Dialogue and De- whipped up sentiments and aviation very safe and secure culture and remarkable foot- velopment. thrown up a false sense of crisis and also in addition very pre- print in human civilisation. “The day provides us with in the state chapter of the All cise,” he said. “All of these and the modern an opportunity to deepen our Progressives Congress (APC).

Labour minister denies plans to proscribe NUPENG JOSHUA BASSEY

L-R: Osita Ede, head, product liabilities, Access Bank plc; Robert Giles, head, product insights and capabilities, Access Bank; Chidiebere Chukwu, daughter of the Salary 4life winner, DiamondXtra quarterly draw, and Victor Etuokwu, executive director, retail banking, Access Bank, at the DiamondXtra Season 11 quarterly draw prize presentation ceremony in Lagos, yesterday . Pic by Pius Okeosisi

Senate wants FG, Rivers to tackle killings with workable strategies OWEDE AGBAJILEKE, Abuja

enate has urged the Federal and the Rivers State government to develop workable strategies that would stop the incessant cases of killings in the state. The resolution was sequent to a motion titled ‘Frightening Killings in Rivers,’ sponsored by Andrew Uchendu (Rivers State) on Wednesday. Leading debate on the motion, the lawmaker, who said some years ago he raised concern on the insecurity in the state, added that till date, killings had not abated in the state. Uchendu explained that the killing of innocent citizens as a

result of murder, kidnapping, violence or abduction had been the bane of Rivers State for more than a decade now, recalling that these killings assumed a very dangerous proportion before, during, and after the 2015 general elections, with over 250 deaths. He expressed worry that the nature of killings in the state assumed a more horrendous dimension by the decapitation of body parts, including beheading of victims. “At about 9.00pm on Sunday the 19th May, 2019, unknown gunmen invaded Isiodu Community in Emohua LGA, Rivers State, and killed three young men aged between 23 and 30, and unashamedly burnt the corpses. These killwww.businessday.ng

ings spread across the length and breadth of Rivers State. “During the last interaction between the Senate and the Inspector General of Police (IGP), Mohammed Adamu, I stated emphatically that kidnappings and killings have become a way of life in Rivers State. “In Rivers State, life has become more brutish and worthless, since anybody can be killed, kidnapped or abducted at any time of the day. “No meaningful strategy has been put in place to check this unbridled development in the polity,” he said. The lawmaker, however, regretted that traditional rulers and community heads who were neither in control of the police, the army nor

the resources were being held responsible to check kidnapping and killings in their own community. Shortly after the resolution of the Senate, the Senate president, Bukola Saraki, who presided over the session, pointed out that the issue of insecurity must be dealt with frontally and should not be politicised. Saraki said the government and the police were doing their best in the North West but that it should be intensified. In his contribution, Bala Na’allah (APC, Kebbi) said if the action was taken when he raised the issue in the House of Representatives, the issue would not had degenerated.

https://www.facebook.com/businessdayng

inster of labour and employment, Chris Ngige, has denied alleged plans to proscribe Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) and also warned the Nigeria Labour Congress (NLC) against false claim that NUPENG was its affiliate. Ngige on Wednesday described the allegation that his ministry was planning to proscribe the oil workers’ union, as “cheap and unconscionable lies.” The union had accused the minister of being on a vendetta mission, for requesting it to submit its 2017 and 2018 audited accounts within 72 hours. It alleged that the request was a ploy to proscribe it because of the recent disagreement over the non-appointment of Frank Kokori, a former general secretary of NUPENG, as chairman of the Nigeria Social Insurance Trust Fund (NSITF), which led to the picketing of the minister’s residence in Abuja by labour unions. But the labour ministry, in a statement, explained the genesis of its request. It said, “On May 13, 2019, a letter was written by the Department of Trade Union Services and Industrial Relations (TUSIR) of the Federal Ministry of Labour and Employment, precisely by the registrar of Trade Union to both the NUPENG and Trade Union Congress (TUC) drawing the attention of the unions to the non-rendition of their financial returns for the @Businessdayng

… warns NLC

years 2017 and 2018. “The letter directed that the unions should comply according to the provisions of sections 40 and 37(i) of the Trade Unions Act of 2004, which states that “”every registered body shall send to the registrar before June 1, each year, an annual return in the prescribed form… and shall be certified as correct by the dully appointed auditor.” “NUPENG and TUC being in breach of this Section 37(i) the registrar of Trade Union invoked sec.40 of the Trade Unions Act Cap T.14 (LFN) 2004, which gives the registrar of Trade Union powers to request that all the books of accounts of defaulting unions be submitted to the registrar for further scrutiny to make for accountability in the management of the unions’ funds, which are check-of dues of workers deducted at source from their salaries. “While the TUC president personally came to the ministry to explain his predicament and asked for extension of time on compassionate ground, the ever combative, arrogant and ill-informed NUPENG leadership took to the press for base name-calling, reminding everyone of their ill-fated invasion of the private residence of the minister and asking this group of junior cadre oil workers, especially tanker drivers, to be on red alert for strike – thus threatening Nigerians instead of apologising for being in default. We warn NUPENG to cease forthwith with this bogey of tanker drivers.”

Thursday 23 May 2019

BUSINESS DAY

NEWS

Lagos Post Online re-brands, to set pace in online journalism Jonathan Aderoju

ith a positive result of innovative and introduction of additional modern technology into social media, Nigeria’s online newspaper, LagosPostng.com has moved a step further in rebranding, repackaging and reinvigorating. The new Lagos Post Online is being handled and managed by versatile and experience journalists with decades of experience in journalism. These set of media experts have worked in various notable dailies and traversed across the country with global touch and ideas. The rebranding of Lagos Post Online became necessary so as to meet the demand of the readers in term of wider information gathering and dissemination of vital investigative information to the general populace. The decision was also made in order to give its publics the best of journalism with content that is concise, short and simple and therefore exciting to readers as well as identifying with the economic realities, which has affected the subscribing powers of the average citizen. The introduction of repack-

age and rebranding Lagos Post Online is the outcome of deliberate and painstaking research aimed at retaining the loyalty of existing publics as well as drawing the interest of a new set of audience mainly young people unto online reading. The content of the medium are purely analytical and development oriented. This will enable the medium to meet international standard and compete favourably with other medium globally. One of the innovative ideas added to the international online medium, Lagos Post Online is a feature that will enable readers to read the original content published in English language in local language like Yoruba and others. According to Damilare Bankole, the managing editor, LagosPostng.com, this is a right step in a right direction, looking at the high number of people across the world who are online searching for good news content. Adding that Lagos Post Online is open to all business across the world and ready to partner with organisations for events, conferences and also with governments, institutions, Corporations, NGOs etc. across the across the world.

Africa’s history should push us to create a better future for our children – Elumelu FRANK ELEANYA

nowledge of African history should propel leaders and citizens to have a sense of dissatisfaction for the status quo in order to create a new history that the children will be proud of, Tony Elumelu, chairman of UBA, says. The UBA chairman said this during the celebration of Africa Day 2019 at the bank’s headquarters in Lagos. Themed ‘Africa’s History Redefined: Our past, a path to the future,’ the celebration brought together notable names in Africa and Nigerian history - Wole Soyinka, Nigeria’s Nobel Laureate, Samil Nkhrumah, politician and daughter of the late Kwame Nkrumah, Djibril Tamsir Niane, historian and playwright, Femi Kuti, afro musician and son of the late Fela Anikulapo Kuti, and Ayo Obe, lawyer and partner at Ogunsola Shonibare. The speakers decried the state of history in the continent. Many countries in Africa have removed the teaching of history from their national curriculum. Nigeria in 2015 was among the countries to expunge history. However, under the President Muhammadu Buhari’s administration, the subject was returned. Soyinka recalled his response

when he heard news of the removal. “I was shocked when I returned to Nigeria many years ago and heard that History has been taken off our national curriculum. I asked Governor Fashola then he said, a federal minister thought out children did not need to learn the subject because there were not enough teachers,” Soyinka said. He described history as more than an academic exercise but as a development. Femi Kuti on his part pointed out that the idea of depriving women based on their sex, for instance, was not native to African culture, saying there was a need to relearn and imbibe a new culture based on the lessons of African history. “Feminism wasn’t an African thing. It was religion and colonialism that taught us to discriminate against our women. The religious books are full of “He, he, he…” there is no “she” in there. Our ancestors valued women and didn’t discriminate against them,” Kuti said. Nkrumah noted that the total liberation of the continent from colonialism and neo colonialism only lies in total liberation, which comes with unification. To achieve that Africans has to actively re-orientate themselves of their origin.

Why we gave IT solutions to FUTA, UNIPORT best students

lobacom says it decided to endow five students each from the Federal University of Technology, Akure, (FUTA) and the University of Port Harcourt because of their outstanding performances in their academics. Each of the students who had the highest CGPA points in each of the tertiary institutions received advanced smartphones and Glo data packages in an ongoing nation-wide campaign to equip tertiary institutions with IT solutions. Management of the two institutions also received five routers each to boost learning through research and teaching. Olusegun Oguntuase, Globacom’s state manager, Ondo State, called on members of the University community to explore the opportunity of the company’s ongoing week-long data clinic within the school to upgrade to Glo 4G to avail themselves of its download and upload speed advantage. According to him, the Glo 4G is available in all tertiary institutions in the country. Those who got smartphones included Lawal Adeshile of the Department of Physiology; Adebiyi Emmanuel of the Department of Building Technology; Phillip Onochiemume, Department of

Accounting; Omolara Bakare, Physics Department; Okunoye Olayinka of the Department of Metallurgical and Materials and Ogundeji Emmanuel of Urban and Regional Planning Department all from the Federal University of Technology. From the University of Port Harcourt, the recipients included Munachiso Wodi of the College of Medicine, Joshua Tom of the Department of Mechanical Engineering, Esther Isonguyo of the Department of Forestry and Wildfire, Juliet Onwuka of the Department of Education Foundation and Glory Chilaka of the Department of Philosophy. Responding on behalf of the student beneficiaries from the University of Port Harcourt, Chilaka Glory of the Department of Philosophy said, “I’m very happy to be one of the beneficiaries and I am grateful to Glo for the opportunity.” The Vice Chancellor of the Federal University of Technology, Akure, Joseph Adeola Fuwape, received the part meant for his institution. He expressed appreciation to Globacom for the kind gesture which he opined would encourage research and motivate the students to be more diligent in their academic pursuits.

Intels: NPA owes us over $750m, as Port Authority faults claim AMAKA ANAGOR-EWUZIE

ollowing the recent termination of its boat service agreement on the allegation ofindebtedness,themanagement of Intels Nigeria Limited, Nigeria’s oil and gas logistics firm, says it is not indebted to the Nigerian Ports Authority (NPA), but rather NPA owes it more than $750 million. The company, which issued a statementonTuesdayinresponse totheterminationofitsboatspilotage monitoring and supervision agreement by the NPA, says while itisopentoanamicableresolution of the contract dispute with NPA, it is willing to proceed in all appropriate directions to protect its interests and its 5,000 employees. “With regard to the media report in ThisDay Newspaper of Sunday 19th May, 2019 concerning the agency agreement between NPA and Intels, the latter states that it has not breached or violatedtheagreementwithNPA,” the statement, which was sent to BusinessDay, stated. Intelsfurtherconfirmsthecorrectness of its actions, in line with the agreement signed on August 24, 2018, according to the terms and timing established therein, in compliance with the principle of reciprocity of rights and obligations thereby provided for. According to Intels, the same agreementsupplementstheoriginal agreement and reinforced the understanding of the parties that the agency service was entrusted to Intels, in order to guarantee a repayment plan for the significant investments made. “Intels reiterates that, overall, it is not in any way indebted to NPA, but it is instead a creditor

of NPA for an amount exceeding $750 million against the financing granted by Intels and associated entities to NPA over time,” the statement read. Intels however expresses hopes that the undergoing amicable procedure with NPA may result in clarifications between the parties and a return to normal operation. It also reaffirms its willingness toproceedinallappropriatedirections to protect its own interests, in line with the contractual agreement, and all valid receivable claims against NPA, for the protection of its corporate interests, 5,000 Nigerian employees and shareholders and those who have been operating in the country for over 40 years. Meanwhile, the NPA in its reaction has faulted this claim, saying it is not true that it owes its contractor that supposed to generate money and remit to the government. Adams Jatto, general manager, corporate and strategic communications of the NPA, who faulted Intels’ claim, told BusinessDay on the telephone that Intels had agreement with the NPA, which stated that monies collected in the boat service contract should be remitted to the authority through Treasury Single Account (TSA), and that the NPA would give Intels commission, which was 28 percent of all monies collected. “The over $142 million NPA says Intels owes is the accumulated amount, which is yet to be remitted into the TSA. How come is NPA that owes them? Is it that they gave us services and we did not pay or what?” he questioned. www.businessday.ng

L-R: Rejina Chris Ogbodo, national publicity secretary, Unilag Alumni Association; Ademola Adebise, managing director, Wema Bank plc, and Aaron Akinloye, national secretary, Unilag Alumni Association, during a courtesy visit to Wema Bank recently.

N/Assembly pledges legislative support for Commodity Exchange to grow impact HARRISON EDEH, Abuja

he National Assembly has assured the Nigeria Commodity Exchange (NCX) of commitments to formulate quality legislations that will give more impetus to the activities of the exchange to foster more economic growth and development of the country. The resolution was reached in Abuja by the House of Representatives’ Committee on Capital Market and Institutions at a two-day capacity building on the workings and activities of the Nigeria Com-

modity Exchange. The Committee’s chairman, Tajudeen Yusuf, said the training was apt as it would enable lawmakers make informed budgetary decisions about the agency, especially at this time that Nigeria was placing more emphasis on the diversification of its economy. “As you know, your agency needs more money and legislative backing to excel in your endeavour. With this quality presentations and insight into what the exchange is doing, you will definitely get our support for the overall benefit of the country,” Yusuf said.

https://www.facebook.com/businessdayng

“Without enough money through budgetary provision, the silos will not serve the purpose it was meant for,” the lawmaker added. Some members of the committee, who participated in the two-day programme while acknowledging the importance of the NCX to the economic diversification agenda of the President Muhammadu Buhari’s administration, agreed to ensure that the ninth assembly as a matter of urgent national importance would formulate bills to enhance the status of the @Businessdayng

exchange. Zaheera Baba-Adi, managing director, NCX, who was represented by the general manager, Operations, Benson Lawal, assured the lawmakers of the exchange readiness to work with the National Assembly towards changing the face of the commodity market operation in the country. “We as NCX will do all what we could to win the support of the National Assembly for improved budgetary allocation and quality legislations to aid our work as it is obtainable in other parts of the world.

Thursday 23 May 2019

BUSINESS DAY

cityfile Lagos Neighborhood Corps to get hazard allowance JOSHUA BASSEY

Tony O. Elumelu, chairman, Heirs Holdings, (left) and Awele Elumelu, CEO, Avon Medical, (right) with the winners; Ayagwa Success, first runner-up (l); Mary Oluwabukola, First Female, (3rd l); Akpojotor Mudiaga Stephen, winner, and Okeh Paul, second runner-up, during the inaugural Avon Medical 5K Colour Run,in commemoration of the World Hypertension Day at the weekend

Communities to benefit as FG to circulate 600,000 gas cylinders

he Federal Government says it w ill inje ct 600,000 gas cylinders to support effort to boost Liquefied Petroleum Gas (LPG), also known as cooking gas, penetration into communities across the country. Brenda Ataga, special adviser on gas to the minister of state for petroleum resources, Ibe Kachikwu, disclosed this at the stakeholders’ forum on LPG penetration in Abuja. According to her, “from our estimation, we have 386,000 micro distribution centres across the country. We have issued a few licenses but I don’t have the total number here. “We will inject 600,000 cylinders to filling plants and skid owners that have converted their skids to

micro distribution centres,” she said. She said that the government would come up with a policy that would remove the ownership of LPG cylinders from consumers. Ataga added that the policy would require that the ownership of the cylinders rests strictly with the dealers and distributors as part of strategy to deepen the penetration of LPG. The minister’s aide said that cylinders would be distributed on credit, with a pre-payment period of 18 months. Commenting on the roadside sellers or illegal gas sellers, Ataga said that government would commence awareness campaign to help sensitise people to the right procedures.

She said that after awareness the Department of Petroleum Resources (DPR) would commence clamping down on illegal or road side sellers. “Actually, enforcement will start next week, we will start notifying people from today; there will be jingles in the media, so that people will understand what we are talking about. “The clamp down will be done area by area where convention of Skids had be done and where illegal sellers have been warned,” she added. Ataga said that over a million illegal retailers are currently existing in the country, adding that government has planned to remove Value Added Tax (VAT) to achieve its target. Umar Gwandu of DPR

called on all stakeholders and Nigerians to support government’s effort to ensure the success of LPG penetration in the country. He promised that DPR would put strategy in place to help all stakeholders key in properly. Patrick Ukpa, FCT commandant of the Nigeria Security and Civil Defence Corps (NSCDC), FCT command, assured the agency of maximum support to help government achieve LPG penetration in the country. “There is no business without regulations, sensitising people to the right thing is a good way to start. “As a law enforcement agency, we must help to stop all illegal businesses; we all need to cooperate to ensure sanity in our country,” he said.

Navy arrests 3 suspects with 455 bags of rice MIKE ABANG, Calabar he navy has handed over to the Nig e r i a Cu st o m s Service (NCS) three suspects alleged to have smuggled 455 bags of parboiled rice worth N8 million into the country.

Commander of Nigerian Navy Ship Victory, Vincent Okeke, told newsmen at the handing over ceremony in Calabar that the arrests were made on May 19 by officials of the navy. The street value of the rice is N8 million. Howevwww.businessday.ng

er, we should not focus on the price of the rice but the impact of smuggling on our economy because it causes unemployment and impact negatively on the revenue to the Federal Government,” said Okeke. Johnson Gabriel, the

Assistant Comptroller of Customs, Eastern Marine command, who received the rice and the three suspects, lauded the navy for the effort. Gabriel said that the Customs would carry out its investigations and arraign the suspects in court.

https://www.facebook.com/businessdayng

srael Ajao, a retired Deputy Inspector General of (DIG) of police and chairman, Lagos State Neighborhood Safety Agency (LNSA), says the agency was working on hazard allowance for its operatives. Ajao said this at an interactive seminar themed: Neighborhood safety as a strategy for effective crime control in Lagos State.” Ajao was represented by Babatunde Aboyade, a ranking officer of LNSA. He said that the agency was working towards boosting the welfare of corps officers starting with hazard allowance and other benefits such as life insurance, health insurance and salary increase. “Despite the fact that the corps officers carry no arms, they have been diligent in discharging their responsibilities. Presently, we are working on their hazard allowance which is before the state governor. “We have lost four of our members so far and we want to convince the corps officers that we mean business as we give them adequate insurance so that they will be able to do more,” he said. He added that the security challenge in Surulere/ Lagos Island division is cultism and assured members of the public of synergy with the police to put an end to cultism in the state.

“On cultism, we will have an open discussion with educational authorities. We already have a plan to visit schools, catch them young and talk to the grassroots on the evils of cultism.” he said. He commended the state government for continued support and urged members of the public to assist the agency with intelligence information. The LNSA Lagos divisional representative, Ishola Laguda, also lauded the government, adding, however, that synergy among security agencies and use of technology would help in making Lagos safe. “Looking at the population of Lagos State, we have the challenge of shortage of security personnel. Despite the challenges, we have been able to synergise with police to ensure crime is reduced in the state. “In some foreign countries, you hardly see the police. They utilise technology and their neighborhood patrol personnel to check crime in their society. “I want to commend the state legislature for supporting the state government on the establishment of the agency. I will also commend the Lagos State Security Trust Fund (LSSTF) for their support and LNSA board for their commitment to the safety of Lagosians,” he said.

Police arrest 20 suspected terrorists in Sokoto

he police in Sokoto have arrested 20 suspects alleged to have been terrorising residents of Sabon Birni local government and its environs. The Commissioner of Police (CP) in charge of Sokoto, Ibrahim Kaoje, at a news conference, said the suspects were arrested in the last seven days. According to Kaoje, the suspects were arrested by a joint security team, comprising the police, army, customs, and immigra@Businessdayng

tion, civil defence corps. He said the suspects were apprehended with a gun, axes, army uniforms, hemps and drugs as well as items suspected to be charms. Kaoje called on the residents to assist security operatives with useful information that would lead to the arrest of criminals in their domain. The commissioner further urged the people to go about their businesses as security agencies had taken control of the black spots in the state.

Thursday 23 May 2019

BUSINESS DAY

comment is free

comment

Send 800word comments to comment@businessday.ng

African socialism: The bad dream Nigeria can’t seem to wake up from

David Hundeyin

ometime in September 1984, my dad and his pregnant wife drove to Abeokuta with my older brother in the car, pretending to be on a family getaway. The real purpose of their trip however, was to buy the only brand of baby food that my then 18 monthold brother would eat. Just under a year ago, a certain General Muhammadu Buhari had seized power from Shehu Shagari in a coup, and one of his signature policies was to establish a top-down price control directive that penalized traders and shop owners for selling certain items above the government-directed price. At the time, it was not uncommon to witness the absurd spectacle of soldiers dressed in full combat gear storming street markets and stores to catch and punish errant shop owners for selling so-called “Essenco” (Essential Commodities) above the prices dictated from Dodan Barracks. Regardless of cost price and the havoc wreaked by a sliding naira, selling prices were to be strictly adhered to on the pain of seizure and destruction of goods, or even prosecution. Predictably, traders and other business people quickly caught on to the game being played and adapted in typical Nigerian fashion. Soon,

shortages of all such goods became the norm as shop owners adopted the methods of drug dealers, surreptitiously letting people know how to get their contraband commodities away from the prying eyes of the military government. One of such commodities was my brother’s preferred baby food brand, which could no longer be found in Lagos. With the benefit of being among a handful of Nigerians with a telephone at home, my parents were able to find out that the “contraband” baby food could be found in Abeokuta, and so commenced the least cheerful family roadtrip ever according to the story I was told. That was 1984, when Nelson Mandela was still imprisoned on Robben Island, and the word NITEL appeared regularly in newspaper headlines. How much evidence do you need? 35 years after 1984, an HIV vaccine is being trialed, Elon Musk is shooting sports cars into space, China is now the world’s second largest economy, and Nigeria – amazingly – has not yet made up its mind about whether the African socialism of our parents’ generation worked or not. While some (myself included) see that era and all economic and political decisions taken therein as a dark chapter in Nigeria’s history that should only be spoken about in hushed tones out of sheer embarrassment, many Nigerians genuinely believe that we can – even should – return to an era where access to everything including food and soap was determined by government, and one could encounter the dreaded military horsewhip for the egregious crime of selling goods to make a profit. One of such Nigerians incidentally, was my brother, who 30 years after his

infant ordeal, supported the second coming of Rt. General Muhammadu Buhari in 2015. Like so many others, he believed that Nigeria needed a “strong hand” in contrast to the “weakness” of former president Goodluck Jonathan. While my brother certainly did not believe that tired and discredited economic experiments like price control and import restriction should return, a significant number of those who bought into “Buharism” also bought into this idea. The myth of the benevolent African dictator is seemingly tied up inextricably with the myth of the benevolent, all-powerful African socialist government, which gives citizens a full, free ride from cradle to grave. When it comes to the subject of economic ideology, I believe Nigerians by and large suffer from a kind of weaponised nostalgia for a past that never actually happened the way it is often presented today. As a result of this nostalgia, the government is able to get away with flying a series of populist kites promising the return of price control boards and denouncing certain business owners as ‘unpatriotic.’ This of course, substitutes for actual economic policy and security, which are the parameters by which it should ordinarily be judged. For the avoidance of doubt, every attempt to interfere with the market in Africa between the 1960s and the 1990s all resulted in the same things – massive shortages and artificial scarcities, large amounts of avoidable human suffering, accumulation of wealth and power into government-backed private hands instead of the economy, and a debilitating brain drain that has turned Africa into the “talent farm” of the Western world. There has been not

‘

…Nigeria’s government has neither the finances nor the institutional capacity to interfere with the economy without producing disastrous results. Nigeria is the proverbial butterfly that thinks itself to be a bird…

a single success story attributed to the application of socialist economics on a macro scale anywhere on this continent – it has simply never happened. But the Chinese and the Saudis… Whenever the point is raised that African socialism is a long-dead and discredited idea evidenced by four decades of painful history in Nigeria and across the continent, some reflexively point to China and Saudi Arabia as proof that countries can be wealthy and powerful, while distorting their economies with a plethora of interventions, grants, subsidies, exchange rate controls and capital restrictions. The idea of a comparison between Nigeria and either of those countries is laughable for one simple reason – we simply don’t have the range. At risk of flogging a dead horse, it must again be pointed out that Nigeria’s government has neither the finances nor the institutional capacity to interfere with the economy without producing disastrous results. Nigeria is the proverbial butterfly that thinks itself to be a bird, constantly overregulating, over-taxing, subsidising, intervening, restricting and banning its way through existence, leaving a trail of avoidable destruction in its wake. After surviving the era of “Essenco” and ITT, we really ought to have figured out that grandiose plans made by cash strapped governments of poor, densely-populated countries always end up on the scrapheap of history. Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng/ David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Financing the development of gas fields in the context of creating an LNG supply business

PATRICK O. D. MGBENWELU

n establishing an LNG supply chain, a number of major capital intensive activities need to be integrated and delivered effectively. The entire value chain, from field development, gas treatment, transportation of extracted gas, liquefaction of the gas, transportation of the LNG to the end buyer’s market, regasification at the point of unloading and transportation of the gas to the end users, need to demonstrate a robust fully funded financing plan and be de-risked to attract funding. The cost of building the exporting infrastructure will depend heavily upon, among other things, the state of development of the gas fields and location of the fields relative to the point of export. The liquefaction equipment cost will not vary considerably between facilities of a similar size but the cost of developing the gas fields and transporting the gas obviously will vary from project to project. Financing structures Given the huge capital costs / investments involved, LNG projects are not undertaken on a speculative basis, such is more common in the petrochemicals industry for example, although well-structured petrochemicals

projects “bolt-on” credible off-takers to reduce the unknown contents. Before such investments are made, the export of LNG will need to be backed through the establishment of long term (usually 15 years or more) Sales and Purchase Agreements (‘SPA’) with one or more credible LNG purchasers. However, given the evolution of LNG projects over the last 20 years, an increasing component of LNG sales are now being done on a much shorter basis, but overall, lenders have significantly less appetite for such short term contracts. The SPA provides the core “building-block” of the financing structure as it defines the nature and quantum of the revenues to be received over the life of the financing of the investment and therefore banks place their spotlight / attention in this direction as it drives the transaction’s debt capacity. SPAs will specify both the volumes to be delivered and also the price of the gas. Volumes will typically be fixed with some limited deferral options and in the absence of a spot LNG market, pricing will typically be linked to a proxy such as the price of crude oil which as a competing fuel source gives some indication of the monetary energy value of LNG. We have seen LNG project financing structures develop incrementally over the last two decades. In the 1980s borrowers raised debt finance either on a corporate basis or with the guarantee of their shareholders. In the 1990s project finance structures first came into usewith, two project finance models being adopted. The first, of which the Qatargas LNG project is an example, separates the development of the gas fields from the remaining

www.businessday.ng

infrastructure including LNG Liquefaction. The second, such as Ras Laffan, treats all elements as a single transaction and provides a single financing package – the trend globally has gravitated towards the foregoing. The first model of adopting two financings was the first to be seen in the market. Whilst it can be argued that this properly reflects the fact that gas field development and an LNG export facility are two separate businesses, the fact that the former is being developed as a dedicated source for the latter ensures that the financing structures for the two are heavily interlinked – this of course presumes common shareholders. For example, the pricing of gas supply from the gas field project (revenues high enough to support its debt) and the LNG project (gas supply costs low enough to ensure sufficient cash is generated from the SPAs). Not only is this relationship between the two project entities critical but the relationship between the two sets of lenders is equally sensitive. These complexities have led to the adoption of an integrated approach whereby the gas field development and LNG infrastructure are financed as one integrated package. By pooling the financing of the two elements, a more simplified structure can be achieved which will reduce the cost, time and “runaway risks” involved in concluding a successful financing. In terms of arranging debt, a simpler and interconnected structure will also aid the raising of debt from the bond and or bank markets, and may also assist in securing better terms from export credit agencies (‘ECAs’). Shareholder requirements Historically, it has been the case that debt

https://www.facebook.com/businessdayng

providers are willing to finance up to 75% to 80% of the costs for such development projects. The balance being financed by equity from the project owner(s), typically in the form of share capital but possibly also in combinations with quasi-equity such as shareholder debt subordinated to the main commercial debt providers. The choice will normally be dictated by the adequacy of funds for capital and taxation considerations. Higher equity proportions may be needed for projects having SPAs with weaker credit countries or corporates. In addition to providing a proportion of the financing requirement through equity or quasi-equity, the shareholders would normally be expected to provide guarantees to the debt providers in respect of the completion of the project. This would usually include undertakings to complete the project within a fixed time schedule and to repay the debt providers in full in case such deadline is missed by more than an agreed extension period. The finance providers would also generally insist on restrictions being placed on shareholder dividend distributions subject to an agreed list of financial and technical metrics – i.e. a minimum percentage of the debt having been amortized and also the project demonstrating acceptable cover ratios as a minimum over a continuous period of time. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Mgbenwelu is Head Investment Banking, FBNQuest Merchant Bank Email : patrick.mgbenwelu@fbnquestmb.com.

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

National pride and Nigeria’s growing population Remi Adekoya

igerians have long taken pride in being a large nation. “We are very grateful to Britain for giving us Nigeria. It is a great thing to belong to a big country. There is always an unspoken contempt for small countries in international affairs, and we are happy to be citizens of a big country,” said Obafemi Awolowo in 1958. Nigeria’s size and population as guarantor of global gravitas has since become entrenched in the national psyche. Especially as numbers remains the essential foundation of our claim to the “Giant of Africa” status. In terms of sheer natural wealth for instance, countries like Congo and South Africa are no lesser than Nigeria. But with198 million citizens to manage, and counting, according to Eze Duruiheoma, Chairman of the National Population Commission, is Nigeria’s population size a misguided source of national pride and how capable is the Nigerian state of handling such numbers? It has become a bit of a cliché to say a large population offers both opportunities and challenges. But this it boils down to. If mere population size determined national success, China and India, with roughly 1.4 billion citizens each, should be the world’s two main economic superpowers. But more efficiently-governed China is the only superpower of the two, with

a $12 trillion economy, second only to America’s. Meanwhile, India’s 1.4 billion population generates a GDP of $2.6 trillion, far less than the $4.9 trillion of 127 million-strong Japan and significantly less than the $3.7 trillion GDP a “mere” 82 million Germans generate. Switzerland’s 8.6 million population enjoys a GDP double that of 204 million Pakistanis while 37 million Canadians have grown an economy six times the size of 168 million-strong Bangladesh. Clearly, a large population is no guarantor of national success, much less greatness, a fact we would be wise to always remember. On the other hand, while many Nigerians might be too quick to equate their large population with preordained greatness, there are also those who say Nigeria is grossly overpopulated. This too is hardly the case, at least not in terms of population density. In 2018, there were 215 Nigerians per square kilometre, making Nigeria less densely populated than successful Britain, Germany, Japan, South Korea and Holland. Considering much of Nigeria is habitable land, the country is not (yet) physically overpopulated per se. The problem lies in the ability to manage the existing population. Let’s leave aside government corruption for now. The Nigerian state quite simply lacks the physical capacity to manage a territory the size and population of Nigeria. Privately, those running the country often feel as overwhelmed with Nigeria’s myriad problems as the rest of us. They too scratch their heads trying to figure out where to start from. But, of course, they can’t admit this publicly, so ministers and government officials put on their brave clever faces and pretend they have control over events they have limited or no control over. Take security, the key concern for many Nigerians today. In 2016, Lt.-Gen. Tukur Buratai said Nigeria’s

army needed to increase its active personnel from 100,000 to 200,000 by 2024, recruiting 12,000 new soldiers per year. So, by now, Nigeria has perhaps 136,000 soldiers tackling Boko Haram in the North-East, keeping an eye on Niger Delta militants and various other armed groups across the country, and generally trying to secure a volatile and angry territory four times the size of Great Britain. For comparison, Egypt has 440,000 soldiers securing a similar area-size with half as many people. A 2016 survey showed Nigeria with 219 police officers per 100,000 citizens, below the global average of 300 and sub-Saharan Africa average of 268. And we know how underpaid, undertrained and under-equipped Nigeria’s police are, often wielding lower-grade weapons than armed robbers and kidnappers. From security to education, the capacity of the Nigerian state to manage the situation on the ground is extremely low. Critics of the governing class often speak of a “lack of political will” to solve this or that problem in Nigeria. The implication being if only Nigeria’s leaders were genuinely interested in making the country safe and prosperous, they could do so tomorrow. This is a fallacy. Scarily, it is no longer just a matter of “political will”, but of sheer capability. If a police chief orders officers to secure area X by all means, but those officers end up over-run by better-equipped bandits, who do we blame for this? I know nobody likes “government” in Nigeria (except when they are in it), but the single most pressing requirement to manage the country’s galloping population is a much stronger state. Alongside trying to slow population growth via well thought-out familyplanning campaigns, the strengthening of state capacity is key to preventing all-out chaos in Nigeria. Last week, we discussed the tiny budget Nigeria’s

‘

Without a boost in state finances, national pride will continue to be sought in population numbers rather than state functionality

government has, smaller than what the likes of Angola, South Africa, Pakistan or Bangladesh have to spend on their citizens. Even if one kobo of Nigeria’s budget was not stolen, it still wouldn’t be enough to run a functional country. The Nigerian state undoubtedly needs more money to perform its everyday functions. The only way I see to raise significantly more revenue is via vastly improved nation-wide tax-collection a la Lagos. I know some of you will be hissing loudly by now, but apart from mega oil-rich tiny-population Gulf countries like Qatar or Kuwait, I know of no prosperous safe state not significantly financed by its citizens’ taxes. Yet, while South Africa, with a population of 57 million, collected $90 billion in tax revenues last year, Nigeria raised the equivalent of $15 billion, which turned out to be a historically record amount! Of course, to increase tax revenues, Nigeria’s leaders would need to do two things: foster an enabling economic environment in which people have money in their pockets to pay taxes from and build trust in the citizenry their hard-earned money won’t be squandered and stolen. But there is no escaping the fact a big country is expensive to run. Without a boost in state finances, national pride will continue to be sought in population numbers rather than state functionality.And without the ability of the Nigerian state to provide basic security, infrastructure and social services for its citizenry, it will continue to be the worst of possible states: strong enough to oppress the individual, but too weak to enablethe collective. Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others. He tweets @ RemiAdekoya1

The mathematics of corruption

Zeal Akaraiwe

hen I met Namchir, it was glaringly obvious that there was something “off” about him even though it was extremely difficult to place a finger on what exactly it was. He was very well dressed in a well-tailored 3-piece suit but seeing that he was pushing a wheelbarrow under the hot sun, the contradiction was difficult to miss. His wheelbarrow was filled with what looked like decorations for a home but when I spoke to him, he had no home and he had spent the last couple of years accumulating all of these decorations none of which he’ll ever use. Yet, everyday, he went out collecting more and more of them. When the wheelbarrow filled up and I offered to relieve him of the agony of tugging along these assets that were of no use to him, he vehemently fought me off and often threatened to kill me. I heard he had attacked and caused grievous bodily hard to all those who, in the past, attempted to help him reduce the strain of carrying things he didn’t have any reasonable use for. Funny enough, considering that he spoke very well, this “madness” was really hard to explain especially because he neither looked dirty nor

unkempt and away from the nausea-inducingputrid-stench from his wheelbarrow, he smelled rather nice. Everyday, I meet a Namchir in the pages of the newspaper, in stories of $43million abandoned in a flat, $2.2billion (N800,000,000,000 for perspective) fraud, N10billion confiscated, N200million power bike crashed, 30 houses seized, people owning 4 Rolls Royce’s…mind boggling assets accumulated that have no reasonable use - these are all our Namchir. I often wonder why people acquired so much in assets like cash, property, cars, and jewelry when it is more than evident that in their entire lifetimes, they could never exhaust it and yet, the greed for acquisition continues unabated. I came across some interesting reading in the field of Neuro Linguistic Programming that pretty accurately explains this behavior and I’ll attempt to share. First, let me introduce you to an average struggling-supposedly-middle-class Nigerian; let’s call him Namroop! Namroop has struggled his whole life and has barely ever been able to make ends meet. He lives in an environment where he is forced to create, manage, fund and protect a mini-country all by himself by ensuring he has power, water, security, education, transport, healthcare for himself, his family and dependants and the cost of running this “mini-country” takes up at least 85% of his annual budget. Now, try and picture that Namroop suddenly finds himself in a position where he knows that for the next couple of years (let’s arbitrarily pick the next 4 years), he has almost unfettered access to an obscene amount of money belonging

www.businessday.ng

to other people and imagine that he also knows that his fate following the 4 year term is relatively unknown which means that his future becomes insecure again like his past. Imagine he knows that in the 4 years while in this position, his accountability is to no “real” person or group except “God”, “godfathers” and his very malleable conscience. Can you imagine the state of mind he would have in the next 4 years? Can you imagine the behaviors he’ll exhibit? We should all have come across the mathematical concept of “Present Value or PV”, which basically means looking into the future, placing a monetary value on all the things you see in the future and then equating (calculating is more accurate) what that value is today using certain variables. (For this article, don’t bother yourself too much with the formula, just the concept.) So, Namroop gets sworn into office for a 4-year term and immediately goes to work but as you can imagine, his primordial instinct of self-survival will be his driving force. He has never been trained in nor come across the delicate art of “delayed gratification” nor does he understand the concept of “greater good” nor “communal benefit”. He is well schooled, but significantly sub-literate and largely uneducated. Worse, he hasn’t been raised in a society that has regard for rule of law, nor is there reward for good nor punishment for error. With this brief summary of his background, let me now introduce you to the inner subconscious workings of his mind. Namroop’s primordial instincts kick in after month 2 of swearing in (month one is for parties, congratulatory messages, introductions, thanksgivings and finding the loopholes to exploit) and he subconsciously begins a complex

https://www.facebook.com/businessdayng

mathematical decomposition of the present value of his needs for the rest of his life. He needs to subconsciously calculate what his lifetime needs in monetary terms for each of these line items (amongst many): • A befitting house in a befitting area • Contingency house for that house • An extra house or perhaps 2 more for his social status • A new generator for each of the houses • A back up generator for the houses • Each generator will be changed every 3 years • Diesel consumption for the rest of his life • At least summer holiday and general travel cost for himself and his family • School fees for all his children up to PhD level in Harvard, Yale etc • A house for each of his children in the city of their schools • Bi-annual medical check up abroad for himself, wife and whole family • Cost of anticipated treatment if check up shows any illness • Contingency funds for cost of treating cancer which MAY come up in any member of his family. If all this will come to $250million then, he has to consider that he may have left a few things out and/or underestimated inflation and exchange rate volatility; so lest round it up to $500million (at current exchange rate, this is N180,000,000,000 –>N180billion). Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Zeal Akaraiwe is a financial analyst and social commentator.

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

comment is free

comment

Send 800word comments to comment@businessday.ng

Can PPP’s solve the learning challenge in our education system? Bongonomics

Bongo Adi

ast week we started considering the feasibility of introducing public private partnerships in education to deal with the learning challenge — poor quality schools that are not enough to go round. As new administrative tenure commences for most governments at the state level, many are taking stock of their respective fiscal and resource positions to draw up plans on how to deliver the dividends of governance to the public. Coinciding with this exercise under various transition committees is the recent publication of annual states viability index by Economic Confidential which shows that 17 out of 36 states of Nigeria are insolvent. Most of the states are also heavily burdened by huge debts overhang, further threatening their fiscal sustainability. Funding for education as well as other physical and social infrastructure will therefore continue to suffer huge deficit as has been the case beginning from the lost decades of the 80s. Continued underfunding of education, poor management, overcrowding, poor teacher quality and obsolete curriculum have contributed to the quality deficit in public schools which has partially fueled the proliferation of private schools. Until

the mid 1990s, the educational landscape was dominated by good, quality public schools and few schools run by the missionaries. But for the reasons cited above, private schools of varying standards but all seemingly driven by the inordinate quest for profit, have come to dominate the scene. Today, our educational landscape is sharply bifurcated between public schools (mostly substandard, maladministered and cheap) and private schools (different standards but mostly expensive) with few faith-based schools. The explosion in student population has led to overcrowding in public schools thus stretching public resources and whittling down quality. Access to private schools by the teeming population of students is however, limited by high pricing. As we showed last week, even if private schools were to be subsidized, their combined capacity cannot significantly improve access. Both public and private schools have grossly limited capacity to absorb the everincreasing student population. We argue that between the ridiculously low fees of public education institutions and the very expensive private education lies a deadweight-loss brought about by this discrepancy — call it a market failure. There is an ostensible gain in admission numbers that is left uncaptured by this bipolar pricing. There is no doubt that a large chunk of eligible university or tertiary institutions candidates who are locked out of the current system, either by lack of space (in public schools) or pricing (in private schools) can be met in-between by more institutions who are not fully publicly subsidized and not fully private. This is our case for the deployment of PPPs in schools.

Government or public sector’s engagement of the private sector for the provision of public goods and services traditionally conceived as government’s responsibility is not recent. In the US for instance, joint public and private sector funding for education has been around since the early 20th century. However, its recent popularity owes to the New Public Management movement for public sector reform which is itself the outcome of perceived failures and limitations of government in providing infrastructure. The argument is to “roll back the state”, decentralize government and adopt output or performance-based standards for public services. The World Bank and donor agencies have been at the forefront of promoting the adoption of PPPs in public sector service procurement and this seems to have created something of a buzzword around PPP. But the major attraction of PPPs for the government is that PPPs appear to attract additional financing for projects and thus expand the availability of public goods and services. Although the evidence to the success of PPPs in its deployment for infrastructure provision is still tenuous, governments around the world still look up to PPPs as a way of facilitating private provision to help meet an increased demand for public infrastructure. However, there is growing tension around the world that PPP may not be delivering the muchexpected dividends. Some critics see it as nothing but a new rent seeking mechanism that socializes costs and risks but privatizes benefits. The World Bank was picketed by anti-PPP activists in its 2018 Spring Meeting who accused the Bank of ignoring negative evidence on PPPs and continuing

‘

…public funding of private provision of social infrastructure like education, urban renewal, prisons etc. predate the recent PPPbuzz and has really succeeded in improving access, enhancing quality and removing the natural market failure …

to promote it. The World Bank seems to have changed track in recent times as it now talks about “blended finance.” Our position is simply that public funding of private provision of social infrastructure like education, urban renewal, prisons etc. predate the recent PPP-buzz and has really succeeded in improving access, enhancing quality and removing the natural market failure inherent in the bifurcated regime of government provision at one extreme and private provision at another extreme. As we have argued elsewhere, there is nothing in school-provided education that limits it to government monopoly. It is true that Plato had argued in his Republic that education is too serious a business to be left to private citizens. But the truth is that education is not the same as school. Education, regarding content, modules and practices could well be regulated or “provided” by government. But school is a private good like any other that could be provided in the market place. Just as the market has inherent mechanisms to facilitate efficiency, innovation and utility in the provision of other market goods so it does for schools. In countries like the Philippines, Spain and the US, PPPs are adopted as costeffective policy solution to address the access and quality problems like we are facing in Nigeria and indeed, Africa’s education systems.

Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Dr Adi is a Senior Economics faculty at the Lagos Business School

Buhari’s ministers: Expectations and realities

ik MUO

ur people say that one cannot use her palms to cover a pregnancy because the evidence will sooner than later be in the public domain! All Nigerians and the world at large have seen the performance or non performance of Buhari’s core disciples in the past four years. And because we are different in terms of analytical abilities, perceptions, orientations and interests, we will surely judge differently. Just last month, I asked my Organisational Behavior students as we were dissecting the concept of perception: who do you think that the son of man is? While I saw myself as one helping them by insisting that they did do what they had come to OOU to do (face their books instead of face-booking), some of them described me as one of the best lecturers, eager to impact knowledge, offering fatherly advice and driving them to excel, while others saw me as too strict, discipline-focused and not a candidate for the best-teacher’s award!. Of course, they wrote anonymously! If students in the same class, under the same circumstances would have such divergent views of their teacher, you can them imagine how 170m-190m Nigerians would assess their ministers. So, while admitting that we perceive differently, I have adopted a simple methodology in this matter. In 2015, I had argued that they were not the saints that PMB had made us believe, that some of them would not perform because they could not perform and that even those of them with previous performance- records would not perform because the circumstances were different. After 4 years, I still stand where I stood. They are not that saintly and their performance, jointly and severally, has not been not sparkling.

But even before assessing their performance, I wish to state that the visibility of these ministers is the lowest since I started observing and commenting on our national issues 41 years ago (second year at UI,1978). I still recall the names and faces of some Shagari Ministers (including those who celebrated their birthdays with customized champagnes) , and those who worked with Buhari in his first outing, some of whom he tried to resurrect politically this time around. Many Nigerians still remember the names of most of the Obasanjo ‘boys and girls’ and some of them have not left the public space since then. Sadly, most Nigerians cannot recall the names and portfolios of most of our present ministers. And those that they can recall their names and portfolios (like Ngige and Amaechi) may well be for the wrong reasons. This is because in a body-language environment when nobody is sure of anything, when parochialism is a state policy, when those in the kitchen are more powerful than the customers they are cooking for, when access to the rock and the rocky occupant is not determined by strategic importance of roles, it is safer and even wiser to face ones face rather than be an Ambode who is now wiser after the come has come to become. Ibe Kachikwu, an urbane technocrat, master of petroleum matters, and the Minister of State for petroleum, who has born the cross meant for the substantive minister (and you know who that is) is an example of what has been wrong with the Buhari Ministers. He is the expert who could not do so much because he could not port his talent from Mobil to the murky waters of Nigerian public service. He told the whole world that he has it tough accessing his two-way direct boss( as the president and as the minister of petroleum) because of the series of deliberately mounted road-blocks on his way. He has a subordinate who is more powerful and and unrestricted access to the rock-the GMD of NNPC. We will surely not remember him for reducing the price of fuel, eliminating the fuel subsidy or minimizing its opacity, fixing the refineries or constructing new ones; we will rather remember him for his various double speaks( for instance on the subsidy question, or the missing $25bn) and for placing the nations hope of fuel sufficiency on the shoulders of Dangote, our alternative government.

www.businessday.ng

Fashola, the great BRF of Lagos, beyond his gray hairs, is still trying to figure out what to do with power, which is the key impediment of Nigeria’s economic rejuvenation; he is even more at loss about the housing sector and the works segment is neither here nor there as the shown in the Lagos-Ibadan express way or the amoebic second Niger Bridge. He doesn’t know whether to hold the discos accountable and insist that they do the right thing or whether to make cases for them; he is still wondering whether the government has something to do with power supply or not (and he is the minister of power) and he is at loss of the quantum of power generated or transmitted. Of course, it appears that he was set up to fail, given the gargantuan responsibilities placed on his shoulders, when we have other millions of capable Nigerians including the son of man! He could not port his Lagos-magic to Abuja! Lai Mohammed ministered more as the spokesman for APC than an MFR( Minister of the Federal Republic); in fact, he rendered the various APC spokespersons redundant. The minister of justice is busy fighting with the agents supposed to be under his supervision and it is under his watch that the Chief Justice of Nigeria received a queer kind of justice. Mrs Kemi Adeosun was still trying to grapple with the intricacies and challenges of her job when she was swallowed by the NYSCgate, just like the minister of communication, Mr Shitu, who said that there was nothing wrong violating the laws of Nigeria on the NYSC scheme(and I think he is a lawyer). Unfortunately, I can’t recall the names of the new ministers of finance and communication. Udo Udoma has not been able to get the budgeting process right neither has he been able to settle the vexatious issue of whether the NASS has the power to up the budget figures to any level they wish any time they wish. At the heart of the performance challenges faced by Buhari’s disciples is the propagandabased outlandish promises made by APC during their campaigns and the absence a workable framework for addressing the challenges of Nigeria, apart from blaming GEJ and PDP and at times all past administrations, of which PMB is an indelible part. They invested so much efforts in wrenching power from the PDP/GEJ but did not give much thoughts on what to do with that power

https://www.facebook.com/businessdayng

and before they knew it, the 4-year tenure, which looked like it was forever in 2015, is over. Other matters: A death-friendly generation Because of the uncertainty of the realities in the hereafter, we ordinarily wish to stay as long as we can on this side of the divide. We also value human life and death itself was regarded with some form of awe. But not anymore! The current generation appears eager to dispatch others to the great beyond without qualms and for flimsy reasons. And they forget that harming or killing somebody does not solve any problem because after the murder or manslaughter or culpable homicide (I no be lawyer!), the person, who has now become an accused, still has to face his or her problems, which have become more complicated and compounded. Last month, Dejo Adenuga killed 8 members of a family to get at his girlfriend who said I no do again! Meanwhile, Ahmed Abubakar of GSS, Kastina (18) recently murdered his friend because they disagreed over a girl, just as Nyaluk Magorok of South Sudan was beaten to death by her brothers in collusion with their father for refusing a suitor who offered a dowry of 40 cows, while Ifeanyi Nwokolo of Port Harcourt killed his wife Ijeoma, for demanding sex from him while he was preparing for a church vigil. In the US, Matthew Borges, a teenager beheaded his classmate, Lee Emmanuel, for sitting (just sitting!) with his girlfriend in the schools cafeteria; in Lagos, Kanile Nwabuzor committed suicide because of a disagreement with her boyfriend; in Ikare, one Gbenga killed his mother and committed suicide while in Ukum LGA of Benue, Suese Moses stabbed her 26 year old daughter to death. What is happening? These are not isolated cases! How did we come to a situation in which people now kill each other or commit suicide over apparently minor matters and it is happening across the globe. We are now bound to violence and the worst is that all those people accused have already lost whatever led them to commit the murder, they have lost their freedom as well as their peace of mind and their lives will never be the same again-on the negative side. So, what have they benefitted? Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye, Ogun State muoigbo@ yahoo.com ;muo.ik@oouagoiwoye.edu.ng ; 08033026625

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

Editorial Publisher/CEO

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Improving JAMB effectiveness for better results

ver the years, t h e p e r f o rmance and effectiveness of the Joint Admissions and Matriculation Board (JAMB) have improved significantly in terms of revenue generation and method of conducting qualifying examinations for students seeking admission into tertiary institutions. Between 2010 and 2016, the board which was set up in 1978, remitted only N50 million to the federal government coffers, but in the last two years (2017 and 2018), under a new management, the board has been able to remit N15.6 billion to the federal purse. Similarly, before now, JAMB was a nightmare to all young Nigerians who wished to enter the universities and polytechnics through its qualifying examinations. JAMB exams usually began from the long, tortuous and tasking paper work (filling forms) that made almost impossible demands from the candidates. The examination proper was a whole lot of drudgery. Question papers were served along with answer

sheets containing tiny boxes arranged with the first five letters of the alphabets as optional answers to choose from. A candidate’s success or failure in the exams started from here. The introduction of technology about five years ago, leading to the use of computer-based tests (CBT) in place of the voluminous paper work has changed the narrative for both the candidates and the examining body. But the challenges remain. From this year’s JAMB exams and the just released results plus the ones taken earlier under the CBT initiative, it could be seen that JAMB may have assumed too much or taken a lot for granted, seeing the initiative as a destination and not a journey. The University and Tertiar y Matriculation E xaminations (UTME) which JAMB conducts is a nationwide examination for candidates in both urban and rural areas. It does seem that JAMB did not stop to think that candidates in these opposite locations have unequal opportunities, particularly in exposure and access to computer. A good number of the

candidates, particularly those in the rural areas, have no access to computer. This situation is so grave that some of them have their first contact with computer on the examination day. JAMB has to work around this by either sponsoring computer training for prospective JAMB exam candidates or making computer literacy part of the requirements for applying for the examinations. The transition from paper work to CBT has necessitated the migration from the use of school halls and classrooms to the use of computer centres owned by private operators. Over the years, there have been a lot of issues with these CBT centres, ranging from malfunctioning computers to power failure midway into exams to different degrees of malpractices or irregularities. Of the 1.7 million candidates that sat for 2019 UTME, JAMB withheld the results of 34,120 candidates, citing various infractions during the examination across the nation. 15,145 other results were also withheld for further clarification. Infractions leading to

withholding the results of 34, 120 candidates in a single examination is unacceptable and cast a pall on the credibility of such an examination. JAMB, therefore, has the statutory and moral duty of protecting and enhancing the credibility of this examination which is the only major route to the nation’s universities where its manpower and future leaders are produced. The board should use s ome of the revenues it remits to the government to procure and deploy more technology such as CCTV cameras in the CBT Centres and make same known to the candidates. This has the capacity of curtailing infractions in future. Again, exam cheats captured by the cameras will be barred from taking UTME for, at least, two years to serve as deterrent to intending ones. It is expected that procuring and deploying more technology at CBT centres and also making computer literacy a requirement for applying for UTME would improve the effectiveness of JAMB and that would, in turn, produce better results in terms of the quality of university products.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799108 08034743892 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 Legal Advisers The Law Union

Mission Statement To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

BUSINESS TRAVEL Domestic aviation sector sees boom four years on Stories by IFEOMA OKEKE

our years after Hadi Sirika, resumed office as the minister of State, Aviation, the industry may not be at a perfect condition, but has sustained some level of growth from what it used to be to where it is today. The re-introduction of zero import duties on aircraft engine, introduction of same for spare parts and the removal of Value Added Tax (VAT) from all shared transportation including commercial flights received commendations from all concerned stakeholders. The ministry’s timely intervention to rescue Arik and Aero Airlines, two of Nigeria’s major airlines from total collapse has also helped in boosting the domestic aviation sector. Speaking during the 6th Aviation Stakeholders’ Forum in Lagos, Hadi Sirika assured that the ministry has continued to liaise with relevant MDAs to ensure the smooth implementation of the Presidential Order. “Government recently commenced the payment of severance and retirement benefits of former staff of the defunct Nigeria Airways and ensured a safe and competi-

tive Aviation industry resulting in the opening of new routes, increased passenger volume and better utilisation of the nation’s airports. “Government also assisted and guided the domestic airlines in the country to attain certification in IATA Operational Safety Audit (IOSA). Currently, eight Nigerian domestic airlines have IOSA Certification,” Sirika said. He disclosed that statistically, the country recorded an average growth of 33percent on domestic operations and 11percent on international operations, adding that Lagos and Abuja Airports are gradually emerging as hubs for the West African sub region. The certification of Murtala Muhammed International Airport, (MMIA) Ikeja, Lagos in April, 2017 and Nnamdi Azikiwe International Airport, Abuja in November, 2017 are part of efforts by government to reiterate compliance with international standards. In line with the guidelines and procedures stipulated by the International Civil Aviation Organization (ICAO), the certification of Kano and Port Harcourt airports are in advanced stages. The minister recalled that the ministry promulgated a new Nigerian Civil Aviation Regulation which took effect

Hadi Sirika

in July, 2016, adding that the ICAO Universal Security Audit Programme undertaken in June, 2015 revealed that Nigeria oversight and compliance indicator was 96.45percent. “Nigeria achieved an Effective Implementation Level of 67.36percent during the ICAO Universal Safety Oversight Audit Programme carried out in March, 2016 which is above global average of 63.54percent. In the areas of State Safety Programmes, Nigeria has attained Level three out of four levels, thereby moving Nigeria from red to

green on the ICAO Dashboard,” he said. On safety and security infrastructure (Navigational Facilities), Sirika said the ministry has completed the Kano Tower Automated Air Traffic Management and Meteorological Systems and has installed Instrument Landing Systems (ILS), Doppler VORs (DVORs) and Distance Measuring Equipment (DMEs) at ten airports. “The ministry has installed Very High Frequency (VHF) radios for aerodrome and approach air-ground commu-

Med-View boss to chair 23rd LAAC annual conference

uneer Bankole, the Chief Executive Officer (CEO) Med-View Airline has been selected as the Chairman of the forthcoming Conference and Awards of the League of Airport and Aviation Correspondents (LAAC). Speaking with the committee in his office, recently, Bankole said that the resolutions reached at the conference in the past had helped to shape the industry. The event, which is scheduled to hold on July 17, 2019 at Radisson Blu Hotel is with the theme: ‘Boosting Aviation Investment Through Policy.’ Bankole stated that members of the league had been able to put the government on its toes through objective and analytical writings, while the policies of the government for the industry are reviewed by reporters on the beat. He said: “LAAC over the years has been our partner in progress. Members of the league have been tremen-

dously useful to the growth of the airline and the industry at large. Without you doing the informative reporting, the industry won’t be where it is today even though we know there are still a lot needed to be done.” He said that the relationship between the two bodies had been symbiotic over the years and promised that the airline would continue to support the programmes of the league. Besides, Hadi Sirika, the Minister of State for Aviation was selected as the Special

www.businessday.ng

Guest of Honour, while Chief Executive Officers of aviation agencies in the country as well as private service providers would also grace the occasion. Others expected included: Nick Fadugba, former Secretary General of African Airlines Association (AFRAA), Harold Demuren, former DirectorGeneral of Nigerian Civil Aviation Authority (NCAA) and Babatunde Irukera, DirectorGeneral of Consumer Protection Council (CPC) amongst others. The 23rd Conference and Awards 2019 is expected to be

nication in 21 airports nationwide and upgraded infrastructure at various airports to improve operations especially during hours of darkness and inclement weather. “There has been commencement of Aeronautical Information Management Automation Project which comprises a network of 26 VSAT facilities at all Nigerian airports as well as Search and Rescue, with coordination domiciled in Lagos. “The Deployment of Controller-Pilot-Data Link Communication (CPDLC) in Lagos and Kano has enhanced communication in the oceanic region and the remote areas of the north,” Sirika stated. The minister also said the sector has developed and published Performance-Based Navigation (PBN) procedures for 18 airports and introduced Standard Instrument Departures (SIDs) and Standard Arrival Routes (STARs) at Lagos, Abuja, Kano and Port Harcourt. Sirika also commissioned the multi-million naira International Civil Aviation Organisation approved Federal Airports Authority of Nigeria (FAAN) Training School, the Aviation Clinic, the Nigerian Airspace Management Agency (NAMA) Centrex and other projects at Murtala

Muhammed Airport (MMA), Lagos. Last year, during the Airport Council International (ACI) meeting in Mauritius, FAAN training school was designated as an ICAO training centre. Saleh Dunoma, FAAN’s former managing director, had last year said that, one of the advantages of the training centre is that it will make it easier for member countries to train their personnel in Nigeria and it is also cheaper for them to come to Nigeria to be trained, rather than going to United Kingdom, United States and other countries around the world. Another advantage, he said is that there will present more opportunity for those in the region to get trained. “You know when cost is not really a factor; more people will be factored in for training. There is also accessibility for trainees and the weather conditions are favourable in Nigeria, while the learning facilities are fantastic and new. “For ICAO to designate us as a training centre, you will know that everything that we needed to put in place have been put in place. The training facilities are up to date. The instructors will be coming from all over the world and they are ICAO trained instructors,” Dunoma said.

Aero celebrates 60th anniversary as MD ties airline’s success to AMCON, staff dedication

attended by over 250 aviat’ion industry professionals, cutting across the aviation agencies, security agencies, international and domestic airlines operating in Nigeria, aviation support services, travel trade sellers and buyers and captains of the aviation industry in Nigeria. Key stakeholders made up of individuals and corporate organisations who had distinguished themselves in the industry would also be honoured with various awards at the event. Bankole is an experienced, energetic, hardworking man with an in-built capacity and a vast knowledge in aviation Industry. With almost 40 years experience in the Industry, Bankole joined defunct national carrier, Nigeria Airways Limited in 1978 and was appointed as a Traffic/Ramp and Duty Manager and later as a Marketing Manager of the Airline at Murtala Muhammed International Airport, Lagos.

https://www.facebook.com/businessdayng

he oldest operating airline in Nigeria, Aero Contractors has celebrated its 60th year anniversary as it commended the federal government for its timely intervention through the Assets Management of Corporation of Nigeria (AMCON) and resilience of its staff. Speaking on the occasion to mark the 60th anniversary of the airline at its headquarters at Lagos airport, he said the new management took series of hard decisions to return Aero to profitability, adding that such was without the cooperation of the staff who stood their ground that the airline will be lifted back. He said the airline services has since December 2016 returned to full operations and grown its fixed wing operational aircraft from one to four with expectation to grow its fixed wing aircraft to six by the close of 2019. “The present count of four aircraft improved our domestic flight operations to 32 daily. From one helicopter in 2017 @Businessdayng

we now have five operational helicopters with capacity to further grow this number to 10 helicopters by the close of the year so as to deepen our services. “In all, we began our repositioning journey growing our domestic operations from eight to 32 daily flights, from ferrying 8,000 passengers per month, to 52,000 passengers per month into and out of the several airports in our route,” Sanusi said. He said Aero has successfully conducted three C-checks on 737 CL Boeing aircraft, relying wholly on its indigenous engineers with technical support from Messrs AJW/SAA Technics as its technical partners. He disclosed that following its emerging leadership in aircraft maintenance, countries such as Ghana and the Democratic Republic of Congo have made Nigeria its destination of choice for comprehensive aircraft maintenance. He added that the airline is in talks with Mali and Cameron to help them carry out their aircraft maintenance.

Thursday 23 May 2019

Innovation

BUSINESS DAY

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

TECHTALK

Broadband Infrastructure

Bank IT Security

Uber killed Yellow Cabs: Will GoKada be death of Okada? Adedeji Olowe (Guest writer)

ber came to Lagos around 2014 and went straight for the middle-class crowd albeit, that market wasn’t fat enough. They soon found out that any businesses targeting recherché segments in Nigeria never last long. Uber pivoted as the recession gradually wore off as ridehailing became the go-to for almost every middle-classer. It didn’t take too long before a pricing war ensured. It was bloody! By the time the smoke cleared, it was you and your cousins that had the last laugh. Baba Simbiat, the yellow cab driver was the collateral damage. As expected, ride-hailing became so successful in Lagos that it killed yellow cabs in high-brow areas. After all, only the well-to-do were taking yellow cabs before, so they all just ditched loyalty for comfort and value. Or why would you prefer to stand in the sun to roast or in the rain to take a public bath when you can get Uber at your doorstep with just an app? With a zero-brain-needed simple app, you request your ride and a (sometimes) decent man or pretty lady (on

your lucky day) pulls over in an air-conditioned Toyota Corolla after some 10 – 15 minutes. How easier and fulfilling could commuting be? To make matters worse for Baba Simbiat, Uber charges 33% less and ensures that you get as comfortable as you could be because the driver knows how much a five-star rating on his feedback dashboard could do for him. Baba Simbiat doesn’t give two flying horse legs. Woe betide you if you are deemed to be dressed indecently, Baba will remind you that your mom

failed parenting 101. Putting that into perspective, you pay N1,000 as the Uber fare for a 9 km distance, but Baba Simbiat will charge you nothing less than N1,500 for the same journey in his rickety cab. How cruel! It’s like being asked to choose between Shawarma and Agege bread. Interestingly, Uber was not the first guy on the block to try out technology on transportation, but they seem to have done their homework well to have their model scale. The first shot at the use

of technology for transportation in Lagos dates back to 2009 when the “Red Cab” was launched. Unfortunately, Citrans Global Limited, operators of the “Red Cab” failed to leverage on its first mover advantage. Since Uber’s entrance into the Nigerian market, a flurry of other ride-hailing platforms has emerged, some of which include; Taxify, NaijaTaxi, CabMan, PamDrive, SmartCabs, Holy Cabs, Oga Taxi, GoMyWay, Alakowe, Smart Cab, Jekalo, Ridebliss amongst others.

Takeaways from Andela’s Power of 10 X launch FRANK ELEANYA

he Nigerian software industry may not have born at the turn of the century as it is widely believed; the pioneers go as far back as the 1950s when Nigeria first discovered oil. O luwafemi Bankole, co-founder and editor-inchief of Big Cabal Media disclosed this at the launch of the “Power of 10 X” campaign by Andela Nigeria. “Nigeria’s software industry is not 10 years,” he said. “Everything happening right now has happened before.” Before it became popular, Shell and a few oil companies had sought to establish a local software company led by Don Etiebet to attract local talents in the country. The development encouraged companies like Tranter IT which came years later and has raked in millions of naira software IT management for big organisations. “That period failed because the education sys-

tem could not keep up,” Bankole said. Till today, the Nigerian academia is still largely absent in terms of playing a significant role in growing software talents in the country. Software development – a process by which standalone or individual software is created using a specific programming language – is seen a critical part of growing the Nigerian economy given that technology innovation will nearly not be possible without it. Hence, many countries in the world are investing heavy resources in developing talents – software engineers - to power the new industry. “Software engineering can solve about 70 per cent of problems in Africa,” says Prosper Otemuyiwa, a former technical writer at Andela and co-founder of Eden and ForloopAfrica. New players like Andela are making frantic efforts to bridge the talent gap. While the company may want more people to be part of its training programme, the

rigorousness of the process ensures that only about 0.7 per cent of the total number of applicants is selected in any cycle. Seni Sulyman, former country manager and currently vice president operations at Andela once told BusinessDay in an interview that the startup receives over 3,000 applications and at the end, it probably picks about 15 people. “ Th e re a re mu l t i p l e stages along the way, so there is a test that people take online that measures their IQ levels and problem solving skills. It is like a psychometric test and then we also have other value based tests because we want to see if people have integrity, are collaborative and fit into the culture here. After that, we screen them and invite a few of them to interview. In a typical cycle, we go from about 3,000 applications to about 150 invited to real life interviews. From the interviews we cut down to about 60 people who would then be

invited to the bootcamp,” Sulyman said. While it may seem too intense, the process has largely paid off for the company as its engineers are some of the most sought after in the tech ecosystem in Africa and around the world. Jolomi Otumara, director, Developer Programs at Andela said there is still a huge talent gap and definitely not a problem the company alone can tackle. Africa needs more startups like Andela. Otemuyiwa said providing adequate funding can go a long way to help startups with such ambitions. “People like to imitate; they just copy and paste and before you know it there is a proliferation of Andelas,” he said. He acknowledged the quality could be different but in time the talents can catch up with their peers in Andela. “We need funding to have a lot of these companies doing what Andela is doing,” he said.

But all that is history for those that care to know… Nonetheless, traffic in Lagos has become so bad that a baby born at the start of one in the morning is old enough to enter JS 1 before it clears. Consequently, the utility of Uber is trending towards zero on bad days. We are always in a hurry to get to our destinations and Okada is the next best thing. But then some of us can’t be found dead, alive, or even comatose at the back of an Okada and it’s not because of feeling fly; a trip to Igbobi will convince you. Nevertheless, Gokada and Max.ng have brought the Uber model to Okada business in Lagos. The Gokada way makes a whole lot of sense if you don’t want to spend the rest of day inside the toxic Lagos traffic. And they are getting cheap enough to take a small dent on the regular Okada business; probably in the same high-brow areas. Fortunately for the ingenuity of Chinedu Azodoh and Adetayo Bamiduro of Max.ng and Deji Oduntan of Gokada, Akinwunmi Ambode led administration has banned movement of all 100 cc motorbikes which are mainly driven by the regular

Facebook removes 265 suspicious accounts targeting Nigeria, others FRANK ELEANYA

acebook said it has removed 265 Facebook and Instagram accounts, Facebook Pages, Groups and events allegedly involved in “coordinated inauthentic behaviour”. According to the social media platform, the accounts originated in Israel and are targeted at Nigeria, Senegal, Togo, Angola, Niger and Tunisia with some activity in Latin American and Southeast Asia. Facebook said the accounts which are politically motivated, were part of an underground network that uses fake accounts to run pages, disseminate content and artificially increase engagement. “They also represented themselves as locals, including local news organisations, and published allegedly leaked information about politicians,” said Nathaniel Gleicher, head of Cybersecurity Policy at Facebook. “The page administrators and account owners frequently posted about political news, including topics like elec-

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

https://www.facebook.com/businessdayng

“Okada” riders, hence giving room for the new guys to scale with their 200 cc motorbikes. So, asides from getting you quickly to a desired destination, these guys also ensure that you don’t go home with a new set of rashes and infections anytime you use their helmet. That makes you more comfortable to get the next ride and beat traffic with class, wearing a fine green helmet. Well, the jury is still out if they would be successful but trust me, the demand far outstrips the supply. If this can remain for the next 5 years, then we’ll all have to trust the “Invisible” to do its thing and wipe out all the Okadas from the street of Lagos Now back to the Yellow Cabs. They have virtually disappeared from Lekki, Ikoyi, Victoria Island, and Ikeja areas, and I bet you, in 5 years, they could be 100 per cent gone. The reason is simple, they would never be cheap enough to become a replacement for buses and never convenient enough to match Uber and Bolt. That’s checkmate for Baba Simbiat. Well, maybe he’ll run to Ibadan and repaint his vehicle, but I heard Bolt (former Taxify) is doing stuff there already.

@Businessdayng

tions in various countries, candidate views and criticism of political opponents.” Facebook said it identified the accounts through its internal investigations into suspected coordinated inauthentic behaviour and shared same with industry partners and policymakers. “We’re constantly working to detect and stop this type of activity because we don’t want our services to be used to manipulate people. We are taking down these Pages and accounts based on their behaviour, not the content they posted. As in other cases involving coordinated inauthentic behaviour, the individual behind this activity coordinated with one another to mislead others about who they were and what were doing, and that was the basis for our action,” Facebook noted in its statement. Fake news on social media platforms escalated during the just concluded elections in Nigeria as parties engaged each other in a bid to win the election.

Thursday 23 May 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

COMPANIES & MARKETS

Omoluabi Mortgage Bank’s net income falters on cost inefficiency

COMPANY NEWS ANALYSIS INSIGHT

Pg. 18

MARKET

Nigerian stocks see biggest gain in 2019 as bargain hunters take on market bellwethers …stocks cross 30,000 points OLUWASEGUN OLAKOYENIKAN

quities listed on the Nigerian Stock Exchange (NSE) Tuesday witnessed their biggest gain this year as bargain hunters took advantage of investment opportunities in blue-chip stocks amid scarcity in MTN Nigeria’s shares. The key performance indicator of the NSE, the AllShare Index (ASI), extended its winning streak into the fourth session after rising 2.87 percent to 30,218.14 points, the market’s best performance since December 24, 2018. As a result, the market capitalisation of traded equities, which opened at N12.94 trillion, closed at N13.31 trillion. “The upticks we have been seeing since last Friday have been driven by MTN Nigeria,” said Tajudeen Ibrahim, Head of Research at Chapel Hill Denham Securities Limited. “But today’s performance was driven largely by high market cap stocks like MTN Nigeria, Dangote Cement and GT-

Bank.” The largest company on the NSE, Dangote Cement, rose 3.93 percent to close to N185. MTN Nigeria sustained its rally by 9.98 percent to hit N131.70, while Guaranty Trust Bank (GTBank) surged from its lowest level in over two years by 2.96 percent to N31.30. The three firms account for over 50 percent of NSE market capitalisation. In a bid by shareholders of market bellwethers at the domestic bourse to take position in MTN Nigeria, Nigeria’s largest telecommunication company by subscriber base which recently listed on the NSE by a way of introduction, there were sell-offs in NSE biggest companies thereby creating investment opportunities in the stocks. Although the Nigerian economy grew at a sluggish pace of 2.01 percent in the first quarter of 2019 compared with 2.38 percent recorded in the last three months of 2018, analysts say the bullish trend embarked upon by stocks at the local bourse was independent of

the GDP report as released by the National Bureau of Statistics early this week. “ The slowdown witnessed in the economy was a resultant effect of the 2019 general elections held in the period,” Gbolahan Ologunro, an analyst at CSL Stockbrokers Limited, told BusinessDay. “This had

already been envisaged by investors as witnessed also in the fourth quarter of 2018, hence, priced into the market.” Having lost 3.9 percent year-to-date, NSE currently underperforms the Ghana Stock Exchange (GSE) with a YTD performance of -3.1 percent, and Johannesburg

Stock Exchange which advanced 5.3 percent YTD as at Tuesday. Market turnover surged 117 percent to N17.2 billion as against N7.9 billion recorded in the previous trading session after a total of 335.6 million shares exchanged hands in 4,453 deals. Analysts at Afrinvest Se-

curities Limited expressed optimism that the positive market performance would continue on the back of the strong buying interest in the newly listed telecoms firm. “Following sustained interest in MTN Nigeria we expect the bullish run in the equities market to continue,” they said.

for pupils from public schools into seven topflight private secondary schools across Nigeria to enhance access to quality education,” he said. On the ongoing Bonga South West Aparo, a new

project in the Bonga field, Ojulari said the company was making progress with the 150,000 barrel per day capacity project after signing the Head of Terms agreement with partners last February

and released Invitation to Tenders to contractors in the same month. “We are working with our government and other partners to take the project to a point where we are able to take the fi-

Oil & Gas

SNEPCo remits N366bn to FG OLUSOLA BELLO

hell Nigeria Exploration and Production Company Limited (SNEPCo) paid N366 billion in 2018 as revenue to the Federal Government from its exploration activities, while it made another N2.1 billion as statutory payment to the Niger Delta Development Commission (NDDC), Bayo Ojulari, SNEPCo’s managing director, says. Ojulari disclosed in Lagos at a media launch of the 2019 edition of Shell in Nigeria Briefing Notes, an annual publication detailing the activities of the business interests of the global energy firm in Nigeria covering SNEPCo; The Shell Petroleum Development Company of Nigeria Limited (SPDC); Shell Nigeria Gas, and the Nigeria Liquefied Natural Gas.

According to Ojulari, the payments resulted from oil and gas production by SNEPCo’s flagship investment, Bonga, which is Nigeria’s first oil and gas project in water depths of over 1,000 metres. “At the end of 2018, SNEPCo had produced 819 million barrels of oil from the Bonga field which translates into huge contributions to the Nigerian economy in addition to the significant human capital development of deepwater expertise among Nigerians.” He noted that the pride of SNEPCo was the increase in its Nigerian workforce to over 96 percent and the creation of Nigeria’s first oil and gas engineers with deepwater experience. “The success story at Bonga is not only that it is Nigeria’s first deep-water project but the fact that Bonga

is a Nigerian venture delivered by Nigerians using global expertise and processes offered by the Shell Group that have launched Nigeria into the league of notable deepwater players.” Apart from payments to government, SNEPCo is also credited with many social investment initiatives nationwide, particularly in education, health and sports, which Ojulari said were considered very critical to the overall well being of Nigerians. According to him, the company spent over N2.2 billion on various social investment programmes in 2018. “Today, SNEPCo supports 298 undergraduates towards achieving their degrees with beneficiaries across the 36 states of Nigeria and another 375 scholars on fullboard secondary school scholarship programme

L-R: Francis Olawale, chairman, ICSAN Lagos; Olukayode Pitan, MD/CEO, Bank of Industry, and Folashade Akin Akinmusire, mobilisation secretary, ICSAN Lagos, during the ICSAN executives working visit to Bank of Industry in Lagos.

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

Thursday 23 May 2019

BUSINESS DAY

COMPANIES&MARKETS MORTGAGE

Omoluabi Mortgage Bank’s net income falters on cost inefficiency ISRAEL ODUBOLA

espite the surge in interest income of Osun-based Omoluabi Mortgage Bank (OMB) Plc, the firm saw its net income shed nearly by half owing to its inability to keep cost in check. Interest income climbed 244 percent to N170 million in full year 2018, compared with N70 billion in the preceding year, driven by huge increase in mortgage loans and advances to customers. How e v e r, p o s t- t a x profit shed 45 percent to N79.5 million on elevated operational expenses, which consequently affected the company’s ability to harness assets to generate earnings. Total operational expenses of the bank accelerated in triple-digits at 112 percent from N346 million in the previous year to N389 million in

the review year. Consequently, cost-to-income ratio up 11 percentage points to 91.30 percent. Other operating income, which comprises proceeds on investment securities, which should have bolstered bottomline shrank substantially as the housing financing provider was unable to realize proceeds from profits on assets disposal, rental income and cut in income from government treasury bills. OMB did not declare any dividend shareholders in 2018, unlike the previous year when it excited shareholders with N50 million returns, the first since the bank’s inception. Adebayo Jimoh, Chairman, Board of Directors, said in the statement that the current economic challenges of the country open new areas of opportunities, the bank can explore for growth and expansion. “The mortgage sector

has attracted renewed Fe deral G overnment attention based on untapped investment potentials and the enormous unmet demand for housing from the populace. ”We intend to play even a more prominent role in 2019 with the new Federal Government drive to deliver homes to Nigerians in using affordable and mass housing schemes and accessible mortgage finance.” The double-digit contraction in other operating income to N244 million in 2018 from N422 in the prior year, adversely affected gross revenue, which plunged 88 percent, despite big increase in interest income and non-interest income. Total assets of OMB appreciated by N6 million to N4.2 billion last year, triggered by increased mortgage loans and advances to customers and income from financial investments at fair value. OMB gave out loans

POWER

Schneider Electric, AFD, NAPTIN collaborate on training electricians FRANK UZUEGBUNAM

n its quest to improve the capabilities of Nigeria’s power sector value chain, Schneider electric in partnership with Agence Francaise de Development (AFD) and the National Power Training Institute (NAPTIN) has launched an electricians’ training programme. This is set to give a significant boost to a sector with limited local human and institutional capacities. According to Viviane Mike-Eze, Marketing Communication Manager, Schneider Electric, the initiative is borne out of the desire to empower Nigerian youths and electricians, availing them the opportunity of getting trained and obtaining a certification. This would also ensure safety as incidences of fire outbreak in homes are alarmingly high. “Incidences of fire out-

breaks from faulty electrical installations in Nigeria need to be curbed. It is also our responsibility as an Original Equipment Manufacturer (OEM) to make sure that we give them the best in competency, so whenever they install electrical fittings, they do it the right way”, Viviane Mike-Eze said. “Another benefit is employability. We don’t only train people in technical skills we also train them to become employable by teaching them business skills which they could express by becoming better entrepreneurs and be job creators themselves. We have done it before. Today, former students of Schneider Electric training programs with partners have become employers of labour,” she added. The reception has been massive, more so because Schneider Electric and AFD are subsidizing it to make it affordable for Nigerians.

“The training of electricians is beyond power supply. As we are striving to have more power supply, we need to have well trained electricians in the sense of bringing more safety to the homes. We are co-partners of this event with the support of the French Treasury. As electricity can do well, so can it do badly if not wellmanaged. We’re focusing on the entire power value chain – generation, transmission and distribution”, Ademola Adesoji, Senior Project Manager, Energy and Transport, AFD said. Earlier, Christophe Begat, Managing Director, Schneider Electric, Anglophone, West Africa said that “through its Access to Energy Training program, Schneider Electric has trained over 1000 beneficiaries in the last 5 years. This program is another milestone. We plans to extend it to Abuja and Port Harcourt, and train over 300 electricians per year.”

www.businessday.ng

L-R: Eddie Efekoha, MD/CEO, Consolidated Hallmark Insurance (CHI) Plc; Obinna Ekezie, chairman, and Rukevwe Falana, company secretary, at the 24th annual general meeting of the company in Lagos. Pic by Olawale Amoo

worth N1.56 billion to customers in 2018, indicating 179 percent uptick from N861 million provided in 2017. The bank gave N1.4 billion for mortgage, with 60 percent going for residential purpose. Mortgage loans for National Housing Fund, Commercial and Estate development got N320

million, N3 million and N218 million respectively. OMB is a pr imar y mortgage institution that is regulated by the Other Financial Institutions Department of the Central Bank of Nigeria. The core business model of the bank involves residential and commercial mortgage

financing as well as construction finance among other services. OMB is the first-listed firm on the Alternative Securities Market of the Lagos Exchange, with Morgan Capital Securities Limited and Osun State & Local Governments as major investors with 83 percent shareholding.

TECHNOLOGY

Maliyo games count on Telecoming to distribute her offer in the African mobile market JONATHAN ADEROJU

he European Carrier Billing specialist expands its presence within the African market with a renowned local partner; the distribution agreement has been signed for six countries in the region. Telecoming (Telecoming.com), the European technology company specialized in digital services monetization has closed an agreement with African company Maliyo Games, the pioneer mobile gaming company in Nigeria, to distribute its offer in the region. This agreement will allow Telecoming to enhance its presence across the African market. This agreement is part of Telecoming’s strategy to develop digital services with excellent user experience.

https://www.facebook.com/businessdayng

According to Nicolas Gimenez, Telecoming’s Content Director “the combination of quality content and technology is key to offer services with a differential user experience. The African market offers endless opportunities for the mobile market. It is a region with excellent local content producers and where users demand innovative services to enjoy on mobile.” Nicholas further says that “The agreement with Maliyo games allows us to include a high-quality local offer in our state-ofthe-art mobile services.” The games developed by Maliyo will be distributed among mobile users of 6 African countries. The bundle of Africathemed games acquired by Telecoming has been designed to depict the @Businessdayng

everyday lives of Africans in general and Nigerians; in particular, with fun and engaging proposals to reach all ages audiences. Maliyo Games seeks to provide Africans with all kind of entertaining games built on experiential content with a strong focus on the African daily culture. Telecoming monetizes digital content in the region since 2015 in partnership with the leading mobile operators and the best local content producers. Maliyo Games is a Nigerian company that creates casual mobile games to share the experiences of everyday Africans with a global audience. MALIYO Games creates casual browser games to share the experiences of everyday Africans with a global audience.

Thursday 23 May 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

TECHNOLOGY

Access to Premium Local TV Channels made possible via SES Satellite …With multi language channels inclusive JONATHAN ADEROJU

igeria’s latest freeto-air (FTA) local channel bouquet, “PREMIUM.FREE”, has recently just enabled local television broadcast audiences access to 13 new premium channels which are custom-made for African viewers. These include multinational language channels like Cinema Hausa, and popular African lifestyle channels such as True African. These channels will be delivered via SES satellites (www.SES.com), this innovative channel bouquet is supplied by AfricaXP, the leading independent African network, which is wellknown for its compelling Nollywood catalogue and longstanding partnerships with prominent West African producers. According to the CEO of AfricaXP, Craig Kelly, he says that working with SES has

enabled PREMIUM.FREE to achieve the maximum possible reach in Nigeria. “We are confident that localization, coupled with our fresh international rights will provide the kind of content blend that modern West African audiences demand. Transmitted free-to-air via satellite, this is obviously a great offer at a price point that can’t be beaten.” He further said that “We are confident that localization, coupled with our fresh international rights will provide the kind of content blend that modern West African audiences demand.” It is this blend of premium African programming with top-flight international content across a diverse range of themes from sports to movies, telenovelas, kids, factual, reality and lifestyle programming, which really sets PREMIUM.FREE apart from other channel bouquet offerings on the market. SES satellites, is the world’s leading satellite op-

erator with over 70 satellites, reaches over 9 million Direct-to-Home households across West Africa from its orbital position of 28.2 degrees East. Those households with existing FTA settop boxes (STBs) will be able to start watching the new channels on their existing STBs for free. According to the Vice President of Sales and Market Development, Africa for SES Video Clint Brown, he says “The Nigerian FTA market in particular offers great opportunities for growth, and we are proud to have engaged with PREMIUM.FREE to deliver a differentiated content package for Nigeria and offer more choice for viewers.” Brown concludes by saying that “New initiatives like this, which focus on delivering local and international content that is attractive for the end-consumer and is offered in high picture quality, will further develop consumer choice in Nigeria.”

L-R: Nduka Ikeyi, board member; Eniola Adedayo, board member; Tony Edeh, MD/CEO; Ibrahim Aliyu, board chairman; Ifeoma Malo, independent director; and Andrew Nweke, board member, all of the Norrenberger Financial Group, at the company’s inaugural Board Meeting in Abuja.

L-R: Lanre Osibona, senior special adviser to the president on Information, Communication and Technology [ICT]; Carlos Figueredo, CEO and founder Open Vector, and Sam Okojere, director, Payments System Management Department, at the 2019 Lagos Fintech Week recently.

INDUSTRIAL

Lafarge Africa Launches its Ready to Use Tile Adhesive, SUPAFIX SEGUN ADAMS

s part of its continuous drive for excellence in the building industry, Lafarge Africa Plc., a subsidiary of LafargeHolcim, the global leader in building materials and solutions, recently launched a ready to use tile adhesive, Supafix, into the Nigerian market. Lafarge’s Supafix is a cementitious tile adhesive made of cement, aggregates, organic and inorganic additives, certified by the Standard Organisation of Nigeria (SON). This product is designed for placing of ceramic tiles, flooring and walling applications, as indoor coating solutions. The introduction of Supafix into the Nigerian market is in line with Lafarge’s Strategy 2022, Building for Growth, which aims to drive profitable growth and simplify the business to deliver resilient returns and attractive value to stakeholders. Speaking at the launch in Lagos, Head of Mortar, Lafarge Africa, Jumoke Adegunle, acknowledged that

the new product’s introduction into the Nigerian market is in response to customer needs and global construction trends in the craft of tiling. She further stated: “We launched Supafix because we have a unique understanding of our customers’ needs. With our access to best in class, innovative solutions from across the LafargeHolcim group worldwide, we were able to identify and introduce the right tiling adhesive that will satisfy the needs of our local customers.” “For 60 years, Lafarge Africa has been at the forefront of technological advancement in the Nigerian construction sector. Our global presence and Research Centre in Lyon, France allows us to share best practices and create innovative solutions that deliver more to our customers. The new Supafix tile adhesive is one of such solutions” she concluded. Beyond its value of reinforcing buildings, quality tiling enhances the aesthetics in any construction project at www.businessday.ng

no additional cost. Supafix is the ultimate tiler’s choice because it is fast and easy to use. Simply add water to the ready to use mixture and the tiler seamlessly gets to work. The product also has a very neat, strong finish when compared to existing solutions in the market. Commending the efforts of Lafarge Africa, one of the participants at the Supafix sensitization market storm and application demonstration, Mr Dosu Togbe, said it is interesting to know that the organization has developed a product like Supafix to ease our work as tilers. “We thank the company for this initiative. While I encourage my colleagues to be more diligent at their work, I believe using the new product from Lafarge will provide great relief for us from the huge cost that we normally incur when there is an error. This demonstration has added to our knowledge on the job as we can now carry out our work with ease and achieve better results”, Togbe said.

L-R: Dapo Kolawole, commissioner for finance & economic development, Ekiti State; Yemisi Owolabi, accountant general; Biodun Oyebanji, secretary to the State Government; John Kayode Fayemi, governor; Samuel Oluyemi, head, CRM (Vertical Markets), Nigeria Inter Bank Settlemnt System (NIBSS); Uche Uzoebo, head, distribution and engagement, Shared Agent Network Facilitu (SANEF); Osamuede Odiase, head, CRM (Public Sector and Aggregators-South), NIBSS; Segun Akano, MD/CEO, Upperlink Limited, at the unveiling of the TSA Platform for Ekiti State Government.

L-R: Olumide Aina, vice chair, Abuja, Institute of Workplace & Facilities Management (IWFM) Nigeria Region; Wale Odufalu, chair of the institute; Tunde Obileye, vice chair, Lagos; and Helen Majemite, event co-ordinate, during the unveiling of IWFM Nigeria FM Report 2019, at the Nigerian FM roundtable 2019, organised by Alpha Mead Group in Lagos.

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

INTERVIEW Another strong year predicted as cross-border private equity activity hits record high value in 2018

Interview with Matthias Jaletze, Partner, Hogan Lovells PE firms are sitting on over US$2 trillion in dry powder and the increased capital is driving up valuations and competition for good assets. Has this led firms to increasingly consider crossborder deals? atthias Jaletzke: If you look at the history of private equity (PE) in Europe, and to some extent also in the United States, it has always been cross-border. If you look at different segments in PE, the really big funds that sit in the United States – Hellman & Friedman, Blackstone, KKR, Apollo, Bain – have funds with double-digit billion dollar or euro amounts, and they have been doing deals outside the United States for 15 to 20 years. Then you have large UK funds, such as Apax Partners, Cinven, CVC, or Permira, that have fund sizes between US$3 billion and US$10 billion. They were already doing deals across Europe in the late 1990s. There has been a rise in cross-border PE activity, but it has always been a feature of the sector. Are PE firms increasingly looking at sectors they previously would have avoided? Jaletzke: Health care is one sector that PE funds wouldn’t have looked at ten years ago. In the last three to five years, we have seen a lot of transactions in the nursing home sector from midsize firms like Carlyle, EQT, and Nordic Capital. This has to do with aging populations and the stable cash flows these businesses provide. We have also seen a couple of firms invest in hospitals and clinics. Again, that is something that was unknown a decade ago. Additionally, the aerospace, defense, and government services (ADG) sector has become increasingly attractive to funds. On the other hand, there are sectors that are less popular than they used to be. PE is pretty skeptical about the automotive industry, for instance. The industry is changing from traditional combustion engines to electro-mobility and while that takes investment, the future has become less certain and it is not clear how quickly things will change. What are the challenges facing PE firms when attempting to exit large investments? Jaletzke: Inherently, in really big deals, the number of potential buyers are limited. And if you look at how volatile the stock markets have been in the last 24 months, it hasn’t necessarily been a favorable time for IPO-based exits either. The biggest cross-border PE deal of Q1 was the US$6.4 billion take-private of Scout Holding AG, which is interesting, because Hellman & Friedman had IPO’d Scout not that long ago. But, given the downturn in the public market, it was rel-

Matthias Jaletze

www.businessday.ng

‘

There are some firms where the investment is done by investment partners, and then the asset changes hands and is handled by the operating partners, who are often former executives of large companies with a lot of industry experience

https://www.facebook.com/businessdayng

‘

atively good timing to re-acquire. Scout is an internet/e-commerce company, so everyone expects it to have a good future. When the stock markets go up, there is likely an arbitrage opportunity to exit via the stock exchange again. Speaking of Scout, as you mention, it was taken private by a consortium made up of Hellman & Friedman and Blackstone. Are these types of club deals becoming increasingly common? What are some of the challenges when PE firms do these kind of deals? Jaletzke: When it comes to club deals, you have to be sure that the philosophy of the club members is concurrent and harmonized around management and how to develop the firm. In most of the club deals that I have seen, participants thought they were on the same page – but what happens if the company comes into a crisis? If the company does not perform according to expectations, what does that mean in terms of exit strategy and management strategy? And here we’ve seen a couple of situations where participants left the consortium and were bought out by other participants. So, there are different aspects that make club deals difficult to execute through the exit.

I predict that we will see them on-andoff again for really large deals. Club deals tend to come in and out of fashion in the PE world. For instance, in the 2000s, there were many large firms taken over by consortia. Then, after the Lehman crisis, club deals subsided for a while, and now we are seeing some large club deals again, so it’s a bit cyclical. I do not think that, as a general notion, club deals are more popular than they were in the past. How are PE firms responding to the challenge of increased competition from strategics and rivals for the strongest assets? Jaletzke: Firms have become much more operational than they used to be. Before the Lehman crisis, PE was, in some respects, about financial engineering, and getting your finances straight, before executing a decent exit a couple of years later. More recently, all of the big PE funds have so-called “operating partners” and are more deeply involved in the strategy of the companies that they are buying. There are some firms where the investment is done by investment partners, and then the asset changes hands and is handled by the operating partners, who are often former executives of large companies with a lot of industry experience. This is something that has changed in the last five to seven years and it is certainly a method of trying to improve the handling of the asset and the success rate with the asset. One of the main themes that has emerged recently in cross-border M&A is increased protectionism. How does it affect PE? Jaletzke: This is a multi-faceted issue. Recently, for many asset classes, Chinese buyers have effectively been taken off the market because of CFIUS approvals. Moreover, China has tightened foreign exchange controls, and with the trade war with the United States, it is very difficult for a Chinese buyer to invest in anything that comes close to being considered national security in the United States. There are only a few PE firms that predominantly use Chinese or Middle Eastern funding, but they might come under increased scrutiny. Conversely, this may be positive for the large U.S. PE funds. Most of the investors in U.S. PE funds like Hellman & Friedman, Blackstone, and Apollo, are big U.S. institutions like CalPERS. For these funds, it may actually be somewhat of an advantage. On the other hand, it could potentially be an issue for future exits. Certainly in recent years, people were anticipating that China would be an exit route. That route does not exist in the same way now. We can expect, however, that trade hostilities will be resolved one way or the other and, therefore, Chinese buyers may come back in the long term.

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

INTERVIEW ‘Every organization including Nigerian SMEs, have needs for IT asset management’ Adewale Saka, chief operating officer of Tranter IT, one of Nigeria’s pioneering IT asset management firms in this interview with BusinessDay’s Frank Eleanya spoke about the company’s investment in software engineering talents and why every company in Nigeria need to take IT asset management very seriously. What is the partnership between Tranter IT and ManageEngine meant to address? ranter IT became a partner to ManageEngine about 6 years ago as the sole distributor of ManageEngine products and services in Nigeria. The partnership was[CE1] [CE2] meant to deepen market penetration of ManageEngine solutions in Nigeria and by extension help organisations to address various gaps in their technology operations and services and position them for growth. How important is IT asset management to any organization? IT Assets are pivotal to stability of IT environment and smooth running of businesses. Effective Management of these assets is therefore critical to service availability, business continuity and ultimately customer satisfaction. Imagine CIOs, CFOs and business leaders being able to determine the quantity and quality of their IT Assets, determine the locations, costs, NBV, history and status of all their assets through a dashboard from any part of the globe. With ManageEngine solutions such as ServiceDesk Plus, Desktop Central and Asset Explorer, organizations will be able to proactively plan for asset maintenance, replacement, trade-in, etc and avoid preventable business downtimes. How exactly does this help companies planning to change their processes and leveraging new technologies? ManageEngine Solutions are wellengineered and developed with IT best practices and standards embedded in them. Take for instance the ManageEngine ServiceDesk Plus solution designed to deliver top-notch automated helpdesk services which is built on ITIL version 4.0 framework and ISMS. There is no doubt that this innovative solution will help organizations deliver business objectives through low-cost and optimised IT Services. Traditional way of managing IT services will surely give way to superior automated processes delivered by ManageEngine cutting edge technologies. Your organisation has been offering this service for many years; before you came on board how did companies address their IT assets and what has changed since your entering the market? Though a couple of Asset Management solutions were in the market but most organizations were not receptive to some of them because of complexities associated with their deployment, and in some cases absence of quality support services. In fact, most organisations including some large corporations were managing their IT Assets manually and at most semiautomatically using various types of assets management tools. Most of these tools are plagued with quite a number of challenges which include deployment complexity, inability to scale, resource

Adewale Saka

www.businessday.ng

regular basis to ensure value realization from their investments in our solutions. What is the potential of the IT asset management market in Nigeria? The potentials of the market are quite huge. Every organization including SMEs, have needs for IT asset management because of its relevance to IT cost manage-

‘

A lot of effort and funds have gone into research as well as building a very formidable and knowledgeable technical team responsible for implementing, customizing and providing all forms of technical support required to extract value from our customers’ investments on our products and services

https://www.facebook.com/businessdayng

‘

intensive, unpleasant user interface and experience, high cost of deployment and recurrent expenditure, unavailability of local support among others. Introduction of ManageEngine Asset Explorer to Nigerian market by Tranter IT has brought succour to all stakeholders in IT asset management as it provides them with alternative that guarantees agility, scalability, simplicity, standardization and convenience at a fraction of their current cost outlay. What are the strategies you have that makes your products and services different from competitors? Our products are uniquely designed to eliminate the pain-points of our customers and we always deliver value for their investment. We have invested a lot in both capacity and market development. A lot of effort and funds have gone into research as well as building a very formidable and knowledgeable technical team responsible for implementing, customizing and providing all forms of technical support required to extract value from our customers’ investments on our products and services. This has made our after-sales service and support very attractive to our customers. Unlike other competing products and services where almost all support requirements are done offshore, our customers enjoy customized and standardized local support from our seasoned professionals giving them the comfort they need to optimise their services. We also work with our clients on

ment, IT Service Management, Information Security and overall business objectives. There are over 20 million business enterprises spread across the 36 states and Federal Capital Territory (FCT) in Nigeria with over 95 per cent of them being SMEs. Most of these organizations are managing their IT assets manually with its attendant challenges and frustrations and therefore will be favourably disposed to eliminating their pain points through simple and costeffective IT Asset Management solution. How much investment goes into sourcing your talents and ensuring they have the right skillsets to deliver their jobs? To us at Tranter IT, sourcing, developing and empowering talents is more than just a Corporate Social Responsibility (CSR). We attract raw talents (fresh from universities or Colleges) and take them through our academy where they are groomed to become professionals. Our position in the market has also helped us to attract quite a number of experienced professionals from various industries when such need arises. We have well-seasoned human resource (HR) professionals and our HR policies and processes are not only world-class but also largely automated. In most cases, the grooming starts with an intensive training spanning 4 to 8 weeks depending on cadre of staff and the role they are expected to take in the organisation. This is followed by internship and a mentorship program which is customized for each employee. I can assure you it does not come cheap as we have to balance that with competitive remuneration and staff welfare programs to retain our most valued asset – Our People. You have a new line-up of partnership: can you tell us some of their unique features and what makes them the perfect fit for organisations? The next half year will witness introduction of a number of our new products and services while also giving more attention to pushing our flagship products and services in the market. On Security side, we will be pushing aggressively SafeXS, a security solution for data protection. Also very close to that is QR Patrol, a solution specially designed for tracking and monitoring security guards (both para-military and military) and giving the command and control centre comprehensive visibility on what is happening to their officers and men. Our special Managed Services product called TenPlus IT, designed to address IT support gaps in the SME space is also a product that will eliminate almost all IT challenges being confronted by SMEs in Nigeria today. How affordable are these products and services? I can assure you that all our products and services are very competitive in terms of pricing. We believe more in value delivery and strongly believe that volume will compensate for our thin margins.

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Henry Ford and the Founding of the Ford Foundation ONUWA LUCKY JOSEPH

enr y Ford was a man whose curiosity drove him to endlessly innovate and to try change the things he believed could be improved upon. Fascinated by the idea of the democratic automobile, he didn’t relent until the Model T became first an American and then a global phenomenon. And just like it did for Bill Gates who helped bring about the era of the personal computer as against the clunky gigantic computers of yore, Henry Ford’s Model T made it possible via the assembly line technique for regular individuals to own their own cars. And of course, it made Henry Ford a very wealthy man. The Ford Foundation which plays a big role in CSR interventions worldwide was, however, more a business necessity than it was a selfless endeavor. That’s not to say that Henry Ford was not a generous man. He was very generous man who engaged vigorously with the social issues of his days. In this write-up excerpted from the book “Doing Well and Doing Good – Money, Giving and Caring in a Free Society” by O. S. Guinness, you will get to see more clearly the considerations that brought about the need for Ford Foundation. Not much different, we might add, from a lot of what happens today. Foundations, though designed, apparently, to benefit society, are sometimes layered with machinations that escape the untrained eyes. Enjoy the read… HENRY FORD’S PHILOSOPHY OF GIVING Henry Ford…created philanthropies that outlived him and still honour his wishes. As early as 1911, he created a home for underprivileged boys. But his major works were the Henry Ford Hospital in Detroit and two related efforts in Dearborn, Michigan – Greenfield Village and the Edison Institute (now the Henry Ford Museum). The Henry Ford Hospital is still one of Detroit’s leading hospitals, and millions of visitors flock to Greenfield Village each year to see the historic houses that Ford collected and reassembled. Throughout his life, Ford was besieged by requests for aid. As early as 1914, after introducing one of the nation’s first profit-sharing plans, swarms of people lined up outside his house. By 1915, he received two hundred letters a day for aid; by 1924, the number had climbed to 10,000 a week, and a team of private secretaries sent out over fifty form

letters in response. Ford often gave money spontaneously to poor people he met during his travels. But he always refused to give to organisations he could not directly control. He would not give to community chests, the predecessors of the United Way, and he consistently opposed any form of charity that might reward idleness …. In a 1924 interview, he said “I believe in living wages – I do not believe in charity. I believe we should all be producers. Organised charity and schools of philanthropy and the whole idea of “giving” to the poor are on the wrong track. They don’t produce anything. If a railroad had a bad piece of track that wrecked cars every day and piled them in the ditch it would cure nothing to merely build a fine repair shop. The track itself should be fixed. Charity and philanthropy are the repair shops and the efficiency, however high, does not remove the cause of the human wrecks.” For those who had experienced misfortune, and were willing to work, Ford had plenty of jobs at good wages at his plants. He prided himself on taking people that others might have considered hopeless and turning them into productive workers. He routinely hired the disabled. In 1919, nearly twenty percent of his workers had some sort of disability, including one employee who had lost both hands, four whose legs were gone, four who were totally blind, 123 who only had one hand or arm, and 1,560 with hernias… A CHANCE AND NOT CHARITY Given his belief in self-reliance, Ford always told reporters that he planned to use his wealth to create jobs and cars, not a foundation. “Mr. Ford,” William L. Stidger asked in 1923, “the people want to know what you are going to do with your huge fortune when you die”? “Why do you want to know?” Ford replied. www.businessday.ng

I presume because it is getting to be a habit with wealthy men to do some useful and social thing with the vast sums of money that they can accumulate. Take Mr. Rockefeller, he has established the Rockefeller Foundation,” Stidger said. So they want to know what I’m going to do with my money. Well, you can tell them there is no ‘going to do’ about it. I am doing it now! I am investing my money in men, every cent of it, and I will continue to do so. When people ask me what am I going to do with my money they usually mean what bunch of secretaries or societies I am going to select to dole out my ‘charity’. My money is going to keep on going where it is going where it is going now – into men,” Ford said. “Then the business itself is to be the Ford Foundation?” Stidger asked. “That’s right. The organisation is to be the Ford Foundation. I want that Foundation to be the life-saving opportunity of millions of men and women to be self-supporting and self-sustaining. My old motto, ‘A chance and not charity,’ will be the spirit of the Ford Foundation. I do not believe in giving folks things. I do believe in giving them a chance to make things for themselves!”… CREATION OF THE FORD FOUNDATION On January 15, 1936, Henry Ford took the only option he could to preserve family control of the Ford Motor Company. He created the Ford Foundation. The existing Ford Motor Company stock was converted into two types: non-voting Class A common stock, which comprised 95% of the total stock, and voting Class B common stock. Ford drafted a will leaving the Class A shares to the Ford Foundation and the Class B shares to his son and grandchildren. Edsel Ford (his son), drafted a similar will. The Ford estate was thus divided into two parts, leaving the wealth Ford created to philanthropy and the

https://www.facebook.com/businessdayng

Ford Foundation Motor Company to the family. Ford did not create the Ford Foundation out of altruism or to restore his reputation. Unlike the great fortunes created before the Income Tax Act of 1913, no one called Ford a “robber baron” or wicked capitalist. Nor was he seen as a paragon of conspicuous consumption. He lived simply and reinvested most of the profits he made back into his business. In 1948, as the wills of Edsel and Henry Ford were being probated, Henry Ford II signed a statement that he would later regret. He declared that the Ford family would @Businessdayng

make no effort to use the inheritance of his father and grandfather to control the Ford Foundation. Henry Ford II would be chairman of the board of the foundation and his brother Benson would be a trustee, but their influence would be no greater than any other Ford Foundation employee…. By signing the document, Henry Ford II ensured that the intentions of his family would be steadily undermined.

Be ready to revise any system, scrap any method, abandon any theory, if the success of the job requires it. Henry Ford

Thursday 23 May 2019

BUSINESS DAY

Corporate Social Impact

“Zero Malaria Starts with Me”

auchi Govt, Bamanga Tukur Foundation, May & Baker, Get Involved Why was 19th century West Africa described as The White Man’s Grave? The tropical climate and its sweltering heat was one reason. But even more was the profusion of insects chief amongst which was malaria, that dealt the death blow, (or is it bite) to the early missionaries and colonialists that ventured this way. They succumbed in their numbers to the many fevers that thrive in the tropics. The interesting thing is that Africans were thought to have built some sort of immunity against the diseases. Not that they weren’t dying, but not in the dramatic numbers as was the fate of the whites. One considered opinion is that aside the immunity conferred by millennia of living in the tropics, black folks had also developed herbs and other drugs which were effective against the diseases. Effective, did you say? Not quite. Because all the many years before and after the white man’s arrival, malaria has stayed largely implacable. Even though more effective treatments have been developed over time, the quinine back then enabling the White man not just to survive, but also to thrive and take over the entire continent, but the hits have not been without the attendant misses. A lot of those earlier treatments are now consigned to the waste basket of medicine in view of side effects which, have been proven, over time, to be worse than the malaria disease itself. For Nigeria, the statistics with regard to malaria are not a good at all. The country alone accounts for 25 per cent of the malaria burden worldwide. Even worse, it is responsible for 19 per cent of all malaria deaths across the world! This disheartening disclosure was made by Dr. Mohammed Sambo Alkali, Executive Chairman of the Bauchi State Agency for the Control of HIV/AIDS, Tuberculosis, Leprosy and Malaria (BACATMA) Another sad statistic, this one not specifically Nigerian, is that children constitute 61 per cent of all malaria deaths globally, while the continent of Africa accounts for 90 per cent of global cases of malaria and 91 per cent of malaria deaths. Makes you want to shout “Na wah!” It’s in view of these depressing numbers, and the clear and present danger that they represent, that foundations, individuals, state governments and organisations commemorated World Malaria Day on May 9th this year with activities geared towards increased awareness, prevention and cure of malaria. Dr Alkali volunteered for instance that the state was distributing 3.8 million mosquito nets across the 20 local government areas of the state as part of measures to combat malaria in the state. May & Baker, a pharmaceutical firm, beat a path to Moshalashi, Agege, in Lagos, also to mark the World Malaria Day. According to the company, the commemoration, tagged ‘Zero Malaria Starts with Me’ stated that at least 250 residents of the community got free malaria testing and drugs. Mr. Chukutem Chukuka who is the company’s Executive Director, Pharma Sales and Marketing, said the outreach was designed to sensitise

This billionaire just pledged to pay off everyone’s student loan debt in the morehouse class of 2019 ZACK FRIEDMAN

his does not exactly apply in Nigeria, but those who study in the US understand the import of this guy’s largesse. It must be the mother of all graduation presents!) Robert F. Smith, a billionaire investor and philanthropist, just gave the ultimate graduation gift to the Morehouse College Class of 2019: Smith said he will pay off each graduate’s student loan debt - in full. Here’s what you need to know. The Gift of All Gifts: Student Loan Forgiveness Smith has an estimated worth of $5 billion and is the founder and CEO of Vista Equity Partners, an investment firm focused on software, data and technology, and served as commencement speaker at Morehouse on Sunday. During his speech, he announced that his family would establish a grant to pay off student loan debt for all Morehouse graduates in the Class of 2019, which is approximately 400 students. The gift is estimated at about $40 million, and is in addition to a $1.5 million gift Smith already announced to Morehouse. In 2016, Smith donated $50 million to his alma mater, Cornell University. “On behalf of the eight generations of my family that have been in this country, we’re gonna put a little fuel in your bus,” Smith said. “This is my class, 2019. And my family is making a grant to eliminate their

Nigerians to the scourge of malaria and to guide them on how best to live a malaria free life. His own rendition of the unwholesome statistic is that malaria is the reason 300,000 Nigerians lose their lives every year, adding that over 100 million Nigerians are at risk of the disease. He said: “Globally, World Malaria Day, which takes place on 25 April each year, is an internationally recognized day, highlighting efforts to control malaria and celebrate the gains that have been made. Crediting his company as being in the forefront of the campaign to reduce the burden of malaria through the introduction of several life-saving interventions, the latest being Malact, which he described as one of Nigeria’s most effective anti-malaria drugs, he said the organisation was committed to the fight primarily through several enlightenment campaigns in communities on prevention as well as the provision and distribution of high-quality antimalarial drugs at affordable prices. Several residents were delighted at being able to get free malaria testing and drugs. “The initiative also involves staff of May & Baker in partnership with In partnership with the the Lagos State Waste Management Authority (LAWMA), May & Baker carried out an environmental sanitation exercise in the community to promote awareness on how proper environmental management can help reduce the transmission of malaria in line with www.businessday.ng

the theme of this year’s celebrations.” And in Abuja, the Bamanga Tukur Foundation found its way to the Durumi Internally Displaced Persons (IDPs) Camp, to offer free malaria testing and drug administration According to the Programme Manager, Bamanga Tukur Foundation, Oyebisi Bamidele, more than 500 out of the 3015 IDPs in the camp were tested with 210 of them who were diagnosed with malaria fever, administered drugs. He said children and women, the most vulnerable groups in the society were the ones chiefly targeted by the outreach which was organised in collaboration with Inamsaj Advocacy Foundation and Roll Back Malaria (RBM) to better achieve its objectives. Oyebisi stressed, like the others, that the outreach is aimed at helping Nigeria eliminate malaria totally, adding that the foundation was concerned with malaria campaigns, advocacy and data collection. Working along the objectives of the theme, “Zero Malaria Starts With Me”, he said the foundation would return at a later date to supply mosquito nets to the IDPs. Bala Yusuf, secretary of the IDP camp, while commending the foundation for reaching out to the IDPs, described malaria as one of the commonest diseases among children and women in the camp, adding that they were happy with the testing and provision of drugs, but even more for the lessons on how to protect themselves from malaria.

https://www.facebook.com/businessdayng

student loans...”I know my class will make sure they pay this forward… and let’s make sure every class has the same opportunity going forward because we are enough to take care of our own community.” Student Loan Debt Statistics The latest student loan debt statistics show there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. alone. According to personal finance site Make Lemonade, student loan debt is now the second highest consumer debt category - behind only mortgage debt - and higher than both credit cards and auto loans. Student loan repayment remains as one of the biggest challenges facing graduates. (Culled from Forbes magazine)

Are you the Nigerian teacher of the year?

ay 16 marked the beginning of the search for this year’s Maltina Teacher of the Year; so said Sade Morgan, Corporate Affairs Director of Nigerian Breweries Plc. The competition, which is open to public and private secondary school teachers in Nigeria, will see the one person whose teaching acumen is adjudged to be the best go home with N6.5million. This will be in addition to capacity training abroad. In addition, the school that produces the winning teacher will have the additional honour of a

@Businessdayng

block of classrooms courtesy of Nigeria Breweries. Second runner up will get N1m, while the second runner up gets N750,000. It is clear that this is almost a winner-takes-all competition. And if you think you have what it takes, you would do well to download the application forms from the Maltina website http:// www.maltina-nigeria.com/maltina-teacher-of-the-year.html or pick up a form at their States Ministry of Education, Nigerian Union of Teachers office nationwide. Entries close July 12, 2019.

Thursday 23 May 2019

BUSINESS DAY

Investor

In association with

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

Market capitalisation

NSE Premium Index

N11.721 trillion

Week open 10 – 05–19

31,924.51 28,847.81

N10.842 trillion

2,064.03

Week close (17 – 05–19)

28,871.93

N12.717 trillion

2,138.26

Year Open

2,241.37

The NSE-Main Board

1,456.29 1,319.69 1,271.79

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

806.91

1,294.53 1,255.43

370.27

118.63

669.53

264.90

2,070.60

1,096.75

1,094.61

354.30

114.66

641.87

258.76

2,013.53

1,054.20

1,094.61

-3.88

-2.62

806.91

Percentage change (WoW)

0.08

-2.62

-3.63

0.00

Percentage change (YTD)

-8.14

-2.59

-11.67

1.65

-3.02 -11.41

-4.31 -11.19

-2.62 -9.35

-4.13

-2.32

-14.28

-14.38

-2.76 -9.87

-14.84

-11.72

Scarce MTNN stocks, rising price: Who takes the blame? Iheanyi Nwachukwu

he recent trends following the listing by introduction of MTN Nigeria Communication Plc (MTNN) and resultant steep rise in the share price has only taken me back to the basic laws of demand and supply in economics. The Nigerian Stock Exchange (NSE) on Thursday May 16 listed by introduction on its Premium Board, 20.35billion ordinary shares of MTN Nigeria Communications Plc at N90 per share. Since its listing, MTN Nigeria has remained the sole market catalyst, driving market to its highest gain since February 12, 2019. Every day, expectations for the stock market to close positive is being hinged on the back of the new listing and till date it remains the main source of respite for the market. Though it is the hottest listing to come to the Nigerian Stock Exchange (NSE) in the past 3 years, but good luck getting a hand on the shares of MTN Nigeria whether you are an institutional or retail investor. The scarcity of MTNN shares is largely due to the unusual listing by introduction approach used to bring it to market, which is in turn causing a mismatch between buy (bid) and sell (ask), orders leading to a spike in price. In four trading days after its listing on the NSE, the value of MTN Nigeria Communications Plc increased by approximately N850billion and still

counting. There is now palpable anger among many stockbrokers and dealers who are unable to meet up with their clients bid orders. The NSE has issued statements clarifying some know issues while MTN Nigeria has also come out with its own clarifications on the listing. On Monday, May 20, 2019, the NSE in a statement clarifies concerns on MTN Nigeria’s Premium Board listing. The Exchange carefully responded to issue of paucity of MTN shares on its floor; MTN Nigeria’s free

www.businessday.ng

float valuation, and its commitment to protect investors. Excerpt from the NSE statement reads: “We believe in market forces as the most efficient methodology for price discovery. Demand and supply will interact to discover appropriate prices as trading activities continue in the market”. In a market economy, price has the most central role. According to basic economic principles, the price of your product (in this case shares) is determined by supply and demand. This is an unfortunate fact that many

https://www.facebook.com/businessdayng

of us try to deny. In economics, manipulating supply and demand is actually not difficult since there are only two variables involved –supply and demand. If you are able to gain control over these two variables, you will be able to gain control of your pricing and profit margin. The four basic laws of supply and demand say: If demand increases and supply remains unchanged, a shortage occurs, it leads to a higher equilibrium price. If demand decreases and supply

@Businessdayng

remains unchanged, a surplus occurs; it leads to a lower equilibrium price. If demand remains unchanged and supply increases, a surplus occurs, it leads to a lower equilibrium price; and if demand remains unchanged and supply decreases, a shortage occurs; it leads to a higher equilibrium price. MTN Nigeria listed by introduction. Chapel Hill Denhan acted as a joint financial adviser with Stanbic IBTC Capital in the historic listing of MTN Nigeria. According to the NSE, “Since the listing of MTN Nigeria on Thursday May 16, 2019 a total of 105,301,759 shares valued at N12.231billion have traded in three (3) days. These trades were carried out by ten (10) Dealing Member Firms in 134 cross deals/ negotiated deals.” Taking a cue from the daily permissible limit of 10 percent which MTN Nigeria stock attains on daily basis since its listing, and its N131.7 per share on Tuesday May 21, 2019, having rallied by N11.95 or 9.98percent as at 10:15 am same day, if demand continues to outweigh supply, it is surely off to reaching a high of N200 per share in the next 8 trading days to May 31. “N150 per share is the going rate for MTN Nigeria in off market deals,” said a Lagos based fund manager. He confirmed that people are now negotiating MTNN share prices on 2 days limit up. “I have been on phone all morning scrambling, trying to get exposure for my clients and fund,” our Continues on Page 25

Thursday 23 May 2019

BUSINESS DAY

Investor

Helping you to build wealth & make wise decisions

United Capital Investment Views

Investor’s Square

MTN’s historic listing revives market sentiment?

he bearish theme that dominated trading sentiments on the exchange for the past three consecutive weeks came to a halt last week following the listing of MTN Nigerian (MTNN) shares. Consequently, the NSEASI gained +0.1percent week-onweek (w/w) to close at 28,871.9 points as year-to-date (YTD) return improved to -8.1percent. Total market capitalization jumped N1.9tn to settle at N12.7trillion, boosted by the N1.8tr illion market capitalisation of MTNN that was listed during the review week. Activity level was mixed as the average value of stocks traded rose 63.8percent w/w to end at N3.5billion while average volume traded declined by 21.1percent w/w to finish at 295million units. The Telecommunication sector (+21percent), proxied by MTNN primarily drove gains

Mone y Market : MP C outcome to provide directional impetus to investors The Apex bank’s decision to stay off the OMO window last week ensured that system liquidity level remained largely afloat buoyed further by inflows from OMO maturity (N117.1billion) on Thursday, as well as DANGCEM (N35billion) and FSDH (N15.1billion) commercial paper IV and VIII maturities on Tuesday. The major liquidity drain for the week came in the form of wholesale FX intervention sales which mopped up naira liquidity from the system, on Monday. Consequently, average interbank funding rates (Open Buy Back and Overnight rates) tracked the direction of system liquidity, starting the week on a high of 16.4percent before moderating to 4.9percent at the close of the week. In all, with lack of OMO sales during the week, interbank activities at CBN’s SLF/SDF

over the week, while the Banking (-4.3percent), Consumer Goods (-4.1percent), Industrial Goods(-3.9percent), Insurance (-3.3percent), and Oil & Gas (-2.3percent) sectors all closed downbeat, attributable to price declines in GUARANTY (-4.4percent), ZENITH (-2percent), DANG CEM (-1.7percent), NB (-4.3percent), MOBIL (-1.7percent), SEPLAT (-0.4percent) and AIICO (-7.1percent). Meanwhile, the Agricultural sector closed flat for the week. Investors’ sentiment was underwhelming as indicated by a market breadth of 0.4x as only 16 stocks advanced against 41 decliners. Going forward, we expect the listing of MTNN shares on the exchange to keep sentiments upbeat as investors continue to scramble to get a piece of the telco.

window remained positive but narrowed compared to the prior week as players deposit excess fund with the CBN. E l s e w h e re, t h e C B N conducted its bi-monthly Nigerian Treasur y Bills (NTB) auction on behalf of the Federal Government (FG) and successfully re-financed maturing bills worth N33.8bn. Despite the small offer size, average bids worth 5.7x (last auction 2.1x) the offered amount turned up - tilted largely to the 364-day tenor with a bid-cover ratio of 9.8x. Accordingly, average stop rates at the auction cleared lower when compared to previous levels, reflecting rising investors’ interest in the mid and long tenor bills; [91-day (10percent versus 10percent at the last auction), 182-day (12.30percent versus 12.49percent at the last auction)

www.businessday.ng

and 364-day (12.49percent versus 12.77percent at the last auction)]. In the secondary Nigerian Treasury Bills (NTB) market, market bulls outweighed the bears as average yields declined w/w by 78bps to close at 12.1percent, amid continued improvement in investable liquidity. This week, OMO maturities of above N100billion are scheduled to hit the system. However, we expect naira liquidity mop up to remain in the form of FX funding sales. Meanwhile, we expect investors to remain on the sidelines pending directional impetus from the outcome of the MPC meeting, tomorrow. Bond Market: Investors look to May Bond auction Sentiments in the secondary bond market were mixed in the prior week as what opened as a quiet week went bearish before the NTB auction and very quickly rebounded in the later part of the week, amid massive system liquidity. In all, market bulls outweighed the bears as average bond yields trended lower by 11bps w/w to close at 14percent. In the Eurobond market, interest in FGN Sovereign Eurobonds remained restrained as the trade spat between the US and China continued to fuel risk-off sentiments toward EM assets. Accordingly, average yields inched higher marginally by 4bps w/w to close at c . 7 p e r c e n t . H o w e v e r, sentiments for Corporate Eurobonds turned bullish as we witnessed a renewed buying interest in ACCESS, F BN N L , E C O BA N K a n d SEPLAT’s Eurobonds. The defunct-DIAMOND bank Eurobond was priced at par as maturity date (21st of May 2019) draws nearer. Consequently, average yields (ex-DIAMOND’s Eurobond) dipped 9bps w/w to close at c. 7.7percent. In the primary Eurobond market, Kenya successfully issued its third Eurobond since its first issuance in 2014. The issuance was split between 7-year ($900million) and 12-year ($1,200.0mn) notes, priced at a rate of 7percent and 8percent respectively as investors were attracted by the country’s consistently high growth rate.

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

Scarce MTNN stock, rising ... Continued from page 24 source said. A N150 stock price would value MTNN at N3.052 trillion slightly higher than Dangote Cement which closed trading at N3.033 trillion on Monday. MTNN speaks MTN Nigeria Plc in a statement on May 20, 2019 said it met all conditions required to list as a member of the Premium Board of the Exchange. Excerpt from the statement reads, “The listing by introduction means that the existing shares of MTN Group (78.8percent), the Nigerian investors (19.4percent); and other investors (1.8percent) are listed”. “MTN listing by introduction on the premium board of the NSE on May 16 creates a new telecoms and technology asset segment for the NSE. It also deepens the equity capital markets base of the country, which makes it possible to broaden the shareholding base of MTNN over time.” Various comments by some capital Market Operators A s t o c k b ro k e r s a i d : “Increasing price through cross deals does not look like a Market driven activity. It is at best, financial engineering. The rule has been changed and by new rule they have meet. The MTN group listed in South Africa is actually down close 40percent in market price mainly concerning its issues in Nigeria and Iran. Will you chase what is not available or what is…” “Going by current rule of the market, what is the legality or otherwise of increasing stock price via cross deal transactions? We need the NSE to say something here. Pending when we get a response from NSE, my understanding of the trading rule guiding Cross deal is that the daily price change must be within the 10percent maximum per day,” our source said. Another broker simply said, “If they meet the volume to justify the price change then everything is okay.” She said, “The implication is that they can drive the price to any level, sell at the price they need to meet all obligations and leave the Market to carry the can of a sour offer or be responsible enough to stop at a reasonable point and make the stocks available in reasonable

https://www.facebook.com/businessdayng

Oscar Onyema, NSE CEO

portions to keep a high market rate that will not distort the actual price of the stock and will be sustainable.” “Maybe the rule should have stated that the maximum price change of a stock on Introduction should trade via a minimum number of houses (maybe 10 or 20percent of the houses in the market), so as to ensure that there is a broad market base,” the broker said. “The whole scenario looks like a case of Tax avoidance, it is not a crime but it leaves an uncomfortable garment on the knowledgeable observer. It appears this Introduction by MTN is walking on the thin line that separates legality from illegality. You can only fault it on moral and not technical grounds”, our source added. Still on the scare MTN shares, an angered broker said, “Am glad the index is increasing in volume and value and the two D’s …are rushing towards each other. Let the game continua.” “I think the key question is if our clients (particularly retail) who have being so excited about the planned listing of MTN benefited so far? I have N50million plus to purchase MTN for my clients and I can’t get it (imagine the huge potential income). Also how do we think this event would further affect clients perception of our market? “Especially seeing the daily trade on MTN shares and it’s prices appreciation, and you’re trying to explain that the trades are crosses reason you can’t get for them and with these crosses comes daily 10percent upwards price gain”, he said. “Honestly these issues needs be addressed so we don’t further worsen the negative market sentiment we’re making efforts to improve. I don’t think the listing presently as benefited the brokers and @Businessdayng

retail clients. It’s obvious those who have benefited currently. My advice is for the appropriate authority to take note of the individual comments here and subsequently address the issue because sincerely the comments even from clients regarding the MTN listing isn’t palatable”, the broker said. “Not even ONE unit by the time I last looked (at about 2.05pm) while over 31 million shares were already traded at the time. This implies cross deals. So Really Nothing Happened in “the market”. How then can the price “change” occur? I am still dazed,” a broker said. “I am coming from the angle of loss of confidence in the market since 2009 by retail investors and correlating d a m a g e t o t h e g ro w t h of our institute came from suspect price manipulation. I conjecture same may repeat itself in future if your contrite comments are not well diagnosed and stockbroking business protected. This is the end and greater picture we must protect. So I support your concern raised in view of its damaging possibilities on the market,” he said. “Attraction to vanity is an issue for those who understand the dynamics of the market. For a society with high financial illiteracy, more is expected in terms of market protection, or else the profession shall suffer visceral risk after MTN. I think the stockbrokers to the listing should have advised the major shareholder, MTN International limited to make available enough shares on the day of listing to guarantee liquidity of the stock in the market. “I remember that we had such an implicit agreement with the NSE the last time that Finmal advised on a listing by introduction. Ensuring that 200m to 500m shares were available for trading over the course of the first six months would have solved this problem and would not have reduced their controlling interest in any significant way. “Now that that hasn’t been done, I think the onus is on brokers as professionals to value the company using all available data and the accepted valuation metrics , and advise their clients as to what is the appropriate price they should stop pursuing the scarce shares at.

Thursday 23 May 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Nigerian Breweries pays N19.4bn dividend

igerian Breweries Plc has paid out N19.40billion as dividend for the 2018 financial year ended December 31. This follows the approval of its shareholders at the company’s 73rd Annual General Meeting (AGM) held in Lagos on Friday May 17, 2019. Nigerian Breweries had declared a total dividend of N19.401billion for the 2018 financial year representing N2.43 per ordinary share of 50kobo each. The shareholders commended Nigeria Breweries Plc for its performance, despite the challenging operating environment in the review financial year. The shareholders said that the 2018 results as provided in the audited report and the 100percent dividend payout is a strong reflection of the company’s stability as well as its resilience in the face of challenges in the economy. They lauded the capacity of the board and the management for keeping the company stable and strong in the face of mounting challenges. One of the shareholders, Nornah Awoh who spoke at the meeting expressed appreciation to the board and management of Nigerian Breweries Plc for the efficient management of resources which has helped to sustain positive outlook for the business despite challenging operating environment. “Even with the introduction of excise duty by the government last year, the company was still able to fulfill its promise to the shareholders and still be competitive,” he said. In his remarks at the meeting, the Chair-

man of Nigerian Breweries Plc, Kola Jamodu informed the shareholders that the company’s performance for 2018 financial year was good “though there was a dip of about 5percent between 2017 and 2018 results.” He disclosed that despite increasing cost of running business as a result of increase in excise duty tariff by Federal Government and the double digit inflation witnessed in the coun-

SEC sees viable Commodities Exchange providing forex earnings

n a bid to ensure that Nigeria realises its full potentials in the Commodities market as well as boost foreign exchange (FX) earnings, the Securities and Exchange Commission (SEC) has emphasised the need to have a vibrant Commodities Exchange in the country. This was disclosed by Acting Director General of the SEC, Mary Uduk at the opening ceremony of training for Senior Managers and Management Staff of the Investment and Securities Tribunal (IST) in Abuja, Tuesday. Uduk who was represented by Head of Department, Registration, Exchanges and Market Infrastructure of the SEC, Emomotimi Agama, said the nation needs to harness the full potentials in the Commodities market. According to Uduk, “The Capital Market Master Plan did an analysis of where we are and where we want to be as the leading capital market in Africa and one of the areas is the Commodities market which is very important, but one of the least developed. The Nigerian economy is mainly agrarian driven, all states of the federation have exportable quantities of commodities and we have some of the highest grades in the world. “Government wants to diversify to agriculture and so we need to be able to export some of these commodities. If the farmers do very well, the earnings of the country will be boosted” She said. She disclosed that these commodities can be exported, while on the other hand industries can be set up that will employ a large number of our teeming population. “If we can develop this very well, our

country will be better for it. What we need now are better pricing, transparency and better quality and these are what we set to achieve with the farmers and that is why the Commodities Exchange is important. “The crude form they are trading now does not provide the farmers the benefit of price discovery, transparency among others. The only way to achieve these is to have an exchange hence the need arose to set up the Technical Committee to look holistically at all the issues. Uduk disclosed that expectedly with the successful introduction of an initiative, there are bound to be disagreements and disputes, hence the need to train the IST officials, who are empowered by Investments and Securities Act, ISA 2007 to adjudicate on capital market issues. She said, “It was realized that this success in the commodities market will bring about disputes. Once the exchange becomes very vibrant, there is bound to be issues and disputes. “By virtue of the ISA 2007, the Investments and Securities Tribunal, IST is the adjudicator in event of such issues in the capital market. It is then important the IST which has this responsibility is properly aware of these issues and the types of disputes that will arise”. She added that the training is to create a foundation that we can build upon as we go along. Our resolve is to always involve the IST in capacity building so that when there are disputes, they could be quickly resolved thereby increasing investors’ confidence and deepening the market.

www.businessday.ng

try’s economy last year, the company could not pass the cost to consumers due partly to weak purchasing power. The company recorded net revenue of N324.38billion for the 2018 financial year as against N344.53billion recorded in 2017. Marketing and Distribution Expenses for the 2018 financial year also increased by 4.8percent relative to the cost incurred in 2017. Administrative

expenses also experience a 4.4percent decline from N21.75billion to N20.78billion, which was largely informed by elimination of bad costs. The Company Secretary/Legal Director, Nigerian Breweries Plc, Uaboi Agbebaku disclosed that the 2018 financial year recorded a big boost as sales volume grew for the company even though cost of sales was a bit higher. “We sold more in 2018 despite the cost going a bit up. Because we could not pass on the extra cost on consumers, it affected profit. The good news is that despite all that, we remain profitable. However, we have embarked on initiatives that help to save cost which we called internal efficiency”. He further stated that despite the difficult operating environment, the company still achieved profitability which accounted for the consistency in the dividend payout to shareholders. “This company has been in existence in Nigeria for the past 70 years and we have gone through tougher times. Consistently, we have made return on investment to our shareholders a top priority. Whatever the situation, we would brace up and continue to run our business in a way that it would give return on investment to shareholders. Some people managed this business to where it is now and it is our responsibility to run it for the next 70 years” he added. Agbebaku who was optimistic on the growth of the company going forward noted that the interest of shareholders would remain paramount in any decision or step taken by the management and the board.

‘African Alliance financially strong to deliver customer value’ Modestus Anaesoronye

ife specialist underwriter, African Alliance Insurance Plc says it has strong to financial capacity to meet its obligations and deliver value to its numerous customers. The company in its Quarter 1, 2019 recorded a 78 percent increase in gross premium compared to the same period in 2018. Funmi Omo, managing director of Nigeria’s foremost insurance company, African Alliance Insurance Plc disclosed this ahead of the company’s release of its audited financial statements and in response to confirmation on the company’s 2019 target goals.

Funmi Omo

https://www.facebook.com/businessdayng

“African Alliance Insurance has grown strategically in the past year. In the same Quarter 1, we paid claims worth N1.8billion as against N1.5billion in the same period last year. We are in a strong financial position, and our recent investments and decisions back this,” she affirmed. To further demonstrate its commitment towards financial inclusion and its brand promise to protect the future of every Nigerian, the company recently embarked on a nationwide Takaful campaign aimed at spreading kindness nationwide. The campaign is a call to spread kindness and work together towards achieving life’s goals. In response to the campaign, one of its customers commented: “Your Takaful services have been excellent. Your account managers remained impressive in relationship management, and most importantly, payment of claims have been prompt. Hence, the reason I have been able to refer more people to get your Takaful Plan over the years”. The company recently embarked on its first rebranding campaign since its 58-year existence. The rebranding was the first in the company’s history, was led by its Managing Director in a bid to refresh the brand and align its internal digital transformation to its outward, youthful look and feel. The new logo boasts of two solid shades of blue and diamond shape. “Life is precious to everyone of us. There is no other country in the world where people are resilient and determined to make the most out of life. Our new diamond logo demonstrates how special our customers are to us,” she said.

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

How to unlock Nigeria’s gas potentials Stories by Olusola Bello

n l o c k i n g Ni geria’s gas potentials will require partnership between the Nigerian Government and oil and gas companies that have the ability to innovate, capacity for domestic gas market and willingness to make long-term commitments. But for this to happen there are several challenges stakeholders must overcome in order to successfully develop growth projects for the domestic market. There is however hope that some of the challenges would be resolved as Shell Petroleum Development Company has given thumb up for the new funding arrangement for the joint venture oil and gas operation in the country that is currently operational and which is expected to resolve the Ni-

gerian National Petroleum Corporation NNPC funding constraints. This new funding arrangement aims to increase gas production by optimising existing operations as well as accelerate the completion of new gas development projects.

High prospect for Ajaokuta LNG project as DPR issues license to Establish

he Department of Petroleum Resources (DPR) has issued a License to Establish (LTE) for the Liquefied Natural Gas (LNG) facility in Ajaokuta, Kogi State. The LNG project is being developed via a joint venture between Transit Gas Nigeria Limited, a subsidiary of Axxela Limited, and Nigerian Gas Marketing Company (NGMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC). The Federal Ministry of Environment has also approved the project’s Environmental and Social Impact Assessment (ESIA). DPR’s issuance of the LTE and the Federal Ministry of Environment’s ESIA) approval are significant project milestones demonstrating the critical regulatory support for the LNG facility development. The project is on a fast track to completion as it recently received a Gas Purchase Order (GPO) for its feed gas from the Gas Aggregation Company of Nigeria (GACN). NGMC and Transit Gas have adopted a world-class development approach in collaborating with a global team of experienced Engineering, Procurement and Construction (EPC) contractors, technology providers, and other Olusola Bello, Team lead,

professionals to ensure project delivery in accordance with international best practices and safety standards. The establishment of the LNG facility in the strategically located industrial hub of Ajaokuta, will assure the safe supply of natural gas in liquefied form via specialised cryogenic trucks across Nigeria. The largest block of beneficiaries are commercial and industrial businesses in the Northern part of the country which have been considered stranded so far due to the absence of a gas pipeline infrastructure. LNG is an environmentally friendly fuel for power, process and feedstock needs that provides up to 40 percent in cost savings compared to alternative liquid fuels such as diesel. Continuous and reliable supply of gas is guaranteed by the installation of storage facilities at customer locations in addition to the buffer storage at the main LNG facility. The project is expected to be completed and marketready by 2020, thus boosting productivity of existing industries, attracting new investments into the country, creating jobs for Nigeria’s growing populace and advancing the government’s push for socioeconomic resurgence across the country.

Graphics: Joel Samson.

The company has however said that without payment of outstanding gas and power invoice arrears and securitisation of current and future revenues, operators are reluctant to commit additional investments to grow domestic gas. Another challenge deals

subsidiaries is at the forefront of providing domestic gas to industrial customers and manufacturing plants. The Nigeria Liquefied Natural Gas Limited (NLNG), it also noted, remains a strategic asset in a growing and increasingly competitive global LNG marketplace, in which the Shell Group has a world-class portfolio. On the new policy of flared gas commercialisation programme, the company said: “Remaining sites with low volume flares are located in remote areas and since late 2016, SPDC has been working with third parties to develop small-scale projects to capture the associated gas from these sites for domestic utilisation.” It added that following successful engagement with the FGN, the SPDV JV had included these sites into the ‘Nigeria Flared Gas Commercialisation Programme, which it said was expected to address these remaining sites.

Seplat to step up production growth

e p l a t P e t ro l e u m Development Company Plc has given assurance to its stakeholders that it will grow production, drive increased shareholder yield and capital appreciation. The Company, which reiterated its commitment to stronger growth in the oil and gas sector as it held its sixth annual general meeting in Lagos, posted N73 billion profit for the period ended, December 31st, 2018. It also announced N228 billion revenue in its full year 2018. This is an increase of 65 per cent from the N137billion the company made in the 2017. Its N73 billion profit before differed tax, represented a 480 per cent increase from N13 billion which it made over the same period in 2017. Gross profit for the period grew by 84% to N120billion from N65billion reported in December 2017. O p e rat i ng p ro f i t sto o d at N95billion, representing a growth of 177% over N34billion recorded in the corresponding period of December 2017. Seplat’s net profit after however dipped by 45% from N81billion recorded as at December 2017 to N45

www.businessday.ng

with the need to attract investment to further develop infrastructure along the gas value chain, for example creating a more robust pipeline network to improve reliability and security of supply. The reliability of the existing power transmission line, the multinational oil

company in its Brief Note for 2019 noted, must be improved upon as its weakness has inhibited evacuation of the much-needed power to the national grid. Also, ensuring a conducive environment is essential to attracting investments and running reliable operations. This includes a respect for the sanctity of existing contracts, predictable regulatory, commercial and legal framework across the country. O ve rc o m i ng s e c u r i t y challenges in the Niger Delta that has experienced an increased risk to personnel and property as well as the disruption to operations is also very important. Shell says it has continued to boost production of natural gas for domestic power generation and export, as SNEPCO’s growth ambitions in deep water includes expansion of natural gas production, while Shell Nigeria Gas, also one of its

billion in December 2018. In his address to shareholders, the Chairman, A .B.C. Orjiako, said the company’s 2018 operational and financial performance reflected the significantly higher year-on-year levels of production uptime at its core oil producing assets combined with a firmer, albeit still volatile, oil price and increased contribution from the company’s gas business. “As you are aware, our results from the previous two years were characterised by the extended period of force majeure at the Forcados terminal from February 2016 to June 2017. “As we enter 2019, our reliable production base, low unit cost of production and discretion over capital commitments will allow the business to remain highly free cash flow generative and profitable. In the absence of any major interruption or force majeure event, this will enable Seplat to honour its dividend policy and provide an attractive yield to our shareholders in addition to the potential for capital appreciation.” According to Orjiako, the company will selectively invest in low-risk oil production drilling oppor-

tunities within the existing portfolio and the continued expansion of the gas business, with 2019 set to be the year that activity intensifies at the large-scale AssaNorth and Ohaji-South (ANOH) gas and condensate development. “Seplat remains an ambitious growth-orientated company that is in a position of strength to capture inorganic opportunities where we can leverage our competitive advantages to seek out carefully considered, price disciplined and value accretive acquisitions. Also speaking at the AGM, the Chief Executive Officer of Seplat Petroleum, Austin Avuru, said: “Seplat has delivered an excellent operational and financial performance resulting in robust profitability and cash flow generation providing us with an extremely solid foundation for growth in the coming years. At our core assets in the West, OMLs 4, 38 and 41, the extension of the license to 2038 means that we can confidently plan and invest long into the future to realise the full potential of those blocks. “As Seplat continues to enhance production and revenue diversification

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

https://www.facebook.com/businessdayng

@Businessdayng

with new wells scheduled at OML 53 in the East, the board took the Final Investment Decision to invest in the large-scale ANOH gas and condensate development which will form the next phase of transformational growth for our gas business. Disciplined capital allocation continues to remain at the core of our activities evidenced by our continual deleveraging of our debt levels to the current balance of US$350m,” he added. Avuru noted that Seplat’s board had recommended a final dividend of US$0.05 per share to all its shareholders. “In 2018, Seplat reinstated the dividend, increased capital investments and with the resources and headroom in our capital structure, we are equipped to capitalise on organic and inorganic growth opportunities as they may arise,” Avuru said. He also announced that Seplat board had taken the Final Investment Decision for the ANOH and Amukpeto-Escravos alternate export pipeline which would be completed and fully commissioned in Q2 2019. These projects are part of the future expansion initiatives of Seplat in Nigeria’s oil and gas industry.

Thursday 23 May 2019

BUSINESS DAY

ENERGYREPORT

Lessons from NDEP for marginal field operators …how it grew from 5m barrels reserve to 50m Olusola Bello

ut for providence and the determination to survive which propelled the management the much celebrated achievement of Niger Delta Exploration and Production, the company would have been nothing but failure. The company had a startup it had conceived: it wanted to go into marginal oil field development. They had actually got an oil field they could develop but could not get presidential approval during the regime General Sani Abacha. It was a period of death to come because the promoters were not able to do anything yet they had shareholders that believed in what they are doing and have put money done. Then came Goddy Ibru, an entrepreneur of great intellect who had a group of about twelve other investors behind him. With his intervention the company set into action to develop the field and today it is history. Chevron had given them a marginal oil field but the problem was funding. To raise money, the promoters of the company had to engage in hawking or street conversing

L-R: Adetunji Oyebanji, managing director,11Plc; Ramesh Kansagra, chairman 11Plc; Abdulkadir Aminu, director; Danladi Ochekpe, company secretary; Paul Obi, director, and Richi Kansagra, director, during the company’s 41st Annual General Meeting in Lagos

for the shares of the company, according to Layi Fatona, managing director of the company. The managing director who spoke at the May 2019 technical meeting organised by the Nigerian Association of Petroleum Explorationists (NAPE) who spoke on the journey of the company since it started, said the marginal oil field, Ogbele, given to the company by chevron had a reserve of just five million barrels then but had grown to almost 50 million barrels by

2019 and was still counting. After suffering so many disappointments especially while trying to raise money to develop the field coupled with the death of Aret Adams, the chief promoter of the company, in 2002, it eventually recorded a breakthrough in 2005 when it struck the first oil. When Niger Delta Exploration and Production Plc started planning for Ogbelle, the oil price was $ 12 per barrel. “Then we ran our number up to $20 saying if oil price got $22 or $23 dol-

Enyo retail and supply graduates mechanics from 2nd edition of its Mechtech FRANK UZUEGBUNAM

nyo Retail and Supply, a downstream operator has graduated its second batch of trainees from its mechanics & technicians training academy, Mechtech. The initiative is a corporate investment and skills development programme targeted at bridging the skills gap amongst mechanics in the Nigerian auto-repair industry. As part of the program, the top 3 participants were gifted with a trip to the International Auto Mechanical Seminar and Exhibition, Dubai 2019. Mechtech is an initiative to train and boost the capacity of up to 5,000 automechanics over a 3-5 year period thereby increasing their capacity to trouble shoot, diagnose and repair high end vehicles thereby increasing their earning capacity. “Our goal with Mechtech, is to create a well-qualified workforce who have the ability to work with the latest technological advancements in the dynamic auto maintenance industry. We are proud to give these individuals a platform to add more value to

themselves, their families and most importantly their customers through their trade. At Enyo, we invest in people and in learning, we care about the development of the sector,” Abayomi Awobokun, Chief Executive Officer of Enyo Retail and Supply said. He also expressed his appreciation to the Lagos State Chairman and the executives of the Motormechs and Technicians Association (MOMTAN), the body for all the participants in the Enyo Mechtech program for their support for the program and ardent interest in the development of their members. “Mechanic training is an important investment which is majorly overlooked in the skilled labour force. With initiatives like Enyo’s Mechtech, I have the assurance that over a thousand of our members will have the perquisite skills needed to excel in auto-repair industry. I call on various stakeholders to emulate Enyo and support our members to improve the standard of automobile engineering in Nigeria,” Moruf Arowolo, Chairman, Motor Mechanics & Technician association of Nigeria (MOMTAN), Halima Adeyemi, a female www.businessday.ng

auto technician and graduating student from Mechtech 2.0 also stated, “This training has been a very rewarding experience. I started my apprenticeship a year ago, but with this training I have been exposed to various tools and learnt how to find out the actual cause of problems in a vehicle. I am more confident because of all I have learnt”. With the graduation of Mechtech 2.0 completed, Enyo Retail and Supply announced the commencement of Mechtech 3.0 which would feature up to double the amount of women mechanics compared to previous editions. Meanwhile to mark its 2nd year anniversary, the company has launched its Stillwater mega station at Lekki-Epe expressway. The 2nd anniversary celebration was dedicated to the company’s growing customer base especially in the Lekki axis of Lagos. Enyo Retail uses a popular tag line” our litre is a litre” derived from a feedback from customers after a recent customer survey on why motorists consistently patronise their stations and prefer them over most other stations in the country.

lars per barrel, at that level we would be able to pay our debt of $ 6 million. This was the strength and the character that allowed the company to be bold enough to take a $ 6 million loans. By the time the company was able to get to first production oil price was at $54”, said Layi Fatona . He said that at the beginning the company was battling with all sorts of problems, gas flaring had become a challenge. It then decide it was going to invest in gas, it negotiated first gas purchase

agreement with Shell and commenced gas pipeline of 20 kilometres and delivered it first gas in 2012 to buyers. The gas challenge turned into an opportunity for the company as it was enable to diversified it revenue base while still dealing with so much security. The gas curves he said turned the company around. For small companies like NDEP Plc there was life beyond oil production as its model of field integrated concept came a life at Ogbele. Beyond first oil at Ogbele the company grew reserves from five million by drilling additional nine wells thereby adding more to it reserve. Just a few days ago, the company completed well 11 in Ogbele. One interesting thing about the field is that field had no gas reserve when Chevron handed it over to the company but today it is carrying gas of half Tcf Layi Fatona said : “I believe every marginal field has the potentials and prospects like Ogbele. You can imagine if every marginal field turns out to be like this, then what the prospect for Nigerian petroleum industry would be. This can only be if we can get everything right, such as safe

environment where people can work, funding in place, develop our own human capital and make sure we can do all the right things. I can see the story of the Nigerian petroleum industry good to go”. Today, the company is contributing highly to the domestic gas supply through Escravos-Lagos Gas pipeline as its gas comes to Lagos and the West African Gas pipeline. It has metamorphosed into fully integrated oil company as there is Niger Delta Resources, ND Western, have fully commercialise its gas resources, there is ND Gas, The company and two others have taken a shot at drilling first shallow offshore well. For the first time as a company, it can claim it has booked reserves that are sitting in offshore domain. This is very remarkable of the story of the company. As at the beginning of May 2019 the company produced about 15 million barrels of oil from Ogbele. This is three hundred times the reserve in place when Chevron gave the block to Niger Delta Petroleum Resources. It has produced 81.5 billion standard cubic feet of gas, which it is supplying to the Nigeria Natural Gas Limited.

Natural gas supply and demand grew at their fastest pace since 2010

018 has been a remarkable year for the global natural gas market. Global natural gas demand surged 4.7% to 3,850 bcm, driven by the US and China. The US was the standout performer, accounting for more than 45% of the global increase in both the consumption and supply of natural gas. 2018 marks the second year of strong growth of natural gas demand, after a 3.5 % rise in 2017. It also recorded the highest growth of gas demand since the post-crisis

rebound of 2010. According to gas report, this fast expansion was driven by the abundance of competitive gas supply, especially in the US and in Russia and by supportive energy and environmental policies, in some countries, particularly in China. Investment in transport infrastructure also contributed to bolster gas penetration in key markets. China became the largest net importer of natural gas in the world before Japan. Chinese net imports jumped by 32% and accounted for

more than 80% of the global increase in net imports, once again highlighting the crucial role of China in absorbing global gas production. Like in 2017, the expansion of natural gas demand was part of a substantial global growth in world energy demand, driven by a robust global economy and extreme weather conditions. Strong gas demand growth in Asia contributed to a rise in market prices in key areas and prevented the formation of a global LNG bubble.

Edo communities vow to protect Sahara energy’s facilities, operations

esidents of Ajoki and Ajamimogha communities in IkpobaOkha local government of Edo State area have commended Sahara Energy for its numerous Corporate Social Responsibility projects and contribution to the development of their communities. They stated their readiness to protect Sahara Energy’s facilities and operations amid disruption campaigns planned by neighboring communities. According to them, the communities have continued to experience a “cordial, peaceful and beneficial relationship” with Sahara Energy

https://www.facebook.com/businessdayng

that is widely acknowledged and commended by all stakeholders The residents said Sahara Energy has lived up to its responsibilities by providing social amenities for them. Speaking to newsmen at a press briefing, spokesman and youth Chairman for Ajoki community Mr Isaac Ajatiton said they are at peace with the operations of Sahara Energy because many of their youths have been employed. The spokesman said what they want is development and such could only happen when there is peace between the firms and host communities. @Businessdayng

He said Sahara Energy has helped to extend electricity to their community, provide scholarships to deserving students and facilitated the provision of medical care for the elderly. According to him, “We are very happy with Sahara Energy operations. The company has no problem in our community. Most of the things we asked them to do have been done.” On his part, the spokesman for Ajamimogha and trustee president Bawo Otikpere said they were prepared to protect facilities of Sahara Energy and other oil firms in their community.

Thursday 23 May 2019

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

TMT Experts move to drive investments in tech sector ...call for review of IP law in Nigeria

xperts in technology, media, telecommunication (TMT) and finance have called on concerned authorities to review Nigeria’s outdated Intellectual Property (IP) laws, so as to attract investment opportunities in the technology sector and other sectors across the country. This call is coming at a time when technology has continued to disrupt ways organisations operate, resulting in innovations that would need to be protected by the law for them to thrive and remain sustainable. Speaking during the 2nd Annual Business Series of Duale, Ovia & Alex-Adedipe (the

“Firm”) a fast-growing fullservice commercial law firm in Nigeria, Adeleke Alex-Adedipe, a partner at the law firm said the firm would continue to reach out to lead the charge and drive conversations towards to reform of Nigeria’s out-dated Intellectual IP laws, especially as it relates to trade marks. “Why does it take such a long time to register a trade mark? It is a problem and we write opinion to clients all the time about time line to register IP. In a country that is trying to drive investment and trade, we shouldn’t have such impediments in our laws. These are conversations and take-way from this business series and www.businessday.ng

things that will be sent across of appropriate authorities to help organisations,” Alex-Adedipe said. Speaking during a panel session, Kenneth Obiajulu, co-founder and managing director of FarmGate Africa, said IP issues are quite sensitive in Nigeria and is not at the level it ought to be. Obiajulu said waiting for the current regulatory framework to protect you as an investor may not work, adding that it is important for Nigeria to build the regulatory framework it desires. Also speaking during the panel session, Kenneth Muhangi, partner, KTA Advocate of

https://www.facebook.com/businessdayng

Uganda, noted that intellectual property should be looked at broadly, as several countries are investing in technology, which is changing things. For Muhangi, engaging regulators is also key to ensuring the required IP laws are enacted. Adeniyi Duale, managing partner of DOA, stressed that no investor would put their money in a business with a risks associated with not having strong intellectual property rights or trademark, “therefore the need to have legal framework that can help protect innovations, especially as it concerns technology,” he said. He raised concerns on the need for government to under@Businessdayng

stand issues relating to the tech sector, so as to take the right approach. During his key note address, Uzoma Dozie, former CEO, Diamond Bank, said Diamond bank used new technological services to attract wide range of customers. “We invested in equipment, expertise and education. We turned Diamond bank from paper-based operations to a paperless organisation. We became more mobile and agile. Technological tools as artificial intelligence can be leveraged on to provide exceptional services,” Dozie added. See more pictures on page 30

BUSINESS DAY

LegalBusiness

Thursday 23 May 2019

TMT Experts move to drive investments... Continued from page 29

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

YOUNG BUSINESSLAWYER

Performance pressure

often start with a search on nominated themes for my periodic articles and when I did my search on this theme “performance pressure”, the search pulled up the word “stress”. In distilling the connection, I understood that this was because work requirements could create pressure to always show up irrespective of convenience and where not managed well could lead to stress. Performance pressure is a reality for most professionals but in my opinion, for lawyers even more. Our informal and professional community expect a certain quantum of exposure or competency and most of the time, even when others are clueless, recourse is to the lawyer in the room to show up or present ingenious solutions. This expectation while positive and well-intentioned does chime up the pressure under which lawyers work and as this pressure rarely subsides, different reactions result. In many cases, lawyers work under immense emotional and physical stress without proper self-management

and then resort to knee-jerk reactions when the negative effects set in. These kneejerk reactions could involve sudden resignations, emotional break-down, terrible personal relationships and frustrations or simply biting more than can be chewed just to showcase capacity. Technology has also increased the flux of work and timelines, hard-stops and deadlines are unavoidable buzz words. For many young lawyers, this pressure is accentuated and often giddy with confusion, young lawyers are under pressure to perform with minimal direction.

There are star performers who have the gift of working devoid of stress no matter the pressure, but it is not the same with everyone. For most, capacity percolates over time and there is nothing wrong with this. However, the demands of the profession may require that we manage or accelerate growth and where this is the case, personal responsibility must be taken to develop a performance strategy to ensure that one is not working beneath the thresholds of the needs arising at the time. To get this right, some helpful considerations are below. Life happens in bits and mites This is an obvious but often ignored fact about life. People are more conscious of what they want to do in the next 5 years than they are of the next 30 minutes. Consequently, we set the stage for tomorrow and vacate the tasks that will enable the advancement we seek. In her book, “Come matter here”, Hannah Brencher elaborates on how critical it is to be conscious of the present and

be “here in a getting there world”. While we aspire to more, we must address immediate challenges with full attention. We must graduate our progress intentionally and critique the value derived or dispensed in relation to time and worth. This is a personal responsibility and often the preventive measure for knee-jerk reactions that many are prone to take at critical points in their career. Check and change your record Sometimes, the stage for pressure is set by previous failures. We have made mistakes and we do not want them repeated so we work prejudiced by defence and fear of another failure. What is weird is that in such circumstances, we are more prone to error and miss details. Where your record is chequered, it is important to work towards change but one must be careful to avoid working under failure induced pressure. It reduces objectivity and causes stress in excess of what ordinarily can be handled. Scientists

LegalBusiness

report that in such instances, the hormone, cortisol is released, and the brain reacts by putting the body into a defensive mode while reducing objectivity, a necessary work tool. Calmness is a critical work tool and this is the appropriate environment for accuracy, which is the goal. This can be cultivated by proper time management and adequate preparation. Sometimes, pressure is a ghost Pressure is sometimes rooted in notions which are without foundation and we must be careful with this as well. Proper understanding of expectations enables clear application of principles. This is why the culture of working in a silo is deficient. Try always to be on the same page with your team or the beneficiary of the service you render. This closes the gaps and enables a calm approach to work. Break the habit Habits are crutches and could limit progress. More so, work pressure is amplified by bad habits. What are you known for that is negative? Work to correct or change this with sincerity. Talk is easy, work is hard, aim to get the hard work in

to change bad habits. Create full-stops Almost everything in motion has fluctuations in movement. Speed is good, but it must be controlled. It is important to pace work flux with capacity. Too much work is not always good. Efficient work is best. It is not volume or speed that makes motion happen, so piling up work may make you feel busy but it is not synonymous with growth. Take breaks, use your leave days allowance, gauge your energy periodically. Work is better when energy is optimal. Pace yourself, do not aim to grow all at once, it is not practical. In simple terms, be calm. Excellent performance is not a myth, it is worked out intentionally and preferably without pressure. OYEYEMI ADERIBIGBE is a Senior Associate at Templars. She is also the current Vice-Chairman of the Young Lawyers’ Forum of the Nigerian Bar Association -Section on Business Law and the Young Lawyers’ Committee Liaison Officer of the African Regional Forum of the International Bar Association. Feedback – Oyeyemi. aderibigbe@templars-law. com

Overview of the NERC consultation paper on development of a regulatory framework for electricity distribution franchising in Nigeria Continued from last week

dditionally, we observe that the franchise arrangement is similar to the Independent Electricity Distribution Networks (“IEDN”) permitted via the NERC IEDN Regulations 2012. Under the IEDN Regulations, an IEDN is defined as distribution network not directly connected to a transmission system operated by the system operator. By section 6 of the IEDN Regulations, NERC may grant a licensee the exclusive right to construct, own, operate and maintain a distribution system in a designated geographical area within the area of operations of a Disco (please note that IEDN is also permitted to have its own generation component). The IEDN framework and the franchise arrangement have very conspicuous similarities in that both concepts are geared towards encouraging investment in distribution infrastructure to unserved and under-served areas within the Disco’s area of operation. Thus, the franchise arrangement when promulgated into law would cast doubt as to the relevance of the IEDN structure. To avoid a duplication of frameworks, NERC would have to consider the applicability of both concepts in the NESI. Tariffs The Consultation Paper states that the NERC shall approve Multi Year

Tariff Order (“MBSO”) tariffs for areas covered by the Distribution franchisees with the Franchisee being able to gain a premium where it provides additional power to the Disco. It would be essential for NERC to undertake adequate customer sensitization for customers who would be paying for electricity within franchise areas particularly as such customers may be paying more tariffs than other customers not covered by a franchise arrangement. Implications of the Consultation Paper on the NESI Sale of Stranded Power: The Generation Companies have accused the Discos of rejecting power supplied to the Discos as result of the Discos not having adequate evacuation infrastructure. This has led to the grid having excess volumes of stranded power and as a result inefficient collection and loss of tariffs across the power sector value chain. With the Consultation Paper, NERC is seeking to bridge the gap between the Discos and the consumers by ensuring that the latter is provided with improved access to electricity and eventual purchase of such stranded generation capacities. Improved Generation Capacity The Consultation Paper seeks to www.businessday.ng

increase the generation capacity of the country by encouraging distribution franchisees to also sell generation capacity to the Discos. The implication of this the Disco would have more power which can be supplied to a larger number of offtakers (provided that the distribution infrastructure is put in place. Additionally, in the event of grid failure/system collapse, the Disco have an alternative off grid sources of power which can be supplied to customers. We envisage that small thermal plants as well as renewable power plants would play a major role in this regard. Improvement in NESI Liquidity: The illiquidity issues running across all levels of the NESI are mainly based on collection losses and inadequate remittances from the Discos. It is reported that for the year 2018, the average rate of disco remittance to the Nigerian Bulk Electricity Trading Company stood at 25.5% per cent monthly for power sold to such disco. To the extent that the aim of the Consultation Paper is to improve access to electricity as well improve metering and collections, the franchise arrangement could potentially improve the rate of collections of the Discos. However, the risk of collection and payment would be transferred from the Discos to the distribution franchisee and as such the franchisee would to come up

https://www.facebook.com/businessdayng

sufficient measures to ensure efficient collection of revenues. Uncertainty as the role of the Meter Asset Providers and the IEDNs: The Consultation Paper appears to make redundant, the roles of the Meter Asset Providers and the IEDNs since the distribution franchisees can undertake and perform the obligations of both entities. Justifiable concerns on duplication and redundancy would make investors wary of their investments in those two entities and as such, it would be crucial for NERC to clear outline what the roles of the Distribution Franchisee would be under this framework. Blurred Lines between Generation/Distribution Licences and Franchisees: The Consultation Paper seems to create an uncertainty regarding the ability of the franchisee to sell and distribute power (above 1mw/100 kw respectively) without the need to obtain a generation or distribution licence (as applicable). It would be essential for NERC to address this point from a regulatory standpoint to avoid any conflicts in this area, Conclusion Whilst the franchise arrangement seeks to achieve a “Win-Win” situation for the Discos, the Franchisee, the customers and the NESI, it @Businessdayng

remains to be seen, however, how the industry stakeholders, particularly, Discos and the customers will react to this development. Unarguably, the electricity sector requires more funding and infrastructure, there is some tendency for Discos to treat this development with great suspicion. Additionally, the uncertainties created by the Consultation Paper would also need to be addressed in the regulation to be released by NERC. This notwithstanding, it is quite commendable that the Franchisee is required to have electrical distribution management expertise and the capacity to invest resources into the upgrade as well as expansion of the distribution system. One can only hope the Distribution Franchise Model, if and when allowed to finally come into operation, will be given the right business environment to thrive, without jeopardising the interests of Discos, while taking into account the concerns of all other stakeholders.

Ayodele Oni {ayodeleoni@outlook.com}, a solicitor, specializes in international energy (oil, gas and electricity) investment law and policy. He holds a mini-MBA in power & electricity.

Thursday 23 May 2019

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

Lagos Judiciary to support 13th Annual Business Law conference

he Chief Judge of Lagos State, Hon Justice Opeyemi Oke has assured the Council of the Nigerian Bar Association Section on Business Law (NBA-SBL), and members of the 2019 Conference Planning Committee that Lagos State Judiciary would render all its support towards the success of the 13th Annual Business Law Conference, which would take place in Lagos. She said this during a courtesy visit by the Chairman of the NBA-SBL, Seni Adio, SAN and members of the Conference Planning Committee to her Chambers at the Ikeja High Court. The visit was to brief the Chief Judge of Lagos State, Hon. Justice Opeyemi Oke about the Section’s forthcoming conference scheduled to hold between June 26th – 28th, 2019 at the Eko Hotel and Suites, Victoria Island, Lagos. Introducing members of his delegation to the Chief Judge, the NBA-SBL Chairman who was accompanied by Council members, Yode Delano, SAN and Sam Aiboni; the Chairman of the 2019 Conference Planning Committee (CPC) Dr Adeoye Adefulu and other members of the CPC, thanked the Hon. Chief Judge for her warm reception and support for the section over the years. Briefing the CJ on the level of preparedness of the CPC, Dr. Adefulu disclosed

the theme of the Conference “Growth, Investment and Employment: Beyond Rhetoric” to Justice Oke and her theme. He said, “As the theme suggests, the conference would focus on the factors, steps and actions required to ensure economic growth, increased rate of investment and employment in Nigeria. The role of legal practitioners and the opportunities for business growth and professional capacity development

would also form a major thrust of discussions.” Dr Adefulu further stated that the Conference would be a unique opportunity for the government, multilateral institutions and investors, the private sector to discuss frankly, on strategies to attract the right kind of growth and investment into the Nigerian economy. He gave a brief outline of the conference Program as well as the first plenary session which is Triage

-assessing the state of the Nigerian economy – Identifying Priorities, Proferring Pragmatic Solutions and the debate session on whether sexual harassment in the work place is prevalent in Nigeria including any cultural stigma that may prevent victims from speaking up. Adding to Dr. Adefulu’s outline, the NBa-SBL Chairman also noted that the Chief Judge of Lagos State had been very instrumental to the law reform, which

according to him has led to investor-confidence in Lagos State. He further observed that the valedictory ceremony and thanksgiving service for the current Chief judge incidentally falls within the week of the Conference and used the opportunity to appreciate the CJ’s contribution to Justice sector and the legal profession in general. In her response to the NBA-SBL delegation, the CJ thanked the leadership of the NBA-SBL and the Conference Planning Committee for its visit. She stated that the theme of the conference, “Growth,

Investment and Employment: Beyond Rhetoric” was timely, adding that private sector involvement was very critical to the growth and development of any economy. Oke cited the contributions of the Lagos State Government, the NBA-SBL, and other private sector-led organisations to the work of PEBEC on the ease of doing business in Nigeria, and thus assured the NBA-SBL of her strong support for the conference, which she said would start with plans ahead to ensure Lagos State Judges were in attendance at the conference in spite of her valedictory.

Annual Business Law conference seeks to provide practical solutions to Nigeria’s growth and employment challenges – Dr. Adeoye Adefulu

he Chairman of the Conference Planning Committee for the 13th Annual Business Law Conference organised by the NBA Section on Business Law, Dr. Adeoye Adefulu has said that the 2019 conference would seek to provide practical solutions to critical challenges facing Nigeria’s economy, with a view to achieving increased and inclusive growth for Nigerian. According to him, topics such as, Health, Security and Education (HSE); Sexual Harassment In The Work Place Discussion On The Oil & Gas Industry – The Role Of The Private Sector In Fixing Nigeria; Making The Civil Justice System Better – The future Of Law,” would be a few out of several others to be discussed by a wide array of business experts, thought leaders and captains of industry at the event. Fielding questions from law editors and legal correspondents, the CPC Chair stated that

the government would be fully involved in the conversations that would be had at this conference. ”Just like last year’s event where our theme and topics discussed lent credence to the conversation on African Continental Free Trade Agreement (AFCFTA) and why Nigeria should make www.businessday.ng

bolds moves to become a signatory. Adefulu said, ”The conference was instrumental to bringing it to the fore front of the government,” he said. In his remarks, the Chairman of NBA-SBL, Seni Adio, SAN, made a case for the Companies and Allied Matters (CAM) Bill to

https://www.facebook.com/businessdayng

be signed into law, adding that the NBA-SBL would continue to lead the charge for this to become a reality. According to him, the provisions of the bill would make bring about business efficiency around the country, as most of the bottlenecks encountered by business owners will be eradi@Businessdayng

cated and adequately addressed The Chairman also thanked members of the press for their continuous support over the years and encouraged them to continue to report on various critical areas and sectors the economy that would bring about real change.

Thursday 23 May 2019

BUSINESS DAY

Factoring and small enterprises 36

Emefiele’s Agenda for the Economy in Next 5 Years 35

How to Score Innovative Ideas

The best way to get what you want? Focus on your customers’ needs

What next for Nigeria’s steel industry? …As WEMPCO duty waivers bug and other factors send this giant steel maker packing, SIAKA MOMOH reports.

he abuse was very evident and BusinessDay, in 2013, cried out against it. This writer as Industry Editor in the newspaper wrote extensively on it, drawing attention to the irregularities in the waiver that had to do with, among other things, Western Metal Products Company Limited (WEMPCO) listing for duty waiver, importation of items that were in production in Nigeria. Expectedly, the story called for WEMPCO’s quick and plump reaction. Sources within the industry alleged WEMPCO abused the exclusive rights and waivers that were granted to it by the Federal Government during President Goodluck Jonathan’s administration. The previous government had granted the firm heavy waivers to aid it in the production of cold-rolled sheet locally. Cheaper substandard smuggled roofing sheets also constituted part of WEMPCO’s headache. CBN’s initiative Again, in 2015, the Central Bank of Nigeria (CBN), as part of its initiative to resuscitate local industries and improve employment generation, released a list of items not eligible for foreign exchange in the government-created Importers & Exporters window. Among the 41 items on the list are cold-rolled steel sheets, galvanized steel sheets, and roofing sheets. However, the firm had instead embarked on heavy importation of the product. Implications The implication of all these will be labour flight. This reminds one of the case of St Louis Sugar that is being imported into Nigeria, which accounts for the loss of 4000 jobs to France. The attention of government was drawn to this yet lobbyists are still having the upper hand on this matter. Several media reports have revealed that no fewer than 19 enamelware firms are equally closing business due to WEMPCO’s proposed exit; about 250,000 jobs are therefore on the line. Stakeholders’ warnings Concerned stakeholders in the industry have never ceased raising their voices in condemnation of abuse of tax waivers. These industry players have criticized the Federal Government for its reckless issuance of waivers and levy concessions to a select group of steel manufacturers, apparently referring to the likes of WEMPCO and several

other import substitution skewed companies in the country describing the government action as highly irresponsible and a disservice to the nation. Some informed industry stakeholders told BusinessDay in confidence that import duty waivers, levy concessions, and petroleum subsidies are robust tools for funding elections, implying that beneficiaries of the scam are in league with key government functionaries. The Manufacturers Association of Nigeria (MAN), the umbrella body for manufacturers in Nigeria, observed that contrary to the stipulation of Chapter 72 of the Tariff Book that says no waivers and concession on import duty and VAT should be given, steel items are being imported in enormous tonnages, most times in excess of what is needed to execute claimed projects. MAN, in a letter dated January 10, 2013, written to the Coordinating Minister of the Economy and Hon-

ourable Minister of Finance, Ngozi Okonjo-Iweala ( Attention: Director general , Budget Office), said: “CME, we are surprised also to discover that the material/product list attached to the concessions newly granted to three other companies (Messrs WEMPCO, Rite Aid Wire Industries Limited and Quits Aviation Services Limited) contain items that are not plant and machinery and are also being produced locally.” MAN argued these approvals should be amended to exclude skill and other items that are produced locally (such as steel, cables, etc.) in order to save local manufacturing from collapse. The Lagos Chamber of Commerce and Industry (LCCI) has been concerned about the wanton abuse of Import Duty waivers. The Chamber, according Muda Yusuf, its director general, this condition has a number of very serious implications for the economy. He argued, “First, it creates

Advertise here

distortions in the investment space as a result of the uneven playing field it creates among private sector players. This could be a major disincentive to entrepreneurship and enterprise development. Secondly, it is a system that is prone to corruption. Access to duty waivers is often dependent on critical contacts in the realm of politics or bureaucracy and this is a process that is considerably prone to corruption. It is not a system that recognizes merit. Thirdly, it leads to profound loss of revenue as had been variously reported by the Nigerian Customs Service”. For the Chamber, “It is astounding that in spite of the various assurances by the government that granting of waivers has been stopped, the practice apparently had continued. This is regrettable and not healthy for the economy. The

Continues on page 34

Thursday 23 May 2019

BUSINESS DAY

Tech Business

FG is committed ITU BSG programme ‘

he Ministry of Communications is committed to forward-looking policies to enable citizens, businesses and societies to prosper while mitigating the possible adverse effects that can accompany economic change.’ The Honourable Minister of Communication, Dr. Adebayo Shittu has assured that Nigeria will join the International Communication Union (ITU) in the Bridging the Standardization Gap (BSG) programmes by facilitating the efficient participation of Nigeria in ITU’s standard-making processes and hands-on sessions during the year. The Minister of Communications who was represented at the World Telecommunication and Information Society Day (2019) by Director (Radio

Monitoring & Survey) Engr.Kilyobas N. Binga which was held at the SGF Hall, Federal Secretariat said the BSG is a fundamental part of ITU’s mission

to connect the world. He stated that it is also one of the strategic objectives of ITU’s standardization sector (ITU-T) to address the

disparities in the ability of developing countries, relative to developed ones, to access, implement and influence ITU’s international standards In his words “the overarching goal of the Bridging the Standardization Gap (BSG) programme is to facilitate increased participation of developing countries in standardization, to ensure that developing countries experience the economic benefits of associated technological development, and to better reflect the requirements and interests of developing countries in the standards-development process”. D r. S h i t t u a d d e d t h a t I T U standards are consistently being pursued to ensure interoperability, open up global markets and spur innovation and growth noting that

the standards are good for both the developed and developing countries as well as to help accelerate ICTs for all Sustainable Development Goals. The Minister reiterated that Nigeria shall learn about Bridging the Standardization Gaps, develop the right skills for standards-making at ITU-T Community, Join the activities in the regions and Participate in the standardization work of ITU-T as well as Partner with recognized bodies to help us bridge the standardization gap. He calls on ITU Member States, industry members, small and big companies and academia, together with UN sister agencies, partners and all stakeholders, to support ITU’s “Bridging the Standardization Gap (BSG)” programme for the prosperity and the well-being of all.

What next for Nigeria’s steel.... The Ajaokuta Steel Story Continued from page 33 principle of waivers would make sense where strategic government projects are involved, with significant national interests at stake. It is not supposed to serve narrow interests of profitability. Where it becomes inevitable to grant such waivers, it should be of universal application to all players in the sector.” For Shuaibu Idris, former deputy managing director, Dangote Flour Mills Plc, entrepreneur and industry analyst argued, “In general the concept of duty waivers, concession and tax holiday is good and an excellent idea which has been used by many countries to help industrialize nations. However, successive governments in Nigeria tend to use these waivers, concessions and tax holidays in a way and manner that is highly questionable and in fact a disservice to the nation. Scrupulous and frivolous persons apply for this assistance under questionable guise and are processed and granted waivers on duty only for them to turn back and sell the commodities without any regards to the waivers and a few people feed fat on the system. This economic rent seeking, while many present day business men and women alike did enjoy it to rise to stardom.” Egg Heads In a paper titled ‘Abuse of Import Duty Waivers in Nigeria’ authored by Nwanneka Modebe, Okoro Okoro, Chinwe Okoyeuzu & Chibuike Uche of the University of Nigeria, they argued: “An increasingly popular but disturbing method of misappropriating government revenue in Nigeria is the practice of granting all manner of indiscriminate waivers of tariffs and duties on imported commodities under the directive of the Presidency.” The paper critiqued the law, use and abuse of duty waivers in Nigeria. It argued that although the President, on the advice of the Tariff Council, has powers to grant waivers, such powers are neither supposed to be granted indiscriminately nor in secret. It added that the granting of indiscriminate waivers to individual operators in an industry rather than to the entire industry distorts national economic and industrial development which is

normally the very essence of granting such waivers. The paper also raised questions about the implications of the granting of indiscriminate duty waivers by the Presidency for fiscal relationships in a federal state.” It noted that the practice ran through the administrations of Presidents Olusegun Obasanjo, Umaru Musa Yar’Adua and Goodluck Jonathan. It noted in particular that “It has for instance been asserted that in “the run-up to the 2007 elections, verifiable reports by the House of Representatives Committee on Customs and Excise indicate that Nigeria lost over N380 billion in import duties which were waived by the Federal Government to its crony importers.” The paper added that “it has further been suggested that, at least in part, such abuse of fiscal resources by the Federal Government has been used for the purpose of financing elections”. Buhari and waivers President Mohammadu Buhari had to axe waivers in 2016 to shore up government dwindling revenue. It did this to rev up revenue as the Federal Government continued to consider options to close the widening gap in the 2016 budget occasioned by the continuous fall in the price of crude oil at the international market. WEMPCO, among other challenges has now been hit by this and those who raised their voices against waivers bug have been proved right.

What to do now We know iron and steel industry is strategic to the development of any developing economy like ours. We know that the industry is needed for the take off and sustenance of the automobile industry and interestingly, there is an automotive policy on ground now. We know that machine tools and equipment of all sorts are products of the iron and steel industry. We are aware too that our oil and gas industry is, and will remain under the control of foreigners as long as the Nigerian iron and steel industry remain undeveloped because the entire gamut of infrastructure in the sector is made of iron and steel. Do we allow our iron and steel industry to go under and lose the advantages listed herein? The answer of course is ‘No’. Ajaokuta must be made to work. According to Bayo Kolade, a retired Director of the Ministry of Power and Steel, there are two sectors in the steel industry – primary and secondary sectors. He explained, “Ajaokuta operates in the primary space whilst WEMPCO, African Steel Mills Limited, African Foundries Limited, Verod Steel Limited and the steel rolling mills in Oshogbo, Jos and Katsina and others in this category, operate in the secondary space. The primary sector should feed the secondary sector – Ajaokuta whose raw material is iron ore should be the source of raw material for industries in the secondary sector.”

The plan to develop the Iron and Steel Sector began with the Yakubu Gowon Regime with the formation of National Steel Development Authority (NSDA) in 1971. Basir Borodo, former president, Federation of West African Manufacturers Association, who has been a player in the Nigerian industrial sector for over 40 years, attested to this in an interview with this writer. The mandate of the Authority was essentially to develop the steel sector. What followed was the formation of various steel companies during the General Muritala Mohammed/ Obasanjo Regime. These companies started realizing their potentials during the Shagari Regime. The companies include Ajaokuta Steel Company, Kogi State; National Iron Ore Mining Company Itakpe, Kogi State; Delta Steel Company Ovwian Aladja, Delta State; Jos Steel Rolling Company, Jos Plateau State; Katsina Steel Rolling Company, Katsina State; Oshogbo Steel Rolling Company, Osun State; National Steel Raw Materials Exploration Agency, Kaduna State; National Metallurgical development Center, Jos Plateau State; and Metallurgical Training Institute Onitsha, Anambra State. Quite a mouthful; but they never realised their full potentials. West’s sham David Ricardo theory The Western World, through their Institutions, the World Bank and International Monetary Fund (IMF),

amplified the story: Development of the Steel Industry in third world countries which includes Nigeria, to them is uneconomical and so should not be touched, should not be considered. They drew on the sham David Ricardo theory of comparative cost advantage that Africa should not develop Steel Industry but should export their raw materials to the metropolitan West and buy finished Steel from them. The Soviet Union agreed to develop the Iron and Steel Industry for Nigeria; the civil works given to the West grounded it. Borodo corroborated this West’s sham stand when he recalled that some of his professors in Nigerian universities (professors from the West) in sixties said Nigeria should not consider having steel plants; that we were not right for it, “whereas they had steel plants in their own countries”. Ajaokuta steel plant project and the adjoining steel rolling mills are thus stalled today. Ajaokuta has gone through many hands - The Ajaokuta plant was 90 percent built by Russia’s Tyazyproexport and designed to use local ore and imported coal. Nigeria signed a concession agreement with Ispat unit Global Infrastructure Holding Ltd. to revive the uncompleted 1.3 million tonnes-per-year mill after the collapse of an earlier $3.6 billion 10year deal with UK-registered Solgas Energy Limited. What we witnessed thereafter was the plundering of the plant’s machinery.

Thursday 23 May 2019

BUSINESS DAY

Economy

Emefiele’s Agenda for the Economy in Next 5 Years

entral Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele says CBN in the next five years, will aggressively pursue policies that will further diversify the Nigerian economy, NAN has reported. Emefiele said this in an interview with newsmen on Friday in Nsukka, Enugu State, after a Special Convocation of the University of Nigeria (UNN), where he was conferred with an Honorary Doctorate Degree in Business Administration. The pledge was coming after the Nigeria Senate on Thursday confirmed Emefiele for a second term in office as CBN Governor, starting June 3. Emefiele said the CBN in the next phase of his administration would consolidate on already existing policies. “Nigeria belongs to all of us and we have a role to play to make sure things get better. “I will also emphasize that Nigerian policy makers are good at developing policies, but the biggest challenge of the Nigerian economic policy is that people try circumventing policies. “Given this opportunity now, we will make it very difficult for people to circumvent economic policies. “We must learn to respect our policies. If you don’t respect the economic policies of this country, and you fall short of our economic policies as an economic saboteur, you will be dealt with,” he said. Emefiele, who is the 11th CBN Governor, began his five-year tenure on June 3, 2014. Some of the major policies undertaken by the apex bank in the

last five years included the Anchor Borrowers’ Programme which aimed at increasing the country’s local food production and conserving the foreign reserves. The CBN took the decision to also ban 41 items from accessing foreign exchange through official routes to encourage local production of the items and simultaneously conserve the nation’s depleting foreign reserves. Since then, the CBN had raised the number of items affected on the list to 43, with the inclusion of fertilizer and textile products. Some of the items not valid for foreign exchange at the Nigerian window included rice, cement, margarine, palm produce, beef, vegetables, poultry and eggs, private airplanes, wooden doors and Iron rods, among others. The CBN also introduced the

multiple foreign exchange system, which led to the creation of the Inter-bank/Wholesale, Invisible, Small & Medium Enterprises (SMEs) and the Investors/Exporters’ windows. Also, in 2018, the CBN signed a bilateral currency swap agreement with the People’s Republic of China worth about 2.5 billion dollars. The currency swap agreement was designed to aid trade transactions between China and Nigeria and remove the need to first source for U.S. Dollars before payments for transactions involving the two countries. The CBN through the Banker’ Committee and in collaboration with all banks in Nigeria also inaugurated a centralized biometric identification system for the banking industry tagged: “Bank Verification Number (BVN)”.

Editor’s Note

oncerned stakeholders in Nigerian business space, for a long time, did not spare government for its indiscriminate issuing of duty waivers to selected companies in the country. A particular case in point is that of Western Metal Products Company Limited (WEMPCO) which is shutting down its operations in Nigeria. Sources within the industry alleged WEMPCO abused the exclusive rights and waivers that were granted to it by the Federal Government during President Goodluck Jonathan’s administration. The previous government had granted the firm heavy waivers to aid it in the production of cold-rolled sheet locally. WEMPCO abused the use of the waivers. This abuse and some other factors have now caused the failure of the firm in Nigeria. The steel industry in Nigeria is now threatened. What solution for this challenge? Our cover has the rest of the story. Godwin Emefiele CBN for a second term of five years in office says he would aggressively pursue, in the next five years, policies that will further diversify the Nigerian economy. How much do you know about factoring, a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount? Get to know about this in our story titled ‘Factoring and small

Siaka Momoh

enterprises’ Read all above and more in your enthralling magazine for this month. You are welcome on board. For advert placements, sponsorship, reactions, editorial contributions, please contact SIAKA through siakamomoh@yahoo. com; 2348061396410; 23408023033988.

Innovation

How to Score Innovative Ideas S

uppose you are running a pitch competition and need to create a scoring rubric? Or, maybe you are the head of a technology transfer office or innovation center and need to screen lots of ideas? Or maybeyou teach innovation and entrepreneurship and need to clearly explain to your students how their submissions will be graded?

How do you score innovation ideas? At many companies, the idea evaluation process revolves around detailed Excel spreadsheets, comprehensive PowerPoint documents, and an orchestrated sequence of pre-meetings leading up to a decision meeting. This kind of disciplined approach works very well when companies have knowledge that lets them be precise in their analysis, and executives have the relevant domain experience to make informed decisions.

Applying this same discipline to nascent opportunities in new spaces can be disastrous. People spend days discussing Excel spreadsheets that are nothing more than mathematical relationships between made-up numbers. Managers working on ideas discover that detailed PowerPoint documents are their biggest enemy, because the details act as bait for

nit-picking devil’s advocates. Endless pre-meetings crowd out action-based learning. Here’s how one investment team screens and scores. There are many ways to screen, score and scale your innovation management system, but, here are some considerations when you do: 1. Should judges do it or should

you task the innovator with self scoring? 2. How many ideas do you anticipate and how will you scale the process? 3. How will you communicate the structure, process and criteria to those who enter the process? How will you engage innovators? 4. How will you create fairness and eliminate bias in the selection process? 5. How much money do you have to spend on screening, scoring and scaling? 6. How will you determine the selection criteria that are consistent with your strategic objectives? 7. What will you do with those who have submitted ideas that have been rejected? 8. How many stages of evaluation will you have? Pass-fail or stage gate? 9. What is the most appropriate

process for your industry or point of view? Should a new medical practice idea be judged the same way you would judge a digital health idea at a pitch competition or, a technology if you worked at a technology commercialization firm? 10. Should you automate the process? Most managers and many leaders fail at picking winners, regardless of how they go about picking the jockey and not the horse. The thumbs up or thumbs down approach, with death to the vanquished, creates innovation cultural chaos. “Ave, Imperator, morituri te salutant” If might have worked for Caesar, but, when it comes to leading innovators, those who are about to die won’t salute you. They’ll leave and compete with you.

By Jason Feifer Source: Innovation Excellence

Thursday 23 May 2019

BUSINESS DAY

Business

The best way to get what you want? Focus on your customers’ needs

curious email rolled into my inbox recently. The subject line was “Write article.” And here was the entire message: “Hi Jeff. I wanted to write an article, who do I speak with? Thanks.” Maybe you have some questions. I do! What kind of article does this person want to write? What makes them qualified? Why would I want to publish it? When did my name become Jeff? And that’s just the start. But let’s focus on the most telling word in this email -- the one that explains what went wrong, and should serve as a warning sign for us all. The word is wanted, as in “I wanted to write an article.” The email writer led with what he wanted, not with what he could provide. And although his email was particularly clumsy, his mistake was very common. We are all, at some points, blinded by our own interests. We want something badly, and so, like a starving man who sees everything around him as food, we begin to see the people around us as providers. We expect them to deliver a service, as if they’re hired for a job. We become needy. Demanding! But here’s the harsh reality: Nobody cares what you or I or anyone else wants. Instead, they care about what we can do for them. Consider how successful transactions take place. An entrepreneur may want an investor’s money, but they don’t say, “I want your money”; they talk about how they can make the investor money. And nobody tells a customer, “I want your purchase”; they tell a customer about how their product or service can make the customer’s life better.

Factoring and small enterprises

F I wanted to write an article. That’s what the email said. As if my job is to grant wishes. He was so laser-focused on that desire that he failed to sell me on an idea. He offered no value, even though that’s what everyone is looking for. Please understand, this isn’t about reaching out to me. It’s about reaching out to anybody. Do I expect us all to be selfless, always giving and never getting? I don’t. We all want things, and we should. But we should also be mindful of the best way to get them. Otherwise, we’re just wasting our and everyone else’s time. I mean, just imagine if I’d written this column -- the thing you’re reading right now -- about what I really want. “Dear reader, I want you to buy this magazine and follow Entrepreneur on social media. Oh, and follow me, too! And listen to my podcasts!” Do I want those things? Of course. But if I said that, I’d give you no incentive to actually do them. So instead, I pay close attention to what my readers want. I correspond with them and talk to them at events; I take note of what they like and dislike. And then, when it comes time to produce this magazine, I reflect upon what I’ve learned and do

my best to deliver value. I’m not saying I do it perfectly. But I know it’s the only path forward. That’s the power of value, after all: When you know how to deliver it, you’re in a far better position to receive value for yourself, too. That point was hammered home recently by an entrepreneur friend of mine, whom I shared these thoughts with. He runs a medical company and spends a lot of time fundraising and building partnerships. “It’s how I approach negotiations,” he says. “You have a much better chance of getting what you want if you focus on what the other person wants. Then you can negotiate from strength, because you already know what’s important to the other party.” I know it can sound obvious. But in day-to-day interactions, we can slip up -- talking too much about ourselves, pivoting too quickly toward the thing we desire. So here’s my challenge to you (and to myself!), at all times and in all interactions: Be relentless on value. You’ll get what you want by providing what someone else wants first. Source: Entrepreneur

Business Awards

BusinessDay honours CEOs for distinguished outing in NSE in 2018

usinessDay honoured recently, in Lagos, chief executives of companies, who distinguished themselves by contributing to the growth of the market capitalisation of quoted firms in 2018 in spite of the overall market performance ending in the negative territory. BusinessDay, in the Next Bulls Awards, also celebrated a number of firms for inculcating good corporate governance, innovations and raising the standards of their organisations to a point where it would be seamless if they were to be listed on the NSE today. Access Bank, ASL Nigeria, Berger Paints, AIICO Insurance, Beta Glass, CAP, Caverton Offshore Support, CCNN, Custodian Investment, Eterna, FCMB Group, and Fidson Healthcare won in the Top 25 CEOs Awards. Other winners of the Top 25 CEOs Awards include Linkage Assurance, Prestige Assurance, Neimeth International, NEM, NPF MfB, Seplat, Stanbic IBTC Holdings, Sterling Bank, Unity Bank, Vitafoam and Wema Bank. Access Bank and e-Tranzact got special recognitions. Similarly, Airtel Networks Limited, Dana Airlines, Enyo Retail & Supply, IHS Towers Limited, Phase 3 Telecoms, Rack Centre, System Specs, VFD Group, Farmcrowdy, Alpha Mead Group,AJE Group PTY Nigeria, Innoson Group, Mojec International Limited,Parlton Morgan

Holdings,Sona Group Nigeria,Tolaram Group, Urban Shelter Limited, WACOT Limited, Zinox Technologies Ltd and Halogen Security Limited won the Next Bulls Awards. Frank Aigbogun, Publisher/CEO, BusinessDay Media Limited, commended the managements of the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) for their relentless efforts to attract more interest into the market. He, however, said the capital market is currently dominated by the bears, an indication that equity prices are grossly undervalued as most stocks trade below their actual valuations, in spite of the forecasts about the post-election rally. The annual Top 25 CEOs Awards, which debuted in 2012 as Business-

Day’s way of recognising CEOs who distinguished themselves by adding value to the investments of shareholders, have as parameters share price appreciation and profitability. A team of analysts at BusinessDay Research and Intelligence Unit (BRIU) peruses the performances of listed firms on the NSE once transaction ended on the last trading day of the year. Supported with the appraisal of each firm’s latest financials, the list of listed firms is then pruned down to 25, whose CEOs are honoured annually at the event. The Next Bulls Awards made its debut this year to support the mandate to get more firms listed on the NSE. Companies considered for this category of awards is those that will seamlessly get listed on the NSE should they decide to do so today.

actoring is not a common form of finance for small enterprises in Nigeria. Banks grant most factoring done to companies in the oil and gas sector or large corporate clients. Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. In “advance” factoring, the factor provides financing to the seller of the accounts in the form of a cash “advance,” often 70-85 percent of the purchase price of the accounts, with the balance of the purchase price being paid, net of the factor’s discount fee (commission) and other charges, upon collection from the account client. In “maturity” factoring, the factor makes no advance on the purchased accounts; rather, the purchase price is paid on or about the average maturity date of the accounts being purchased in the batch. In other sectors, where the value chain is not as well understood, banks perceive higher risk in providing factoring finance to SMEs. But reports show that finance houses have been providing short-term working capital loans for SMEs, providing some factoring and purchase order financing. But the truth is factoring in small business sector has not taken strong root. There is need for small business operators to explore this attractive funding option. We can take a cue from India whose case is similar to ours. The role of a factoring business is yet to gain ground in India, wherein small and medium enterprises (SMEs) struggle to get funding support from banks on concern of asset quality. At a little higher cost of funds, a factoring company can well be the liquidity generator to stimulate the SME growth engine. According to Sudeb Sarbadhikary, CEO, and India Factoring - a Mumbai-based standalone company, the business volume is increasing for factoring companies even as banks’ credit is contracting. SMEs generate the majority of country’s (around 75%) employment and they should keep growing with free fund flows. “SMEs are promoter driven company with limited resources. The challenge is that money is blocked for 6-12 months, leading to liquidity stress for them. In FY12, our business volume was at Rs 2,500 crore (N7, 166.53), while we aim to take it to Rs 5,000 crore (N14, 333.06) in FY13. We have around 200 SME clients, which form around 90 percent of the total kitty. It was around 160 in the previous year,” he told moneycontrol.com, in an exclusive interaction. The year-on-year business growth is on a lower base, as the company was started in December 2009. There are around 10 factoring companies in India. Can bank Fac-

tors and SBI Global Factors are two of the oldest factoring companies in India. As of now, the total size of factoring business volume in India roughly stands at around Rs 17,000 crore (N48, 732.67), which according to Sarbadhikary, forms around 0.30 percent of the total banks’ credit in the country. How it works Small businesses sell their products to other big companies, which do not immediately release cash. Meanwhile, the former, with limited wherewithal, require more funds to expand their business. Banks are not so keen to extend credit to them beyond a point. Here comes the role of a factoring company, which gives 80 percent of the assignment money upfront at an interest cost in the range of 1415 percent per annum to the seller (chargeable on monthly basis). The factor will recover the money from the product buyer after a stipulated period. If the SME client does not repay interest, the factor will deduct it from the rest 20 percent at the time of final realisation. Does it require any collateral? “Banks want more collateral against loans. Factoring companies are relatively flexible. If we are satisfied with the quality of the debtors, we then are not hooked into collateral. In the last few years, we have seen SMEs are getting starved of traditional liquidity. In the recent time, a lot of new clients are approaching us,” the CEO said. Increase in factoring demand No doubt, it is banks’ drying up credit. In the wake of rising bad loans, banks have of late, become very selective about sanctioning SME loans. Other major trigger is the Factoring Bill enacted by the Parliament in January 2012. “Factoring Bill brought in clarity of assignments. Earlier, we did not have any right to proceed legally against the buyers (on behalf of SMEs) in case of any default. Moreover, we could not expect our clients, who own smaller business entities to pay off the debt. The Bill now empowers us to have the same legal right,” Sarbadhikary said. Following the Factoring Bill, the Reserve Bank of India recently issued guidelines creating a new non-banking finance category christened as NBFC-Factors. This has separated the class from other NBFCs, which have been facing a slew of regulatory issues. Capital infusion and fund raising Shareholders of India Factoring include Punjab National Bank (30%), Malta-based FIMBank (49%), Italybased Banca IFIS (10%), Blend Financial (1%), and employees’ ESOP (10%).

Thursday 23 May 2019

BUSINESS DAY

Live @ The Exchanges Dangote Cement, MTNN, other stocks push market higher by N400bn Stories by Iheanyi Nwachukwu

he Nigerian stock market advanced by 3.07percent at the close of trading on Wednesday May 22 as more investors rushed to buy the shares of Dangote Cement Plc. Dangote Cement rallied most on Custom Street despite that a record upfront demand and negotiated deals pushed higher the share price of MTN Nigeria Communications Plc. The shares of Nigerian Stock Exchange (NSE) most capitalised company –Dangote Cement Plc rallied to the topmost position on the price gainers table. It gained N18 or 9.73percent, from N185 to N203 at the close of trading. Meanwhile, the share price of MTN Nigeria Communications Plc increased to N144.85 as at 10:35am on Wednesday May 22, 2019 from N131.7 recorded on Tuesday. The share price increased by N13.15 or 9.98 percent which represents its daily allowable limit. MTNN stock gained a total of N270billion on Wednesday. The value of Nigeria’s

listed equities increased to N13.717trillion from preceding day low of N13.3trillion, which implies an increase of about N408billion. At the current market price, Dangote Cement is valued at N3.459trillion while the cumulative value (market cap) of MTNN is now N2.950trillion. It implies that MTNN will need to advance by at least N506billion to catch up with Dangote Cement. The All Share Index (ASI) rose from 30,254.89points to 31,145.15 points. In 4,835 deals, dealers exchanged 294,572,910 units valued at N17.468billion. On the losers table, Nestle Nigeria Plc led the pack after its share price declined from N1430 to N1320, losing N110 or 7.69percent; followed by Ecobank Transnational Incorporated Plc which was down from N10 to N9.15, after losing 85kobo or 8.50percent. MTNN, Zenith Bank Plc, UBA Plc, Access Bank Plc, and GTBank Plc were actively traded stocks on the Nigerian Bourse. Investors exchanged 93,722,710 units of MTNN valued at N13.575billion. MTNN stock price has risen by N54.9 or 60.9percent

in just five days after its listing by introduction on the Nigerian Stock Exchange (NSE). As at May 16, stock dealers exchanged 5.541million units of MTN Nigeria shares at N99 per share. On May 17, they exchanged 32.098units at N108.90 per share. On May 20, 51.4million units were exchanged at N119.75 per share; while on May 21, stock dealers exchanged at N131.70per share, 110.7million units of MTN Nigeria Communications Plc. The stock has the potential to continue its upward trend amid the Nigerian Stock Exchange (NSE) confirming that significant issues have been raised that Dealing Members who have not been involved in the cross deals have been unable to trade on behalf of their clients. MTN Nigeria listed by introduction its 20.35billion shares at N90 per share. The stock was listed on the Premium Board. The listing by introduction means that the existing shares of MTN Group (78.8percent), the Nigerian investors (19.4percent); and other investors (1.8percent) are listed.

Coronation Research releases its 2019 Nigerian Consumer Report

oronation Research has just released its 2019 Consumer Report titled, ‘Power to the Price Point. The report which presents an in-depth analysis of the Nigerian food & consumer industry from data garnered from a detailed market study, is a radical re-interpretation of the developments in the industry and identifies the possible winners and losers in the sector. In the report, Coronation Research asks the question: if Nigeria’s population is growing at 2.6percent per annum and the urban population is growing at 4.6percent per annum, shouldn’t food and consumer product sales, in inflation-adjusted terms, be growing at between 2.6per-

cent and 4.6percent per annum? “They should, but the sales of the main listed food and consumer product companies, when adjusted for inflation, are not growing in line with Nigeria’s population figures. A close look at some of the players within the sector reveals Nestle Nigeria has shown positive inflation-adjusted growth over the past eight years, but the record for Flour Mills of Nigeria, Unilever Nigeria and PZ Cussons Nigeria is open to question”, according to Guy Czartoryski, Head, Research, Coronation Merchant Bank. One could then wonder, if Nigerian consumers are not buying the bulk of their food and consumer prod-

ucts from these companies, then who are they buying from, where, and at what prices? To answer these questions, Coronation Research devised a model household living on a modest income in Lagos and sent them shopping in outer Lagos. The shopping basket they brought back has not so pleasant news for the main listed companies. In the shopping baskets are products from an array of companies, most of them unlisted companies. Although Nestle Nigeria, Flour Mills of Nigeria, Unilever Nigeria and PZ Cussons Nigeria all feature, there are many more products from unlisted – generally smaller – companies.

Union Bank, Mama Moni establish innovation hub for low-income women

s part of its commitment to boost women empowerment, talent development, and financial inclusion, Union Bank of Nigeria Plc recently partnered with MamaMoni Empowerment Foundation to set up an Innovation Hub. The hub, which is for low-income women and girls from urban slum communities is located in Amuwo-Odofin area of Lagos State, was formally opened

on May 21, 2019. The vocational training programme has been established to enable the girls and women to build sustainable means of living. It is anticipated that each year, over 400 underprivileged beneficiaries will receive training in vocational skills such as hairdressing, make up, fashion designing, mobile farming and furniture making. Other courses to be offered at the hub include financial lit-

eracy, coding and personal branding. Speaking at the launch of the innovation centre, Ogochukwu Ekezie-Ekaidem, Head of Corporate Communications and Marketing at Union Bank, applauded the efforts of the MamaMoni team in improving the outcomes of women in underserved communities through micro loans and empowerment schemes. She said.

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

news Apapa: No longer business as usual as... Continued from page 1

Expectation is that respite will come the way of residents, business owners, motorists, port users and anybody who has something to do with/in Apapa as the new taskforce is coming from the highest seat of power and is coming on the assumption that it cannot afford to fail in its assignment. The announcement of the new presidential order and taskforce,Wednesday,washowever receivedwithscepticismby some. This is because Apapa is not new to presidential orders. The order given by Vice President Yemi Osinbajo in August 2018 never worked, while several taskforces set up at various levels of government failed. But despite the scepticism, BusinessDay gathered that “it is not going to be business as usual this time around because this new taskforce is different.”. The new taskforce, according to Ayo Vaughn, who is a

member, has the full backing of President Buhari who set up the taskforce chaired by the Vice President. Vaughn, who spoke to BusinessDay on phone, Wednesday, said the presidential order expects the trucks on Apapa roads and bridges to find their wayintotheLilypondContainer TerminalandtheTinCanTrailer Park,whichisbeingconstructed by the Federal Government on Apapa-Oshodi Expressway. But the challenge, BusinessDay finds, is that whereas the Lilypond Terminal has been opened and put to use by the Nigerian Ports Authority (NPA), completion/opening of the trailer park is still being delayed. Adedamola Kuti, Federal Controller of Works in Lagos, however, is optimistic that “the trailer park would be completed very soon because we are working hard on it” and that the presidential order would be achieved with the

Lilypond Terminal already open and functioning. A source close to the Federal Ministry of Works, Power and Housing told BusinessDay that the ministry has set middle of June as a tentative date for handing over the trailer park to NPA. Adams Jatto, general manager, corporate and strategic communications of NPA, noted that the park had issues with basic facilities such as lighting, toilets and others that are supposed to be put in place before it can be put into use. “The ministry gave the NPA till the first two weeks of June for them to complete the facility and get it ready for use; the park is almost completed and that is why we are now using Lilypond Terminal pending when the park is completed,” Jatto said. RemiOgungbemi,chairman, Association of Maritime Truck Owners (AMATO), also believes the presidential directive would work, explaining that about 85

percent of trucks that operate at the port have their private parks away from the transit park. Ogungbemi, who spoke to BusinessDay on phone, noted further that the problem had been that the trucks were all comingtotheportenvironment at the same time due to lack of call-up system to regulate their movement into the port. “The directive is long overdue and I believe that with the provision of Lilypond and other individual parks, such directive will make the environment more conducive. It is a welcome development,” he said. On the checkpoints, he said the army and naval officers have no option but to vacate the bridges and Apapa roads as directed by the Presidency. “The Navy must go back to their barracks, which is long overdue. It is even an aberration for the government to use military personnel to control traffic. Instead of helping the situation, their presence has been compounding the issue,”

Ogungbemi said. “Military personnel cannot be the solution to Apapa gridlock. One of the solutions is converting Lilypond into transit part, which the NPA has done and it can accommodate about 1,000 trucks,” he said. He said there are other parks which other individuals are working on, citing the example of a park that can accommodate about 1,500 trucks. “But any trucker parking in such park has to pay, which is better than parking on the bridges which can constitute environmental hazard to the society and can put lives and property in danger,” he said. Meanwhile, there is palpable fear among Lagos residents that pushing these trucks out of Apapa by executive fiat would compel them to overrun the surrounding areas like Surulere, Olodi Apapa, LagosBadagry Expressway, Festac Town, Costain, and other areas that are already feeling the heat of the rampaging trucks.

Dangote Cement sees biggest gain in... Continued from page 1

geria Communications plc increased to N144.85 or 9.98 percent which represents its daily allowable limit. The stock gained a total of N270 billion on Wednesday. At the current market price, Dangote Cement is valued at N3.459 trillion while the cumulative value (market cap) of MTNN is now N2.950 trillion. It implies that MTNN will need to advance by at least N506 billion to catch up with Dangote Cement. Gbenga Sholotan, head of research at RMB Nigeria Stockbrokers (RMBNS), in an MTN Nigeria (MTNN) research report valued the company’s equity at N3.002 trillion ($8.338 million). This value, he noted, translates to target price (TP) of N147. “For investors that have created liquidity and waited to buy MTN Nigeria’s shares, a lot of them were looking for the best option,” Ayodeji Ebo, managing director at Afrinvest Securities Limited, told BusinessDay. “Rather than wait to buy

MTN on Friday at N175, the investors opted for Dangote Cement at N180,” he said. After growing net income for the full-year 2018 by 91 percent to N390.33 billion, Dangote Cement proposed a final dividend of N16 per share for its shareholders with a due date of June 3, 2019. This implies any investor that buys the stock now would qualify for the dividend, Ebo noted. “The market has been looking for the period when MTNN would become the largest stock by market capitalisation, but there was a very sudden movement in Dangote Cement,” said another market analyst who spoke on condition of anonymity. “The stock has been very flat recently until on Tuesday when it gained 3 percent and on Wednesday over 9 percent. This is against what we have been seeing in this stock in the last couple of months, so perhaps that gain was just to ensure the company remains largest stock by market cap ahead MTNN just for bragging rights,” the analyst said.

Here are SEC-listed fund managers... Continued from page 2

asset managed by Stanbic IBTC, the latter is higher than the asset of the former by 155.89 billion or 47.54 percent. According to Johnson Chukwu, MD of Cowry Asset Limited, the volume of assets in the portfolio of fund managers is dependent on the size and the number of funds they manage. “It is driven by the size of the funds. If you have funds in different asset classes, the

more likely you will have more assets in your portfolio. So, the larger the number of funds and the bigger the sizes, the more assets a fund manager will control,” Chukwu said. A further analysis of the SEC data revealed that Asset & Resources Mgt. Co. Ltd with four funds under its management had a total NAV of N63.46 billion. This is N108.54 billion or 171 percent less than the asset managed by FBN Capital Asset Mgt but the total

No clarity on NNPC takeover of troubled... Continued from page 2

disputefinallyariseswithrespect to Shell’s interests in OML 11.

“Shell is likely going to adopt alternative dispute resolution mechanisms. I see Shell starting with negotiation and www.businessday.ng

When BusinessDay visited Apapa-Oshodi Expressway and Lagos-Badagry Expressway on Wednesday, it was discovered that trailers and containercarrying trucks have converted the main carriageway of the roads into parking lots. This was observed especially between Cele and Mile 2 inward Apapa, while both sides of the LagosBadagry Expressway, especially between Orile and Mile 2, have been taken over by trucks going to Tin-Can Island Ports and some other trucks evacuated from Ijora-Wharf Road axis. “It is good that government takes drastic action like this to free Apapa from perennial gridlock. But there should adequate planning to ensure that other parts of Lagos are not at the receiving end of that action. The planning should be holistic so that it shouldn’t be a case of shifting the problem from one spot to another and not solving it,” said a Festac Town resident who did not want to be named.

Godwin Emefiele (l), governor, Central Bank of Nigeria (CBN), acknowledging cheers from the audience after receiving a Benin bronze cast from Osasere Orunmwense, vice-chancellor, University of Benin, shortly after presenting the Third Eminent Persons’ Lecture of the University at the Ugbowo Campus, yesterday.

“With demand for MTNN (the primary market driver) waning, as evidenced by reducing bid size (closed with over 10.5 million units at limit up compared to Wednesday of over 18 million units at limit up), in our opinion, the rally might not be sustained beyond Thursday,” research analysts at Vetiva said in their May 22 note. The All Share Index (ASI) rose from 30,254.89 points to

31,145.15 points. In 4,835 deals, dealers exchanged 294,572,910 units valued at N17.468 billion. The value of Nigeria’s listed equities increased to N13.717 trillion from preceding day low of N13.3 trillion. MTNN stock price has risen by N54.9 or 60.9 percent in just five days after its listing by introduction on the Nigerian Stock Exchange (NSE). As at May 16, stock dealers exchanged 5.541 million units

of MTN Nigeria shares at N99 per share. On May 17, they exchanged 32.098 units at N108.90 per share. On May 20, 51.4 million units were exchanged at N119.75 per share, while on May 21, stock dealers exchanged 110.7 million units of MTN Nigeria Communications plc at N131.70 per share. While Dangote Cement plc has enjoyed the status

of most capitalised stock on the NSE for years, MTN Nigeria on Thursday, May 16, listed by introduction its 20.35 billion shares at N90 per share. MTNN was listed on the Premium Board. The listing by introduction means that the existing shares of MTN Group (78.8 percent), the Nigerian investors (19.4 percent), and other investors (1.8 percent) are listed.

NAV managed by the fund manager is higher than the asset controlled by each of the remaining 24 fund managers on the securities exchange. Also on the top five with largest asset under management, FSDH Asset Management Ltd and AXA Mansard Investments Limited, both fund managers controlling three and two funds, respectively, reported NAV of N38.59 billion and N26.89 billion, respectively. However, fund managers like Capital Express Asset and Trust Limited, Lead As-

set Management Limited, and PAC Asset Management Limited reported some of the smallest assets under management with NAV at N326.21 million, N380.65 million and N732.69 million, respectively. SEC data analysed by BusinessDay revealed that the total funds controlled by the various mutual fund managers grew by N660 billion from N77.67 billion NAV reported for the week ended August 19, 2011 to N737.74 billion as it the week ended May 10, 2019. On how Nigerian mutual

fundsmangerswereabletogrow their assets under management in the eight-year period analysed byBusinessDay,industrysources say it’s on improved level of sensitisation, product development and distribution. “Within the asset management space, more products have been created and a lot of fund managers are into distribution, in terms of marketing,” Dayo Obisan, president, Fund Managers Association of Nigeria (FMAN), said. Paul Uzuma, MD of Halo Nigeria Capital Ltd, said improve-

ment in the level of sensitisation has led to the growth in the asset managedbythefundmanagers. “There has been improvement in sensitisation of what mutualfundisallabout.Assuch, fund managers have been able to reach out to a lot of investors, encouragingthemandofcourse giving them adequate information on what mutual fund entails,” Uzuma told BusinessDay. “Most retail investors that put in their resources in mutual funds use it to reduce volatility” as it is a way of diversifying their portfolio, he added.

perhaps ending with arbitration,” Onele told BusinessDay. Onele believes it is in the best interest of both Shell and the Federal Government to amicablyresolvewhateverdisputethat

may arise out of OML 11 by both parties making compromises where feasible and reasonable. The Movement for the Survival of Ogoni People (MOSOP) has already rejected the direc-

tive, stressing that the resumption of oil exploration in Ogoniland in the face of current pollution remained unacceptable. Since the directive, stakeholders in the oil sector have

expressed concern and urged the Federal Government to be more transparent in handling the matter.

https://www.facebook.com/businessdayng

@Businessdayng

•Continues online at www.businessday.ng

Thursday 23 May 2019

BUSINESS DAY

POLITICS & POLICY Ministers to remain in office till May 28 - Buhari Tony Ailemen, Abuja

resident Muhammadu Buhari has directed the Ministers to remain in office until the 28th of May when they are expected to send in their resignation letters. T h e P re s i d e nt s t a t e d this during the valedictory Federal Executive Council meeting held at the Council Chambers. The President, while wishing the outgoing ministers well in their future endeavours, also urged them to be proud of their contributions to the nation’s development while in office “You should be proud that you were part of the government that introduced social investments, that achieved the most ambitious roads, rails and infrastructure programmes in the history of the nation,” he said. President Buhari, who noted that the team work led to the successes recorded in the first term and consequently his recent re-election victory,

said the team had worked hard in the past three-anda-half years, to deliver the campaign promises. “I want to put on record that your achievements in the last three-and-a-half years have guaranteed your position in the history books of this nation. You have certainly built the foundations for an improved economy and a more purposeful government. “We inherited a broken economy which eventually went into recession in the second quarter of Fiscal Year 2016. The situation was further compounded by insecurity and massive corruption. “Many would have given up. Indeed, many outside commentators said our situation was well nigh hopeless. However, we all came together and pushed forward to deliver our campaign promise to rescue our country from its parlous state. “Although we all had a common vision, we frequently had heated debates in this room on the best way to achieve our goals. These differing views are what made

Muhammadu Buhari

the decisions we took all the more rational,” he said. He revealed that it was this quality that made him to retain the cabinet for the full term, adding that “Each of you in this room has a unique skill and strength. We are a reflection of the Nigeria we aspire to achieve; a diverse but tolerant nation where no one is silenced and where

Taraba Assembly members-elect tasked on impactful legislation Nathaniel Gbaoron, Jalingo

embers of the incoming ninth Taraba State House of Assembly have been told to prepare for serious legislative business so as to impact meaningfully on the lives of their constituents. At an induction training for the members-elect, in Jalingo between Monday and Tuesday, Speaker of the assembly, Abel Peter Diah told them to legislate on issues that have direct

bearing on the lives of the people. BusinessDay gathered that the 2-day induction training was meant to upscale the knowledge of the members-elect of the Taraba State House of Assembly. All the members-elect were in attendance. The speaker of the assembly, Abel Peter Diah, who is also a member-elect, said the essence of the training was to prepare the incoming legislators for the task ahead. Some other principal of-

over your schedules to your respective Permanent Secretaries. Your handing over letters should be submitted to the Office of the Secretary to the Government of the Federation.” The President, while also acknowledging the contributions of other Council members who resigned before the completion of the current tenure, specifically singled out James Ocholi, former Minister of State, Labour and Employment, who passed away in a ghastly motor accident with his wife, Blessing, and son, Joshua, just four months after being sworn in as a minister. He urged the ministers to continue to remember them, adding that “he was a true patriot committed to our change agenda.” He thanked the ministers for agreeing to serve the nation during these difficult times, adding that “I want to use this opportunity to recognise the silent partners to this cabinet, your spouses, families and friends, who supported you through these years.”

EFCC summons Kwara SSG, Assembly clerk over N400m severance allowances

ficers of the assembly also shared their wealth of experience with the members-elect. Albasu Kunini, the majority leader and a member of the 8th assembly, said he believes the training will sharpen their legislative work. Earlier while declaring the occasion open, the governor of Taraba State, Darius Ishaku congratulated the members for their victory. Ishaku, who appreciated the members of the 8th assembly, also appealed to the incoming members to work for the progress of the state.

Governor Darius Ishaku and members-elect of the state House of Assembly during the induction training for the in-coming lawmakers. www.businessday.ng

every opinion should be heard and considered. I want you all to leave this meeting proud to have served your nation to the best of your ability. “You should be proud to have been part of the government that liberated the local governments previously under Boko Haram rule. “You should be proud to

have contributed to our food security and economic diversification agenda which led to the revival of our rural agrarian economy.” The President further said: “You should be proud to have been part of the team that developed the Economic Recovery and Growth Plan which led Nigeria exiting its worst recession in decades. “You should be proud to have introduced the social investment programme that enhanced livelihoods of millions of Nigerians. “You should be proud to have participated in settling outstanding pensions of many senior citizens abandoned by previous governments while supporting state governments to meet their salary arrears. “And of course, you should all be proud to have overseen the most ambitious road, rail and airport rehabilitation programmes in the history of our country.” The President declared that although “today is our last council meeting, I expect all of you to continue working until Tuesday, 28th May 2019 when you will officially hand

SIKIRAT SHEHU, Ilorin

he Economic and Financial Crimes Commission (EFCC), Ilorin Zonal Office is currently interrogating Isiaka Gold, the secretary to Kwara State Government and Kperogi Halimat Jummai, clerk of the state House of Assembly, over the alleged payment of N400million severance allowances to members of the State Executive Council and 24 state legislators. The anti-graft agency claimed that the payment of the severance allowances to the concerned public officials did not follow due process. It was gathered that all the lawmakers and some members of the State Executive Council two weeks ago received severance gratuities before the expiration of their tenure. The petitioner said even though the lawmakers and members of the State Executive Council are entitled to severance payment, it is the next administration that is supposed to pay the money. He alleged that the state government with their selfish interest quickly paid the money before the expiration of their tenure. More worrisome is the is-

https://www.facebook.com/businessdayng

sue of furniture allowances running to hundreds of millions of naira according to the petitioner which they wanted it paid along with severance gratuities. But, in a letter written by Ali Ahmad, the Speaker of Kwara State House of Assembly, to the State Governor, it was confirmed that the Lawmakers are entitled to severance gratuities at the end of their tenure due to terminate on the 7th of June, 2019 . The Letter said further, “In accordance with the provisions of the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), Honourable Members are entitled to 200percent of their annual basic salaries as their severance gratuity allowance at the end of their tenure of Office” The Clerk of the house, Halimat Jummai Kperogi, who confirmed that the lawmakers had received their severance gratuities, told the operatives of the EFCC that the payment was approved by Governor Abdulfatai Ahmed. Kperogi said: “In a meeting of the Principal Officers of the Kwara House of Assembly wherein I am scheduled to be the Secretary, held on 8th of May 2019, Issue of Severance Gratuity to the Honourable Members was @Businessdayng

raised, the principal officers were informed that the State Governor has approved the payment of the Severance Gratuity.” “At the meeting, I informed the House that his Excellency had approved the payment, and that members were expected to be paid after the expiration of their tenure of office. The house debated it and they over ruled me.” The Secretary to the State Government, Sola Isiaka Gold on the other hand wrote and sought for the approval of the severance gratuity and furniture allowances amounting to about three hundred million naira of some members of the State Executive Council. Gold, in a letter to the Governor dated 8th of May 2019 said: “Your Excellency, by virtue of the provisions of Kwara State remuneration of Political and Public Office Holders Law, certain category of political and public office holders are entitled to severance and furniture allowances of their basic salaries respectively upon successful completion of tenure.” According to the SSG, while the lawmakers have received their monies, members of the State Executive Council are yet to receive their gratuities.

Thursday 23 May 2019

BUSINESS DAY

RESEARCH&INSIGHT

In association with

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

briu@businessday.ng

08098710024

Implications of April 2019 inflationary pressure on urban and rural CPI ADEMOLA ASUNLOYE

Source: NBS, BRIU munities, imported food inflationary figure came to 1.28 per cent MoM and 1.22 per cent MoM respectively in April 2019. These figures surged by 0.02 percentage point and 0.04 percentage point respectively from the previous month. The continuous increase in the imported food inflation value implies that the prices of imported food commodities are also increasing. Upward movement in priceswill then suggest that: Domestic demand of imported food is also increasing. If demand for imported food increases, then the naira price of imported food will also increase. This implies that the domestic supply gap is widening which is being filled by imported food commodities. The growing demand for imported food implies growing import bills; which will lead to the erosion of the value of the naira, and consequently lead to implicit exchange-rate pass-through of inflation. Although, the analysis of the inflation indices (both YoY and MoM)categorised by the country composite index, urban index and rural index showed that imported food inflation was generally the highest, these do

not tell the true story as imported food inflation is relatively stable compared to “Food” and “Food & Non-Alcoholic Beverage” which showed more inflationary pressure. A major factor in the “Food” and “Food & Non Alcoholic Beverage” inflationary pressure is seasonality. As the country gradually approaches the planting season, more pressure will be put on the existing reservoir of the commodities to sustain the demand. The CPI chart above tells a story of the inflationary pressure on the urban and rural communities. In the urban communities, there are relatively stable price levels recorded in April 2019 in “All items less farm produce, ”, “Imported Food”, “Clothing and Footwear”, “Furnishings & Household Equipment Maintenance”, “Health”, “Communication”, “Education”, “Restaurant & Hotels” and “Miscellaneous Goods & Services” with relatively low MoM changes in inflation value (less than 0.031 per cent) in comparison to March 2016. Similarly in April 2019, “Transport”, “Communication”, “Education” and “Restaurant & Hotels” recorded relatively stable price levels in the rural communities due to the relatively

low MoM changes in inflation value (less than 0.031 per cent). Other basket of goods and service in the chart above showed relative MoM inflation value increase more than 0.03 percentage point. The highest change in the MoM inflation index between April 2019 and March 2019 was 0.34 percentage point recorded for “Food” in the urban inflationary index, followed by 0.33 percentage point in the “Food & Non Alcoholic Beverage.” These percentage points change shows that there is inflationary pressure on the commodities. Conclusion These numbers tell a story about the growing hunger and poverty which is widespread in the country. We need to be more intentional and strategic about issues of poverty, population, unemployment and other welfare indices.When the inflation rate is above 9 per cent, the policy target is often to bring inflation rate down to single digits and by extension to encourage lower real interest rate environment. At such, the government may require urgent policy by the federal government to stem the tide. 12734BDN

he Consumer Price Index (CPI) which measures the average change over time in prices of basket of goods and services consumed by the people highlights a list of components under food and beverages, apparel, housing, transportation, education and communication, recreation, medical care as well as other goods and services. Inflation, the percentage change in the Consumer Price Index (CPI), increased by 0.12 percentage point from 11.25 per cent Year-onYear (YoY) in March 2019 to 11.37 per cent YoY in April 2019. On Month-on-Month (MoM) basis, the headline index which was garnered from the divisions of all Classification of Individual Consumption by Purpose (COICOP) increased to 0.94 per cent in April 2019, this figure represents 0.15 percentage point higher than the preceding month. On a 12-month average, the percentage change in the average composite CPI ending April 2019 over the average of the CPI for the previous 12 months was 11.31 per cent; this figure was down by 0.09 per cent from the index recorded in March 2019. Similarly, urban inflation rate was up by 0.16 per cent to 11.70 per cent YoY in April 2019 from 11.54 per cent recorded in March 2019, while rural inflation rate upturned by 0.09 percentage point from 10.99 per cent in March 2019 to 11.54 per cent YoY in April 2019. The analysis of the CPI data on a MoM basis showed that the urban inflation rate was up by 0.19 per cent from 0.81 per cent recorded in March 2019, while the rural index similarly rose by 0.13 percentage point from March 2019 to 0.90 per cent. The percentage change in the average urban CPI as well as rural CPI for the 12-month period ended April 2019 over the average urban and rural CPIs for the previous 12-month period was 11.69 per cent and 11.00 per cent respectively. These figures were down by 0.09 per cent and 0.08 per cent in the urban and rural indices respectively from the 11.78 per cent and 11.08 per cent recorded in March 2019 respectively. Imported food price inflation of the composite CPI majorly inspired the hike as it was up by 0.09 per cent to 15.68 per cent YoY in April 2019 from 15.59 per cent recorded in March 2019. It became evidently that it was higher in urban centres—16.14 percent YoY in April 2019 (from 11.54 per cent in March) than in rural communities—15.30 per cent YoY in April2019 (from 15.17 per cent in March). Similarly, imported food inflation of the composite CPI came to 1.24 per cent MoM in April 2019 from 1.22 per cent recorded in March 2019 leading to an upturn of 0.03 percentage point. In urban and rural com-

WIDE OPEN MINDED RMB Nigeria. Solutionist Thinking.

www.businessday.ng

Rand Merchant Bank Nigeria Limited is an Authorised Financial Services Provider

https://www.facebook.com/businessdayng

We believe in stretching ourselves. In broadening our horizons and embracing the unconventional to consider every possibility. Solutionist Thinking means deliberating together and collaborating with our clients to unlock exceptional prospects for the future. It’s the magic that inspires everything we do.

www.rmb.com.ng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

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

briu@businessday.ng

08098710024

Kerosene, gas price trend in April 2019 highest M-o-M change of 4.63 percent, and the highest year-to-date change of 8.58 percent. It suggests periodic scarcity or demand and supply gaps, leading to sporadic price hikes. Same could be said of North-Central and North-East wherein issues around logistics and transport costs may account more for the price volatility.

AMAMCHUKWU OKAFOR

erosene (DPK) and Liquefied Petroleum Gas (LPG) are two major sources of energy for household heating. They also constitute a significant fraction of household consumption function. As the prices of these essential household products increase, it passes through to general price level – Inflation rate. The April inflation figure released by the Nigerian Bureau of Statistic (NBS) recorded a 0.12 percentage points increase in April from 11.25 percent in March. This increase, as presented was largely driven by food inflation which rose by 0.25 percentage points from 11.45 percent in March. Disaggregated, the Composite Consumer Price Index for Household utilities shows an inflation rate of 0.69 percent – wherein it shows a slightly higher figure in rural areas at 0.70 percent than in urban centres at 0.68 percent. This suggests that rural dwellers bore the brunt of energy-price volatility in the month. Kerosene price watch The NBS also released the price watch for the month of April on both kerosene and LPG. The data presents distinctively, the prices of these household fuels across the 36 states of the federation. The data shows the national average price of kerosene to be N316.25 per litre.The litre price of kerosene has been increasing through the months since August 2018 resulting on a year-onyear (YoY) increase of 13.57percent as at April 2019. In the month of April, Enugu , N383.33; Plateau, 361.90; Anambra, 353.47;, Edo, 352.86; and Ebonyi, 350.48 had the highest average price per litre of kerosene; whereas

Source: NBS, BRIU

states like Gombe, 269.04; Lagos, 272.02; Nasarawa, 287.45; Katsina and Abuja, 291.67 each, and Kaduna, 295.35 had the lowest price per litre. However, relative to the month-on-month (MoM) change, states like Edo, 13. 01 percent; Taraba, 12.90 percent;

Source: NBS, BRIU

Enugu, 11.51 percent; and Plateau, 11.17 percent had the highest MoM change in comparison to the month of March – indicative of price hike in within a month. Only a few states recorded price decline: Abuja, -6.04 percent; Katsina, -4.55 percent; Zam-

LPG price watch The data shows the national average price per 5kg of gas to be N2,046.53. The price of gas in a 5kg bottle has been decelerating since October 2018 with a YoY decrease of -0.57 percent and -0.87 percent (MoM). Bauchi, N2,513.33; Adamawa, N2,375.00; Borno ,N2,362.50; Cross-River, N2,325.00; and Yobe, N2,301.44 have the highest average monthly price per 5kg of gas; whereas Kaduna, N1,800.00; Oyo, 1790.38; and Osun, 1,766.66; have lowest average monthly price per 5Kg of gas. More interesting insight comes from the YoY and MoM changes across the states: states like Niger showed relative price stability with a YoY and MoM of 0.00 percent and -1.64 percent respectively; others include Kebbi; -0.02, 2.50 and Anambra, -0.19, -3.30 for YoY and MoM respectively. Adamawa, Borno and Gombe had stable price level in the one-month period–with a MoM change of 0.00 percent. Bayelsa, Zamfara and Nasarawa had the highest price decline in one month of-8.89, -8.53 and -5.71 percent respectively, while price hikes were highest in Plateau, 6.95 percent and Rivers, 5.52 percent .Osun, -19.15 percent; Ogun -14.29 percent; and Ondo, -13.19 percent had the highest YoY decline in price. Across regions, North-East, N2, 305.27; N2, 316.77 and South-South N2, 174.39; N1, 846.76 had the highest price per 5kg of gas

Source: NBS, BRIU

fara, -4.13 percent; Akwa-Ibom, -3.55; Lagos, -3.17 percent; and Yobe,-1.30 percent. A regional representation of the data shows the average price per litre to be highest in the South-East, N337.60 and SouthWest, N321.66. However, the highest MoM change was recorded in the South-East, 5.77 percent and North-East, 4.7 percent; whereas North-West alone recorded the lowest MoM change (1.54 percent) and a decline of -0.81 percent (year-to-date). The data for the South-West region especially gives an insight on the demand-supply dynamics in the market for kerosene: It recorded the second highest current price per litre, third

Source: NBS, BRIU www.businessday.ng

https://www.facebook.com/businessdayng

for April and March respectively. Only two regions, North Central, 0.60 percent and South-East, 0.63 percent recorded a slight average price increase on a MoM basis. The others showed price decline especially in the South-South, -2.94 percent and NorthWest, -2.07 percent. The same region, SouthSouth and North-West still maintained price decline on a YtD basis. This is indicative of either supply glut or demand shortfall in the market for household gas in the respective regions. South-West had the highest YtD change indicative of growing demand due to increasing adoption of gas for household cooking (or relative scarcity thereof).

@Businessdayng

42 BUSINESS DAY

Thursday 23 May 2019

MADE in aba

Abia mulls MFB to sustain gains of made-in-Aba campaign GODFREY OFURUM

b i a St a t e government has announced plans to set up a microfinance bank in the state to provide low-interest loans to artisans and other entrepreneurs who have been starved of funds by commercial banks. Nkwachukwu Agomou, permanent secretar y, Ministr y of Small and Medium Enterprises Development, who affirmed this to BusinessDay, stated that the state’s SME Micro Finance Bank would be launched in the next few weeks. He explained that the SME MFB would enable artisans and other entrepreneurs in the state to acquire funds at a singledigit interest loans. “It will also make government accessible to the people. MFB is being established to help the people get funds and reequip their businesses”. He urged those yet to register their businesses to do so, to make it formal and accessible for people to know what they do. “Most informal businesses in this part of our world are wrongly done and that is why it is bringing low proceeds and that is

why we are not where we ought to be. SME is where the money is and people should take advantage of it,” he observed. Lack of finance has been a major challenge faced by garment and finished leather sector operators in Aba, a situation attributed to the refusal of commercial banks to lend single-digit loans to micro and small industries. To e n s u re t h a t i t s members qualify for the C B N-A G S M E I S l o a n , which comes with a lower interest rate than what the commercial banks

offer, the Aba Chamber of Commerce, Industry Mines and Agriculture (ACCIMA) recently signed a memorandum of Understanding (MoU) with Wider Perspectives, a management consulting firm to train its members to qualify for the loan. Andy Uba-Obasi, president, ACCIMA, while addressing members at a sensitisation event, observed that the capacity of MSMEs to perform its role as the engine of growth of the country’s economy is hampered by challenges such as lack of access to

finance, modern technology and market with unfair competition to imported goods, among others. He urged entrepreneurs, especially manufacturers, to apply for the CBN and BoI loans, which, according to him, come with lower interest rates. Ada Obi-Umeh, head, Economic Analysis Unit, Wider Perspectives Limited, explained that C BN-AG SM E I S wa s designed to help MSMEs in agric business-production, input supply, storage, processing, logistics and marketing, e ducation,

health services,-hospitality, catering services, among others. It also aims at empowering entrepreneurs in ICT, manufacturing, mining, creative industry, fashion designing, crafts, entertainment and petrochemicals. R e p re s e n t e d a t t h e forum by Amarachukwu Ajomiwe, head, Eastern Operations of the firm, Umeh explained that applicants, who are interested in accessing the loan, must undergo training organised by a CBN-EDI, of which Wider Perspectives

has been selected to train applicants in the SouthEast/South-South zones of the country. She stated also that Wider Perspectives would package its trainees to access the CBN fund. The BoI, on the other hand, has launched the N500million Aba finished leather goods (FLG) cluster financing pro gramme, geared towards supporting shoe, bag and belt makers in Aba to produce seamless products that can compete favorably in the international market. The Aba FLG Cluster Fi na n c i n g p ro g ra m m e provides affordable working capital credit to qualified members of the Leather Products Manufacturers Association of Abia State (LEPMAAS) with the aim of affording artisans the opportunity to re duce the level of manually completed tasks, by purchasing small scale production tools. It will also help improve quality of finished leather products and promote job creation within the cluster. BoI is executing the programme, which was officially launched in August 2018, in Aba, in collaboration with the Ford Foundation West Africa and Fidelity Bank plc, its strategic partners.

Why financial organisations should be interested in Aba Gbemi Faminu

he Aba industrial hub majorly comprises m i c ro, s ma l l and medium scale enterprises. These businesses encounter various challenges which i n clu d e i n f ra str u c ture deficit, lack of sophisticated machines, constrained market, and inability to access cheap credit. While some of the challenges are being managed, one main problem, which is lack of funds, remains a bane for businesses, especially as it hinders the prospects of business expansion. According to the Manufacturers Association of Nigeria (MAN) CEO’s Confidence Index report for Q1 2019, high interest

rate as well as difficulty in accessing loans is ranked 3rd place in challenges affecting the production sector. Manufacturers, for example, accessed loans

www.businessday.ng

from commercial banks at over 22 percent, according to MAN. In recent times, various organisations have stepped in and aided business

owners in the industry by providing grants, work instruments and single-digit loans. The Bank of Industry and other SME-friendly banks have done their bits.

https://www.facebook.com/businessdayng

@Businessdayng

However, these are often not adequate to cater for over 70,000 players. In fact, the loans are sometimes considered infinitesimal for a N120 billion industry. In Q3 2018, Fidelity Bank partnered with the Bank of Industry and the Ford Foundation to provide funds worth N400 million and technical assistance to artisans in the industry. This served as a boost to the beneficiaries who received opportunities to grow and expand their businesses. But a number of banks are still not interested because they either do not understand the industry or are unwilling to lend to a sector that is largely informal. The Monetary Policy Rate (MPR), which is the benchmark interest rate, stands at 13.5 percent which is considered high for manufacturers. This is @Businessdayng

inevitably why banks lend at rates higher than 20 percent. Furthermore, the MSMEs are denied access to loans by Nigerian lenders due to lack of proper business structure as well as nearabsence of proper business model. As the sector imports inputs, it is still exposed to the vagaries of the foreign exchange market, which makes the case for adequate funding important. According to BusinessDay calculations, in Aba, one million pairs of shoes are produced by no fewer than 80,000 leather makers weekly. Consequently, 48 million pairs are produced each year at an average price of N2, 000 a pair. The Aba industry is worth N120 billion and has the potential to increase if given the right support.

Thursday 23 May 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Mobile groups comply with African rulers’ orders to block internet Orange and Vodafone switched off access after controversial Congo elections TOM WILSON

uthoritarian governments in Africa are using internet shutdowns as a new tool of repression as they strong-arm telecoms companies into flicking the off switch. Since the start of the year at least six African countries have turned off access to part or all of the internet and in each case the government has required the assistance of mobile operators to do it. The official orders to block internet access and messaging services have left operators caught, experts say, between their obligations to regulators and a moral duty to protect customers’ freedom to communicate. Both the UN and the African Union have passed resolutions condemning internet shutdowns as a violation of human rights, yet disruptions continue with increasing frequency. In the Democratic Republic of Congo, where access to the entire internet was shut down for 20 days after a widely discredited presidential election last December, the global telecoms groups Vodafone of the UK and France’s Orange said they had no choice but to comply. Orange, the second-biggest mobile network provider in Congo, said instructions to restrict internet and messaging services came from the “empowered authorities” and that under the terms of its license it is required to respond.

“We cannot oppose requests for restriction based on local regulation or our license obligations without risk of exposing our employees to heavy penalties,” said a spokesperson. Vodafone, which owns a controlling stake in Vodacom, Congo’s biggest operator, said it has to balance a responsibility to respect customers’ “right to privacy and freedom of expression” with its obligation to respond to lawful instructions from regulators. “Refusal to comply with a country’s laws is not an option,” it said. Across Africa, platforms such as WhatsApp and Facebook have made it easier for politicians, activists and citizens to talk and organise at speed via smartphone. But the government’s ability to shut down those conversations has become a powerful new weapon in the arsenal of autocratic leaders. Asia and Africa suffer the most internet blackouts during 2016-18, Asia had 310, Africa 46, Europe 12 and South America 3 Though the Congolese government made no formal announcement confirming it had ordered the shutdown, ruling party officials said it was necessary to prevent the circulation of false vote counts. The more important impact, democracy campaigners said, was that candidates and civil society groups could not verify election results by dispatching teams to the 70,000 polling stations to photograph and send photos of the official counts via smartphones. Some governments have justi-

At least six African countries have switched off access to all or part of the internet this year

fied the disruptions as necessary to prevent the planning of potentially violent protests. In other cases, the authorities and service providers have offered no explanation at all, leaving citizens in the dark as access to online services suddenly dropped off. In Benin, as citizens queued up to vote in parliamentary elections late last month, internet providers began to block access to social media networks including Facebook and Twitter. By midday 99.5 per cent of Benin was offline, according to NetBlocks, an organisation that tracks internet disruptions. Internet advocacy group Access Now, which is based in London,

calculates that there were 188 shutdowns globally in 2018, up from 108 in 2017 and 75 in 2016. Over those three years 310 occurred in Asia and 46 in Africa. But it is in Africa where the trend appears to be growing most quickly, and where blackouts — when access is not just reduced but completely blocked — are becoming more common, said advocacy director, Melody Patry. The technology required to filter or block access to the internet is unsophisticated and exists at every internet service provider, experts say. To use it authorities need the service providers to comply and in most cases they do. “The idea of a national kill

switch is actually a bit of a myth. In almost all cases we have seen connectivity drop off provider by provider,” said Alp Toker, executive director at NetBlocks. “It means that these companies are, in a way, party to the censorship, in that they have a choice of whether to push back or to implement the block.” While it is true that some operating licenses allow the regulator to demand a suspension of internet services without a court ruling or further justification, Access Now is trying to encourage network providers to push back against such provisions when negotiating licenses and to legally equip firms to oppose such orders.

Theresa May under pressure to pull Brexit deal vote EE and Vodafone pull Huawei phones from UK 5G launch Conservative MPs call for PM’s resignation a day after revamped plan announced SEBASTIAN PAYNE AND NAOMI ROVNICK

heresa May is under increasing pressure to pull the parliamentary vote on her revamped Brexit deal just a day after it was announced, with a growing number of MPs from her Conservative party calling on her to resign. On Tuesday, the prime minister announced she would bring her Brexit package back to the House of Commons for a fourth — and final — vote in the first week of June. But the overwhelmingly negative response to her speech has dashed Downing Street’s hopes of success. Michael Gove, the environment secretary and prominent Brexiter, said there would be “reflection on [the] best way forward” by the government and hinted that the vote might not go ahead as planned. “We will reflect over the course of the next few days on how people look at the proposition put forward,” he told the BBC on Wednesday. “But there has to be a vote on the withdrawal agreement implementation bill [at some stage].” The pound was trading at less than $1.27 on Wednesday morning, its lowest level since January, reflecting the continued political uncertainty.

Mr Gove acknowledged “there’s been a lot of sturm und drang, summer lightning” over the prime minister’s new proposals but urged his Conservative colleagues to “read the bill and reflect on the options in it”. Prominent Conservatives have called on Mrs May to step down immediately. Former Brexit minister David Jones told The Daily Telegraph: “She is desperate, she is deluded and she is doomed.” Zac Goldsmith, MP for Richmond Park and North Kingston, also called for her to resign. Jacob Rees-Mogg, head of the Brexitsupporting European Research Group of MPs, said Mrs May’s strategy had failed and she should resign instead of bringing the bill forward. “She decided to tack to the left whilst losing people in her own party,” he said. “Under constitutional conventions, a prime minister should recognise that she does not have a majority in the house and take the more dignified approach by tendering her resignation to the Queen.” The 1922 Committee of Conservative MPs will meet later on Wednesday, where several members of its executive will push for rule changes to allow an immediate challenge to Mrs May’s position. “I would be amazed if rule change is not discussed,” said one member. www.businessday.ng

Japan’s SoftBank and KDDI are also excluding Chinese group’s handsets NIC FILDES

wo of Britain’s largest mobile phone operators have pulled Huawei’s phones from their 5G networks, joining other global telecoms groups in dropping launch plans after the Chinese group was hit by a US export ban that could stop it using Google’s Android operating system. EE, part of BT, had planned to offer Huawei phones as part of its launch on Wednesday of the UK’s first 5G network, but decided to “pause” this because of uncertainty after the Chinese group was included on a blacklist that forbids US companies to supply it with technology. This could stop Google from providing future versions of its Android system to Huawei. Vodafone also said it would suspend Huawei’s Mate X phone from its 5G line-up. Vodafone had planned to launch the handset in the summer on its 5G network, but a spokesman said on Wednesday that “Huawei’s 5G handset is yet to receive the necessary certifications”. Two of Japan’s largest mobile phone carriers also said they would delay the launch of a new smartphone by Huawei as global mobile

https://www.facebook.com/businessdayng

operators scrambled to deal with the proposed US export restrictions on the Chinese telecoms equipment maker. The decision on Wednesday by SoftBank and KDDI will affect the Huawei P30 Lite smartphone, which was due to go on sale in Japan on Friday. NTT DoCoMo, Japan’s largest carrier, said it was also considering cancelling pre-orders for the Huawei handset. Marc Allera, chief executive of EE, said the company had “paused” the launch of Huawei’s 5G phones because it did not have the “surety of service” it needed to offer long-term contracts. “We’ve had to hold that back,” he said. The company will, however, continue to use Huawei, alongside Ericsson, for the radio equipment for its 5G network despite the political debate around the use of the Chinese company’s equipment and its supply chain issues following the move by US authorities to put it on to the entity list. Mr Allera said EE has tested its 5G network using Huawei technology and has had “no indications” from the UK government to change course. He said the supply chain restrictions were a concern but that the UK would not benefit from a lengthy delay to 5G @Businessdayng

launches while the situation is being resolved. “There are so many scenarios and we don’t have any clarity. But we can’t stand still,” he said. “Nothing is crystal clear but we have to work within that ambiguity.” The debate around Huawei has overshadowed the launch of 5G services in the UK as networks have lobbied the government not to ban the Chinese company from 5G network builds. EE has battled to be the first to launch 5G networks against Vodafone, which goes live in July. EE will charge a premium for the faster network of about £5 and has partnered with Google and Niantic, the company behind Pokémon Go that has developed a Harry Potter-themed game, for the launch. It will initially launch 5G in six cities and this will rise to 50 by summer this year as it looks to upgrade 100 sites a month. The initial version of 5G will be the equivalent of an enhanced 4G network offering speeds 10 times faster than today’s smartphones. Its full 5G network will be launched in 2022 with ultra-low latency services available in 2023.

Thursday 23 May 2019

BUSINESS DAY

NATIONAL NEWS

Canada’s Barrick Gold makes buyout offer for Acacia Mining Proposal values Africa-focused gold producer at $787m NEIL HUME AND HENRY SANDERSON

anada’s Barrick Gold has offered to buy the remaining 35 per cent of Acacia Mining, an Africa-focused gold producer, it does not already own through an all-stock offer pitched at a discount to the prevailing share price. Barrick said in a statement that it made an indicative offer because it was clear the government of Tanzania was not prepared to deal directly with Acacia to settle a long-running row over outstanding tax claims. “As a consequence of the negotiations with the government of Tanzania, Barrick has had the opportunity to undertake detailed due diligence on the Acacia assets and on the basis of this work has concluded that the proposal on the terms set out above reflects the fair value of the company,” it said. “Since the proposal is in Barrick shares, the Acacia minority shareholders will be able to benefit from any future potential upside in both the Acacia assets and Barrick’s broader portfolio of assets,” Barrick said in the statement. Barrick, one of the world’s biggest gold producers, is offering 0.1533 of its shares for every Acacia share. The proposal values London-listed Acacia at $787m and minority shareholders are being offered roughly 147p share, against a closing price on Tuesday of 159p. Shares in Acacia were recently trading 5 per cent lower at 151.2p. “In our opinion, the bid value reflects the $300m tax payment that has been negotiated between Barrick and the government of Tanzania, which

becomes payable once a resolution is ratified,” said analysts at Jefferies. Acacia said it was “considering these developments” and was attempting to seek clarification of Tanzania’s position. It did not state whether it was prepared to recommend the offer, although this seems unlikely. “Barrick has also provided the company today with a letter from the acting chairman of the government of Tanzania negotiating team who have been in discussions with Barrick,” it said in a statement. “This letter states that the government of Tanzania is resolved that it will not execute final agreements for the resolution of the company’s disputes if the company is one of the counterparties to the agreements, and that it will only sign such agreements if satisfied that substantial changes have been made to the management style of the operating companies and of their shareholders,” Acacia added. Acacia has been unable to export gold-bearing ore from Tanzania since March 2017 because of the row over unpaid taxes. Barrick is led by Mark Bristow, who has a wealth of experience in Africa and built Randgold Resources into London’s biggest gold miner before selling it to his current employer. One top 20 Acacia shareholder described Barrick’s offer as “absurdly low” and said it would be rejected by minority shareholders. “Barrick have offered a value of $787m for Acacia’s equity. However, this is only 57 per cent of their own internal valuation of $1.36bn, which they publish in their own year end accounts, a valuation which is approved by auditors and done using a $1,200 an ounce gold price,” said the shareholder.

US judge rules Qualcomm ‘strangled competition’ Court decision threatens to upset chipmaker’s business model again TIM BRADSHAW

ualcomm “strangled competition” in the lucrative market for smartphone modems to command “unreasonably high royalty rates” for its intellectual property, a judge in California has ruled, in a decision that reopens longstanding complaints over the chipmaker’s business model. Tuesday’s decision came little more than a month after the San Diego-based company settled a multibillion-dollar lawsuit with Apple over complaints of anti-competitive behaviour. Qualcomm’s stock was down by as much as 9 per cent in pre-market trading in New York on Wednesday. Judge Lucy Koh in San Jose ruled in favour of the US Federal Trade Commission, which brought the antitrust case in January 2017, and ordered sweeping changes to the way Qualcomm sells its chips to the likes of Apple and Samsung, and to how it licenses its patent portfolio to rivals such as Intel. “Qualcomm has used its monopoly power . . . to engage in a wide variety of anticompetitive acts against [manufacturers],” Ms Koh wrote. “The evidence demonstrates that Qualcomm’s anticompetitive conduct is ongoing.” The FTC case set off a string of legal challenges against the chipmaker that many investors had hoped were now close to resolution, following a settlement with Apple last month. But in an unusual intervention

earlier this month ahead of the ruling, the US Department of Justice warned that an “overly broad remedy” in the case “has the distinct potential to harm rather than help competition”. Qualcomm’s dominance in the supply of modem chips that underpin smartphone connectivity meant that even large manufacturers such as Samsung were forced to agree unfairly high royalty rates, the judge said. “Qualcomm’s ability to charge monopoly prices on premium LTE modem chips over an extended period also shows that competitors were not able to quickly increase output,” she added. “In combination, Qualcomm’s licensing practices have strangled competition in the CDMA and premium LTE modem chip markets for years, and harmed rivals, OEMs [original equipment manufacturers] and end consumers in the process,” Ms Koh wrote, making them an “unreasonable restraint of trade”, in breach of the US Sherman act. The judge ordered Qualcomm to renegotiate its current licensing agreements and to license its patents to rival chipmakers at fair prices. She also ordered Qualcomm to submit to monitoring for the next seven years to ensure it abides by the remedies. The verdict comes as President Donald Trump seeks to position Qualcomm as a national champion, forming a vital bulwark against China’s Huawei in the transition to next-generation 5G mobile networks. www.businessday.ng

Cyril Ramaphosa’s deputy stands down to fight graft allegations David Mabuza bows to ANC demands and postpones swearing-in as South African MP JOSEPH COTTERILL

outh Africa’s ruling African National Congress faces upheaval after President Cyril Ramaphosa’s deputy declined to take a post in the country’s new parliament in order to fight allegations of wrongdoing. David Mabuza, who had served as deputy since Mr Ramaphosa unseated Jacob Zuma as the president last year, bowed to the demands of a party integrity commission by postponing his swearing-in as an MP on Tuesday hours before it was due to take place. Mr Mabuza, a powerful party boss who has often been accused of running a corruption racket, decided “to follow the dictates of his conscience” and request the postponement, Mr Ramaphosa said in a statement as ANC leader. Mr Mabuza’s bowing-out has come as a surprise even after Mr Ramaphosa helped the ANC to victory in elections this month with a pledge to stamp out wrongdoing in government. The postponement effectively means Mr Ramaphosa must ap-

point a new deputy. Mr Mabuza is unlikely to answer the allegations against him and retake his seat before the president appoints his post-election cabinet this weekend. The party that has ruled South Africa since 1994 won its lowest ever majority in the election, after a decade-long descent into corruption under Mr Zuma, who was forced from office in a power struggle after Mr Ramaphosa became party leader. Mr Ramaphosa said on Tuesday that “the deputy president believes that the ANC as a governing party should advance the electoral mandate in an environment of public trust”. Mr Mabuza is a big powerbroker in the party, who as a provincial premier was an influential ally of Mr Zuma. He switched support at a critical moment to push Mr Ramaphosa over the line in a tight race to succeed Mr Zuma as the ANC’s leader. He later became the party’s deputy president, a powerful position that he will retain even without serving in the government. During the election Mr Ramaphosa pledged to voters that ANC

members implicated in graft would not be allowed to take up state positions. Until now he has had to move cautiously since allies of Mr Zuma occupy powerful positions within the party. The president’s allies wield influence in the ANC integrity commission, which called for several individuals including Mr Mabuza to remove themselves from the party’s list of MPs before the election. “Cyril is using the few instruments at his disposal to make a move,” Khaya Sithole, a political analyst, said. The party’s integrity commission “is seen as an autonomous structure which insulates him from being directly accused of conducting a purge”, he added. But the ANC has rarely broken with an entrenched party tradition that its deputy leaders simultaneously occupy the same position in the government. Under Thabo Mbeki, Mr Zuma stepped down as state deputy president, also under a cloud of corruption allegations — thereby igniting factional conflict in the party.

Chinese airlines seek compensation from Boeing for faulty planes US aircraft maker faces new financial hit over grounding of 737 Max after fatal crashes TOM MITCHELL AND YIZHEN JIA

hina’s biggest airlines have demanded compensation from Boeing for grounding their 737 Max fleets, heaping pressure on the US aircraft maker on the eve of a crucial regulatory meeting to determine if the plane is allowed to fly again. The aircraft has been grounded around the world since March when one of the jets crashed in Ethiopia, killing all 157 people on board, just five months after another 737 Max crashed in Indonesia, killing 189 passengers and crew. The two fatal crashes were blamed on design flaws and other errors in the aircraft’s safety system. On Wednesday, a spokesperson for Air China, the country’s flagship carrier, confirmed it was seeking compensation but declined to provide further details. China Southern Airlines said in an email that it was demanding compensation for “losses caused by the Boeing 737 Max grounding and

https://www.facebook.com/businessdayng

late delivery”. The Guangzhou-based carrier grounded 24 737 Max aircraft in on March 11, in accordance with an order issued by the Civil Aviation Administration of China (CAAC). “We have asked Boeing to negotiate a compensation plan as soon as possible,” it added. The Chinese Communist party’s flagship newspaper, the People’s Daily, reported that the third of China’s “big three” carriers, Shanghai-based China Eastern Airlines, had also demanded compensation from Boeing. China Eastern declined to comment, but a spokesman for China’s foreign ministry said that any such compensation requests would be justified. “The Boeing 737 Max aircraft was grounded all over the world for safety reasons and the technical problems have not been solved yet,” the spokesman said. “But it is justifiable for any enterprise to claim its legitimate interests in accordance with law.” Aviation regulators from around the world are scheduled to meet @Businessdayng

Federal Aviation Administration officials on Thursday in Texas, where they will review Boeing’s application to allow the aircraft to fly again. The CAAC did not respond to a request for comment about the compensation demands — or on its likely position at Thursday’s meeting. The CAAC was the first regulator to order a suspension of the 737 Max in on March 11, highlighting its growing clout. US president Donald Trump and the FAA followed the CAAC’s lead two days later. China is expected to overtake the US as the world’s largest aviation market by 2033, propelled by its demand for single-aisle aircraft, according to Boeing projections. China has the world’s biggest 737 Max fleet, with 97 planes accounting for more than a quarter of total deliveries to date. The country is a crucial market for the 737 Max, with Chinese airlines and leasing companies accounting for at least 10 per cent of Boeing’s unfilled order book for the aircraft.

Thursday 23 May 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Blackstone leads global surge in property investment New York group retains crown as world’s biggest property landlord with assets of €202bn CHRIS FLOOD

lackstone’s real estate business raced past the €200bn asset mark for the first time in 2018 in a surge that helped the New York-listed group keep its crown as the world’s largest property landlord for a third year. Real estate has enjoyed a bull run lasting almost a decade but rising property values and huge investor inflows have fuelled fears of unsustainable pricing bubbles in some markets. Assets managed by Blackstone’s property arm jumped by almost a quarter to nearly €202bn ($231bn) last year, according to an annual ranking by Inrev, the European association that represents investors in non-listed real estate vehicles. Kathleen McCarthy, co-head of real estate at Blackstone, said “property valuations today mean we have to work hard to find good deals” but she was confident her unit would continue to deliver attractive riskadjusted returns to investors. “Our large real estate investment team, access to proprietary information and capacity to do deals that other managers cannot, help us to create value for our investors in any economic environment,” she said. Four themes have been targeted for further investment: logistics where ecommerce businesses are increasing demand for warehouses; so-called innovation cities such as Seattle where tech companies need office space; rental housing in regions where there are supply shortages including the US west coast and Spain, and hospitality assets in order to meet the expected global increase in spending on travel. Blackstone has created five “permanent capital” real estate investment vehicles that do not have a fixed expiry date unlike traditional

closed end funds. “Permanent capital vehicles allow Blackstone to hold real estate assets over a longer term which helps investors to compound returns,” said Ms McCarthy. Toronto-based Brookfield, the number two ranked player, saw its property assets increase 27 per cent last year to €164bn, while PGIM, the investment arm of US insurer Prudential Financial, retained third place after its property assets Blackstone has become the world’s largest property landlord under chief executive Stephen Schwarzman (Mark Kauzlarich/Bloomberg) jumped 39 per cent to €148bn. The three groups have a clear lead over the next two players which joined the exclusive club of managers with property assets of more than €100bn for the first time. Nuveen Investments (previously Potential listing of transport-booking app would be one of largest in UK if successful TH Real Estate) moved up one spot bookings accounted for only 39 per tribute tough market conditions and to fourth place after its real estate JOSH SPERO AND JAVIER ESPINOZA cent of tickets in Europe’s top five a drop in valuations as a deterrent to assets reached €109bn, up by a fifth, float businesses. rainline, the transport-book- markets. while Texas-based Hines, another People following the process Private equity groups are also ing app owned by US private privately owned real estate managwarned that the timing of an IPO put off by listings because they are equity group KKR, has aners, slipped to fifth in the ranking could slip and that there was no obliged to sell business to the pubafter its property assets grew 14 per nounced its intention to float on the guarantee of a successful listing. lic markets in stages — often for a London Stock Exchange. cent to €104bn. Trainline made an operating number of years — which allows The company is aiming for a “The concentration at the top is profit of £10.5m in the year to the businesses to benefit from growth becoming more obvious with the valuation of £1.5bn, people briefed end of February 2019 after three but also to be exposed to a slump on the matter said. JPMorgan and 10 largest managers accounting years of losses. in trade. for about 40 per cent of global real Morgan Stanley will lead the sale, The company has acquired a Companies that listed in 2017 which would be one of the largest estate assets,” said Henri Vuong, Inhigh level of debt since KKR bought and 2018 lost on average 21 per cent initial public offerings this year in rev’s director of research and market it. At the end of February 2018, it of their initial market capitalisation information. “Consolidation is still the UK if it is successful. had net debt of £577m, more than 12 months post-IPO, according to a Chief executive Clare Gilmartin happening as more managers have 10 times the figure before it was report by Bain & Company. By conambitions to become global players said: “We are the leading indepen- sold, with revenue of £178m and a trast, those that went public between dent rail and coach platform globand mergers and acquisitions offer pre-tax loss of £29.4m, according to 2015 and 2016 gained an average the quickest route to meeting that ally, selling tickets on behalf of 220 its accounts. of 105 per cent in value during the carriers across 45 countries . . . I am objective.” Chief financial officer Shaun same period. especially proud of the team and Investors put a record €162bn McCabe said the company was Private equity groups have been of new money into real estate in culture we have created at Trainline targeting a debt level of twice ditching listings for sales to one and excited by the global growth 2018 in spite of worries that suitable adjusted earnings before interest, group. For example, CVC sold Sky opportunities to deploy capital are opportunity that lies ahead for the tax, depreciation and amortisation, Betting & Gaming to the Stars Group becoming more difficult to find. business.” The company, which was bought which were £53m in financial year in a $4.7bn deal last year following Pension funds accounted for just speculation that the business would by KKR in 2015 for roughly £500m, 2019, at IPO. over a third of the new capital while A potential listing comes at a float. London-based Bridgepoint insurance companies doubled their doubled ticket sales from £1.6bn in time when private equity groups was also exploring a listing of Pret A allocations to real estate compared 2015 to £3.2bn in 2019. It said it had have found IPOs an increasingly Manger in New York before selling with 2017 and sovereign wealth plenty of room to grow in a large, unpalatable option as executives at- the business to JAB. funds also increased their commit- fragmented industry and that online ments to property markets.

Trainline aims for £1.5bn valuation with London float

Sterling slips to fresh lows as May’s deal faces wall of opposition

Wall Street set for shaky start as trade fears linger Demand for UK sovereign debt rises as uncertainty grows and followed a White House anMICHAEL HUNTER AND SIDDARTH SHRIKANTH

sense of unease set the tone across world stock markets on Wednesday, with concern about the trade dispute between China and the US deepening toward the start of Wall Street trade. Sentiment faltered after reports that China’s Hikvision may be included in a US blacklist, building on restrictions issued against Huawei last week, developments which undermined more optimistic signs on the stand-off that had helped Wall Street overnight. Futures trade pointed to a decline of 0.4 per cent for New York’s S&P 500. That would leave it over 3 per cent below April’s record closing high. The tech-heavy Nasdaq was expected to slip 0.7 per cent. The jitters also tracked the extent of exposure of US companies to retaliation from China. They left the S&P’s overnight rise of 0.9 per cent looking exposed. The gain was the first in three sessions

nouncement that it would allow US companies to keep doing business with Huawei for the next three months. Mainland Chinese equities eased, with the CSI 300 down 0.5 per cent, while Hong Kong’s Hang Seng held steady. European bourses fared better, but were unable to hold modest intraday gains. Demand for the region’s chipmakers remained as investors refined their impressions of what the tech battle between the US and China could mean for the sector in the region. The Stoxx index tracking the sector was up 0.2 per cent, as the wider Stoxx 600 slipped 0.4 per cent. Frankfurt’s Xetra Dax 30 also slipped 0.4 per cent. London’s FTSE 100 outperformed, holding steady overall, helped by a weaker pound tracking the deepening political uncertainty around Brexit. Sterling remained under $1.27, a line it lost during the previous session for the first time since January. www.businessday.ng

PHILIP GEORGIADIS AND MICHAEL HUNTER

terling fell to fresh multimonth lows on Wednesday as Theresa May’s final gamble to force her Brexit deal through parliament met a wall of opposition. The pound fell 0.5 per cent on the day to trade around $1.2650, its lowest level since early January. The currency had briefly rallied on Tuesday as the prime minister offered MPs a “new deal” including the possibility of a second referendum if they back the withdrawal bill at the fourth time of asking. But Mrs May’s cross-party gambit has only hardened Eurosceptic Conservative opposition to the deal, while Labour leader Jeremy Corbyn has indicated his party would oppose the plan. Sterling extended its losses as there was little evidence of support for Mrs May’s plan at Prime Minister’s Questions. “Her time is up,” said the Scottish National party’s Westminster leader Ian Blackford. Earlier, Boris Johnson, a Conservative leadership candidate

https://www.facebook.com/businessdayng

who backed the deal at its most recent failure, said he would not vote for a bill “directly against our manifesto”, while Labour’s Margaret Beckett said her party would “reject this hotchpotch offer”, illustrating the opposition Mrs May faces from both sides of the Brexit divide. Derek Halpenny, head of global market research at MUFG called the prospect of Mrs May “breathing new life” into her deal on the terms of Brexit “negligible”. “We therefore concur with the fresh slide in the pound from the highs reached just prior to the statement as there now appears a growing risk that a fall away in Conservative support on a fresh vote would not be compensated by increased Labour Party support,” he said. Sterling is the worst-performing developed market currency against the US dollar this month, and had been under wider selling pressure as opinion polls suggest Nigel Farage’s Brexit Party is on course for a strong showing in @Businessdayng

this week’s European election and amid broad dollar strength. Analysts said the UK government’s stance on Brexit could harden if the party advocating a hard split from the EU does well in the elections tomorrow. Sterling was trading 0.5 per cent lower against the euro, with one British pound fetching €1.1328, and on track to weaken against the single currency for 13 sessions in a row, its longest losing streak since the euro was adopted in 1999. Corporate activity in the foreign exchange market has “kicked into life in recent weeks” as the pound’s weakness becomes “impossible to ignore for importers” who are growing increasingly concerned about their hedges, Jonathan Pryor, head of FX sales at Investec, said. “Throughout the whirlwind of Brexit news in earlier parts of the year, the pound remained relatively rangebound against the dollar. Corporates have underestimated the fragility of sterling until we reach a resolution,” he said.

Thursday 23 May 2019

BUSINESS DAY

ANALYSIS

Morgan Stanley, Goldman and JPMorgan’s grip on tech IPOs under threat after Uber

Weak debuts for ride-hailing apps prompt banking rivals to chase new business ERIC PLATT, LAURA NOONAN, NICOLE BULLOCK AND SHANNON BOND

organ Stanley, Goldman Sachs and JPMorgan Chase have a vice-like grip on advising top technology companies. After Uber and Lyft’s weak initial public offerings, rival banks are hoping for some market disruption. “The quality of deal execution is being called into question more, by both corporates and VCs [venture capital firms],” said David Hermer, head of equity capital markets at Credit Suisse, noting that a “small number of banks have a disproportionate share of leadership roles in technology IPO”. Prized as much for the reputational halo it offers as the hundreds of millions of dollars at stake in big mandates, the business of taking tech companies public has been highly concentrated since the 2000 dotcom crash, when many banks withdrew from the battered sector. Morgan Stanley, Goldman and JPMorgan earned 55 per cent of the

The trio benefited as some rivals retrenched after the financial crisis; they also capitalised on demand for additional services from tech companies who were staying private for longer. Private placements were particularly popular, such as the 2015 $1.6bn private placement that Goldman led for Uber. It was a deal that was backed by Goldman’s own private wealth clients. “We have been long-term players in this industry,” said Dan Dees, co-head of Goldman’s investment banking division. “We have committed resource. We have kept our people here. We have maintained the commitment to the business through the lean times.” Goldman and Morgan Stanley bankers were roaming Silicon Valley in the 1990s when tech underwriting business was most associated with the “Four Horsemen” — boutique investment banks Alex Brown, Hambrecht & Quist, Robertson Stephens and Montgomery Securities — which have long since been taken over by bigger institutions. Morgan Stanley alumni from that time include the noted ven-

$400m-plus fees generated by US tech IPOs last year, triple the bounty of the next three highest paid banks, according to data provider Refinitiv. The trio have held the top three places since 2011 with a share that is far larger than the 38 per cent of fees they command in the broader $1.9bn-a-year US IPO fee pool. The recent post-IPO share price falls for Lyft and Uber offer hope to rivals as they set out their stall to companies such as Airbnb and WeWork that are considering flotations. History suggests the upstarts face an uphill battle. To dislodge the top three, challengers such as Credit Suisse, Bank of America, Citigroup, Barclays and Deutsche Bank are pitted against some of the most wellconnected bankers in Silicon Valley. “When you’re a tech entrepreneur and you’re taking your company public, introducing new risk into the equation is not something you’re jumping to do,” said Howard Lerman, chief executive and co-founder of Yext, an enterprise software company. “By going with a tried and true [adviser], you are not going to do something crazy.” Yext’s 2017 IPO was led by Morgan Stanley. Mr Lerman said the longstanding relationship between the bank and his chief financial officer, Steve Cakebread, made it the obvious choice. Mr Cakebread had worked with Morgan Stanley on the IPOs of Salesforce and Pandora when he was CFO of those companies. “Between those three banks, they keep each other honest,” Mr Lerman said, referring to Morgan Stanley, Goldman and JPMorgan.

ture capitalist Mary Meeker. Goldman is also a prolific early investor in tech companies, getting in early with household names like Spotify and Uber as well as less wellknown potential IPO candidates such as $2.65bn banking technology company Plaid. Morgan Stanley was also on the pre-IPO roster for Spotify and numerous other unicorns, including cloud storage venture Dropbox, which listed for $9.2bn last year. bar chart showing top ten tech IPOs by money raised While rivals have come close to the top of league tables based on the volume of cash raised by clients, Morgan Stanley, Goldman and JPMorgan earn the lion’s share of the fees. Take Uber, where Morgan Stanley, Goldman and Bank of America will share more than $100m in underwriting fees. Morgan Stanley, which led the IPO, will earn almost twice as much as Goldman and roughly four times BofA’s payout. “There is never a dearth of additional voices that an issuer can tap if they choose to,” said Liz Myers, global head of equity capital markets at JPMorgan. “But they tend to rely on people and views at firms that have the longest record of doing deals in their space.” In some ways JPMorgan is the successful challenger. Since 2000 it has muscled into what some bankers described as a cosy duopoly between Morgan Stanley and Goldman. Its push has been partly fuelled by its ability to lend, using the biggest bank balance sheet in the US, and the provision of other services such as cash management and private banking. www.businessday.ng

Electric cars: China powers the battery supply chain The US and Europe fear the country’s dominance of the global market in lithium HENRY SANDERSON

n a factory beside a paddy field on the outskirts of a small city in central China, one of the core components of the modern global economy is being produced. Inside a warren of cement and steel pipes, rock — mined in Australia — is heated to 1,000C in a giant coal-fired boiler. It is then leached with acid, dried and purified into a fine white powder that carries the charge inside a battery that enables an electric car to drive. The product, lithium carbonate, sells for more than $11,500 a tonne and global demand is expected to double by 2023, according to Volkswagen. “This all used to be countryside,” a young staff member says in the company electric car, a black Tesla Model S, as it approaches the factory gates. The city of Xinyu supplied lithium to China’s nuclear weapons industry in the 1960s, part of Mao Zedong’s push to place industry deep into the rural heartland of the country in case of a nuclear attack. Now the city supplies Tesla, BMW and VW, making it a vital node on the global electric car supply chain — the 21st-century equivalent of the refineries, pipelines and ships that supported the age of oil-based transport which batteries could eventually replace. In the space of a few years Chinese companies have become some of the world’s largest producers of lithium, a lightweight metal that is a key raw material for batteries. They have bought up mines from Australia to South America and are building plants in China to make lithium chemicals and batteries. The latest example of China’s ability to channel prodigious amounts of capital to fast growing industries, the country produced over 60 per cent of the world’s lithium in April, compared with less than 1 per cent from the US, according to Benchmark Mineral Intelligence. China’s dominance in the electric car supply chain has triggered growing concerns in a trade-war obsessed Washington and Brussels, with both fearing that they could be squeezed out of the next generation of industry. At the beginning of May two US senators, Lisa Murkowski and Joe Manchin, proposed a bipartisan bill designed to boost US production of critical minerals such as lithium. And the European Investment Bank has pledged €350m to back Swedish battery start-up Northvolt, which aims to build a battery factory in Sweden and source raw minerals such as lithium from Europe. At a time when western governments are watching Chinese industrial policy for signs of unfair advantage, one of the interesting features of its new prominence in lithium is that it has not been achieved by the stateowned companies. Instead, it is the product of a group of entrepreneurs who “jumped into the sea”, as the Chinese call the launch of a private

https://www.facebook.com/businessdayng

business — sensing an opportunity in batteries for mobile phones and then electric cars. Revenues for Ganfeng Lithium and its larger Shenzhenlisted rival Tianqi Lithium have risen from around $100m a year to over $1bn in a decade, joining the ranks of the largest producers. “The Wild West nature of Chinese capitalism has allowed companies to grow that quickly,” says Sam Jaffe, managing director of Cairn Energy Research Advisors, who analyses the battery market. “The government gives signals that a land rush is starting and then you have these entrepreneurs that get in their stagecoaches and gallop as fast as they can to get to the land. Some of them win [but] a lot of them lose.” For most of the 20th century the US was the largest producer of lithium, but the Kings Mountain mine in North Carolina shut in the 1980s after competition from Chile. After that the market was dominated by a cosy oligopoly known as the Big Three: SQM of Chile, which was controlled by the son-in-law of the country’s former dictator Augusto Pinochet, and US producers Albemarle and FMC. In 2015, Albemarle acquired rival US producer Rockwood and last year FMC split off its lithium business into a separate entity, New York-listed Livent. Founded in 2000 by Li Liangbin, who previously worked for a stateowned lithium plant, Ganfeng began life as a customer of SQM, helping to purchase the lithium extracted from the Atacama Desert in Chile. In his office in Shanghai, vice-chairman Wang Xiaoshen remembers that in 2004 Mr Li offered a 15 per cent stake in Ganfeng to SQM, in order to secure lithium supplies. “At that time SQM hired Deloitte to do due diligence and after that [SQM] quit. It said ‘no thank you’. Ganfeng at that time was a very small company,” recalls Mr Wang, who had worked for the country’s first lithium plant in the far western city of Urumqi, in Xinjiang. Instead, Ganfeng became a competitor: listing on the Shenzhen Stock Exchange in 2010 and starting to secure supplies of lithium around the world. In September 2015 it bought a stake in the Mount Marion mine in Western Australia, eventually building this into a 50 per cent stake. It also has a 9 per cent stake in another Australian miner Pilbara Minerals, which owns one of the largest hard rock deposits of lithium, the Pilgangoora project that came with a 10year supply agreement for its lithium. This week Ganfeng said it would buy a 30 per cent stake in London-listed Bacanora Minerals, which is developing a lithium project in northern Mexico. Ganfeng agreed a 10-year supply deal with VW last month. The carmaker aims to launch more than 70 electric car models over the next 10 years — a target of 22m electric vehicles by 2028. “Lithium will in the near future @Businessdayng

be one of the most sought-after raw materials on earth,” VW said. But it is in Argentina where Ganfeng’s most ambitious project is taking shape, one that could turn it into a truly global company. In 2018 Ganfeng bought a 38 per cent stake held in the Cauchari-Olaroz project from SQM. Then in April it agreed to boost its stake in the project to 50 per cent, paying $160m in a deal that is set to close in June. Situated in one of Argentina’s poorest areas, in the far north-west Jujuy province, the project will extract lithium from brine beneath the desert by evaporating it in the fierce desert sun. It aims to begin production in the second half of 2020, with a target of 25,000 tonnes a year of lithium carbonate. “If you look at the long term the demand is coming,” Ganfeng’s Mr Wang says. “This year traditional [carmakers] have launched their EV models. So that will generate demand for sure.” In the same area as Cauchari is a solar power plant being built by a Chinese construction company and backed by Import-Export Bank of China. With 1.2m solar panels it will be the largest solar plant in South America. It will help provide the energy to pump the brine from beneath the desert. Ganfeng teams on the ground will have to overcome myriad difficulties, including finding translators who understand lithium as well as Chinese. Only one other lithium company operates in the area, Australia-listed Orocobre. “In this little puna [plateau] at 4,000 metres we’re going to have over 1,000 workers between the solar project and Cauchari and Orocobre,” says John Kanellitsas, a former investment banker who is executive vicechairman of New York-listed Lithium Americas, which is developing the project in Argentina with Ganfeng. Across the Andes in Chile, Ganfeng’s rival Tianqi has been expanding its presence, led by Vivian Wu, a 45-year-old former English teacher who previously worked for Nokia. Last year Tianqi spent $4.1bn for a 24 per cent stake in SQM, gaining three seats on its board. The deal was fiercely opposed by the company’s largest shareholder Julio Ponce Lerou, Pinochet’s former son-in-law, who lost control over the company last year. He said it would give Tianqi sensitive information about a rival. Mr Ponce Lerou filed a lawsuit to block the deal, but it was dismissed in October by Chile’s antitrust court. Tianqi’s founder Jiang Weiping got his first big break after he managed to buy a state-owned lithium plant in Sichuan in 2004 for Rmb11m ($1.6m at today’s exchange rate). Mr Jiang had been supplying the plant with lithium from Australia. The local government suggested he take it over to resolve their debts, as it was close to bankruptcy, according to Ms Wu. Today the plant produces around 17,000 tonnes a yearof lithium.

Friday 24 May 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

COMPANY

Huawei set to launch own mobile operating system amid sanctions from Google Stories by OLUFIKAYO OWOEYE

mid intense rift with the United States, Huawei said it will roll out its own mobile phone operating system “very quickly” if its smartphones are cut off from Google’s Android software. Huawei currently the world’s second-largest smartphone maker is facing the prospect of being shut out of the world’s most popular smartphone operating system after being placed on a “banned entity” list. Huawei, which last year sold 200m phones, promised its customers that their current phones would continue to work, and have access to Google’s Play Store to buy apps. These phones are certified so that Google can provide them with updates and downloads without going through Huawei

Google had announced that they will be blocking Huawei devices from accessing their services. The US government temporarily eased some of the restrictions on Huawei which means for the next three months, the company is allowed to purchase US-made goods and provide software updates to existing Huawei handsets. What does this means? About a quarter of all phones sold in the UK are made by China’s Huawei and based on the Android operating system owned by Google. Globally, Huawei had nearly 19 per cent of the smartphone market in the first quarter of this year, according to Canalys, making it the second-biggest seller behind Samsung. This move means Google is no longer going to provide technical support and collaboration for Android and Google services to Huawei. Also, Android updates only

come to the open-source version a lot later than the licensed one. This is particularly concerning when

it comes to security updates. Also its future smartphones may lose access to apps including YouTube,

Gmail and Maps, and to the Google Play store and to security updates. This is likely to have a severe ef-

fect on their attractiveness to consumers outside of China, where many Google apps are already banned

CONSUMER SPENDING

Nigeria commuters pay more for intercity bus in April

igures from the Transport fare watch report for April 2019 show that average fare paid by commuters for bus journey intercity increased by 0.77% month-on-month and by decreased 6.88% year-on-year to N1,604. in April 2019 from N1,592. in March 2019. States with highest bus journey fare intercity were Abuja FCT (N4,050), Borno (N2,550) and Adamawa (N2,400) while States with lowest bus journey fare within city were Bayelsa (N1000), Bauchi (N985) and Enugu (N945). The report which covers bus journey within the city per drop constant route; bus journey intercity, state route, charge per person; air fare charge for specified routes single journey; journey by motorcycle (Okada) per drop; and water way

passenger transport. Average fare paid by commuters for bus journey within the city decreased by 0.07% month-on-month and increased by 9.22% yearon-year to N181.24 in April 2019 from N181.36 in March 2019. States with highest

bus journey fare within city were Zamfara (N305), Cross River (N284) and Abuja FCT (N280) while States with lowest bus journey fare within city were Sokoto (N132), Abia (N130) and Bauchi (N95). Average fare paid by air

www.businessday.ng

passengers for specified routes single journey increased by 0.33% monthon-month and decreased by -3.49% year-on-year to N30,721.19 in April 2019 from N30,620.19 in March 2019. States with highest air fare were Abuja

https://www.facebook.com/businessdayng

F c t ( N 3 5 , 5 0 0 ) , Kw a r a ( N 3 5 , 1 5 0 ) a n d Ji g aw a (N35,050) while States with lowest air fare were Katsina (N25,500), Nassarawa (N25,400), and Oyo (N25,200). Average fare paid by commuters for journey by

@Businessdayng

motorcycle per drop increased by 0.01% monthon-month and 9.46% yearon-year to N116.30 in April 2019 from N116.29 in March 2019. States with highest journey fare by motorcycle per drop were Ondo (N191), Rivers (N190) and Ogun (N188) while states with lowest journey fare by motorcycle per drop were Kebbi (N60), Adamawa (N55) and Jigawa (N55). Average fare paid by passengers for water way passenger transport decreased by -0.15% month-on-month and by -5.21% year-on-year to N542.32 in April 2019 from N543.16 in March 2019. States with highest fare by water way passenger transport were Bayelsa (N1,900), Rivers (N1,756) and Delta (N1,500) while states with lowest fare by water way passenger transport were Niger (N195), Gombe (N170) and Borno (N125)

Thursday 23 May 2019

BUSINESS DAY

Retail &

consumer business

COMMODITY

Steady import level fails to impress investors in local wheat production Temitayo Ayetoto

igeria is one of the African countries that will not make significant contribution to the forecast of an all-time high of 49.3 million tons in total wheat imports to Africa between 2019 and 2020, yet this will not translate to increased demand for investors in local wheat production. Nearly all of the projected increase in Africa’s import will be concentrated in two countries facing reduced production prospects this year – Algeria and Morocco, the Food and Agricultural Organisation’s Biannual Report on Global Food Market says. Nigeria’s wheat imports within 2018 and 2019 marketing year were forecast at 5.4 million metric tons, up four percent from the import figure of 5.2 million metric tons. In the same year, wheat accounted for N362.4 billion, marking 42.5 percent of the N852 billion agricultural goods imported into Nigeria. Demand for Wheat in Nigeria is 4.7 million metric tons but local production drags at 60,000 metric tons, leaving a deficit of 4.64 million metric tons. Imports by Algeria are forecast to rise by 10 percent to 7.7 million tons while Morocco’s imports could surge by as much as 42 percent to reach 4.7 million tons based on an anticipated 25 percent drop in domestic production. “Wheat shipments to most other major destinations in Africa are likely to remain steady at around the 2018/19 levels,” FAO

said but stakeholders in wheat production consider it inconsequential as a combination of uncompetitive pricing, poor production conditions and quality variation constitute setback. Analysts believe current times are not the best to invest in local wheat production because the local market hardly benefited from huge industrial demand. Producers have had to rely on open markets to recoup

their investments. “Until it is reduced, nothing will come out of a steady level of import. We want it reduced drastically before the year 2030,” Salim Saleh, president Wheat Farmers Association of Nigeria told BusinessDay. “Agriculture needs a thorough team that can drive it. if we don’t have this team and we just allow the ministry to be under the leadership of a minister alone can determine

the fate of over 200 million people.” Wheat is an important commodity that is essential in flour which is used in processing bread, biscuit and other food items that is generally consumed. Nigeria’s wheat production yield has been a struggle between 2.1 and 2.5 tonnes per hectare. A generally upward movement in international prices of wheat in 2018 has given way to a declining trend since March 2019. At the start of this year, wheat prices were affected by less than ideal weather during harvesting in Argentina and Australia. Wheat woes were further compounded by reports of historically low winter wheat seeding in the United States of America and rising concerns over tightening exportable supplies in the Russian Federation. These conditions combined to push February prices up to their highest level since October 2018. But in March wheat prices started to drift lower, influenced primarily by continued large sales from the Russia and a favourable outlook for crops to be harvested this year, especially among the major exporters. The benchmark United States of America wheat, Hard Red Winter, averaged $213 per ton in April, over 10 percent below its level at the start of the current year and also the same period last year, FAO says. The forecast for global wheat production in 2019 is pegged at 767 million tons, nearly 37 million tons above last year’s output and, if confirmed, it would set a new record.

COMMERCE

India commerce ministry prepares action plan for Nigeria retail market share Deliberations have been completed in the eastern part and soon similar engagements would be organised in places especially Nigeria, Africa’s biggest retail market, he added. “The idea is to discover new markets. We are meeting them regularly... Trade is relatively very small with Africa,” Prabhu said. With India’s exports growing at a relatively slower rate, Africa holds huge potential to boost exports. According to experts, India needs to take more steps to increase cooperation with the continent in various areas including services. “India has lot of prospects in Africa. We need to increase our engagement with the continent. We have not yet exploited that fully as compared to China, which has huge presence,” said Biswajit Dhar, a professor of economics at Jawaharlal Nehru University. Prabhu has earlier pitched for a free trade agreement with Africa to boost economic ties between the two regions

David Ibemere

ndia commerce ministry is presently formulating a comprehensive action plan to boost India’s trade with Africa and has earmarked Nigeria as its number one target. Suresh Prabhu Commerce and industry minister says the plan is aimed at increasing India trade to Africa using a series of engagements with various players and regulators especially in the retail segment. “As part of our strategy to explore new markets, we are constantly engaging with Africa where there is huge scope for exports...We have decided to prepare an action plan to boost exports and imports from Africa,” the commerce and industry minister said To strengthen the dialogue on trade and investments, “we have divided them in five parts - east, west, north, south and central”, Prabhu said.

Analyst: Bunmi Bailey Graphics: Fifen Eyemisanre Famous www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Wednesday 22 May 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 211,494.09 5.95 -0.83 278 21,403,759 UNITED BANK FOR AFRICA PLC 194,936.70 5.70 -4.20 472 22,367,898 ZENITH BANK PLC 596,533.38 19.00 -2.56 658 29,465,005 1,408 73,236,662 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 247,677.52 6.90 0.72 181 13,550,981 181 13,550,981 1,589 86,787,643 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,948,351.22 144.85 9.98 464 93,722,710 464 93,722,710 464 93,722,710 BUILDING MATERIALS DANGOTE CEMENT PLC 3,459,223.00 203.00 9.73 306 8,744,238 LAFARGE AFRICA PLC. 161,077.95 10.00 -1.96 104 3,841,788 410 12,586,026 410 12,586,026 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 305,991.17 520.00 - 11 4,526 11 4,526 11 4,526 2,474 193,100,905 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 1 10 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 1 10 1 10 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 10 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 60 OKOMU OIL PALM PLC. 70,589.34 74.00 - 9 37,050 PRESCO PLC 58,000.00 58.00 - 6 17,500 16 54,610 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 -4.76 19 405,954 19 405,954 35 460,564 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 - 2 5,022 JOHN HOLT PLC. 182.90 0.47 - 1 530 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 47,964.63 1.18 -7.09 54 4,169,240 U A C N PLC. 19,016.56 6.60 2.33 65 2,715,002 122 6,889,794 122 6,889,794 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 30,360.00 23.00 - 21 50,738 ROADS NIG PLC. 165.00 6.60 - 0 0 21 50,738 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 7 62,557 7 62,557 28 113,295 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 8,612.45 1.10 -5.98 13 257,463 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 110,614.33 50.50 - 28 80,034 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 2 5,000 NIGERIAN BREW. PLC. 493,408.86 61.70 -0.72 60 2,178,190 103 2,520,687 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 82,250.00 16.45 0.61 75 833,048 DANGOTE SUGAR REFINERY PLC 160,800.00 13.40 0.37 117 6,112,793 FLOUR MILLS NIG. PLC. 63,555.88 15.50 - 68 283,070 HONEYWELL FLOUR MILL PLC 8,723.22 1.10 - 18 170,800 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 47,557.42 17.95 - 9 8,115 UNION DICON SALT PLC. 3,321.07 12.15 - 1 100 288 7,407,926 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,721.12 10.50 1.45 26 182,277 NESTLE NIGERIA PLC. 1,046,306.25 1,320.00 -7.69 65 198,192 91 380,469 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,316.09 4.25 9.82 28 848,540 28 848,540 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 33,749.05 8.50 - 16 85,003 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 37 2,620,110 53 2,705,113 563 13,862,735 BANKING ECOBANK TRANSNATIONAL INCORPORATED 167,898.39 9.15 -8.50 20 162,183 FIDELITY BANK PLC 47,808.42 1.65 -0.60 113 7,596,548 GUARANTY TRUST BANK PLC. 897,650.97 30.50 -2.56 318 16,552,656 JAIZ BANK PLC 14,142.84 0.48 -4.00 20 2,506,743 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 65,930.06 2.29 -0.43 97 6,604,474 UNION BANK NIG.PLC. 206,757.34 7.10 - 34 1,447,006 UNITY BANK PLC 7,948.75 0.68 3.03 11 850,002 WEMA BANK PLC. 23,916.17 0.62 -1.59 56 3,548,412 669 39,268,024 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,573.93 0.66 - 18 151,667 AXAMANSARD INSURANCE PLC 18,900.00 1.80 - 9 68,145 CONSOLIDATED HALLMARK INSURANCE PLC 2,195.10 0.27 -6.90 5 1,946,043 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 0 0 GOLDLINK INSURANCE PLC 909.99 0.20 - 3 19,650 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,270.26 0.31 - 14 827,629 LAW UNION AND ROCK INS. PLC. 1,718.53 0.40 -9.09 17 266,543 LINKAGE ASSURANCE PLC 3,840.00 0.48 - 5 30,700 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 - 25 460,415 NEM INSURANCE PLC 12,461.99 2.36 - 11 99,160 NIGER INSURANCE PLC 1,547.90 0.20 - 3 12,934 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 2 1,000,200 REGENCY ASSURANCE PLC 1,333.75 0.20 - 11 1,887,493 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 - 6 14,400 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 3 1,050 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 - 2 45,000 WAPIC INSURANCE PLC 5,353.10 0.40 -2.50 27 3,210,400

www.businessday.ng

161 10,041,429 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,109.83 1.36 -7.48 2 164,120 2 164,120 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,320.00 3.66 -7.11 71 1,411,475 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 0.83 6 553,751 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,684.34 1.60 -0.62 72 5,592,447 ROYAL EXCHANGE PLC. 1,183.44 0.23 - 1 200 STANBIC IBTC HOLDINGS PLC 451,096.36 44.05 - 9 22,642 UNITED CAPITAL PLC 13,800.00 2.30 -6.50 129 6,225,880 288 13,806,395 1,120 63,279,968 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 -4.00 2 210,000 2 210,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,900.00 4.60 - 0 0 GLAXO SMITHKLINE CONSUMER NIG. PLC. 10,703.09 8.95 5.29 10 149,800 MAY & BAKER NIGERIA PLC. 3,933.54 2.28 - 12 155,718 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 3 11,300 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 25 316,818 27 526,818 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 -8.00 11 1,515,200 11 1,515,200 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 5 11,510 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 5 11,510 PROCESSING SYSTEMS CHAMS PLC 1,690.58 0.36 -5.26 11 995,750 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 3 1,590 14 997,340 30 2,524,050 BUILDING MATERIALS BERGER PAINTS PLC 2,130.20 7.35 - 7 28,633 CAP PLC 23,800.00 34.00 - 35 558,989 CEMENT CO. OF NORTH.NIG. PLC 184,009.01 14.00 - 7 8,362 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 1 20 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 2 200 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 52 596,204 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,906.18 1.65 - 9 64,151 9 64,151 PACKAGING/CONTAINERS BETA GLASS PLC. 34,848.05 69.70 - 4 1,010 GREIF NIGERIA PLC 388.02 9.10 - 0 0 4 1,010 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 65 661,365 CHEMICALS B.O.C. GASES PLC. 1,731.58 4.16 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 1 10 1 10 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 2 12,510 2 12,510 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 88.00 0.40 8.11 1 200,000 1 200,000 4 212,520 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,377.79 0.22 -8.33 24 5,251,601 24 5,251,601 INTEGRATED OIL AND GAS SERVICES OANDO PLC 56,562.93 4.55 -2.15 77 1,823,624 77 1,823,624 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 61,301.19 170.00 - 9 10,134 CONOIL PLC 13,983.14 20.15 0.25 25 114,553 ETERNA PLC. 5,216.58 4.00 - 17 94,555 FORTE OIL PLC. 36,208.97 27.80 - 101 794,252 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 1 100 TOTAL NIGERIA PLC. 55,002.54 162.00 - 25 21,701 178 1,035,295 279 8,110,520 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 2 2,000 2 2,000 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 1 60 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 5 4,746 6 4,806 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 100 IKEJA HOTEL PLC 3,014.25 1.45 - 4 1,400 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 4 510 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 10 10 2,020 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 2 20,100 LEARN AFRICA PLC 941.17 1.22 - 4 27,403 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 5.88 4 220,000 10 267,503

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

Live @ The Exchanges Dangote Cement, MTNN, other stocks push market higher by N400bn Stories by Iheanyi Nwachukwu

Coronation Research releases its 2019 Nigerian Consumer Report

Union Bank, Mama Moni establish innovation hub for low-income women

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 23 May 2019

BUSINESS DAY

GARDEN CITYBUSINESS DIGEST

Hope rises for Port Harcourt port as containers reappear IGNATIUS CHUKWU

any had written off the P o r t H a rcour t por t along with what they call eastern ports. Many said there was a national policy conspiracy to keep the eastern ports backward so that importers would continue to use western ports and create viability there, despite Rivers State producing a minister in charge some years ago, and now, Chibuike Rotimi Amaechi. Last week, Energy and Maritime Reporters (EMR) corps in Port Harcourt paid a visit to the Abubakar Garba Umar, PH Port Manager since 2016, who is widely believed to must have been carefully selected to go to PH and confront that situation, in his office. He made exciting revelations. He said Rivers ports are now safe and buy. Many reporters did not seem to believe their ears. It appeared that most persons actually went away with the ugly side without doubling back to know when things would change, but have things really changed?

Middle: Port Manager, Garba Umar, (left) Martins Giadom, chairman of EMR, (right), Ayo Odungweru, secretary

PM, Garba Umar Up to 2016, the complaints were about that Port Harcourt port was not having activities. So, upon assumption, we embarked on sensitisation visits to importers in this region on the need to route their goods through the Port Harcourt port. We created awareness on the viability of the Rivers port and we allayed their fears about insecurity and other matters. They bought the idea.

PORT HARCOURT BY BOAT

IGNATIUS CHUKWU

he Federal Government of Nigeria (FG) through the Nigerian Ports Authority (NPA) has terminated the contract agreement that gives Integrated Logistics (INTELS) Nigeria believed to be owned by Abubakar Atiku, President Buhari’s latest rival. The only thing that oozes from the bickering and eventual termination is politics, though the NPA denies it. Whatever it is, Intels has had enemies or rivals chipping away at its monopoly for over a decade such that another company in 2013 was given the right to develop a part of Onne Oil/Gas Free Zone to the surprise of most journalists in Port Harcourt. Next, non-oil ships began berthing in the hitherto exclusive oil/gas port. Even the Goodluck Jonathan administration was seen to be eroding that monopoly. That could be because Atiku himself has always been at the other end of any sitting president since 2001 soon after he parted ways with Obj. He has always decamped to an opposition political party to challenge or fight the incumbent; he opposed Obj, Ya’Adua, Jonathan, and now he is opposing Buhari. All of this has must have affected the fortunes of Intels and its parent body, Orlean Invest. He must have guts to combine opposition politics and mega business.

Now, the Port Harcourt port is busy and viable. Most of our berths are now occupied. Containers now come because two shipping lines now come to Port Harcourt and one more is about to join. Road congestion that was a fact of the Harbour Road is no more because we took proactive measures to keep that in check. We now insist that our road be free. We say, do not use port road for parking.

Security: It was a fear in the past, not anymore. From 2017, Rives ports operate on step 1, no more step 2. Response to requests: Your request for timely information is positive. We will endeavour to do that. Your request for an office is tentative because of the international security rules governing ports all over the world. There are statutory bodies that are allowed by international regulations to have

permanent presence in ports. However, access to the ports for information to you newsmen would not suffer. Update of information is important and you have already observed that we are steadily reaching out to the media. We believe that regular update is key. We are prepared to partner with the EMR in Port Harcourt. We know we visit stakeholders on awareness campaigns but we are aware that you are the primary organs of information. We will work with the media to achieve better information dissemination. We can only request you to always clarify information before use. EMR chairman, Martins Giadom This visit affords us the opportunity to explore areas of mutual cooperation in the pursuit of a better port system in Rivers State and other facilities of the NPA in the state to boost the economy of the state. Your achievements excite us. The Energy and Maritime Reporters (EMR) is an organization founded by senior journalists in the Energy and Maritime sectors of the profession with the key objective of pursuing strategic media

goals that would help bring to better limelight the issues of the sectors. EMR in its short period of existence has already made waves in the Media space in the Niger Delta and Nigeria as a whole. We have continued to mobilize our energy and resources to report the sector and also to educate our members to meet the challenges of reporting sensitive sectors such as energy and maritime in the Niger Delta region. We however cannot begin a meaningful exercise without adequate sensitization of the critical agencies and organizations in the two sectors. Our visit thus aims at assuring you of our readiness to partner with you and deploy our expertise in the Media environment of Nigeria and particularly in Rivers State to give focused coverage to your agency and its activities in such an informed and articulate approach that would assist the NPA to deliver its mandate to the sector. We expect that this synergy will remain robust, mutually beneficial, and above all, beneficial to the business community and the state.

How NPA may replace Intels in multi-million dollar pilotage services Some of us saw this coming, and we even think Intels has lasted very long because Nigerian politics brooks no opposition. The moment Tonye Cole picked form to challenge Gov Nyesom Wike, the purchase agreement his company, Sahara Energy, had with the Rivers State government over power plant was revoked, fiam. It did not attract huge uproar because it was not a federal matter o it was not done by the wrong person. The fortunes of Intels must have dwindled over the years on this account, and this can be obvious to outsiders through the decrease in its workforce from stated 15,000 to now 3,000, and this number is said to be at the verge of being wiped off. What is important now however is how NPA, which had not agreed it had capacity to manage any port, let alone pilotage, would handle the exit of Intels in the next three months when the notice would expire. The most visible pressure group in the maritime industry, the Marine Club of Nigeria (MCN) headed by Chinedu Jideofo-Ogbuagu (PhD), has raised concerns on this, thus; “What concerns and bothers us at Marine Club of Nigeria (MCN) is who will take over that contract. With a plethora of experienced mariners in Nigeria - many of them unemployed or under-employed, NPA should not have a problem finding competent Nigerian pilots for employment or contract award.” Sources at the NPA have already told a newspaper that they would begin the process of appointing another company. This may not seem too difficult, being that many detractors have been pushing for Intels to be pushed off, offering themselves. Persons outside a thing always think www.businessday.ng

it is easy to take over and maintain the boat. Let the NPA shine their eyes as we say in the creeks. The other option is for the NPA to set up a unit and employ the numerous pilots the MCN talked about and run the services by themselves, but why did the NPA outsource it in the first place, if it could do it? Besides, what is it that has been efficiently handled by any government agency in Nigeria before? Perhaps, the best option is to divide the pilotage service into four zones and award it to four different contractors to create competition and help NPA understand what is happening. After all, the ports were done that way in the concession scheme. Atiku chose to fight the heads of the FG while choosing to be business partner with the same FG in a country where the government sees itself as the ‘people’. Each time anybody did anything against the interest of Gov Wike’s administration, he usually said it was done against Rivers people. This is same in most other states. People have come to realise that the interest of the head of the government is exactly the interest of the people of that place, including those who fight against the government. About Intels & Orlean Invest: Whatever will soon be the fate of Intels will be huge. This is because the first time the present FG tried this in 2017, the matter brought the Italian billionaire and the majority shareholder in Intels, Gabrielle Volpi, to Nigeria to profusely beg. The size of the interests of Intels and/or Orlean Invest as represented by remittances and investment portfolios should help to appreciate

https://www.facebook.com/businessdayng

‘‘

This may not seem too difficult, being that many detractors have been pushing for Intels to be pushed off, offering themselves

@Businessdayng

this. By 2014 when Jonathan commissioned a project there, unconfirmed figures showed this pattern: Remitted N118Bn ($724.6m) to FG since it got its concession; Remitted N20.6Bn between 2006 and Q1-2014; Paid a commencement fee of $10.3m (about N1.68Bn), a lease fee of $253,859m, throughput fee of $305.201m and land industrial area fee of $155.291m, totalling $724.651m. No fewer than 4,386 Nigerians were in its employment at that point, Onne Port alone created 28,000 jobs; over 17,000 vehicular movements per day through port’s main entrance. Intels has invested a total sum of $74.245m (about N11.557 billion) in Port Facilities Infrastructure Development (PFID). There is development of warehouse facilities and Federal Ocean Terminal (FOT) and development of boat manufacturing facilities at the FOT - $1.679Bn. A major area of tears would be host communities. There is an avalanche of CSR, especially in jobs, empowerment, road projects, solar street lights, scholarships to indigent students, medical facilities and smooth community relations. Orlean Invest and its subsidiaries are strategically located within the major Oil & Gas producing ports in Nigeria. They provide the framework required to set up your company’s infrastructure. We ask again; Intels and FG, are you sure you want to fight this fight to the end? Atiku and Buhari, are you sure you both want to fight this fight to the very end? When two elephants fight, the grass must turn brown oh. This boatman does not like what he is fears will surely happen oh.

Thursday 23 May 2019

BUSINESS DAY

Investing in Rivers State

Rivers informal sector IGR target threatened by incessant attacks on businesses Ignatius Chukwu & Sam Esogwa

ivers State plans to launched its oft-suspended revenue push in the informal sector, hoping to double its about N10Bn per month internally generated revenue (IGR). The sector made up of traders and sundry business people has however come under intense attack from armed gangs who kill, rape, kidnap and rob them at will. This has raised fears about the impending push by the state’s revenue board headed by Adoage Norteh, a tax expert. Though most parts of the state as well as almost every segment of Port Hrcourt, the state capital, have been invaded, but Diobu, a densely populated but fast-developing town in the Garden City, close to the seat of power, is most hit. It is becoming notorious for its high rate of crime. Over the years, such crimes as cultism, armed robbery, kidnapping, pick-pocketing, rape and rugged life style have made Diobu a dreaded place to live in. Ironically, despite the high crime rate, Diobu has remained one of the business nerve centres in Port Harcourt. As a matter of fact, it is the printing hub of the city.

Governor Nyesom Wike

Efforts by successive governments, especially those of Celestine Omehia, Chibuike Amaechi, and the incumbent, Nyesom Wike, to reduce the crime rate in Diobu, have yielded only little results. Investigation shows that while crimes like cultism and kidnapping have reduced a little, armed robbery and pick-pocketing still occur frequently in Diobu, although they have taken a more subtle dimension as the criminals have devised new tactics. The latest is gang rape and busting

into homes where gangs rape wives and daughters including nursing mothers, or ask men to rape their daughters or watch them do it, like in Sodom of old. Rather than first scare their victims with gun shots and create a scene like before, they now quietly walk up to their victims, calm them down with soothing words before showing them guns to force them to comply without making noise and then go ahead to rob them. According to sources, what the

criminals usually rob now in Diobu are phones, palm tops, lap tops, and money. They now operate mostly between six and seven o’clock in the evening and sometimes in broad-day light to the full glare of passers-by, who, even when they see it, pretend as if nothing is happening, for fear of being attacked by the criminals. As a result of this, those doing business in Diobu, such as printers, canteen and restaurant owners, business centre operators, among others, now get edgy and more apprehensive as soon as evening draws close while some close their businesses between 6’oclock and 6-30pm to avoid being taken unawares. Two weeks ago, a three-man gang of armed robbers invaded a telecoms shop at 11 Ikwerre Road, Mile 1, Diobu, around 10 a.m., robbed all the workers in the shop and killed one man there for arguing with them. Confirming this latest development, a manager of a printing press in Abakaliki Street, Mile 1, Diobu, told our reporter that their reason for closing early is to avoid falling victim to armed robbery attack. He said on many occasions, armed robbers had attacked some of the printing presses, stealing money, generators, papers and other printing equipment. The printing press manager add-

ed: “Diobu has become worse now. These boys (the criminals) can come at any time, especially from 7pm. That is why we tell our customers to bring their work early before 6pm, so that our operators will start the printing on time. If they come after 6:30 or 7 p.m., we cannot do anything because our printers will go and come back early, sometimes 5 a.m., to start the work. Sometimes we finish the work a bit late. Many of our clients- the publishers- are complaining but there’s nothing we can do. “Even, somebody can be walking along the road and all of a sudden he will be surrounded by two or three boys with gun and before you know it, they have robbed him. That is how Diobu is now; so everybody is being careful. Efforts by the leader of the Rumuwoji-Diobu Vigilante/Community Police, Alalibo Gogo Abite, aka Mandela, to get assistance from the state government, have not yielded result so far. Residents and business owners in Diobu are afraid that if nothing is done urgently to reduce the increasing rate of armed robbery in Diobu, sooner than later, businesses in the area will start folding up. The police public relations officer (PPRO), Nnamdi Omoni, said the police had deployed new methods to contain the new surge in Diobu.

NDDC wants to create regional power supply base and industrial parks in oil states Ignatius Chukwu

study has been commissioned on the possibility of building a regional electric power base for the Niger Delta to attract investments and boost rapid industrialization. The proposed capacity is estimated to be about 7,000mw linked through a 330kv regional transmission backbone. This regional power pool will then feed industrial parks that would be developed in each of these states with reliable electricity for 24hours every day, at an expected tariff that should be significantly lower than anywhere else in Nigeria for minimum of 10 years to drive quick growths, according to experts that worked on the study. The Niger Delta Development Commission (NDDC) which received the study said it is equally planning to build three industrial parks in each of the nine states that make the oil zone using adequate power supply as a pillar. The plans were unveiled in Port Harcourt in the week by the NDDC Acting Managing Director, the Bayelsa-born the professor, Nelson Brambaifa, who stated this during a meeting with officials of Income Electrix and a consulting consortium from Germany and Singapore, at the NDDC headquarters. The NDDC boss said that the

Commission was determined to stimulate industrial growth in the Niger Delta region. Brambaifa, represented by the NDDC Acting Executive Director, Projects, an engineer, Samuel Adjogbe, observed that activities in the Niger Delta region revolved almost exclusively around oil and gas business. He said: “We have looked at some indicators and it is obvious that the power requirement for industrial growth in the region is not available. So, we need to make a deliberate effort to set up projects that can boost power and attract investors to the region.” .

The NDDC boss explained that the objective was to create three industrial parks in each of the nine states of the Niger Delta region, adding that the essence of the project was to tap the abundant gas resources in the region for electricity. He said: “Because of the few investors in the region, they are compelled to pay high electricity tariffs. We must begin to pay a more serious attention to power which is a major driver in the economy.” In his own remarks, the Group Chief Strategy Officer for Income Electrix, Chima Omeike, re-stated the need to create alternative sources of

L-R: m) Wong Kok Cheong, senior consultant, Cephas Development PTE Ltd; Ag CEO of NDDC, Nelson Brambaifa; (far right) Ag executive director, projects, Samuel Adjogbe www.businessday.ng

https://www.facebook.com/businessdayng

revenue and create development and investment opportunities in the Niger Delta region. A representative of Frost & Sullivan Pte Ltd, the consulting consortium from Singapore, Richard Wong, observed that the Niger Delta had tremendous opportunities to become a major industrial hub in Nigeria. He said that the region had huge energy resources waiting to be fully exploited. …… As NDDC plans to adopt community-based management system in sustaining projects Meanwhile, the NDDC has reaffirmed its commitment to ensure the sustenance of projects executed by the Commission in the Niger Delta region for the benefit of the people through a community-based management template. This was stated by the Acting Managing Director of the commission, a professor, Nelson Brambaifa, during a meeting of the Commission’s Focal Task Team (FTT) with delegates of the European Union Niger Delta Support Programme (EU-NDSP), at the NDDC headquarters in Port Harcourt. The NDDC CEO who was represented by the Director, Community and Rural Development, CRD, Solomon Ita, commended the EU-backed initiative, stating that the Commission would adopt the community-based management approach to ensure the maintenance of @Businessdayng

other projects in the region. He said: “I want to commend this team that has been handling the capacity building of our communities and promoting synergy towards the implementation of Niger Delta pilot project scheme.” Ita remarked that recently, the Focal Task team had a meeting, which produced an estimated cost of rehabilitating 45 selected water projects across the nine mandate states of the NDDC. According to him, the NDDC and the European Union would continue to build community-based management that would properly take care of the projects even when the parties had moved to face other areas of intervention. He added: “We are hoping that this template will be used by the Commission and other agencies in implementing and managing some of the abandoned projects we have in the region.” In her remarks, the leader of the European Union delegation, Cecil Collins, said that the purpose of the meeting was to review and evaluate the results and the impact of the various interventions, as well as understand the extent they had met the demands of the people, noting that such appraisals would enable the EU do things differently in the future to contribute to the prosperity of the nation and the Niger Delta region.

industry Insight

BUSINESS DAY Thursday 23 May 2019 www.businessday.ng

Positioning Aba leather industry for global competitiveness Shoe export records of 5 countries

ODINAKA ANUDU, MAURICE OGU & GBEMI FAMINU

ve r t h e ye a r s, Ab a, the industrial capital of Abia State, SouthEast Nigeria, has been a hub of creativity and manufacturing. The city is well-known for production of garments, shoes, bags and trunk boxes. There are over 80,000 players in the leather industry, with some producing shoes, and others making bags and trunk boxes. The industry is estimated at N120 billion, though key players think it is much more than that. The Aba leather industry is made up of shoes, trunk boxes and belts. It provides employment for tens of thousands of people, with many specialising in different stages of production such as designing, patterning, cutting, skiving, stitching, peeling and finishing. It is made up of clusters such as Powerline, Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, and Ochendo Industrial Market, comprising input suppliers, among others. Aba is indubitably a shoes’ paradise, producing 48 million pairs of shoes and slippers annually, according to BusinessDay calculations. Available data show that China produces 12.6 billion pairs of leather shoes annually, while Vietnam produces 760 million pairs. Indonesia produces 660 million pairs, while Italy produces 205 million of the same commodity annually. From 2013 to 2017 show that the top four leather shoe producing countries were China, India, Vietnam, Indonesia and Brazil, according to a research report conducted by Statista. In the top ten global ranking of leather shoe producing countries, Italy occupies the tenth position. China, Vietnam and Indonesia make it to the top ten producing countries and top ten exporting countries. The leading exporting countries of China, Italy, Vietnam, Germany and Indonesia have laid substantial foundations to the shoe production and exports industry a way of boosting their economies. China exports shoes and leather valued at $9.1 billion annually, while Vietnam’s export is estimated at $6 billion. Indonesia, on the other hand, exports shoes worth $2.6 billion. However, there is currently no record of export done by Aba shoemakers and

but it takes $250,000 to N750,000 to set up a standard shoe factory. So, what can N300,000 do when the industry is capital intensive?” he asked. According to the Manufacturers Association of Nigeria (MAN), the sector vietnam $6 billion got leans from banks at over 22 percent india in 2018. $9.1 billion ethiopia But this is not the case in many subSaharan African countries. The current indonesia repo rate (central bank lending rate to china commercial banks) in South Africa is 6.5 percent while the prime lending rate (lending rate to customers) is 10 percent. $1.4 billion Kenya Central Bank’s monetary policy $ committee cut the determining bank rate 33.7 million $2.6 billion in late July to 9 per cent from 9.5 per cent. SOURCE: worldtopexports.com BusinessDay gathered that Kenyans now borrow at an interest of 13 per cent (as against from 13.5 percent earlier) in line with the interest rate capping rule Aba leather industry in numbers that limits lending rates to 4 percentage points above the CBR. ITEMS VALUE Zambia is one of the emerging coun80,000 Leather makers tries in SSA and its central bank cut benchmark lending rate by 50 basis points N120 billion ($333 million) Industry size to 9.75 percent in February 2018, citing N2,500 lower consumer inflation and weaker Average price economic growth, according to Reuters. 48 million Average produced annually Experts believe that only a singledigit rate will spur the leather industry 0 Export record in Aba. MAN wants the Bank of Industry recapitalised to enable it lend more to the industrial sector. They equally urge the SOURCE: BUSINESSDAY, ABA SHOEMAKERS Development Bank of Nigeria to lend at single-digits, rather than double digits. 20 to 30 percent. In many cases, deposit other players in the leather industry. Moreover, players, especially the big Industry experts say the first step to money banks are not even interested in players, struggle to get inputs from the making Aba a globally competitive hub funding Aba shoes because the financial local market. They can’t buy animal skins is to track the leather products that leave institutions believe that the players are locally because tanneries process and sell largely informal and the majority do not to make foreign exchange. This is purely the country from the city. Secondly, many shoemakers are not have business plans. More so, it is a fact a business case, but big players are hard yet in the global map as they are not seen that many players are not even registered hit by dollar scarcity, like the one experiat the Corporate Affairs Commission. enced in 2016 and 2017. even on the internet. It is only recently that the likes of Gada Analysts suggest that the government and “What happens is that the tanneries in Africa, Jiji.ng and abanaijamade.com.ng, the Nigerian Export Promotion Council Kano and Kaduna process animal skins among others, have come in to handle begin to intensify efforts to formalise this and sell them as leather in the global marketing and distribution of shoes, industry. market, earning foreign exchange,” said Due to lack of funds, many players use Chinatu Nwagbara, coordinator of Madeincluding belts and trunk boxes. Online shops take 20 to 50 percent cuts from crude machines and do much of their in-Aba Project, who produced shoes for sellers, BusinessDay gathered from the work by human labour. Olusegun Obasanjo in 2016. Ken Anyanwu, secretary of the Assoshoe makers. “So we go to China and other countries However, marketing and distribution ciation of Leather and Allied Industrial- to buy. Sometimes, we buy our products are still a big challenge. An average Aba ists of Nigeria (ALAN), who produced and re-import,” he said. pair of shoes costs $7, but China goes as Nigerian armed forces shoes in 2016, told Apart from animal skins, they also BusinessDAY recently in Aba that the in- cannot buy quality synthetic leather and low as $5 on platforms like Alibaba. Interest rate in Vietnam is about 8 dustry suffers from lack of access to credit. adhesives because of their high prices in “This is where the problem lies. We in the global market. percent, while Indonesia’s is around 5.75 percent. China is less than 6 percent and Aba have no good machines,” Anyanwu Experts call for backward integration of ALAIN said. so are many shoe exporting countries. in the industry to make access to inputs “The Bank of Industry has done its easy and reduce exposure to the foreign In Nigeria, Monetary Policy Rate is 13.5 percent and banks lend as high as best by giving some of us N300,000 each, exchange.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.